A comparative analysis of renewable electricity support mechanisms for Southeast Asia

This study evaluates the applicability of eight renewable electricity policy mechanisms for Southeast Asian electricity markets. It begins by describing the methodology behind 90 research interviews of stakeholders in the electricity industry. It then outlines four justifications given by respondents for government intervention to support renewables in Southeast Asia: unpriced negative externalities, counteracting subsidies for conventional energy sources, the public goods aspect of renewable energy, and the presence of non-technical barriers. The article develops an analytical framework to evaluate renewable portfolio standards, green power programs, public research and development expenditures, systems benefits charges, investment tax credits, production tax credits, tendering, and feed-in tariffs in Southeast Asia. It assesses each of these mechanisms according to the criteria of efficacy, cost effectiveness, dynamic efficiency, equity, and fiscal responsibility. The study concludes that one mechanism, feed-in tariffs, is both the most preferred by respondents and the only one that meets all criteria.     

Cost effects of international trade in meeting EU renewable electricity targets

The European market for renewable electricity received a major stimulus from the adoption of the Directive on the Promotion of Renewable Electricity. The Directive specifies the indicative targets for electricity supply from renewable energy sources (RES-E) to be reached in European Union (EU) Member States in the year 2010. It also requires Member States to certify the origin of their renewable electricity production. This article presents a first EU-wide quantitative evaluation of the effects of meeting the targets, using an EU-wide system for tradable green certificates (TGC). We calculate the equilibrium price of green certificates and identify which countries are likely to export or import certificates. Cost advantages of participating in such an EU-wide trading scheme are determined for each of the Member States. Moreover, we identify which choice of technologies results in meeting targets at least costs. Results are obtained from a model that quantifies the effects of achieving the RES-E targets in the EU with and without trade. The article provides a brief insight in this model as well as the methodology that was used to specify cost potential curves for renewable electricity in each of the 15 EU Member States. Model calculations show that within the EU-wide TGC system, the total production costs of the last option needed to satisfy the overall EU RES-E target equals 9.2 eurocent/kWh. Assuming that the production price of electricity on the European power market would equal 3 eurocent/kWh in the year 2010, the indicative green certificate price equals 6.2 eurocent/kWh. We conclude that implementation of an EU-wide TGC system is a cost-efficient way of stimulating renewable electricity supply.     

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.     

Do state renewable portfolio standards promote in-state renewable generation?

Several US states have passed renewable portfolio standard (RPS) policies in order to encourage investment in renewable energy technologies. Existing research on their effectiveness has either employed a cross-sectional approach or has ignored heterogeneity among RPS policies. In this paper, we introduce a new measure for the stringency of an RPS that explicitly accounts for some RPS design features that may have a significant impact on the strength of an RPS. We also investigate the impacts of renewable portfolio standards on in-state renewable electricity development using panel data and our new measure of RPS stringency, and compare the results with those when alternative measures are used. Using our new measure, the results suggest that RPS policies have had a significant and positive effect on in-state renewable energy development, a finding which is masked when design differences among RPS policies are ignored. We also find that another important design feature – allowing “free trade” of REC’s – can significantly weaken the impact of an RPS. These results should prove instructive to policy makers, whether considering the development of a federal-level RPS or the development or redesign of a state-level RPS.     

Biomass assessment and small scale biomass fired electricity generation in the Green Triangle, Australia

Coal fired electricity is a major factor in Australia’s greenhouse gas emissions (GHG) emissions. The country has adopted a mandatory renewable energy target (MRET) to ensure that 20% of electricity comes from renewable sources by 2020. In order to support the MRET, a market scheme of tradable Renewable Energy Certificates (RECs) has been implemented since 2001. Generators using biomass from eligible sources are able to contribute to GHG emission reduction through the substitution of coal for electricity production and are eligible to create and trade RECs. This paper quantifies the potential biomass resources available for energy generation from forestry and agriculture in the Green Triangle, one of the most promising Australian Regions for biomass production. We analyse the cost of electricity generation using direct firing of biomass, and estimate the required REC prices to make it competitive with coal fired electricity generation. Major findings suggest that more than 2.6 million tonnes of biomass are produced every year within 200 km of the regional hub of Mount Gambier and biomass fired electricity is viable using feedstock with a plant gate cost of 46 Australian Dollars (AUD) per tonne under the current REC price of 34 AUD per MWh. These findings are then discussed in the context of regional energy security and existing targets and incentives for renewable energies.     

