Missing Gas Capacity: An Adverse Effect of Subsidized Renewables

*The Paradox: Renewables Undercut Gas While Coal Remains*
▶ Wind and solar electricity need flexible backup capacity.
▶ Gas plants would be ideal because of their lower emissions compared to lignite and hard coal.
▶ Yet direct financial support for renewables creates an undesirable outcome.
▶ Gas is pushed out of the market, while coal remains.
▶ A high CO2 price leads to a better market outcome.

Wind and solar need flexible backup. Gas would be the cleaner bridge compared with lignite and hard coal—but direct subsidies for renewables can create a paradox: gas capacity is discouraged while coal remains. In this video, I show the mechanism with data, a simple merit-order graph, and evidence from the literature. The policy fix is straightforward: a high CO2 price aligns incentives without locking in coal.

*Reference:*
Liebensteiner, M., & Wrienz, M. (2020). Do intermittent renewables threaten the electricity supply security?. Energy Economics, 87, 104499.
https://doi.org/10.1016/j.eneco.2019.104499

*Contents:*
00:00 Intro
00:34 Debate around new gas plants
01:55 Study in a nutshell
03:22 Graph: renewables push out gas
04:36 Empirical model
07:18 Results: effect of renewables on gas
09:22 Effect of renewables on coal
09:59 Problems: supply security & emissions
11:04 Better policy: carbon pricing
13:21 Conclusions

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#energyeconomics #co2 #econometrics #causalinference #electricity #energymarket #energymarkets #stromversorgung #emission #renewableenergy

Видео Missing Gas Capacity: An Adverse Effect of Subsidized Renewables канала Energiemärkte — Prof. Mario Liebensteiner