Effects Of Feed-in Tariff Research Articles

How feed-in-tariff subsidies affect renewable energy investments in China? New evidence from firm-level data

The feed-in-tariff (FiT) policy is a commonly applied policy instrument aimed at fostering renewable energy (RE) investments, yet its actual incentive effect remains controversial, and there is a dearth of micro-level evidence. This study utilizes data from 39 Chinese RE generation companies from 2014 to 2021 to investigate the effect of FiT subsidies on RE investments at the corporate level. Our outcomes are as follows: (1) FiT subsidies exert a significantly positive influence on the investments of RE firms, wherein cash flow, corporate profitability and financing constraints serve as intermediating factors. (2) The economic policy uncertainty (EPU) tends to diminish the positive impact of FiT subsidies on RE investments. Conversely, environmental regulation (ER) levels can enhance the FiT subsidies' positive effect. (3) The stimulating effect of FiT subsidies on investments in large state-owned RE firms exhibits a greater magnitude. Based on this, we put forward targeted policy recommendations.

Feed-in tariffs and the carbon emission trading scheme under China's peak emission target: A dynamic CGE analysis for the development of renewable electricity

Thermal power industry is one of China's leading sources of carbon emissions. China has launched a national carbon emissions trading scheme (ETS) and renewable energy incentive programs to achieve its peak emission target by 2030. However, since 2021, China no longer provides a central feed-in tariff (FIT) for new centrally located solar photovoltaic (PV) power plants, commercial and industrially distributed PV projects, and newly approved onshore wind power projects. This change in policy may threaten China's carbon reduction targets and economic development. Using a dynamic computable general equilibrium (CGE) model, we assess the combined effects of carbon ETS and FIT on China's electricity sector, carbon emission peak target, renewable energy and economic development. In terms of policy overlap and integration, we analyze the impact of these policies and estimate how to coordinate FIT and carbon ETS policies to ensure their effectiveness. Results show that the overall effects of FIT subsidies are superior to phasing-out FIT scenarios. The fiscal pressure caused by FIT is lower than its actual expenditure because it stimulates economic activity and boosts government revenue. However, considering the multiplier effect of the FIT on promoting government revenue growth and GDP growth, the most effective FIT should be terminated in 2025, followed by subsidies ending in 2030 and 2035.

How does feed-in tariff and renewable portfolio standard evolve synergistically? An integrated approach of tripartite evolutionary game and system dynamics

In order to promote the healthy development of renewable energy, China has implemented Feed-in Tariff (FIT) and Renewable Portfolio Standard (RPS). However, due to the differences in natural conditions, social economy and renewable energy development, how does FIT and RPS evolve to achieve the best policy synergy is still a controversial issue. To explore the cooperation and evolution between FIT and RPS, we establish a tripartite evolutionary game model based on regulatory agencies, renewable energy companies and power grid companies to explore the evolution of FIT and RPS, and then combine a game model and a system dynamics model to simulate and analyze the policy effects of FIT and RPS. The findings of the study are: (1) Considering three aspects of the environment, economic benefits, and the consumption of renewable energy, RPS will replace FIT as the main RE policy if the introduction of tradable green certificate market is carried out in an orderly manner. (2) The faster the rate of decline of FIT subsidies and the rate of increase of RPS quotas, the faster the power market will reach stability. (3) It is essential to formulate a reasonable incentive and penalty mechanism in the regulation of the RPS system.

Effect of Feed-In Tariff with Deregulation on Directed Technical Change in the Energy Sector

Abstract In this study, we examine how a feed-in tariff (FIT) accompanied with deregulation in the energy sector affects the direction of technical change along the balanced growth path. A final good is composed of resource-saving (such as renewable) energy and traditional resource-intensive energy. The government introduces a FIT scheme for promoting resource-saving energy, while it deregulates the traditional energy sector for efficiency improvement. The implementation of the scheme positively affects directed technical change toward the resource-saving energy technology and economic growth. Meanwhile, the biased technical change leads to an upsurge in the surcharge. Associated deregulation not only accelerates the biased technical change but also drives the surge in the surcharge rate, unless the initial market structure of the traditional energy sector is highly concentrated.

Policy mixes and the policy learning process of energy transitions: Insights from the feed-in tariff policy and urban community solar in Hong Kong

Effectiveness of renewable energy feed-in tariff (FiT) varies across the world. Designing policy mixes of a package of policy instruments to optimise the normative effect of FiT is critical but has remained challenging and under-studied. This paper brings together the key concepts of policy mixes and policy learning to examine how the effectiveness of renewable energy policies can be improved, with reference to a recent FiT policy in Hong Kong focusing two prospective solar communities. Based on 99 in-depth interviews and workshop discussions involving 57 householders, we found that FiT was an effective policy in stimulating growth of new solar photovoltaic (PV) projects in some sub-sectors in Hong Kong, but has not yet mainstreamed solar at the community and city levels. The FiT was insufficient to address multiple non-economic barriers perceived by householders. The limited policy impacts of the FiT indicated that policy makers were able to attain technical learning, but faced major constraints in advancing to conceptual and social forms of policy learning. This paper concludes that policy makers should give closer attention to policy mixes and advanced forms of policy learning than choosing a single “most effective” policy instrument to unlock the under-used community solar potentials.

