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The issue is the high fixed cost / low marginal cost cost structure of wind. The price required to bring the wind power onto the market is the marginal cost of production, but the marginal cost of production is below the replacement cost.

That means with sufficient market penetration that wind is frequently on the extensive margin, it can be non-commercial, even when it is clearly economic given that providing it at replacement cost plus a normal profit yields a net reduction in energy cost to consumers.

This is independent of the issue that the market, of course, is not capable of designing a complex system, and so either we must be content with the complex systems designed to support the interests of private corporate governments, or else must support a public role in the design of complex systems.

The establishment of subcontinental long hail electricity to pool wind and other renewable energy resources to reduce or eliminate intermittency is an example of the type of complex system that a pure market system is incapable of designing.


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 Sun May 3rd, 2009 at 04:32:00 PM EST
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