Monday, August 7, 2017

Finance: Movement Away from “Feed-in Tariffs” to Subsidize Renewable Energy Projects.

The Renewable Energy Auction Revolution (Energy Institute Blog)

There’s a revolution happening in the world of renewable energy policy. At last count, 48 countries had adopted auction-based approaches to subsidizing renewables, with an additional 27 countries seriously considering the idea.

The idea is simple (in theory). Set a target level of investment in renewable energy capacity, and then allocate these contracts to the lowest bidders. This idea is also somewhat polarizing because it marks a move away from “feed-in tariffs” which have been used in many countries, for many years, to subsidize renewable energy projects.

Feed-in tariffs (FiTs) have traditionally been set well above the prevailing electricity price. The concern among some renewable energy advocates is that determining tariffs via competitive auction will drive renewable energy subsidies down…or eliminate them entirely.

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(Thanks to GRC Member Marcelo Lippmann, Staff Scientist (retired) at Lawrence Berkeley National Laboratory for the submission.)