> "The countries with abundant electricity will be the leaders of the 21st century," said Finance Minister François-Philippe Champagne in prepared remarks shared with the media.
People are focusing on sustainability and climate change too much. It's a nice side effect of people shifting to renewable energy. But the real story here is the economics and wiping out marginal cost of producing energy. Most infrastructure related to renewable energy has cap-ex but very low op-ex. Once you have it, it works for decades.
And the cap-ex part is coming down steadily due to economies of scale, learning effects, R&D delivering incremental improvements, and of course occasionally some bigger improvements.
This is often portrayed as cost that somebody needs to pay for. But a better way to think of this stuff is as investment with a big return on investment. Op-ex has no ROI. If you buy fuel, you burn it and then it's gone. Cap-ex can have lots of ROI. A battery that removes the need for you to source many gwh of power over a few decades is saving you money. If that energy is surplus solar/wind with essentially very low marginal cost that would otherwise have been curtailed, you save money. That's why pairing solar with batteries is so popular. It increases the capex. But you get better utilization of your solar panels.
So, these grid improvements might potentially have a really good ROI for Canada. Grid infrastructure lasts a long time; especially power lines. And they move a lot of power around. Which is nice when you have a lot of very spikey supply from solar and wind. This often results in over supply, which then gets curtailed (thrown away). If the grid can move it to somewhere it can be used, that can offset other energy sources (e.g. gas power) with higher marginal cost. This 50 billion amortizes over decades but might break even before the first decade is over.
Not disagreeing. I live here (not a native). Germany needs to rethink it's policies. It should do the exact opposite with financing. Also, not borrowing when interest was low and when it had a lot of infrastructure needs means that it is now a lot more expensive than it used to be to fix things.
That being said, I think policy changes would stimulate a lot of companies and households to up their game on the energy front while benefiting from it.
A few policy changes could be done quickly and relatively cheaply that would stimulate that. But it seems Germany is being very hesitant and indecisive. Policy is the cheapest to do and the hardest to get done somehow. But it creates the context for investments to happen and for people to benefit from those investments.
By making renewable power expensive, it prevents people to benefit from investments already made. Which I agree is severely misguided. German credit rating is excellent. They could use that to stimulate their economy (which could use some stimulating) while fixing their infrastructure and lowering their cost of living. That all starts with sorting out policy and (counter) incentives.
Canada desperately needs infrastructure, yet I am not convinced that electricity grid should be the main focus. It concerns me that this smells of data centres.
Data centers are great and this concern over them is insane though.You should be more concerned about how the government is going to waste your money here, because they will, because they have for decades now and inefficient meddling is worse than effective meddling in most cases. For example, the bulk of this appears to be going into the clean electricity investment tax credit, which is a 15% refund on eligible capital costs that has some questionable requirements (like abiding by dumb prevailing wage laws rather than focusing on the correct thing, getting the project done well for as little expense as possible).
> "The countries with abundant electricity will be the leaders of the 21st century," said Finance Minister François-Philippe Champagne in prepared remarks shared with the media.
People are focusing on sustainability and climate change too much. It's a nice side effect of people shifting to renewable energy. But the real story here is the economics and wiping out marginal cost of producing energy. Most infrastructure related to renewable energy has cap-ex but very low op-ex. Once you have it, it works for decades.
And the cap-ex part is coming down steadily due to economies of scale, learning effects, R&D delivering incremental improvements, and of course occasionally some bigger improvements.
This is often portrayed as cost that somebody needs to pay for. But a better way to think of this stuff is as investment with a big return on investment. Op-ex has no ROI. If you buy fuel, you burn it and then it's gone. Cap-ex can have lots of ROI. A battery that removes the need for you to source many gwh of power over a few decades is saving you money. If that energy is surplus solar/wind with essentially very low marginal cost that would otherwise have been curtailed, you save money. That's why pairing solar with batteries is so popular. It increases the capex. But you get better utilization of your solar panels.
So, these grid improvements might potentially have a really good ROI for Canada. Grid infrastructure lasts a long time; especially power lines. And they move a lot of power around. Which is nice when you have a lot of very spikey supply from solar and wind. This often results in over supply, which then gets curtailed (thrown away). If the grid can move it to somewhere it can be used, that can offset other energy sources (e.g. gas power) with higher marginal cost. This 50 billion amortizes over decades but might break even before the first decade is over.
100% agree.
that's also why i don't understand why germany is financing it through the electricity prices.
it's a classic investment for the bond markets.
the oldest of the huge poles for high-voltage power lines here in germany is 114y old.
now that's roi in excellence.
Not disagreeing. I live here (not a native). Germany needs to rethink it's policies. It should do the exact opposite with financing. Also, not borrowing when interest was low and when it had a lot of infrastructure needs means that it is now a lot more expensive than it used to be to fix things.
That being said, I think policy changes would stimulate a lot of companies and households to up their game on the energy front while benefiting from it.
A few policy changes could be done quickly and relatively cheaply that would stimulate that. But it seems Germany is being very hesitant and indecisive. Policy is the cheapest to do and the hardest to get done somehow. But it creates the context for investments to happen and for people to benefit from those investments.
By making renewable power expensive, it prevents people to benefit from investments already made. Which I agree is severely misguided. German credit rating is excellent. They could use that to stimulate their economy (which could use some stimulating) while fixing their infrastructure and lowering their cost of living. That all starts with sorting out policy and (counter) incentives.
Canada desperately needs infrastructure, yet I am not convinced that electricity grid should be the main focus. It concerns me that this smells of data centres.
Data centers are great and this concern over them is insane though.You should be more concerned about how the government is going to waste your money here, because they will, because they have for decades now and inefficient meddling is worse than effective meddling in most cases. For example, the bulk of this appears to be going into the clean electricity investment tax credit, which is a 15% refund on eligible capital costs that has some questionable requirements (like abiding by dumb prevailing wage laws rather than focusing on the correct thing, getting the project done well for as little expense as possible).
It is!! That’s why it’s the main focus.