Feed-in Research Articles

Public policies to promote renewable energy technologies: Learning from Indian experiences

The excessive usage of the non-conventional energy especially the fossil fuels has led to the degradation of the environment. This calls out for the countries to develop, the energy policies in order to deal with this serious issue. Energy policies play a vital role in developing innovations and cost reduction techniques for promoting Renewable Energy (RE) and its adoption. India, one of the fastest growing energy consumer, is putting great efforts in the production and consumption of RE and to deal with the environmental degradation. The country has signed the Paris Agreement and launched a number of policies for supporting RE. Energy being the subject of federal and state governments makes state governments a crucial stakeholder in this initiative. In order to promote and augment RE, different states of India have also implemented policies at their level to support the national target such as feed in tariffs, capital subsidies, incentives etc. However, the effectiveness of every policy differs from each other. This paper will analyse the impact of different policy tools in the renewable sector covering five major states of India viz. Andhra Pradesh, Assam, Gujarat, Punjab and Rajasthan. The study reviews renewable energy related public polices of these states in subject, which will be learning from these states experiences and combining it with their local resources will help the other states to perform better in the renewable sector.

Renewable Energy Consumption Shocks on CO2 Emissions and Economic Growth of Nigeria

The paper examines the nexus among economic growth, renewable energy consumption and CO2 pollution in Nigeria. The study tested for co-integration using the Johansen technique, which is evident and applied the vector error correction model (VECM) on the annual data for the period 1990-2015. The results indicate a bi-directional causality between renewable energy consumption (REC) and economic growth (GDP). REC positively granger causes GDP in both short-run and long-run, while GDP has an adverse effect on REC in the short run. Historical decomposition of shocks reveals the relative implications of renewable energy shocks on GDP to be mostly negative between period 1990 and 2007. This is as a result of inefficient renewable technologies during the period. However, there is persistent and positive influence of REC on economic growth in the period between 2009 and 2015. Increase use of renewable technologies due to its relative affordability and better efficiency contributes to the progressive influence on economic growth. The variance decomposition analysis predicts an increase in the use of renewable energy technologies in the five year forecast period, with CO2 emissions will increasing as a consequence of dependence fossil fuel energy resources. The paper suggests environmental and tax policy instruments, as well as, effective governance to enhance environmental quality and encourage sustainable/green economic growth. The key instruments include: grants, feed-in-tariffs (FIT), production tax credits, renewable portfolio standards (RPS), and loans to enable industrial sector invest in renewable energy.

Exploring profitability of bioeconomy paths: Dimethyl ether from biogas as case study

Herein a novel path is analysed for its economic viability to synergize the production of biomethane and dimethyl ether from biogas. We conduct a profitability analysis based on the discounted cash flow method. The results revealed an unprofitable process with high cost/revenues ratios. Profitable scenarios would be reached by setting prohibitive DME prices (1983–5566 €/t) or very high feed-in tariffs subsidies (95.22 €/MWh in the best case scenario). From the cost reduction side, the analysis revealed the need of reducing investment costs. For this purpose, we propose a percentage of investment as incentive scheme. Although the size increase benefits cost/revenues ratio, only the 1000 m3/h biogas plant size will reach profitability if 90% of the investment is subsidized. A sensitivity analysis to check the influence of some important economical parameters is also included. Overall this study evidences the big challenge that our society faces in the way towards a circular economy.

