Wind farm revenues in Western Europe in present and future climate

55 Pages Posted: 18 Feb 2021

See all articles by Bastien Alonzo

Bastien Alonzo

Ecole Polytechnique, Palaiseau

Silvia Concettini

Climate Economics Chair; Energy and Prosperity Chair

Anna Creti

affiliation not provided to SSRN

Philippe Drobinski

Ecole Polytechnique, Palaiseau

Peter Tankov

ENSAE, Institut Polytechnique de Paris

Date Written: January 19, 2021

Abstract

Investments into wind generation may be hampered by revenues uncertainty caused by the natural variability of the resource, the impact of climate change on wind potential and electricity prices, and the regulatory risks. We quantify the uncertainty of the net present value of wind farms in France, Germany and Denmark and we evaluate the cost of support mechanisms needed to guarantee their profitability under present and future climate. We build a localised model for wind power output and a country-level model for electricity demand and prices taking into account hourly variation of wind, load and prices. Our study reveals that support mechanisms are needed at current market prices and current climate, as well as under future climate according to several scenarios for climate change and energy transition. The cost of support mechanisms for a 15-year period is evaluated to 57-172 billion euros in France, 232-397 in Germany, and 18-50 in Denmark.

Keywords: wind energy, climate variability, climate change, net present value

JEL Classification: Q42

Suggested Citation

Alonzo, Bastien and Concettini, Silvia and Creti, Anna and Drobinski, Philippe and Tankov, Peter, Wind farm revenues in Western Europe in present and future climate (January 19, 2021). Available at SSRN: https://ssrn.com/abstract=3769189 or http://dx.doi.org/10.2139/ssrn.3769189

Bastien Alonzo

Ecole Polytechnique, Palaiseau ( email )

Route de Saclay
Palaiseau, 91128
France

Silvia Concettini

Climate Economics Chair ( email )

Energy and Prosperity Chair ( email )

Anna Creti

affiliation not provided to SSRN ( email )

Philippe Drobinski

Ecole Polytechnique, Palaiseau ( email )

Route de Saclay
Palaiseau, 91128
France

Peter Tankov (Contact Author)

ENSAE, Institut Polytechnique de Paris ( email )

Palaiseau
France

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