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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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„Pushing the limits of windpower“ debate will be shaped by institutions, their impact and experience

with these

• Government institutions (central, local) and paradigms• Electricity incumbents and their relations to

government• Did legislation specific to RES-E sector produce and

mobilise new stakeholders?• Ecoomic results of support legislation? • How all this will affect deliberations and choices

COMPARISON WITH SITUATION IN GERMANY

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Overview

• Structure of government• Regulatory state paradigm v. political policies• Incumbents undisturbed by political goals?• Role of local utilities• Local political control over utilities?• Support policy and the mobilisation of new RES

entrepreneurs and other actors• Experiences with primary goals of support policy

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Structure of government

UK• Highly centralised (exc. Scotland)• No policy experiments at local level?Germany• Experiments at various levels in 1990s, incl.

development of the „cost covering feed in tariff“ (Federal law + local government + local utilities) which became model for EEG FIT

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Regulatory state paradigm v. political policies

UK• Economic activity should be driven by markets,

government assures market performance• Government must not impose qualitative goals, cannot

assure energy transition to renewable energy

Germany• Other variant of neoliberalism• RES-E not subject to Dept of Econ Aff, somewhat exempt

from primacy of short-term economic goals

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Incumbents undisturbed by political goals

UK RO mostly implemented by incumbentsRO relies mostly on positive inducement, there is no effective penalty

for not reaching the goals of the RO (the penalty mechanism actually increases the value of certificates)

Incumbents not as close to Econ Aff Min as in Germany?

GermanyBig utilities are similarly reluctant about RES-E but subject to political

regulation - purchasing obligation and FIT. They were only permitted to become active as RES-E generators under EEG 2000 in order to involve them in offshore wind – not very successfully so far.

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Role of local utilitiesUK• Not existent?Germany• good place for experimentation with renewables since

1980s, for „political“ reasons (i.e. other than short term economic rationality)

• Need political support for experimentation with RES (political mandate)

• collectively, economic and political weight (e.g. offshore)• Important in 1990s, several introduced „full cost feed in

tariff“ -> „Aachen model“ (-> EEG 2000), important for legitimacy of new FIT

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Local political control of local utilities

UK• not existent?Germany• Traditionally opposed to privileges for centralised

generation (since 1935)• Political support for RES-E by municipalities early

on, since 1980s• Several municipalities charged their local utilities to

support RES-E development (e.g. „Aachen model“)

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Did RES-E legislation produce new entrepreneurs and other stakeholders?

UK• Largely restricted to a few reluctant incumbents and

project developers and their personnelGermany• Tens of thousands of wind farm owners • Hundreds of thousands of solar PV owners• Several hundred thousands employed in RES-E

equipment industry• Several thousand new firms, many big exporters

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…new entrepreneurs etc.

• These groups have their own associations, their own media

• They have substantial access to wider media, influence on business associations (VDMA,…) labour unions (metalworkers, services), farmer associations, churches)

• They have access to political parties, government, important state institutions (BMU, KfW, dena=grid agency)

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Experience with support legislation

UK• Profitable for a few incumbents, developers• Economically highly inefficient:

-profits several times as high as in Germany -incumbents get windfall profits for non-innovative technology, neglect new tech., big price gap to „brown el.“

• No perspective of falling ROC prices any time soon• A new FIT at 15p for small wind not competitive either• Lagging development (two thirds target fulfilment)Germany• Windpower no longer expensive – net benefits• On windy days, reduces prices at power exchange

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How will wind/RES-E come out in conflict with CCS and new nuclear

UKGovernment structure and

paradigm problem for RES-EFew unambiguous RES-E

entrepreneurs, stakeholdersPoor experience with support

system for windpowerThis operates in favour of

privileging CCS and new nuclear

GermanyMore favourable situation for

RES-E hereMany RES-E entrepreneurs and

stakeholdersVery positive experience, is

starting to pay dividends RES-E has good cards in such

discussions though outcome is uncertain