Evaluating the entire cost of renewable energy sources

Concern about obtaining cheaper and cleaner energy has led to the development of a wide variety of resources. Among them, renewable energy sources (RES) have received much attention because of their potential to balance increasing energy demand with environmental concerns. However, these sources are not costless. The reliability and storage problems of these kinds of energy sources are well known. Furthermore, there are other important considerations, such as the hassle (think about a solar power plant in your neighborhood) and risk to biodiversity (think about the impact on flora and fauna of a hydroelectric dam).

Different studies have analyzed people’s preferences for RES and their willingness to pay for these sources of energy, but many of these studies do not take into consideration the actual experiences of people who live, for instance, near a wind farm. In a recent paper published in Energy, Jacob Ladenburg tries to understand this dynamic by explaining how living near a wind farm affects RES preferences in Denmark, a country that gets almost 30 percent of its electricity consumption from wind power. Through surveys, Ladenburg estimates absolute and relative preferences for wind power and other RES (solar power and biomass) across the Danish population. This information can change the cost benefit analysis of a project and modify the optimal pool of energy sources.

The study compares the survey results of three sample populations: a national survey of Danish citizens and two surveys of residents from cities that are located near offshore wind power plants. The latter two groups have experienced the effects of wind power plants near their residences. The technology of both farms is similar, consisting of between 72–80 turbines, each 110 m high. There is an important difference, however: One farm, called Nysted, is located 6–10 km from the coast, while the other, Horns Rev, is located 14–17 km offshore. The Danish Energy Authority took the survey during the construction of both wind farms. The samples were randomly selected, representing the entire population of Denmark and the cities near the two wind power plants.

The study asks for the respondent’s preferences for different RES. The answers are ranked according to which source of energy is preferred: wind, biomass, or solar energy. The author uses these data as inputs into a pair of models that control for the respondents’ demographic and location information, as well as proximity to a wind farm. The first model regresses preferences for RES as alternative sources of energy that could help reduce CO₂ emissions. A second model uses the same econometrical approach to test relative preferences among those RES. In this way, the substitution preferences among the different sources can be calculated while controlling by location and other demographic factors.

As one might predict, the results show that having a visible on-shore turbine reduces preferences for wind power by 6 percent. Moreover, for people living near Nysted, with relatively closer wind turbines, the preference for wind energy drops by 26 percent and preferences for both biomass and solar energy increase by 5 percent. Interestingly, however, offshore turbines in view of residents could have a positive impact in wind energy preferences.

Obviously onshore wind farms are more economically efficient than offshore ones due to their relatively cheaper construction, generation, and transmission costs. However, they may face opposition from nearby communities. Conversely, offshore wind farms not only do not reduce but also actually may increase preferences for wind power.

Carbon-conscious countries are increasingly seeking more efficient and cleaner sources of energy. Renewable energy sources have become an important part of the effort to reduce carbon emissions. By analyzing attitudes in Denmark, it is easy to see how “not in my back yard” issues will be raised as such resources become more common. For that reason, energy planners must consider not only the technically optimum location but also local reactions. The best site will be a function of cost and potential resistance of households that would be affected.

Article Source: Dynamic properties of the preferences for renewable energy sources—A wind power experience-based approach, Ladenburg, Energy, Volume 76, 1 November 2014, Pages 542-551

Feature Photo: cc/(Jim Larson)