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Can the Current State Support Mechanisms Help the Growth of Renewable Energies in Wind Markets?

Author

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  • Donato Morea

    (Department of Mechanical, Chemical and Materials Engineering, University of Cagliari, Via Marengo, 2, 09123 Cagliari, Italy)

  • Lucilla Bittucci

    (Department of Management, Sapienza University, Via del Castro Laurenziano, 9, 00161 Rome, Italy)

  • Arturo Cafaro

    (Department of Management, Sapienza University, Via del Castro Laurenziano, 9, 00161 Rome, Italy)

  • Fabiomassimo Mango

    (Department of Management, Sapienza University, Via del Castro Laurenziano, 9, 00161 Rome, Italy)

  • Pina Murè

    (Department of Management, Sapienza University, Via del Castro Laurenziano, 9, 00161 Rome, Italy)

Abstract

The aim of this paper is to provide evidence on the effectiveness of the current state support mechanism incentive adopted by the Italian government in the wind market. In particular, this paper intends to investigate the effectiveness of the auction mechanism as an incentive tool for renewable sources as required by the transposition of Directive 2009/28/EC. In order to demonstrate the economic and financial feasibility of a typical wind-sector investment, we performed a scenario analysis (Monte Carlo simulation) determining a 52,500 Net Present Value (NPV) by varying the key underlying variables of the investment. The results show that with the mechanism currently in place the percentage of positive leveraged NPV is approximately equal to 70%. Despite the state contribution provided through the “Feed-in tariff” mechanism, the profitability of wind projects is not always successful, and this problem could be amplified by the slowness of the authorization procedures. The article offers prime reflections for scholars and policy makers who have long been committed to promoting sustainable development and important considerations on the introduction of further incentive models.

Suggested Citation

  • Donato Morea & Lucilla Bittucci & Arturo Cafaro & Fabiomassimo Mango & Pina Murè, 2021. "Can the Current State Support Mechanisms Help the Growth of Renewable Energies in Wind Markets?," Sustainability, MDPI, vol. 13(21), pages 1-17, November.
    • Handle: RePEc:gam:jsusta:v:13:y:2021:i:21:p:12094-:d:670474
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