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Rethinking how to support intermittent renewables

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  • Narbel, Patrick A.

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

Abstract

Intermittent renewable energy sources, including solar and wind power, typically remain more expensive than conventional power sources. As a consequence, few intermittent power projects would have been deployed if specific policy instruments had not been implemented. Existing policy instruments facilitating the deployment of intermittent renewable energy technologies include the feed-in tariff, the feed-in premium and the quota system. Based on a numerical analysis, it is shown that these specific policy instruments do not necessarily facilitate the deployment of valuable energy sources because they ignore the cost of intermittency. A valuable intermittent energy source is defined here as a source of energy which requires little financial support and which limits the need for capacity payments in order to ensure the security of supply. Based on insights from the numerical analysis, a new policy instrument is suggested: a multiplicative premium. This type of policy instrument would increase the likelihood that valuable intermittent energy assets are deployed in priority.

Suggested Citation

  • Narbel, Patrick A., 2014. "Rethinking how to support intermittent renewables," Discussion Papers 2014/17, Norwegian School of Economics, Department of Business and Management Science.
    • Handle: RePEc:hhs:nhhfms:2014_017
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    File URL: http://hdl.handle.net/11250/194988
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    5. Mihaylov, Mihail & Rădulescu, Roxana & Razo-Zapata, Iván & Jurado, Sergio & Arco, Leticia & Avellana, Narcís & Nowé, Ann, 2019. "Comparing stakeholder incentives across state-of-the-art renewable support mechanisms," Renewable Energy, Elsevier, vol. 131(C), pages 689-699.
    6. Hansen, J.P. & Narbel, P.A. & Aksnes, D.L., 2017. "Limits to growth in the renewable energy sector," Renewable and Sustainable Energy Reviews, Elsevier, vol. 70(C), pages 769-774.
    7. Taliotis, Constantinos & Taibi, Emanuele & Howells, Mark & Rogner, Holger & Bazilian, Morgan & Welsch, Manuel, 2017. "Renewable energy technology integration for the island of Cyprus: A cost-optimization approach," Energy, Elsevier, vol. 137(C), pages 31-41.
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    9. Amedeo Argentiero, Tarek Atalla, Simona Bigerna, Silvia Micheli, and Paolo Polinori, 2017. "Comparing Renewable Energy Policies in EU-15, U.S. and China: A Bayesian DSGE Model," The Energy Journal, International Association for Energy Economics, vol. 0(KAPSARC S).
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    More about this item

    Keywords

    Intermittent renewables; value of energy; security of supply;
    All these keywords.

    JEL classification:

    • Q40 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - General
    • Q50 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - General

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