Environmental Engineering Reference
In-Depth Information
he lesson for policymakers is that bold strategies designed to expedite a
transition away from carbon-intensive technologies are rarely achievable in
practice. Sunken investment in electricity generation infrastructure is like a
hog in a python—it has to work its way through the digestive track before the
python can contemplate further activities. Policy decisions that are being made
today typically will not have much efect for at least one decade from now.
herefore, the importance of discouraging investment in conventional energy
cannot be overstated. It is easy to put of making hard decisions for decades
and simply allow conventional technologies to serve as interim measures, but
this engenders a degree of technological entrenchment that is hard to break.
It is for this reason that many wind power advocates point to the decou-
pling of T&D activities from electricity generation as a necessary structural
reform for optimizing wind power difusion. Management of the grid should
be considered to be a public good because users should not be excluded from
it and assigning property rights to the grid diminishes resilience and econo-
mies of scale. As such, nations that wish to balance grid resilience, afordabil-
ity, system reliability, and unfettered access can beneit from nationalizing
the grid service function. On the other hand, electricity generation should
be considered as a private good because assigning property rights to elec-
tricity generation can improve system afordability. Private goods are best
left to competitive markets.
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10.4.4 Economic Factor 4: Competitive Health of Firms in the
Energy Sector
Insights from the case studies suggest that wind power development in a
given nation is inluenced by both the inancial health of competing tech-
nology irms and the inancial health of domestic wind power irms. In mar-
kets where there are private conventional energy irms that enjoy a strong
market foothold, the threat that wind power development poses to corpo-
rate proitability encourages defensive responses that can derail wind power
development. Private, well-funded irms tend to react to stif competition
by adopting marginal cost pricing strategies which make it diicult for new
competitors to gain market share.
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he case studies provide evidence of this
being undertaken by the nuclear power industry in Japan and the coal and
oil industries in the United States and Canada. Conversely, publicly owned
conventional energy irms are guided by a broader array of strategic objec-
tives and rarely take competition to this level.
Two other strategies that private conventional energy irms have been
known to adopt to deter competition include funding lobby groups to
