Valuing the Attributes of Renewable Energy Investments

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Abstract

Increasing the proportion of power derived from renewable energy sources is becoming an increasingly important part of many countries’s strategies to achieve reductions in greenhouse gas emissions. However, renewable energy in-vestments can often have external costs and bene?ts, which need to be taken into account if socially optimal investments are to be made. This paper attempts to estimate the magnitude of these external costs and bene?ts for the case of re-newable technologies in Scotland, a country which has set particularly ambitious targets for expanding renewable en-ergy. The external effects we consider are those on landscape quality, wildlife and air quality. We also consider the welfare implications of different investment strategies for employment and electricity prices. The methodology used to do this is the choice experiment technique. Renewable technologies considered include hydro, on-shore and off-shore wind power and biomass. Welfare changes for different combinations of impacts associated with different investment strategies are estimated. We also test for differences in preferences towards these impacts between urban and rural communities, and between high-and low-income households.

Keywords

Renewable Energy; External Costs and Bene?ts; Choice Experiments

Conflicts of Interest

The authors declare no conflicts of interest.

References