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Renewable and non-renewable intermittent energy sources: friends and foes?

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  • Edmond Baranes
  • Julien Jacqmin
  • Jean-Christophe Poudou

Abstract

This paper studies the links between renewable and non-renewable intermittent energy sources in the production of electricity. More precisely, we argue that the relationship between the natural gas price and capacity investments in solar and wind power energy is far from univocal. We find that this relationship is not linear but is better represented by a bell-shaped curve. Hence, for relativelly low gas price, the two modes of production are substitutable. After a price threshhold is reached, the two are complementary. A theoretical model explains this as the trade-off resulting from two forces: the input price differential of these two modes of production and the risks related to the unpredictable nature of the intermittence of renewable energies. Using U.S. state level data from 1998 to 2012, we find that this relationship is robust to various empirical specifications.

Suggested Citation

  • Edmond Baranes & Julien Jacqmin & Jean-Christophe Poudou, 2014. "Renewable and non-renewable intermittent energy sources: friends and foes?," Working Papers 14-09, LAMETA, Universtiy of Montpellier, revised Oct 2014.
    • Handle: RePEc:lam:wpaper:14-09
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    File URL: http://www.lameta.univ-montp1.fr/Documents/DR2014-09.pdf
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    References listed on IDEAS

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    Cited by:

    1. Stefan Ambec & Claude Crampes, 2019. "Decarbonizing Electricity Generation with Intermittent Sources of Energy," Journal of the Association of Environmental and Resource Economists, University of Chicago Press, vol. 6(6), pages 1105-1134.

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