Policy Interaction and the Integration of Volatile Renewable Energy

This paper argues that there are inherent trade-offs in energy policy objectives that pose frictions to the establishment of a new technology base. We ask how institutions in an evolving electricity system can be designed to best achieve policy targets that are partly conflicting. In particular, this concerns sector regulation that seeks to maintain security of supply which may conflict with the promotion of volatile renewable energy displacing peak and emergency capacities on the wholesale market. In a case study of the electricity sectors in Germany, Spain and Denmark, policy fields are analysed, which jointly determine systemic performance. The results suggest a key role of policy coordination in mitigating outage risks arising due to the displacement effect