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I’m in a process of building 1MW in Poland, and - at least here - it’s not true that renewables are not commercially viable. That is, if I finished building to

I’m in a process of building 1MW in Poland, and - at least here - it’s not true that renewables are not commercially viable. That is, if I finished building today and began trading on an open market, I would benefit more in the upcoming years (possibly overall), than through auctions. The benefit of auctions is that since they guarantee the proce for the next 15 years, it’s way easier to get financing for them. Our estimates show that we would have way higher returns on the open market, but the risks would be much higher as well.

ZeroGravitas 6y ago
Which basically means the government is taking on that risk and (potential) profit.
tialaramex 6y ago
> it’s not true that renewables are not commercially viable. Ah, I think this is perhaps a language problem. Given you said in Poland I suppose that it's plausible English is not your first language. Here's what I wrote: > In the UK where green energy isn't commercially viable on its own the subsidy is implemented as Contracts for Difference. Now, what I intended here is that "where" is a conditional constraint on the subsequent explanation. I can see what you thought I meant, and it's a valid reading of the sentence but isn't what I intended. What I was going for is roughly equivalent in meaning to: > In the UK, if some particular type of green energy isn't commercially viable on its own the subsidy for that type of green energy is implemented as Contracts for Difference. Thus, CfDs are no longer available for some proven plant types, it makes commercial sense to build these anyway, so no need to subsidise them. But for others subsidy is still very much necessary. Tidal projects are an example, you can make power from tidal forces, on the coast and Britain has lots of coast because it's an island - but right now all projects have a huge up-front capital investment that can't be justified by low electricity prices so a large subsidy is necessary if they are to be developed other than as small research projects. You're correct that risk reduction means it can make sense to offer (and bid for) CfDs even when the strike price will be below expected market prices. And it's anticipated that a future UK government "Pot 1" auction for onshore wind will work out that way, there's no way new onshore wind needs £40+ per MWh but that's what you'd get on the open market today, however the risk reduction is valuable at a lower price.

ZeroGravitas 6y ago

Which basically means the government is taking on that risk and (potential) profit.

tialaramex 6y ago

> it’s not true that renewables are not commercially viable. Ah, I think this is perhaps a language problem. Given you said in Poland I suppose that it's plausible English is not your first language. Here's what I wrote: > In the UK where green energy isn't commercially viable on its own the subsidy is implemented as Contracts for Difference. Now, what I intended here is that "where" is a conditional constraint on the subsequent explanation. I can see what you thought I meant, and it's a valid reading of the sentence but isn't what I intended. What I was going for is roughly equivalent in meaning to: > In the UK, if some particular type of green energy isn't commercially viable on its own the subsidy for that type of green energy is implemented as Contracts for Difference. Thus, CfDs are no longer available for some proven plant types, it makes commercial sense to build these anyway, so no need to subsidise them. But for others subsidy is still very much necessary. Tidal projects are an example, you can make power from tidal forces, on the coast and Britain has lots of coast because it's an island - but right now all projects have a huge up-front capital investment that can't be justified by low electricity prices so a large subsidy is necessary if they are to be developed other than as small research projects. You're correct that risk reduction means it can make sense to offer (and bid for) CfDs even when the strike price will be below expected market prices. And it's anticipated that a future UK government "Pot 1" auction for onshore wind will work out that way, there's no way new onshore wind needs £40+ per MWh but that's what you'd get on the open market today, however the risk reduction is valuable at a lower price.