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Gone with the Wind? An Empirical Analysis of the Equilibrium Impact of Renewable Energy

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  • Matti Liski
  • Iivo Vehviläinen

Abstract

What are the final equilibrium impacts of renewable energy investments on consumer and producer surpluses? This paper offers an approach to quantify the surplus breakdown in a market dominated by renewables and sufficient storage to counterbalance their intermittency—the Nordic electricity market. Wind power entry has strong distributional impacts: 10% market share for wind generation changes the consumer side surplus by an amount that is equivalent to a 40% decline in expenditures, at the cost of incumbents’ surplus. The surplus transfer is big enough to cover the cost of subsidizing entry.

Suggested Citation

  • Matti Liski & Iivo Vehviläinen, 2020. "Gone with the Wind? An Empirical Analysis of the Equilibrium Impact of Renewable Energy," Journal of the Association of Environmental and Resource Economists, University of Chicago Press, vol. 7(5), pages 873-900.
    • Handle: RePEc:ucp:jaerec:doi:10.1086/709648
    DOI: 10.1086/709648
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    Cited by:

    1. Nagy, Roel L.G. & Fleten, Stein-Erik & Sendstad, Lars H., 2023. "Don’t stop me now: Incremental capacity growth under subsidy termination risk," Energy Policy, Elsevier, vol. 172(C).
    2. Helm, Carsten & Mier, Mathias, 2021. "Steering the energy transition in a world of intermittent electricity supply: Optimal subsidies and taxes for renewables and storage," Journal of Environmental Economics and Management, Elsevier, vol. 109(C).
    3. Petersen, Claire & Reguant, Mar & Segura, Lola, 2024. "Measuring the impact of wind power and intermittency," Energy Economics, Elsevier, vol. 129(C).
    4. Liebensteiner, Mario & Haxhimusa, Adhurim & Naumann, Fabian, 2023. "Subsidized renewables’ adverse effect on energy storage and carbon pricing as a potential remedy," Renewable and Sustainable Energy Reviews, Elsevier, vol. 171(C).

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