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CAWM Discussion Papers, Universität Münster >
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http://hdl.handle.net/10419/62131
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| Title: | | Quantities vs. capacities: Minimizing the social cost of renewable energy promotion  |
| Authors: | | Andor, Mark Flinkerbusch, Kai Voß, Achim |
| Issue Date: | | 2012 |
| Series/Report no.: | | CAWM Discussion Paper, Centrum für Angewandte Wirtschaftsforschung Münster 59 |
| Abstract: | | In this article we show how different promotion schemes for renewables affect economic welfare. Our starting point is that external benefits of renewable electricity supply besides the abatement of greenhouse gases are not related to actual electricity generation but to producing and installing capacity. We argue that generation based subsidies such as feed-in tariffs and bonus payments can only be a second-best solution. Our model framework allows us to explain how these second-best instruments cause welfare losses in an environment of volatile demand. We postulate that capacity payments for renewables should be implemented in order to avoid unnecessary social costs. |
| Subjects: | | Renewable Energy Sources Energy Policy Promotion Instruments |
| JEL: | | Q41 Q48 H23 |
| Document Type: | | Working Paper |
| Appears in Collections: | | CAWM Discussion Papers, Universität Münster
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