IDEAS home Printed from https://ideas.repec.org/a/eee/renene/v37y2012i1p310-317.html
   My bibliography  Save this article

A system dynamics approach for investigating impacts of incentive mechanisms on wind power investment

Author

Listed:
  • Alishahi, E.
  • Moghaddam, M. Parsa
  • Sheikh-El-Eslami, M.K.

Abstract

Large integration of intermittent wind generation in power system has necessitated the inclusion of more innovative and sophisticated approaches in power system investment planning. The intermittent nature and uncertainties of wind power generation will cause the investors encounter risk in their investment decisions. Main factors such as uncertainties in demand, fuel price, wind power generation which affect long-term planning have been considered in the proposed model. To overcome this problem i.e. risk impacts on decisions, this paper presents improved incentive mechanisms for wind power investment. The mechanism has been investigated based on system dynamics modeling. In the proposed mechanism, wind power generations will recover a part of their investment cost through incentive mechanisms. In this paper, different incentive methods some of which are dependent to market conditions are being proposed. The functionality of these incentive mechanisms on wind generation investment are illustrated by simulation studies.

Suggested Citation

  • Alishahi, E. & Moghaddam, M. Parsa & Sheikh-El-Eslami, M.K., 2012. "A system dynamics approach for investigating impacts of incentive mechanisms on wind power investment," Renewable Energy, Elsevier, vol. 37(1), pages 310-317.
    • Handle: RePEc:eee:renene:v:37:y:2012:i:1:p:310-317
    DOI: 10.1016/j.renene.2011.06.026
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0960148111003181
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.renene.2011.06.026?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.

