Feed-in Tariff Policy Research Articles

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.

Impacts of Government Policies on the Adoption of Biomass Power: A System Dynamic Perspective

As a kind of renewable energy, biomass power has great development potential in mitigating greenhouse gas emissions. Therefore, under the background of carbon peak and carbon neutrality, the diffusion of biomass power generation technology has practical significance. To address these issues, this paper constructs a system dynamics model to study the impact of different policy effects on the diffusion of biomass power generation technologies. The results show that the feed-in tariff policy can significantly promote the installed capacity growth of biomass power generation projects; on the other hand, carbon emission trading increases the investment value of projects and promotes the growth of the installed capacity of biomass power generation projects, to a certain extent, so relevant policies need to be improved to achieve the promotion of biomass power generation technology in the future.

PROSPECTS OF ELECTRIFYING KENYA THROUGH A MIX OF SOURCES

Electricity consumption in Kenya is about 178 kWh/capita. The country’s Vision 2030 wishes to transform it intoa middle-income economy by the year 2030. This implies that electricity consumption should rise to about 4,345kWh/capita. Kenya currently generates electricity through hydropower, geothermal power, thermal power andrenewable sources, mainly, solar and wind.The current generation capacity is 2,651MW. The projected Vision 2030 installed capacity is 64,700MW. Vision 2030 generation mix will include geothermal at 26%, nuclear at 19%, coal at 13 %, liquefied Natural Gas (LNG)at 11%, thermal at 9%, wind at 9%, hydropower at 5%, imports at 5 % and solar at 3%. The estimated cost toachieve this is US dollars 26,055,236,042.The current transmission network lines are 55,485 kilometres. This will increase to 73,355 km. This increase will cost about US dollars 3.8 billion. The current distribution network is 42,176 km. The figure is expected to be expanded to 45,876.6 km.by 2024. The expansion will cost an estimate of USD 331,269,348. This sector will have to be liberalized to remove the current monopoly by involving the national and county governments as well as the private sector. The current legislation guiding the sector is the energy Act of 2006, the new Energy Bill of 2015, the Feed-in Tariff (FiT) Policy, The National Energy Policy 2012 and the constitution of Kenya, 2010. However, to achieve the vision 2030 electricity generation, transmission and distribution all the legislation guiding energy should be tailored to encourage investors in the sector and reduce system losses.This paper also reviews the human resource and research needs of the sector. The paper also reviews the financial challenges of the development of the energy sector. USD 31,052,165,310 is needed to develop the sector to Vision 2030 standards

Simulation study on the low carbon transition process in Japan’s electricity market

Low carbon transition (LCT) is a key issue in the future development of human society, and the full application of renewable electricity is the top priority. The process of transition is extremely complex, involving policies, markets, technologies, and other aspects. Only when all fields work simultaneously can they effectively promote the diffusion of low carbon energy. Therefore, various countries have proposed different policies to stimulate the development of low carbon energy according to the structures of their own electricity systems. In this study, the Japan’s electricity market is regarded as an object, an agent-based model is presented to describe the process of LCT in the said market. The model takes the market as core, integrates the subsidy promotion and technological development mechanisms, and restores all aspects involved in LCT as much as possible. Simulation results are highly consistent with historical data on the development of the Japanese electricity market in the past 10 years. The development of low carbon energy soon (within 10 years) is predicted, and the results are very close to the goals set by the Japanese government. Finally, we find that the main driving force for Japan’s low carbon energy development in this stage is the country’s feed-in tariff (FIT) policy, so we focus on the subsidy promotion mechanism and sum up an empirical formula which can be used as a quantitative analysis tool for FIT policy.

