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An assessment of the optimal timing and size of investments in concentrated solar power

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  • Massetti, Emanuele
  • Ricci, Elena Claire

Abstract

We extend the WITCH model to consider the possibility to produce and trade electricity generated by large-scale concentrated solar power plants (CSP) in highly productive areas that are connected to demand centers through High Voltage Direct Current cables. We test the attractiveness of the CSP option by imposing a global cap on Greenhouse gases concentration equal to 535ppm CO2-eq in 2100, with and without constraints to the expansion of nuclear power and IGCC coal with carbon capture and storage (CCS). We find that it becomes optimal to produce with CSP from 2040 and to trade CSP electricity across the Mediterranean from 2050. Therefore projects like DESERTEC seem to be premature. After 2050, CSP electricity shares become significant. CSP has a high stabilization cost option value: depending on the constraints, it ranges between 2.1% and 4.1% of discounted GDP in the Middle East and North Africa (MENA), between 1.1. and 3.4 in China, between 0.2% and 1.2% in the USA, between 0.1 and 1.3% in Eastern Europe and between 0.1 and 0.4% in Western Europe. A moderate level of subsidy to invest more and earlier in CSP might increase welfare. However, large-scale deployment should occur after 2040. We also show that MENA countries have the incentive to form a cartel to sell electricity to Europe at a price higher than the marginal cost. This suggests that a hypothetical Mediterranean market for electricity should be carefully regulated.

Suggested Citation

  • Massetti, Emanuele & Ricci, Elena Claire, 2013. "An assessment of the optimal timing and size of investments in concentrated solar power," Energy Economics, Elsevier, vol. 38(C), pages 186-203.
  • Handle: RePEc:eee:eneeco:v:38:y:2013:i:c:p:186-203
    DOI: 10.1016/j.eneco.2013.02.012
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    References listed on IDEAS

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    1. Carraro, Carlo & Bosetti, Valentina & Massetti, Emanuele & Tavoni, Massimo, 2007. "Optimal Energy Investment and R&D Strategies to Stabilise Greenhouse Gas Atmospheric Concentrations," CEPR Discussion Papers 6549, C.E.P.R. Discussion Papers.
    2. Valentina Bosetti & Carlo Carraro & Marzio Galeotti & Emanuele Massetti & Massimo Tavoni, 2006. "WITCH. A World Induced Technical Change Hybrid Model," Working Papers 2006_46, Department of Economics, University of Venice "Ca' Foscari".
    3. Emanuele Massetti & Fabio Sferra, 2010. "A Numerical Analysis of Optimal Extraction and Trade of Oil under Climate Policy," Working Papers 2010.113, Fondazione Eni Enrico Mattei.
    4. Arce, Pablo & Medrano, Marc & Gil, Antoni & Oró, Eduard & Cabeza, Luisa F., 2011. "Overview of thermal energy storage (TES) potential energy savings and climate change mitigation in Spain and Europe," Applied Energy, Elsevier, vol. 88(8), pages 2764-2774, August.
    5. Bosetti, Valentina & Catenacci, Michela & Fiorese, Giulia & Verdolini, Elena, 2012. "The future prospect of PV and CSP solar technologies: An expert elicitation survey," Energy Policy, Elsevier, vol. 49(C), pages 308-317.
    6. Neij, Lena, 2008. "Cost development of future technologies for power generation--A study based on experience curves and complementary bottom-up assessments," Energy Policy, Elsevier, vol. 36(6), pages 2200-2211, June.
    7. R. H. Coase, 2013. "The Problem of Social Cost," Journal of Law and Economics, University of Chicago Press, vol. 56(4), pages 837-877.
    8. Paul L. Joskow, 2012. "Creating a Smarter U.S. Electricity Grid," Journal of Economic Perspectives, American Economic Association, vol. 26(1), pages 29-48, Winter.
    9. Valentina Bosetti, Carlo Carraro, Marzio Galeotti, Emanuele Massetti, Massimo Tavoni, 2006. "A World induced Technical Change Hybrid Model," The Energy Journal, International Association for Energy Economics, vol. 0(Special I), pages 13-38.
    10. Williges, Keith & Lilliestam, Johan & Patt, Anthony, 2010. "Making concentrated solar power competitive with coal: The costs of a European feed-in tariff," Energy Policy, Elsevier, vol. 38(6), pages 3089-3097, June.
    11. Valentina Bosetti & Emanuele Massetti & Massimo Tavoni, 2007. "The WITCH Model. Structure, Baseline, Solutions," Working Papers 2007.10, Fondazione Eni Enrico Mattei.
    12. Volker Krey & Leon Clarke, 2011. "Role of renewable energy in climate mitigation: a synthesis of recent scenarios," Climate Policy, Taylor & Francis Journals, vol. 11(4), pages 1131-1158, July.
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    Cited by:

    1. Perrihan Al-Riffai & Julian Blohmke & Clemens Breisinger & Manfred Wiebelt, 2015. "Harnessing the Sun and Wind for Economic Development? An Economy-Wide Assessment for Egypt," Sustainability, MDPI, vol. 7(6), pages 1-27, June.
    2. Carrara, Samuel & Marangoni, Giacomo, 2017. "Including system integration of variable renewable energies in a constant elasticity of substitution framework: The case of the WITCH model," Energy Economics, Elsevier, vol. 64(C), pages 612-626.
    3. Bijarniya, Jay Prakash & Sudhakar, K. & Baredar, Prashant, 2016. "Concentrated solar power technology in India: A review," Renewable and Sustainable Energy Reviews, Elsevier, vol. 63(C), pages 593-603.
    4. Ricci, Elena Claire & Banterle, Alessandro, 2020. "Do major climate change-related public events have an impact on consumer choices?," Renewable and Sustainable Energy Reviews, Elsevier, vol. 126(C).
    5. Frisari, Gianleo & Stadelmann, Martin, 2015. "De-risking concentrated solar power in emerging markets: The role of policies and international finance institutions," Energy Policy, Elsevier, vol. 82(C), pages 12-22.
    6. Pietzcker, Robert Carl & Stetter, Daniel & Manger, Susanne & Luderer, Gunnar, 2014. "Using the sun to decarbonize the power sector: The economic potential of photovoltaics and concentrating solar power," Applied Energy, Elsevier, vol. 135(C), pages 704-720.
    7. del Río, Pablo & Peñasco, Cristina & Mir-Artigues, Pere, 2018. "An overview of drivers and barriers to concentrated solar power in the European Union," Renewable and Sustainable Energy Reviews, Elsevier, vol. 81(P1), pages 1019-1029.
    8. Elena Claire Ricci, 2013. "An Integrated Assessment of Super & Smart Grids," Working Papers 2013.84, Fondazione Eni Enrico Mattei.
    9. Balta-Ozkan, Nazmiye & Yildirim, Julide & Connor, Peter M., 2015. "Regional distribution of photovoltaic deployment in the UK and its determinants: A spatial econometric approach," Energy Economics, Elsevier, vol. 51(C), pages 417-429.

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    More about this item

    Keywords

    Climate policy; Integrated assessment; Renewable energy; Concentrated solar power; Super-grids; Electricity trade;
    All these keywords.

    JEL classification:

    • Q2 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation
    • Q43 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Energy and the Macroeconomy
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming

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