Two decades ago, governments and utilities around the world began offering above-market rates and contracts to fuel the rise of clean energy, helping wind and solar become some of the cheapest power sources. Now, these pacts are under attack.
In Canada, Ontario Premier Doug Ford killed hundreds of contracts for planned wind and solar farms. Spain pulled back subsidies, yanking the rug from projects already up and running. And in the U.S., bankrupt California power giant PG&E Corp. could soon move to renegotiate costly power deals signed when prices were three times as expensive as they are now.
The rollback has divided both policy makers and the energy industry, with some calling it a natural evolution and others warning that it will undermine clean energy growth just as wind and solar have finally become mainstream sources of power.
While renewables can now compete head-to-head against coal and natural gas in some parts of the world, the risk of contracts getting dropped threatens to scare away investors and undermine the economics of capital-intensive projects.
“It sends shudders through the industry,” said Ethan Zindler, head of Americas research for BloombergNEF. The blowback is, weirdly enough, a sign of renewable power’s success. Beginning around 2000, governments began establishing incentives for clean power to fight global warming and generate jobs.
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