Carbon Price instead of Support Schemes: Wind Power Investments by the Electricity Market

Abstract : This paper studies wind power development within electricity markets with a significant carbon price as the sole incentive. Simulation of electricity market and investment decisions by System Dynamics modelling is used to trace the evolution of the electricity generation mix over a 20-year period from an initially thermal system. A range of carbon prices is tested to determine the value above which market-driven development of wind power becomes economically possible. This requires not only economic competitiveness in terms of cost-price, but also profitability versus traditional fossil-fuel technologies. Results stress that wind power is profitable for investors only if the carbon price is significantly higher than the price required for making wind power MWh's cost-price competitive on the basis of levelized costs. In this context, the market-driven development of wind power seems only possible if there is a strong commitment to climate policy, reflected in a stable and high carbon price. Moreover, market driven development of wind power becomes more challenging if nuclear is part of investment options.
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Article dans une revue
Energy Journal, International Association for Energy Economics, 2016, 37 (4), pp.109-140. 〈10.5547/01956574.37.4.mpet〉
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Soumis le : mardi 3 janvier 2017 - 12:52:48
Dernière modification le : jeudi 11 janvier 2018 - 06:23:20

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M. Petitet, D. Finon, T. Janssen. Carbon Price instead of Support Schemes: Wind Power Investments by the Electricity Market. Energy Journal, International Association for Energy Economics, 2016, 37 (4), pp.109-140. 〈10.5547/01956574.37.4.mpet〉. 〈hal-01425104〉

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