The impact of feed-in tariff degression on R&D investment in renewable energy: The case of the solar PV industry

Feed-in tariff (FIT) is a broadly used policy instrument around the world, in which the payment level is always designed to decline gradually in order to track and encourage technological improvement in renewable energy. However, the potential adverse effects of tariff degression on renewable energy research and development (R&D) investment have not been sufficiently addressed. In this paper, we explore the impact of FIT payment degression on renewable energy R&D investment and analyze the efficient FIT payment structure for R&D investment. We form a modeling framework that captures the dynamics of FIT payment levels and the inventor's strategic reactions to tariff changes. In this framework, we model the inventor's optimal R&D investment decisions based on the canonical real option approach and simulate the impact of FIT payment degression on R&D investment and the efficient FIT payment structure under different R&D characteristics using the case of the solar photovoltaic (PV) industry. Our results emphasize the adverse effect of tariff degression on the commercial value of new renewable technology and hence the inventor's incentive in R&D investment, especially when facing more technical uncertainty and financial constraints. Our model could help policymakers to design an efficient FIT payment structure through which the cost of the FIT program is restricted to a minimum level but without influencing the inventor's R&D investment decisions. • The impact of FIT changes on renewable energy R&D investment is explored. • A real option approach is proposed to model the inventor's investment decisions. • The simulation is performed using the case of the solar PV industry. • Implications for policymakers on the design of FIT programs are provided.

Analysis of renewable energy subsidy in China under uncertainty: Feed-in tariff vs. renewable portfolio standard

Environmental pollution, climate warming and other issues have become global issues, and the use of renewable energy as the best way to solve the problem has gradually attracted the attention of all countries. Uncertainty has an important effect on the production of renewable energy. Through a two-stage model, this paper compares the effects of feed-in tariff (FIT) and renewable portfolio standard (RPS) in the developing renewable energy industry under uncertainty. The results show that the FIT have higher expected output and profit, and lower market prices. The risks of production and gain is of relatively more significant. By contrast, the production and profit of RPS remain relatively more stable. When the cost of renewable energy is high, the incentive effect of the policy under FIT is better. As the cost decreases, the incentive effect under RPS will continually increase. In summary, at low cost, the output of renewable energy is proportional to the intensity of the policy under the two policies. We can further conclude that FIT is suitable for the early stage of the development of the renewable energy industry. Once the industry is mature, we can strategically integrate FIT and RPS to ensure a healthy and sustainable development.

A multi-year two-stage stochastic programming model for optimal design and operation of residential photovoltaic-battery systems

The residential PV-battery system is becoming economically viable due to technological advances. Selecting optimum investment portfolios and operation strategies are still the challenges faced by homeowners. This study proposed an integrated stochastic sizing-operating framework for optimal design and operation of grid-connected residential photovoltaic (PV)-battery systems. The two-stage stochastic programming method is adopted to address the uncertainties from load and PV productions, where 1) the first stage optimizes the investment portfolio of PV and battery, and 2) the second stage optimizes the energy system operation cost. A multi-year financial model is used to calculate the cash flows during the analysis period. The discounted net present values of expected net benefit (NB) are used as the maximization objective function to make optimal decisions for PV-battery investment and operation. Annual battery degradation factors estimate the aging battery effect. To separately evaluate the PV/battery profitability, we are the first to define the added value/cost metrics of PV/battery. Simulations based on realistic load/PV output profiles and estimated technical–economic parameters validated the effectiveness of the proposed framework and the added value/cost metrics of PV/battery components. The impacts of critical factors, including feed-in tariffs (FiT), tariff profiles and levels, and unit costs, were investigated to provide key findings to stakeholders. This framework can guide the homeowners to cost-effectively invest in and operate the distributed residential PV-battery system to facilitate the transition to a reliable, affordable, and clean building energy system.

Biogas and biofertilizer production from organic fraction municipal solid waste for sustainable circular economy and environmental protection in Malaysia.

