Fiscal Policy & Regulation

An interesting article - and potential for an IA, I'd say. This article highlights a dramatic fall in the number of solar panels being installed as a result of the government removing its subsidies on them.

Lots to contemplate - elasticity of demand, the economics of subsidies, and the economics of renewable power more generally. 

It seems that the once-vaunted Swansea Bay tidal power project is dead. There have been board level changes and it seems that the passion for the project, and the investment funds have dried up.

Oh dear! Guardian readers everywhere might spill their quinoa with the news that the government have eventually rejected a plan to build a tidal lagoon in Swansea Bay. The plan was to create a new source of renewable energy contributing to increased diversity of the UK's energy mix. 

However, perhaps the biggest gripe here is that the government have seemingly been keen to encourage the project until recently, as the price of other low carbon alternatives has fallen. If anything it illustrates the danger of trying to second guess markets.

Classic Guardian: renewable energy firms have said that they can pick up the slack after the Wylfa nuclear plant has been scrapped, if the government is willing to relax its ban on onshore subsidies. It's an interesting idea - and given the strike price at Hinkley Point, perhaps not the worst idea. 

However, I'm always alarmed when subsidies are involved - they have an opportunity cost, risk government failure and clearly there are distributional concerns. I suspect the government will sit on its hands and hope that technological advances make many of these projects viable in the next few years without the need for subsidies.

Yesterday's National Infrastructure Commission, chaired by Sir John Armitt, has a number of interesting aspects. The headline captures the concerns about the current model for running Britain's railways, but of at least equal significance are the conclusions drawn about the future of electricity generation.

The report is explicit in suggesting that the future of electricity should be renewable, rather than nuclear - largely as a result of falling renewable costs - and it will be interesting to see if successive governments heed this advice. Remember, the National Infrastructure Commission is non-partisan.