Wind farm revenues in Western Europe in present and future climate
55 Pages Posted: 18 Feb 2021
Date Written: January 19, 2021
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: Suggested Citation