A preliminary evaluation of financial incentives for renewable energy technologies in India

The Government of India has been providing various financial incentives including capital subsidy, interest subsidy and depreciation related income tax benefits with the objective of promoting development and dissemination of renewable energy technologies in the country. These financial incentives have, however, changed from time to time in their type, magnitude, scope and even geographical coverage. In some cases, the state governments have also been providing additional incentives. It is therefore, necessary to undertake a detailed evaluation and comparison of different financial incentives provided for dissemination of renewable energy technologies in India (provided in the past as well as the existing incentives) to facilitate a comprehensive grasp of these measures for future planning. An attempt in this direction has been made in this paper. Simple mathematical expressions have been derived to facilitate comparison among some of the commonly provided financial incentives. Results of some exemplifying calculations for three solar energy systems have been presented and briefly discussed. Copyright © 2004 John Wiley & Sons, Ltd.     

Optimal regulation of renewable energy: A comparison of Feed-in Tariffs and Tradable Green Certificates in the Spanish electricity system

Incentives for renewable energy based on Feed-in-Tariffs have succeeded in achieving high levels of renewable installed capacity. However, these incentives have not been responsive to market conditions or price signals, imposing in some cases a great financial burden on consumers when Renewable Energy Sources reached significant levels. A way out of this problem could be a market mechanism where incentives respond to the level of investment on renewables. We explore this issue comparing a regulatory system based on Tradable Green Certificates, able to react to market changes, to a Feed-in-Tariffs incentive scheme. We model the strategic interaction between participants in the electricity pool and the Tradable Green Certificates market and focus on the optimal regulation for the retailer segment, which generates the desired demand for green certificates as a decreasing function of the certificate price. We then calibrate our theoretical model with data from the Spanish electricity system for the period 2008–2013. Simulations show that a green certificate scheme could both achieve the 2020 targets for renewable electricity and reduce regulatory costs. However, the role of regulators is still important, since setting the right target for renewable electricity affects the cost burden of the system.     

Effect of financial and fiscal incentives on the effective capital cost of solar energy technologies to the user

Development and dissemination of solar energy technologies in India has been aided by a variety of policy and support measures. One of the promotional measures is the provision of financial and fiscal incentives such as capital subsidy, low interest loan and accelerated depreciation related income tax benefits to the users on the purchase of solar energy technologies. In this study an attempt has been made to determine the effective capital cost of solar energy technologies to the user with the provision of financial and/or fiscal incentives. Results of exemplifying calculations for a domestic and an industrial solar water heating system, a solar home lighting system and a solar drying system have been presented and discussed.     

Rewarding energy savings rather than energy efficiency: Exploring the concept of a feed-in tariff for energy savings

Financial incentives are important for overcoming certain market barriers to improved energy efficiency and for the adoption of energy efficient technologies. Financial incentives are mainly focused on the introduction of specific technologies, rather than behavioural change. While the declared goal of financial support schemes very often is to save energy or reduce harmful emissions rather than to foster new technologies per se, it is often encountered that such financial support for energy efficient technologies may not ensure real energy savings due to the rebound effect and various market barriers.In the area of renewable energies it is common for financial support to be given to power producers for the verified production of renewable electricity, in the form of a guaranteed financial incentive (feed-in tariff). In the energy efficiency policy research little attention has been paid to the possible use of a “feed-in tariff” in the form of a financial incentive based on the kWh saved by the end-user. This paper discusses the possible setup of a feed-in tariff designed to reward energy savings.     

Facilitation of renewable electricity using price based appliance control in Ireland’s electricity market

Abstract Ireland’s share of electricity generated from RES-E (renewable energy sources) is due to increase from 14.4% in 2009 to 40% in 2020. With this target predominantly fulfilled with wind generated electricity, the need for increased grid flexibility to facilitate this intermittent energy source is becoming ever more significant. As smart metering becomes available, demand side participation will be one option for achieving this flexibility. Using an immersion heated hot water tank as an example, this paper examines the impact that price optimised load scheduling has on the facilitation of wind generated electricity. To replicate real-world data availability, optimisation is performed using day-ahead predicted prices while the results are calculated using final prices and metered generation data. The results demonstrate a correlation between the day-ahead predicted half-hourly price of electricity and real-time wind availability. This supports the use of price as a means of providing an incentive for load response in order to increase the amount of renewable energy that can be facilitated on the electrical grid. Furthermore, various thermal storage efficiencies were examined for the device to reveal that as the energy loss rate of the device is reduced, the financial savings increase, wind generation increases, and conventional generation decreases.     

