In the renewable energy world, there is quite some euphoria about the fall in cost for solar and wind installations. Then, why don’t we see an acceleration of the growth of these sources, but rather a deceleration? In my previous post, I presented an overview of the development of wind and solar energy in large countries. We saw that developments are far from smooth and stop-go policies are not the exception, but rather the rule.
The dynamic behaviour of policies may be described in terms of positive and negative feedback loops. Fortunately, there are positive feedback loops. The most well-known and most celebrated is technological learning: investment in renewable energy technology leads to increased experience and associated cost reduction, which improves the business case for renewable energy, leading to extra investments, etc. Another one: renewable energy investments lead to more employment, which in turn leads to enhanced political support, driving new investments.
But there are also negative feedback loops.
Renewable energy leads to negative side effects, for example, some people do not like wind turbines in their neighbourhood. This may water down political support for renewable energy development, at least at the local level, and this hinders the growth of renewables. Another one: the increased costs of support systems are often leading to higher electricity prices, which may be considered negative by politicians and reduce political support. Strong growth of renewable energy leads to higher demand in the supply chains and possibly to higher prices, offsetting part of the gains achieved through technological learning. Extra electricity infrastructure is needed – if the development lags behind, this may hamper the development of renewables. And last but not least, there are also parties that will lose if renewables grow rapidly – they will develop counter-forces that will try to reduce the political will for the further development of renewable energy.
Everyone in the renewable energy world knows several examples of these negative feedback loops. They may well – together – form the explanation of the stop-go policies for renewables, and that is no real surprise. Reverse salients are a well-know phenomenon associated with many innovations. But given the high global ambitions for renewable energy development and greenhouse gas mitigation, we cannot afford that much delay.
Therefore, for every renewable-energy policy maker, the number one priority should be to develop robust policies that are successful even with the negative feedbacks.