Waste management in Malaysia remains a persistent economic and environmental challenge. Up to date, more than 80% of Malaysian solid waste disposed at landfills and dumpsites. Therefore, Malaysia is facing an urgent need to move towards a sustainable solid waste management and thus resource recovery from organic solid waste. Hence, this study aims to investigate the feasibility of energy and bio fertilizer recovery from organic fraction municipal solid waste (OFMSW) via anaerobic digestion. The economic and environmental benefit analysis was investigated. Approximate and elementary analysis of OFMSW samples were carried out to estimate the potential production of biogas and bio fertilizer. It was found that organic waste contributes about 45% of the total MSW generated in Malaysia. Anaerobic digestion of 50% of organic waste is expected to produce 3941 MWh/day of electrical energy and 2500t/day of bio fertilizer. In terms of environmental impacts, 2735t/day of Carbon dioxide (CO2) emission, 1128 m2/day of landfilling area and 481m3/day of leachate can be avoided. A net revenue of 3300 million RM (1 US Dollar ≈ 4.15 RM) can be generated by the sales of electricity via Feed-in-Tariff (FiT), sales of biofertilizer to local agricultural industries and inclusive of the saving generated from the reduction of OFMSW landfilling operations and leachate treatment at landfills. Economic development can go hand-in-hand with environmental sound practices in the field of waste management.

Regional Electricity Models for Community Energy in Germany: The Role of Governance Structures

Community energy actors play an important role in the energy transition, fostering the diffusion of sustainable innovation in the renewable energy market. Because market conditions for business models in the renewable energy sector are changing and feed-in-tariff (FiT) schemes expiring, community energy companies are in the process of innovating their business models. In recent years, several community energy companies in Germany have entered the electricity retail market selling locally generated electricity from their renewable energy installations to customers in their region. We explore the evolving regional electricity business models for community energy companies in Germany, related governance structures, and the role they play for a sustainable energy transition. In order to implement these complex business models, community energy companies cooperate with professional marketing partners (intermediaries), which are capable of taking over the tasks and obligations of electricity suppliers. Through a series of expert interviews and desk research, we identify three distinctive regional electricity business models and examine opportunities and challenges to their implementation. Results show that there are different forms of cooperation, leading to specific governance structures and creating a set of new value propositions. Through these forms of cooperation, business networks emerge, which can function as incubators for sustainable innovation and learning for the post-FiT era.

Actual uptake of home batteries: The key roles of capital and policy

What are the key factors that drive actual uptake of home battery storage? This paper uses linear probability and probit regressions with data from an Australian household survey of homes with solar panels to assess a range of economic, policy, social, and locational explanatory variables. We find that capital and policy are important determinants. Households with smaller solar systems are less likely to install batteries, an example of a physical capital effect. Households facing financial pressure, indicative of financial capital constraints, are also less likely to install home batteries. There is also evidence of a policy impact, as smaller solar feed-in tariffs motivate actual battery uptake. This paper is intended as an early contribution to the very sparse literature on actual home-battery uptake; we emphasize the importance of capital and policy analysis in future studies. There are also implications for policymakers including that higher solar feed-in tariffs may delay the battery revolution in some cases.

Plant siting and economic potential of ocean thermal energy conversion in Indonesia a novel GIS-based methodology

Indonesia strives for a renewable energy share of 23% by 2025. One option to contribute to this goal is Ocean Thermal Energy Conversion (OTEC). Despite a global theoretical potential of up to 30 TW, its economically deployable share remains unknown. This paper proposes a novel methodology, which enables to determine OTEC’s economic potential for any regional scope considering technical, economic and natural variables. The methodology was tested for 100 MWe OTEC in Indonesia on a provincial and national level. Against a regionally variable electricity tariff of 6.67–18.14 US$ct.(2018)/kWh, the national economic potential is 0–2 GWe with a Levelized Cost of Electricity (LCOE) as low as 15.6 US$ct.(2018)/kWh. With an annual electricity production of 0–16 TWh, OTEC could provide up to 6% of Indonesia’s electricity demand in 2018. The capacity factor, capital expenses and discount rate are the most sensitive variables of the LCOE on average. A nationally uniform feed-in tariff of 18 US$ct.(2018)/kWh or more could increase the economic potential significantly. The proposed methodology can be a helpful quick-scan tool for determining economically interesting OTEC sites for follow-up in-depth feasibility studies. Limitations are discussed and future research, amongst others upscaling scenarios with cost reducing effects like technological learning, is recommended.

