Global wind power development: Economics and policies

Existing literature indicates that theoretically, the earth's wind energy supply potential significantly exceeds global energy demand. Yet, only 2–3% of global electricity demand is currently derived from wind power despite 27% annual growth in wind generating capacity over the last 17 years. More than 95% of total current wind power capacity is installed in the developed countries plus China and India. Our analysis shows that the economic competitiveness of wind power varies at wider range across countries or locations. A climate change damage cost of US$20/tCO₂ imposed to fossil fuels would make onshore wind competitive to all fossil fuels for power generation; however, the same would not happen to offshore wind, with few exceptions, even if the damage cost is increased to US$100/tCO₂. To overcome a large number of technical, financial, institutional, market and other barriers to wind power, many countries have employed various policy instruments, including capital subsidies, tax incentives, tradable energy certificates, feed-in tariffs, grid access guarantees and mandatory standards. Besides, climate change mitigation policies, such as the Clean Development Mechanism, have played a pivotal role in promoting wind power. Despite these policies, intermittency, the main technical constraint, could remain as the major challenge to the future growth of wind power.     

State renewable energy electricity policies: An empirical evaluation of effectiveness

Over the past decade, state governments have emerged as US energy policy leaders. Across the country, states are adopting policy instruments aimed at carbon mitigation and renewable energy deployment. One of the most prevalent and innovative policy instruments is a renewable portfolio standard (RPS), which seeks to increase the share of renewable energy electrification in the electricity market. This analysis evaluates the effectiveness of state energy programs with an empirical investigation of the linkage between state RPS policy implementation and the percentage of renewable energy electricity generation across states. We use a variant of a standard fixed effects model, referred to as a fixed effects vector decomposition, with state-level data from 1998 to 2006. Results indicate that RPS implementation is not a significant predictor of the percentage of renewable energy generation out of the total generation mix, yet for each additional year that a state has an RPS policy, they are found to increase the total amount of renewable energy generation. These findings reveal a potentially significant shortcoming of RPS policies. Political institutions, natural resource endowments, deregulation, gross state product per capita, electricity use per person, electricity price, and the presence of regional RPS policies are also found to be significantly related to renewable energy deployment.     

Governmental policy and prospect in electricity production from renewables in Lithuania

In Lithuania, the generation of electricity is based on the nuclear energy and on the fossil fuels. After the decommissioning of Ignalina nuclear power plant in 2009, the Lithuanian Power Plant and other thermal plants will become the major sources of electricity. Consequently, the Lithuanian power sector must focus on the implementation of renewable energy projects, penetration of new technologies and on consideration of the future opportunities for renewables, and Government policy for promoting this kind of energy. Production of electricity from renewable energy is based on hydro, biomass and wind energy resources in Lithuania. Due to the typical climatic condition in Lithuania the solar photovoltaics and geothermal energy are not used for power sector. Moreover, the further development of hydropower plants is limited by environmental restrictions, therefore priority is given to wind energy development and installation of new biomass power plants. According to the requirements set out in the Directive 2001/77/EC of the European Parliament and of the Council of 27 September 2001 on the promotion of electricity produced from renewable energy sources in the internal electricity market [Official Journal L283, 33–40, 27 October 2001], 7% of gross consumption of electricity will be generated from renewable energy by 2010 in Lithuania. The aim of this paper is to show the estimation of the maximum renewable power penetration in the Lithuanian electricity sector and possible environmental impact.     

Green electricity market development: Lessons from Europe and the US

This study compares the development and implementation of green electricity policies in Germany, the Netherlands, Sweden, and the United States, a set of countries applying a range of policy instruments to encourage electricity from renewable energy sources. A general tendency is identified that policies shift emphasis from R&D stimulation towards dissemination and market application of renewable energy technologies. We argue that in light of the long term nature of policy goals on energy security, mitigation of climate change, and environmental protection, the applied range of policy instruments may be lacking in providing incentives for the long term development of new technologies. Clarifying policy objectives would allow careful selection of policy instruments, including support for R&D. Improved capacity building for policy implementation is also important.     

