Wednesday, November 6, 2013

EU Commission on subsidies and capacity markets/Increasing grid utilization in U.S.

An important story out of Europe today, for the future of subsidies (structure), and capacity markets.
From the U.S., a related blog entry: related as it talks about market arrangements to increase efficiency/grid utilization.

The EU Commission has today released its Communication “Delivering the internal electricity market and making the most of public intervention”, together with a set of Staff Working Documents on important aspects of the Communication. The package shall give guidance to Member States on state interventions aimed at preventing market distortions and providing secure and affordable energy. The documents cover in particular generation adequacy, the design of renewables support schemes, the use of and model agreements for renewable energy cooperation mechanisms, and demand side flexibility mechanisms. 
Based on best practices the Commission proposes the following:
  • ...Feed in tariffs should be replaced by feed in premiums or other support instruments which give incentives to producers to respond to market developments.
  • ...In order to provide for cost-efficient back-up capacities for the growing amount of intermittent renewables and take full advantage of the European market the Commission proposes to first analyse the causes for inadequate generation and remove any distortions that may prevent the market from delivering the right incentives for investment in generation capacity. Besides the Commission calls on the governments to ensure that renewable electricity producers react to market signals and promote flexibility on the demand side. Additionally, the Commission says any back-up capacity mechanism should not be designed having only the national market in mind but the European perspective.
On the topic of a perspective accounting for multiple jurisdictions ... from the U.S. a blog entry educating on improving the utilization of existing power grids.

The Real Balkanization of the Power Grid | Energy Economics Exchange

A few months ago, The New York Times ran a prominent article that focused on a familiar stalking horse for U.S. energy policy analysts: the difficulties building new transmission. The gist of the story is that we have a system with so many quasi-independent jurisdictions and fiefdoms that building transmission to connect them becomes hopelessly embroiled in turf-wars and rent-seeking. Now, I’m not disagreeing with this narrative. Heck, I’ve served on “blue-ribbon” panels lamenting these problems and even participated in a national transmission grid study.
However, this is not the first time this narrative has surfaced, and it is frustrating to me that the focus is always so squarely aimed at the construction of new transmission lines when so much of the country has a real problem with utilizing the lines that are already there. This is the real balkanization of the transmission grid.

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