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.