The Impending Scandal Over "Capacity Markets"

Losing the ability to sell electricity much of the time to renewables, the coal-based energy sector has come up with a new mantra: capacity markets. This requires that consumers and/or taxpayers pay to have the old fossil fuel plants sit there and "be available" for peak needs. This will cost the German dearly, annually over ten billion more than assumed.

Using coal plants as "peakers" to meet the highest part of the demand cycle is very, very inefficient. As costly as energy storage is now according to its skeptics, it is still more cost effective than using fossil-fuel peaker plants! The Edison Electric Power Research Institute reported a benefit to cost ratio over one for nearly every technological scenario.  “Cost-Effectiveness of Energy Storage in California,” Application of the EPRI EnergyStorage Valuation Tool to Inform the California Public Utility Commission Proceeding R. 10-12-007 3002001162  (2014).

One has to speculate that the state aid guidelines exclusion of stored renewable energy from obtaining operating support was calculated to make energy storage less attractive (and to promote capacity markets). Pretty outrageous stuff! See THE NEW POLISH RES LAW NEEDS TO PROMOTE ENERGY STORAGE, Mott's Blog, July 15, 2014. DG Competition rolled the DG Energy on the support for eneergy storage directly contradicting an earlier Commission position: It is important to ensure that electricity from RES keeps its RES label, even if it has been stored before the final consumption. Possible feed in tariffs should not be affected by intermediate storage.” DG Energy Working Paper. 

No one is publicly talking about the scandal that is "capacity markets" and it is nothing but a new sleigh-of-hand to use state aid to keep large utilities that are heavily invested in old technology from getting hit with more financial losses. 


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