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Large-scale wind power in European electricity markets: Time for revisiting support schemes and market designs?

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  • Hiroux, C.
  • Saguan, M.
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    Abstract

    This paper questions whether current renewable support schemes and electricity market designs are well-suited to host a significant amount of wind energy. Our analysis aims at finding the right equilibrium between market signals received by wind generators and their intrinsic risks. More market signals are needed to give the right incentives for reducing wind integration costs but should not undermine the effectiveness of support schemes. Although several alternatives combining support schemes and market signals could improve the current situation in terms of market signals and risks, feed-in premium support scheme seems actually to be the more balanced option. Furthermore, an adequate sharing of wind generation technical responsibility between the system operator and wind power producers can help to control wind integration costs even in the absence of accurate market signals.

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    Bibliographic Info

    Article provided by Elsevier in its journal Energy Policy.

    Volume (Year): 38 (2010)
    Issue (Month): 7 (July)
    Pages: 3135-3145

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    Handle: RePEc:eee:enepol:v:38:y:2010:i:7:p:3135-3145

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    Web page: http://www.elsevier.com/locate/enpol

    Related research

    Keywords: Electricity Market Design Renewable Support Schemes Wind Power;

    References

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    1. del Rio, Pablo & Gual, Miguel A., 2007. "An integrated assessment of the feed-in tariff system in Spain," Energy Policy, Elsevier, vol. 35(2), pages 994-1012, February.
    2. Resch, Gustav & Held, Anne & Faber, Thomas & Panzer, Christian & Toro, Felipe & Haas, Reinhard, 2008. "Potentials and prospects for renewable energies at global scale," Energy Policy, Elsevier, vol. 36(11), pages 4048-4056, November.
    3. Vincent Rious & Jean-Michel Glachant & Yannick Perez & Philippe Dessante, 2008. "The diversity of design of TSOs," Post-Print hal-00318518, HAL.
    4. repec:reg:wpaper:152 is not listed on IDEAS
    5. Richard J. Green, 2008. "Electricity Wholesale Markets: Designs Now and in a Low-carbon Future," The Energy Journal, International Association for Energy Economics, vol. 0(Special I), pages 95-124.
    6. Müsgens, F. & Neuhoff, K., 2006. "Modelling Dynamic Constraints in Electricity Markets and the Costs of Uncertain Wind Output," Cambridge Working Papers in Economics 0610, Faculty of Economics, University of Cambridge.
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    Citations

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    Cited by:
    1. Christine Brandstätt & Gert Brunekreeft & Katy Jahnke, 2010. "Large-scale integration of wind: Flexible Voluntary Curtailment Agreements under a Feed-in System with RES-E priority to avoid inefficiently negative power prices," Bremen Energy Working Papers 0004, Bremer Energie Institut.
    2. Hallack, Michelle & Vazquez, Miguel, 2013. "European Union regulation of gas transmission services: Challenges in the allocation of network resources through entry/exit schemes," Utilities Policy, Elsevier, vol. 25(C), pages 23-32.
    3. Narbel, Patrick A., 2014. "Rethinking how to support intermittent renewables," Discussion Papers 2014/17, Department of Business and Management Science, Norwegian School of Economics.
    4. Jean Michel Glachant & Arthur Henriot, 2013. "Melting-pots and salad bowls: the current debate on electricity market design for RES integration," Cambridge Working Papers in Economics 1354, Faculty of Economics, University of Cambridge.
    5. Peeter Pikk & Marko Viiding, 2013. "The dangers of marginal cost based electricity pricing," Baltic Journal of Economics, Baltic International Centre for Economic Policy Studies, vol. 13(1), pages 49-62, July.
    6. Kaldellis, J.K., 2011. "Critical evaluation of financial supporting schemes for wind-based projects: Case study Greece," Energy Policy, Elsevier, vol. 39(5), pages 2490-2500, May.
    7. Gawel, Erik & Purkus, Alexandra, 2013. "Promoting the market and system integration of renewable energies through premium schemes: A case study of the German market premium," UFZ Discussion Papers 4/2013, Helmholtz Centre for Environmental Research (UFZ), Division of Social Sciences (ÖKUS).
    8. Vazquez, Miguel & Hallack, Michelle, 2013. "Need and design of short-term auctions in the EU gas markets," Energy Policy, Elsevier, vol. 63(C), pages 484-493.
    9. Gawel, Erik & Purkus, Alexandra, 2013. "Promoting the market and system integration of renewable energies through premium schemes—A case study of the German market premium," Energy Policy, Elsevier, vol. 61(C), pages 599-609.
    10. Chaves-Ávila, J.P. & Hakvoort, R.A. & Ramos, A., 2014. "The impact of European balancing rules on wind power economics and on short-term bidding strategies," Energy Policy, Elsevier, vol. 68(C), pages 383-393.
    11. Bueno-Lorenzo, Miriam & Moreno, M. Ángeles & Usaola, Julio, 2013. "Analysis of the imbalance price scheme in the Spanish electricity market: A wind power test case," Energy Policy, Elsevier, vol. 62(C), pages 1010-1019.
    12. Arthur Henriot, 2012. "Market design with wind: managing low-predictability in intraday markets," RSCAS Working Papers 2012/63, European University Institute.
    13. Schmidt, J. & Lehecka, G. & Gass, V. & Schmid, E., 2013. "Where the wind blows: Assessing the effect of fixed and premium based feed-in tariffs on the spatial diversification of wind turbines," Energy Economics, Elsevier, vol. 40(C), pages 269-276.
    14. Henriot, Arthur & Glachant, Jean-Michel, 2013. "Melting-pots and salad bowls: The current debate on electricity market design for integration of intermittent RES," Utilities Policy, Elsevier, vol. 27(C), pages 57-64.
    15. Jonas Frank & Jana Lippelt & Johannes Pfeiffer, 2012. "Kurz zum Klima: Die Energiewende und das energiepolitische Zieldreieck – Teil 2: Wirtschaftlichkeit und Bezahlbarkeit der Energieversorgung," Ifo Schnelldienst, Ifo Institute for Economic Research at the University of Munich, vol. 65(23), pages 81-85, December.

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