Policy, technical change, and environmental efficiency: Evidence of China's power system from dynamic and spatial perspective

Feed-in tariff (FIT) and renewable portfolio standard (RPS) policies have been implemented to facilitate wind and solar power technologies with the aim of achieving sustainable development in power system. It is essential to study how efficient these policies are in accelerating technical progress and how efficient the power system is in balancing development and environmental protection. Dynamic network data envelopment analysis and the global Malmquist productivity index are first employed to study the environmental efficiency and technical progress, after which a dynamic spatial Durbin model is applied to analyze the impact of policies on technical progress. The results reveal that both FIT and RPS lead to technical progress which is the main driving force in environmental efficiency improvement, but that RPS performs better than FIT. From a spatial perspective, the adjacent regions usually show similar characteristics in technical progress. Therefore, future policy design should carefully consider the regional agglomeration effects and should effectively strengthen the implementation of RPS policy.

Facing the uncertainty of renewable energy production: Production decisions of a power plant with different risk attitudes

This paper studies the production decisions of a power plant with two different risk attitudes, in which the power plant faces the risks of uncertainty in renewable energy production, and two types of risk attitudes are considered, namely, risk neutrality and risk aversion. First, we construct the optimization models of a power plant with two different risk attitudes under the Feed-in-Tariffs (FIT) policy, and obtain the optimal outcomes by solving the models, including the optimal output and the expected profit. Then, by comparing the optimal outcomes under the two risk attitudes, we reveal the impacts of the different risk attitudes of power plants on their power production decisions. In addition, we also give an extended study to analyze the change from the FIT policy to the market-oriented Tradable Green Certificates (TGC) policy. The results show that the expected profit of the power plant decreases if it switches from risk-neutral to risk-averse, and the fossil energy output of the risk-neutral power plant is higher than that of the risk-averse power plant if the difference between the levelized costs of renewable energy and fossil energy exceeds a certain threshold.

A methodology for determining the incentive policy for photovoltaic distributed generation that leverages its technical benefits in the distribution system

Although photovoltaic distributed generation (PVDG) is expanding worldwide, its growth is still relatively small in most countries. Thus, it is necessary to establish appropriate incentive policies that increase the integration of PVDG into the distribution system. The impacts that the adoption of each policy causes must be analyzed to maximize the benefits and minimize the technical problems arising from the integration of PVDG into the grid. In this context, this study proposes a methodology to determine the most appropriate policy to encourage PVDG by observing its technical impacts on the grid. A stochastic model is proposed to determine the technical and financial impacts on voltage levels, technical losses, and peak demand derived from the integration of PVDG. The proposed methodology was applied to dozens of real feeders, seeking to compare the Net Metering (NeM) and the Feed-in Tariff (FiT) policies. The results showed that the NeM policy presented the best performance. Among the two investigated FiT policies, it was verified that the incentive to PVDG with lower powers implies greater benefits. This methodology allows the determination of the most appropriate PVDG incentive policy considering its technical impacts on the grid.

The policy effects of demand-pull and technology-push on the diffusion of wind power: A scenario analysis based on system dynamics approach

With the support of incentive policies, the diffusion of wind power has achieved tremendous achievements in China. However, behind this rapid expansion, it is raised a question: what are the driving forces behind the diffusion of wind power? And which policies are more efficient to improve the diffusion rate of wind power? To scientifically answer this question, this paper combines system dynamics and the two-factor learning curve to investigate the dynamic diffusion process of wind power. The results show that: (1) The demand-pull policy through feed-in tariff (FIT) policy can promote the diffusion of wind power; (2) The technology-push policy through R&D policy also promotes the diffusion of wind power; (3) A higher level of FIT is more efficient to expand the installed capacity of wind power, in addition, a higher level of R&D intensity is more efficient for cost reduction; (4) The coefficient of learning by doing of wind power is 0.0274 and the coefficient of learning by research of wind power is 0.2540, which indicates China's wind power industry is transitioning from price subsidies to technology innovation policies. The research results can enrich the research on the diffusion of wind power and provide a reference for other regions to study the diffusion of renewable energy.

