**9. Conclusion**

energy policies. Normative regulation and efficiency in building policies create wind pow‐ er overcapacity. Indeed, these policies imply better efficiency and consumption savings. Reducing energy consumption in buildings contributes to aggravating idle capacity. More‐ over, fiscal and tariff policies, including tax reduction in retrofitting investments, promote investments in new power plants, replacing old equipment with technologies that gener‐ ate higher power and are more efficient. Retrofit investments help to upgrade the electrici‐

Overcapacity of renewables is another aspect of the intermittency phenomenon. Wind ener‐ gy has been a very common and widely accepted instrument in reaching the 20-20-20 tar‐ gets. It merits a review of the implicit economic consequences. Policy makers should pay more attention to the advantages and consequences of their policies and measures focused on renewables in order to avoid a blindly ill-considered decision-making process. The de‐ ployment of wind power installed capacity has implications for the energy grid as a whole and creates economic distortions. To balance conventional energy sources with all renewa‐ bles is a challenging task that requires enlightened political and scientific intervention. Poli‐ cy makers should bear in mind that the growth of renewables has to be in line with energy consumption patterns. To mitigate this problem, micro-production incentives seem to be a solution to balancing domestic consumption with network energy supply. Furthermore, in‐ stalled players should not resist investment in new technologies in order to maximize wind capacity factors. Off-shore sites are a good alternative for countries with coastal areas be‐ cause in addition to having higher power generation, wind farms can make more efficient

Coal-based and gas-fired power plants are actually used to backup wind power. However, this imposes an extra cost on the final consumer since the non-use of conventional power plants is subsidized. Regulatory authorities should be aware and take measures to prevent the price escalation that combines the contribution to investment in renewables with these subsidies for energy industry lobbies. The implementation of mixed systems based on re‐ newable energy in regions with available natural resources can both improve the energy supply economically and supplant the needs of the area (Erdinc and Uzunoglu, 2012). With the opening of energy markets to the private sector, stronger regulation of the market may

Generally, there are no incentives to increase the efficiency of renewables' technology. For example, in some countries such as Portugal, there is an incentive based on feed-in tariffs for the solar photovoltaic micro-generation system. The incentive to improve efficiency is nonexistent given that the maximum electricity generation that could be sold to the player dis‐ tributer is bounded. In general, the feed-in tariffs guarantee the price for kWh regardless of whether it is generated by a very efficient device or not. This form of intervention merely ensures income for the players. Policymakers should consider implementing measures that will add competition to the renewables industry, particularly in solar and wind industries,

ty system and reduce idle capacity.

74 New Developments in Renewable Energy

use of installed capacity.

be an instrument in monitoring immoderate investments.

and thus promote patenting and R&D activities.

This chapter is centered on a panel dataset of 19 European countries for the time span 1998-2009 in order to understand and analyze the causes of wind overcapacity that may arise from non-constant electricity generation from renewables. To the best of our knowl‐ edge, this approach had never been made through panel data techniques and it is a new method in the renewables' intermittency literature. Some light is shed on overcapacity of wind energy and its interaction with conventional energy sources, other renewables, socioeconomic drivers and energy policies in the context of an economic bloc with common longterm energy guidelines.

Results from our models reveal that fossil fuel power plants, such as coal-based and gasfired, are actually used to backup wind power. Oil and nuclear do not appear to be signifi‐ cant in explaining wind overcapacity. These results may highlight the robustness of our model, considering that oil and nuclear power are generally used for base load energy gen‐ eration and therefore have no direct effect on wind overcapacity. As further robustness as‐ sessment, the robust regression estimator was performed to deal with possible outliers from our panel. Overall, the robust regression supports the main results of the estimations.

Renewables such as hydropower and solar photovoltaic seem to make no apparent contri‐ bution to explaining wind power overcapacity, unlike industrial and municipal waste. Moreover, the results indicate that population density is a factor in greater wind overcapaci‐ ty, while countries with a higher standard of living are associated with less overcapacity. The results for public policies and measures suggest that a positive effect on increased over‐ capacity may be due to inefficient incentives for deployment of wind power. The promotion of renewable energy is a crucial decision because it deals with one of the central inputs of economies and societies in general. In order to gain a full understanding of the appropriate ways in which to promote the paradigm shift from fossil to renewable sources, objectivity is needed in analyzing both the advantages and disadvantages associated with the path that has already been trodden. This cumulative experience should support the intensification of measures that have had a positive impact on the development of renewables and have not added significant distortions to the economy as a whole. Other measures which do not pro‐ duce the desired effects, or fail to contribute to an egalitarian distribution of benefits, should be reconsidered or even abandoned and replaced.

Policy measures, particularly incentives, should be largely dependent on the level of effi‐ ciency achieved by the players. These measures should be oriented towards the market, avoiding distortions between the different players acting in the energy market. Such meas‐ ures should not result in costs for the economy that endanger the prosperity levels of society in general. In fact, we are dealing with a non-cooperative game played between internation‐ al players, including countries or economic blocs, where the competitive advantage of this technology domain is more quickly surpassed than the comparative advantage of the pos‐ session of fossil resources, such as coal or oil reserves.
