Coordinated Renewable Energy Support Schemes

Abstract

This paper illustrates the effect that can be observed when support schemes for renewable energy are regionalised. Two theoretical examples are used to explain interactive effects on, e.g., the price of power, conditions for conventional power producers, and changes in import and export of power. The first example covers countries with regional power markets that also regionalise their support schemes, the second countries with separate national power markets that regionalise their support schemes. The main findings indicate that the almost ideal situation exists if the region prior to regionalising RES-E support schemes already has a common liberalised power market. In this case the introduction of a common support scheme for renewable technologies will lead to more efficient sitings of renewable plants, improving economic and environmental performance of the total power system. But if no such common power market exits regionalising RES-E support schemes might due to interactions introduce distortions in the conventional power system. Thus contrary to intentions we might in this case end up in a system that is far from optimal with regard to efficiency and emissions. Thus considerable cautious should be taken when coordinated or regionalised support schemes are introduced, the outcome depending especially on the conditions at the power market.