 Future wind and solar power market values in Germany — Evidence of spatial and technological dependencies?Manuel Eising, Hannes Hobbie and Dominik Möst Energy Economics, 2020, vol. 86, issue C Abstract: Achieving ambitious climate targets entails an extensive utilisation of renewable energy sources. However, due to weather-dependent fluctuations, generation from variable renewable energy (VRE) sources is characterised by significantly lower market values in comparison to conventional technologies, reinforced by a decline in electricity prices. This development poses interesting questions as to its drivers and to what extent market values of wind and solar power can be influenced by the design of electricity markets. Against this background, a scenario-based analysis is conducted to trace the future development of market values using endogenously derived electricity prices considering different regional and technological VRE diversification strategies and investments into VRE technologies on a myopic basis. The results show a continued decline in market values with increasing regional discrepancies indicating a growing importance of interregional interdependencies for assessing the profitability of VRE. Furthermore, from a system point of view, a more distributed allocation of onshore wind capacities to contend with declining market values does not always prove to stabilise market values by facilitating a more constant feed-in pattern, contrary to expectation. Finally, replacing onshore with offshore wind energy appears to be beneficial as it can lead to an overall increase in the market values of offshore, onshore as well as PV generation technologies compared to other mitigation strategies. This result raise interesting questions about the systemic economic value of offshore wind despite its higher LCOE in the context of market integration of VRE. Keywords: Market value; Market integration of renewables; Technological diversification; Geographical diversification; Spatial value factor distribution (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:eneeco:v:86:y:2020:i:c:s0140988319304359 DOI: 10.1016/j.eneco.2019.104638 Access Statistics for this article Energy Economics is currently edited by R. S. J. Tol, Beng Ang, Lance Bachmeier, Perry Sadorsky, Ugur Soytas and J. P. Weyant More articles in Energy Economics from Elsevier |
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