Canada’s constitutional separation of (wind) power

This paper investigates the impact that a federal government structure has on strategic selection of renewable energy policy instruments. The context for this study centers on wind power development in Canada. Canada is a nation that is blessed by all the attributes necessary to catalyze global leadership in installed wind power capacity. Unfortunately, the constitutional separation of powers that underpins Canada’s federal system impedes the creation of a national wind power development strategy because Canada’s provinces have constitutional authority over electricity governance. The insights gleaned from the case study are used to develop a conceptual framework for understanding the impact that federal structure has on policy instrument selection and efficacy under areas of federal, regional and concurrent policy jurisdiction. Finally, this framework is re-applied to identify specific approaches the Canadian federal government could take to resolve what currently amounts to be a fragmented, ineffective approach to wind power development planning.     

Green electricity policies in the United States: case study

While there has been interest in promoting the use of renewable energy in electricity production for a number of years in the United States, the market share of non-hydro renewable energy sources in electricity production has remained at about 2 percent over the past decade. The paper reviews the principal energy resources used for electricity production, considers the changing regulatory environment for the electricity industry, and describes government policies that have been used to promote green electricity in the United States, with an emphasis on measures adopted by state governments. Factors influencing the development of green power markets are also discussed, including underlying economic issues, public policy measures, the regulatory environment, external costs, and subsidies. Without significant increases in fossil fuel prices, much more stringent environmental regulations, or significant changes in electricity customer preferences, green electricity markets are likely to develop slowly in the United States.     

Designing effective and efficient incentive policies for renewable energy in generation expansion planning

We present a bilevel optimization approach to designing effective and efficient incentive policies for stimulating investment in renewable energy. The effectiveness of an incentive policy is its capability to achieve a goal that would not be achievable without it. Renewable portfolio standards are used in this paper as the policy goal. The efficiency of an incentive policy is measured by the amount of policy intervention, such as taxes collected or subsidies paid, to achieve the policy goal. We obtain the most effective and efficient incentive policies in the context of generation expansion planning, in which a centralized planner makes investment decisions for the energy system to serve projected demand of electricity. A case study is conducted on integrated coal transportation and electricity transmission networks representing the contiguous United States. The numerical analysis from the case study provides insights on the comparison of various incentive policies. The sensitivity of the incentive policies with respect to coal production cost, wind energy investment cost, and transmission capacity is also studied.     

The role of public policy in optimizing renewable energy development in the greater southern Appalachian mountains

This research presents a third component of a comprehensive decision support system for energy planning that allows for combining existing electricity generating capabilities with increased use of renewable energy sources. It focuses on energy planning at the regional level, and concentrates specifically on the greater southern Appalachian mountains of the eastern United States: a region that was chosen for analysis not only due to its heavy dependence on coal for electricity, but also because of its potential for increased use of wind and solar power. Previous research used a geographic information system (GIS) model for identifying renewable energy potential to provide input data for a multi-objective linear programming (MOLP) model to determine the optimal constrained mix of renewable energy sources and existing fossil fuel facilities by balancing annual generation costs against the corresponding greenhouse gas emissions. This new component of the system analyzes three potential public policies—renewable portfolio standard, carbon tax, and renewable energy production tax credit—that have been used to foster increased renewable energy usage. These policies require minor modifications to the MOLP model for implementation. The results of these policy cases were then analyzed to determine the impact that these policies have on generation cost and pollution emissions within the region.     

