The podcast which accompanied the article discusses how there lies a paradox in subsidizing renewable energy given that the money also goes to fund fossil fuel-based energy production. The speakers talk about how despite the falling costs of renewable energy, it has yet to become sustainable by itself.Wind energy or solar power are often not reliable which leads these companies to use government funds to provide fossil fuel-based (coal/gas/oil) power during downtimes.
Another added problem to the falling costs is how this is causing a crisis in the electricity market, so while costs for producing renewable energy are getting cheaper, consumers are being forced to pay higher bills in countries that have not adopted these new changes. While certainly, this may help to disincentivize people from buying electricity from these places but for the most part, the choice to buy an alternative might not be available to them for a while.
The article discusses how this abundance of subsidies (not necessarily misplaced) is also having the negative consequence of lowering the revenues one could expect from the power markets. This brings to the final conclusion about how renewable energy is not just unsustainable on its own right as of now, but also how this is deterring further investments into the industry due to its consequences on the global electricity market.
But of course, this is no reason to backtrack from investing in renewable energy (which will need to account for half of the global electricity consumption in the next 30-40 years) but a reason to look at other aspects of what needs to be changed. One of the suggestions discussed in the podcast looks at how the technology for storage of power is still highly underdeveloped and bears great potential for the renewable energy industry. Both the article and the podcast talk about how it is important to adopt flexible measures regarding regulations and prices and focus on smoothing out and possibly reducing demand by adopting digital meters, batteries and small, modular plants.
It is ironic how at its current form renewable energy sources are not sustainable economically, but it is understandable how governments undertaking the costs to correct a market failure inadvertently stemmed its own problems of crowding out private investors. The government really needs to focus on the other aspects of this industry in order to make sure that this investment is carried out efficiently and has the potential to grow on its own without this level of subsidy incentive.
Given how this is a relatively new turf for investments, the industry needs to be shaped in a way where it can be monetized enough to incentivize spending. But for now, the transition is going to be slow and we need to find alternative approaches to make this sustainable soon. Influencing demand by marking up taxes and disincentivizing consumers from buying dirty energy could be a temporary proposition but in the long term, regulations will need to be put into place for the renewable energy industry to truly make an impact.
http://www.economist.com/blogs/freeexchange/2017/02/podcast-money-talks-1
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