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Gone with the wind: an empirical analysis of the renewable energy rent transfer

Author

Listed:
  • Matti Liski

    (economics department of the Aalto University)

  • Iivo Vehviläinen

    (Gaia Group and Aalto University.)

Abstract

Subsidies to renewable energy are costly and contentious. We estimate the reduction in prices that follows from the subsidized entry of wind power in the Nordic electricity market. A relatively small-scale entry of renewables leads to a large-scale transfer of surplus from the incumbent producers to the consumers: 10 % market share for wind generation eliminates one-half of the total electricity market expenditures. The subsidies generate net gains to consumers. We develop an approach to analyzing storage and renewable energy in equilibrium, and provide an anatomy of a market dominated by such technologies.
(This abstract was borrowed from another version of this item.)

Suggested Citation

  • Matti Liski & Iivo Vehviläinen, 2017. "Gone with the wind: an empirical analysis of the renewable energy rent transfer," Working Papers EPRG 1701, Energy Policy Research Group, Cambridge Judge Business School, University of Cambridge.
    • Handle: RePEc:enp:wpaper:eprg1701
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    Citations

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    Cited by:

    1. Carsten Helm & Mathias Mier, 2018. "Subsidising Renewables but Taxing Storage? Second-Best Policies with Imperfect Pricing," Working Papers V-413-18, University of Oldenburg, Department of Economics, revised Oct 2018.
    2. Doda, Baran & Fankhauser, Sam, 2020. "Climate policy and power producers: The distribution of pain and gain," Energy Policy, Elsevier, vol. 138(C).
    3. Darudi, Ali & Weigt, Hannes, 2019. "Renewable Support, Intermittency and Market Power: An Equilibrium Investment Approach," Working papers 2019/06, Faculty of Business and Economics - University of Basel.
    4. Mar Reguant, 2018. "The Efficiency and Sectoral Distributional Implications of Large-Scale Renewable Policies," NBER Working Papers 24398, National Bureau of Economic Research, Inc.
    5. Baran Doda, Sam Fankhauser, 2017. "Energy policy and the power sector in the long run," GRI Working Papers 276, Grantham Research Institute on Climate Change and the Environment.
    6. Abrell, Jan & Kosch, Mirjam & Rausch, Sebastian, 2019. "Carbon abatement with renewables: Evaluating wind and solar subsidies in Germany and Spain," Journal of Public Economics, Elsevier, vol. 169(C), pages 172-202.
    7. Helm, Carsten & Mier, Mathias, 2019. "On the efficient market diffusion of intermittent renewable energies," Energy Economics, Elsevier, vol. 80(C), pages 812-830.
    8. Ritz, Robert A., 2016. "How does renewables competition affect forward contracting in electricity markets?," Economics Letters, Elsevier, vol. 146(C), pages 135-139.
    9. Fabra, Natalia & , Imelda, 2020. "Market Power and Price Exposure: Learning from Changes in Renewables' Regulation," CEPR Discussion Papers 14729, C.E.P.R. Discussion Papers.

    More about this item

    Keywords

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    JEL classification:

    • L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation
    • L94 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Electric Utilities
    • Q28 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Government Policy
    • Q42 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Alternative Energy Sources
    • Q48 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Government Policy

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