During the last two decades, the use of residential photovoltaic systems (PVs) has been widely promoted by governments through various support mechanisms such as feed-in-tariffs, net-metering, net-billing, etc. These support schemes have developed a secure investment environment, increasing the penetration level of PVs in low-voltage distribution grids. Nonetheless, increased PV integration may introduce several technical problems regarding the secure operation of distribution grids. Battery energy storage (BES) systems can mitigate such challenges, but the high capital cost is one of the most important limiting factors towards the widespread use of these systems. In fact, the financial viability of integrated PV and BES systems under different support schemes remains an open issue. In this paper, the profitability of PV and BES systems is evaluated through an advanced techno-economic model, that provides the optimal size of PV-BES system in terms of net present value, based on the electricity production and consumption profile of the installation, PV and BES systems costs, and electricity charges. The proposed model may be a useful tool for prosumers, grid operators and policy makers, to assess the impact of various incentive policy schemes and different BES operation strategies on the economic viability of PV-BES systems.
This report provides an overview of the next generation of renewable energy policies. It highlights how ongoing changes in renewable energy policy design and breaking down the conventional policy categories and giving rise to innovative policy hybrids.
Following the deregulation of electricity markets, a current challenge of policy makers is to facilitate the transition to a sustainable power system at the highest welfare for society. In this paper we investigate the efficiency of different support schemes, such as a feed-in tariff, a feed-in premium and tradable green certificates, with respect to incentivizing the required investments in renewable generation. We consider a number of generation expansion problems, and formulate stochastic equilibrium models that account for uncertainty in demand and renewable supply, the risk-aversion of investors and the competitiveness of the market. The problem of the policy maker is formulated as a mathematical program with equilibrium constraints (MPEC) and as a non-linear complementarity problem (NCP) for the feed-in schemes and the certificate market, respectively. Our models are solved for a small illustrative example and a larger case study based on the Danish power system. The results confirm that the main driver for the optimal choice of renewable support scheme is the aversion of power producers towards price and volume risk, while the competitiveness of the market rarely affects such choice.
en We are at an historical crossroads. The latest IPCC report gives dire predictions about potential losses from climate change, ranging from high sea levels to deterioration of agricultural production. Although emissions are still concentrated in the North, the most‐rapid growth of emissions is occurring in the South, suggesting the need for major changes in the trajectory of its economic development. Massive aid flows for climate‐change mitigation and adaptation lack any clear framework. We begin the task by examining the evolution of Central American electricity systems, seeking to explain the exceptional ability of several countries wracked by conflict, weak institutions, and struggling economies to move toward renewable fuels. We use first‐person interviews, government documents and websites, and consultant and expert reports to examine the largely unrecognized achievements. The necessity of finding alternative energy is not in question, but how these countries overcame the financial, technical, and policy challenges should be of great interest and could potentially provide valuable lessons for other countries. Abstract es Estamos en una encrucijada histórica. El último informe IPCC da terribles predicciones sobre altas pérdidas potenciales del cambio climático, que incluyen niveles más altos del mar y un deterioro de la producción agrícola. Mientras que las emisiones todavía se concentran en los países del norte, el más rápido crecimiento de las emisiones se está produciendo en los del sur, lo que sugiere la necesidad de cambios importantes en la trayectoria de su desarrollo económico. Los flujos de ayuda masiva para la mitigación del y adaptación al cambio climático carecen de un marco claro. Comenzamos este ensayo mediante el examen de la evolución de los sistemas de electricidad de América Central, tratando de explicar la capacidad excepcional de algunos de estos países azotados por conflictos, instituciones débiles y economías en problemas, por avanzar hacia el uso de combustibles renovables. Utilizando entrevistas personales, documentos gubernamentales e informes de portales electrónicos, de consultores y expertos, examinamos sus logros en gran parte desconocidos. La necesidad de encontrar alternativas energéticas no está en duda, pero entender cómo estos países superaron los retos financieros, técnicos y de política es de gran interés y podría potencialmente ofrecer lecciones valiosas para otros países.
