Publication Details

Category Text Publication
Reference Category Reports
URL http://hdl.handle.net/10419/126160
Document publication document
Title (Primary) Can technology-specific deployment policies be cost-effective? The case of renewable energy support schemes
Author Lehmann, P.; Söderholm, P.
Source Titel UFZ Discussion Papers
Year 2016
Department OEKON
Volume 1/2016
Page To 25
Language englisch
Keywords Technology deployment; renewable energy sources; support schemes; cost-effectiveness
Abstract 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 paper we question the frequently stressed argument that technology-neutral schemes will promote RES-E deployment cost-effectively. A simple partial equilibrium model of the electricity sector with one representative investor is developed to illustrate how the cost-effective support levels to different RES-E technologies will be influenced when selected market failures are introduced. We address 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 these analytical findings 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 ends by discussing a number of possible caveats to implementing cost-effective technology-specific support schemes in practice, including the role of various information and political economy constraints. While these considerations involve important challenges, neither of them suggests an unambiguous plea for technology-neutral RES support policies either.
Persistent UFZ Identifier https://www.ufz.de/index.php?en=20939&ufzPublicationIdentifier=17290
Lehmann, P., Söderholm, P. (2016):
Can technology-specific deployment policies be cost-effective? The case of renewable energy support schemes
UFZ Discussion Papers 1/2016
Helmholtz-Zentrum für Umweltforschung - UFZ, Leipzig, 25 pp.