Scandinavian Working Papers in Economics

Working Paper Series,
Research Institute of Industrial Economics

No 940: Scrapping a Wind Turbine: Policy Changes, Scrapping Incentives and Why Wind Turbines in Good Locations Get Scrapped First

Johannes Mauritzen ()
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Johannes Mauritzen: Research Institute of Industrial Economics (IFN), Postal: P.O. Box 55665, SE-102 15 Stockholm, Sweden

Abstract: The most common reason for scrapping a wind turbine in Denmark is to make room for a newer turbine. The decision to scrap a wind turbine is then highly dependent on an opportunity cost that comes from the interaction of scarce land resources, technological change and changes in subsidy policy. Using a Cox regression model I show that turbines that are located in areas with better wind resources are at a higher risk of being scrapped. Policies put in place in order to encourage the scrapping of older, poorly placed turbines actually have a larger effect on well-placed turbines.

Keywords: Wind power scrapping; Nordic electricity market; Cox regression model

JEL-codes: D22; D92; L94; O13; Q42

39 pages, November 16, 2012

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