Equilibrium transitions from non-renewable energy to renewable energy under capacity constraints

Jean-Pierre Amigues, Alain Ayong Le Kama () and Michel Moreaux

Journal of Economic Dynamics and Control, 2015, vol. 55, issue C, 89-112

Abstract: We study the transition between non-renewable and renewable energy sources with adjustment costs over the production capacity of renewable energy. Assuming constant variable marginal costs for both energy sources, convex adjustment costs and a more expensive renewable energy, we show the following. With sufficiently abundant non-renewable energy endowments, the dynamic equilibrium path is composed of a first time phase of only non-renewable energy use followed by a transition phase substituting progressively renewable energy to non-renewable energy before a last time phase of only renewable energy use. The investment into renewable energy may either begin before actual production of renewable energy or be delayed until the energy price achieves a sufficient gap with respect to the renewable energy cost. With an initially abundant non-renewable resource, the features of the transition between non-renewable and renewable energy do not depend upon the initial resource stock.

Keywords: Energy transition; Non-renewable resource; Renewable energy; Adjustment costs; Capacity constraints (search for similar items in EconPapers)
JEL-codes: D92 Q30 Q40 Q42 (search for similar items in EconPapers)
Date: 2015
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (32)

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Related works:
Working Paper: Equilibrium transitions from non-renewable energy to renewable energy under capacity constraints (2015)
Working Paper: Equilibrium Transitions from Non Renewable Energy to Renewable Energy under Capacity Constraints (2015)
Working Paper: Equilibrium Transitions from Non Renewable Energy to Renewable Energy under Capacity Constraints (2015)
Working Paper: Equilibrium Transitions from Non Renewable Energy to Renewable Energy under Capacity Constraints (2011)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:dyncon:v:55:y:2015:i:c:p:89-112

DOI: 10.1016/j.jedc.2015.04.001

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