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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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    File URL: https://doi.org/10.1111/j.1467-8292.2006.00308.x
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    References listed on IDEAS

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    Cited by:

    1. Freitas Gomes, Icaro Silvestre & Perez, Yannick & Suomalainen, Emilia, 2020. "Coupling small batteries and PV generation: A review," Renewable and Sustainable Energy Reviews, Elsevier, vol. 126(C).
    2. Dominique Finon, 2008. "L'inadéquation du mode de subvention du photovoltaïque à sa maturité technologique," Working Papers hal-00866415, HAL.
    3. 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.
    4. 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.
    5. 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.
    6. 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.
    7. Dominique Finon, 2008. "L'inadéquation du mode de subvention du photovoltaïque à sa maturité technologique," CIRED Working Papers hal-00866415, HAL.
    8. Hervé Dumez & Sandra Renou, 2019. "Do renewable sources of energy exist? Can the energy transition be steered?," Post-Print hal-03089097, HAL.

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