IDEAS home Printed from https://ideas.repec.org/a/eee/appene/v88y2011i6p2201-2209.html
   My bibliography  Save this article

Designing effective and efficient incentive policies for renewable energy in generation expansion planning

Author

Listed:
  • Zhou, Ying
  • Wang, Lizhi
  • McCalley, James D.

Abstract

We present a bilevel optimization approach to designing effective and efficient incentive policies for stimulating investment in renewable energy. The effectiveness of an incentive policy is its capability to achieve a goal that would not be achievable without it. Renewable portfolio standards are used in this paper as the policy goal. The efficiency of an incentive policy is measured by the amount of policy intervention, such as taxes collected or subsidies paid, to achieve the policy goal. We obtain the most effective and efficient incentive policies in the context of generation expansion planning, in which a centralized planner makes investment decisions for the energy system to serve projected demand of electricity. A case study is conducted on integrated coal transportation and electricity transmission networks representing the contiguous United States. The numerical analysis from the case study provides insights on the comparison of various incentive policies. The sensitivity of the incentive policies with respect to coal production cost, wind energy investment cost, and transmission capacity is also studied.

Suggested Citation

  • Zhou, Ying & Wang, Lizhi & McCalley, James D., 2011. "Designing effective and efficient incentive policies for renewable energy in generation expansion planning," Applied Energy, Elsevier, vol. 88(6), pages 2201-2209, June.
    • Handle: RePEc:eee:appene:v:88:y:2011:i:6:p:2201-2209
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0306-2619(10)00542-8
    Download Restriction: Full text for ScienceDirect subscribers only
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Lawrence H. Goulder, 1992. "Carbon Tax Design and US Industry Performance," NBER Chapters, in: Tax Policy and the Economy, Volume 6, pages 59-104, National Bureau of Economic Research, Inc.
    2. Stigson, Peter & Dotzauer, Erik & Yan, Jinyue, 2009. "Improving policy making through government-industry policy learning: The case of a novel Swedish policy framework," Applied Energy, Elsevier, vol. 86(4), pages 399-406, April.
    3. Berry, Trent & Jaccard, Mark, 2001. "The renewable portfolio standard:: design considerations and an implementation survey," Energy Policy, Elsevier, vol. 29(4), pages 263-277, March.
    4. Palmer, Karen & Burtraw, Dallas, 2005. "Cost-effectiveness of renewable electricity policies," Energy Economics, Elsevier, vol. 27(6), pages 873-894, November.
    5. Fuss, Sabine & Szolgayova, Jana & Obersteiner, Michael & Gusti, Mykola, 2008. "Investment under market and climate policy uncertainty," Applied Energy, Elsevier, vol. 85(8), pages 708-721, August.
    6. Rader, Nancy A. & Norgaard, Richard B., 1996. "Efficiency and sustainability in restructured electricity markets: the renewables portfolio standard," The Electricity Journal, Elsevier, vol. 9(6), pages 37-49, July.
    7. Solomon, Barry D. & Banerjee, Abhijit, 2006. "Erratum to "A global survey of hydrogen energy research, development and policy": [Energy Policy 34 (2006) 781-792]," Energy Policy, Elsevier, vol. 34(11), pages 1318-1208, July.
    8. Loiter, Jeffrey M. & Norberg-Bohm, Vicki, 1999. "Technology policy and renewable energy: public roles in the development of new energy technologies," Energy Policy, Elsevier, vol. 27(2), pages 85-97, February.
    9. Antunes, C.Henggeler & Martins, A.Gomes & Brito, Isabel Sofia, 2004. "A multiple objective mixed integer linear programming model for power generation expansion planning," Energy, Elsevier, vol. 29(4), pages 613-627.
    10. Hofman, Karen & Li, Xianguo, 2009. "Canada's energy perspectives and policies for sustainable development," Applied Energy, Elsevier, vol. 86(4), pages 407-415, April.
    11. Zhaoyang Duan & Lizhi Wang, 2011. "Heuristic algorithms for the inverse mixed integer linear programming problem," Journal of Global Optimization, Springer, vol. 51(3), pages 463-471, November.
    12. Blok, Kornelis, 2006. "Renewable energy policies in the European Union," Energy Policy, Elsevier, vol. 34(3), pages 251-255, February.
    13. Mitchell, C. & Bauknecht, D. & Connor, P.M., 2006. "Effectiveness through risk reduction: a comparison of the renewable obligation in England and Wales and the feed-in system in Germany," Energy Policy, Elsevier, vol. 34(3), pages 297-305, February.
    14. Gregory F. Nemet & Erin Baker, 2009. "Demand Subsidies Versus R&D: Comparing the Uncertain Impacts of Policy on a Pre-commercial Low-carbon Energy Technology," The Energy Journal, International Association for Energy Economics, vol. 0(Number 4), pages 49-80.
    15. Chupka, Marc W., 2003. "Designing Effective Renewable Markets," The Electricity Journal, Elsevier, vol. 16(4), pages 46-57, May.
    16. Solomon, Barry D. & Banerjee, Abhijit, 2006. "A global survey of hydrogen energy research, development and policy," Energy Policy, Elsevier, vol. 34(7), pages 781-792, May.
