Resource title

Subsidies for Wind Power: Surfing down the Learning Curve?

Resource image

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Resource description

We develop a model with two types of electricity producers, fossil fuel utilities generating emissions, and suppliers of electricity from renewable resources such as wind energy. We account for the vertical structure of the wind-energy sector by considering wind-turbine producers engaged in learning by doing and selling their turbines to turbine operators. We show that in the absence of learning spillovers a first-best policy requires Pigouvian taxes only. We also study second-best optimal subsidies on electricity generated by wind power when (optimal) emission taxes are ruled out. We further investigate the impact of subsidies on prices, output, the number of firms, and environmental damage. It turns out that, in the case of purely private learning, secondbest optimal subsidies should only account for the environmental damage but are not necessary to spur learning.

Resource author

Albrecht Bläsi, Till Requate

Resource publisher

Resource publish date

Resource language

eng

Resource content type

text/html

Resource resource URL

http://hdl.handle.net/10419/22044

Resource license

Adapt according to the presented license agreement and reference the original author.