Effectiveness and efficiency of support schemes in promoting renewable energy sources in the Spanish electricity market

Abstract

This research paper delves into the central mechanisms implemented in Spain to foster the adoption of clean energy projects. The study scrutinizes various mechanisms established from 2005 onwards, evaluating their efficacy in achieving the desired outcome of supporting clean energy project implementation. The aim is to comprehensively assess the associated costs, effectiveness, and attainment of renewable energy objectives stemming from implementing diverse support schemes. This paper explores the effectiveness of feed-in tariffs and feed-in premium mechanisms in promoting the integration of new renewable energy generation into the power system. However, the Spanish experience suggests that exhaustive planning control is imperative to prevent excessive support costs that could jeopardize the entire market and cause a significant rise in final energy costs. The research studies the support schemes and associated market distortion and presents the roadmap from regulated tariffs to a “total market” for wind and solar energy. The findings demonstrate that, under proper supervision and planning, a transitional retribution scheme effectively promotes renewable energy plant integration. Finally, the analysis examines the need to regulate the excess benefits that non-emitting power sources receive in a marginal price market, as this can lead to market imbalances and a substantial increase in final costs. These plans serve as a crucial tool in achieving the decarbonization objectives of the European Power System.