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Reference Category Journals
DOI 10.1007/s10640-017-0169-9
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Title (Primary) Can technology-specific deployment policies be cost-effective? The case of renewable energy support schemes
Author Lehmann, P.; Söderholm, P.
Source Titel Environmental & Resource Economics
Year 2018
Department OEKON
Volume 71
Issue 2
Page From 475
Page To 505
Language englisch
Keywords Technology development; Renewable energy sources; Support schemes; Cost-effectiveness
UFZ wide themes RU6;
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 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.
Persistent UFZ Identifier
Lehmann, P., Söderholm, P. (2018):
Can technology-specific deployment policies be cost-effective? The case of renewable energy support schemes
Environ. Resour. Econ. 71 (2), 475 - 505 10.1007/s10640-017-0169-9