Public Support for Feed-in-Tariff and Net Energy Metering Policies in Malaysia: The Role of Policy Information

Renewable energy (RE) policies have proven to be an effective tool for implementing RE. Despite various policies introduced, the RE deployment in Malaysia has been weak, especially individual RE uptake. Lack of policy support has been linked with inadequate policy awareness and information based on the knowledge deficit theory. This study investigates the support for the Feed-in-Tariff (FiT) and Net Energy Metering (NEM) policy of individual solar photovoltaic (PV) technology among landed residents in Malaysia and the effect of information provision on policy support. A Solomon-four-group design was employed to measure policy support and test the relationship between information provision and policy support using a set of Likert scale questionnaires and a poster of FiT and NEM policy prepared in layman's terms as an intervention. Results show that majority of the residents agree with the environmental mission of the policy, except for the reduction of fossil fuel usage. For the economic aspect, the residents prefer a fixed rate for RE produced and generally agreed that high electricity consumers should pay for the RE fund. However, residents were less enthusiastic about the percentage deducted from electricity bills and the 'high electricity consumer' baseline. There was a significant difference between items scores at pre and post-test when given the intervention, in line with the deficit theory. Therefore, policy information should be communicated strategically, focusing on thepolicy's social and economic components that have the greatest influence on Malaysians.

Evaluating feed-in tariff policies on enhancing geothermal development in Indonesia

Geothermal is vital for sustainably meeting Indonesia's energy demand, given its estimated massive reserves potential equivalent to 24 GW of electricity. The Indonesian government has set geothermal contributions to the national energy mix at 7,241.5 MW by 2025 and 17,546 MW by 2050, despite harnessing such vast potential needing significant investment. To that goal, the government established a feed-in tariff (FIT) mechanism to encourage private sector investment in geothermal development. However, FIT has undergone significant alterations in a short period. Moreover, various complicating factors—bureaucracy, social, and technical—exist alongside FIT implementation. Therefore, the extent that FIT can effectively enhance geothermal development in Indonesia should be challenged with further investigation. This study explores the efficacy of FIT policies for geothermal electricity by comparing the performance of several FIT schemes in terms of their impact on the government's target achievement. This study combines the policy analysis framework with system dynamics modeling to understand the dynamic interaction of FIT policy and other important components in geothermal development. The findings show that modest bureaucracy and public support are required. Furthermore, to enhance geothermal development more effectively, FIT should be at least 11 cents US$/kWh and accompanied by technical breakthroughs and government-funded exploration activities.

Integrating distributed energy resources

The rapid growth of the behind-the-meter (BTM) distributed generation has led to initiatives to reform the net energy metering (NEM) policies to address pressing concerns of rising electricity bills, fairness of cost allocation, and the long-term growth of distributed energy resources. This article presents an analytical framework for the optimal prosumer consumption decision using an inclusive NEM X tariff model that covers existing and proposed NEM tariff designs. The structure of the optimal consumption policy lends itself to near closed-form optimal solutions suitable for practical energy management systems that are responsive to stochastic BTM generation and dynamic pricing. The short and long-run performance of NEM and feed-in tariffs (FiT) are considered under a sequential rate-setting decision process. Also presented are numerical results that characterize social welfare distributions, cross-subsidies, and long-run solar adoption performance for selected NEM and FiT policy designs.

Integrated approach to evaluating the impact of feed-in tariffs on the life cycle economic performance of photovoltaic systems in China: A case study of educational facilities

The photovoltaic (PV) system in a building is being actively promoted; however, they have a high initial investment cost and take a long time to make money back. To solve this challenge, this study aimed to propose an integrated approach to evaluating how feed-in tariffs (FiT) affect the life cycle economic performance of PV systems in educational facilities, in which the impact of China's zonal FiT policy was investigated in various ways. The integrated approach consists of three steps: (i) data collection; (ii) technical analysis of PV systems by considering shading effects; and (iii) economic analysis of PV systems by considering a government financial supporting policy. The followings are main findings. If the self-consumed utilization plan (SC plan) and the grid-connected utilization plan (GC plan) could be mixed together and used as a single utilization plan, net present value at year 25 (NPV25), saving-to-investment ratio at year 25 (SIR25) and break-even point (BEP) were found to be 1423.03 USD/kW, 2.63, and 6.40 years, respectively. This study could be a promising approach for the managers of educational facilities to evaluate in advance whether PV systems would be feasible for their buildings from a long-term perspective with government policy (e.g., FiT upwards).

