How do you put a value on backup generation facilities

[RenewableCandy]

From Wind Power Monthly

The speed of change resulting from the rapid rise of renewables clearly caught a traditionally slow moving industry unawares. But the trend was well documented and utilities had the information to make different investment decisions points out Jerome Guillet of Green Giraffe Energy Bankers. "I thus have limited sympathy for their complaints about losing money in today's market - especially with new plants."

Jumbled legislation

Even so, governments and market regulators have taken utility cries of financial pain and warnings of possible supply interruptions - the "missing money" - at face value. Without proper analysis of whether a serious problem exists, the cause and effect and how to deal with it, mitigating legislation or regulations have and are being initiated. These range from new flat rate payments to generators for providing capacity, to competitive auctions for blocks of capacity in full scale "capacity markets" separate to wholesale markets for energy and grid support services.

Scrape below the surface, however, and it becomes clear that making fundamental changes to generation and supply before proper analysis carries the grave risk of exacerbating the sector's ills.