october 10th, 2011

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October 10th, 2011

Johannes Mauritzen, johannes.mauritzen@nhh.noNHH Norwegian School of Economics, Bergen

And

Institute for Industrial Economics (IFN), Stockholm

The Decision to Scrap a Wind TurbineOpportunity Cost, Timing and Policy

Data and Methodology• Main Data set from Danish Transimission Operator, Energinett

• Date of Installation and ”Decomission”• Coordinates• Principality• Capacity, Tower Height, Rotor Diameter, Manufacturer

• Duration Models• Kaplan Meier non-parametric estimation• Cox semi-parametric regression model

• Identification• Semi-Instrumental Variables• Semi- (regression) discontinuity• Proportional Hazards Assumption

Total Wind Power Capacity in Denmark

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Total Wind Power Capacity in Denmark

Tariff for Wind Power

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Scrapped Turbines per Month

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Scrappage Policies• April 1st, 2001 – January 1st, 2004

• Retroactive to 1999• Max capacity of 150 kW• Subsidy of .17 DKK/kWh

• 3x scrapped value <100kW• 2x scrapped value >100, <150

• December 15th, 2004• Max capacity of 450 kW• Subsidy of .12 DKK/kWh

• 2x scrapped capacity• limited to 12,000 FLH, max of .48 DKK total tariff• February 21, 2008 – extra .08 DKK/kWh hour added

Kaplan Meier Survivor Function Estimate

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Kaplan Meier Survivor Function Estimate

Kaplan-Meier Survival Estimates (100-200 kW)

Kaplan-Meier Survival Estimates (400-500 kW)

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Turbine Scrappage Hazard: Cox Regression

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Turbine Scrappage Hazard: Cox Regression

Turbine Efficiency Indicator

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Conclusion and Discussion