IDEAS home Printed from https://ideas.repec.org/a/eee/rensus/v45y2015icp263-277.html
   My bibliography  Save this article

The legal and economic impacts of implementing a joint feed-in premium support scheme on the development of an offshore grid

Author

Listed:
  • Shariat Torbaghan, Shahab
  • Müller, Hannah K.
  • Gibescu, Madeleine
  • van der Meijden, Mart
  • Roggenkamp, Martha

Abstract

Offshore wind projects require large investments. Therefore, they currently need governmental support to become competitive and economically attractive for investors. There is a general consensus that a feed-in premium scheme would be most adequate to support offshore wind generation in the North Sea. With increasing distance from shore, scarcity of adequate cable routes, and an increasing need to reduce cost, cross-border projects between two or more North Sea states come into discussion. After discussing different support schemes, we argue that existing nationally oriented instruments have to be amended to become applicable to cross-border projects envisioned in the North Sea. In order to support our arguments quantitatively, we introduce a novel optimization framework that is able to account for the impact of implementing different types of feed-in premium based wind supporting schemes (generation-based and capacity-based) on the development of the offshore grid in the North Sea region. For a given level of support for wind development, an optimal plan includes the grid and offshore wind capacities. The transmission capacities are set in such a way that the congestion revenue collected throughout the life time of the project pays off the investment cost of building the grid. At the same time, the remuneration of the offshore wind farms pays off the unsubsidized initial investment cost of building the wind farms, provided that the premium level is selected adequately. Numerical simulation results are interpreted in economic terms and appraise the quality and effectiveness of the proposed approach. The paper will end with an outlook of how such a joint support scheme might be implemented.

Suggested Citation

  • Shariat Torbaghan, Shahab & Müller, Hannah K. & Gibescu, Madeleine & van der Meijden, Mart & Roggenkamp, Martha, 2015. "The legal and economic impacts of implementing a joint feed-in premium support scheme on the development of an offshore grid," Renewable and Sustainable Energy Reviews, Elsevier, vol. 45(C), pages 263-277.
    • Handle: RePEc:eee:rensus:v:45:y:2015:i:c:p:263-277
    DOI: 10.1016/j.rser.2015.01.058
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S1364032115000684
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.rser.2015.01.058?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    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. Haas, Reinhard & Resch, Gustav & Panzer, Christian & Busch, Sebastian & Ragwitz, Mario & Held, Anne, 2011. "Efficiency and effectiveness of promotion systems for electricity generation from renewable energy sources – Lessons from EU countries," Energy, Elsevier, vol. 36(4), pages 2186-2193.
    2. Rabl, Ari & Rabl, Veronika A., 2013. "External costs of nuclear: Greater or less than the alternatives?," Energy Policy, Elsevier, vol. 57(C), pages 575-584.
    3. David M. Newbery, 2012. "Reforming Competitive Electricity Markets to Meet Environmental Targets," Economics of Energy & Environmental Policy, International Association for Energy Economics, vol. 0(Number 1).
    4. Klessmann, Corinna & Lamers, Patrick & Ragwitz, Mario & Resch, Gustav, 2010. "Design options for cooperation mechanisms under the new European renewable energy directive," Energy Policy, Elsevier, vol. 38(8), pages 4679-4691, August.
    5. Madariaga, A. & de Alegría, I. Martínez & Martín, J.L. & Eguía, P. & Ceballos, S., 2012. "Current facts about offshore wind farms," Renewable and Sustainable Energy Reviews, Elsevier, vol. 16(5), pages 3105-3116.
    6. Mark Andor & Kai Flinkerbusch & Achim Voß, "undated". "Quantities vs. Capacities: Minimizing the Social Cost of Renewable Energy Promotion," Working Papers 201284, Institute of Spatial and Housing Economics, Munster Universitary.
    7. Blanco, María Isabel, 2009. "The economics of wind energy," Renewable and Sustainable Energy Reviews, Elsevier, vol. 13(6-7), pages 1372-1382, August.
    8. Fouquet, Dörte, 2013. "Policy instruments for renewable energy – From a European perspective," Renewable Energy, Elsevier, vol. 49(C), pages 15-18.
    9. De Decker, Jan & Woyte, Achim, 2013. "Review of the various proposals for the European offshore grid," Renewable Energy, Elsevier, vol. 49(C), pages 58-62.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Gorenstein Dedecca, João & Hakvoort, Rudi A., 2016. "A review of the North Seas offshore grid modeling: Current and future research," Renewable and Sustainable Energy Reviews, Elsevier, vol. 60(C), pages 129-143.
    2. Santiago Salvador & Xurxo Costoya & Francisco Javier Sanz-Larruga & Luis Gimeno, 2018. "Development of Offshore Wind Power: Contrasting Optimal Wind Sites with Legal Restrictions in Galicia, Spain," Energies, MDPI, vol. 11(4), pages 1-25, March.
    3. Hualin Cai & Jiageng Chen & Chenjing Dong & Jing Li & Zhemin Lin & Chuan He & Yicheng Jiang & Jincheng Li & Li Yang, 2019. "Power Market Equilibrium under the Joint FIP-RPS Renewable Energy Incentive Mechanism in China," Sustainability, MDPI, vol. 11(18), pages 1-19, September.
    4. Croonenbroeck, Carsten & Hennecke, David, 2020. "Does the German renewable energy act provide a fair incentive system for onshore wind power? — A simulation analysis," Energy Policy, Elsevier, vol. 144(C).

