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The Social Efficiency Of Instruments For The Promotion Of Renewable Energies In The Liberalised Power Industry

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  • Dominique Finon

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ABSTRACT**: This paper compares the social efficiency of the two main regulatory instruments used to promote renewable energy sources in electricity generation (RES‐E), taking into consideration their role in promoting the preservation of the climate. They are based on a purchase obligation and act either by price (feed‐in tariffs) or by quantity (RES‐E quotas). In their reference design, the instruments show different performances in several dimensions: market incentives intensity, control of the cost for consumers, safeguards of RES‐E investments, and conformity with the new market regime of the electricity industry. The comparison shows that neither instrument offers an optimal solution in each of these dimensions. In particular, the intrinsic qualities of the quotas instrument that are put forward to mandate its adoption by the EU members are overestimated. A government will thus select an instrument in accordance with the relative importance of its objectives: environmental policy versus cost control by market pressure.

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  • Dominique Finon, 2006. "The Social Efficiency Of Instruments For The Promotion Of Renewable Energies In The Liberalised Power Industry," Annals of Public and Cooperative Economics, Wiley Blackwell, vol. 77(3), pages 309-343, September.
    • Handle: RePEc:bla:annpce:v:77:y:2006:i:3:p:309-343
    DOI: 10.1111/j.1467-8292.2006.00308.x
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    3. Wang, Tan & Gong, Yu & Jiang, Chuanwen, 2014. "A review on promoting share of renewable energy by green-trading mechanisms in power system," Renewable and Sustainable Energy Reviews, Elsevier, vol. 40(C), pages 923-929.
    4. Newbery, D., 2021. "Designing an incentive-compatible efficient Renewable Electricity Support Scheme," Cambridge Working Papers in Economics 2128, Faculty of Economics, University of Cambridge.
    5. Gungah, Aarti & Emodi, Nnaemeka Vincent & Dioha, Michael O., 2019. "Improving Nigeria's renewable energy policy design: A case study approach," Energy Policy, Elsevier, vol. 130(C), pages 89-100.
    6. Haotong Jiang & Liuyang Yao & Xueru Bai & Hua Li, 2023. "Dynamic Analysis and Simulation of the Feasibility and Stability of Innovative Carbon Emission Reduction Projects Entering the Carbon-Trading Market," Sustainability, MDPI, vol. 15(8), pages 1-19, April.
    7. Dominique Finon, 2008. "L'inadéquation du mode de subvention du photovoltaïque à sa maturité technologique," CIRED Working Papers hal-00866415, HAL.
    8. Newbery, David M., 2016. "Towards a green energy economy? The EU Energy Union’s transition to a low-carbon zero subsidy electricity system – Lessons from the UK’s Electricity Market Reform," Applied Energy, Elsevier, vol. 179(C), pages 1321-1330.
    9. Christoph Heinzel & Thomas Winkler, 2011. "Economic functioning and politically pragmatic justification of tradable green certificates in Poland," Environmental Economics and Policy Studies, Springer;Society for Environmental Economics and Policy Studies - SEEPS, vol. 13(2), pages 157-175, June.
    10. Thiam, Djiby Racine, 2011. "An energy pricing scheme for the diffusion of decentralized renewable technology investment in developing countries," Energy Policy, Elsevier, vol. 39(7), pages 4284-4297, July.
    11. Maria Kopsakangas-Savolainen & Rauli Svento, 2013. "Promotion of Market Access for Renewable Energy in the Nordic Power Markets," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 54(4), pages 549-569, April.
    12. Kim, Jung Eun & Tang, Tian, 2020. "Preventing early lock-in with technology-specific policy designs: The Renewable Portfolio Standards and diversity in renewable energy technologies," Renewable and Sustainable Energy Reviews, Elsevier, vol. 123(C).
    13. Buckman, Greg, 2011. "The effectiveness of Renewable Portfolio Standard banding and carve-outs in supporting high-cost types of renewable electricity," Energy Policy, Elsevier, vol. 39(7), pages 4105-4114, July.
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    15. Yoon, Jong-Han & Sim, Kwang-ho, 2015. "Why is South Korea's renewable energy policy failing? A qualitative evaluation," Energy Policy, Elsevier, vol. 86(C), pages 369-379.

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