Subsidized Renewables’ Adverse Effect on Energy Storages and Carbon Pricing as a Potential Remedy
Liebensteiner M, Haxhimusa A, Naumann F (2022)
Publication Language: English
Publication Type: Journal article, Original article
Publication year: 2022
Journal
Journal Issue: 171
URI: https://authors.elsevier.com/a/1g1UN4s9Hw63I7
DOI: 10.1016/j.rser.2022.112990
Abstract
Large-scale energy storage is viewed as a key complementary technology in a power system fed by a large share of intermittent renewable energies (RE). However, subsidies for RE - a well-intended market intervention - may distort price signals, thereby adversely undermining the profitability of energy storages, and thus, adequate investment incentives. This study provides novel causal estimates supporting this notion, using an econometric instrumental-variables framework and data on Austrian pumped storages, operating in the German-Austrian electricity market, characterized by a large share of generously subsidized RE. The findings show that RE significantly depress storage profitability and that further deployment of RE will intensify this effect. This may pose an obstacle against adequate investment in bulk energy storage capacity. Moreover, the results indicate that intensifying carbon pricing would significantly counteract the problem via a market-based price signal. This study contributes to the general debate on the design and effects of environmental regulation and particularly shows that a non-market-based policy for a green technology may adversely affect complementary technologies.
Authors with CRIS profile
Mario Liebensteiner
Juniorprofessur für Wirtschaftswissenschaften (Energiemärkte und Energiesystemanalyse)
Involved external institutions
Germany (DE)How to cite
APA:
Liebensteiner, M., Haxhimusa, A., & Naumann, F. (2022). Subsidized Renewables’ Adverse Effect on Energy Storages and Carbon Pricing as a Potential Remedy. Renewable and Sustainable Energy Reviews, 171. https://doi.org/10.1016/j.rser.2022.112990
MLA:
Liebensteiner, Mario, Adhurim Haxhimusa, and Fabian Naumann. "Subsidized Renewables’ Adverse Effect on Energy Storages and Carbon Pricing as a Potential Remedy." Renewable and Sustainable Energy Reviews 171 (2022).
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