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On the economics of renewable energy sources

Ottmar Edenhofer (), Lion Hirth (), Brigitte Knopf, Michael Pahle, Steffen Schlömer, Eva Schmid () and Falko Ueckerdt

Energy Economics, 2013, vol. 40, issue S1, S12-S23

Abstract: With the global expansion of renewable energy (RE) technologies, the provision of optimal RE policy packages becomes an important task. We review pivotal aspects regarding the economics of renewables that are relevant to the design of an optimal RE policy, many of which are to date unresolved. We do so from three interrelated perspectives that a meaningful public policy framework for inquiry must take into account. First, we explore different social objectives justifying the deployment of RE technologies and review model-based estimates of the economic potential of RE technologies, i.e. their socially optimal deployment level. Second, we address pivotal market failures that arise in the course of implementing the economic potential of RE sources in decentralized markets. Third, we discuss multiple policy instruments curing these market failures. Our framework reveals the requirements for an assessment of the relevant options for real-world decision makers in the field of RE policies. This review makes it clear that there are remaining white areas on the knowledge map concerning consistent and socially optimal RE policies.

Keywords: Energy; Mitigation; Integrated assessment modeling; Variable renewables; Electricity market design; Renewable policy (search for similar items in EconPapers)
JEL-codes: Q21 Q28 Q42 Q54 Q55 (search for similar items in EconPapers)
Date: 2013
References: View references in EconPapers View complete reference list from CitEc
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Persistent link: https://EconPapers.repec.org/RePEc:eee:eneeco:v:40:y:2013:i:s1:p:s12-s23

DOI: 10.1016/j.eneco.2013.09.015

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Energy Economics is currently edited by R. S. J. Tol, Beng Ang, Lance Bachmeier, Perry Sadorsky, Ugur Soytas and J. P. Weyant

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