The Impact of Wind Power Support Schemes on Technology Choices

Germany changed renewable remuneration for wind power from a fixed Feed-In Tariff (FIT) to a floating Market Premium Scheme (MPS) in 2012. One aim of this adjustment was to better align the supply of generated wind electricity with the demand for it, e.g. through more system-friendly wind turbine technology choices. In energy systems with a high share of variable renewable energies, such turbines produce a higher share of their production at lower wind speeds and thus can reduce the need for alternative flexibility options like back-up capacity, storage, grid extensions and demand side measures. However, based on a wind power investment model, I show that the MPS fails to convey strong enough incentives to project developers to significantly alter their investment decisions as long as these base their investments on current electricity market price profiles and are limited by their access to risk-averse project finance. One reform proposal to support the installation of system-friendly turbines is a change in the production volume-based benchmark approach which plays an integral part in both the fixed FIT and the MPS. The investment model indicates that such a revised policy can incentivize the deployment of moderately more system-friendly wind power technologies at some locations. An alternative option is to shift to a production value-based benchmark approach. It directly reflects the future additional market value of system-friendly turbines in today's remuneration structure. Thus, this approach sets incentives also for investors without perfect foresight - or with financing constraints - to deploy more systemfriendly turbines that meet the requirements of power systems with increasing shares of wind power

Wind Providing Balancing Reserves: An Application to the German Electricity System of 2025

This paper analyzes the influence of wind turbines as new participants on prices and allocation within balancing markets. We introduce the cost-minimizing electricity sector model ELMOD-MIP, that includes detailed unit-commitment constraints, complex combined heat and power constraints, and minimum bid sizes for balancing capacity reservation. The model also features a novel approach of modeling balancing reservation by considering possible activation costs already during the reservation phase, mimicking the activation anticipation of market participants. The model includes the spot and balancing market of Germany and is applied to scenarios for 2013 and 2025. The results for 2025 show, in comparison to 2013, a price increase for positive and negative reserves, in case no new participants enter the market. With the participation of wind turbines the cost for balancing provision is reduced by 40%, but above 2013 values. The relative cost savings from wind participation are higher for negative reserve provision than positive reserve provision, as wind turbines can use their full capacity if not activated and do not have to be curtailed ex ante. The participation of wind turbines especially reduces the occurrence of peak prices for positive and negative reserves in 2025. This reduction effect occurs even with a relatively low share where wind turbines participate with only five percent of their capacity. Therefore, further fostering the process of allowing wind turbines to participate in the German reserve market seems favorable

Sowing the Wind and Reaping the Whirlwind? The Effect of Wind Turbines on Residential Well-Being

This paper investigates the effect of wind turbines on residential well-being in Germany, using panel data from the German Socio-Economic Panel (SOEP) and a unique, novel data set on wind turbines for the time period between 2000 and 2012. Using a Geographical Information System (GIS), it calculates the distance from households to the nearest wind turbines to determine whether an individual is affected by disamenities, e.g. through visual pollution. The depth of our unique, novel data set on wind turbines, which has been collected at the regional level and which includes, besides their exact geographical coordinates, their construction dates, allows estimating the causal effect of wind turbines on residential well-being, using difference-in-difference propensity-score and spatial matching techniques. We demonstrate that the construction of a new wind turbine in a treatment area of 4000 metres around households has a significantly negative impact on life satisfaction. Moreover, this effect is found to be of transitory nature. Contrasting the implicit monetary valuation with the damage through CO2 emissions avoided by wind turbines, wind power turns out to be a favorable technology despite robust evidence for negative externalities