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Equilibrium Transitions from Non Renewable Energy to Renewable Energy under Capacity Constraints

Jean-Pierre Amigues (), Alain Ayong Le Kama () and Michel Moreaux
Authors registered in the RePEc Author Service: Ujjayant Chakravorty ()

No 13-440, TSE Working Papers from Toulouse School of Economics (TSE)

Abstract: We study the transition between non renewable and renewable energy sources with adjustment costs over the production capacity of renewable energy. Assuming constant variable marginal costs for both energy sources, convex adjustment costs and a more expensive renewable energy, we show the following. With sufficiently abundant non renewable energy endowments, the dynamic equilibrium path is composed of a first time phase of only non renewable energy use followed by a transition phase substituting progressively renewable energy to non renewable energy before a last time phase of only renewable energy use. The investment into renewable energy may either begin before actual production of renewable energy or be delayed until the energy price achieves a sufficient gap with respect to the renewable energy cost. With an initially abundant non renewable resource, the features of the transition between non renewable and renewable energy do not depend upon the initial resource stock.

Keywords: non renewable resource; renewable energy; adjustment costs; resources transition; capacity constraints (search for similar items in EconPapers)
JEL-codes: D92 Q30 Q40 Q42 (search for similar items in EconPapers)
Date: 2013-10, Revised 2015-03
References: View references in EconPapers View complete reference list from CitEc
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Related works:
Journal Article: Equilibrium transitions from non-renewable energy to renewable energy under capacity constraints (2015) Downloads
Working Paper: Equilibrium Transitions from Non Renewable Energy to Renewable Energy under Capacity Constraints (2015)
Working Paper: Equilibrium Transitions from Non Renewable Energy to Renewable Energy under Capacity Constraints (2015) Downloads
Working Paper: Equilibrium Transitions from Non Renewable Energy to Renewable Energy under Capacity Constraints (2011) Downloads
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