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The Impact of Wind Power Support Schemes on Technology Choices

Aufsätze referiert extern - Web of Science

Nils May

In: Energy Economics 65 (2017), S. 343-354


In energy systems with large shares of variable renewable energies, electricity generation is lower during unfavorable weather conditions. System-friendly wind turbines (SFTs) rectify this by producing a larger share of their electricity at low wind speeds. This paper analyzes to what extent SFTs' benefits out-weigh their additional costs and how to incentivize investments into them. Using a wind power investment model for Germany, I show that SFTs indeed deliver benefits for the energy system that over-compensate for their cost premium. Floating market premium schemes incentivize their deployment only where investors bear significant price risks and possess sufficient foresight. Alternatively, a new production value-based benchmark triggers investors to install SFTs that meet the requirements of power systems with increasing shares of variable renewable energies.

Nils May

Research Associate in the Climate Policy Department

JEL-Classification: Q42;Q55;O38
Keywords: Renewable energy, Wind power technology, Feed-in tariff, Project finance, Market premium, Policy evaluation, Market value