• Initiative -
  • Type KAPSARC journal article
  • Date 1 June 2018
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Abstract

The success of any renewable policy can be measured through three parameters: total cost, aggregate installed capacity of renewable technology deployed over the lifetime of the policy and speed at which renewables are adopted. Using these three parameters, this study allows us to explore how policy instruments perform under different market conditions taking into account the impact of price volatility and uncertainty of those investments. This study has a financial perspective, omitting political, institutional and economic barriers that impact on renewable technology deployment. In particular, this paper develops a generator of potential renewable projects, using Spanish onshore wind data. The economic environment for those projects is set using a stochastic future evolution of European electricity prices. Finally, for each project this study calculates, under the five different policies, the expected present value and when is the best moment to commission the project. A relevant insight for policymaker is that, in reality, there is no ‘best policy instrument’ since there are tradeoffs among different policy instruments. Governments must prioritize between the total deployment of renewables, speed of adoption and cost of policies. Our findings show that feed-in tariff, in particular the contract-for-difference, is the policy that yields the fastest adoption of renewables. However, it is also the most expensive policy. The investment credit is the cheapest policy, while at the same time has the slowest pace of adoption with the largest number of laggards. © 2018 The Authors

https://www.sciencedirect.com/science/article/pii/S1364032118303988

Renewable and Sustainable Energy Reviews

Authors

Nora Nezamuddin

Senior Research Associate Nora is a Senior research associate currently working on assessing the current and future status of freight transportation in the… Nora is a Senior research associate currently working on assessing the current and future status of freight transportation in the Kingdom of Saudi Arabia from a global and local perspective and understanding the energy demand in freight movement in India. She has also worked on renewable transitions policy and costs and their effect on electricity markets.

Expertise

  • Transport economics
  • Freight transport
  • Energy policies
  • Transport policy
  • Transitions policy and trade
  • Energy in transport

Publications See all Nora Nezamuddin’s publications

Tamim Zamrik

Tamim Zamrik

Jorge Blazquez

Jorge Blazquez

Former Research Fellow Jorge is a former research fellow specializing in energy and economics, with research interests in energy and macroeconomics, energy policies… Jorge is a former research fellow specializing in energy and economics, with research interests in energy and macroeconomics, energy policies and transitions.

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