Decisions on Investments in Photovoltaics and Carbon Capture and Storage: A Comparison between Two Different Greenhouse Gas Control Strategies

STE Preprint 22/2012, Institute for Energy and Climate Research - Systems Analysis and Technology Evaluation, Forschungszentrum Jülich, D-52425 Jülich, Germany

20 Pages Posted: 23 Oct 2012

See all articles by Stefan Vögele

Stefan Vögele

IEF-STE

Dirk T. G. Rübbelke

Technische Universität Bergakademie Freiberg

Date Written: September 3, 2012

Abstract

Decisions of electricity suppliers on investments in low-carbon energy technologies like photovoltaic (PV) and carbon dioxide capture and storage (CCS) depend on the expected profits or surpluses that can be earned. For an assessment of the profitability of investments in PV (and other renewable energy technologies), additional costs caused by the fluctuation in PV power plants’ productivity and by the need for backup capacities have to be taken into account. Changes in the rest of the power plant stock will via their influence on the merit-order curve also affect the return on investment. Bearing these aspects in mind, it might become more attractive to invest in alternative technologies like CCS than to channel the investments towards PV in combination with backup power plants. In our study we compare investments in CCS and PV regarding possible merit-order effects and profitability, using investments in Germany as an example.

Keywords: crbon dioxide capture and storage, greenhouse gas control, low-carbon investments, merit-order effects, photovoltaic

JEL Classification: Q40, Q54, F18

Suggested Citation

Vögele, Stefan and Rübbelke, Dirk T. G., Decisions on Investments in Photovoltaics and Carbon Capture and Storage: A Comparison between Two Different Greenhouse Gas Control Strategies (September 3, 2012). STE Preprint 22/2012, Institute for Energy and Climate Research - Systems Analysis and Technology Evaluation, Forschungszentrum Jülich, D-52425 Jülich, Germany. Available at SSRN: https://ssrn.com/abstract=2165699 or http://dx.doi.org/10.2139/ssrn.2165699

Stefan Vögele (Contact Author)

IEF-STE ( email )

Jülich, 52425
Germany

Dirk T. G. Rübbelke

Technische Universität Bergakademie Freiberg ( email )

Freiberg, 09599
Germany

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