In their article, ‘The power of wind: The global wind energy industry's successes and failures’, published in Ecological Economics, Oliver Summerfield-Ryan and Professor Susan Park examine the wind industry and underscore the limits of market mechanisms for a sustainable energy transition.
The global shift to renewable energy is crucial for preventing catastrophic climate change. Three quarters of CO2 emissions are generated by the energy sector, making greenhouse gas reductions to net zero necessary by 2040–2050, with significant reductions by 2030.
As Oliver and Professor Park document, wind technology is playing a leading role in reducing emissions to meet the 2015 Paris Agreement: it is one of the fastest growing, most competitive, and least harmful of the renewable energy technologies.
Using an Original Institutional Economics approach, they examine the successes and challenges facing the global wind energy industry, while recognising that markets are social constructs rather than objective, value neutral, institutions.
Oliver and Professor Park evaluate structural weaknesses in the industry that could limit wind energy's role in decarbonisation. They argue that electricity markets for wind energy favour traditional fossil fuels. In addition to existing market challenges, this contributes to volatility, which could limit future investment and hamper wind as a major part of the sustainable energy transition.
They also point out that the social benefits of wind are clear compared with other energy sources and cannot be fully represented through price signals. But right now, the global wind energy market shows market failures that could impede the shift to carbon neutrality by 2050.
Oliver and Professor Park argue that if price signals alone do not capture wind energy's benefits, then we must seriously reconsider the “systems value” of the structure of electricity markets for the sustainability transition. Their analysis highlights that there are a range of measures that could contribute to wind energy's viability beyond subsidies, capacity mechanisms, and price caps.
Their argument has significant implications for the future trajectory of wind energy, the limits of market mechanisms, and the need for a “systems value” approach to the energy transition.