There have been reports that some EU members, meaning Germany, plan massive windfall profit taxes on low-carbon energy producers, including wind and solar, while at the same time keeping subsidies for these two industries. Some say this is a clever way of taking money out of one pocket and putting it in the other. Others suspect it’s another demonstration of utter stupidity. All I know is, this is highly confusing. Your turn.
Personally - it aint going to work. In the US it may be a way for polititions to get kick backs from the renewable sectors, and consumers will pay through higher energy costs, and inflation.
"Some say this is a clever way of taking money out of one pocket and putting it in the other."
probably the answer and I would add some rents being extracted during the journey between pockets. Unfortunately, I don't have the energy to try and figure out what these knaves are up to currently. Safe to assume theft by the politically connected is happening.
Even with the crazy subsidies, Vestas, GE Wind and Siemens Gamesa are all losing money hand over fist. So it is a guaranteed loss to install and then they will take your profits away if you generate any.
Sounds like EU green bonds are the new 120 Trillion Zimbabwean Dollar note.
The OEMs don't own the projects/ investments. What this will do is prevent project (bank) finance, which is what the equity providers need to finance the projects. Vestas, Siemens and the like as turbine suppliers are part of this capital investment and get screwed down on price and warranty provisions by the project SPV company, not to mention exposure to escalstion in material prices. Its interesting that in the drive to scale up lead to systemic technology risk which almost sank vestas once before.
I’m not as familiar with the developer side of things, but I know that the offshore wind companies in the UK are struggling to provide power profitably at the prices negotiated, even before the 2022 energy crisis. This will only make the situation worse.
Oh well, after half a trillion euros spent on all these wind and solar subsidies, the house of cards was bound to collapse. So maybe the silver lining is that this stops people from throwing good money after bad...
The CFDs have helped the developers shield themselves from wholesale price shifts. I think what they need to watch is the reliability and Opex costs associated with actually generating. What's really crazy here is what the Shell CEO said, that it's the lack of a formalised mechanism for the tax, that creates uncertainty and hence no commitment in investment. I think the (already tottering) house of cards got blown on!
They can take whatever they want. Without cheaper natural gas, the big indsutrial companies will leave Germany. Thus all the investment non sense in renewables will also be gone and the old, cheap and dirty coal is coming back.
That´s amazing to me how a small crowd of people can destroy an industrial powerhouse such as Germany.
How about this for stupidity Irina; Germany seeks to limit South Africa's energy generation by discouraging use of its fossil fuels but then imports huge amounts of coal from SA to keep its ligit's on. Even more stupid.... Germany is warned by a former US President not to become reliant on Russia for gas and they laugh in the face of him. Even more stupid.... Germany transitions away from a highly reliable energy sources costing itself billions in the process, only to replace it with highly unreliable sources of energy which come crashing down causing energy shortages and massive increases in costs across the global. Now that is bloody stupid. And last but not least, politicians from Western countries follow Germany's lead and then double down on unreliable, expensive sources of energy as the solution to the very problem they caused. Beat that!!!!
Now if that's not smart, I don't know what is. Fit for one of Bauldrick's cunning plans.
Personally - it aint going to work. In the US it may be a way for polititions to get kick backs from the renewable sectors, and consumers will pay through higher energy costs, and inflation.
Been off the grid for almost two weeks and trying to make sense of it all!
You sure picked a time to be off the grid. Don't you wish you'd stayed off?
"Some say this is a clever way of taking money out of one pocket and putting it in the other."
probably the answer and I would add some rents being extracted during the journey between pockets. Unfortunately, I don't have the energy to try and figure out what these knaves are up to currently. Safe to assume theft by the politically connected is happening.
I’m becoming less and less confused as I watch them do more and more things that can only be described as designed to wreck their countries.
Confusing is the right word.
I don’t understand how anyone can make expensive, multi-year infrastructure investments with constantly shifting rules.
We’re already at the point, even in the US, where many such projects are simply impossible without government support.
Wait, so there is a windfall on the windfall?
Even with the crazy subsidies, Vestas, GE Wind and Siemens Gamesa are all losing money hand over fist. So it is a guaranteed loss to install and then they will take your profits away if you generate any.
Sounds like EU green bonds are the new 120 Trillion Zimbabwean Dollar note.
The OEMs don't own the projects/ investments. What this will do is prevent project (bank) finance, which is what the equity providers need to finance the projects. Vestas, Siemens and the like as turbine suppliers are part of this capital investment and get screwed down on price and warranty provisions by the project SPV company, not to mention exposure to escalstion in material prices. Its interesting that in the drive to scale up lead to systemic technology risk which almost sank vestas once before.
I’m not as familiar with the developer side of things, but I know that the offshore wind companies in the UK are struggling to provide power profitably at the prices negotiated, even before the 2022 energy crisis. This will only make the situation worse.
Oh well, after half a trillion euros spent on all these wind and solar subsidies, the house of cards was bound to collapse. So maybe the silver lining is that this stops people from throwing good money after bad...
The CFDs have helped the developers shield themselves from wholesale price shifts. I think what they need to watch is the reliability and Opex costs associated with actually generating. What's really crazy here is what the Shell CEO said, that it's the lack of a formalised mechanism for the tax, that creates uncertainty and hence no commitment in investment. I think the (already tottering) house of cards got blown on!
Do you think this could lead to default and nationalisation of existing assets?
They can take whatever they want. Without cheaper natural gas, the big indsutrial companies will leave Germany. Thus all the investment non sense in renewables will also be gone and the old, cheap and dirty coal is coming back.
That´s amazing to me how a small crowd of people can destroy an industrial powerhouse such as Germany.
Auf Wiedersehen
Rent seekers will still want their hefty government subsidies.
A windfall tax on wind is pricelessly absurd.
So my question is, will rent seekers seek even bigger subsidies in order to counter the windfall tax?
How about this for stupidity Irina; Germany seeks to limit South Africa's energy generation by discouraging use of its fossil fuels but then imports huge amounts of coal from SA to keep its ligit's on. Even more stupid.... Germany is warned by a former US President not to become reliant on Russia for gas and they laugh in the face of him. Even more stupid.... Germany transitions away from a highly reliable energy sources costing itself billions in the process, only to replace it with highly unreliable sources of energy which come crashing down causing energy shortages and massive increases in costs across the global. Now that is bloody stupid. And last but not least, politicians from Western countries follow Germany's lead and then double down on unreliable, expensive sources of energy as the solution to the very problem they caused. Beat that!!!!
#lights