[Update: Germany Stops Fighting Arithmetic and Ramps Up Construction of Economically Sensible Power Generation]
Two years ago we looked at the claim that wind generation can save money for power pool customers. We found that the supposed savings could be realized only if the elephant in the room – the above-market feed-in tariffs – were ignored.
In other words, the total amount spent on electricity purchases from a power pool was augmented by the additional amounts consumers pay to fund the feed-in-tariff (FIT). As long as wind generators can bid a low price but receive the higher FIT, then they have an incentive to underbid, thereby reducing pool prices, but not overall costs.
In addition, we looked at what an economically least cost system might look like in Germany over the next ten years. …
Articles on this blog have consistently made the point that shale gas in the U.S. represents an unprecedented pathway to abundant, low-cost, clean energy supplies. In previous posts it was noted that unconventional gas resources, combined with new production technologies, could potentially break the global oil-natural gas price bond, just as has happened in the U.S.
Shale gas is now subject to active exploration in England, Australia, Poland, Ukraine, China, India, and to a lesser extent, South America. Canada has already moved to the development stage with its shale formations in British Columbia (Montney and Horn River). Mexico shares the prolific Eagle Ford shale formation with Texas, but its state-owned PEMEX has done little to develop that resource yet.
Other nations have rejected the gift of unconventional gas. Romania and Bulgaria, both heavily dependent on Russian gas, have said “no” to shale gas production, as has France.…
The U.S. Department of Energy publishes periodic reports (see the latest) on federal government subsidies to energy production in the U.S. These reports total up the costs of direct financial support for various energy technologies, tax incentives, research related to marketing and implementation and price support.
Federal support for energy in FY 2010 alone includes the following activities:
Direct Expenditures to Producers or Consumers – $14.3 billion. Federal programs involving direct cash outlays that provide a financial benefit to producers or consumers of energy.
Tax Expenditures – $16.3 billion. Provisions in the federal tax code that reduce the tax liability of firms or individuals who take specified actions that affect energy production, consumption, or conservation.
Research and Development (R&D) – $4.4 billion. Federal expenditures aimed at a variety of goals, such as increasing U.S.…