Work

Renewable Energy Investments, Support Schemes and the Dirty Option

Year: 2024

Type: article

Abstract: ABSTRACT In a real options framework, we analyze the behavior of a large energy producer who can invest in a portfolio of Renewable Energy Source (RES) and dirty energy source. Competitive fuel prices challenge the investments in RES. Given a budget constraint, the agent allocates the optimal capacities of both energy instalments and selects the optimal investment time. We use the model to compare the effectiveness of classical support schemes such as Feed‐in Tariffs or Green Certificate with respect to forms of taxation of dirty technology such as Carbon Taxes or Carbon Permits. This paper proposes a conceptual framework and qualitative analysis to understand which support system enhances the attractiveness of renewable energy investments.

Source: Applied Stochastic Models in Business and Industry

DOI: 10.1002/asmb.2901

Authors: Domenico De Giovanni, Elena Iakimova

Institution: University of Calabria

Language: English

Topic: Capital Investment and Risk Analysis

Subfield: Finance

Field: Economics, Econometrics and Finance

Domain: Social Sciences

SDGs: Affordable and clean energy, Climate action

Open Access status: hybrid

Estimated APC paid: $3,620