— IPEEC (@IPEEC) March 23, 2015
New technologies need to be taken through a cost learning curve to iron out their teething problems. This means someone needs to finance the learning investment. For renewable energy technologies, many EU Member States provided financial support for these in the last decade, but such intervention leads to windfall profits when the learning effect is underestimated or regulation does not adapt quickly enough to cost reductions. Moreover, government budgets running out of cash lead to boom and bust cycles.
It is more challenging to let market forces play, but considering that the above risks are not unlikely, that’s what we need to do for energy policy in the future. Market design is key.