Concentration versus diversification: A spatial deployment approach to improve the economics of wind power

Leo Klie and Reinhard Madlener

Energy Policy, 2024, vol. 185, issue C

Abstract: Previous studies on the economics of onshore wind parks in Germany found that geographic diversification results in minor system costs savings (Pfluger et al., 2017a). Furthermore, such diversification does not necessarily result in higher market values (Eising et al., 2020) or better merchant profitability (Klie and Madlener, 2022). Therefore, the question arises whether an alternative allocation (i.e. concentration rather than diversification) of the German wind park fleet is more economical. In this paper, we compare the future (2030) market values, subsidy needs and total system costs (excl. intra-national grid costs due to congestion, redispatch and curtailment) of a more concentrated versus a more diversified allocation of onshore wind turbines in Germany. The results show that a concentration of turbines, in areas where the gap between market values and levelized costs of electricity is smallest (i.e. Northern Germany), is more beneficial in terms of subsidy need and system costs (ignoring congestion, redispatch and curtailment). The analysis further shows that these areas are also more beneficial in terms of market values, when using system-friendly turbine configurations selected based on the same approach. To incentivize such a selection of areas and turbine configurations based on minimal gaps between market values and levelized costs an alternative renewables support scheme is presented, which favors such minimal gaps in its auctioning process.

Keywords: Market value; Market penetration; Spatial concentration; Spatial diversification; Renewable energy support scheme; Onshore wind; Germany (search for similar items in EconPapers)
JEL-codes: O25 P48 Q42 Q48 R32 (search for similar items in EconPapers)
Date: 2024
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0301421523005426
Full text for ScienceDirect subscribers only

Related works:
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:eee:enepol:v:185:y:2024:i:c:s0301421523005426

DOI: 10.1016/j.enpol.2023.113957

Access Statistics for this article

Energy Policy is currently edited by N. France

More articles in Energy Policy from Elsevier
Bibliographic data for series maintained by Catherine Liu ().