IDEAS home Printed from https://ideas.repec.org/a/eee/enepol/v38y2010i7p3135-3145.html
   My bibliography  Save this article

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

Author

Listed:
  • Hiroux, C.
  • Saguan, M.

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.

Suggested Citation

  • Hiroux, C. & Saguan, M., 2010. "Large-scale wind power in European electricity markets: Time for revisiting support schemes and market designs?," Energy Policy, Elsevier, vol. 38(7), pages 3135-3145, July.
    • Handle: RePEc:eee:enepol:v:38:y:2010:i:7:p:3135-3145
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0301-4215(09)00548-5
    Download Restriction: Full text for ScienceDirect subscribers only
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Butler, Lucy & Neuhoff, Karsten, 2008. "Comparison of feed-in tariff, quota and auction mechanisms to support wind power development," Renewable Energy, Elsevier, vol. 33(8), pages 1854-1867.
    2. Klessmann, Corinna & Nabe, Christian & Burges, Karsten, 2008. "Pros and cons of exposing renewables to electricity market risks--A comparison of the market integration approaches in Germany, Spain, and the UK," Energy Policy, Elsevier, vol. 36(10), pages 3646-3661, October.
    3. Dominique Finon & Yannick Perez, 2007. "Transactional Efficiency and Public Promotion of Environmental Technologies: The Case of Renewable Energies in the Electric Industry," Post-Print hal-01660443, HAL.
    4. Rious, Vincent & Glachant, Jean-Michel & Perez, Yannick & Dessante, Philippe, 2008. "The diversity of design of TSOs," Energy Policy, Elsevier, vol. 36(9), pages 3323-3332, September.
    5. Barth, Rüdiger & Weber, Christoph & Swider, Derk J., 2008. "Distribution of costs induced by the integration of RES-E power," Energy Policy, Elsevier, vol. 36(8), pages 3097-3105, August.
    6. Leuthold, Florian & Weigt, Hannes & von Hirschhausen, Christian, 2008. "Efficient pricing for European electricity networks - The theory of nodal pricing applied to feeding-in wind in Germany," Utilities Policy, Elsevier, vol. 16(4), pages 284-291, December.
    7. Ehrenmann, Andreas & Smeers, Yves, 2005. "Inefficiencies in European congestion management proposals," Utilities Policy, Elsevier, vol. 13(2), pages 135-152, June.
    8. 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.
    9. Matteo Di Castelnuovo & Matthew Leach & Peter Pearson, 2008. "An analysis of spatial pricing and renewable generation in the British electricity system," International Journal of Global Energy Issues, Inderscience Enterprises Ltd, vol. 29(1/2), pages 199-220.
    10. Swider, Derk J. & Beurskens, Luuk & Davidson, Sarah & Twidell, John & Pyrko, Jurek & Prüggler, Wolfgang & Auer, Hans & Vertin, Katarina & Skema, Romualdas, 2008. "Conditions and costs for renewables electricity grid connection: Examples in Europe," Renewable Energy, Elsevier, vol. 33(8), pages 1832-1842.
    11. Vandezande, Leen & Meeus, Leonardo & Belmans, Ronnie & Saguan, Marcelo & Glachant, Jean-Michel, 2010. "Well-functioning balancing markets: A prerequisite for wind power integration," Energy Policy, Elsevier, vol. 38(7), pages 3146-3154, July.
    12. 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.
    13. 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.
    14. Mitchell, C. & Bauknecht, D. & Connor, P.M., 2006. "Effectiveness through risk reduction: a comparison of the renewable obligation in England and Wales and the feed-in system in Germany," Energy Policy, Elsevier, vol. 34(3), pages 297-305, February.
    15. 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.
    16. Weigt, Hannes & Jeske, Till & Leuthold, Florian & von Hirschhausen, Christian, 2010. ""Take the long way down": Integration of large-scale North Sea wind using HVDC transmission," Energy Policy, Elsevier, vol. 38(7), pages 3164-3173, July.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. 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.
    2. Jean-Michel Glachant & Arthur Henriot, 2013. "Melting-pots and salad bowls: the current debate on electricity market design for RES integration," Working Papers EPRG 1329, Energy Policy Research Group, Cambridge Judge Business School, University of Cambridge.
