Subsidies for Wind Power: Surfing down the Learning Curve?

Albrecht Bläsi and Till Requate ()

No 2007-28, Economics Working Papers from Christian-Albrechts-University of Kiel, Department of Economics

Abstract: We develop a model with two types of electricity producers, fossil fuel utilities generating emissions, and suppliers of electricity from renewable resources such as wind energy. We account for the vertical structure of the wind-energy sector by considering wind-turbine producers engaged in learning by doing and selling their turbines to turbine operators. We show that in the absence of learning spillovers a first-best policy requires Pigouvian taxes only. We also study second-best optimal subsidies on electricity generated by wind power when (optimal) emission taxes are ruled out. We further investigate the impact of subsidies on prices, output, the number of firms, and environmental damage. It turns out that, in the case of purely private learning, secondbest optimal subsidies should only account for the environmental damage but are not necessary to spur learning.

Keywords: learning by doing; renewable energies; environmental policy; Pigouvian taxes; subsidies; feed-in tariffs (search for similar items in EconPapers)
Date: 2007
New Economics Papers: this item is included in nep-ene and nep-env
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Citations: View citations in EconPapers (12)

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Persistent link: https://EconPapers.repec.org/RePEc:zbw:cauewp:6797

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