Efficient spatial distribution of wind power plants given environmental externalities due to turbines and grids

Highlights: • Conditions for efficient geographical siting of wind power plants. • Accounting for the environmental costs of both turbines and grids is essential. • Numerical energy system model illustrates social benefit of efficient siting. • Simplified taxation scheme for wind power plants. Negative environmental externalities associated with wind power plants are due to the physical characteristics of turbine installations and associated power lines and the geographical siting. This paper presents an environmental taxation scheme for achieving efficient spatial distribution of new wind power production, taking account of both production and environmental costs. Further, the paper illustrates the impact of environmental taxation by means of a detailed numerical energy system model for Norway. The analyses show that a given target for wind power production can be achieved at a significantly lower social cost by implementing a tax scheme, compared to the current situation with no environmental taxes. The analyses also show that the environmental costs associated with both turbines and power lines were crucial to the efficient spatial allocation of wind power plants.