    References listed on IDEAS

    as
    1. del Ri­o González, Pablo, 2008. "Ten years of renewable electricity policies in Spain: An analysis of successive feed-in tariff reforms," Energy Policy, Elsevier, vol. 36(8), pages 2907-2919, August.
    2. Philippe Menanteau & Dominique Finon & Marie-Laure Lamy, 2003. "Prices versus quantities :environmental policies for promoting the development of renewable energy," Post-Print halshs-00480457, HAL.
    3. Arango, Santiago, 2007. "Simulation of alternative regulations in the Colombian electricity market," Socio-Economic Planning Sciences, Elsevier, vol. 41(4), pages 305-319, December.
    4. Ford, Andrew & Vogstad, Klaus & Flynn, Hilary, 2007. "Simulating price patterns for tradable green certificates to promote electricity generation from wind," Energy Policy, Elsevier, vol. 35(1), pages 91-111, January.
    5. Butler, Lucy & Neuhoff, Karsten, 2008. "Comparison of feed-in tariff, quota and auction mechanisms to support wind power development," Renewable Energy, Elsevier, vol. 33(8), pages 1854-1867.
    6. Andrew Ford, 2002. "Boom and Bust in Power Plant Construction: Lessons from the California Electricity Crisis," Journal of Industry, Competition and Trade, Springer, vol. 2(1), pages 59-74, June.
    7. Meyer, Niels I., 2003. "European schemes for promoting renewables in liberalised markets," Energy Policy, Elsevier, vol. 31(7), pages 665-676, June.
    8. Mitchell, C. & Bauknecht, D. & Connor, P.M., 2006. "Effectiveness through risk reduction: a comparison of the renewable obligation in England and Wales and the feed-in system in Germany," Energy Policy, Elsevier, vol. 34(3), pages 297-305, February.
    9. Langni, Ole & Diekmann, Jochen & Lehr, Ulrike, 2009. "Advanced mechanisms for the promotion of renewable energy--Models for the future evolution of the German Renewable Energy Act," Energy Policy, Elsevier, vol. 37(4), pages 1289-1297, April.
    10. Falconett, Irina & Nagasaka, Ken, 2010. "Comparative analysis of support mechanisms for renewable energy technologies using probability distributions," Renewable Energy, Elsevier, vol. 35(6), pages 1135-1144.
    11. Dutra, Ricardo & Szklo, Alexandre, 2008. "Assessing long-term incentive programs for implementing wind power in Brazil using GIS rule-based methods," Renewable Energy, Elsevier, vol. 33(12), pages 2507-2515.
    12. Menanteau, Philippe & Finon, Dominique & Lamy, Marie-Laure, 2003. "Prices versus quantities: choosing policies for promoting the development of renewable energy," Energy Policy, Elsevier, vol. 31(8), pages 799-812, June.
    13. Ackermann, Thomas & Andersson, Göran & Söder, Lennart, 2001. "Overview of government and market driven programs for the promotion of renewable power generation," Renewable Energy, Elsevier, vol. 22(1), pages 197-204.
    14. Ford, Andrew, 1999. "Cycles in competitive electricity markets: a simulation study of the western United States," Energy Policy, Elsevier, vol. 27(11), pages 637-658, October.
    15. Fouquet, Doerte & Johansson, Thomas B., 2008. "European renewable energy policy at crossroads--Focus on electricity support mechanisms," Energy Policy, Elsevier, vol. 36(11), pages 4079-4092, November.
    16. Ringel, Marc, 2006. "Fostering the use of renewable energies in the European Union: the race between feed-in tariffs and green certificates," Renewable Energy, Elsevier, vol. 31(1), pages 1-17.
    17. Assili, Mohsen & Javidi D.B., M. Hossein & Ghazi, Reza, 2008. "An improved mechanism for capacity payment based on system dynamics modeling for investment planning in competitive electricity environment," Energy Policy, Elsevier, vol. 36(10), pages 3703-3713, October.
    18. Lipp, Judith, 2007. "Lessons for effective renewable electricity policy from Denmark, Germany and the United Kingdom," Energy Policy, Elsevier, vol. 35(11), pages 5481-5495, November.
    19. Couture, Toby & Gagnon, Yves, 2010. "An analysis of feed-in tariff remuneration models: Implications for renewable energy investment," Energy Policy, Elsevier, vol. 38(2), pages 955-965, February.
    20. Ford, Andrew, 2001. "Waiting for the boom: : a simulation study of power plant construction in California," Energy Policy, Elsevier, vol. 29(11), pages 847-869, September.
    21. Lemming, Jacob, 2003. "Financial risks for green electricity investors and producers in a tradable green certificate market," Energy Policy, Elsevier, vol. 31(1), pages 21-32, January.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Shen, Neng & Deng, Rumeng & Liao, Haolan & Shevchuk, Oleksandr, 2020. "Mapping renewable energy subsidy policy research published from 1997 to 2018: A scientometric review," Utilities Policy, Elsevier, vol. 64(C).
    2. Stokes, Leah C., 2013. "The politics of renewable energy policies: The case of feed-in tariffs in Ontario, Canada," Energy Policy, Elsevier, vol. 56(C), pages 490-500.
    3. Schallenberg-Rodriguez, Julieta, 2017. "Renewable electricity support systems: Are feed-in systems taking the lead?," Renewable and Sustainable Energy Reviews, Elsevier, vol. 76(C), pages 1422-1439.
    4. Sakah, Marriette & Diawuo, Felix Amankwah & Katzenbach, Rolf & Gyamfi, Samuel, 2017. "Towards a sustainable electrification in Ghana: A review of renewable energy deployment policies," Renewable and Sustainable Energy Reviews, Elsevier, vol. 79(C), pages 544-557.
    5. Paul Lehmann & Felix Creutzig & Melf-Hinrich Ehlers & Nele Friedrichsen & Clemens Heuson & Lion Hirth & Robert Pietzcker, 2012. "Carbon Lock-Out: Advancing Renewable Energy Policy in Europe," Energies, MDPI, vol. 5(2), pages 1-32, February.
    6. Li, Jinke & Liu, Guy & Shao, Jing, 2020. "Understanding the ROC transfer payment in the renewable obligation with the recycling mechanism in the United Kingdom," Energy Economics, Elsevier, vol. 87(C).
    7. Wiser, Ryan & Barbose, Galen & Holt, Edward, 2011. "Supporting solar power in renewables portfolio standards: Experience from the United States," Energy Policy, Elsevier, vol. 39(7), pages 3894-3905, July.
    8. Pérez de Arce, Miguel & Sauma, Enzo & Contreras, Javier, 2016. "Renewable energy policy performance in reducing CO2 emissions," Energy Economics, Elsevier, vol. 54(C), pages 272-280.
    9. Martin, Nigel J. & Rice, John L., 2017. "Examining the use of concept analysis and mapping software for renewable energy feed-in tariff design," Renewable Energy, Elsevier, vol. 113(C), pages 211-220.
    10. Martin, Nigel & Rice, John, 2013. "The solar photovoltaic feed-in tariff scheme in New South Wales, Australia," Energy Policy, Elsevier, vol. 61(C), pages 697-706.
    11. Maria Kopsakangas-Savolainen & Rauli Svento, 2013. "Promotion of Market Access for Renewable Energy in the Nordic Power Markets," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 54(4), pages 549-569, April.
    12. Couture, Toby & Gagnon, Yves, 2010. "An analysis of feed-in tariff remuneration models: Implications for renewable energy investment," Energy Policy, Elsevier, vol. 38(2), pages 955-965, February.
    13. del Río, Pablo & Bleda, Mercedes, 2012. "Comparing the innovation effects of support schemes for renewable electricity technologies: A function of innovation approach," Energy Policy, Elsevier, vol. 50(C), pages 272-282.
    14. Escoffier, Margaux & Hache, Emmanuel & Mignon, Valérie & Paris, Anthony, 2021. "Determinants of solar photovoltaic deployment in the electricity mix: Do oil prices really matter?," Energy Economics, Elsevier, vol. 97(C).
    15. Agnolucci, Paolo, 2007. "The effect of financial constraints, technological progress and long-term contracts on tradable green certificates," Energy Policy, Elsevier, vol. 35(6), pages 3347-3359, June.
    16. Li, Shin-Je & Chang, Ting-Huan & Chang, Ssu-Li, 2017. "The policy effectiveness of economic instruments for the photovoltaic and wind power development in the European Union," Renewable Energy, Elsevier, vol. 101(C), pages 660-666.
    17. Wang, Tan & Gong, Yu & Jiang, Chuanwen, 2014. "A review on promoting share of renewable energy by green-trading mechanisms in power system," Renewable and Sustainable Energy Reviews, Elsevier, vol. 40(C), pages 923-929.
    18. Marian Klobasa & Jenny Winkler & Frank Sensfuß & Mario Ragwitz, 2013. "Market Integration of Renewable Electricity Generation — The German Market Premium Model," Energy & Environment, , vol. 24(1-2), pages 127-146, February.
    19. Miguel Pérez de Arce and Enzo Sauma, 2016. "Comparison of Incentive Policies for Renewable Energy in an Oligopolistic Market with Price-Responsive Demand," The Energy Journal, International Association for Energy Economics, vol. 0(Number 3).
    20. Darmani, Anna & Rickne, Annika & Hidalgo, Antonio & Arvidsson, Niklas, 2016. "When outcomes are the reflection of the analysis criteria: A review of the tradable green certificate assessments," Renewable and Sustainable Energy Reviews, Elsevier, vol. 62(C), pages 372-381.

    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:37:y:2012:i:1:p:310-317. 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.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with 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.