Comparison of feed-in tariff, quota and auction mechanisms to support wind power development

Abstract

A comparison of support schemes for market-based deployment of renewable energy in the UK and Germany shows that the feed-in tariff reduces costs to consumers and results in larger deployment. A survey among project developers suggests two explanations: (1) Site selection presents the biggest obstacle under the feed-in tariff. Uncertain financing of other schemes reduces efforts at initial project stages and planning permits become a major obstacle. (2) Project developers do not compete in price but for good sites under the feed-in tariff. Most importantly, turbine producers and construction services contribute to most of the costs, and face at least equal levels of competition under the feed-in tariff. r

Tradable Renewable Quota vs. Feed-In Tariff vs. Feed-In Premium Under Uncertainty

“…For example, Menanteau et al (2003), in a qualitative analysis without formal model, illustrate and compare the different mechanics of FIT and TRQ, also under uncertainty, and use a multi-criteria analysis to derive their conclusion that the efficiency of the former is superior. Butler and Neuhoff (2008) corroborate this finding in a comparative case study on onshore wind-energy in Germany and the UK, citing as one of the main reasons the lower risk to developers the FIT offers.…”

An examination on the feed-in tariff policy for renewable electricity: Taiwan’s case example

“…The feed-in tariff (FIT) policy has been implemented by many countries and proved to perform well to trigger a considerable increase in renewable electricity production. In general, it may be seen as an effective supporting mechanism for the successful development of newly emerging renewable energy technology (Couture and Gagnon 2010;Mendonca 2007;Rowlands 2005Rowlands , 2007 since it can reduce the financial risks for renewable energy technology developers (Mitchell and Connor 2004) and deploy the installation of renewable energy systems at lower cost than other policy mechanisms (Lipp 2007;Butler and Neuhoff 2008;Fouquet and Johansson 2008).…”

“…Many researchers focus on the assessment of FIT schemes that implemented in some countries for renewable technology (e.g., Rowlands 2005;Astrand and Neij 2006;Jacobsson and Lauber 2006;Butler and Neuhoff 2008;Mitchell et al 2006;Del Rio and Gual 2007). The FIT level is designed and determined by levelizing the generation costs by the government, so that the renewable power systems can be efficiently for operation and cost effectively for development (Mendonca 2007;Klein 2008).…”

“…Foxon and Pearson (2007) and Finon and Perez (2007) present frameworks to evaluate the factor affecting the efficiency of renewable policies. Butler and Neuhoff (2008) compare the FIT schemes for market-based deployment of renewable energy. They find that the feed-in tariff implemented in the UK and Germany may bring about cost reduction for consumers and larger deployment.…”

“…They find that the feed-in tariff implemented in the UK and Germany may bring about cost reduction for consumers and larger deployment. Many researchers argue that feed-in tariff policies may be the most effective tool at low cost to encourage the development of renewable energy (Lipp 2007;Butler and Neuhoff 2008;Fouquet and Johansson 2008). The analysis result of Sarzynski et al (2012) also finds that financial incentives like rebates may result in more extensive and rapid deployment of grid-tied PV technology.…”