Abstract
Electricity production from wind generators holds significant importance in European Union’s 20% renewable energy target by 2020. In this paper, I show that ownership of
wind generators affects market outcomes by using both a Cournot oligopoly model and a
real options model. In the Cournot oligopoly model, ownership of the wind generators by
owners of fossil-fueled (peakload) generators decreases total peakload production and increases the market price. These effects increase with total wind generation and aggregate
wind generator ownership. In the real options model, start up and shut down price thresholds are significantly higher when the monopolist at the peakload level owns both types of generators. Furthermore, when producing electricity with the peakload generator, the monopolist can avoid facing prices below marginal cost by owning a certain share of the wind generators.
wind generators affects market outcomes by using both a Cournot oligopoly model and a
real options model. In the Cournot oligopoly model, ownership of the wind generators by
owners of fossil-fueled (peakload) generators decreases total peakload production and increases the market price. These effects increase with total wind generation and aggregate
wind generator ownership. In the real options model, start up and shut down price thresholds are significantly higher when the monopolist at the peakload level owns both types of generators. Furthermore, when producing electricity with the peakload generator, the monopolist can avoid facing prices below marginal cost by owning a certain share of the wind generators.
| Original language | English |
|---|---|
| Publication date | 2013 |
| Number of pages | 26 |
| Publication status | Published - 2013 |
| Event | The 17th Annual International Real Options Conference 2013 - University of Tokyo, Tokyo, Japan Duration: 25 Jul 2013 → 26 Jul 2013 Conference number: 17 http://www.realoptions.org/abstracts2013.html |
Conference
| Conference | The 17th Annual International Real Options Conference 2013 |
|---|---|
| Number | 17 |
| Location | University of Tokyo |
| Country/Territory | Japan |
| City | Tokyo |
| Period | 25/07/2013 → 26/07/2013 |
| Internet address |