Pricing intermittent renewable energy

Stefan Ambec, Claude Crampes and Stefan Lamp

No 25-1653, TSE Working Papers from Toulouse School of Economics (TSE)

Abstract: Governments support wind and solar investment through fixed-price contracts that reward output regardless of when it is produced. We show that efficiency requires adjusting the price with a technology-specific bonus–malus that reflects the covariance between renewable output and wholesale electricity prices. We estimate this adjustment for California, France, Germany, and Spain. We then express it in terms of technological parameters to assess the optimality of future renewable capacity targets. Finally, using a budget-neutral counterfactual, we show that adjusting Germany’s feed-in tariffs with the bonus–malus would have increased the market value of renewable generation by 3%, or €58 million.

Keywords: Electricity market; feed-in tariff; power purchase agreement; contract for difference; levelized cost of energy; intermittent renewable energy. (search for similar items in EconPapers)
JEL-codes: D47 L23 Q41 Q48 (search for similar items in EconPapers)
Date: 2025-07-07, Revised 2026-10
New Economics Papers: this item is included in nep-ene, nep-env and nep-reg
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Citations: View citations in EconPapers (1)

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Related works:
Working Paper: Pricing Intermittent Renewable Energy (2025)
Working Paper: Pricing Intermittent Renewable Energy (2025)
Working Paper: Pricing intermittent renewable energy (2025)
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Persistent link: https://EconPapers.repec.org/RePEc:tse:wpaper:130654

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