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The effectiveness of Renewable Portfolio Standard banding and carve-outs in supporting high-cost types of renewable electricity

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  • Buckman, Greg
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    Abstract

    Renewable Portfolio Standards (RPSs) are renewable electricity (RES-E) subsidy mechanisms in which governments mandate how much RES-E should be generated and markets determine the cost of the subsidy needed to generate the RES-E. Two modifications of the RPS that can help support high-cost types of RES-E are banding, where governments mandate higher multiples of RPS tradable certificates for high-cost types of RES-E, and carve-outs, where governments prescribe parts of a RPS target that can be met only by a particular type, or types, of RES-E. This paper analyses the design and generation performance of banding, as used in the UK, with some reference to Italy; and carve-outs, as used in the USA. To date, there is insufficient experience of either device to reach firm conclusions about their generation effectiveness. However, there is early, tentative evidence that banding is successful at supporting high-cost types of RES-E in the UK. Carve-outs are not being fully exploited in US states that use a RPS mechanism, and Italy is using banding in a fairly insignificant way. Though both devices have different design strengths and weaknesses, and either could be adapted to specific RPS markets, banding is probably the better device for supporting high-cost RES-E.

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    Bibliographic Info

    Article provided by Elsevier in its journal Energy Policy.

    Volume (Year): 39 (2011)
    Issue (Month): 7 (July)
    Pages: 4105-4114

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    Handle: RePEc:eee:enepol:v:39:y:2011:i:7:p:4105-4114

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    Web page: http://www.elsevier.com/locate/enpol

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    Keywords: Renewable electricity Banding Carve-outs;

    References

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    Cited by:
    1. Commission of Experts for Research and Innovation (EFI), Berlin (ed.), 2013. "Research, innovation and technological performance in Germany - EFI Report 2013," Research, innovation and technological performance in Germany: Report, Expertenkommission Forschung und Innovation (EFI), volume 127, number 2013e, November.
    2. Abolhosseini, Shahrouz & Heshmati, Almas, 2014. "The Main Support Mechanisms to Finance Renewable Energy Development," IZA Discussion Papers 8182, Institute for the Study of Labor (IZA).
    3. 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.
    4. Expertenkommission Forschung und Innovation (EFI), Berlin (ed.), 2013. "Gutachten zu Forschung, Innovation und technologischer Leistungsfähigkeit Deutschlands 2013," Research, innovation and technological performance in Germany: Report, Expertenkommission Forschung und Innovation (EFI), volume 127, number 2013, November.

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