Federal policies for renewable electricity: Impacts and interactions

Three types of policies that are prominent in the federal debate over addressing greenhouse gas emissions in the United States are a cap-and-trade program (CTP) on emissions, a renewable portfolio standard (RPS) for electricity production, and tax credits for renewable electricity producers. Each of these policies would have different consequences, and combinations of these policies could induce interactions yielding a whole that is not the sum of its parts. This paper utilizes the Haiku electricity market model to evaluate the economic and technology outcomes, climate benefits, and cost-effectiveness of three such policies and all possible combinations of the policies. A central finding is that the carbon dioxide (CO₂) emissions reductions from CTP can be significantly greater than those from the other policies, even for similar levels of renewable electricity production, since of the three policies, CTP is the only one that distinguishes electricity generated by coal and natural gas. It follows that CTP is the most cost-effective among these approaches at reducing CO₂ emissions. An alternative compliance payment mechanism in an RPS program could substantially affect renewables penetration, and the electricity price effects of the policies hinge partly on the regulatory structure of electricity markets, which varies across the country.     

Co-firing biomass with coal for electricity generation—An assessment of the potential in EU27

The European Union aims to increase bioenergy use. Co-firing biomass with coal represents an attractive near-term option for electricity generation from renewable energy sources (RES-E). This study assesses the near-term technical potential for biomass co-firing with coal in the existing coal-fired power plant infrastructure in the EU27 Member States. The total technical potential for RES-E from biomass co-firing amounts to approximately 50–90 TWh/yr, which requires a biomass supply of approximately 500–900 PJ/yr. The estimated co-firing potential in EU27 amounts to 20–35% of the estimated gap between current RES-E production and the RES-E target for 2010. However, for some member states the national co-firing potential is large enough to fill the national gap. The national biomass supply potential is considerably larger than the estimated biomass demand for co-firing for all member states. About 45% of the estimated biomass demand for co-firing comes from plants located close to the sea or near main navigable rivers and indicates the possibility for biomass import by sea transport. Thus, biomass co-firing has the potential to contribute substantially to the RES-E development in EU27.     

Cooperation mechanisms to achieve EU renewable targets

There are considerable benefits from cooperating among member states on meeting the 2020 renewable energy sources (RES) targets. Today countries are supporting investments in renewable energy by many different types of support schemes and with different levels of support. The EU has opened for cooperation mechanisms such as joint support schemes for promoting renewable energy to meet the 2020 targets. The potential coordination benefits, with more efficient localisation and composition of renewable investment, can be achieved by creating new areas/sub-segments of renewable technologies where support costs are shared and credits are transferred between countries.Countries that are not coordinating support for renewable energy might induce inefficient investment in new capacity that would have been more beneficial elsewhere and still have provided the same contribution to meeting the 2020 RES targets. Furthermore, countries might find themselves competing for investment in a market with limited capital available. In both cases, the cost-efficiency of the renewable support policies is reduced compared to a coordinated solution.Barriers for joint support such as network regulation regarding connection of new capacity to the electricity grid and cost sharing rules for electricity transmission expansion are examined and examples given. The influence of additional renewable capacity on domestic/regional power market prices can be a barrier. The market will be influenced by for example an expansion of the wind capacity resulting in lower prices, which will affect existing conventional producers. This development will be opposed by conventional producers, whereas consumers will support such a strategy.A major barrier is the timing of RES targets and the uncertainty regarding future targets. We illustrate the importance of different assumptions on future targets and the implied value of RES credits. The effect on the credit price for 2020 is presented in an exemplary case study of 200 MW wind capacity.     

