Market always wins

Stop me if you’ve heard this but one of the biggest wind and solar developers in Europe recently announced it would be building less wind and solar in the coming years for reasons that have to do with costs and electricity prices.

Oh, wait. It was actually the biggest developer of wind and solar in Europe, Norway-based Statkraft, which said last month that electricity prices in Europe have gone too low and production costs have gone too high, so it’s planning fewer projects for the immediate future.

“The transition from fossil to renewable energy is happening at an increasing pace in Europe and the rest of the world. However, the market conditions for the entire renewable energy industry have become more challenging,” Statkraft’s chief executive told the Financial Times.

Obviously, she was being modest and if she was being honest instead, the quote would have gone as follows: “The attempted transition to renewable energy is happening at an increasing pace, so market forces are kicking in more noticeably than before, making conditions for the industry more challenging.”

Now, my only academic experience of market forces comes from a single semester of studying economics and business administration, which were the most boring six months of my life because I was young and stupid but some basics stuck with me, and when I say basics I mean the most basic of the basics: supply and demand.

It has been my experience and observation that in free markets (as free as they can be in the presence of so many massively huge corporations) supply and demand play equal roles as fuel for the growth engine. When supply for a product goes too high, demand lags behind, supply declines and, unless demand remains low and the product is replaced by another, demand begins to exceed supply and causes a supply rebound.

Of course this is as basic an explanation as is possible to produce but it serves my purpose, which is a comparison with planned economies. In planned economies, demand is a secondary concern. In planned economies, you buy what’s in front of you and don’t ask for a choice because there is none.

The planned economy has plans, not market forces, however illusory they often are — and how increasingly illusory the leaders of the Great Climate Crusade (GCC) are trying to make them. Because there is no way the transition can work on an even moderately free market and we just got a bunch of fresh proof to add to the “We Told You So” file.