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Can Technology-Specific Deployment Policies Be Cost-Effective?: The Case of Renewable Energy Support Schemes
Helmholtz-Centre for Environmental Research – UFZ, Leipzig.
Luleå University of Technology, Department of Business Administration, Technology and Social Sciences, Social Sciences.ORCID iD: 0000-0003-2264-7043
2017 (English)In: Environmental and Resource Economics, ISSN 0924-6460, E-ISSN 1573-1502, , 28 p.Article in journal (Refereed) Epub ahead of print
Abstract [en]

While there is relatively limited disagreement on the general need for supporting the deployment of renewable energy sources for electricity generation (RES-E), there are diverging views on whether the granted support levels should be technology-neutral or technology-specific. In this review paper we question the frequently stressed argument that technology-neutral schemes will promote RES-E deployment cost-effectively. We use a simple partial equilibrium model of the electricity sector with one representative investor as a vehicle to synthesize the existing literature, and review potential rationales for technology-specific RES-E support. The analysis addresses market failures associated with technological development, long-term risk taking, path dependencies as well as various external costs, all of which drive a wedge between the private and the social costs of RES-E deployment. Based on analytical insight and a review of empirical literature, we conclude that the relevance of these market failures is typically heterogeneous across different RES-E technologies. The paper also discusses a number of possible caveats to implementing cost-effective technology-specific support schemes in practice, including the role of various informational and politico-economic constraints. While these considerations involve important challenges, neither of them suggests an unambiguous plea for technology-neutral RES-E support policies either. We close by highlighting principles for careful RES-E policy design, and by outlining four important avenues for future research.

Place, publisher, year, edition, pages
2017. , 28 p.
National Category
Economics
Research subject
Economics; Renewable energy (AERI)
Identifiers
URN: urn:nbn:se:ltu:diva-65088DOI: 10.1007/s10640-017-0169-9OAI: oai:DiVA.org:ltu-65088DiVA: diva2:1131679
Available from: 2017-08-15 Created: 2017-08-15 Last updated: 2017-08-18

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CiteExportLink to record
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