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Utilities and integrating renewables: A place for government?

At the end of December, I wrote about the recently released U.S. Department of Energy/Alstom grid global study in Strategies for success: Integrating renewables in utility control centers.

In the article, I said: "Of keen interest to me, and to electric utility operations personnel, is the clear identification and description within the report of nine current best-practice tools and decision support systems that grid operators in the U.S. and in Europe are using to integrate and manage wind energy (and, in some cases, solar energy, as well.)"

While I was more interested in pointing to the best-practice tools available within the report, an anonymous commenter took up the anti-green-subsidy flag, instead, and wrote: "(T)he whole green energy push is not economically competitive-in fact, it is a scam because every nameplate MW of 'green' energy generation has to be backed up by a MW of some other type of generation, typically fossil-fueled and much of it simple-cycle gas turbines which are a considerable way from being the most efficient users of fuel."

Before joining Energy Central, I wrote about wind energy for many years, and so my dander was raised by what I felt was a gross, and dated, generalization.

So, I reached out to the LinkedIn Smart Grid Executive Forum for input on the subject.

As usual, the forum members did not disappoint. (As this particular group is a members-only forum, I will not be identifying by name any of those who stepped up to comment to my question within the forum's pages.) A wide-ranging discussion and argument ensued, with 69 comments in quick succession. I'd like to share some of those comments here, on both sides of the subsidy equation.

It seems my original commenter is not alone in his sentiment about subsidies. A few forum members were quick out of the traces to take up both sides of the argument.

"Without subsidies, the wind farms would not have been built," one wrote. "On the other hand, without subsidies, there would be no national railroad network, no national defense highway (interstate system), no sewage treatment plants, few hospitals of any size, no drinking water systems, [and] no large hydro-electric dams to speak of. In short, the country has invested (and that is the key here) in almost every large infrastructure project in history ... this is one of the reasons we have governments and taxes, to move the ball forward where large infrastructure investments need to be made."

Another argued that : "Fossil fuel industries enjoy enduring tax breaks that are written into the tax code, while renewable energy financing policies live and die in piecemeal legislative erraticism ... Let's revise the tax code to eliminate the permanent subsidies, royalty forgiveness, and other tax breaks for conventional-fueled systems. If subsidies are bad for young solar and wind power developers, then they are insanely stupid for established oil companies that earn record-breaking profits."

Yet another commenter took issues with government subsidies at all: "Government control of, and funding for, new technology is a relatively recent phenomena in this country, though you wouldn't know it from widespread media coverage of today. Probably the greatest marvel of our age - electricity - was the result of private experimentation and development over a long period of time."

He went on to write, "I think it is a legitimate question to ask whether heavy government support for any technology, including renewables, is a proper function of government in a free-enterprise system, absent wartime requirements."

Free enterprise played a large part in in the wide-ranging direction the discussion ultimately took, but it was tempered, in the end, by the following statement:  "I think we ought to consider whether we want 'free enterprise' (usually a nice word for short term profit making at any cost) to exclusively decide the 'winners and losers'. Anyone who has tried to get new ideas, funding for new technology, and real breakthroughs through the management of large companies might disagree that that is the best way to promote new ideas. Most really new commercial ideas are developed in research and development groups and universities that are often supported by public funding as they should be."

I'll leave the final comment to yet another forum member. His sentiment was echoed by about half the commenters.

He said: "Unfortunately too many people get suckered into debates like this without questioning the underlying premise in the argument: that new forms of energy should compete in the free market - subsidies represent government interference. On its face, it sounds great, but if you really think about it, it's absurd and out of touch with reality. The allegedly 'unsubsidized' energy market they talk about is at least as subsidized and in many cases more subsidized than any of these current 'green' incentives ... The proper response to Kate's detractor is that you might agree if ALL subsidies were pulled. Only then can you talk about level playing fields."

My thanks to the LinkedIn Smart Grid Executive Forum for taking up the challenge, and for an excellent, lively forum debate. May we do it again soon!

I'd like to issue a similar challenge to Intelligent Utility Daily readers. What do you feel is the most appropriate way forward regarding industry subsidies? I enjoy - and learn from - a good intellectual argument.

Kate Rowland
Editor-in-chief, Intelligent Utility magazine
krowland@energycentral.com

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