    3. del Río, Pablo, 2011. "Analysing future trends of renewable electricity in the EU in a low-carbon context," Renewable and Sustainable Energy Reviews, Elsevier, vol. 15(5), pages 2520-2533, June.
    4. Chinmoy, Lakshmi & Iniyan, S. & Goic, Ranko, 2019. "Modeling wind power investments, policies and social benefits for deregulated electricity market – A review," Applied Energy, Elsevier, vol. 242(C), pages 364-377.
    5. Huang, Shih-Chieh & Lo, Shang-Lien & Lin, Yen-Ching, 2013. "Application of a fuzzy cognitive map based on a structural equation model for the identification of limitations to the development of wind power," Energy Policy, Elsevier, vol. 63(C), pages 851-861.
    6. Klessmann, Corinna & Held, Anne & Rathmann, Max & Ragwitz, Mario, 2011. "Status and perspectives of renewable energy policy and deployment in the European Union—What is needed to reach the 2020 targets?," Energy Policy, Elsevier, vol. 39(12), pages 7637-7657.
    7. Li, Jinke & Liu, Guy & Shao, Jing, 2020. "Understanding the ROC transfer payment in the renewable obligation with the recycling mechanism in the United Kingdom," Energy Economics, Elsevier, vol. 87(C).
    8. Jean-Michel Glachant, 2012. "Regulating Networks in the New Economy," Review of Economics and Institutions, Università di Perugia, vol. 3(1).
    9. Ross, S.J. & McHenry, M.P. & Whale, J., 2012. "The impact of state feed-in tariffs and federal tradable quota support policies on grid-connected small wind turbine installed capacity in Australia," Renewable Energy, Elsevier, vol. 46(C), pages 141-147.
    10. González, Javier Serrano & Lacal-Arántegui, Roberto, 2016. "A review of regulatory framework for wind energy in European Union countries: Current state and expected developments," Renewable and Sustainable Energy Reviews, Elsevier, vol. 56(C), pages 588-602.
    11. Schallenberg-Rodriguez, Julieta, 2014. "Renewable electricity support system: Design of a variable premium system based on the Spanish experience," Renewable Energy, Elsevier, vol. 68(C), pages 801-813.
    12. del Río, Pablo & Tarancón, Miguel-Ángel, 2012. "Analysing the determinants of on-shore wind capacity additions in the EU: An econometric study," Applied Energy, Elsevier, vol. 95(C), pages 12-21.
    13. Darudi, Ali & Weigt, Hannes, 2019. "Renewable Support, Intermittency and Market Power: An Equilibrium Investment Approach," Working papers 2019/06, Faculty of Business and Economics - University of Basel.
    14. Grimm, Veronika & Rückel, Bastian & Sölch, Christian & Zöttl, Gregor, 2021. "The impact of market design on transmission and generation investment in electricity markets," Energy Economics, Elsevier, vol. 93(C).
    15. Polzin, Friedemann & Egli, Florian & Steffen, Bjarne & Schmidt, Tobias S., 2019. "How do policies mobilize private finance for renewable energy?—A systematic review with an investor perspective," Applied Energy, Elsevier, vol. 236(C), pages 1249-1268.
    16. O’Keeffe, Aoife & Haggett, Claire, 2012. "An investigation into the potential barriers facing the development of offshore wind energy in Scotland: Case study – Firth of Forth offshore wind farm," Renewable and Sustainable Energy Reviews, Elsevier, vol. 16(6), pages 3711-3721.
    17. Mustafa G zen, 2014. "Renewable Energy Support Mechanism in Turkey: Financial Analysis and Recommendations to Policymakers," International Journal of Energy Economics and Policy, Econjournals, vol. 4(2), pages 274-287.
    18. Kitzing, Lena & Juul, Nina & Drud, Michael & Boomsma, Trine Krogh, 2017. "A real options approach to analyse wind energy investments under different support schemes," Applied Energy, Elsevier, vol. 188(C), pages 83-96.
    19. Schallenberg-Rodriguez, Julieta, 2017. "Renewable electricity support systems: Are feed-in systems taking the lead?," Renewable and Sustainable Energy Reviews, Elsevier, vol. 76(C), pages 1422-1439.
    20. Paul Koutstaal & X. van Tilburg & Michiel Bijlsma & Gijsbert Zwart, 2009. "Market performance and distributional effects on renewable energy markets," CPB Document 190, CPB Netherlands Bureau for Economic Policy Analysis.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:enepol:v:38:y:2010:i:7:p:3135-3145. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/enpol .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.