Abstract
Negative environmental externalities associated with wind power plants are due to the physical characteristics of turbine installations and associated power lines and the geographical siting. This paper presents an environmental taxation scheme for achieving efficient spatial distribution of new wind power production, taking account of both production and environmental costs. Further, the paper illustrates the impact of environmental taxation by means of a detailed numerical energy system model for Norway. The analyses show that a given target for wind power production can be achieved at a significantly lower social cost by implementing a tax scheme, compared to the current situation with no environmental taxes. The analyses also show that the environmental costs associated with both turbines and power lines were crucial to the efficient spatial allocation of wind power plants.
Highlights
Decarbonisation of the electricity markets is expected to result in a large increase in land-based wind power production (IEA, 2019)
We have identified three sources of environmental costs that may result in inefficient spatial distribution of wind power plants (WPPs): turbines, regional power lines and transmission lines
The numerical energy system model TIMES-Norway is used to illustrate the socially efficient siting of WPPs in Norway compared with the social costs of a potentially inefficient spatial distribution of wind power production, given a target of 20 TWh wind power production
Summary
Decarbonisation of the electricity markets is expected to result in a large increase in land-based wind power production (IEA, 2019). The numerical model simulations assume a set target for increased wind power production in Norway and illustrate how efficient taxation of externalities affects the social costs and spatial allocation of WPPs compared to the present situation with no environmental taxes. The proposed environmental taxation scheme contributes to a more socially efficient expansion of wind power production, as investors in new WPPs must take into account the environmental costs of turbines and power lines when deciding whether or not to carry out their proposed WPP project. This analysis sets the target for Norwegian wind power production at 20 TWh, approximately four times the present production level.
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