Co-benefit analysis of incentives for energy generation and storage systems; a multi-stakeholder perspective

In this work, we are analyzing the advantages of energy incentives for all the stakeholders in an energy system. The stakeholders include the government, the energy hub operator, and the energy consumer. Two streams of energy incentives were compared in this work: incentives for renewable energy generation technologies and incentives for energy storage technologies. The first type aims increasing the share of renewable energies in the electricity system while the second type aims development of systems which use clean electricity to replace fossil fuels in other sectors of an energy system such as the transportation, residential and industrial sector. In this work, we are analyzing the advantages of energy incentives for all the stakeholders in an energy system. The stakeholders include the government, the energy hub operator, and the energy consumer. Two streams of energy incentives were compared in this work: incentives for renewable energy generation technologies and incentives for energy storage technologies. The first type aims to increase the share of renewable energies in the electricity system while the second type aims the development of systems which use clean electricity to replace fossil fuels in other sectors of an energy system such as the transportation, residential and industrial sector. The results of the analysis showed that replacing fossil fuel-based electricity generation with wind and solar power is a less expensive way for the energy consumer to reduce GHG emissions (60 and 92 CAD/ tonne CO_2e for wind and solar, respectively) compared to investing on energy storage technologies (225 and 317 CAD/ tonne CO_2e for Power-to-Gas and battery powered forklifts, respectively). However, considering the current Ontario's electricity mix, incentives for the Power-to-Gas and battery powered technologies are less expensive ways to reduce emissions compared to replacing the grid with wind and solar power technologies (1479 and 2418 CAD/ tonne CO_2e for wind and solar, respectively). Our analysis also shows that battery storage and hydrogen storage are complementary technologies for reducing GHG emissions in Ontario.     

Progress of renewable electricity replacing fossil fuels

Dramatic fall in costs of renewable energy in the last 24 months has not only accelerated the replacement of fossil fuels by renewable energy in electricity generation. The low cost renewable electricity is now starting to replace fossil fuels in other sectors.One reason is that renewable electricity is now cheaper per unit energy than oil, about the same price as fossil methan but, still, more expensive than coal. Another reason is that electricity often offer other opportunities, such as cheaper transport, better control, higher energy efficiency in final production of energy services and lower local environmental costs.     

Tax incentives to promote green electricity: An overview of EU-27 countries

This paper provides a comprehensive overview of the main tax incentives used in the EU-27 member states (MSs) to promote green electricity. Sixteen MSs use tax incentives to promote green electricity simultaneously with other promotion measures, especially quota obligations and price regulation. However, not all available technologies are promoted. For example, six MSs (Germany, Romania, Slovak Republic, Denmark, Sweden and Poland) have included an exemption on the payments of excise duties for electricity when the electricity is generated from renewable energy sources (RES). This tax incentive is the most widely used. Limited tax incentives in personal income tax are available in Belgium, France, Czech Republic and Luxembourg. In corporate tax, tax incentives consist mainly of a deduction in the taxable profit (Belgium, Greece, Czech Republic and Spain). Lower tax rates in VAT are applied in three MSs, France, Italy and Portugal. Only Spain and Italy use effective tax incentives in property tax. As a great diversity of tax incentives has been used to promote green electricity, this adds another difficulty to the EU objective of providing a renewable energy policy framework, but also it offers a useful set of case studies which can be used to inform EU policy development.     

A market for renewable energy credits in the Indian power sector

Electricity generation from renewable energy sources in India has been promoted through a host of fiscal policies and preferential tariff for electricity produced from the same. The fiscal policies include tax incentives and purchase of electricity generated through renewable energy sources. The enactment of the Electricity Act 2003 (the Act) has lent further support to renewable energy by stipulating purchase of a certain percentage of the power procurement by distribution utilities from renewable energy sources. The renewable portfolio obligation as well as the feed-in tariff for power procurement has been specified by a number of State Electricity Regulatory Commissions (SERCs) for the respective state under their jurisdiction. A feed-in tariff determined through a cost-plus approach under a rate of return framework lacks incentive for cost minimisation and does not encourage optimal utilisation of renewable energy resources in the country. Such regulatory provisions differ across states.The prevalent practice of fixing a renewable portfolio obligation along with cost-based feed-in tariffs disregards economic efficiency. The paper proposes nationally tradable renewable energy credits scheme for achieving the targets set by the respective SERCs as renewable portfolio obligation. This would reduce the cost of compliance to a renewable portfolio obligation, and would encourage efficient resource utilisation and investment in appropriate technologies. The paper highlights its advantages and implementation issues. This paper discusses regulatory developments for promotion of renewable energy in various Indian states. The paper also identifies a number of issues related to regulations concerning renewable portfolio obligation.     