Price and subsidy under uncertainty: Real-option approach to optimal investment decisions on energy storage with solar PV

Renewable generation sources still have not achieved economic validity in many countries including Korea, and require subsidies to support the transition to a low-carbon economy. An initial Feed-In Tariff (FIT) was adopted to support the deployment of renewable energy in Korea until 2011 and then was switched to the Renewable Portfolio Standard (RPS) to implement more market-oriented mechanisms. However, high volatilities in electricity prices and subsidies under the RPS scheme have weakened investment incentives. In this study we estimate how the multiple price volatilities under the RPS scheme affect the optimal investment decisions of energy storage projects, whose importance is increasing rapidly because they can mitigate the variability and uncertainty of solar and wind generation in the power system. We applied mathematical analysis based on real-option methods to estimate the optimal trigger price for investment in energy-storage projects with and without multiple price volatilities. We found that the optimal trigger price of subsidy called the Renewable Energy Certificate (REC) under multiple price volatilities is 10.5% higher than that under no price volatilities. If the volatility of the REC price gets doubled, the project requires a 26.6% higher optimal investment price to justify the investment against the increased risk. In the end, we propose an auction scheme that has the advantage of both RPS and FIT in order to minimize the financial burden of the subsidy program by eliminating subsidy volatility and find the minimum willingness-to-accept price for investors.

Projected Avoided Costs of Conventional Power Plants in Libya Using Wind Energy

This paper investigates the costs that can be avoided by using wind energy in the central coastal area of Libya. The investigation of the capacity credit was performed in a previous work. The analysis included Fuel saving, capacity saving and emission reduction (NO, SO2 and CO2) to the atmosphere. The avoided costs were translated into equivalent energy costs of wind energy systems. The evaluation was conducted using the reliability (LOLP) analysis and the contribution of wind system during peak demand to the utility total electricity generation system. The calculations were carried out using WASP (Wien Automatic System Planning Package) for the proposed period of 2009-2019 where wind power installation would increase from 100 MW in 2009 to 500 MW in 2019. The results showed that the avoided costs of wind energy will increase from 2.4 c/kWh in 2009 to 8.6 c/kWh in 2019. The mean value of the avoided costs of wend energy over the 10-year period is 6 c/kWh, which would make wind power economically competitive with conventional power plants in Libya. Further investigations of detailed external costs of all energy systems in the national energy mix, as well as the feed in tariff, are recommended and should be introduced to the national energy sectors in order to promote implementation of wind energy and other renewable energy technologies.

Life cycle cost assessment of biomass co-firing power plants with CO2 capture and storage considering multiple incentives

Realizing the 1.5 °C target of the Paris Agreement and reaching China's carbon neutrality by 2060 will most likely rely on the deployment of negative emissions technologies, especially biomass energy with CO2 capture and storage (BECCS). Co-firing biomass and coal in power plants with CCS is an efficient measure for deep decarbonization in the energy sector. Various incentives are currently implemented to compensate for the heavy economic burden of this technology portfolio, which has severely limited its large-scale application. We account for the levelized costs of electricity of ten co-firing plants from a life cycle perspective and optimize the best combination of three incentives (e.g., carbon price, tax credit, and feed-in tariff) to achieve cost-competitiveness under a goal of minimum policy burden. The results obtained reveal that power plants that use biomass energy with CCS are not currently economically viable in the absence of incentive measures. Biomass co-firing plants both with and without CCS should preferably select feed-in tariffs and tax credits, respectively, to improve their overall cost-competitiveness. However, the current policy constraints are not sufficient to meet the break-even levels required. Rational planning incentives have become a key option to improve the economic viability of BECCS technology and promote its development under existing conditions. Our results provide critical insights for designing a mitigation strategy in China's energy sector while laying out an important reference for achieving economically negative carbon emissions in other industry sectors.

