Articles by
Jérôme Guillet

Some early lessons of 2024 in the energy sector
By
Jérôme Guillet
Meanwhile, incumbents (utilities), long used to dominating the debate and government policies have been caught on the receiving end of the anti-renewables propaganda they spewed in the past, and which have been weaponized wittingly or unwittingly by the political opponents of the greens, usually the rightwing populists, who are ascendant right now. So the current debate on energy is highly polarized, mostly tribal, and renewables are on the losing side in the public debate. It does not matter much because the march of solar and batteries is relentless and irreversible, but it makes policy making harder, and investment decisions scarier.

Suggestions to reform the German electricity market
By
Jérôme Guillet
Overall, we believe that this handful of relatively straightforward measures could materially enhance the transition towards a low-carbon Electricity System at low cost. The Energiewende gets a bad rap in the English-language press, even though it has helped create a competitive renewable energy industry from scratch – something the whole world benefits from, even though mostly German ratepayers pay for it. Our proposed reforms would help reduce that last item.

How utilities and big oil broke the economic model of offshore wind
By
Jérôme Guillet
Offshore wind is currently broken. There is a despondent mood in the sector, and it looks like everybody is trying to get rid of their assets or reduce their exposure to the sector (see BP, Equinor, Shell, Vattenfall, Total, an even Ørsted, Corio or Bluefloat). And yet - they brought this on themselves, through a combination of hubris, ignorance, and reliance on lobbying rather than good business acumen.

Why fans of nuclear are a problem today
By
Jérôme Guillet
If nuclear made sense, Microsoft or Amazon or Rio Tinto would finance the construction of a few plants to feed their ever growing appetite for reliable carbon-free energy… In reality, despite all the high-powered attention, ridiculously few new nuclear plants are being built compared to new renewables, even in China. Nuclear is at best irrelevant and at worst a distraction…

The (currently terrible) mood in renewables…
By
Jérôme Guillet
So, for power generation and the wider energy transition, unexpectedly maybe, small is and will be beautiful, even as the overall volumes are gigantic. For renewables, no headlines is probably a good thing (as most stories seem to be scary ones). And for offshore wind, a lack of “animal spirits” may be a pity, but the sector will remain a niche (very useful in some places) and a relative minnow compared to solar, onshore wind and, increasingly, storage.

Offshore wind requires Contracts for Difference – not subsidies
By
Jérôme Guillet
Governments procure renewables through a variety of mechanisms. Contracts for difference (CfDs) have been used for more than 50% of the global offshore wind supply. The payments awarded through CfDs are sometimes labelled subsidies, suggesting that they support uneconomic activity. Here, we argue that the primary role of CfDs is rather risk management by creating a market for electricity supply at stable long-term prices. Similar to its use in other sectors of the economy, this contract type transforms a variable to a fixed price to reallocate volatility risks. Such long-term contracts are often necessary for renewables financing due to limited hedging options in existing markets.

How to design a good offshore wind auction
By
Jérôme Guillet
As the offshore wind sector struggles with cost increases and the often-hostile scrutiny that this brings, it is worth taking a step back to think about how governments should design auctions to get projects built at the lowest possible cost.
Several of the recent highly publicised project cancellations or delays are directly linked to poor auction design, so it makes sense to avoid or correct certain mistakes.
The goals of auctions are many, and some governments may prioritise some over others, but it is worth listing them explicitly.

Five grand challenges of offshore wind financing in the United States
By
Jérôme Guillet
We identify and describe five grand challenges affecting offshore wind finance in the U.S. Failing to address these challenges may put deployment targets at risk. The challenges include (1) Early years financing: navigating the complexities, timing mismatches, and high costs of projects in the development phase; (2) Policy support for project financial solvency: addressing the uncertainty and systematic transfers of tax credits away from offshore wind, characteristic of the U.S. Investment Tax Credit; (3) Workforce development: building a skilled workforce for an emerging market; (4) Transmission and integration barriers: upgrading the power grid to reliably support large scale offshore wind integration; and (5) Floating wind development: financing the development and scale-up of floating offshore wind technologies. The second challenge has already been solved to a large extent by the Inflation Reduction Act.

What was the French-German spat on energy really about?
By
Jérôme Guillet
The French nuclear programme was a great success, but the conditions to replicate it are gone, and there will be no new nuclear plants built because they cannot be financed, and there are cheaper alternatives (and baseload is not adapted to our new system).

A few basic truths about offshore wind
By
Jérôme Guillet
So offshore wind has become, almost unexpectedly, a significant part of the picture when future renewable energy systems are considered - at least in OECD countries. It provides diversification, opportunities to Big Energy to go green, possibly less public hostility and potentially reasonable economics. But it’s worth remembering that even in Europe, it’s just 10% of the overall wind capacity installed (and a bit more of actual generation, thanks to higher capacity factors).

Offshore wind and big company lobbying
By
Jérôme Guillet
Don’t do tenders based on price if you don’t know when the project can get built (ie if projects are still subject to permitting processes or legal recourse or other uncontrollable delays). That’s a sure way to get unrealistic bids that will then be subject to lobbying and renegotiation.