The importance of comprehensiveness in renewable electricity and energy-efficiency policy

Based on extensive research interviews and supplemented with a review of the academic literature, this article assesses the best way to promote renewable energy and energy efficiency. It begins by briefly laying out why government intervention is needed, and then details the four most favored policy mechanisms identified by participants: eliminating subsidies for conventional and mature electricity technologies, pricing electricity accurately, passing a national feed-in tariff, and implementing a nationwide systems benefit fund to raise public awareness, protect lower income households, and administer demand side management programs. Drawing mostly from case studies in the United States, the article also discusses why these policy mechanisms must be implemented comprehensively, not individually, if the barriers to renewables and energy efficiency are to be overcome.     

Analysing the interactions between renewable energy promotion and energy efficiency support schemes: The impact of different instruments and design elements

CO₂ emissions reduction, renewable energy deployment and energy efficiency are three main energy/environmental goals, particularly in Europe. Their relevance has led to the implementation of support schemes in these realms. Their coexistence may lead to overlaps, synergies and conflicts between them. The aim of this paper is to analyse the interactions between energy efficiency measures and renewable energy promotion, whereas previous analyses have focused on the interactions between emissions trading schemes (ETS) and energy efficiency measures and ETS and renewable energy promotion schemes. Furthermore, the analysis in this paper transcends the “certificate” debate (i.e., tradable green and white certificates) and considers other instruments, particularly feed-in tariffs for renewable electricity. The goal is to identify positive and negative interactions between energy efficiency and renewable electricity promotion and to assess whether the choice of specific instruments and design elements within those instruments affects the results of the interactions.     

Economic modelling of price support mechanisms for renewable energy: Case study on Ireland

The Irish Government is considering its future targets, policy and programmes for renewable energy for the period beyond 2005. This follows a review in 2003 of policy options that identified a number of different measures to stimulate increased deployment of renewable energy generation capacity. This paper expands this review with an economic analysis of renewable energy price support mechanisms in the Irish electricity generation sector. The focus is on three primary price support mechanisms quota obligations, feed in tariffs and competitive tender schemes. The Green-X computer model is utilised to characterise the RES-E potential and costs in Ireland up until, and including, 2020. The results from this dynamic software tool are used to compare the different support mechanisms in terms of total costs to society and the average premium costs relative to the market price for electricity. The results indicate that in achieving a 20% RES-E proportion of gross electricity consumption by 2020, a tender scheme provides the least costs to society over the period 2006–2020 but only in case there is limited or no strategic bidding. Considering, however, strategic bidding, a feed-in tariff can be the more efficient solution. Between the other two support mechanisms, the total costs to society are highest for feed-in-tariffs (FIT) until 2013, at which point the costs for the quota system begin to rise rapidly and overtake FIT in 2014–2020. The paper also provides a sensitivity analysis of the support mechanism calculations by varying default parameters such as the interim (2010) target, the assumed investment risk levels and the amount of biomass co-firing. This analysis shows that a 2010 target of 15% rather than 13.2% generates lower costs for society over the whole period 2006–2020, but higher costs for the RES-E strategy over the period 2006–2010.     

The link between political decision-making and energy options: Assessing future role of renewable energy and energy efficiency in Finland

European Union and Finland are confronted with much the same kind of challenges in energy policy. Because of much higher importance on energy, these issues escalated earlier in Finland including vital political decision-making. Several alternative energy paths to the future can be identified with fairly similar projected costs. The more in-depth analysis in the Finnish case suggests that, e.g., an integrated approach consisting of renewable energy sources and energy efficiency measures would be one competitive alternative to satisfy both increasing energy demand and CO₂ emission reductions already by 2020. The study shows that meeting environmental, energy security and economical targets may not as such be adequate for the future success of an energy option. There is a more profound link between the energy options and the political decision-making, implying a much broader range of criteria than just the 3 Es reflecting thus politicians’ priorities and concerns. For example, in the Finnish case renewable energy sources and energy efficiency did not match optimally the parliamentary majority's preferences when deciding on future electricity direction in 2002. The methodology suggested here can be used to improve the strategic positioning of alternative energy paths.     

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.     

Factors which influence Nova Scotia farmers in implementing energy efficiency and renewable energy measures

Improvements in energy efficiency and renewable energy use can reduce farm operating costs and reduce greenhouse gas (GHG) emissions. Responses (n=224, representing a 32% response rate) from a mail survey were used to assess use and interest in energy efficient and renewable energy options on farms in Nova Scotia, Canada. Energy efficiency options used the most were behavior, insulation, and lighting. Few farms used renewable energy options. Approximately 78% of farmers indicated an interest in implementing energy efficiency and renewable energy options. Interest varied by farm type and size. Interest increased with farm size. The two main efficiency options of interest were lighting (60.8%) and insulation (43.7%), while wind power development (55.5%) and solar water heating (24.5%) were the main renewable options of interest. Farmers concerned about power and equipment reliability were less likely to be interested in implementing options. Farmers concerned about the environment were more likely to be interested in implementing options. Current use of certain energy efficiency technologies, such as efficient lighting, influenced implementation interest.     