An analysis of the factors driving utility-scale solar PV investments in China: How effective was the feed-in tariff policy?

China has become a global manufacturing hub for many industries; recently, thanks to various renewable energy support schemes, we also see the country's growing share in renewable energy investments. However, significant renewable energy investment is still required to achieve China's ambitious carbon targets: achieving carbon peak by 2030, and carbon neutrality by 2060. Based on province-level data covering the whole period of feed-in tariff (FIT) support mechanism, this paper explores the effect of renewable energy subsidies, costs and other economic factors on the installed capacity of utility-scale solar PV (UPV) in China. Our findings indicate that the FIT mechanism in tandem with a significant reduction in renewable energy investment costs have been the major drivers of China's dramatic increase in UPV investments. However, subsidies to distributed solar PV investments also have a crowding-out effect on UPV investments, which result in a statistically significant co-opetition relationship between UPV and Distributed PV. Furthermore, heterogeneity in provincial power consumption and energy supply also affect these investment dynamics.

Feed-in tariff policy for biomass power generation: Incorporating the feedstock acquisition process

The high logistics costs of biomass feedstock and the involvement of other firms that use biomass and independent suppliers make feedstock acquisition increasingly difficult for biomass power plants. Governments provide feed-in tariffs (FiT) for biomass power plants to help reduce the negative impacts of high raw material costs. Using a game-theoretic approach, we study the optimal government FiT for biomass power plants and explore the effects of biomass feedstock competition and the presence of independent biomass feedstock suppliers on FiT strategy. Our results show that governments should subsidize biomass power plants whose competitiveness exceeds a certain threshold. The entry of a feedstock competitor into the biomass supply chain raises this threshold, but the involvement of an independent biomass supplier will not. However, the involvement of an independent biomass supplier reduces the efficiency of the FiT. In addition, FiT for biomass power plants should not be provided if government funds are below a certain threshold, as it does not increase social welfare. By comparing FiT with an alternative use of government funds, the technology subsidy, we find that the technology subsidy should be adopted instead of FiT if the government funds are below a threshold.

Modeling and Simulation of the Urban Metabolism of Bogotá

The urban expansion that takes place in developing countries has important impacts on environment. For that reason, it is important to supply household energy needs through renewable energies such as solar PV. Notwithstanding, as the adoption of solar PV panels in households must overcome important barriers different environmental policies are applied around the world, such as feed in tariff and net metering. This paper assesses following scenarios that consider policies to encourage solar PV adoption: a feed in tariff is applied, net metering scheme is applied, none policy is applied. The solar PV adoption is analyzed in terms of installed capacity, adopter households, potential adopter households, solar PV generation, and avoided CO2 emissions. Findings suggest that feed in tariff policy provides the best results to environment, as under this policy the highest levels of CO2 emissions are reached.

Can support policies promote the innovative diffusion of waste-to-energy technology?

Currently, China is facing severe pressure of environmental emission reduction. As a kind of clean energy, waste-to-energy technology has the advantages of renewability, low pollution, and stable supply. To establish an affordable, effective, and sustainable waste disposable method is critical for the low carbon society transition. Therefore, the innovation diffusion of waste incineration power technology is a problem worth studying. Based on this, in order to answer this question scientifically, this paper constructs a system dynamics model of innovative diffusion, and analyzes the internal mechanism of innovation diffusion. The results show that firstly, the government support policies have a positive influence on the innovation and diffusion of waste incineration power technology; secondly, compared with the R&D policy, feed-in tariffs policy is more efficient to expand the installed capacity of waste incineration power; At last, technological innovation caused by government support policies is the main driving force of waste incineration power industry investment cost reduction.

