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A mean field model for the development of renewable capacities

Author

Listed:
  • Clémence Alasseur

    (Laboratoire de Finance des Marchés de l’énergie)

  • Matteo Basei

    (Laboratoire de Finance des Marchés de l’énergie)

  • Charles Bertucci

    (UMR7641 École Polytechnique)

  • Alekos Cecchin

    (Università di Padova)

Abstract

We propose a model based on a large number of small competitive producers of renewable energies, to study the effect of subsidies on the aggregate level of capacity, taking into account a cannibalization effect. We first derive a model to explain how long-time equilibrium can be reached on the market of production of renewable electricity and compare this equilibrium to the case of monopoly. Then we consider the case in which other capacities of production adjust to the production of renewable energies. The analysis is based on a master equation and we get explicit formulae for the long-time equilibria. We also provide new numerical methods to simulate the master equation and the evolution of the capacities. Thus we find the optimal subsidies to be given by a central planner to the installation and the production in order to reach a desired equilibrium capacity.

Suggested Citation

  • Clémence Alasseur & Matteo Basei & Charles Bertucci & Alekos Cecchin, 2023. "A mean field model for the development of renewable capacities," Mathematics and Financial Economics, Springer, volume 17, number 5, June.
    • Handle: RePEc:spr:mathfi:v:17:y:2023:i:4:d:10.1007_s11579-023-00348-6
    DOI: 10.1007/s11579-023-00348-6
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    More about this item

    Keywords

    Energy transition; Mean field equilibrium; Master equation; Optimal incentives;
    All these keywords.

    JEL classification:

    • G38 - Financial Economics - - Corporate Finance and Governance - - - Government Policy and Regulation
    • Q48 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Government Policy

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