How Fit are Feed-in Tariff Policies? Evidence from the European Wind Market

Feed-in tariffs have become the most widely used policy instrument to promote renewable energy deployment around the world. This paper examines the relation between tariff setting and policy outcome based on wind capacity expansion in 35 European countries over the 1991-2010 period. Using a dynamic panel data model, it estimates the long-run elasticity of wind deployment with respect to the level of feed-in support. The analysis finds that higher subsidies do not necessarily yield greater levels of wind installation. Non-economic barriers and rent-seeking may have contributed to the weak correlation. On the other hand, the length of feed-in contract and guaranteed grid access are important determinants of policy effectiveness. A one-year extension of an original 5-year agreement on average increases wind investment by 6 percent annually, while providing an interconnection guarantee almost doubles wind investment in one year.

Bibliographic Details

Main Author:	Zhang, Fan
Format:	Policy Research Working Paper biblioteca
Language:	English en_US
Published:	World Bank, Washington, DC 2013-02
Subjects:	ALTITUDE, ANNUAL WIND GENERATION, AVAILABILITY, BALANCE, BIDDING, CAPACITY FACTOR, CLEAN ENERGY, CLIMATE, CO, CONVENTIONAL ELECTRICITY, COST OF GAS, DEMAND FOR ELECTRICITY, DEMAND FUNCTION, DIFFUSION, DISCOUNT FACTOR, DISCOUNT RATE, DOMESTIC MARKET, DYNAMIC MODEL, ECONOMIC INCENTIVE, ELECTRIC GRID, ELECTRICITY, ELECTRICITY DEMAND, ELECTRICITY GENERATING, ELECTRICITY GENERATION, ELECTRICITY MARKETS, ELECTRICITY PRICE, ELECTRICITY PRICES, ELECTRICITY TARIFFS, EMPLOYMENT, ENERGY CONSUMERS, ENERGY ECONOMICS, ENERGY OUTPUT, ENERGY POLICIES, ENERGY POLICY, ENERGY PRICES, ENERGY PRODUCTION, ENERGY SECURITY, ENVIRONMENTAL BENEFITS, ENVIRONMENTAL IMPACTS, EXPECTED PRESENT VALUE, FINANCIAL INCENTIVES, FINANCIAL SUPPORT, FOSSIL, FOSSIL FUEL, GENERATING CAPACITY, GREENHOUSE, GREENHOUSE GAS, GREENHOUSE GAS REDUCTION, GRID CONNECTION, HIGHER ENERGY DEMAND, INCOME, INTEREST RATE, INVESTMENT DECISIONS, LOAD FACTOR, LOWER COSTS, LOWER ELECTRICITY DEMAND, MARGINAL COST, MARKET COMPETITION, MARKET CONDITIONS, MARKET DEMAND, MARKET PENETRATION, MARKET PRICE, MARKET PRICES, MARKET REFORM, MARKET STRUCTURE, MARKET VALUE, NATURAL GAS, NATURAL GAS PRICE, NATURAL GAS PRICES, ONSHORE WIND, PEAK DEMAND, PHOTOVOLTAICS, POLICY MAKERS, PORTFOLIO, POWER GENERATION, POWER GENERATORS, POWER PLANT, POWER PLANTS, POWER PRICES, POWER SECTOR, PREMIUM PRICES, PRESENT VALUE, PRICE ADJUSTMENT, PRICE CHANGES, PRICE INCREASES, PRICE UNCERTAINTY, PRODUCER OF ELECTRICITY, QUANTITATIVE ANALYSIS, RELATIVE PRICE, RENEWABLE DEVELOPMENT, RENEWABLE ELECTRICITY, RENEWABLE ENERGY, RENEWABLE ENERGY DEVELOPMENT, RENEWABLE ENERGY POTENTIAL, RENEWABLE ENERGY SUPPLY, RENEWABLE ENERGY TECHNOLOGIES, RENEWABLE GENERATION, RENEWABLE PORTFOLIO STANDARDS, RENEWABLE POWER, RENEWABLE RESOURCE, RENEWABLE RESOURCES, RENEWABLE SOURCES, RENEWABLE TECHNOLOGIES, RESOURCE ECONOMICS, SHADOW PRICE, SOLAR PANEL, SOURCE OF ELECTRICITY, SPREAD, SUPPLIERS, SUPPLY CHAIN, SUPPLY CURVE, TAX CREDITS, TOTAL COST, TOTAL COSTS, TURBINE, TURBINE DESIGN, TURBINE EFFICIENCY, UTILITIES, VARIABLE COST, WHOLESALE PRICE, WHOLESALE PRICES, WIND, WIND CAPACITY, WIND DATA, WIND DEVELOPMENT, WIND ENERGY, WIND FARM, WIND GENERATION, WIND GENERATORS, WIND INDUSTRY, WIND INSTALLATIONS, WIND PENETRATION, WIND POTENTIAL, WIND POWER, WIND POWER GENERATORS, WIND POWER POTENTIAL, WIND PROJECT, WIND PROJECTS, WIND RESOURCES, WIND SPEED, WIND SPEEDS, WIND TECHNOLOGY, WIND TURBINE, WIND TURBINES, WINDFALL PROFITS, ZERO FUEL COST,
Online Access:	http://documents.worldbank.org/curated/en/2013/02/17390570/fit-feed-in-tariff-policies-evidence-european-wind-market http://hdl.handle.net/10986/13185
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