EFFECTIVENESS OF INCENTIVES FOR WIND ENERGY: MODELS AND EMPIRICAL EVIDENCES FROM AN ITALIAN CASE STUDY

Abstract

This study refers to “grid parity” to describe the point in time at which an investment project on renewable energy based on wind power will produce electricity for the same cost to ratepayers as traditional technologies. That is when the new technology can produce electricity for the same cost as the electricity available on a utility’s transmission and distribution “grid”. Our aim is to verify technical-energy-economic feasibility study of systems based on wind power. We evaluate the economic performance of an investment project in a hypothetical wind farm with an installed capacity of 1 Megawatt (MW) in Italy. In our model, the cost-building threshold of the wind farm in order to have a proftability project is computed by using a sensitive analysis. The obtained results underline the importance of incentives to support wind power in Italy because grid-parity presently cannot not achieved in absence of interventions.