Renewable energy policy and electricity market reforms in China

The article examines the potential effectiveness of the renewable energy policy in China and its regulatory Law framework. It frames the option of renewable energy technology within the background of the long-lasting electricity problems that China has faced including serious supply shortages, reliance on coal, and severe environmental contamination. Its dual administrative and ownership system based on state and privately owned industry is discussed together with the market reform measures adopted in the sector. Current renewable energy policy is analysed, and the scope of the 2005 Renewable Energy Promotion Law is investigated. This is conducted within the context of the electricity sector reform that China adopted, and its effects upon the prospects of encouraging as well as expanding the development of renewable energy. This study draws upon primary information collected from interviews with stakeholders on the policy adequacy, and identifies three main types of shortcomings that have interfered with a more successful expansion of renewable energy in China.     

Economic evaluation of renewable energy systems under varying scenarios and its implications to Korea’s renewable energy plan

This paper studies economics of renewable energy systems with consideration of future prospects on costs and uncertain external conditions that may affect competitiveness in the power plant market. The concept of learning curve is adopted to compute estimates on the costs of installing and operating renewable energy systems in the future; fuel costs and carbon price are modeled as scenario-dependent variables to analyze their impact on total costs under different scenarios. The proposed approach allows evaluation and comparison of total costs necessary in implementing renewable energy plans under varying technological, and/or economical conditions that face uncertainty at present. Moreover, analyzing the evaluation results further with techniques like sensitivity analysis can identify factors central to reducing the total costs. As an illustrative case-study, the Korean government’s renewable energy plan has been evaluated accordingly, under three different scenarios defined by International Energy Agency (IEA). The evaluation results indicate minor changes in total costs of achieving the plan among three scenarios, mainly due to counterbalancing between the price of fossil fuels and carbon price. Further analyses revealed factors central to lowering the total costs necessary in implementing the plan—hybridization between renewable energy systems, reduction of biomass production costs via technological innovation, increasing learning rates by focusing on R&D and international cooperation.     

Power to change: Analysis of household participation in a renewable energy and energy efficiency programme in Central Australia

The Australian government funded a national Solar City program (2008–2013) to support communities to increase adoption of energy efficiency measures and renewable energy technology. One community was Alice Springs, a town with about 9000 households in the geographic centre of Australia. The programme offered a package of support: free energy audits, discounts for the purchase of renewable energy technology and energy efficiency measures, and ongoing information. Households that adopted solar hot water and photovoltaic systems reduced their electricity usage immediately after adoption by 10% and 34% respectively, and this was maintained in the long term. A small rebound effect of 15% was observed in the photovoltaic adopters. It was observed that, on average, households that adopted only energy efficiency measures did not have a significant reduction in their electricity usage over the long term. However, consistent with expectations, this study did show that there was a significant correlation between the number of energy efficiency measures adopted and the greatest household reduction in electricity usage. These contrary results indicate that there are additional factors involved. The connection between the effective use of measures, coincident behavioural change or increased energy awareness and greater energy reduction is discussed.     

Algerian renewable energy assessment: The challenge of sustainability

Algeria plays a very important role in world energy markets, both as a significant hydrocarbon producer and as an exporter, as well as a key participant in the renewable energy market. Due to its geographical location, Algeria holds one of the highest solar potentials in the world. This paper presents a review of the present renewable energy situation and assesses present and future potential of renewable energy sources (RESs) in Algeria. This paper also discusses the trends and expectation in solar systems applications and the aspects of future implementation of renewable energies in the Middle East and North Africa (MENA) region status. The problem related to the use of RES and polices to enhance the use of these sources are also analysed in this paper. In addition the available capacity building, the technical know-how for each RES technology and localizing manufacturing of renewable energy equipments are defined. The co-importance of both policy and technology investments for the future Algerian markets of RES and competitiveness of the solar/wind approach is emphasized. Some examples of policy significantly impacting Algerian markets are reviewed, and the intention of the new Algerian RES initiative is discussed.     

Optimum energy storage techniques for the improvement of renewable energy sources-based electricity generation economic efficiency

The high wind and solar potential along with the extremely high electricity production cost met in the majority of Greek Aegean islands comprising autonomous electrical networks, imply the urgency for new renewable energy sources (RES) investments. To by-pass the electrical grid stability constraints arising from an extensive RES utilization, the adaptation of an appropriate energy storage system (ESS) is essential. In the present analysis, the cost effect of introducing selected storage technologies in a large variety of autonomous electrical grids so as to ensure higher levels of RES penetration, in particular wind and solar, is examined in detail. A systematic parametrical analysis concerning the effect of the ESSs’ main parameters on the economic behavior of the entire installation is also included. According to the results obtained, a properly sized RES-based electricity generation station in collaboration with the appropriate energy storage equipment is a promising solution for the energy demand problems of numerous autonomous electrical networks existing worldwide, at the same time suggesting a clean energy generation alternative and contributing to the diminution of the important environmental problems resulting from the operation of thermal power stations.     

