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Substitution effect of renewable portfolio standards and renewable energy certificate trading for feed-in tariff

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Listed:
  • Zhang, Qi
  • Wang, Ge
  • Li, Yan
  • Li, Hailong
  • McLellan, Benjamin
  • Chen, Siyuan

Abstract

The Feed-in Tariff (FIT) has been successfully used to promote the development of renewable energy; nevertheless, it may cause financial burden on the governments at the same time. Compared with FIT, Renewable Portfolio Standards (RPS) and the Renewable Energy Certificate (REC) trading have been considered to reduce the government’s expenditure caused by the subsidization. To examine the effectiveness of RPS and REC trading, the development of renewable energy and the environmental and economic benefits under different policies have been quantitatively investigated by using a multi-region power market model and China has been chosen as a case study. The obtained results show that: (i) REC trading can efficiently reduce the government’s expenditure on subsidies for the development of renewable energy; (ii) Compared to FIT, RPS and REC trading will reduce the power sectors’ profit; and (iii) RPS and REC trading may not be enough to achieve the target on renewable energy especially when the capital cost is high, therefore, RPS, REC trade and FIT subsidy should be implemented as complementary policies, not independent.

Suggested Citation

  • Zhang, Qi & Wang, Ge & Li, Yan & Li, Hailong & McLellan, Benjamin & Chen, Siyuan, 2018. "Substitution effect of renewable portfolio standards and renewable energy certificate trading for feed-in tariff," Applied Energy, Elsevier, vol. 227(C), pages 426-435.
    • Handle: RePEc:eee:appene:v:227:y:2018:i:c:p:426-435
    DOI: 10.1016/j.apenergy.2017.07.118
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