Efficient diffusion of renewable energies: a roller-coaster ride
When the supply of intermittent renewable energies like wind and solar is high, the electricity price is low. Conversely, prices are high when their supply is low. This reduces the pro t potential in renewable energies and, therefore, incentives to invest in renewable capacities. Nevertheless, we sh...
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| Main Authors: | , |
|---|---|
| Format: | Electronic eBook |
| Language: | English |
| Published: |
Oldenburg
University of Oldenburg, Department of Economics
April 2016
|
| Series: | Oldenburg discussion papers in economics
V-389-16 |
| Online Access: | Volltext |
| Summary: | When the supply of intermittent renewable energies like wind and solar is high, the electricity price is low. Conversely, prices are high when their supply is low. This reduces the pro t potential in renewable energies and, therefore, incentives to invest in renewable capacities. Nevertheless, we show that perfect competition and dynamic pricing lead to efficient choices of renewable and fossil capacities, provided that external costs of fossils are internalized by an appropriate tax. We also investigate some properties of electricity markets with intermittent renewables and examine the market diffusion of renewables as their capacity costs fall. We show that the intermittency of renewables causes an S-shaped diffusion pattern, implying that a rapid build-up of capacities is followed by a stage of substantially slower development. While this pattern is well known from the innovation literature, the mechanism is new. Moreover, the S-shaped pattern is followed by another acceleration phase towards the end of the diffusion process. We also find that technology improvements such as better storage capabilities have substantial effects not only on the speed of market penetration, but also on its pattern. Finally, fluctuations of energy prices rise with the share of renewables. If regulators respond with a price cap, this leads to a faster market diffusion of renewables. |
| Physical Description: | 1 Online-Ressource (30 Seiten) Diagramme |
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| spelling | Helm, Carsten 1966- Verfasser (DE-588)171367510 aut Efficient diffusion of renewable energies a roller-coaster ride Carsten Helm, Mathias Mier Oldenburg University of Oldenburg, Department of Economics April 2016 1 Online-Ressource (30 Seiten) Diagramme txt rdacontent c rdamedia cr rdacarrier Oldenburg discussion papers in economics V-389-16 When the supply of intermittent renewable energies like wind and solar is high, the electricity price is low. Conversely, prices are high when their supply is low. This reduces the pro t potential in renewable energies and, therefore, incentives to invest in renewable capacities. Nevertheless, we show that perfect competition and dynamic pricing lead to efficient choices of renewable and fossil capacities, provided that external costs of fossils are internalized by an appropriate tax. We also investigate some properties of electricity markets with intermittent renewables and examine the market diffusion of renewables as their capacity costs fall. We show that the intermittency of renewables causes an S-shaped diffusion pattern, implying that a rapid build-up of capacities is followed by a stage of substantially slower development. While this pattern is well known from the innovation literature, the mechanism is new. Moreover, the S-shaped pattern is followed by another acceleration phase towards the end of the diffusion process. We also find that technology improvements such as better storage capabilities have substantial effects not only on the speed of market penetration, but also on its pattern. Finally, fluctuations of energy prices rise with the share of renewables. If regulators respond with a price cap, this leads to a faster market diffusion of renewables. Mier, Mathias Verfasser aut Oldenburg discussion papers in economics V-389-16 (DE-604)BV039810434 389 http://www.uni-oldenburg.de/fileadmin/user_upload/wire/fachgebiete/vwl/V-389-16.pdf Verlag kostenfrei Volltext |
| spellingShingle | Helm, Carsten 1966- Mier, Mathias Efficient diffusion of renewable energies a roller-coaster ride Oldenburg discussion papers in economics |
| title | Efficient diffusion of renewable energies a roller-coaster ride |
| title_auth | Efficient diffusion of renewable energies a roller-coaster ride |
| title_exact_search | Efficient diffusion of renewable energies a roller-coaster ride |
| title_full | Efficient diffusion of renewable energies a roller-coaster ride Carsten Helm, Mathias Mier |
| title_fullStr | Efficient diffusion of renewable energies a roller-coaster ride Carsten Helm, Mathias Mier |
| title_full_unstemmed | Efficient diffusion of renewable energies a roller-coaster ride Carsten Helm, Mathias Mier |
| title_short | Efficient diffusion of renewable energies |
| title_sort | efficient diffusion of renewable energies a roller coaster ride |
| title_sub | a roller-coaster ride |
| url | http://www.uni-oldenburg.de/fileadmin/user_upload/wire/fachgebiete/vwl/V-389-16.pdf |
| volume_link | (DE-604)BV039810434 |
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