Potential impact of global warming on wind power production in Central Asia

AbstractGlobal warming is affecting the Earth's surface temperature and consequently the intensity of near‐surface airstreams and wind power potential in many regions. Conversely, global wind power installed capacity is continuously growing during the last years. The economic viability and sustainability of centralized wind projects relies heavily on wind resources, efficient technologies, and an attractive and dynamic Feed‐in‐Tariff (FIT). Therefore, this study assesses the potential effect of global warming on the life‐cycle techno‐economic viability of future wind power projects in Central Asia, specifically in Kazakhstan. Hence, the Ereymentau Wind Power Plant (WPP) in the Northern region of Kazakhstan was selected as case study. Historic data showed that monthly averaged wind speed and ambient pressure can be treated as statistically stationary, and only the air density drop due to temperature increase of 0.2°C per decade is assumed in the present study. Our results predict a reduction in Net Present Value, Benefit–Cost Ratio, and Internal Rate of Return of 29 million KZT, of 0.0015, and 0.03%, respectively, in the lifetime of Ereymentau WPP. Moreover, an Equity payback increase of 0.4 years and a drop of 987 tCO2e in GHG emission reductions are projected. Consequently, our results indicate that global warming, despite of being a global problem of significance, would have a negligible impact in ongoing plans to develop the wind potential in Northern regions of Eurasian countries sharing similar conditions to those present in Ereymentau‐Kazakhstan.

How to incentivise hydrogen energy technologies for net zero: Whole-system value chain optimisation of policy scenarios

Policy intervention is essential for enabling energy decarbonisation, and historic examples such as wind and solar power show how well-designed policy can lead to long term system benefits. Hydrogen technologies are emerging technologies that, with sufficient policy support, can also become established and provide valuable energy services. In this study, the policies available for supporting emerging energy technologies and encouraging system decarbonisation are analysed, and their relevance to hydrogen technologies is considered. Value chain optimisation is used to assess the effectiveness of these policies in a system undergoing transition to net-zero emissions. The optimisation results show that both carbon budgets and carbon taxation approaches can be effective in achieving net-zero emissions, but that the details of the policy design can significantly influence overall costs and emissions. The results also show that in a net-zero energy system, hydrogen technologies have a role in industry without needing specific policy support, but policy intervention is needed for hydrogen to become established in other sectors (such as domestic and commercial heating). Both feed-in tariffs and obligations for hydrogen injection were found to be effective at increasing hydrogen uptake, although with an increase in overall system cost of £11–14 for each additional MWh of hydrogen in the system. This study shows the benefits of using value chain optimisation to analyse energy policies and technologies. It also emphasises the importance of careful policy design in order to achieve the best overall system outcomes.

Performance analysis of government subsidies for photovoltaic industry: Based on spatial econometric model

Energy is the basis for development of material civilization. Since fossil energy can cause environmental problems, clean energy has become the trend of energy development. Solar energy is a kind of resource-rich and clean energy. Therefore, it exists great prospects of development. In addition, the cost of photovoltaic power generation is relatively high, and governmental subsidies are required. In this paper, we propose a spatial econometric model to analyze performance of government subsidies for the photovoltaic industry. When spatial dependence is obvious, classical econometrics begins to fail. At this time, spatial econometrics came into being. This paper evaluates the support policies of photovoltaic industry based on the premise that there is spatial dependence among regions. The results show that the installed capacity of photovoltaics in various regions has begun to show a significant positive correlation since 2012.What's more, the feed-in tariff and R&D subsidy policies have played a positive role in photovoltaic installed capacity from 2012 to 2018. It significantly contributes to the transformation of photovoltaic industry policy. At the same time, this paper expands the application scope of spatial econometric model.

A joint test of policy contagion with application to the solar sector

This paper examines the impact of China's 2005–2020 solar power energy policies on the stock performance of nine economic sectors in China, Japan, Germany, and the U.S. In order to model how policy shocks affect market performance, we develop a joint contagion test of higher-order co-moments, defining policy contagion as significant changes in the third- and fourth-order co-moments in the post-announcement period as compared to the pre-announcement period. The results show that eight Chinese solar energy policies have significant impacts on nine economic sectors in China, with weaker effects in Germany and the U.S., and the least significance in Japan. Among the eight energy policies, policy supporting plans (i.e., three national five-year plans from 2006 to 2020) provide stronger evidence of contagion to international markets than economic instruments (i.e., feed-in tariffs and subsidies).

