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

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  • Grothe, Oliver

    ()
    (Energiewirtschaftliches Institut an der Universitaet zu Koeln)

  • Müsgens, Felix

    ()
    (Energiewirtschaftliches Institut an der Universitaet zu Koeln)

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    Abstract

    In many countries worldwide, investment in renewable technologies has been accelerated by the introduction of 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, due to a growing proportion of renewable electricity, the intermittency of most RES increases the volatility of electricity prices and might even prevent market clearing. Therefore, support schemes for RES have to be modified. Recently, Germany launched a market premium model which gives wind power operators the monthly choice to either receive a fixed feed-in tariff or to risk a - subsided - access to the wholesale electricity market. This paper quantifies the revenues of wind turbines under this new model and, in particular, analyzes whether, when and where producers may profit. We find that the position of the wind turbine within the country significantly influences revenues. The results are of interest and importance for wind farm operators deciding whether electricity should be sold in the fixed tariff or in the wholesale market.

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    Bibliographic Info

    Paper provided by Energiewirtschaftliches Institut an der Universitaet zu Koeln in its series EWI Working Papers with number 2012-7.

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    Length: 33 pages
    Date of creation: 09 Mar 2012
    Date of revision:
    Handle: RePEc:ris:ewikln:2012_007

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    Keywords: Wind Power; Market Premium Model; Optimal Areas of Production;

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    1. 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.
    2. Paul L. Joskow, 2010. "Comparing the Costs of Intermittent and Dispatchable Electricity Generating Technologies," Working Papers 1013, Massachusetts Institute of Technology, Center for Energy and Environmental Policy Research.
    3. Katzenstein, Warren & Fertig, Emily & Apt, Jay, 2010. "The variability of interconnected wind plants," Energy Policy, Elsevier, vol. 38(8), pages 4400-4410, August.
    4. 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.
    5. Mulder, Arjen, 2008. "Do economic instruments matter? Wind turbine investments in the EU(15)," Energy Economics, Elsevier, vol. 30(6), pages 2980-2991, November.
    6. Grothe, Oliver & Schnieders, Julius, 2011. "Spatial dependence in wind and optimal wind power allocation: A copula-based analysis," Energy Policy, Elsevier, vol. 39(9), pages 4742-4754, September.
    7. 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.
    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.
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