Showing posts from November, 2016

New EU Rules Will Preclude Coal from Being Used as Reserve Electricity

The big plan to save coal energy in Poland - which is dying here as it is all over Europe - includes plans to allow coal plants to receive subsidies while they are not operating, just so they will be available when needed.

This is a terrible plan on many levels, i.e. coal plants have slow "ramp-up" times and cannot quickly respond to peak power demands. They also are very uneconomic to run at lower than 75-80% utilization rates. U.S. studies showed even at higher prices a few years ago, that energy storage was more cost-effective than fossil-fuel peak plants.

And now the EU seems poised to set a CO2 limit on plants used for reserve power that would preclude coal altogether."Capacity mechanisms will not be used as a backdoor subsidy of high-polluting fossil fuels; that would go against our climate objectives," EU Commissioner for Climate Action and Energy Miguel Arias Canete told Reuters. "It is necessary to include strict environmental criteria in such mechani…

The Fallacy of RES Auctions: Locking Out Developed Capacity

As Poland approaches its first auctions for support for renewable energy, I am reminded of a serious criticism of this approach which I discussed earlier when the European Commission caved into the pressure from big utilities and adopted this as the preferred method of support. See Mott, "The European Commission's Mismanagement of State Aid Rules for Renewable Energy," PowerGen Europe 2015. For there to be competition in the bids for support, which is the principal factor distinguishing the auction mechanism, that has to be a lot of losing bids. The EC suggests about 50% losing bids. Without losing bids, the auctions serve no purpose that could not be achieved by simply using the support caps directly as a feed-in tariff.

Why should we worry about losing bids?* Because each losing bid represents a project that could be built in the opinion of its developer and its equity and debt funding organizations. This is renewable energy capacity that is "shovel ready" a…