Some weeks ago I gave a speech in Naters in the Swiss Alps – a meeting organised by the Committee of the UNESCO Natural Heritage site Jungfrau-Aletsch.
Water is essential for the Jungfrau-Aletsch region – for daily life, for agriculture, for nature and, as a consequence, for tourism. Dams used for hydropower are particularly important – in many valleys they were the starting point for communities moving out of poverty during the 20th century, whilst also reducing the risk of floods and stabilising the water flows.
In the discussion, one speaker on the panel made it clear that this form of generation of electrical energy is at risk today.
What he said is that actually hydropower, from the dams in the alps and elsewhere, is far superior to any other form of energy, if you look at both the environmental impact, the overall externalities, the energy conversion efficiency and also the possibilities of energy storage and easy access to the energy when you need it (i.e. providing peak energy at any point in time). But recently, the market for electricity has been flooded with a surplus of solar and wind power -- relatively unreliable, but highly subsidised. With actual production costs between 20 and 50 Swiss cents, it is sold at some 4.5 to 5 Swiss cents. It does not need large amounts of such heavily subsidised energy to massively distort markets through low marginal prices and therefore hydropower is crowded out. New dams that are urgently needed cannot be built while some existing dams have difficulties to cover the variable cost. He fears that present policies and the kind of subsidies outlined will drive the best possible form of renewable energy, namely hydropower, against a wall.
Is this something that also happens elsewhere in Europe? Your comments and ideas on how to address this would be most welcome.