Financing investments in renewable energy : the impacts of policy design

The costs of electric power projects utilizing renewable energy technologies (RETs) are highly sensitive to financing terms. Consequently, as the electricity industry is restructured and new renewables policies are created, it is important for policymakers to consider the impacts of renewables policy design on RET financing. This paper reviews the power plant financing process for renewable energy projects, estimates the impact of financing terms on levelized energy costs, and provides insights to policymakers on the important nexus between renewables policy design and financing. We review five case studies of renewable energy policies, and find that one of the key reasons that RET policies are not more effective is that project development and financing processes are frequently ignored or misunderstood when designing and implementing renewable energy policies. The case studies specifically show that policies that do not provide long-term stability or that have negative secondary impacts on investment decisions will increase financing costs, sometimes dramatically reducing the effectiveness of the program. Within U.S. electricity restructuring proceedings, new renewable energy policies are being created, and restructuring itself is changing the way RETs are financed. As these new policies are created and implemented, it is essential that policymakers acknowledge the financing difficulties faced by renewables developers and pay special attention to the impacts of renewables policy design on financing. As shown in this paper, a renewables policy that is carefully designed can reduce renewable energy costs dramatically by providing revenue certainty that will, in turn, reduce financing risk premiums.     

Are government policies effective in promoting deployment of renewable electricity resources?

Using a panel data over 50 US states and years 1991–2007, this paper uses a state fixed-effects model with state-specific time-trends to estimate the effects of state policies on the penetration of various emerging renewable electricity sources, including wind, biomass, geothermal, and solar photovoltaic. Renewable portfolio standards with either capacity or sales requirements have a significant impact on the penetration of all types of renewables—however, this impact is variable depending on the type of renewable source: it is negative for combined renewables, wind, and biomass; and positive for geothermal and solar. Further, clean energy funds and required green power options mostly result in increasing the penetration of all types of renewables. On the other hand, voluntary renewable portfolio standards as well as state green power purchasing programs are found to be ineffective in increasing the penetration of any type of renewable source. Finally, economic variables, such as electricity price, natural gas price, and per capita GDP as well as structural variables, such as league of conservation voters rating and the share of coal-generated electricity are found to be generally insignificant, suggesting the crucial role of policy in increasing the penetration of renewables.     

The politics and policy of energy system transformation—explaining the German diffusion of renewable energy technology

To arrest climate change, a transition to a low-carbon economy must take place quite rapidly, within a century at most. Thus, the rate of diffusion of new technologies such as those for the generation of electricity from renewable energy sources becomes a central issue. This article explores the reasons for the particularly rapid spread of two such technologies in Germany, wind turbines and solar cells. We trace this diffusion to the nature of the policy instruments employed and to the political process which led to the adoption of these instruments. The analysis demonstrates how the regulatory framework is formed in a ‘battle over institutions’ where the German parliament, informed and supported by an advocacy coalition of growing strength, backed support policies for renewables sourced electricity against often reluctant governments and the opposition from nuclear and coal interests. It also demonstrates that this major political and environmental achievement carries a modest price if we consider total costs to society, i.e. including both subsidies to coal and the negative external economies of coal.     

The effectiveness of different policy regimes for promoting wind power: Experiences from the states

Governments at the state (and to a lesser extent, local) level in the United States have adopted an array of policies to promote wind and other types of “green” energy, including solar, geothermal, low-impact hydropower, and certain forms of biomass. However, because of different regulatory environments, energy resource endowments, political interests, and other factors, there is considerable variation among the states in their green power policies. This paper analyzes the contribution to wind power development of several state-level policies (renewable portfolio standards (RPS), fuel generation disclosure rules, mandatory green power options, and public benefits funds), along with retail choice (RET) facilitated by electricity restructuring. The empirical results support existing anecdotal and case studies in finding a positive relationship between RPS and wind power development. We also found that requiring electricity suppliers to provide green power options to customers is positively related to development of wind energy, while there is a negative relationship between wind energy development and RET (i.e., allowing retail customers to choose their electricity source).     

