Ambec, Stefan and Crampes, Claude (2019) Decarbonizing electricity generation with intermittent sources of energy. Journal of the Association of Environmental and Resource Economists, vol. 6 (n° 6). pp. 919-948.

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Identification Number : 10.1086/705536


We examine policy instruments that aim to decarbonize electricity production by replacing fossil fuel energy with intermittent renewable sources, namely, wind and solar power. We consider a model of investment, production, and storage with two sources of energy: one is clean but intermittent (wind or solar), whereas the other one is reliable but polluting (thermal power). We first determine the first-best energy mix depending on the social cost of polluting emissions. We then show that, to implement the socially efficient energy mix without a carbon tax, feed-in tariffs and renewable portfolio standards must be complemented with a price cap and volume-limited capacity payments.

Item Type: Article
Language: English
Date: November 2019
Refereed: Yes
Uncontrolled Keywords: electricity, renewables, intermittency, storage, feed-in tariff, carbon emissions.
JEL Classification: D24 - Production; Cost; Capital and Total Factor Productivity; Capacity
D61 - Allocative Efficiency; Cost-Benefit Analysis
Q41 - Demand and Supply
Q42 - Alternative Energy Sources
Q48 - Government Policy
Divisions: TSE-R (Toulouse)
Site: UT1
Date Deposited: 27 May 2019 08:08
Last Modified: 18 Nov 2021 08:40
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