    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. Satir, Mert & Murphy, Fionnuala & McDonnell, Kevin, 2018. "Feasibility study of an offshore wind farm in the Aegean Sea, Turkey," Renewable and Sustainable Energy Reviews, Elsevier, vol. 81(P2), pages 2552-2562.
    2. Mignon, Ingrid & Bergek, Anna, 2016. "Investments in renewable electricity production: The importance of policy revisited," Renewable Energy, Elsevier, vol. 88(C), pages 307-316.
    3. Bigerna, Simona & Bollino, Carlo Andrea & Micheli, Silvia, 2016. "Renewable energy scenarios for costs reductions in the European Union," Renewable Energy, Elsevier, vol. 96(PA), pages 80-90.
    4. Salo, Olli & Syri, Sanna, 2014. "What economic support is needed for Arctic offshore wind power?," Renewable and Sustainable Energy Reviews, Elsevier, vol. 31(C), pages 343-352.
    5. Ruddy, Jonathan & Meere, Ronan & O’Donnell, Terence, 2016. "Low Frequency AC transmission for offshore wind power: A review," Renewable and Sustainable Energy Reviews, Elsevier, vol. 56(C), pages 75-86.
    6. Schallenberg-Rodríguez, Julieta & García Montesdeoca, Nuria, 2018. "Spatial planning to estimate the offshore wind energy potential in coastal regions and islands. Practical case: The Canary Islands," Energy, Elsevier, vol. 143(C), pages 91-103.
    7. Rodrigues, S. & Restrepo, C. & Kontos, E. & Teixeira Pinto, R. & Bauer, P., 2015. "Trends of offshore wind projects," Renewable and Sustainable Energy Reviews, Elsevier, vol. 49(C), pages 1114-1135.
    8. Brzezińska-Rawa, Anna & Goździewicz-Biechońska, Justyna, 2014. "Recent developments in the wind energy sector in Poland," Renewable and Sustainable Energy Reviews, Elsevier, vol. 38(C), pages 79-87.
    9. Donato Morea & Luigi Antonio Poggi, 2017. "An Innovative Model for the Sustainability of Investments in the Wind Energy Sector: The Use of Green Sukuk in an Italian Case Study," International Journal of Energy Economics and Policy, Econjournals, vol. 7(2), pages 53-60.
    10. Paul Lehmann & Felix Creutzig & Melf-Hinrich Ehlers & Nele Friedrichsen & Clemens Heuson & Lion Hirth & Robert Pietzcker, 2012. "Carbon Lock-Out: Advancing Renewable Energy Policy in Europe," Energies, MDPI, vol. 5(2), pages 1-32, February.
    11. Hung-Ta Wen & Jau-Huai Lu & Mai-Xuan Phuc, 2021. "Applying Artificial Intelligence to Predict the Composition of Syngas Using Rice Husks: A Comparison of Artificial Neural Networks and Gradient Boosting Regression," Energies, MDPI, vol. 14(10), pages 1-18, May.
    12. Seel, Joachim & Barbose, Galen L. & Wiser, Ryan H., 2014. "An analysis of residential PV system price differences between the United States and Germany," Energy Policy, Elsevier, vol. 69(C), pages 216-226.
    13. Kolb, Sebastian & Plankenbühler, Thomas & Frank, Jonas & Dettelbacher, Johannes & Ludwig, Ralf & Karl, Jürgen & Dillig, Marius, 2021. "Scenarios for the integration of renewable gases into the German natural gas market – A simulation-based optimisation approach," Renewable and Sustainable Energy Reviews, Elsevier, vol. 139(C).
    14. Connor, Peter M. & Xie, Lei & Lowes, Richard & Britton, Jessica & Richardson, Thomas, 2015. "The development of renewable heating policy in the United Kingdom," Renewable Energy, Elsevier, vol. 75(C), pages 733-744.
    15. Jin, Xin & Zhang, Zhaolong & Shi, Xiaoqiang & Ju, Wenbin, 2014. "A review on wind power industry and corresponding insurance market in China: Current status and challenges," Renewable and Sustainable Energy Reviews, Elsevier, vol. 38(C), pages 1069-1082.
    16. Abolhosseini, Shahrouz & Heshmati, Almas & Altmann, Jörn, 2014. "A Review of Renewable Energy Supply and Energy Efficiency Technologies," IZA Discussion Papers 8145, Institute of Labor Economics (IZA).
    17. Haan, Peter & Simmler, Martin, 2018. "Wind electricity subsidies — A windfall for landowners? Evidence from a feed-in tariff in Germany," Journal of Public Economics, Elsevier, vol. 159(C), pages 16-32.
    18. Foxon, Timothy J., 2013. "Transition pathways for a UK low carbon electricity future," Energy Policy, Elsevier, vol. 52(C), pages 10-24.
    19. Raphael Calel & Jonathan Colmer & Antoine Dechezleprêtre & Matthieu Glachant, 2021. "Do carbon offsets offset carbon?," CEP Discussion Papers dp1808, Centre for Economic Performance, LSE.
    20. Backhaus, Klaus & Gausling, Philipp & Hildebrand, Luise, 2015. "Comparing the incomparable: Lessons to be learned from models evaluating the feasibility of Desertec," Energy, Elsevier, vol. 82(C), pages 905-913.

    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:rensus:v:45:y:2015:i:c:p:263-277. 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/wps/find/journaldescription.cws_home/600126/description#description .

    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.