Risk implications of renewable support instruments: Comparative analysis of feed-in tariffs and premiums using a mean-variance approach

Different support instruments for renewable energy expose investors differently to market risks. This has implications on the attractiveness of investment. We use mean-variance portfolio analysis to identify the risk implications of two support instruments: feed-in tariffs and feed-in premiums. Using cash flow analysis, Monte Carlo simulations and mean-variance analysis, we quantify risk-return relationships for an exemplary offshore wind park in a simplified setting. We show that feedin tariffs systematically require lower direct support levels than feed-in premiums while providing the same attractiveness for investment, because they expose investors to less market risk. These risk implications should be considered when designing policy schemes

Regulating Future Offshore Grids: Economic Impact Analysis on Wind Parks and Transmission System Operators

The increasing development of offshore wind parks in the European offshore territory may lead to meshed offshore grids in which each wind park might be connected to several countries. Such offshore grids could be subject to various regulatory regimes, depending on the degree of cooperation between the respective countries. This study focuses on how investors in wind parks and transmission systems are affected by the choice of regulatory regime in offshore grids with one to four countries connected. In order to capture the uncertainties related to the exposure to market prices as well as risks related to line failures, we develop a stochastic model for an exemplary wind park and offshore grid. This yields the real option values of operational flexibility from additional connections. Simulation results show that the choice of regulatory regime, including market access and pricing rules, can have a significant impact on the value of a wind park and on the value of the interconnection capacity in the offshore grid. The impact can both be positive and negative, implying a complex incentive structure for the involved actors. If contrary effects are not reflected in the remuneration level of a wind park, for example in the price premium level, investment incentives could either be diminished or the wind park could incur windfall profits. Both cases are socio-economically suboptimal as they may pose additional cost to the system. Policy makers should consider these findings when designing the regulatory regime and level of support in an offshore grid in order to maintain an effective and efficient development of offshore wind in Europe

Electrostatic Disorder-Induced Interactions in Inhomogeneous Dielectrics

We investigate the effect of quenched surface charge disorder on electrostatic interactions between two charged surfaces in the presence of dielectric inhomogeneities and added salt. We show that in the linear weak-coupling regime (i.e., by including mean-field and Gaussian-fluctuations contributions), the image-charge effects lead to a non-zero disorder-induced interaction free energy between two surfaces of equal mean charge that can be repulsive or attractive depending on the dielectric mismatch across the bounding surfaces and the exact location of the disordered charge distribution.Comment: 7 pages, 2 figure