This chapter discusses both local opposition and local support to renewable energy developments, with particular attention to wind farms and solar power plants. Actors, arguments, and actions are examined and contrasted. It is argued that opposition to renewables has received far more attention from social scientists, even though the success of this sector in several countries can show that support is frequent and widespread. Regarding opposition, the NIMBY hypothesis is discarded and other more complex and multilayered explanations are discussed, such as place attachment, landscape concerns, procedural and distributive justice, and actual impacts of wind and solar farms. Concerning support to renewable energy developments, justifications such as economic benefits (namely financial incentives and employment generation), landscape rehabilitation, and environmental values are explored.
The LCOE is a widespread indicator, which is often used for cost comparisons of renewable energy technologies with energy prices from the grid in order to determine whether or not grid parity has been achieved. In theory and practice it has been alleged that this is the case if the LCOE is lower or equal than the current energy price. If so, such technologies are considered as marketable and therefore it is assumed that they don’t need subsidies any more. However, the application of the “traditional” LCOE formula is not appropriate for such a grid-parity-check and thus can lead to faulty results, policy and investment decisions because it neglects energy price changes over time. Deduced from an NPV formula and exemplified by a sample calculation in this paper it will be shown that an investment can be profitable – in terms of generating a positive NPV – although the traditional LCOE lies above the current price for energy from the grid. And this contradicts the definition of grid parity. We go back to the origin of the problem and present a modification to the traditional LCOE formula, which considers energy price rise and thus allows more accurate LCOE calculations. Keywords grid paritylevelized costs of energylevelized costs of electricityLCOEnet present valueenergy investment appraisalenergy price variation
In conjunction with the European Union (EU) targets, the United Kingdom (UK) Government has introduced a range of mechanisms to foster the development and deployment of low carbon energy technologies and markets. This study focuses on the three main financial incentive schemes to promote renewable energy sector in the UK for electricity, heat and fuel production from renewables, namely feed-in tariff (FiT), Renewable Heat Incentive (RHI) and Renewables Obligation Certificate (RoC), considering the fact that optimal policy design depends on effective analyses of the impacts of incentives on the performance of renewable energy systems. The effects of potential changes in these incentive schemes on the economic and environmental performance of bioenergy sector are investigated using an analytical methodology. The methodology integrates fuzzy decision making and multi objective mathematical modelling in the same framework to capture uncertainties in the system parameters as well as economic and environmental sustainability aspects. Computational experiments are performed on bioenergy production using the entire West Midlands Region in the UK as case study region. The results reveal that the changes in incentive policies have a significant impact on the profitability of the supply chain, whereas environmental performance of the supply chain in terms of total GHG emissions is the least affected performance indicator by the changes in the incentive policies.
This paper measures the policy effectiveness of power purchasing agreements, capital grants, tax incentives, preferential loans, and research, development, and demonstrations for photovoltaic (PV) and wind power development in the member countries of the European Union (EU). The empirical findings confirm that the feed-in tariff is more efficient than renewable portfolio standards (RPS) for PV and wind power development, although RPS does have an effect on wind power development. However, the other economic instruments are all inefficient for PV development but are efficient for wind power development, except for tax incentives. Moreover, the economic growth required, serious financial deficits, and dependence on imported energy that discourage PV development are unrelated to wind power development. The energy intensity of the economy will have a negative impact on both PV and wind power development.
