IDEAS home Printed from https://ideas.repec.org/a/sae/enejou/v43y2022i6p195-216.html
   My bibliography  Save this article

The Social Efficiency of Electricity Transition Policies Based on Renewables. Which Ways of Improvement?

Author

Listed:
  • Manuel Villavicencio
  • Dominique Finon

Abstract

Climate and energy policies use to be embedded in joint packages with seeming coherent goals on which the electricity sector is targeted. However, the complexity of power systems is rarely fully apprehended while setting up such packages, particularly when technical externalities from variable renewable energies (VRE) become widespread and different sources of flexibility need to be considered. We use a detailed power system model subject to a combination of RE goals and CO2 caps to seize their interplays and propose a methodology to rank the resulting equilibriums in terms of environmental effectiveness and economic efficiency. We show that: only modest levels of VRE develop without subsidies regardless the level of the CO2 cap; technical externalities create trade-offs between VRE penetration and environmental effectiveness; new flexibility technologies may correct or exacerbate these externalities, impacting effectiveness, costs, and coherence of such packages, requiring a sensitive target hierarchization and fine-tuning of such instruments.

Suggested Citation

  • Manuel Villavicencio & Dominique Finon, 2022. "The Social Efficiency of Electricity Transition Policies Based on Renewables. Which Ways of Improvement?," The Energy Journal, , vol. 43(6), pages 195-216, November.
    • Handle: RePEc:sae:enejou:v:43:y:2022:i:6:p:195-216
    DOI: 10.5547/01956574.43.6.mvil
    as

    Download full text from publisher

    File URL: https://journals.sagepub.com/doi/10.5547/01956574.43.6.mvil
    Download Restriction: no
    File URL: https://libkey.io/10.5547/01956574.43.6.mvil?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
    ---><---

    References listed on IDEAS

    as
    1. Lion Hirth, 2013. "The Market Value of Variable Renewables. The Effect of Solar and Wind Power Variability on their Relative Price," RSCAS Working Papers 2013/36, European University Institute.
    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. Keppler, Jan Horst & Quemin, Simon & Saguan, Marcelo, 2022. "Why the sustainable provision of low-carbon electricity needs hybrid markets," Energy Policy, Elsevier, vol. 171(C).
    2. Csereklyei, Zsuzsanna & Qu, Songze & Ancev, Tihomir, 2019. "The effect of wind and solar power generation on wholesale electricity prices in Australia," Energy Policy, Elsevier, vol. 131(C), pages 358-369.
    3. Simshauser, P., 2019. "On the impact of government-initiated CfD’s in Australia’s National Electricity Market," Cambridge Working Papers in Economics 1901, Faculty of Economics, University of Cambridge.
    4. Wang, Jingxing & Chung, Seokhyun & AlShelahi, Abdullah & Kontar, Raed & Byon, Eunshin & Saigal, Romesh, 2021. "Look-ahead decision making for renewable energy: A dynamic “predict and store” approach," Applied Energy, Elsevier, vol. 296(C).
    5. Curtis, John & Lynch, Muireann Á. & Zubiate, Laura, 2016. "The impact of the North Atlantic Oscillation on electricity markets: A case study on Ireland," Energy Economics, Elsevier, vol. 58(C), pages 186-198.
    6. Christopher Kath & Florian Ziel, 2018. "The value of forecasts: Quantifying the economic gains of accurate quarter-hourly electricity price forecasts," Papers 1811.08604, arXiv.org.
    7. Merrick, James H. & Bistline, John E.T. & Blanford, Geoffrey J., 2024. "On representation of energy storage in electricity planning models," Energy Economics, Elsevier, vol. 136(C).
    8. Mikovits, Christian & Wetterlund, Elisabeth & Wehrle, Sebastian & Baumgartner, Johann & Schmidt, Johannes, 2021. "Stronger together: Multi-annual variability of hydrogen production supported by wind power in Sweden," Applied Energy, Elsevier, vol. 282(PB).
    9. Mwampashi, Muthe Mathias & Nikitopoulos, Christina Sklibosios & Konstandatos, Otto & Rai, Alan, 2021. "Wind generation and the dynamics of electricity prices in Australia," Energy Economics, Elsevier, vol. 103(C).
    10. Winkler, Jenny & Gaio, Alberto & Pfluger, Benjamin & Ragwitz, Mario, 2016. "Impact of renewables on electricity markets – Do support schemes matter?," Energy Policy, Elsevier, vol. 93(C), pages 157-167.
    11. René Aïd & Matteo Basei & Huyên Pham, 2020. "A McKean–Vlasov approach to distributed electricity generation development," Mathematical Methods of Operations Research, Springer;Gesellschaft für Operations Research (GOR);Nederlands Genootschap voor Besliskunde (NGB), vol. 91(2), pages 269-310, April.
    12. Davis, Dominic & Brear, Michael J., 2024. "Impact of short-term wind forecast accuracy on the performance of decarbonising wholesale electricity markets," Energy Economics, Elsevier, vol. 130(C).
    13. Luis M. Abadie & José M. Chamorro, 2014. "Valuation of Wind Energy Projects: A Real Options Approach," Energies, MDPI, vol. 7(5), pages 1-38, May.
    14. Paul Simshauser & Farhad Billimoria & Craig Rogers, 2021. "Optimising VRE plant capacity in Renewable Energy Zones," Working Papers EPRG2121, Energy Policy Research Group, Cambridge Judge Business School, University of Cambridge.
    15. Marshman, Daniel & Brear, Michael & Ring, Brendan, 2022. "Impact of unit commitment and RoCoF constraints on revenue sufficiency in decarbonising wholesale electricity markets," Energy Economics, Elsevier, vol. 106(C).
    16. Li, Yan & Feng, Tian-tian & Liu, Li-li & Zhang, Meng-xi, 2023. "How do the electricity market and carbon market interact and achieve integrated development?--A bibliometric-based review," Energy, Elsevier, vol. 265(C).
    17. Johannes Mauritzen & Genaro Sucarrat, 2022. "Increasing or Diversifying Risk? Tail Correlations, Transmission Flows and Prices across Wind Power Areas," The Energy Journal, , vol. 43(3), pages 105-131, May.
    18. Craig, Michael T. & Jaramillo, Paulina & Hodge, Bri-Mathias & Williams, Nathaniel J. & Severnini, Edson, 2018. "A retrospective analysis of the market price response to distributed photovoltaic generation in California," Energy Policy, Elsevier, vol. 121(C), pages 394-403.
    19. Ali Darudi & Hannes Weigt, 2024. "Review and Assessment of Decarbonized Future Electricity Markets," Energies, MDPI, vol. 17(18), pages 1-38, September.
    20. Gugler, Klaus & Haxhimusa, Adhurim, 2019. "Market integration and technology mix: Evidence from the German and French electricity markets," Energy Policy, Elsevier, vol. 126(C), pages 30-46.

    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:sae:enejou:v:43:y:2022:i:6:p:195-216. 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: SAGE Publications (email available below). General contact details of provider: .

    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.