The economic sustainability of renewable energies

Abstract

The transition toward a significant penetration of renewable sources in electricity generation, although desirable under an environmental viewpoint, is likely to be very costly due to the scarce adaptability to Renewable Energy (RE) sources characterized by relevant intermittency. In fact, generation from RE sources implies a change in the scheduling of the rest of generating facilities, which may affect operational costs of the power systems due to a more frequent cycling of thermal plants, i.e. a change in operating modes that occur in response to varying dispatching requirements. In this paper we investigate the effect on cost efficiency of energy operators as a consequence of the penetration of REs at the Country level using a two-step model based on Data Envelopment Analysis. The findings highlight a negative and significant impact of the index of penetration of REs on cost efficiency of firms involved in the production of programmable sources.