IDEAS home Printed from https://ideas.repec.org/a/eee/renene/v33y2008i8p1768-1774.html
   My bibliography  Save this article

Renewable energy in a market-based economy: How to estimate its potential and choose the right incentives

Author

Listed:
  • Faúndez, Pablo

Abstract

A model to explain and predict market-driven investment in renewable energy capital is proposed. The model is suitable for application to the biomass, wind, solar and ocean-derived energy industries. It basically assumes that, given a set of prices and a specific technology, the marginal efficiency of capital invested in these industries only depends on the productivity of the project's site and on its energy transport distance. As suggested by traditional investment theory, the model supposes that only those projects offering marginal efficiencies of capital above the current available rate of interest would be implemented, thus demarcating a region in the productivity–energy transport distance space where all the economically viable projects should lie. By relating this region to the geographic space available for development, total potential investment can be deduced. By using cash flows defined in variable energy transport distance and mean wind speed, a case study for the Chilean wind energy industry is presented. The use of the model to analyse the effect of alternative support schemes for wind energy in Chile is briefly demonstrated. It is concluded that for increasing the area economically available for the development of new wind farms, a research and development support scheme aimed at reducing investment cost of wind turbines by 25% is equivalent to a 20% price subsidy on energy.

Suggested Citation

  • Faúndez, Pablo, 2008. "Renewable energy in a market-based economy: How to estimate its potential and choose the right incentives," Renewable Energy, Elsevier, vol. 33(8), pages 1768-1774.
    • Handle: RePEc:eee:renene:v:33:y:2008:i:8:p:1768-1774
    DOI: 10.1016/j.renene.2007.09.017
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0960148107002972
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.renene.2007.09.017?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Roques, Fabien & Hiroux, Céline & Saguan, Marcelo, 2010. "Optimal wind power deployment in Europe--A portfolio approach," Energy Policy, Elsevier, vol. 38(7), pages 3245-3256, July.
    2. Beran, V. & Sedláček, M. & Marˇs´ık, F., 2013. "A new bladeless hydraulic turbine," Applied Energy, Elsevier, vol. 104(C), pages 978-983.
    3. Aguilar, Francisco X. & Cai, Zhen, 2010. "Exploratory analysis of prospects for renewable energy private investment in the U.S," Energy Economics, Elsevier, vol. 32(6), pages 1245-1252, November.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:renene:v:33:y:2008:i:8:p:1768-1774. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.journals.elsevier.com/renewable-energy .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.