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Saving Wind from its Subsidies

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Saving Wind from its Subsidies
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European subsidies for wind energy are too high and unspecific. They risk frustrating their own objective.

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Anyone with some property, a limited amount of capital and some initiative can become a wind baron. Politicians have realized that they can burnish their environmental credentials, promote a local wind farm and earn tax revenues for their municipality all thanks to the generosity of the public - the ultimate paymaster for all subsidies. The subsidies should be designed to promote the technologies not enrich political or commercial opportunists. They should promote the technology in its early days and be withdrawn as the technologies mature. On shore wind is at that threshold.


Travelling France, for example, one can see the countryside dotted with 100 meter towers and three bladed machines sometimes turning in the wind, but more often not. Every kilowatt hour of electricity is guaranteed a feed-in tariff rate which EdF is obliged to pay that is roughly 50 percent more than the average cost per KWh. Given the feed-in tariff, an onshore wind installation need operate only 25% of the time to generate a 10% - 20% return on capital. That is a nice return in a no-risk environment and you don’t even need much wind. The landowner gets paid a rental fee for allowing the installation, the vendor sells wind machines, the entrepreneur is handsomely rewarded and everyone is happy. Except perhaps EdF that has to pay that price for electricity from a dispersed population of wind machines that too often are not easily handled by a grid that hasn’t yet learned to be smart enough to manage intermittent power. Oh - and the consumer should be unhappy - but he may not know that.


If we are serious about wind power, we need to constantly reevaluate the subsidy structure and specificity to maintain order in wind machine placement and management. Wind technology has advanced quickly in large measure due to these subsidy programs, but the technology has now moved from a need for life support to outpatient status. We need carefully and sensitively planned wind farms with strategically placed wind machines to maximize the harvest of the wind resource and a grid that can efficiency dispatch the power. We need to identify sites that are sufficiently remote to avoid turning our populations against wind energy. Environmental degradation is becoming a major challenge to valid wind projects because of the arbitrary way wind machines are permitted today.


We need to upgrade our grids to effectively dispatch wind and be able to balance its intermittence against other sources of power so that wind itself does not become a source of instability. New transmission lines need to be run to bring wind power from often remote areas and eventually from offshore. All of that, plus the siting and permitting of new conventional or nuclear capacity will already require expending a great deal of political capital. Let us be judicious with public money for low carbon technologies. Solar technologies and biofuels might benefit more now than wind from a financial stimulus as those technologies are much further from commercial viability. Putting windmills unnecessarily in the public’s critical eye because they are a no-risk way to make money or because they create a politically useful green impression is not a good use of the public’s money.

 

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William C. RAMSAY

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Directeur du Centre Energie de l'Ifri de 2008 à 2011, Conseiller de 2012 à 2016

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Climate & Energy
Center for Energy & Climate
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Ifri's Energy and Climate Center carries out activities and research on the geopolitical and geoeconomic issues of energy transitions such as energy security, competitiveness, control of value chains, and acceptability. Specialized in the study of European energy/climate policies as well as energy markets in Europe and around the world, its work also focuses on the energy and climate strategies of major powers such as the United States, China or India. It offers recognized expertise, enriched by international collaborations and events, particularly in Paris and Brussels.

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Date de publication
30 October 2024
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Voluntary carbon markets (VCMs) have a strong potential, notably to help bridge the climate finance gap, especially for Africa.

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Date de publication
22 October 2024
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Making Taiwan a “dead island” through “a blockade” and “disruption of energy supplies” leading to an “economic collapse.” This is how Colonel Zhang Chi of the People’s Liberation Army and professor at the National Defense University in Beijing described the objective of the Chinese military exercises in May 2024, following the inauguration of Taiwan’s new president, Lai Ching-te. Similar to the exercises that took place after Nancy Pelosi’s visit to Taipei in August 2022, China designated exercise zones facing Taiwan’s main ports, effectively simulating a military embargo on Taiwan. These maneuvers illustrate Beijing’s growing pressure on the island, which it aims to conquer, and push Taiwan to question its resilience capacity.

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India’s Broken Power Economics : Addressing DISCOM Challenges

Date de publication
15 October 2024
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India’s electricity demand is rising at an impressive annual rate of 9%. From 2014 to 2023, the country’s gross domestic product (GDP) surged from 1.95 trillion dollars ($) to $3.2 trillion (constant 2015 US$), and the nation is poised to maintain this upward trajectory, with projected growth rates exceeding 7% in 2024 and 2025.  Correspondingly, peak power demand has soared from 136 gigawatts (GW) in 2014 to 243 GW in 2024, positioning India as the world’s third-largest energy consumer. In the past decade, the country has increased its power generation capacity by a remarkable 190 GW, pushing its total installed capacity beyond 400 GW. 

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The Troubled Reorganization of Critical Raw Materials Value Chains: An Assessment of European De-risking Policies

Date de publication
30 September 2024
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With the demand for critical raw materials set to, at a minimum, double by 2030 in the context of the current energy transition policies, the concentration of critical raw materials (CRM) supplies and, even more, of refining capacities in a handful of countries has become one of the paramount issues in international, bilateral and national discussions. China’s dominant position and successive export controls on critical raw materials (lately, germanium, gallium, rare earths processing technology, graphite, antimony) point to a trend of weaponizing critical dependencies.

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