Can the Current State Support Mechanisms Help the Growth of Renewable Energies in Wind Markets?

Abstract

The aim of this paper is to provide evidence on the effectiveness of the current state support mechanism incentive adopted by the Italian government in the wind market. In particular, this paper intends to investigate the effectiveness of the auction mechanism as an incentive tool for renewable sources as required by the transposition of Directive 2009/28/EC. In order to demonstrate the economic and financial feasibility of a typical wind-sector investment, we performed a scenario analysis (Monte Carlo simulation) determining a 52,500 Net Present Value (NPV) by varying the key underlying variables of the investment. The results show that with the mechanism currently in place the percentage of positive leveraged NPV is approximately equal to 70%. Despite the state contribution provided through the “Feed-in tariff” mechanism, the profitability of wind projects is not always successful, and this problem could be amplified by the slowness of the authorization procedures. The article offers prime reflections for scholars and policy makers who have long been committed to promoting sustainable development and important considerations on the introduction of further incentive models.

Energy Context: Analysis of Selected Studies and Future Research Developments

“…Morea et al [12] analyzed the current state support mechanism incentive adopted by the Italian government in the wind sector. They performed a scenario analysis (Monte Carlo simulation) by varying the key variables of the investment.…”

Strategic Study for Renewable Energy Policy, Optimizations and Sustainability in Iran

“…Technical use of wind energy is possible when the average wind speed is in the range of 5 to 25 m per second, and, therefore, most of the wind energy sources are in coastal and mountainous areas. Of course, there are significant resources in the plains [27]. The global estimate of this energy shows that the maximum technical potential that can be extracted from wind energy is about twice the current electricity production in the world.…”

Determining the Optimal Directions of Investment in Regional Renewable Energy Development

“…Recently, renewable energy (RE) has become a priority for sustainable energy sector development in many countries worldwide. To ensure the active deployment of green en-ergy technologies, national governments resort to their economic incentives by setting high feed-in tariffs [1][2][3], applying RE quotas [4], auctions [5], preferential taxation [1,6], loans for RE projects [1,6], etc. [7][8][9].…”