Analysing the determinants of on-shore wind capacity additions in the EU: An econometric study

Rı́o, Pablo del; Tarancón, Miguel-Ángel

doi:10.1016/j.apenergy.2012.01.043

Cited by 34 publications

(24 citation statements)

References 36 publications

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“…However, their success (or the lack thereof) is far from sure. Del Río and Tarancón [7] provide evidence of two major sources of risk to large investors, namely: constantly changing RES-e support schemes and the design details of the instrument. EU Member States have experienced both types of changes in the 2000s.…”

Section: Discussionmentioning

confidence: 99%

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Valuation of Wind Energy Projects: A Real Options Approach

Abadie

Gómez

2014

Energies

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Abstract:We address the valuation of an operating wind farm and the finite-lived option to invest in it under different reward/support schemes: a constant feed-in tariff, a premium on top of the electricity market price (either a fixed premium or a variable subsidy such as a renewable obligation certificate or ROC), and a transitory subsidy, among others. Futures contracts on electricity with ever longer maturities enable market-based valuations to be undertaken. The model considers up to three sources of uncertainty: the electricity price, the level of wind generation, and the certificate (ROC) price where appropriate. When analytical solutions are lacking, we resort to a trinomial lattice combined with Monte Carlo simulation; we also use a two-dimensional binomial lattice when uncertainty in the ROC price is considered. Our data set refers to the UK. The numerical results show the impact of several factors involved in the decision to invest: the subsidy per MWh generated, the initial lump-sum subsidy, the maturity of the investment option, and electricity price volatility. Different combinations of variables can help bring forward investments in wind generation. One-off policies, e.g., a transitory initial subsidy, seem to have a stronger effect than a fixed premium per MWh produced.

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Section: Discussionmentioning

confidence: 99%

“…Del Río and Tarancón [7] identify up to seven categories of barriers/drivers affecting capacity additions in RES-e. Regarding the support schemes, "the literature has argued, especially in recent times, that a key driver of RES-e investments is keeping investors' risks within reasonable limits".…”

Section: Introductionmentioning

confidence: 99%

Valuation of Wind Energy Projects: A Real Options Approach

Abadie

Gómez

2014

Energies

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“…China has provided an almost unique experiment, which simultaneously combines these policy interventions to ensure rapid wind energy deployment at the technology diffusion stage -gradual adoption of a new technology by an economy, which then decides how intensively to use the technology (Schumpeter, 1934). Existing econometric studies focused exclusively on a few developed countries suggest that reduction in investment costs has been the most important determinant of increased diffusion of wind power in European countries (Del Rio & Tarancon, 2012;Soderholm & Klaassen, 2007). However, China's leapfrog in wind energy occurred when relatively mature wind technology had already been widely used in developed countries, and the marginal cost reduction of technology deployment was significantly decreasing (Qiu & Anadon, 2011).…”

Section: Introductionmentioning

confidence: 99%

CDM and national policy: Synergy or conflict? Evidence from the wind power sector in China

Liu

2014

Climate Policy

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This study assesses the effectiveness of a mix of policy instruments including the Clean Development Mechanism (CDM) and the Feed-in Tariff (FIT) to induce wind technology diffusion in China. Relying on a panel dataset consisting of information from 1207 CDM wind projects in thirty provinces over the period 2004-2011, the empirical analysis indicates that: first, wind energy deployment responds primarily to those counterfactual emissions which would have occurred in the absence of the wind projects; second, the dynamic efficiency of the FIT subsidy shows a potential incompatibility with the CDM incentive; third, the leverage of the CDM on wind investment is supported by the industry and technology policy package, which explains in large part the decrease in the FIT subsidy. Given these findings, suggestions are made regarding the design of a future carbon offset scheme and its link with mitigation action in developing countries. Policy relevanceThis article is a further step towards an explicit study of the effectiveness of integrating climate and energy policy interventions in the developing world. Provided that the developing country enables an investment readiness environment, the leverage of climate finance on low carbon investments could be important. Policy makers need to understand how this induced technological change evolves across countries and its role in affecting emissions distribution in the world. There is also a need to design a mechanism that accounts for this accelerated technological change by internalizing these rents in the future emissions targets. In order to harmonize multiple policy instruments and avoid the perverse incentive of the offset scheme, a future international cooperation regime must set up consistency between climate finance and technology diffusion.

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“…A few studies have also used econometric methods (see Section 2 for further details). These last papers suggest that more in addition to the level of support for RES, factors such as energy security, removing administrative barriers, regulatory stability and lower risks, spur renewable energy deployment [10][11][12]. Reducing carbon emissions appears to be a driver of RES investments [11,[13][14][15] Also, the level and trends of the price of fossil fuels influence renewable energy development [15,16].…”

Section: Introductionmentioning

confidence: 99%

Identifying the Drivers of Wind Capacity Additions: The Case of Spain. A Multiequational Approach

et al. 2019

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An abundant volume of literature has been devoted to the analysis of the drivers of renewable electricity capacity additions in general and wind energy in particular. Nevertheless, whereas the direct influence of several explanatory variables has been considered, indirect effects, which refer to impacts of explanatory variables on another explanatory variable which, in turn, influence capacity additions, have been neglected. However, those effects need to be taken into account in order to properly grasp the full influence of the explanatory variables in general, and the policy variable in particular, on capacity additions (whether in wind energy generation or other energy systems). The aim of this paper is to identify the drivers of wind energy capacity additions. Based on data over the 1998–2015 period for Spain, a country with a substantial deployed wind capacity, we estimate a three-stage least squares multiecuational econometric model, which allows the analysis of direct and indirect effects as mediated by their influence on intermediate variables. Our results show that, as expected, wind capacity additions are positively and significantly driven by renewable energy support and negatively driven by the material costs of wind energy. Other variables are related to capacity additions in an indirect manner, i.e., through their influence on intermediate variables, i.e., electricity demand and electricity prices. This includes the positive impact of GDP, wind share, capacity load and price of oil. Others have a negative impact (tax share in the electricity price and electricity transport costs). Finally, no statistically significant relationship can be observed for the risk premium, interest rates and the price of gas. Our findings suggest that the success of renewable energy policy instruments might be contingent upon the level of other variables and, particularly, electricity consumption.

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Analysing the determinants of on-shore wind capacity additions in the EU: An econometric study

Cited by 34 publications

References 36 publications

Valuation of Wind Energy Projects: A Real Options Approach

Valuation of Wind Energy Projects: A Real Options Approach

CDM and national policy: Synergy or conflict? Evidence from the wind power sector in China

Identifying the Drivers of Wind Capacity Additions: The Case of Spain. A Multiequational Approach

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