More and more subsidy schemes and regulations are undermining the ability to integrate large amounts of electricity from renewable energy (RE). These conditions result in countries and regions paying an excessively high price for energy. Countries with a high share of renewables — without exception — provide significant subsidies to fossil-free, power-plant-generated electricity, and, without exception, always to electricity that is produced continuously, regardless of whether there is demand or not. This is a deeply flawed and damaging practice for the green transition.

The bottom line is that subsidies should have been allocated based on systems’ ability to integrate large volumes of renewable energy. This critical point has been overlooked by policymakers in virtually every country. In fact, it is so severe that proper integration of renewable electricity could make electricity and heat from renewables both cheap and attractive to citizens — the only thing missing is the right regulatory framework.

A common trait among state administrations, lobbyists, and the advisory sector is the assumption that every fossil-free kilowatt-hour of electricity is inherently beneficial. Many believe that when one kilowatt of fossil-free electricity is fed into the grid, it directly reduces fossil energy consumption one-to-one — which, in many cases, is simply not true. What often happens in practice is that more and more wind turbines and solar panels are forced to curtail production to make room for subsidized power-plant electricity, which in many cases renders other fossil-free generation useless — and, as a result, the phase-out of fossil fuels in a region or country simply does not occur.

The core problem is this: if the right overarching framework conditions were in place, no subsidies would be necessary. This is because the full and proper deployment of power plants that interact intelligently with renewable energy production — along with optimal smart grid systems that manage this production efficiently — would eliminate the need for financial support altogether. The system would become so effective that fossil-free energy would naturally outcompete fossil-based solutions due to its low cost.