ECONOMIST MAKES PITCH FOR TRADITIONAL UTILITIES
In its February 25 edition, the Economist made an argument that renewable energy subsidies need to be better balanced with traditional utility systems. The magazine said it is “remarkable” what is happening with renewables, as the world may be entering “an era of clean, unlimited and cheap power.”
The magazine points out that more than $800 billion has been used to subsidize renewable energy since 2017. The Economist says that one big problem with this decarbonization, effort is the existing utility system. All of the newly-installed wind and solar power is coming into markets that are set up for traditional utilities, and that challenge is made worse by the timing. Renewables made their surge just when the world economy stagnated and energy efficiency began to make massive gains.
The result has been an electricity glut that has depressed the utility business around the world. Utilities are continuing to support renewables but also having to invest in conventional backups to cover for the intermittency of the renewables. The Economist says that power markets need to be redesigned to reflect the need for flexible supply and demand. Demand response technologies, such as smart meters, are helping consumers adjust their usage and increasing price signals would make that effort even more beneficial. Electricity needs to be priced in real time in a way that consumes can understand if the renewable energy is going to thrive. The grid system also needs to be updated to be more nimble.
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