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Markus Dirnbacher's picture
Director ENcome Energy Performance

AMA - I‘ll be happy to answer all questions. For information upfront please check my LinkedIn profile. All the best, Markus

  • Member since 2020
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  • Dec 7, 2021
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The current zero-interest-rate policy of the EU, in combination with financing mechanisms such as feed-in tariffs (FiT), has contributed immensely towards cost reductions in renewables and spurred investments since 2010. 

This post is a bit of a digression from our usual posts on renewables, but we believe that a more detailed grasp of the financial theory behind the renewables investment surge in recent years is interesting to some of you as well.

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Matt Chester's picture
Matt Chester on Dec 7, 2021

The question with the economic policy on renewables is always whether it creates long-term change or bolsters the industry while in place and then when removed (e.g., renewable tax credits in the United States) will it interrupt that progress. It sounds like in this case you see zero interest rates as doing the former, creating the change needed that wouldn't be required indefinitely to create the right environment for continued market penetration, is that right? 

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Markus Dirnbacher on Dec 7, 2021

That’s right, Matt. Zero interest rates helped a lot to get the needed monies into the renewable energy industry. These investments have naturally caused economy of scales effects in CAPEX and OPEX which has led to solar, f.e. to be competitive even without subsidies. Hence, zero interest rates won’t be needed indefinitely as the industry is maturing and consolidating to pick up the pace of well established energy corporations.

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