Technology learning for renewable energy: Implications for South Africa's long-term mitigation scenarios

Technology learning can make a significant difference to renewable energy as a mitigation option in South Africa's electricity sector. This article considers scenarios implemented in a Markal energy model used for mitigation analysis. It outlines the empirical evidence that unit costs of renewable energy technologies decline, considers the theoretical background and how this can be implemented in modeling. Two scenarios are modelled, assuming 27% and 50% of renewable electricity by 2050, respectively. The results show a dramatic shift in the mitigation costs. In the less ambitious scenario, instead of imposing a cost of Rand 52/t CO₂-eq (at 10% discount rate), reduced costs due to technology learning turn renewables into negative cost option. Our results show that technology learning flips the costs, saving R143. At higher penetration rate, the incremental costs added beyond the base case decline from R92 per ton to R3. Including assumptions about technology learning turns renewable from a higher-cost mitigation option to one close to zero. We conclude that a future world in which global investment in renewables drives down unit costs makes it a much more cost-effective and sustainable mitigation option in South Africa.     

美国加州可再生能源配额制及对我国的启示

配额制本质上是一种对可再生能源开发的激励机制,它的实施需要具备一定的前提条件,目前仍处于不断探索和发展阶段。配额制的实质是以最低成本开发可再生能源,它通常需要依托一个绿色证书市场。任何配额制基本上都包含了配额承担主体及合格的发电类型、配额目标的确定及分解、运作机制、成本分摊与惩罚措施等内容。世界上没有任何两个国家或地区的配额制是完全一致的,均是根据本国或本地区的实际情况而制定。加利福尼亚州是美国可再生能源发展较快,也是最早实施配额制的联邦州之一。加州配额制的配额承担主体主要是为终端用户供电的电力企业;运作机制是通过绿色证书来代替物理计量,以证书数量来反映配额承担主体的履约情况;实现配额义务的成本是通过终端销售电价疏导出去的。这些与英国和日本的配额制相同,而差异性体现在配额目标形式不同、指标分解原则不同以及对不同类型可再生能源的激励程度不同。我国在可再生能源配额制设计中需要关注与现行可再生能源政策的衔接、地区配额指标的差异化设计、地方政府的责任、可再生能源电量的计量以及保障措施等问题。     

Parametric assessment of concentrated photovoltaic parks for the Mediterranean region

Solar electricity produced by concentrated photovoltaic (CPV) solar cells is an alternative renewable energy technology for sustainably providing the world's future energy requirements. Although the technology is relatively recent, it could potentially become viable in regions with high direct irradiance levels, such as the Mediterranean region. The main objective of this feasibility study is to investigate whether the installation of CPV parks in the Mediterranean region is economically feasible. The study takes as an example the available solar potential of the island of Cyprus as well as all available data concerning the current renewable energy sources policy of the island. In order to identify the least cost-feasible option for the installation of 1 MW CPV park, a parametric cost–benefit analysis is carried out by varying the CPV park capital investment, the discount rate and the CO₂ emission trading scheme price. The results indicate that in the case where no feed-in tariff scheme is available, the capital expenditure of the CPV park is a critical parameter for the financial viability of the project.     

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.     

A review of international green power markets: recent experience,trends, and market drivers

Green power marketing—the act of differentially selling electricity generated wholly or in part from renewable sources—has emerged in more than a dozen countries around the world. Almost two million customers worldwide buy green power today. This paper reviews green power marketing activity in Australia, Canada, Japan, the US, and in a number of countries in Europe to gain an understanding of consumer demand for electricity generated from renewable sources. It also examines key factors that influence market penetration of green power products, such as product designs, pricing, incentives, marketing strategies, policies, and product certification.     

Levelised costs of Wave and Tidal energy in the UK: Cost competitiveness and the importance of “banded” Renewables Obligation Certificates

In this paper, publicly available cost data are used to calculate the private levelised costs of two marine energy technologies for UK electricity generation: Wave and Tidal Stream power. These estimates are compared to those for ten other electricity generation technologies whose costs were identified by the UK Government (DTI, 2006). Under plausible assumptions for costs and performance, point estimates of the levelised costs of Wave and Tidal Stream generation are £190 and £81/MWh, respectively. Sensitivity analysis shows how these relative private levelised costs calculations are affected by variation in key parameters, specifically the assumed capital costs, fuel costs and the discount rate. We also consider the impact of the introduction of technology-differentiated financial support for renewable energy on the cost competitiveness of Wave and Tidal Stream power. Further, we compare the impact of the current UK government support level to the more generous degree of assistance for marine technologies that is proposed by the Scottish government.     

