**6. Conventional energy sources and backup**

As stated above, renewable energy sources, particularly wind and solar, suffer from the in‐ termittency phenomenon. This phenomenon could cause overcapacity. There are several factors that may influence overcapacity, such as conventional energy sources and renewable energy sources, socio-economic and energy policies. Our results allow us to explore and dis‐ cuss them individually and suggest some guidance for energy policy and measures.

As shown in the models, the results for conventional energy sources show a negative effect of fossil fuels on overcapacity, more specifically coal and gas power plants. With greater use of coal and gas, the effect of wind overcapacity is reduced. Two main reasons can be at the origin of this effect: (i) intermittency leads to the uncertainty of energy generation and the need to ensure a continuous electricity supply. It requires the existence of fossil fuels like coal and gas to backup power. With more dependence on these sources in peak-load peri‐ ods, electricity generation is simultaneously based on renewables and fossil fuels in order to meet electricity demand and this implies a reduction in wind overcapacity; and (ii) in line with Marques et al. (2010) the results for fossil fuels sustain a lobbying effect in the electrici‐ ty generation industry. This effect promotes the growth of fossil fuels to the detriment of re‐ newables due to more stringent energy policies (Fredriksson et al., 2004). The first sites for installation of wind farms are usually the most efficient ones, and, in some countries, the de‐ ployment of renewables is still in its early stages because fossil fuels still have high shares in total electricity generation. Therefore, some countries still benefit from better sites with high wind speeds and from better capacity factor and, as a consequence, wind overcapacity tends to be lower, since wind power is installed in optimum sites.

Nevertheless, assuming that fossil fuels could have a positive effect on overcapacity, an in‐ crease in the share of coal, gas and oil would provoke a substitution effect in the electrici‐ ty generation process due to less use of wind energy. In this case, idle capacity would be greater.

capacity positively influences overcapacity. Regarding the impact of industrial, municipal and renewable waste power, it seems to overlap wind energy due to positive signs in our results. In fact, with more waste processing for energy generation, there appears to be a sub‐ stitution effect for wind energy. This result is in line with the growing use of waste for elec‐

On the Public Policies Supporting Renewables and Wind Power Overcapacity: Insights into the European Way Forward

http://dx.doi.org/10.5772/52159

73

The spatial dispersion and, in other words, the efficient installation of wind parks should be discussed further. Population density was applied as a proxy for spatial dispersion of wind farms to assess the impact of countries with higher or less population density. These coun‐ tries tend to have less land space to install wind farms properly. Furthermore, continental areas have lower wind speeds than countries with coastlines. Overall, the results support this assumption. Overcapacity is larger in more populated countries. Accordingly, policy makers and players should pay extra attention to this issue in order to support the diversifi‐ cation of wind turbines. To overcome the constraints caused by highly populated countries, offshore technologies can be a better way due to their steadier characteristics mainly driven by higher wind speeds. It also allows the use of higher power generation turbines. In short, offshore wind farms can help to overcome the population density effect on the creation of

In the literature, the role of economic growth as a driver toward renewable energy is far from consensual. Marques et al. (2010) argued that the effect of GDP on renewables de‐ pends on the share level of renewables. In their turn, Chang et al. (2009) conclude that economic growth and renewables' development are not directly related. Nonetheless, countries that are in an upward trajectory with high growth rates can support prices of in‐ vesting in renewables. Despite increased prices for the final consumer, developed coun‐ tries tend to invest more in renewable energy sources. In this chapter, we focus on the effect of the logarithm of GDP *per capita.* Our results are consistent and reveal that coun‐ tries with the highest living standards benefit from more advanced and efficient wind

With the goal of increasing the share of energy from renewable sources, energy policies are stated as an effective instrument for European countries to implement (EU directive, 2009). Several authors (e.g. Gan et al., 2007; and Johnstone et al., 2008) found that incen‐ tive taxes, feed-in tariffs, voluntary programs and R&D policy support are the main driv‐ ers supporting renewables. Our results allow us to analyze individually and jointly the energy policies adopted in the European context. In our models, the total of accumulated energy policies over the years increases overcapacity, showing that the impact of these policies is sometimes inefficient, taking into account only the players' political will to reach European guidelines. Table A.1 of the appendix shows results from disaggregated

tricity generation in recent years, ranging from 2% in 1998 to 5% in 2009.

**8. Socio-economic drivers, energy policies and measures**

overcapacity.

power plants which reduce idle capacity.

Further regarding conventional energy sources, nuclear power is not statistically significant in wind overcapacity, despite its relevance in Europe. Nuclear power is not an intermittent source and its widespread use in Europe is mainly due to its own characteristics: it is cheap‐ er than oil, with a greater capacity to generate power in a single power plant but is inflexible in providing backup for renewables due to its low startup times. Nuclear power works bet‐ ter in full-power operation than on demand (Dittmar, 2012). It is therefore understandable that nuclear is not significant in explaining wind overcapacity. Ultimately, this result can be seen as additional proof of the robustness of the results.
