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The Decision to Scrap a Wind Turbine: Opportunity Cost, Timing and Policy

Author

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  • Mauritzen, Johannes

    (Dept. of Finance and Management Science, Norwegian School of Economics and Business Administration)

Abstract

This paper attempts to empirically identify the key factors involved in the decision to scrap a wind turbine using data from Denmark. The importance of the opportunity cost of operating an older wind turbine is shown to be a prominent factor in the decision to scrap. I show the strong effect that renewable energy policy plays in the decision to scrap a turbine. Through the use of both non-parametric and semi-parametric duration models and an instrumental variables approach I identify a strong effect for scrapping schemes put in place by the Danish government. I also obtain the, initially, counter-intuitive result that more effective wind turbines have a higher hazard of being scrapped.

Suggested Citation

  • Mauritzen, Johannes, 2011. "The Decision to Scrap a Wind Turbine: Opportunity Cost, Timing and Policy," Discussion Papers 2011/17, Norwegian School of Economics, Department of Business and Management Science.
    • Handle: RePEc:hhs:nhhfms:2011_017
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    File URL: http://hdl.handle.net/11250/164182
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    References listed on IDEAS

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    More about this item

    Keywords

    Wind Power; Denmark; Empirical; Duration Models; Scrapping;
    All these keywords.

    JEL classification:

    • Q00 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - General - - - General

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