A dynamic analysis of research and development incentive on China's photovoltaic industry based on system dynamics model

Government policies and investments in the photovoltaic power generation industry have contributed to the fast development of the photovoltaic power generation industry through technology push. But how does the research and development (R&D) investment affect the photovoltaic power generation industry, and what is its effect? This is a problem worthy of discussion. In order to answer this question scientifically, this paper constructs a system dynamics model to study the impact of R&D investment on China's photovoltaic power generation industry and analyzes the impact of other incentive policies such as Feed-in Tariff (FIT) on the photovoltaic industry. The results show that: firstly, R&D investment and FIT are conducive to the technological innovation of China's photovoltaic power generation industry. Secondly, a higher level of R&D investment can induce more cost reduction of photovoltaic power industry. Finally, the effect of FIT in promoting the growth of installed capacity of the photovoltaic power generation industry is more obvious.

The effect of feed-in tariff on China’s photovoltaic capacity development: An empirical analysis based on panel data regression

The effect of feed-in tariff on China’s photovoltaic capacity development: An empirical analysis based on panel data regression

Multi-objective optimal design for integrated palm oil mill complex with consideration of effluent elimination

To reduce greenhouse gas (GHG) impact while sustaining palm oil mill (POM) profitability, Malaysia has recognised POME-derived biogas as a renewable energy. Biogas utilisation for on-site fuel replacement and grid electricity contribution is encouraged by government schemes such as Feed-in-tariff (FiT). Nevertheless, adoption rate of biogas facility is still low among Malaysian POMs. An integrated palm-oil based complex (POBC) was proposed for GHG mitigation by integrating POM and refinery processes while addressing sustainability concerns. This study presented a multi-objective optimisation model-based approach to aid POBC planning at maximised economic potential and net energy, while minimising its GHG emission, water footprint (WFP) and land footprint (LFP) for environment protection. Trade-offs between biogas recovery and POME elimination strategies were considered. The developed fuzzy model was applied to case study and analysed under different multi-objective scenarios. In comparison with baseline study, the economic potential of sustainable POBC increase by 6.7% at USD 39.31 × 106 with 88%, 74% and 91% improvements in GHG footprint, WFP and LFP by compromising 76% net energy. Effect of FiT revenue towards POBC synthesis was investigated. Pareto front was generated to verify the fuzzy results and visualise the relationship between objective functions. The optimisation model and optimal results shall provide input to Malaysian POMs on the sustainability benefits of POBC.

Energy cost minimization for net zero energy homes through optimal sizing of battery storage system

Whilst a net zero energy (NZE) home produces the same amount of energy as it consumes it still exchanges significant amount of energy with the grid due to mismatch between the generation and load patterns. Consequently, the homeowner has to pay an annual electric bill because the cost of imported energy is usually higher than that of exported energy. Installing a local battery energy storage system (BESS) can reduce the electric bill by exchanging less energy with the grid. This paper proposes a method of determining the optimal size of a BESS for a typical NZE home with rooftop solar photovoltaic (PV) system to minimize the annual net payment for electricity and battery cost. The optimal battery size is determined through solving an optimization problem which is formulated using hourly load and PV generation data for a South Australian home, battery annual payment rate, retail price (RP), and feed-in tariff (FIT). The effects of interest rate, RP and FIT on the annual net payment are investigated. The results obtained are thoroughly analysed and clearly indicate that, with current installation cost of BESS and South Australian RP and FIT, the use of a local BESS is economically beneficial for the homeowner.

Shotgun or snowball approach? Accelerating the diffusion of rooftop solar photovoltaics through peer effects and social norms

In the last decade, feed-in tariffs have been the method of choice for policymakers trying to accelerate the diffusion of solar photovoltaics (PV). Despite the overall effectiveness of feed-in tariffs, actual adoption rates have shown surprising regional differences, pointing to the presence of peer influence and regional spillover effects. For future diffusion of photovoltaics, understanding these social influences on the decision to adopt is key. Several studies have used revealed preference approaches to discern peer effects in PV adoption, proving their existence but leaving open questions about underlying psychological mechanisms. We close this gap by conducting a survey among potential PV adopters in one of the top three fastest-growing European solar markets and find that two types of social norms, descriptive and injunctive norms and their underlying interplay, play an important role in explaining PV adoption decision and diffusion patterns. Our findings have significant policy implications – as an alternative to following the shotgun approach of uniform nationwide incentives, policymakers should consider inducing snowball effects by facilitating the creation of regional hot spots. Such programs, which may be supported through co-investments between federal and local authorities, would effectively complement existing policy approaches.

