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As to the pragmatic question of what happens if if where they end up on the merit order curve leaves them unable to cover their financial capital obligations ... someone ends up taking a financial haircut, and the asset is revalued, either internally or on sale, as back-up generating capacity.
If a sound energy policy is pursued, its not necessary to expand the capacity of the coal-fired generators in particular, so the fact that their legacy capital costs might not be covered is no threat to the real system. Its a financial loss, sure, but covering for that is just corporate welfare ~ in a more capitalist version of corporatism, we'd apply the rule that you pays your money and you takes your chances.
I've been accused of being a Marxist, yet while Harpo's my favourite, it's Groucho I'm always quoting. Odd, that.
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