Green electricity policies in the Netherlands: an analysis of policy decisions

Over the last decades, fundamental changes can be observed in both market conditions and the national policy framework for green electricity in the Netherlands. The Dutch Government has regularly intervened in markets, demonstrating fundamental shifts in policy and approach. This study aims to analyse the developments in renewable energy policy making in the Netherlands. It assesses changes in the choice of policy instruments and target groups, the role of stakeholders, and offers explanations behind policy successes and failures. Dutch green electricity policy over the last decade can be characterised roughly by three phases: in the early 1990s, the government negotiated voluntary agreements with the energy distribution sector on targets for green electricity sales, which were never met. In the second half of the 1990s, a regulatory energy tax was introduced, from which customers of green electricity were exempt. This led to a substantial increase in demand, which was largely met by green electricity imports, and did not lead to additional domestic renewable energy capacity. Finally, a change in policy has taken place recently (2003) shifting the focus from promotion of demand to the promotion of supply through a system of regulated feed-in tariffs. Despite the renewable energy policies, growth of the renewable energy market in the Netherlands has been small and targets have not been fully met. The Dutch government has not yet succeeded in substantially reducing market uncertainties and in building confidence among market parties, because the policies have not been stable and policy objectives have frequently been partly ambiguous. In addition, the influence of stakeholders in renewable energy policy making has been small which has the early acceptance and implementation of alternative policies.     

Levelized cost of electricity (LCOE) of renewable energies and required subsidies in China

The development and utilization of renewable energy (RE), a strategic choice for energy structural adjustment, is an important measure of carbon emissions reduction in China. High cost is a main restriction element for large-scale development of RE, and accurate cost estimation of renewable power generation is urgently necessary. This is the first systemic study on the levelized cost of electricity (LCOE) of RE in China. Results indicate that feed-in-tariff (FIT) of RE should be improved and dynamically adjusted based on the LCOE to provide a better support of the development of RE. The current FIT in China can only cover the LCOE of wind (onshore) and solar photovoltaic energy (PV) at a discount rate of 5%. Subsidies to renewables-based electricity generation, except biomass energy, still need to be increased at higher discount rates. Main conclusions are drawn as follows: (1) Government policy should focus on solving the financing problem of RE projects because fixed capital investment exerts considerable influence over the LCOE; and (2) the problem of high cost could be solved by providing subsidies in the short term and more importantly, by reforming electricity price in the mid-and long-term to make the RE competitive.     

Rejecting renewables: The socio-technical impediments to renewable electricity in the United States

If renewable power systems deliver such impressive benefits, why do they still provide only 3 percent of national electricity generation in the United States? As an answer, this article demonstrates that the impediments to renewable power are socio-technical, a term that encompasses the technological, social, political, regulatory, and cultural aspects of electricity supply and use. Extensive interviews of public utility commissioners, utility managers, system operators, manufacturers, researchers, business owners, and ordinary consumers reveal that it is these socio-technical barriers that often explain why wind, solar, biomass, geothermal, and hydroelectric power sources are not embraced. Utility operators reject renewable resources because they are trained to think only in terms of big, conventional power plants. Consumers practically ignore renewable power systems because they are not given accurate price signals about electricity consumption. Intentional market distortions (such as subsidies), and unintentional market distortions (such as split incentives) prevent consumers from becoming fully invested in their electricity choices. As a result, newer and cleaner technologies that may offer social and environmental benefits but are not consistent with the dominant paradigm of the electricity industry continue to face comparative rejection.     

Modelling the promotion of biomass use: A case study of Thailand

This study develops a computable general equilibrium model of the Thailand economy which features several energy-specific enhancements. The model is used to simulate a number of potential policies to achieve the Thai government’s biomass-generated electricity targets contained in its 15-year renewable energy development plan. Examples of simulations conducted with the model include increasing biomass-based electricity purchased from small and very small power producers and increasing other agricultural residue use in electricity generation. The results indicate that implementation of all of the biomass-based electricity promotion policies is likely to achieve the short-run target and reduce somewhat the importation of fuels. However, the policy causes a huge increase in prices of biomass. The sugarcane-based sectors are big winners, while the cassava-based sectors are big losers. The losses can, however, be partly mitigated by promoting other agricultural residue use in electricity generation.     