Many Feed-in Tariff designs exist. This paper provides a framework to determine the optimal design choice through an efficient allocation of market price risk. Feed-in Tariffs (FiTs) incentivise the deployment of renewable energy technologies by subsidising remuneration and transferring market price risk from investors, through policymakers, to a counterparty. This counterparty is often the electricity consumer. Using Stackelberg game theory, we contextualise the application of different FiT policy designs that efficiently divide market price risk between investors and consumers, conditional on risk preferences and market conditions. Explicit consideration of policymaker/consumer risk burden has not been incorporated in FiT analyses to date. We present a simulation-based modelling framework to carry this out. Through an Irish case study, we find that commonly employed flat-rate FiTs are only optimal when policymaker risk aversion is extremely low whilst constant premium policies are only optimal when investor risk aversion is extremely low. When both policymakers and investors are risk averse, an intermediate division of risk is optimal. We provide evidence to suggest that the contextual application of many FiT structures is suboptimal, assuming both investors and policymakers are at least moderately risk averse. Efficient risk allocation in FiT design choice will be of increasing policy importance as renewables deployment grows.
This paper serves to examine and compare the role of markets and institutions in the adoption of clean technologies (‘cleantech’) in Canada, Germany and the USA. Sustainable innovation and industry growth in cleantech in a particular jurisdiction can take place when there is ongoing market pressure for cleantech and a ‘critical mass’ of private sector, government and academic actors, initiatives and structures that support the widespread adoption and use of cleantech. Employing Webb’s (2005) sustainable governance approach as a base of analysis, it would appear that Canada lacks the density of institutions, instruments, processes and actors needed to create a critical mass to support sustainable cleantech activity in the long-term. In particular, when compared with Germany and the USA, the Canadian approach lacks key federal support and lacks the degree of private sector and civil society (academic) activity in cleantech that can be observed in those jurisdictions.
The Australian Government’s installation of the now defunct carbon price in July 2012, triggered a review of the Renewable Energy (RE) Feed-In Tariff (FiT) policies in the state of Victoria. In this article, concept analysis techniques and mapping software have been used to examine RE FiT design elements and priorities proposed by eighty-six RE investors and FiT stakeholders during the course of the review. The results show that concept analysis and mapping can be used to analyse FiT designs enabling identification of combinations of discrete elements including fixed and variable payment rates, differing levels of market regulation and competition, varying tariff operating periods, and eligibility rules for RE system sizes, development sites and low emissions technologies. In addition, while the economic elements of FiT designs were afforded the highest priority by stakeholders, broader contemporary analysis shows that policy makers and regulators should continue to combine economic, technology, system and administration elements into tariffs that can deliver new RE supplies. Also, the results show that governments may elect to change the combinations of these design elements, introduce other ancillary policy instruments and regulatory mechanisms, and reshape the FiT schemes in order to accommodate significant shifts in public policies.
Prosumers are households that are both producers and consumers of electricity. A prosumer has a grid-connected decentralized production unit and makes two types of exchanges with the grid: energy imports when the local production is insufficient to match the local consumption and energy exports when local production exceeds it. There exists two systems to measure the exchanges: a net metering system that uses a single meter to measure the balance between exports and imports and a net purchasing system that uses two meters to measure separately power exports and imports. Both systems are currently used for residential consumption. We build a model to compare the two metering systems. Under net metering, the price of exports paid to prosumers is implicitly set at the price of the electricity that they import. We show that net metering leads to (1) too many prosumers, (2) a decrease in the bills of prosumers, compensated via a higher bill for traditional consumers, and (3) a lack of incentives to synchronize local production and consumption.
Bu çalışmanın amacı yenilenebilir enerjide uygulanan vergisel teşviklerin seçilmiş ülke uygulamaları ışığında değerlendirilmesidir. Literatüre dayalı ele alınan çalışmada, ilk olarak yenilenebilir enerji ile ilgili teşvikler üzerinde durulmuş, ardından yenilenebilir enerji teşvikleri açısından seçilmiş ülke [Almanya, Amerika Birleşik Devletleri (ABD), Çin, Japonya, İngiltere, Hindistan, Norveç ve Avrupa Birliği (AB) genel] uygulamalarına ve Türkiye ile karşılaştırılmasına yer verilmiştir. Potansiyel farklılık yanında teknolojik imkân ve kabiliyetler ve ayrıca maliyet yapısındaki farklılıklardan ötürü yenilenebilir enerji kaynakları için tek bir teşvik türü arzu edilen gelişimi sağlayamamaktadır. Bunun için ülkeler, tek bir teşvik türü yerine birden fazla teşvik ve destek türlerini birlikte kullana-bilmektedir. Türkiye’nin ulusal düzeyde yenilenebilir enerji hedefi olan ve bu hedefini revize eden bir ülke olarak diğer ülkelerle benzer konumda olduğu ve tarife farklılığı ile birlikte sabit fiyat garantisi uygulanmasında ABD ve Norveç hariç diğer ülkelerle paralel şekilde ulusal düzeyde politika yürüttüğü ifade edilebilir. Bununla birlikte, diğer ülkeler-deki yatırım ve üretim vergi teşvikleri gibi mali teşvik kapsamında bulunan uygulamalara yer verilmesi Türkiye açısından faydalı olabilir.
