Assessment of policies to promote renewable energy

Investment subsidies – works the best to give the new renewable energy a big push forward in the starting stage, while it does not encourage the technology R&D progress in the long run. Meanwhile government procurement may lessen the quality of the purchased instruments, and latter maintenance too.

Tax credits – Government provides certain tax deductions to encourage investors to invest in the new energy industries.

Renewable Portfolio Standard (RPS) – is a major way for US to promote the fast growing of renewable energies. The advantage of RPS is that it only poses a limit of renewable energy for the utility companies to meet during a certain time period, but not to interfere with the market directly. Therefore, it still allows the free market competition to lower the cost/price while assures the percentage of renewable energy generated by the power suppliers.

Feed-in tariffs – Simple and clear, easy to execute, has been one of the major means used to stimulate clean energy industry in Europe, e.g. has helped Spain boost its CSP industries. The disadvantage is lack of flexibility during a certain period of time.

Fixed-premium systems – A variant of feed-in tariffs, e.g. environmental premium, which compensates renewable energies’ . This policy is also simple to carry out, given the clean energy extra margin to compete with conventional energies.

Tendering Systems – Using commercial competition to regulate the market, yet has to be well designed to ensure the valid implementation.

Tradable green certificate systems – Flexible as the certificates are tradable. Prices may reflect the real costs of the renewable energies. However, the trading system is complicated and prices may drift with the short term market demand, which will pose risks for the investors too.


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