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Factors affecting the debate on renewables v. CCS and nuclear

Factors affecting the debate on renewables v. CCS and nuclear. Volkmar Lauber, Univ. of Salzburg „ Pushing the Limits of Windpower“ Univ. of St. Andrews, 6 May 2009.

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Factors affecting the debate on renewables v. CCS and nuclear

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  1. Factorsaffectingthedebate on renewables v. CCS andnuclear Volkmar Lauber, Univ. of Salzburg „Pushingthe Limits of Windpower“ Univ. of St. Andrews, 6 May 2009

  2. „Pushingthelimitsof windpower“ debate will beshapedbyinstitutions, theirimpactandexperiencewiththese • Governmentinstitutions (central, local) andparadigms • Electricityincumbentsandtheirrelationstogovernment • Didlegislationspecificto RES-E sectorproduceandmobilisenewstakeholders? • Ecoomicresultsofsupportlegislation? • How all this will affectdeliberationsandchoices COMPARISON WITH SITUATION IN GERMANY

  3. Overview • Structureofgovernment • Regulatorystateparadigm v. politicalpolicies • Incumbentsundisturbedbypoliticalgoals? • Roleoflocal utilities • Localpoliticalcontrolover utilities? • Support policyandthemobilisationofnew RES entrepreneursandotheractors • Experienceswithprimarygoalsofsupportpolicy

  4. Structureofgovernment UK • Highlycentralised (exc. Scotland) • Nopolicyexperimentsatlocallevel? Germany • Experiments atvariouslevels in 1990s, incl. developmentofthe „costcoveringfeed in tariff“ (Federal law + localgovernment + local utilities) whichbecame model for EEG FIT

  5. Regulatorystateparadigmv. politicalpolicies UK • Economicactivityshouldbedrivenbymarkets, governmentassuresmarketperformance • Government must not impose qualitative goals, cannotassureenergytransitiontorenewableenergy Germany • Other variant ofneoliberalism • RES-E not subjecttoDeptofEcon Aff, somewhatexemptfromprimacyofshort-termeconomicgoals

  6. Incumbentsundisturbedbypoliticalgoals UK RO mostlyimplementedbyincumbents RO reliesmostly on positive inducement, thereisnoeffectivepenaltyfor not reachingthegoalsofthe RO (thepenaltymechanismactuallyincreasesthevalueofcertificates) Incumbents not asclosetoEcon Aff Min as in Germany? Germany Big utilities aresimilarlyreluctantabout RES-E but subjecttopoliticalregulation - purchasingobligationand FIT. Theywereonlypermittedtobecomeactiveas RES-E generatorsunder EEG 2000 in order toinvolvethem in offshore wind – not verysuccessfully so far.

  7. Role of local utilities UK • Not existent? Germany • goodplaceforexperimentationwithrenewablessince 1980s, for „political“ reasons (i.e. otherthanshorttermeconomicrationality) • Need politicalsupportforexperimentationwith RES (politicalmandate) • collectively, economicandpoliticalweight (e.g. offshore) • Important in 1990s, severalintroduced „fullcostfeed in tariff“ -> „Aachen model“ (-> EEG 2000), importantforlegitimacyofnew FIT

  8. Localpoliticalcontroloflocal utilities UK • not existent? Germany • Traditionallyopposedtoprivilegesforcentralisedgeneration (since 1935) • Political supportfor RES-E bymunicipalitiesearly on, since 1980s • Severalmunicipalitieschargedtheirlocal utilities tosupport RES-E development (e.g. „Aachen model“)

  9. Did RES-E legislationproducenewentrepreneursandotherstakeholders? UK • Largelyrestrictedto a fewreluctantincumbentsandprojectdevelopersandtheirpersonnel Germany • Tensofthousandsof wind farmowners • Hundredsofthousandsof solar PV owners • Severalhundredthousandsemployed in RES-E equipmentindustry • Severalthousandnewfirms, manybigexporters

  10. …newentrepreneurs etc. • These groupshavetheirownassociations, theirownmedia • Theyhave substantial accessto wider media, influence on businessassociations (VDMA,…) labourunions (metalworkers, services), farmerassociations, churches) • Theyhaveaccesstopoliticalparties, government, importantstateinstitutions (BMU, KfW, dena=gridagency)

  11. Experience withsupportlegislation UK • Profitable for a fewincumbents, developers • Economicallyhighlyinefficient: -profits severaltimesashighas in Germany -incumbentsgetwindfallprofitsfor non-innovative technology, neglectnewtech., bigpricegapto „brownel.“ • Noperspectiveoffalling ROC pricesany time soon • A new FIT at 15p forsmall wind not competitiveeither • Laggingdevelopment (twothirdstargetfulfilment) Germany • Windpower nolonger expensive – netbenefits • On windydays, reducespricesat power exchange

  12. How will wind/RES-E come out in conflictwith CCS andnewnuclear UK Germany More favourablesituationfor RES-E here Many RES-E entrepreneursandstakeholders Very positive experience, isstartingtopaydividends RES-E hasgoodcards in such discussionsthoughoutcomeisuncertain Governmentstructureandparadigmproblemfor RES-E Fewunambiguous RES-E entrepreneurs, stakeholders Poor experiencewithsupportsystemfor windpower Thisoperates in favourofprivileging CCS andnewnuclear

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