Determining the Offshore Wind Power Potential in the Mix-electric Power of Vietnam: The Role of Feed-in Tariff Policy

The purpose of the research is to examine the offshore wind power potential in the mix-electric power of Vietnam. By using net present value method, the paper also aims to explore how economic factors influence the offshore wind power feasibility in the conditions that the technical factors are ensured. The result indicates that offshore wind power will have a low proportion in the mix-electric power of Vietnam before 2030 and may be accelerated in the period 2035 – 2040. Electricity supply from offshore wind is not economically viable without improvements in investment, operating costs, and capacity factor. In particular, the Feed-in-Tariff (FIT) policy designed to support the development of renewable energy sources by providing a guaranteed, above-market price for producers, will be a decisive factor in developing offshore wind power of Vietnam. Additionally, the differences between characteristics of site's condition leading to the disparities in capital and operational expenditure and capacity factor. Thus, the electricity price and the subsidies for bottom-fixed sites and floating sites should be disparate and the location of offshore wind farms should be considered to ensure the harmonization of the profits derived from different types of offshore wind farms.

Decision making on investments in photovoltaic power generation projects based on renewable portfolio standard: Perspective of real option

It is now a main global trend to replace the renewable energy feed-in tariffs (FIT) policy with the renewable portfolio system (RPS) policy in the reform of renewable energy policy systems. To solve the practical problem that the current main studies on the decision making about investments by renewable energy enterprises mainly focus on macroeconomic aspects such as government subsidies, renewable energy FIT and carbon taxes, rather than microeconomic aspects such as RPS and the TGC market's influence, a real option model about photovoltaic power generation projects is established to study these projects' sequential decision making about optimal investment opportunity, optimal installed capacity and phased investment. The result shows that phased investment fruit in much higher investment flexibility, longer economic lives and greater project values, and fewer risks for investors as well; lower technical costs and higher TGC prices help acquire the optimal investment opportunities. The conclusions of this study help make better decision making about investments in photovoltaic power generation projects and, from the microcosmic aspect, prove influence of the RPS policy.

Whether feed-in tariff can be effectively replaced or not? An integrated analysis of renewable portfolio standards and green certificate trading

Nowdays, both the renewable portfolio standards and the green certificate trading policy have become the critical renewable energy policies for supporting the photovoltaic power generation firms. Whether the above emerging policies can effectively replace the feed-in tariff policy or not has become a key issue for China. To explore this problem, this paper establishes an evolutionary game model to analyze the impact of photovoltaic policies on government and photovoltaic power generation firms, and constructs a system dynamics model to simulate the evolution results according to different scenarios of game strategies and photovoltaic policies. According to the study's evolution and simulation analysis, the following implications can be obtained. (1) The renewable portfolio standards policy has significant advantages over the feed-in tariff policy according to the photovoltaic development, but its incentive measures still need to be promoted to reduce the time lag in the policy response of most photovoltaic firms. (2) The initial willingness of stakeholders and the subsidy price have a significant impact on the trading volume of tradable green certificates, but the social welfare of photovoltaic firms is mainly related to the subsidy price. (3) The total amount of government cash subsidy is smaller than the social effect, is the prerequisite of obtaining the appropriate renewable energy support policy for promoting both the photovoltaic development and the economic growth.

Economic, energetic and environmental optimization of hybrid biomass gasification-based combined cooling, heating and power system based on an improved operating strategy

The multi-objective optimization of the hybrid biomass gasification-based combined cooling, heating and power (BGBCCHP) system with respects to economy, energy and environment were realized. A feasibility study of adding the electric chiller (EC) and heat storage tank (HST) to the system was performed. An improved following hybrid electric-thermal load (IFHL) strategy was proposed. Three operating strategies (following thermal load (FTL), following electric load (FEL) and IFHL) and four kinds of biomass raw materials (corn straw (CS), wood pellet (WP), wheat straw (WS) and rice straw (RS)) were used in the optimization. Results show that CS is more conducive to improving economic, environmental and comprehensive performance, while WP is more conducive to improving energetic performance. The capacity of the EC of the system optimized from energetic perspective is larger than that of the system optimized from other perspectives. HST is recommended to add to the system under FEL. IFHL and FEL yield the best and worst system performance, respectively. Sensitivity analysis indicates that gasification efficiency has the greatest impact on system performance. As for the feed-in tariff policy, the equipment capacity and economic performance of the system are not affected by incentive coefficient.