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

  • Hiroux, C.
  • Saguan, M.
Registered author(s):

    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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    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
    Contact details of provider: Web page: http://www.elsevier.com/locate/enpol

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    1. 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.
    2. 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.
    3. 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.
    4. 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.
    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. 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. 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.
    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. 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.
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