A Note on the Inefficiency of Technology- and Region-Specific Renewable Energy Support: The German Case

Abstract

Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Terms of use: Documents in AbstractRenewable energy (RES-E) support schemes have to meet two requirements in order to lead to a costefficient renewable energy mix. First, RES-E support schemes need to expose RES-E producers to the price signal of the wholesale market, which incentivizes investors to account not only for the marginal costs per kWh (M C) but also for the marginal value per kWh (M V el ) of renewable energy technologies. Second, RES-E support schemes need to be technology-and region-neutral in their design (rather than technologyand region-specific). That is, the financial support may not be bound to a specific technology or a specific region. In Germany, however, wind and solar power generation is currently incentivized via technology-and region-specific feed-in tariffs (FIT), which are coupled with capacity support limits. As such, the current RES-E support scheme in Germany fails to expose wind and solar power producers to the price signal of the wholesale market. Moreover, it is technology-and region-specific in its design, i.e., the support level for each kWh differs between wind and solar power technologies and the location of their deployment (at least for onshore wind power). As a consequence, excess costs occur which are burdened by society. This paper illustrates the economic consequences associated with Germany's technology-and region-specific renewable energy support by applying a linear electricity system optimization model. Overall, excess costs are found to amount to more than 6.6 Bn e 2010 . These are driven by comparatively high net marginal costs of offshore wind and solar power in comparison to onshore wind power in Germany up to 2020.

An Illustrative Note on the System Price Effect of Wind and Solar Power: The German Case

“…On the other hand, exposing fluctuating renewables to the market price signal at least induces wind and solar power generators to voluntarily curtail their power generation in response to negative prices (e.g., Hiroux and Saguan (2010), Klessmann et al (2008)) and to align their maintenance planning to hours in which their power generation is less valuable for the system (e.g., Gawel and Purkus (2013), Hiroux and Saguan (2010)). Most importantly, however, exposing wind and solar power to the market price signal allows for cost-efficient investment decisions, as it incentivices investors to account for the marginal value (M V el ) of renewable energy technologies (see also Jägemann (2014)). …”

Risk assessment of energy investment in the industrial framework – Uncertainty and Sensitivity Analysis for energy design and operation optimisation

“…These values correspond to the year 2020 and are likely to decrease in upcoming years due to the growing practice and the economy of scale that the PV sector is experiencing. For this reason, PDFs are created for each year along the lifetime of the equipment, adjusting the initial distribution to the expected tendency exposed in studies [46][47][48], and decreasing the costs up to 30%. Electrochemical ESSs are also undergoing technological developments that will decrease their economic costs.…”

‘Sticky’ Policies—Three Country Cases on Long-Term Commitment and Rooting of RE Policy Goals

“…Thus, there have been growing calls for technology neutral policies, which have been determined more cost-efficient in the short run [40]. Solar power can no longer be considered a niche technology in Germany and the share of the intermittent renewable electricity capacity is growing.…”