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| 1 |
ID:
171376
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| Summary/Abstract |
Policy makers across Europe have implemented renewable support policies with several policy objectives in mind. Among these are achieving ambitious renewable energy targets at the lowest cost, reducing CO2-emissions and promoting technology improvement through learning-by-doing. Using a detailed country-level model of generation markets, we address the question of how policies that subsidize renewable energy (feed-in premia and renewable portfolio standards (RPSs)) versus capacity (investment subsidies) impact the mix of renewable investments, electricity costs, renewable share, the amount of subsidies, and consumer prices in the EU electric power market in 2030 and how they interact with other policies such as the EU ETS. Our analysis shows that subsidies of energy output are cost-effective for achieving renewable energy targets in the short run, whereas policies tied to capacity installation yield more investment and might be more effective in reducing technology costs in the longer term. The difference in costs between these two policy options diminish with higher CO2-prices. Although the differences are significant, they are smaller than cost impacts of other renewable policy design features, namely the effect of not allowing EU members to meet their individual targets by trading renewable credits with other member states.
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| 2 |
ID:
105810
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2011.
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| Summary/Abstract |
The UK has enviable renewable resources, both onshore (wind) and offshore (wind, wave and tidal) (The Offshore Valuation Group, 2010). The government has had policy mechanisms in place since 1990 to encourage these resources to be developed. The current mechanism, the Renewables Obligation (RO), was specifically designed to emphasise competition and therefore to fit in with the UK's overall strategic approach to energy policy. However, as yet, it has not delivered the capacity that it was designed to do, and as a result the UK faces a difficult challenge in attempting to meet European-wide renewable energy targets for 2020, as well as longer term decarbonisation targets. This paper explores some of the major reasons why the RO has performed so poorly to date and considers the prospects for improvement up to 2020. It concludes that the strategic emphasis on competition in the support mechanisms has played a key role in limiting renewables development, but that the mechanism has changed significantly since it was introduced. However, these changes, together with proposals for electricity market reform, still do not address important elements of risk in comparison with a standard Feed In Tariff.
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| 3 |
ID:
125693
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2013.
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| Summary/Abstract |
India's ambitious goals for renewable energy raise many questions regarding the nature of investment required. We conduct financial modeling of actual renewable projects in India; and derive the following insights. First, the high cost of debt is the most pressing problem: higher cost and inferior terms of debt in India may raise the cost of renewable energy by 24-32% compared to the U.S. Second, even if cost of debt goes down, loan terms - including short tenors and variable interest rates - will become significant impediments, given that they add 13-14% to the cost of renewable energy in India compared to the U.S. Finally, due to the high cost of debt, policy lessons from the U.S. and Europe; which focus on finer instruments such as duration of revenue-support, revenue-certainty, investor-risk-perception, and completion/cost-certainty; are not likely to be as effective, with potential impacts on the cost of renewable energy in the 3-11% range. In fact, we find that an interest-rate subsidy, which reduces the cost of debt, reduces the overall subsidy burden by 13-16%. This suggests that Indian policymakers need to prioritize the provision of low-cost, long-term debt and take a closer look at the successful efforts by China and Brazil.
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