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Non-renewable and intermittent renewable energy sources: Friends and foes?

Edmond Baranes, Julien Jacqmin () and Jean-Christophe Poudou ()

Energy Policy, 2017, vol. 111, issue C, 58-67

Abstract: This paper studies the links between non-renewable and intermittent renewable energy sources in the production of electricity. Using U.S. state-level data from 1998 to 2015, we find that the relationship between the price of natural gas and investments in solar and wind capacity is non-linear and can be represented by an inverted U-shape. Hence, for relatively low natural gas prices, the two modes of production are substitutes. After a price threshold is reached, the two are complementary. A theoretical explanation argues that this stylized fact is the result of a trade-off between two characteristics of these modes of production: the high degree of flexibility of electricity production using natural gas as an input and the low marginal cost of renewable energy sources.

Keywords: Renewable energy production; Natural gas; Factor complementarity; Electricity production (search for similar items in EconPapers)
JEL-codes: D22 D24 Q41 Q42 (search for similar items in EconPapers)
Date: 2017
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Related works:
Working Paper: Non-renewable and intermittent renewable energy sources: Friends and foes? (2017)
Working Paper: Non-renewable and intermittent renewable energy sources: friends and foes? (2015) Downloads
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