Harmonization of renewable electricity feed-in laws: A comment

This comment aims at critically analyzing some of the economic efficiency issues that are raised in the paper by Muñoz et al. [2007. Harmonization of renewable electricity feed-in laws in the European Union. Energy Policy 35, 3104–3114] on the harmonization of feed-in law schemes for renewable electricity in the European Union. We comment on the choice between green certificate systems and feed-in laws, but pay particular attention to the implementation and design of a harmonized feed-in law scheme. In the comment we argue first that the approach suggested by Muñoz et al. tends to downplay many of the practical difficulties in assessing the real costs facing investors in renewable electricity, not the least since the presence of regulatory uncertainty about the marginal costs of renewable electricity may be essential for the choice between different support systems. Concerning the benefit side of renewable electricity promotion, the Muñoz et al. (2007) paper builds on an interpretation of the EU Renewables Directive that provides plenty of room for national priorities and that therefore essentially implies that harmonized support premiums per se are of little value. We argue instead that a harmonized system should primarily address the international spillover effects from renewable electricity promotion, not the least those related to improved security of supply in Europe. There exists then a strong case for disregarding the specific national benefits of renewable electricity production in the design of harmonized support systems, and for instead considering international—perhaps at the start bilateral—policy support coordination based on entirely uniform support levels.     

Cost-effectiveness of renewable electricity policies

We analyze policies to promote renewable sources of electricity. A portfolio standard (RPS) raises electricity prices and primarily reduces gas-fired generation. A knee of the cost curve exists between 15% and 20% goals for 2020 in our central case, and higher natural gas prices lower the cost of greater reliance on renewables. A renewable energy production tax credit lowers electricity price at the expense of taxpayers, which limits its effectiveness in reducing carbon emissions, and it is less cost-effective at increasing renewables than a portfolio standard. Neither policy is as cost-effective as a cap-and-trade policy for achieving carbon emission reductions.     

Concentrating solar thermal power as a viable alternative in China's electricity supply

Study of low-carbon and pollution renewable alternatives for China revealed that concentrating solar thermal (CST) electric power generation was underemphasized in China's renewable energy plan. The analysis shows the competitive viability of CST: (1) China has the key prerequisites to make CST power generation economical including high-quality insolation and appropriate land, (2) CST's proven history, scale, and dispatchability makes it a good utility-scale power option, especially in the economically underdeveloped Western regions, (3) while CST power is currently more expensive than coal-fired electricity on a nominal basis, when costs of externalities are accounted for, CST, at 11.4 US cents/kWh, can become 57% cheaper than scrubbed coal and 29% cheaper than nuclear power, (4) CST power continues dropping in cost due to economies of scale and technological improvements and can potentially realize a levelized electricity cost of around 4 cents/kWh within ten years, (5) it would significantly rise in competitiveness if and when China completes the extensive smart grid for connecting its solar-abundant western regions with the high-demand eastern regions, (6) CST has the potential to positively impact Western China's economy, but proper policy and deal structure must be in place to ensure that the local community shares the benefit.     

A 100% renewable electricity generation system for New Zealand utilising hydro,wind, geothermal and biomass resources

The New Zealand electricity generation system is dominated by hydro generation at approximately 60% of installed capacity between 2005 and 2007, augmented with approximately 32% fossil-fuelled generation, plus minor contributions from geothermal, wind and biomass resources. In order to explore the potential for a 100% renewable electricity generation system with substantially increased levels of wind penetration, fossil-fuelled electricity production was removed from an historic 3-year data set, and replaced by modelled electricity production from wind, geothermal and additional peaking options. Generation mixes comprising 53–60% hydro, 22–25% wind, 12–14% geothermal, 1% biomass and 0–12% additional peaking generation were found to be feasible on an energy and power basis, whilst maintaining net hydro storage. Wind capacity credits ranged from 47% to 105% depending upon the incorporation of demand management, and the manner of operation of the hydro system. Wind spillage was minimised, however, a degree of residual spillage was considered to be an inevitable part of incorporating non-dispatchable generation into a stand-alone grid system. Load shifting was shown to have considerable advantages over installation of new peaking plant. Application of the approach applied in this research to countries with different energy resource mixes is discussed, and options for further research are outlined.     

Implications of technological learning on the prospects for renewable energy technologies in Europe

The objective of this article is to examine the consequences of technological developments on the market diffusion of different renewable electricity technologies in the EU-25 until 2020, using a market simulation model (ADMIRE REBUS). It is assumed that from 2012 a harmonized trading system will be implemented, and a target of 24% renewable electricity (RES-E) in 2020 is set and met. By comparing optimistic and pessimistic endogenous technological learning scenarios, it is found that diffusion of onshore wind energy is relatively robust, regardless of technological development, but diffusion rates of offshore wind energy and biomass gasification greatly depend on their technological development. Competition between these two options and (existing) biomass combustion options largely determines the overall costs of electricity from renewables and the choice of technologies for the individual member countries. In the optimistic scenario, in 2020 the market price for RES-E is 1 €ct/kWh lower than in the pessimistic scenario (about 7 vs. 8 €ct/kWh). As a result, total RES-E production costs are 19% lower, and total governmental expenditures for RES-market stimulation are 30% lower in the optimistic scenario.     

