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Why Renewable Power is Becoming Its Own Worst Enemy

A recent report suggested that regulators and utilities should alter energy pricing to address renewable electricity — or risk squandering the dramatic growth of green energy in recent years.

A recent report suggested that regulators and utilities should alter energy pricing to address renewable electricity — or risk squandering the dramatic growth of green energy in recent years.

The Economist wrote last week that inconsistent energy sources like solar and wind need conventional power plants to prevent outages — but that the proliferation of renewable energy eroded utilities' bottom lines.

The publication said that electrical rates should be adjusted more frequently based on supply and demand and that electrical bills should be structured to reward customers that consume less power.

"Without a new approach the renewables revolution will stall," the magazine wrote.

Although renewable energy only accounts for a fraction of the world's power consumption, forecasts anticipate that it will comprise a much larger share of the new capacity added in coming years and decades.

The report noted that renewables not only take a portion of the energy market from traditional utilities -- their low running costs also reduce the overall price of electricity and further erode utility revenue.

Public subsidies, enacted by governments under pressure to reduce carbon emissions, also complicated the energy market.

And although emerging power generation, metering and storage systems can help smooth out the use of energy from intermittent sources, governments are still forced to pay increasing amounts to utilities in renewable-rich areas to ensure that power continues to run.

The magazine warned that problems are already surfacing in Europe and China, where subsidies are expiring and investment in renewable energy is slowing.

"At its heart, the problem is that government-supported renewable energy has been imposed on a market designed in a different era," The Economist wrote.

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