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Showing posts from May, 2015

Polish Presidential Election: Implications for Renewable Energy

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In the opinion of many, Civic Platform (PO) has grown a bit arrogant and very non-transparent in its model of governing. Pundits will have a dozen explanations for the election of Andrzej Duda yesterday, but wide-spread support for his party, Law and Justice (PiS), is not one of them. Voters signaled their concern about PO and wanted something else....just about anything else.

If this trend continues into the Parliamentary elections, as I think it will to a lesser degree, expect PiS gains but no majority. A weaker coalition government with PO, PSL and possibly SLD is the most likely outcome.

It is important to remember that all of the political parties are publicly pro-coal and none of them have a real program to address the growing economic and technological challenge in Polish energy to shift to the "next thing."  PiS is more likely to make foreign energy investors nervous, however, with their more xenophobic rhetoric.

PiS is widely described as anti-wind energy and worked…

Fossil Fuel Subsidies: The Myth of a Free Market Shattered

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My Republican colleagues typically comment on renewable energy, that if it is viable it would survive without subsidies. They point to fossil fuels and claim that green energy should receive the same treatment, i.e. only market-based revenue and investment. But this myth is wholly at odds with the reality around the world.

Fossil fuels have been one of the most heavily subsidized human endeavors in the history of the world. The International Monetary Fund report, just released, notes that globally fossil fuels receive approximately $600 million a HOUR in government support. See PL article. The basis of this huge cost figure is the externalities of fossil fuel burning (mainly coal). There are several new reports of the huge external cost of burning coal in Poland (which leads Europe in air pollution for fossil fuels).

But even the narrow definition of subsidies for internal costs results in a big figure for support. Over 10 billion Euro a year in Europe (where the policy is to allegedl…

Simulated Auction by Polish Wind Association: Predictable Problems

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The Polish Wind Energy Association just conducted a mock auction for renewable energy support using the system included in the new Polish law. The results foretell the problems we can expect in the actual auction and are not surprising.

The main take-away by the association was the under-bidding in the large auction (over 1 MW projects) and less than 4000 MWhr/MW. The prices were unrealistically low. This phenomenon is very common in RES auctions. Bids are speculative and below the real costs of doing the projects in the hope of snagging the support. This is a very common - maybe unavoidable  - problem with reverse auctions:

While auctions aim for a specific amount of electricity to be produced or capacity to be installed, empirical experience has shown that a shortfall of the auctioned amount is a rather common phenomenon. This is mainly due to ‘underbidding,’ which results in economically non-feasible projects.” EcoFys, Design features of support schemes for renewable electricity, …

EU State Aid Guidelines: Huge Problems Ahead

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I have done a full analysis with detailed references on the problems with the new EU State Aid Guidelines for Renewable Energy. The paper will be published in the May edition of the European Energy Journal.  It is also being presented at the PowerGen 2015 conference in Amsterdam on June 10, 2015.

My take is that the guidelines are an effort to try to mitigate threats to power energy utilities. They push support into auctions, a mechanism proven to be bias in favor of large established utility bidders. They will hurt smaller investors and equity investment funds. They bungle the support for energy storage (electricity stored from renewable sources is not considered green after it is stored!). They hurt distributed energy by requiring sources over 500 kW to feed to the grid. The create massive uncertainty over 2020 targets by changing all the rules in the last lap of the race. They tie up renewable energy efforts by restricting what is financially feasible and environmentally desirable.