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?

It is a way to structure a market, just like take-or-pay contracts are a way to structure the gas market. They are, of course, government designed, because the electricity market is government designed and operated (where it works, at least).

As I said, long-range contracts have gone out of fashion and this is atypical.

Your own example (Enron in California) is actually noteworthy here, in that long-term contracts did not "go out of fashion" with the market participants. They were forbidden by the regulators, because they were thought to stifle "competition." When this ban was lifted, the majority of the juice went back to being sold under long-term contracts.

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.

Huh? You mean, like Gazprom's insistence on take-or-pay contracts is evidence that gas extraction is uneconomical?

Instead we can expect to see the price of future construction drop as technology improves making cost recovery of existing plants impossible.

And so what? Should we stop making integrated circuits today, because we know that a cheaper, faster version will be available in six months? What's the point here?

You pointed this out yourself implicitly by saying that bankrupt wind farms would always be a good deal for later investors.

scratches head I don't get it. How do you get from there to here?

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Sun May 3rd, 2009 at 03:33:50 PM EST
[ Parent ]
I would add that all markets are designed - some from scratch other by try and error. And today they are all in part designed by government. There has been examples of markets without an authority or even a common language but today that is quite rare.

I read about an small island in northern Sweden that was used for trade between locals and southerners with a simple system of placing items on a given date, leave for a day and then return. If there was any takers there was a pile of stuff next to yours. If you accepted you took that pile and left. If you wanted to barter you either decreased your pile or left it all. Anyhow you then left for a day. When you returned the other side had either made a new bid or taken their stuff back. I believe it was described in the 18th century (possibly Linneaus or one of his pupils) as having been around longer then anyone could remember. This is what I would call a market that was regulated, but without government.

You can also have trade without regulation - for example viking style - but a market implies something a bit more permanent. And then there is regulation.

Bit ot, but the "unregulated market" is an annoying term.

Sweden's finest (and perhaps only) collaborative, leftist e-newspaper Synapze.se

by A swedish kind of death on Mon May 4th, 2009 at 05:01:49 AM EST
[ Parent ]
... that the regulation is provided by the private participant with the most power.

I've been accused of being a Marxist, yet while Harpo's my favourite, it's Groucho I'm always quoting. Odd, that.
by BruceMcF (agila61 at netscape dot net) on Mon May 4th, 2009 at 10:59:30 AM EST
[ Parent ]


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