Renewable and non-renewable intermittent energy sources: friends and foes?

Edmond Baranes, Julien Jacqmin and Jean-Christophe Poudou

Working Papers from LAMETA, Universtiy of Montpellier

Abstract: This paper studies the links between renewable and non-renewable intermittent energy sources in the production of electricity. More precisely, we argue that the relationship between the natural gas price and capacity investments in solar and wind power energy is far from univocal. We find that this relationship is not linear but is better represented by a bell-shaped curve. Hence, for relativelly low gas price, the two modes of production are substitutable. After a price threshhold is reached, the two are complementary. A theoretical model explains this as the trade-off resulting from two forces: the input price differential of these two modes of production and the risks related to the unpredictable nature of the intermittence of renewable energies. Using U.S. state level data from 1998 to 2012, we find that this relationship is robust to various empirical specifications.

Pages: 27 pages
Date: 2014-10, Revised 2014-10
New Economics Papers: this item is included in nep-ene, nep-env and nep-reg
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:lam:wpaper:14-09

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