Study shows that renewable energy auctions don't reduce costs any more than feed-in tariffs

A study just published in the International Journal of Sustainable Energy Planning and Management says that renewable energy auctions do not reduce costs of renewable energy projects any more than conventional feed-in tariffs.

See

Renewable Energy Auctions and Tenders: How good are they?

David Toke

Abstract

This paper analyses the performance of two cases of renewable energy (RE) auction/tender systems in an effort to contribute to the evaluation of RE auction/tender systems and to study best practice in their delivery of RE projects. This is done by comparing regimes in different settings, one concerned with Danish offshore wind development, the other concerned with renewable energy development in South Africa. It is found that regulatory factors which promote certainty in deployment, including measures to ensure that projects achieve grid connection, are important in assuring delivery of the programmes. However cost reductions that are associated with renewable energy auctions are not caused mainly by the auction systems themselves, but rather are associated with general declines in the costs of renewable energy technologies. Moreover, the effect of renewable energy auctions systems may be more concerned with limiting renewable energy deployment rather than reducing the costs of energy generated by renewable energy projects that are deployed.

The article can be accessed free of charge at:

http://journals.aau.dk/index.php/sepm/article/view/1197

This is an important piece of work since it contradicts a lot of narratives spread by leading utilities and governments who are anxious to limit the spread of renewable energy. Despite the clear message from Paris that we need to expand renewable energy as rapidly as possible the means of promoting renewable energy now being chosen are much concerned with limiting its expansion. This is being done under the guise of allegedly making the schemes be implemented at a low as cost as possible through 'auctions'. Yet as this study suggests, this system does not reduce prices - that is being done by global technological mechanisms - but what governments want to do is to limit the renewable energy that is deployed, and the auction systems can do this because they cap the amounts of capacity that can be deployed. Big energy companies also like the system since they can dominate auctions more easily.

Another important message brought by the study is that the auction systems need to be designed to maximise certainty for and by developers. Otherwise the schemes who win contracts will not be implemented. This means guaranteeing grid connection conditions for developers and to guarantee that the schemes actually materialise (through a system of penalties for non-implementation of projects).

Eco-modernism - I've been mugged!

As an academic who has written widely about ecological modernisation - essentially how business can combine ecological protection and development - I feel thoroughly mugged by the recent launch of the so-called 'eco-modernist' agenda. It ended up being associated with people like Owen Paterson, who wants to scrap the 2008 Climate Change Act, and one of so-called eco-modernism's founders, Mark Lynas seemed surprised by this.

But you shouldn't be surprised if you do read the so-called eco-modernist' agenda. Essentially it rubbishes renewable energy, organic farming and generally green movement preferences for tackling environmental problems and proposes as the solution, well, business-as-usual industrialism. Of course it is very pro-nuclear power. So what is new about this version of eco-modernism? Not much it seems.

But ecological modernisation, an academic tradition stretching back to Germany in the 1980s is about reforming industrialism, not beefing up some of its worst attributes. The founder of the school (and those who have written about it since then including myself) are not noted for their pro-nuclear credentials, and they are of course generally highly supportive of renewable energy.

Renewable energy is. of course, at the cutting edge of ecological modernisation. Nuclear is something that is not happening very much, in fact in the UK not at all! All the British state, for example, seems to be able to do at the moment, is to stop the delivery of renewable energy but it cannot, as much as it tries, manage to deliver nuclear power (except in press releases). The Paris COP21 involves nations pledging to pursue supply side measures through renewable energy and to redouble demand conservation through energy efficiency. Those are the things that business can get along with. Nuclear power, at the fringes of developments now, only seems to get anywhere where the private sector is displaced by the state who ends up backing nuclear schemes which come very slowly at great cost.

I certainly don't claim to be  the leading theorist of ecological modernisation - there are a few I could name who are ahead of me on that - but amongst my writings on ecological modernisation I have written a book about  about ecological modernisation and renewable energy (see details on my profile). It is quite theoretical, I suppose, but the 'eco-modernist' manifesto seems to neglect some basic fundamentals of what ecological modernisation is about, according to the established literature. It seems to avoid engaging with serious thought and relies on what seems to me to be an arrogance of a disappearing mid-twentieth century industrial paradigm. I feel like I have been intellectually mugged and I am not at all surprised that the so-called eco-modernist manifesto crashed. That's because it is junk.

See the report in the Guardian on the 'launch'

http://www.theguardian.com/environment/2015/sep/30/ecomodernism-launch-was-a-screw-up-of-impressive-proportions
the so-called eco-modernist manifesto http://www.ecomodernism.org/ and one of its leaders:
http://blogs.new.spectator.co.uk/2014/10/owen-patersons-speech-on-abandoning-the-2050-climate-change-targets-full-text/

A few more words that I wrote during the course of a debate on this subject:
Contemporary Ecological Modernisation (EM) theorists like Mol and Janicke claim that they describe and analyse processes of ecological reform rather than make normative prescriptions. They argue that environmental objectives are defined through processes centrally involving environmental NGOs (especially emphasised by Hajer) and responses to consumers, but implemented by business. This excludes the so-called  'eco-modernist' project by definition since it leaves out, indeed excoriates, environmentalists and presumes what consumers want. 
I argue that In the case of renewable energy (see my Palgrave book and paper in Environmental Politics) this extends to identifying with renewable energy as a key solution; - with environmentalists helping make technological choices; in early stages as an active social movement, more recently as environmental groups in alliance with renewable industrial trade associations.
Nuclear power won't be a part of change precisely because it is not promoted by environmental groups or social movement organisations (however much the industry describes itself as 'green'). 
Although EM is implemented by business, in practice it can only do so in response to environmentalist/consumer preferences. This limits the extent to which it can be a purely top down process, and is one of the reasons why the recent claim of eco modernism being the way forward is misplaced.
NOTE: There are still some (used) copies of my book 'Ecological Modernisation and Renewable Energy' (Palgrave 2011) available from amazon for under or around £20!