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Working paper / Climate

Carbon Price as Renewable Energy Support? Empirical Analysis on Wind Power in Denmark

Author(s): GAVARD Claire

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ABSTRACT

Empirical analysis on wind energy in Denmark is used to quantify the impact of the various support policies in place in the last decade and infer the carbon price that would lead to the same level of deployment under the hypothesis of revenue certainty equivalence. Probit analysis on monthly data is used to test the impact of electricity price and support policies on the observation of new turbine connections to the grid. The support level is the dominant factor while the impact of the past electricity price is limited. A feed-in tariff regime significantly brings in more wind energy than a fixed premium. No difference between the impacts of a variable and a fixed premium is found. The probability of new connections as a function of the support level and the policy type is used to give an indication of the carbon price level that would support similar renewable deployment.