A study of the role played by renewable energies in China's sustainable energy supply

This paper first provides an overview of the context of renewable energy development in China, including the country's recent renewable energy legislation. Further, it summarizes the current status of renewable energy development and the role it plays in the national energy supply. Next it introduces the national indicative targets for renewable energies in 2010 and 2020, and conducts a long term scenario of the role of renewable energies in China's energy system transition till 2050. It discusses the main risks involved in China's renewable energy development, and proposes some policy measures for risk management.     

Supply amount and marginal price of renewable electricity under the renewables portfolio standard in Japan

The Renewables Portfolio Standard (RPS) in Japan requires that approximately 1.35% of each retail supplier's electricity sales in FY2010 come from renewable energy sources (RES), for example, photovoltaics, wind, biomass, geothermal, and small hydropower. To help retail suppliers and renewable generators develop effective strategies, this study provides a quantitative analysis of the impact of this measure. We assume the supply conditions for electricity generation from renewable energy sources (RES-E) based on regional resource endowments, and we derive the cost-effective compositions of renewable portfolios, RES-E certificate prices, and additional costs to retail suppliers. The future prospects of RES-E are assessed based on technology, region, and year up to FY2010. The analysis reveals that wind power and biomass power generated from municipal waste will provide the majority of the total supply of RES-E under the RPS. It also indicates that the marginal price of RES-E certificates will be approximately 5.8 JPY/kWh (5.2 USc/kWh) in FY2010, in the case wherein the marginal price of electricity is assumed to be 4 JPY/kWh (3.6 USc/kWh). In order to elaborate on this further, sensitivity analyses for some parameters of RES and the price of electricity are provided. The dynamic supply curves of RES-E certificates are also indicated.     

Breaking down the silos: the integration of energy efficiency, renewable energy, demand response and climate change

This paper explores the feasibility of integrating energy efficiency program evaluation with the emerging need for the evaluation of programs from different “energy cultures” (demand response, renewable energy, and climate change). The paper reviews key features and information needs of the energy cultures and critically reviews the opportunities and challenges associated with integrating these with energy efficiency program evaluation. There is a need to integrate the different policy arenas where energy efficiency, demand response, and climate change programs are developed, and there are positive signs that this integration is starting to occur.

Successful renewable energy development in a competitive electricity market: A Texas case study

The development of renewable energy in markets with competition at wholesale and retail levels poses challenges not present in areas served by vertically-integrated utilities. The intermittent nature of some renewable energy resources impact reliability, operations, and market prices, in turn affecting all market participants. Meeting renewable energy goals may require coordination among many market players.     

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.     

International renewable energy policy—between marginalization and initial approaches

This article undertakes an analysis of renewable energy policy at the international level. So far, such policy efforts have been carried out in a fragmented manner across various fields and without the benefit of any specific international agreements or organizations. In the two key policy areas of energy and climate, in which one would expect to find direct approaches at the international level, there have been only marginal efforts to promote renewable energy and with little direct impact—something which at first glance is rather remarkable. Initiated in the wake of the Second World Summit on Sustainable Development, in 2002 in Johannesburg, there exists for the first time a specific policy process – set in motion by the German government – which has led to some initial “soft” instruments and institutional forms; this multilateral process, which, although parallel and independent in its approach, is proceeding nonetheless in a consensual manner similar to the UN negotiations. At the same time, several countries have taken the lead to form an international organization for renewable energy; this is presently being developed. This article examines the various policy levels as well as the roles of the significant national and international actors on the basis of a multilevel governance approach.     

Assessing the potential of renewable energy sources in Turkey

To meet Turkey’s growing energy demand, the installed electric power capacity of 27.8 GW in 2001 has to be doubled by 2010 and increased fourfold by 2020. The difference between Turkey’s total primary energy supply (TPES) of from its own sources and total final consumption (TFC) is projected grow from 1 quad (1.06–2.06) in 1999 to 5.71 quads (2.79–8.5) in 2020 (1 QUAD=293.071 TWh). Turkey’s limited amount of fossil fuels has a present average ratio of proved reserves of 97.38 quads to production rate of 3.2 quads yr⁻¹ of about 30 years. Turkey’s reliance on fossil fuel-based energy systems to meet the growing demand is most likely to exacerbate the issues of energy insecurity, national environmental degradation, and global climate change in increasing proportions. Economically-feasible renewable energy potential in Turkey is estimated at a total of ca. 1.69 quads yr⁻¹ (495.4 TWh yr⁻¹) with the potential for 0.67 quads yr⁻¹ (196.7 TWh yr⁻¹) of biomass energy, 0.42 quads yr⁻¹ (124 TWh yr⁻¹) of hydropower, 0.35 quads yr⁻¹ (102.3 TWh yr⁻¹) of solar energy, 0.17 quads yr⁻¹ (50 TWh yr⁻¹) of wind energy, and 0.08 quads yr⁻¹ (22.4 TWh yr⁻¹) of geothermal energy. Pursuit and implementation of sustainability-based energy policy could provide about 90 and 35% of Turkey’s total energy supply and consumption projected in 2010, respectively. Utilization of renewable energy technologies for electricity generation would necessitate about 23.2 Mha (29.8%) of Turkey’s land resources.