A hybrid model for the optimum integration of renewable technologies in power generation systems

The main purpose of this work is to assess the unavoidable increase in the cost of electricity of a generation system by the integration of the necessary renewable energy sources for power generation (RES-E) technologies in order for the European Union Member States to achieve their national RES energy target. The optimization model developed uses a genetic algorithm (GA) technique for the calculation of both the additional cost of electricity due to the penetration of RES-E technologies as well as the required RES-E levy in the electricity bills in order to fund this RES-E penetration. Also, the procedure enables the estimation of the optimum feed-in-tariff to be offered to future RES-E systems. Also, the overall cost increase in the electricity sector for the promotion of RES-E technologies, for the period 2010–2020, is analyzed taking into account factors, such as, the fuel avoidance cost, the carbon dioxide emissions avoidance cost, the conventional power system increased operation cost, etc. The overall results indicate that in the case of RES-E investments with internal rate of return (IRR) of 10% the cost of integration is higher, compared to RES-E investments with no profit, (i.e., IRR at 0%) by 0.3–0.5 €c/kWh (in real prices), depending on the RES-E penetration level.     

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.     

Renewable energy sources in the Mexican electricity sector

This paper analyzes the role of renewable energy sources (RES) in the Mexican electricity sector in the context of the proposed renewable energy bill currently under consideration in the Mexican Congress. This paper was divided into three parts. The first part presents a chronology of institutional background related to the RES. This is followed by an analysis of the coordination and management system of the Mexican electricity sector, which can facilitate the promotion and integration of the RES without significant structural changes. Finally, the pros and cons of the renewable energy bill are analyzed in order to demonstrate the need for greater coherence between the bill and the coordination system of the sector. It is concluded that when inconsistency is eliminated, RES would strongly be promoted in Mexico.     

Exploring the hypothetical limits to a nuclear and renewable electricity future

This article evaluates whether the world can transition to a future global electricity system powered entirely by nuclear power plants, wind turbines, solar panels, geothermal facilities, hydroelectric stations, and biomass generators by 2030. It begins by explaining the scenario method employed for predicting future electricity generation, drawn mostly from tools used by the International Energy Agency. The article projects that the world would need to build about 7744 Gigawatts (GW) of installed electricity capacity by 2030 to provide 37.2 thousand terawatt‐hours (TWh). Synthesizing data from the primary literature, the article argues that meeting such a projection with nuclear and renewable power stations will be difficult. If constructed using commercially available and state‐of‐the‐art nuclear and renewable power stations today, the capital cost would exceed $40 trillion, anticipated negative externalities would exceed $1 trillion per year, and immense strain would be placed on land, water, material, and human resources. Even if nuclear and renewable power technologies were much improved, trillions of dollars of investment would still be needed, millions of hectares of land set aside, quadrillions of gallons of water used, and material supplies of aluminum, concrete, silicon, and steel heavily utilized or exhausted. Because of these constraints, the only true path towards a more sustainable electricity system appears to be reducing demand for electricity and consuming less of it. Copyright © 2009 John Wiley & Sons, Ltd.     

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.     

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.     

Solar thermal power generation in India: effect of potential incentives on unit cost of electricity

For large-scale dissemination of solar thermal power plants, in countries identified with huge potential, governments are offering various incentives. In an attempt towards studying the effectiveness of various incentives in reducing the levelised cost of electricity (LCOE) delivered by solar thermal power plants in India, this paper presents simple mathematical frameworks that facilitate the determination of the required level of an incentive so as to ensure that the LCOE is within a pre-specified limit. For example, for a 50?MW solar thermal power plant at Barmer (Rajasthan), LCOE of Rs. 9.75 per kWh can be achieved by providing 6.3% viability gap funding or an interest subsidy of 3% or provision of 32% investment tax credits to the equity investor or provision of production tax credits to the equity investor at the rate of Rs. 0.81 per kWh for first 10 years of operation of a plant.