An economic valuation of renewable electricity promoted by feed-in system in Spain

This paper provides an economic valuation of RES-E promoted by the Spanish feed-in system. First, supported RES-E is evaluated in terms of CO2 emissions avoided when they are introduced in the Spanish electricity market instead of other potential polluting energy sources. And secondly, these positive environmental externalities of supported RES-E are compared with the funds they received from the Spanish feed-in system, in order to estimate the economic balance of this support system. The estimate for 2011 shows that approximately 10% of premiums paid to promote RES-E could be explained, from an economic point of view, by the monetary value of CO2 emissions avoided by not using alternative energy sources, as coal and combined cycle. Furthermore, the economic evaluation of National Energy Commission (CNE [Spanish acronym]) proposal that links the energy sources responsible for CO2 emissions to finance the support system of RES-E, confirms that the monetary value of CO2 emissions avoided when using promoted RES-E is nearly 70% of the revenues from the sale of allowances allocated to polluting technologies in the last National Plan of Emission Allowances in 2011. Promotion of RES-E over the use of fossil energy sources, must take into account not only the costs of their implementation, but also the overall balance of their use.