This chapter describes what Kingdon calls the ‘problem stream’. The chapter sets out the debate surrounding the connected issues of ‘energy’ and ‘climate’ topics and outline the issues vying for European policymakers’ attention in the year or so leading up to the European Commission’s 2014 Communication on the Energy and Climate Framework for 2030. The conceivable list of potential problems relevant to the policy area may be extremely large but the list that actually receives attention is necessarily much shorter. The chapter focusses on problems of energy supply, environmental sustainability and the cost of energy.
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In 1996, the Dutch distribution companies signed a voluntary agreement to reduce CO sub align="right" 2 /sub emissions. As one element of the agreement, a renewable portfolio standard (RPS) for the electricity distribution companies with certificates trading was introduced (groen label system). The analysis reveals that the total volume of the obligation (3%) can be considered as modest. In addition, it seems more appropriate to replace the distribution companies’ current monopoly for the issuing of the certificates by an independent institution. A flexibility mechanism (e.g., a certificates’ banking system), which prevents high volatilities in the certificates’ market price, and a clear sanction mechanism are needed. A drawback of the current Dutch system is the discriminatory financing of the RPS, which is only provided by MAP tariff customers. Nevertheless, the Dutch RPS may induce an efficient allocation of financial means to support renewable energies. It provides valuable experiences in the functioning of the new system, from which other countries may gain.
The reduction of greenhouse gas (GHG) emissions is an important goal in the energy and environmental policies of the European Union (EU) and its member states. According to a recent directive-proposal from the EU-commission, the inclusion of renewable technologies is one of the important ways to achieve this emission reduction. More policy instruments are on hand to pursue this objective. Frequently discussed currently is the establishing of a market for tradable permits for CO2-emissions to achieve emission reductions in the power industry. In parallel with this is the introduction of a green certificate market to promote the development of renewables. If these two instruments are brought into play at the same time, two separate markets with two individual targets will co-exist in a number of countries. With a focus on the green certificate market, this paper discusses how these two markets may interact with each other in international trade. Three different cases are analysed: (1) A green certificate market without any tradable permits scheme, (2) a green certificate market in combination with a tradable permits scheme, based on grandfathering and, finally, (3) a green certificate market in combination with a tradable permits bidding scheme. Emphasis is placed on analysing the pricing mechanisms in international trade at the green certificate and tradable permits market in relation to the value of the reductions in GHG-emissions actually achieved. The influence of the permits scheme on the spot market price of electricity is shown, and the benefits of trading green certificates compared to a domestic implementation of renewable technologies are discussed. The main conclusion is that only if a green certificate market is combined with a tradable permit scheme based on a bidding procedure will trade in certificates be equivalent to the domestic development of renewables. Using the bidding system no other country will have to pay for CO2-reductions in the home country of the renewable development, as would otherwise be the case if a tradable permit system based on grandfathering were introduced or – even worse – if no tradable permits were introduced at all. Finally, it must be stated that even if the green certificate market were introduced alongside with a tradable permit bidding system, there still would be no incentives for international certificate trade on account of the need for GHG-reductions. In the version of the green certificate market discussed in this paper no GHG-credits are attached to certificates. This means that the development of renewables will add to GHG-reductions only in those countries, where the plants are established, no matter what kind of tradable permit scheme is adopted.
