Energiewende @ Risk: On the Continuation of Renewable Power Generation at the End of Public Policy Support

Barbara Glensk () and Reinhard Madlener
Additional contact information
Barbara Glensk: E.ON Energy Research Center, Future Energy Consumer Needs and Behavior (FCN), Postal: RWTH Aachen University, Mathieustrasse 10, 52074 Aachen, Germany, https://www.fcn.eonerc.rwth-aachen.de

No 5/2019, FCN Working Papers from E.ON Energy Research Center, Future Energy Consumer Needs and Behavior (FCN)

Abstract: This paper aims to analyze what happens with renewable energy power plants, such as onshore wind, photovoltaics and biomass, when the public policy support based on the Renewable Energy Law expires. With its expiration the first renewable energy (and especially onshore wind) power plants will have to be scrutinized whether they can economically continue operation, whether they have to be repowered, or whether they need to be decommissioned. The relative merits of these three alternatives are evaluated by applying real options analysis. In contrast to traditional project evaluation techniques, the real options approach takes advantage of the use of uncertain parameters included in the model, such as the development of the electricity price or electricity output. The results obtained suggest that parameters such as the level of future operation and maintenance costs, the expected development of the electricity price at the spot market, and the interrelations between these, as well as the development of the electricity output from renewables can significantly affect the profitability of these power plants and thus impact the decision about their further optimal operation.

Keywords: Renewable energy; Real options; Energy market; Policy support; Repowering (search for similar items in EconPapers)
JEL-codes: Q01 Q21 Q40 Q41 Q48 (search for similar items in EconPapers)
Pages: 41 pages
Date: 2019-05-01, Revised 2019-11-01
New Economics Papers: this item is included in nep-ene and nep-reg
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (12)

Downloads: (external link)
https://www.fcn.eonerc.rwth-aachen.de/global/show_ ... p?id=aaaaaaaaajtmmmr Full text (application/pdf)

Related works:
Journal Article: Energiewende @ Risk: On the Continuation of Renewable Power Generation at the End of Public Policy Support (2019)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ris:fcnwpa:2019_005

Access Statistics for this paper

More papers in FCN Working Papers from E.ON Energy Research Center, Future Energy Consumer Needs and Behavior (FCN) Contact information at EDIRC.
Bibliographic data for series maintained by Hendrik Schmitz ().