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Economic analysis of the profitability of existing wind parks in Portugal

Author

Listed:
  • Peña, Ivonne
  • Lima Azevedo, Inês
  • Ferreira, Luís António Fialho Marcelino
Abstract
Discussions on the appropriate policy design and level of incentive to promote renewable energy adoption and meet the 20/20/20 goals have spurred recently in the European Union. These discussions are also ongoing in Portugal, namely in what concerns the level and duration of feed-in tariffs that should be provided to independent power producers. This, in turn, raises the question of whether the past feed-in tariff levels were well designed to achieve the goals of a larger penetration of renewables in the Portuguese grid. The policies to induce wind adoption have led to a growth in wind installed capacity and share of electricity generated by wind in Portugal, but questions arise on their cost-effectiveness and whether alternative policy designs would have led to the same goal. In this work, we estimate profits made by wind independent power producers for wind parks that were connected in Portugal between 1992 and 2010, and conclude that the feed-in tariffs have overcompensated some wind power producers. We also discuss the recent changes in feed-in tariff legislation published in February 2013 and estimate the expected costs of the introduced changes.

Suggested Citation

  • Peña, Ivonne & Lima Azevedo, Inês & Ferreira, Luís António Fialho Marcelino, 2014. "Economic analysis of the profitability of existing wind parks in Portugal," Energy Economics, Elsevier, vol. 45(C), pages 353-363.
    • Handle: RePEc:eee:eneeco:v:45:y:2014:i:c:p:353-363
    DOI: 10.1016/j.eneco.2014.06.013
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    Citations

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    Cited by:

    1. Peña, Ivonne & L. Azevedo, Inês & Marcelino Ferreira, Luís António Fialho, 2017. "Lessons from wind policy in Portugal," Energy Policy, Elsevier, vol. 103(C), pages 193-202.
    2. Prata, Ricardo & Carvalho, Pedro M.S. & Azevedo, Inês L., 2018. "Distributional costs of wind energy production in Portugal under the liberalized Iberian market regime," Energy Policy, Elsevier, vol. 113(C), pages 500-512.
    3. Stetter, Chris & Piel, Jan-Hendrik & Hamann, Julian F.H. & Breitner, Michael H., 2020. "Competitive and risk-adequate auction bids for onshore wind projects in Germany," Energy Economics, Elsevier, vol. 90(C).
    4. Aquila, Giancarlo & Rotela Junior, Paulo & de Oliveira Pamplona, Edson & de Queiroz, Anderson Rodrigo, 2017. "Wind power feasibility analysis under uncertainty in the Brazilian electricity market," Energy Economics, Elsevier, vol. 65(C), pages 127-136.
    5. Zifa Liu & Wenhua Zhang & Changhong Zhao & Jiahai Yuan, 2015. "The Economics of Wind Power in China and Policy Implications," Energies, MDPI, vol. 8(2), pages 1-18, February.
    6. Kumar, Indraneel & Tyner, Wallace E. & Labi, Samuel & Sinha, Kumares C., 2021. "“The Answer My Friend is Blowin’ in the Wind”: A stochastic assessment of wind farms financial feasibility and economic efficiency," Energy Policy, Elsevier, vol. 159(C).
    7. Lone Werner & Bert Scholtens, 2017. "Firm Type, Feed-in Tariff, and Wind Energy Investment in Germany: An Investigation of Decision Making Factors of Energy Producers Regarding Investing in Wind Energy Capacity," Journal of Industrial Ecology, Yale University, vol. 21(2), pages 402-411, April.
    8. Frade, Pedro M.S. & Pereira, João Pedro & Santana, J.J.E. & Catalão, J.P.S., 2019. "Wind balancing costs in a power system with high wind penetration – Evidence from Portugal," Energy Policy, Elsevier, vol. 132(C), pages 702-713.
    9. Haar, Lawrence, 2020. "An empirical analysis of the fiscal incidence of renewable energy support in the European Union," Energy Policy, Elsevier, vol. 143(C).
    10. Lawrence Haar, 2021. "Design Flaws in United Kingdom Renewable Energy Support Scheme," Energies, MDPI, vol. 14(6), pages 1-26, March.

    More about this item

    Keywords

    Feed-in tariffs; Wind energy; Wind policy; Portuguese energy policy;
    All these keywords.

    JEL classification:

    • D2 - Microeconomics - - Production and Organizations
    • Q2 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation
    • H2 - Public Economics - - Taxation, Subsidies, and Revenue
    • R3 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location

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