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One reason why there are different levels of tariffs is that technologies have different levels of maturity, and higher tariffs, for a while, can help spur R&D, scale investment, and make it possible for costs to go down. A well designed system, where tariffs go down over time (like in Germany) will accompany technical progress and help those technologies mature. That's what was done with wind 25 years ago, and is happening with solar. Without the support to the initial expensive attempts, you would not have gotten today's much cheaper technology.

It's hard to get the level right, especially in fast moving sectors, but it's still worth doing, even if you get the occasional windfall to developers or, conversely, too-sharp cuts to investment.

Ground based solar projects in France will bid at tariffs below 15c/kWh in the forthcoming February tender; they were at 60c/kWh 4 years ago.


Wind power

by Jerome a Paris (etg@eurotrib.com) on Fri Jan 6th, 2012 at 03:48:14 AM EST
Exactly, and further, until externalities are properly quantified and entered into the cost equation, accuracy will have to remain compensated by political choice of technology.

Minor quibble: the first tax and tariff incentives are over 30 years old.

"Life shrinks or expands in proportion to one's courage." - Ana´s Nin

by Crazy Horse on Fri Jan 6th, 2012 at 04:02:08 AM EST
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