Rethinking how to support intermittent renewables
Rethinking how to support intermittent renewables / Patrick A. Narbel. Norwegian School of Economics, April 2014, 28 p.
Author’s abstract :
Intermittent renewable energy sources, including solar and wind power, typically remain more expensive than conventional power sources. As a consequence, few intermittent power projects would have been deployed if specic policy instruments had not been implemented. Existing policy instruments facilitating the deployment of intermittent renewable energy technologies include the feed-in tari, the feed-in premium and the quota system. Based on a numerical analysis, it is shown that these specic policy instruments do not necessarily facilitate the deployment of valuable energy sources because they ignore the cost of inter- mittency. A valuable intermittent energy source is dened here as a source of energy which requires little nancial support and which limits the need for capacity payments in order to ensure the security of supply. Based on insights from the numerical analysis, a new policy instrument is suggested: a multiplicative premium. This type of policy instrument would increase the likelihood that valuable intermittent energy assets are deployed in priority.