The merit-order effect: A detailed analysis of the price effect of renewable electricity generation on spot market prices in Germany

The German feed-in support of electricity generation from renewable energy sources has led to high growth rates of the supported technologies. Critics state that the costs for consumers are too high. An important aspect to be considered in the discussion is the price effect created by renewable electricity generation. This paper seeks to analyse the impact of privileged renewable electricity generation on the electricity market in Germany. The central aspect to be analysed is the impact of renewable electricity generation on spot market prices. The results generated by an agent-based simulation platform indicate that the financial volume of the price reduction is considerable. In the short run, this gives rise to a distributional effect which creates savings for the demand side by reducing generator profits. In the case of the year 2006, the volume of the merit-order effect exceeds the volume of the net support payments for renewable electricity generation which have to be paid by consumers.     

An energy management approach for renewable energy integration with power generation and water desalination

The share of the renewable energy sources (RES) in the global electricity market is substantially increasing as a result of the commitment of many countries to increase the contribution of the RES to their energy mix. However, the integration of RES in the electricity grid increases the complexity of the grid management due to the variability and the intermittent nature of these energy sources. Energy storage solutions such as batteries offer either short-term storage that is not sufficient or longer period storage that is significantly expensive. This paper introduces an energy management approach which can be applied in the case of power and desalinated water generation. The approach is based on mathematical optimization model which accounts for random variations in demands and energy supply. The approach allows using desalination plants as a deferrable load to mitigate for the variability of the renewable energy supply and water and/or electricity demands. A mathematical linear programming model is developed to show the applicability of this idea and its effectiveness in reducing the impact of the uncertainty in the environment. The model is solved for the real world case of Saudi Arabia. The optimal solution accounts for random variations in the renewable energy supply and water and/or electricity demands while minimizing the total costs for generating water and power.     

Electricity generation:: regulatory mechanisms to incentive renewable alternative energy sources in Brazil

The dissemination of renewable alternative energy sources for electricity generation has always being done through regulatory mechanisms, created and managed by the government of each country. Since these sources are more costly to generate, they have received incentives in response to worldwide environmental concerns, above all with regard to the reduction of CO₂ emissions. In Brazil, the electricity generation from renewable alternative sources is experiencing a new phase of growth. Until a short time ago, environmental appeal was the strongest incentive to these sources in Brazil but it was insufficient to attain its objective. With the electricity crisis and the rationing imposed in 2001, another important factor gained awareness: the need to diversify energy sources. Within this context, this work has the objective of analyzing the regulatory mechanisms recently developed to stimulate electricity generation from renewable alternative energy sources in Brazil by following the experience of other countries such as the United States, United Kingdom and Germany.     

Switching towards coal or renewable energy? The effects of financial capital on energy transitions

Does a country's stock of financial capital affect its ability to achieve energy transitions? This paper uses data for up to 137 countries for the period 1998–2013 to investigate the importance of financial capital for changes in the use of each energy type. I find that financial capital supports transition to more capital-intensive energy types. For high-income countries, financial capital facilitates transitions from fossil fuels to modern renewable energy sources, especially wind. Both private credit from banks and domestic private debt securities support greater shares of wind energy. For lower-income countries, financial capital supports progression from biomass towards fossil fuel energy sources such as coal. I also find that countries with larger stocks of financial capital are more likely to move to more capital-intensive electricity generation systems.     

More competition: Threat or chance for financing renewable electricity?

The paper examines how increased competition in electricity markets may reshape the future electricity generation portfolio and its potential impact on the renewable energy (RE) within the energy mix. The present analysis, which is based on modelling investor behaviour with a time horizon up to 2030, considers the economic aspects and conditions for this development with a particular focus on the photovoltaics. These aspects include pure financial/investment factors, such as the expected returns in the sector, subsidisation of certain RE resources and other policies focusing on the energy sector (liberalisation, environmental policies and security of supply considerations). The results suggest that policies aiming at the expansion of renewable energy technologies and strengthening the competition in the electricity markets have mutually reinforcing effects. More competition can reduce the financial burden of the existing renewable support schemes and consequently help to achieve the already established RE targets.