Renewable electricity policies: an analysis of quotas, feeds-in laws and a proposal for EU harmonization of feeds-in laws

by Muñoz Cabré, Miquel

Abstract (Summary)
The two main contributions of this dissertation are: 1. a comparison between two types of policy instruments for the promotion of renewable electricity, namely quotas and feed-in laws; and 2. a proposal for harmonization of feed-in laws in the European Union. This dissertation is structured in five parts. Part I explains the deregulated electricity sector and the existing renewable electricity technologies. Among these technologies, the ones with the highest growth rates in the last decade are solar photovoltaic and wind power. Part I also explains the main attributes and impacts of renewable electricity technologies. Part II describes the existing support schemes, policies, measures and financing strategies for the promotion of renewable electricity. The two most important policy instruments are quotas and feed-in laws. Under a quota system, a target (the quota) is mandated for renewable electricity, and a market for renewable electricity certificates is created, to achieve the established target in a cost-efficient way. Under a feed-in law scheme, renewable electricity generators are guaranteed that all their renewable electricity will be bought at a minimum price. Besides quotas and feed-in laws, other schemes and policies are described, such as tendering systems, voluntary markets, tax credits, clean energy funds, net metering, subsidies, and public research and development. Part II also addresses aspects such as grid access, definitions and standards, administrative issues, target setting, awareness and education, financing strategies, and risk management. Part III describes country case studies. Because this dissertation does not pretend to be a compendium of data or existing policies in all countries, a few countries in the European Union have been selected. The selection of countries was broadly made for the following reasons: Germany and Spain because they illustrate successful feed-in systems; Denmark because it is also one of the pioneers of wind power and feed-in laws and illustrates the negative effects of policy changes; France because it illustrates a system hostile to renewables; the Netherlands because it is an example of multiplicity of policies; Ireland because it is an example of tendering systems; Sweden as an example of voluntary markets and green taxes; and the United Kingdom as an example of quotas. The United States is also described, as well as the context of the European Union, particularly with regards to Directive 2001/77/EC on the promotion of renewable electricity. Part IV provides a comparison between feed-in-laws and quota systems in respect of efficiency, effectiveness, induced innovation, efficiency under uncertainty, administrative issues, regulatory risk, funding, discrimination among technologies and geographical dispersion. Part IV concludes that feed-in laws are superior policy instruments with regards to all those aspects, in some cases based on theory and in some on empirical evidence. Part V elaborates policy proposals for the harmonization of feed-in laws in the European Union. In particular, it proposes a methodology for harmonization based on a feed-in law with a modular and transparent premium for renewable electricity producers. This premium considers technology costs, some grid services, political incentives and national priorities. The proposed approach includes flexibility mechanisms to update and revise premiums, to avoid windfall profits for producers, and to share technology innovation benefits with electricity consumers while maintaining incentives for innovation. The flexibility mechanisms include a profitability threshold, an automated premium revision, and a target revision trigger. The proposals on Part V are based on the review of the main features of the German and Spanish feed-in laws. Other considerations necessary for harmonization and not described elsewhere in the dissertation are also taken into account in Part V, such as ownership of rights derived from renewables, and exceptions for small non-commercial producers and energy¬intensive industries.
This document abstract is also available in Catalan.
Bibliographical Information:

Advisor:Martínez Alier, Joan; Llebot, Josep Enric

School:Universitat Autónoma de Barcelona

School Location:Spain

Source Type:Master's Thesis

Keywords:411 departament d economia aplicada


Date of Publication:06/24/2007

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