Gone with the Wind? An Empirical Analysis of the Renewable Energy Rent Transfer

70 Pages Posted: 30 Jan 2017  

Matti Liski

Aalto University - Department of Economics

Iivo Vehviläinen

Aalto University

Date Written: December 19, 2016

Abstract

Subsidies to renewable energy are costly and contentious. We estimate the reduction in prices that follows from the subsidized entry of wind power in the Nordic electricity market. A relatively small-scale entry of renewables leads to a large-scale transfer of surplus from the incumbent producers to the consumers: 10% market share for wind generation eliminates one-half of the total electricity market expenditures. The subsidies generate net gains to consumers. We develop an approach to analyzing storage and renewable energy in equilibrium, and provide an anatomy of a market dominated by such technologies.

Keywords: electricity, renewables, storage, climate policies

JEL Classification: L510, L940, Q280, Q420, Q480

Suggested Citation

Liski, Matti and Vehviläinen, Iivo, Gone with the Wind? An Empirical Analysis of the Renewable Energy Rent Transfer (December 19, 2016). CESifo Working Paper Series No. 6250. Available at SSRN: https://ssrn.com/abstract=2907997

Matti Liski (Contact Author)

Aalto University - Department of Economics ( email )

PO Box 1210
FI-00101 Helsinki
Finland
+358-9-43138384 (Phone)
+358-9-43138735 (Fax)

HOME PAGE: http://www.hkkk.fi/~liski

Iivo Vehviläinen

Aalto University ( email )

P.O. Box 21210
Helsinki, 00101
Finland

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