How does the capital market respond to policy shocks? Evidence from listed solar photovoltaic companies in China

Subsidies and policy support are critical for the development of renewable energy industries such as solar photovoltaics (PV). One of the most important policy instruments for supporting renewable energy development is the feed-in tariff (FIT), which is intended to have a significant, facilitating impact on the steady development of the PV industry. The questions are how strong market reactions are to FIT policies and what forms of policies are more effective. To investigate these questions, this paper uses an event study approach and pays special attention to the responses of the capital market. The empirical results show that the stock returns of listed PV companies in China respond significantly to FIT policies. The capital market responses of these policy shocks differ significantly over time and across companies. Manufacturing companies and companies receiving large subsidies are more sensitive to policy shocks. Given the importance of equity financing to the renewable energy industry, policymakers should take into account the potential uncertainties in the sector that are caused by policy changes.

Impact of Module Degradation on the Viability of On-Grid Photovoltaic Systems in Mediterranean Climate: The Case of Shymkent Airport

This paper presents the techno-economic feasibility analysis of an on-grid Photovoltaic Solar System (PVSS) subject to Mediterranean climate aging effects. The PVSS under study is considered installed on the roof of Shymkent airport, located in southern Kazakhstan. A PVSS performance degradation rate of 1.48%-per-annun was considered according to the Mediterranean climate prevailing in the location. A 25-year life-cycle cost analysis comparing the rated vs. de-rated on-grid PVSS led to a positive Net Present Value (NPV), a less than 9-year equity payback, and favorable internal rate of return (IRR) and Benefit-to-Cost (B-C) ratio in both conditions. However, the de-rated PVSS system underperformed in 16.2%, 43.5% and 20% the IRR, NPV and B-C ratio, respectively. The analysis demonstrates that despite the expected performance degradation associated to climatic aging, a convenient feed-in tariff (FIT) and attractive financial conditions, such as those present in Kazakhstan, conform a robust setting to promote on-grid PVSS in the country.

Future economic perspective and potential revenue of non-subsidized wind turbines in Germany

Abstract. Fixed feed-in tariffs based on the Renewable Energy Act grant secure revenues from selling electricity for wind turbine operators in Germany. Anyhow, the level of federal financial support is being reduced consecutively. Plant operators must trade self-sufficiently in the future and hence generate revenue by selling electricity directly on electricity markets. Therefore, uncertain future market price developments will influence investment considerations and may lead to stagnation in the expansion of renewable energies. This study estimates future revenue potentials of non-subsidized wind turbines in Germany to reduce this risk. The paper introduces and analyses a forecasting model that generates electricity price time series suited for revenue estimation of wind turbines based on the electricity exchange market. Revenues from the capacity market are neglected. The model is based on openly accessible data and applies a merit-order approach in combination with a simple agent-based approach to forecast long-term day-ahead prices at an hourly resolution. The hourly generation profile of wind turbines can be mapped over several years in conjunction with fluctuations in the electricity price. Levelized revenue of energy is used to assess both dynamic variables (electricity supply and price). The merit-order effect from the expansion of renewables as well as the phasing out of nuclear energy and coal are assessed in a scenario analysis. Based on the assumptions made, the opposing effects could result in a constant average price level for Germany over the next 20 years. The influence of emission prices is considered in a sensitivity analysis and correlates with the share of fossil generation capacities in the generation mix. In a brief case study, it was observed that current average wind turbines are not able to yield financial profit over their lifetime without additional subsidies for the given case. This underlines a need for technical development and new business models like power purchase agreements. The model results can be used for setting and negotiating appropriate terms, such as energy price schedule or penalties for those agreements.