Séminaire PSL d'économie de l'énergie
WHAT ARE THE BEST SUPPORT SCHEMES TO INTEGRATE RENEWABLES?
Jenny WINKLER (Research fellow, Fraunhofer Institute-ISI. Karlsruhe)
Impact of renewables on electricity markets – Do support schemes matter?
Rising renewable shares influence electricity markets in several ways: among others, average market prices are reduced and price volatility increases. Therefore, the “missing money problem” in energy-only electricity markets is more likely to occur in systems with high renewable shares. Nevertheless, renewables are supported in many countries due to their expected benefits. The kind of support instrument can however influence the degree to which renewables influence the market. While fixed feed-in tariffs lead to higher market impacts, more market-oriented support schemes such as market premiums, quota systems and capacity-based payments decrease the extent to which markets are affected. This paper analyzes the market impacts of different support schemes. For this purpose, a new module is added to an existing bottom-up simulation model of the electricity market. In addition, different degrees of flexibility in the electricity system are considered. A case study for Germany is used to derive policy recommendations regarding the choice of support scheme.
(Paper co-authored with Mario Ragwitz FhF-ISI and published in Energy Policy, Vol.93, June 2016)
Philippe QUIRION (Directeur de Recherche CNRS, CIRED)
Which type of support to the development of renewables in power generation ?
While most developed and emergent countries support renewable energies in the power sector, they do so in a different manner. The three main existing support systems are feed-‐in-‐tariffs, feed-‐in-‐ premiums and tradable renewable quotas. We provide a survey of the literature which compares these support systems. We conclude that tradable renewable quotas suffer from many weaknesses compared to the other two: bad reaction to uncertainty, important risk for funders which increases investment cost, higher transaction costs. Both feed-‐in-‐tariffs and premiums have pros and cons and there is little evidence that the transition from the former to the latter, currently occurring in Germany and France, is justified. Finally, beyond the choice between tariff and premium, many concrete choices are at least as important such as the way to finance the support and the differentiation between market segments, necessary to limit the rents but potentially a source of inefficiency.
(Paper published in Revue française d’économie, 2015/4 Volume XXX | pages 105 à 140)