What unknowns exist in the policies that might affect the size of the market the prices paid for renewable energy or the duration of the scheme

Unknowns are like the dark matter of renewable energy; they can mean the difference between the universe exploding or collapsing. Some of the variables that can interfere with market growth include: the level of support, the duration of support eligibility, the duration of support schemes and the quantity of renewa-bles required under the scheme (upper limits). Again, however, it comes back to increasing the bankability of projects and minimizing the uncertainties that expose projects to risk.

Many would agree that one of the factors responsible for successful German renewable energy policies is the minimization of such uncertainties. The price for various types of energy was clearly set out and the scheme did not have cut-off dates within the lifetime of likely projects. Developers still had to deal with variables including hardware costs, fuel costs or size, exchange rates and so forth, but thereafter the system into which they were selling was to a large extent set in stone (subject of course to changes in legislation).

In market-based systems, a renewable energy commodity price introduces a new variable and a new risk. Risk increases costs, but market dynamics can also reduce prices. So there is a balance to be struck and a policy choice to be made. How stable is the market? How far out into the future is it defined? Is it likely to increase or decrease in size? These are all very relevant uncertainties that must be removed or minimized if possible through policy.

Manufacturing is particularly susceptible to unknowns. Developers can always come into a system, put up some projects and leave again if things prove too hard or, if things are risky, they adjust their prices accordingly. However, hardware manufacturers require that a successful market work for several years before they cover their costs. For them risk and uncertainty is not a price adjustment, but a threshold. If the risk is too high it is better to import at a higher cost than to expose the company to the risk of million-dollar factories lying idle.

Solar Panel Basics

Solar Panel Basics

Global warming is a huge problem which will significantly affect every country in the world. Many people all over the world are trying to do whatever they can to help combat the effects of global warming. One of the ways that people can fight global warming is to reduce their dependence on non-renewable energy sources like oil and petroleum based products.

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