Year: 2015
Type: preprint
Abstract: In many countries, entry of renewable electricity producers has been supported by subsidies and financed by a tax on electricity consumed. This article is the first to analytically derive the dynamics of the generation mix, subsidy, and tax as renewable capacity increases. This enables us to complement and extend previous work by providing analytical expressions for previously obtained simulation results, and deriving additional results. The analysis yields three main findings. First, the subsidy to renewable may never stop, as the value of the energy produced may decrease faster than the cost as renewable capacity increases. Second, high renewable penetration leads to a discontinuity in marginal values, after which the subsidy and tax grow extremely rapidly. Finally, reducing the occurrence of negative prices, for example by providing renewable producers with financial instead of physical dispatch insurance, yields significant benefits.
Authors: Richard Green, Thomas‐Olivier Léautier
Institutions: Imperial College London, Toulouse School of Economics
Language: English
Subfield: Electrical and Electronic Engineering
Field: Engineering
Domain: Physical Sciences
Open Access status: green
OpenAlex ID: W2264130240