Quotation Reuter, Wolf Heinrich, Szolgayová, Jana, Fuss, Sabine, Obersteiner, Michael. 2012. Renewable Energy Investment: Policy and Market Impacts. Applied Energy 97 249-254.


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Abstract

The liberalization of electricity markets in recent years has enhanced competition among power-generating firms facing uncertain decisions of competitors and thus uncertain prices. At the same time, promoting renewable energy has been a key ingredient in energy policy seeking to de-carbonize the energy mix. Public incentives for companies to invest in renewable technologies range from feed-in tariffs, to investment subsidies, tax credits, portfolio requirements and certificate systems. We use a real options model in discrete time with lumpy multiple investments to analyze the decisions of an electricity producer to invest into new power generating capacity, to select the type of technology and to optimize its operation under price uncertainty and with market effects. We account for both the specific characteristics of renewables and the market effects of investment decisions. The prices are determined endogenously by the supply of electricity in the market and by exogenous electricity price uncertainty. The framework is used to analyze energy policy, as well as the reaction of producers to uncertainty in the political and regulatory framework. In this way, we are able to compare different policies to foster investment into renewables and analyze their impacts on the market.

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Publication's profile

Status of publication Published
Affiliation WU
Type of publication Journal article
Journal Applied Energy
Citation Index SCI
Language English
Title Renewable Energy Investment: Policy and Market Impacts
Volume 97
Year 2012
Page from 249
Page to 254
URL http://dx.doi.org/10.1016/j.apenergy.2012.01.021

Associations

People
Reuter, Wolf Heinrich (Former researcher)
External
Fuss, Sabine (International Institute for Applied Systems Analysis, Laxenburg, Austria)
Obersteiner, Michael (International Institute for Applied Systems Analysis, Laxenburg, Austria)
Szolgayová, Jana (Department of Applied Mathematics and Statistics, Comenius University, Slovakia)
Organization
Department of Economics (Badinger) (Details)
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