    17. Frederic H. Murphy & Yves Smeers, 2005. "Generation Capacity Expansion in Imperfectly Competitive Restructured Electricity Markets," Operations Research, INFORMS, vol. 53(4), pages 646-661, August.
    18. Clemens Heuberger, 2004. "Inverse Combinatorial Optimization: A Survey on Problems, Methods, and Results," Journal of Combinatorial Optimization, Springer, vol. 8(3), pages 329-361, September.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Wiser, Ryan & Barbose, Galen & Holt, Edward, 2011. "Supporting solar power in renewables portfolio standards: Experience from the United States," Energy Policy, Elsevier, vol. 39(7), pages 3894-3905, July.
    2. Stokes, Leah C., 2013. "The politics of renewable energy policies: The case of feed-in tariffs in Ontario, Canada," Energy Policy, Elsevier, vol. 56(C), pages 490-500.
    3. Connor, Peter & Bürger, Veit & Beurskens, Luuk & Ericsson, Karin & Egger, Christiane, 2013. "Devising renewable heat policy: Overview of support options," Energy Policy, Elsevier, vol. 59(C), pages 3-16.
    4. Wu, Di & Aliprantis, Dionysios C., 2013. "Modeling light-duty plug-in electric vehicles for national energy and transportation planning," Energy Policy, Elsevier, vol. 63(C), pages 419-432.
    5. Agnolucci, Paolo, 2007. "The effect of financial constraints, technological progress and long-term contracts on tradable green certificates," Energy Policy, Elsevier, vol. 35(6), pages 3347-3359, June.
    6. Schelly, Chelsea, 2014. "Implementing renewable energy portfolio standards: The good, the bad, and the ugly in a two state comparison," Energy Policy, Elsevier, vol. 67(C), pages 543-551.
    7. Ryan Wiser & Kevin Porter & Robert Grace, 2005. "Evaluating Experience with Renewables Portfolio Standards in the United States," Mitigation and Adaptation Strategies for Global Change, Springer, vol. 10(2), pages 237-263, April.
    8. Shen, Neng & Deng, Rumeng & Liao, Haolan & Shevchuk, Oleksandr, 2020. "Mapping renewable energy subsidy policy research published from 1997 to 2018: A scientometric review," Utilities Policy, Elsevier, vol. 64(C).
    9. Pérez de Arce, Miguel & Sauma, Enzo & Contreras, Javier, 2016. "Renewable energy policy performance in reducing CO2 emissions," Energy Economics, Elsevier, vol. 54(C), pages 272-280.
    10. Miguel Pérez de Arce and Enzo Sauma, 2016. "Comparison of Incentive Policies for Renewable Energy in an Oligopolistic Market with Price-Responsive Demand," The Energy Journal, International Association for Energy Economics, vol. 0(Number 3).
    11. Paul Koutstaal & Michiel Bijlsma & Gijsbert Zwart & X. van Tilburg, 2009. "Market performance and distributional effects on renewable energy markets," CPB Document 190.rdf, CPB Netherlands Bureau for Economic Policy Analysis.
    12. Reinhard Madlener & Weiyu Gao & Ilja Neustadt & Peter Zweifel, 2008. "Promoting renewable electricity generation in imperfect markets: price vs. quantity policies," SOI - Working Papers 0809, Socioeconomic Institute - University of Zurich.
    13. Mulder, Peter & de Groot, Henri L.F., 2013. "Dutch sectoral energy intensity developments in international perspective, 1987–2005," Energy Policy, Elsevier, vol. 52(C), pages 501-512.
    14. Agnolucci, Paolo, 2008. "Factors influencing the likelihood of regulatory changes in renewable electricity policies," Renewable and Sustainable Energy Reviews, Elsevier, vol. 12(1), pages 141-161, January.
    15. Wüstenhagen, Rolf & Menichetti, Emanuela, 2012. "Strategic choices for renewable energy investment: Conceptual framework and opportunities for further research," Energy Policy, Elsevier, vol. 40(C), pages 1-10.
    16. Klessmann, Corinna & Held, Anne & Rathmann, Max & Ragwitz, Mario, 2011. "Status and perspectives of renewable energy policy and deployment in the European Union—What is needed to reach the 2020 targets?," Energy Policy, Elsevier, vol. 39(12), pages 7637-7657.
    17. Johnson, Sean D. & Moyer, Elisabeth J., 2012. "Feasibility of U.S. renewable portfolio standards under cost caps and case study for Illinois," Energy Policy, Elsevier, vol. 49(C), pages 499-514.
    18. Li, Jinke & Liu, Guy & Shao, Jing, 2020. "Understanding the ROC transfer payment in the renewable obligation with the recycling mechanism in the United Kingdom," Energy Economics, Elsevier, vol. 87(C).
    19. Nicolini, Marcella & Tavoni, Massimo, 2017. "Are renewable energy subsidies effective? Evidence from Europe," Renewable and Sustainable Energy Reviews, Elsevier, vol. 74(C), pages 412-423.
    20. Vagliasindi, Maria, 2012. "The role of policy driven incentives to attract PPPs in renewable-based energy in developing countries : a cross-country analysis," Policy Research Working Paper Series 6120, The World Bank.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:appene:v:88:y:2011:i:6:p:2201-2209. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/wps/find/journaldescription.cws_home/405891/description#description .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.