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A substantial difference with accelerated amortisation with windfall gains is that accelerated amortisation does not roll out more wind power capacity, and so does not have the same positive impact on Sweden's net exports.

I think you're tacitly assuming that the "seeded" farms have a lower required rate of return on equity than the "seeding" farms. After all, if the "seeded" farms make sense on a seeding basis with constant cost of equity, then they should also make sense on an accelerated amortisation basis, assuming that you have available, equally priced, equity from other sources. As long as wind is a small(ish) fraction of total real capital investment, the latter does not strike me as an unduly unreasonable assumption.

And since a substantial share of the boom and bust falls to German capital goods industry.

Yes, if you allow a boom-and-bust cycle, you'll keep production in Germany. But if you have stable onshore demand, you'll get onshore industry (the economics of transporting windmills relative to transporting the raw materials say that the manufacturing will relocate to the vicinity of the demand). That's why you want to avoid a boom-and-bust cycle in the first place.

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Wed Mar 30th, 2011 at 03:05:47 AM EST
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