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Comment by dpierce9 | Hacker News Reader

Why call this political uncertainty as opposed to economic uncertainty? The future is intrinsically uncertain. The only thing that has changed is new entrants to the market. If gas plants can be replaced by something cheaper then they will be. If gas plants make economic sense, they will be built. The fact that gas developers have to model additional players in their markets to prove their economic viability seems fine to me. The fact that they are riskier investments means higher capital costs also seems fine (they are riskier!). Would you rather the politicians say no batteries because that would make financing gas plants harder?

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> "If gas plants can be replaced by something cheaper then they will be"

This is a simplification of what is a highly complex, interdependent, path dependent and regulated system, with long lead times, and more priorities than just least-cost. The energy system's development isn't the unfolding of an endogenous economic rationality - it's very messy! For all those reasons, it's usually best understood through the lens of political economy.

Also, I don't know why you think there's an anti-green sentiment implicit in my comment. My own views are precisely the opposite.

>Why call this political uncertainty as opposed to economic uncertainty?

I'm assuming this is because so much of the energy market is directed through political mechanisms like subsidies, research funding etc. It's the political uncertainty that undergirds the economic uncertainty.

Sure, but why is that special for gas plants? CTs are expensive to run so if they run less that is generally good for people using electricity. I am not saying political uncertainty doesn’t exist or that the grid systems are apolitical or that building plants is easy. I don’t know much about the UK grid or rules which is why I was asking for specifics on what makes this specific case political.

Just speculation, but I imagine there is much less volatility in terms of fossil fuel policies. Fossil fuels (regretfully) have large and entrenched lobbyists who seem to get continued political support regardless of the office party. Contrast that to policies for/against renewables which have become a signaling mechanism.

What? Gas prices in Europe are extremely volatile [0]. Neither lobbyists nor politicians control prices and even if they did it isn’t obvious the lobbyists would prefer smooth prices.

[0] https://tradingeconomics.com/commodity/eu-natural-gas

Volatility in terms of policies, not prices. E.g., the it's fairly certain the subsidies for gas that are in place this year will continue next year. Price volatility has a lot more market dynamics at play.

I have lost the thread. The og parent said that political uncertainties were responsible for gas plant economic issues. You are now saying that gas plant lobbyists create more political certainty. I don’t know if that is true but it is beside the point.

I don’t think it is. If we agree that lobbyists affect political outcomes, and we can agree that some industries have entrenched lobbyists, then we can connect the two to say that lobbyists create more political certainty. That’s not to conflate “more certainty about policy” with “good policy.” It’s only beside the point if you think policy doesn’t impact energy prices, which is fairly easy to disprove.

In other words, if you think it's hard to implement a new energy policy in part because of monied interests, those monied interests are providing certainty in policy. To ground it in more real terms, I may not want to bet on new energy tech if the have an economic advantage based on who's in the White House. By contrast, betting on fossil fuels has more certainty because those interests are protected almost regardless of who's in the White House.

From the parent: “Political uncertainty about the future energy system is jacking up the rate of return investors are demanding of gas plant projects without contracted revenues.”

Your argument about lobbyists creating certainty doesn’t follow. Not all people in an industry have the same interests (gas generators and gas producers both like gas but price impacting regulation will create divergences). Lobbyists may reduce certainty because, for example, a super convincing lobbyist might instigate changes to an staid regime. The cumulative impact of different, less effective lobbyists over time may wash out or it may cause branches.

Ok, I'll try to be more explicit with the caveat that it's possible I'm reading too much between the OP's lines.

"future energy systems" means, in this case, battery and EV tech. Had it said "legacy energy systems" I agree that it does not follow. However, as stated, they are saying "we just don't know what's going to be on the political horizon. Maybe a ultra-conservative will be in the white house and all of these subsidies that help foster future energy systems will go out the window." Again, it's about the volatility of less-entrenched, prospective industries that are more reliant on policies to make them viable.

Entrenched lobbyists, almost by definition, want to keep the status quo. So I don't think we can agree that they are likely to institute massive changes. Put differently, do you think it's more likely that fossil fuel subsidies or that renewable subsidies will be dramatically reduced if the WH changes parties in the next election?

Not to mention taxes, mandates, sanctions , and even wars

I've often wondered if anyone has ever studied what the "all in" cost of gasoline would be taking account of all those externalities.

It's pretty interesting question actually. I think for an honest accounting you would have to take into account the positive externalities as well.

One way to start thinking about the question is to benchmark society before gasoline.

Mass use of gasoline kicked off around 1900, with the popularization of the automobile.

You can compare life now versus 1900 to get one estimate. The world definitely had problems and Wars before 1900.

What the world would look like today had gasoline never been discovered is a lot more tricky, but my gut feeling is that we would be worse off than today.

I suspect you're right. That's why I think it's important to get a transition right, because it would be a shame to squander the type of bootstrapping that oil afforded us as a society.

>You can compare life now versus 1900 to get one estimate.

I think this is probably too broad because it assumes a causal connection between gasoline and all of those differences. The industrial revolution had been decades underway before cheap oil, and would have continued if oil was never found in Pennslyvania. But cheap oil definitely helped speed it along faster.

>The industrial revolution had been decades underway before cheap oil, and would have continued if oil was never found in Pennslyvania. But cheap oil definitely helped speed it along faster.

That is certainly true. I meant using it a benchmark to extrapolate from. In many ways it seems to me that the industrialization at that time had a pretty negative trajectory, with a heavy basis in coal and brutal industrial towns. It is quite possible that we are living one of the best possible timelines from 1900.

I don't think the fuel type, but rather the labor and regulatory environment, was the driver of those conditions. We can't know for sure, obviously, but had oil been used before coal, I have a feeling those towns would still exist.

I agree that's probably a big part of it. Another interesting thought is that if we never moved off of coal we would probably have a lot more electrification and mass transit because call makes more sense in terms of centralized power generation. Sounds like the makings of a steampunk novella

> If gas plants can be replaced by something cheaper then they will be. If gas plants make economic sense, they will be built.

Eventually, the system will land in a semi-stable equilibrium. Getting there may be quite painful, though.

Capitalism is NOT an inherently stable system when the time scales of production and consumption have a mismatch. Look at farming and the feast/famine cycles it goes through. Practically all "developed" countries stabilize their agricultural sector, somehow, precisely for this reason.

Capitalism will happily take plants offline faster than new investment can replace. The grid needs a certain amount of base production or it becomes unreliable--which defeats the whole point of a "grid" in the first place.

Batteries are not enough by themselves. You need a combination of batteries, solar, HVDC links over larger areas (to give you diversity to ride out weather), gas plants, and nuclear plants. Many of these will be unprofitable to build but are necessary.

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