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International climate change policy has come to a relative standstill with most of the countries being discouraged by the high costs of actively pursued climate policy measures. However, climate change policy offers ancillary benefits for proactive stakeholders like the European Union, in addition to the main benefit of mitigating climate change. This article takes a closer look at ancillary benefits the EU hopes to retrieve from its active climate change policy in the field of energy policy. The analysis is limited to the electricity sector, in which the highest potentials for emission abatement can be expected. It shows that most reduction potentials can be realised by using win-win measures, supporting aims of both climate change and energy policies. Generalising this finding, this review points out that ancillary benefits should be emphasised more than before as an incentive for an actively pursued global environmental policy.
Worldwide, some two billion people live without access to modern energy supply. About 1.6 billion people live without access to electricity. Alleviating this "energy poverty" is a factor in reaching most of the UN’s millennium goals. In our contribution to the debate on how to achieve this aim, we discuss the nexus between energy and poverty in developing countries. In order to deal with all aspects of energy poverty, the potential to mitigate the lack of energy supply in developing countries is systemised and discussed along the value chain of energy services. It becomes obvious that, at each stage of the chain, the potential to fight energy poverty effectively does exist. The example of India is used in order to highlight the energy-poverty nexus and clarify potentials to overcome the vicious circle of energy-poverty. Finally, we draw conclusions about future needs to tackle the energy-poverty problem.
The paper provides details on green certificate systems in Belgium. The Flemish region has established a system and the Walloon region is preparing a slightly different one. The lack of uniformity and consequently of transparency in one country emphasises the need for more EU leadership in the field. The main part of the article analyses the established Flemish system. Green certificates are complementary to other instruments that promote renewable electricity, e.g. direct subventions on the feed-in price of green electricity or direct subventions on capital investments. Certificates execute a forcing effect on the actual development of green power if the imposed shares of green power in total sales are significant and if the fine level is at the height to enforce the quota. If the fine is too low the incentive effect turns into a financing tax effect. When the green certificate system does the job it is designed for, i.e. operating at the edge of the RES-E development and organise the transition from a non-sustainable to a sustainable power system, certificate prices will be high and reduce end-use consumption of electricity. A segmentation of the RES-E sector along the various RES-E technologies is a necessity to keep any certificate system affordable, effective and efficient. One can segment the tradable certificate market or one can assign a different number of certificates to a different RES-E technology project. Both solutions require an intensive follow-up of cost structures and of other policy measures (subventions), but given the infant state of understanding and experience segmenting markets may be best in the nearby years.
Six years after the adoption of the Kyoto Protocol in December 1997, most countries of the international community are still a long way from the climate protection objectives agreed at the time. In 2001, greenhouse gas emissions in OECD countries that had promised to reduce emissions in the Kyoto Protocol up to the 2008-2012 period (so-called Annex II countries) were well above the level of 1990. Only in the countries of transition in Central and Eastern Europe did emissions fall significantly, but mainly as a result of the profound economic recession, but certainly not because of special climate protection efforts. Carbon dioxide (CO2) emissions, which are by far the most important greenhouse gas, are expected to have risen by almost four% compared to the previous year, according to preliminary estimates in 2002. With more than 9% they have increased particularly strongly in developing countries. Overall, CO2 emissions in the 2002 years would have been approximately one fifth higher than 1990’s. With the adoption of a directive on emissions trading, the EU has strengthened its pioneering role in the implementation of the Kyoto Protocol and has obliged the Member States to submit a binding allocation plan for achieving the reduction targets adopted under the European burden sharing scheme. However, given that in most EU Member States the current level of emissions is still very far from the agreed targets, there are doubts as to whether the targets have been met. Germany, on the other hand, has already come very close to its international commitment. Continuing climate protection efforts and including emissions trading, it should be possible to reduce greenhouse gas emissions by 2010 by the promised 21%. […]