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View Diary: DK GreenRoots: the economics of wind power (114 comments)

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  •  the most important sentence in this diary: (3+ / 0-)
    Recommended by:
    bara, Winnie, patriceayme

    it is difficult for wind power generators to make money under market mechanisms unless wind penetration remains very low

    .

    Markets Do Not Work. you've provided us with one brilliant example. other examples exist in almost every realm of human economic endeavor. Markets Do Not Work. they are inefficient. they are riddled with paradoxical gotchas like that show in this diary. they are driven by abstract, artificial interests.

    Markets Do Not Work.

    To put the torture behind us is, inevitably, to put it in front of us.

    by UntimelyRippd on Sat Jul 04, 2009 at 12:16:17 PM PDT

    •  Amazing admission, if I understand well (2+ / 0-)
      Recommended by:
      Winnie, Joffan

      indeed! So if wind penetration becomes high, then what??? I wish Jerome would explain. May be it's a typo?
      BTW, carbon does not respect markets, because if coal was submitted to the same crierions as nuclear, with its billion tons of waste, it would be uneconomical...

      Patrice Ayme Tyranosopher Patriceayme.wordpress.com

      by patriceayme on Sat Jul 04, 2009 at 12:26:20 PM PDT

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      •  The point is that in the long run, the economic (1+ / 0-)
        Recommended by:
        Winnie

        benefits inherent in wind power require government intervention in the market, so that the fixed costs of wind power get partially funded outside of whatever the spot price is on the days when they are generating maximum electricity.

        To put the torture behind us is, inevitably, to put it in front of us.

        by UntimelyRippd on Sat Jul 04, 2009 at 01:00:34 PM PDT

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      •  you'll note, by the way, that jerome claims in (3+ / 0-)
        Recommended by:
        Ignacio Magaloni, Winnie, BruceMcF

        a comment that the same phenomenon applies to nuclear, and that this is why nuclear energy is best operated as a state-owned utility.

        To put the torture behind us is, inevitably, to put it in front of us.

        by UntimelyRippd on Sat Jul 04, 2009 at 01:03:19 PM PDT

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      •  There more benefits it delivers to ... (2+ / 0-)
        Recommended by:
        RunawayRose, Winnie

        ... customers, the lower the return for selling at marginal cost.

        Its a long established result that competitive markets with low barriers to entry tend to price to marginal cost, and when the cost effective production has very high fixed cost share and very low variable cost share, its marginal costs are also very low.

        Its also one of the factors that keeps nuclear penetration relatively low, and biases market driven solution toward fossil fueled power with a higher share of their cost as variable costs for the purchase of fuel.

        Progressive Economics Shortcut: just read the billy blog

        by BruceMcF on Sat Jul 04, 2009 at 01:55:20 PM PDT

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    •  Markets do work, but (2+ / 0-)
      Recommended by:
      Winnie, bryfry

      they must be regulated and controlled to some extent. Regulation of emissions could run the market for fossil fuel down rapidly, because then the costs would properly reflect the use of the commons (in this case the common atmosphere).

      Electricity is a very subtle and difficult market because it is produced on demand, even though (as Jerome shows) there are steady and predictably-varying components to that demand as well as the wild peaks.

      This is not a sig-line.

      by Joffan on Sat Jul 04, 2009 at 12:58:32 PM PDT

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      •  the key regulation required here, as jerome has (1+ / 0-)
        Recommended by:
        Winnie

        outlined, is the one where the government takes money away from everybody who uses electricity and gives it to the people who own the wind turbines, outside of the normal market mechanism of paying X euros for Y kWH.

        To put the torture behind us is, inevitably, to put it in front of us.

        by UntimelyRippd on Sat Jul 04, 2009 at 01:01:59 PM PDT

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        •  Yes, thereby buying us clean energy (0+ / 0-)

          I would rather we get our electricity from wind.  I am glad to have our society subsidize it.

        •  That is not a regulated market (2+ / 0-)
          Recommended by:
          Winnie, bryfry

          That is a central decision on power generation. It may be right, for a while, to an extent, but it will not be unlimited and it will have other consequences for the rest of the generation market that wind cannot address.

          This is not a sig-line.

          by Joffan on Sat Jul 04, 2009 at 01:22:24 PM PDT

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        •  Giving electricity at a lower average cost. (2+ / 0-)
          Recommended by:
          Winnie, Boreal Ecologist

          Guaranteeing a price that can cover the cost of installing the wind turbines means that the wind generated electricity is online, avoiding the electricity production with the highest marginal cost.

          Progressive Economics Shortcut: just read the billy blog

          by BruceMcF on Sat Jul 04, 2009 at 02:00:48 PM PDT

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          •  Well, no, it avoids the fuel cost (2+ / 0-)
            Recommended by:
            Winnie, bryfry

            but it incurs the remainder of the O&M cost and all of the capital costs for lower utilization on the other generation plant. So the costs overall could rise. It is not automatically the case that this strategy will lower costs for electricity taken as a whole.

            This is not a sig-line.

            by Joffan on Sat Jul 04, 2009 at 03:57:00 PM PDT

            [ Parent ]

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