Perfect So Far? Substitutability Between Wind & Solar and Dirty Electricity Generation

Anthony Wiskich

CAMA Working Papers from Centre for Applied Macroeconomic Analysis, Crawford School of Public Policy, The Australian National University

Abstract: Wind and solar are driving the clean transition in electricity: this paper uses panel data to investigate how these technologies substitute with dirty (fossil fuel) electricity generation. Production functions with a constant and a variable elasticity of substitution are estimated. Results suggest a higher elasticity of substitution than previous estimates, aligning with long-run analysis from electricity dispatch models and assumptions often made in economic models. Little evidence is found of the elasticity decreasing so far. However, the uptake of wind and solar decreases the utilisation rates of dirty capital.

Keywords: elasticity of substitution; climate change; energy; electricity; production function (search for similar items in EconPapers)
JEL-codes: O33 Q41 Q42 Q54 Q58 (search for similar items in EconPapers)
Pages: 23 pages
Date: 2023-06
New Economics Papers: this item is included in nep-eff, nep-ene, nep-env and nep-mfd
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Persistent link: https://EconPapers.repec.org/RePEc:een:camaaa:2023-27

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