The elasticity of renewable demand and controversity

Newly-elected federal Liberal MP for Hume, Angus Taylor, is a committed anti-wind campaigner and is reported to be against the NSW government decision to allow the “controversial” Collector Wind Farm decision. In the reported post it was said he hinted policy and that the Renewable Energy Target (RET) review would likely prove the undoing of the wind farm industry in Australia –

“Projects like this seem set to continue unabated until a national review – which the new federal government has committed to in 2014 – can reveal the true economics behind the industry,” he said. “The RET review will look into the massive subsidies for wind farms, which are forcing up electricity prices and propping up an economically unviable industry.”

Source:  Hamish Boland-Rudder, Reporter at The Canberra Times | December 5, 2013 | www.canberratimes.com.au .

Unfortunately, in this country, we have again simply decided that ‘a review’ will do, to ignore that real innovators will suffer. The statement may be best viewed if you dissect the last quote above. In particular: subsidies – the go against the traditional models for supply; forcing up – obviously painful to the traditional models; propping up – this is the corker, as it suggests unless it is the traditional supply model the demand balance cannot be effective. If you think even harder you can also come of the view energy efficiency will be discouraged as decreased demand for energy will threaten the ‘viable’ industry. The most interesting part of all this politicking is that it ignores that what is driving all this angst is that technology is quickly overtaking the industry. Technology that is outmoding conventional supply systems. Like all technology advances it takes courage to move forward, to encourage the uptake and reward the innovators. But, alias my dear for that we need a review and force unreasonable cost to those with the shallow pockets.

However, is the secret deal as simple as reducing subsidies and reducing prices? Unfortunately economics is not that simple it also involves elasticity.

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