Welcome to European Tribune. It's gone a bit quiet around here these days, but it's still going.
Are feed-in tariffs a market designed structure or a government encouraged activity? I tend to think it is the latter. As I said, long-range contracts have gone out of fashion and this is atypical.

In fact it is almost a validation that the present wind plants being built are uneconomic over the long term. If they weren't they wouldn't need a guaranteed income stream. Instead we can expect to see the price of future construction drop as technology improves making cost recovery of existing plants impossible. You pointed this out yourself implicitly by saying that bankrupt wind farms would always be a good deal for later investors.

I have nothing against government sponsoring startup technology either directly through subsidies or indirectly through tax breaks or the like, but let's not pretend it is anything but an attempt to make uncompetitive technologies more competitive.

I'm all in favor of making conventional power generation more expensive by accounting for externalities. What I think is a fallacy is that this will per force lead to technological innovation. Economic forces can encourage innovation, but cannot guarantee it. The economists debating carbon tax vs cap and trade are leaving the hard issue of what happens next to someone else to deal with. It's a variation on the old economics joke "assume a can opener".

There's an old joke about three guys stranded in the desert, dying of thirst. They have a can of water -- but can't open it. One guy, an engineer, uses a stick as a lever and a rock as a fulcrum and ... nothing. The second guy, a physicist, does some calculations, drops the can from a predetermined height at a carefully considered angle and ... still nothing. Finally, the third guy, an economist, looks at the can and says: "OK. I have the solution. Assume a can opener."

I'm not trying to be discouraging. I'm quite pleased to see the progress you and your colleagues are making, but I think it has to be combined with more emphasis on reducing demand.

Policies not Politics
---- Daily Landscape

by rdf (robert.feinman@gmail.com) on Sun May 3rd, 2009 at 01:20:45 PM EST
[ Parent ]

Others have rated this comment as follows:


Occasional Series