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The influence of spatial effects on wind power revenues under direct marketing rules

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  • Grothe, Oliver
  • Müsgens, Felix
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    Abstract

    In many countries, investments in renewable technologies have been accelerated by fixed feed-in tariffs for electricity from renewable energy sources (RES). While fixed tariffs accomplish this purpose, they lack incentives to align the RES production with price signals. Today, the intermittency of most RES increases the volatility of electricity prices and makes balancing supply and demand more complicated. Therefore, support schemes for RES have to be modified. Recently, Germany launched a scheme which gives wind power operators the monthly choice to either receive a fixed tariff or to risk a – subsidized – access to the wholesale electricity market. This paper quantifies revenues of wind turbines under this new subsidy and analyzes whether, when and where producers may profit. We find that the position of the wind turbine within the country significantly influences revenues in terms of EUR/MWh. The results are important for wind farm operators deciding whether electricity should be sold in the fixed feed-in tariff or in the wholesale market. However, no location is persistently, i.e., in every calendar month of the year, above the average. This limits the effect of the new subsidy scheme on investment locations and long term improvements in the aggregated wind feed-in profile.

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    Bibliographic Info

    Article provided by Elsevier in its journal Energy Policy.

    Volume (Year): 58 (2013)
    Issue (Month): C ()
    Pages: 237-247

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    Handle: RePEc:eee:enepol:v:58:y:2013:i:c:p:237-247

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

    Related research

    Keywords: Wind power; Market premium model; Optimal areas of production;

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    1. Paul L. Joskow, 2011. "Comparing the Costs of Intermittent and Dispatchable Electricity Generating Technologies," EUI-RSCAS Working Papers 45, European University Institute (EUI), Robert Schuman Centre of Advanced Studies (RSCAS).
    2. Cansino, José M. & Pablo-Romero, María del P. & Román, Rocío & Yñiguez, Rocío, 2010. "Tax incentives to promote green electricity: An overview of EU-27 countries," Energy Policy, Elsevier, vol. 38(10), pages 6000-6008, October.
    3. Mulder, Arjen, 2008. "Do economic instruments matter? Wind turbine investments in the EU(15)," Energy Economics, Elsevier, vol. 30(6), pages 2980-2991, November.
    4. Lipp, Judith, 2007. "Lessons for effective renewable electricity policy from Denmark, Germany and the United Kingdom," Energy Policy, Elsevier, vol. 35(11), pages 5481-5495, November.
    5. Haas, Reinhard & Panzer, Christian & Resch, Gustav & Ragwitz, Mario & Reece, Gemma & Held, Anne, 2011. "A historical review of promotion strategies for electricity from renewable energy sources in EU countries," Renewable and Sustainable Energy Reviews, Elsevier, vol. 15(2), pages 1003-1034, February.
    6. Pierre Desrochers, 2008. "Did the Invisible Hand Need a Regulatory Glove to Develop a Green Thumb? Some Historical Perspective on Market Incentives, Win-Win Innovations and the Porter Hypothesis," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 41(4), pages 519-539, December.
    7. Katzenstein, Warren & Fertig, Emily & Apt, Jay, 2010. "The variability of interconnected wind plants," Energy Policy, Elsevier, vol. 38(8), pages 4400-4410, August.
    8. António Marques & José Fuinhas & José Manso, 2011. "A Quantile Approach to Identify Factors Promoting Renewable Energy in European Countries," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 49(3), pages 351-366, July.
    9. Janina Ketterer, 2012. "The Impact of Wind Power Generation on the Electricity Price in Germany," Ifo Working Paper Series Ifo Working Paper No. 143, Ifo Institute for Economic Research at the University of Munich.
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