Status and perspectives of renewable energy policy and deployment in the European Union—What is needed to reach the 2020 targets?

This article evaluates the status of current RES deployment, policies and barriers in the EU-27 member states and compares it to the required to meet the 2020 targets. The evaluation relies strongly on the quantitative deployment status and policy effectiveness indicators. European RES deployment and policy has progressed strongly in recent years, but the growth here has been mainly driven by effective policies in a small or medium number of top runner countries. Across Europe, the highest average policy effectiveness over six years was reached for onshore wind (4.2%), biofuels (3.6%) and biomass electricity (2.7%), while in the heat sector, all technologies score below 2%. Comparing the recent progress to the required growth for meeting the 2020 target, it appears that some countries largely exceed the interim targets of the RES Directive 2009/28/EC. Despite this, Europe will need additional policy effort to reach the 2020 target. Critical success factors include implementing effective and efficient policies that attract sufficient investments, reducing administrative and grid related barriers, especially in currently less advanced countries, upgrading the power grid infrastructure, dismantling financial barriers in the heat sector, realising sustainability standards for biomass, and lowering energy demand through increased energy efficiency efforts.     

On generation-integrated energy storage

Generation-integrated energy storage (GIES) systems store energy at some point along the transformation between the primary energy form and electricity. Instances exist already in natural hydro power, biomass generation, wave power, and concentrated solar power. GIES systems have been proposed for wind, nuclear power and they arise naturally in photocatalysis systems that are in development. GIES systems can compare very favourably in both performance and total cost against equivalent non-integrated systems comprising both generation and storage. Despite this, they have not hitherto been recognised as a discrete class of systems. Consequently policy decisions affecting development or demonstration projects and policy approaches concerning low-carbon generation are not fully informed. This paper highlights that policy structures exist militating against the development and introduction of GIES systems-probably to the detriment of overall system good.     

Renewable power for China: Past,present, and future

This paper briefly examines the history, status, policy situation, development issues, and prospects for key renewable power technologies in China. The country has become a global leader in wind turbine and solar photovoltaic (PV) production, and leads the world in total power capacity from renewable energy. Policy frameworks have matured and evolved since the landmark 2005 Renewable Energy Law, updated in 2009. China’s 2020 renewable energy target is similar to that of the EU. However, China continues to face many challenges in technology development, grid-integration, and policy frameworks. These include training, research and development, wind turbine operating experience and performance, transmission constraints, grid interconnection time lags, resource assessments, power grid integration on large scales, and continued policy development and adjustment. Wind and solar PV targets for 2020 will likely be satisfied early, although domestic demand for solar PV remains weak and the pathways toward incorporating distributed and building-integrated solar PV are uncertain. Prospects for biomass power are limited by resource constraints. Other technologies such as concentrating solar thermal power, ocean energy, and electricity storage require greater attention.     

The Japanese energy sector: Current situation,and future paths

As the world’s third leading economy and a major importer of fuels, the choice of future energy paths and policies that Japan makes in the next few years will have a significant influence on the energy security of the world as a whole, and of the Northeast Asia region in particular. In this article we describe the current status of and recent trends in the Japanese energy sector, including energy demand and supply by fuel and by sector. We then discuss the current energy policy situation in Japan, focusing on policies related to climate change targets, renewable energy development and deployment, liberalization of energy markets, and the evolution of the Japanese nuclear power sector. The final section of the article presents the structure of the Japan LEAP (long-range energy alternatives planning software system) dataset, describes several alternative energy paths for Japan – with an emphasis on alternative paths for nuclear power development and GHG emission abatement – and touches upon key current issues of energy policy facing Japan, as reflected in the modeling inputs and results.