Can technology-specific deployment policies be cost-effective? The case of renewable energy support schemes

Arbeitspapier | Working paper

While there is relatively limited disagreement on the general need for supporting the deployment of renewable energy sources for electricity generation (RES-E), there are diverging views on whether the granted support levels should be technology-neutral or technology-specific. In this paper we question the frequently stressed argument that technology-neutral schemes will promote RES-E deployment cost-effectively. A simple partial equilibrium model of the electricity sector with one representative investor is developed to illustrate how the cost-effective support levels to different RES-E technologies will be influenced when selected market failures are introduced. We address market failures associated with technological development, long-term risk taking, path dependencies as well as various external costs, all of which drive a wedge between the private and the social costs of RES-E deployment. Based on these analytical findings and a review of empirical literature, we conclude that the relevance of these market failures is typically heterogeneous across different RES-E technologies. The paper ends by discussing a number of possible caveats to implementing cost-effective technology-specific support schemes in practice, including the role of various information and political economy constraints. While these considerations involve important challenges, neither of them suggests an unambiguous plea for technology-neutral RES support policies either.

Object Details

• ISSN: 1436-140X
• Extent: Seite(n): 27
• Language: Englisch
• Notes: Status: Veröffentlichungsversion

References and Relationships

• Bibliographic citation: UFZ Discussion Papers (1/2016)

Classification and Topics

• Subject: Ökologie ; Politikwissenschaft ; Ökologie und Umwelt ; spezielle Ressortpolitik ; erneuerbare Energie ; Energieerzeugung ; Elektrizität ; neue Technologie ; Förderpolitik ; Energiepolitik ; Effektivität ; Subvention ; Bioenergie

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Lehmann, Paul ; Söderholm, Patrik
• Event: Veröffentlichung
• (who): Helmholtz-Zentrum für Umweltforschung - UFZ
• (where): Deutschland, Leipzig
• (when): 2016

Further information

• URN: urn:nbn:de:0168-ssoar-46488-2
• Rights: GESIS - Leibniz-Institut für Sozialwissenschaften. Bibliothek Köln
• Last update: 21.06.2024, 4:27 PM CEST