On the Effectiveness of Feed-in Tariffs in the Development of Solar Photovoltaics

Growing concern about climate change and rising prices of fossil fuels has prompted governments to stimulate the development of renewables. The most common instrument is a feed-in tariff (FIT). This paper empirically tests whether or not FIT policies have been effective in encouraging the development of photovoltaic solar (PV), explicitly taking into account the structure and consistency of FITs. Panel data estimations are employed for 30 OECD member countries in the period 1990-2011. We find a positive effect of the presence of a FIT on the development of a country's added yearly capacity of PV per capita. This is in line with the results found in the existing literature. However, our study shows that the literature underestimates the potential impact of FITs, as the effect of a well-designed FIT is much larger than the average effect of the currently applied FITs. Not only the height of the tariff is important, but also the duration of the contract and the absence/presence of a cap have an impact. We also show that consistency greatly affects the effectiveness of FITs. Consistency is especially important when the tariff of a FIT is low. The total effect of a FIT can be seven times larger if it is well designed. Our results are robust for differences between countries with respect to the availability of other policy instruments, the use of nuclear or hydro power and the level of CO2 emissions.

Robust optimization for load scheduling of a smart home with photovoltaic system

In this paper, a robust approach is developed to tackle the uncertainty of PV power output for load scheduling of smart homes integrated with household PV system. Specifically, a robust formulation is proposed and further transformed to an equivalent quadratic programming problem. Day-ahead load schedules with different robustness can be generated by solving the proposed robust formulation with different predefined parameters. The validity and advantage of the proposed approach has been verified by simulation results. Also, the effects of feed-in tariff and PV output have been evaluated.

On the Effectiveness of Feed-In Tariffs in the Development of Photovoltaic Solar

markdownabstract__Abstract__ Growing concern for climate change and rising scarcity of fossil fuels prompted governments to stimulate the development of renewables. This paper empirically tests whether feed-in tariff (FIT) policies have been effective in the development of photovoltaic solar (PV), explicitly taking into account structure and consistency of FITs. Panel data estimations are employed for 30 OECD member countries over the period 1990-2011. We find a positive effect of the presence of a FIT and the development of a country’s share of PV in the electricity-mix. This effect increases if policies are consistent. Tariff height is the most important characteristic of a FIT, but other characteristics such as cost level, duration of contract and restrictions on capacity levels can also not be neglected if the goal is to increase effectiveness of FITs.

Uncertainty analysis of wave energy farms financial indicators

In this work, an analysis of the uncertainty that influences wave energy farm financial returns is carried out. Firstly, a methodology to analyze the financial uncertainty through cash flow analysis is developed. A reconstruction of a set of power production life-cycles is made based on the methodology proposed in Ref. [1] using a selection and an interpolation technique. This set of lifecycles allowed to obtain the statistical distributions of the main financial indicators (IRR, NPV and PBP). The high variability of these parameters is explained by the climate variability. Therefore, for the economic study of a wave energy project the influence of the climate conditions is demonstrated and for this purpose a long climate data series is needed. Finally, a second uncertainty source related with the political and legislation environment is studied, focusing on the effect of feed in tariff. This sensitivity analysis of the feed in tariffs is made based on cash-flow algorithm. Current feed in tariffs seemed insufficient in order to get profitable wave energy projects and also an increase in feed in tariff resulted in an increase of variability of financial indicators. Therefore an increase in feed in tariff is not recommended for early stage technologies. Finally, learning curve was also included in this investigation and it appeared as a key parameter in order to get cost effective financial returns.

The Effect of Feed-in Tariffs on Renewable Electricity Generation: An Instrumental Variables Approach

While carbon taxes and other market-based instruments are widely regarded as optimal for climate mitigation, political constraints have prevented governments from using them. Instead, narrower instruments, including the feed-in tariff (FIT) for renewable electricity generation, have become popular. However, their causal effect on renewable electricity generation remains subject to uncertainty. We use instrumental variables to estimate the causal effect of FITs on renewable electricity generation in 26 industrialized countries, 1979–2005. We find that increasing the FIT by one U.S. cent (2000 constant prices) per kilowatt hour increases the percentage change in renewable electricity’s share of the total by 0.11 % points. All else constant, if a country implemented for a decade the sample mean FIT of three U.S. cents, the national share of renewable electricity would increase by 3.3 % points, which is more than the sample mean. In addition to demonstrating that the FIT is an effective way to increase renewable electricity generation, our approach lays the foundation for future studies of the causal effects of renewable energy policies.

Support schemes and vertical integration—Who skims the cream?

This paper examines how the effectiveness of feed-in tariffs for distributed generators, producing renewable electricity, depends on industry structure, i.e., vertical integration vs. unbundling. A stylized analytical model with a monopolist and a competitive fringe (distributed generators) will be developed to analyze the impact of feed-in tariffs on renewable power production. The vertically integrated monopolist maximizes profits by setting the electricity price for residual demand and a network access charge incurred by the fringe. The fringe receives a fixed feed-in tariff per unit of electricity produced. Under vertical integration, a rise in the feed-in tariff induces the monopolist to raise access charges for fringe firms and skim part of their additional income. This partially offsets the supply increase of the fringe firms stimulated by the feed-in tariff. However, in the case of effective unbundling with an externally set access charge, there is no possibility for the monopolist to extract part of the fringe's profit. Then, the feed-in tariff fully accrues to the competitive fringe, and its supply will further increase. This setting will be extended to horizontal expansion when the monopolist also enters the renewable production segment. The effects on prices and output will be derived and compared.