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Comparison of Feed-in Tariffs and Tenders to Remunerate Solar Power Generation

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  • Thilo Grau

Abstract

This paper analyzes the trade-offs for using feed-in tariffs or tenders to remunerate different scales of solar photovoltaics (PV) projects. In recent years, European countries increasingly combined feed-in tariffs for small renewables systems with tenders for large installations. This study develops an analytic framework to quantify deployment effectiveness of responsive feed-in tariff adjustment mechanisms across project scales and to compare specific cost effectiveness factors of feed-in tariffs and tenders for PV plants with their dynamic cost trends. To assess deployment effectiveness, an analytic model is used to simulate installations and feed-in tariffs for different project sizes. Then semi-structured interviews with German and French project developers are conducted to identify additional factors to be considered for a comparison of feed-in tariffs and tenders, and to explore how different remuneration schemes impact cost of capital and transaction costs. The paper finally discusses the relative merits of feed-in tariffs and tenders.

Suggested Citation

  • Thilo Grau, 2014. "Comparison of Feed-in Tariffs and Tenders to Remunerate Solar Power Generation," Discussion Papers of DIW Berlin 1363, DIW Berlin, German Institute for Economic Research.
    • Handle: RePEc:diw:diwwpp:dp1363
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    References listed on IDEAS

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    5. Butler, Lucy & Neuhoff, Karsten, 2008. "Comparison of feed-in tariff, quota and auction mechanisms to support wind power development," Renewable Energy, Elsevier, vol. 33(8), pages 1854-1867.
    6. Menanteau, Philippe & Finon, Dominique & Lamy, Marie-Laure, 2003. "Prices versus quantities: choosing policies for promoting the development of renewable energy," Energy Policy, Elsevier, vol. 31(8), pages 799-812, June.
    7. Batlle, C. & Pérez-Arriaga, I.J. & Zambrano-Barragán, P., 2012. "Regulatory design for RES-E support mechanisms: Learning curves, market structure, and burden-sharing," Energy Policy, Elsevier, vol. 41(C), pages 212-220.
    8. Thilo Grau, 2012. "Responsive Adjustment of Feed-in Tariffs to Dynamic PV Technology Development," Discussion Papers of DIW Berlin 1189, DIW Berlin, German Institute for Economic Research.
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    Citations

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    Cited by:

    1. Ogunmodimu, Olumide & Okoroigwe, Edmund C., 2019. "Solar thermal electricity in Nigeria: Prospects and challenges," Energy Policy, Elsevier, vol. 128(C), pages 440-448.
    2. Malte Gephart & Corinna Klessmann & Fabian Wigand, 2017. "Renewable energy auctions – When are they (cost-)effective?," Energy & Environment, , vol. 28(1-2), pages 145-165, March.
    3. López Prol, Javier, 2018. "Regulation, profitability and diffusion of photovoltaic grid-connected systems: A comparative analysis of Germany and Spain," Renewable and Sustainable Energy Reviews, Elsevier, vol. 91(C), pages 1170-1181.
    4. Emodi, Nnaemeka Vincent & Boo, Kyung-Jin, 2015. "Sustainable energy development in Nigeria: Current status and policy options," Renewable and Sustainable Energy Reviews, Elsevier, vol. 51(C), pages 356-381.
    5. Andreas Welling, 2017. "Green Finance: Recent developments, characteristics and important actors," FEMM Working Papers 170002, Otto-von-Guericke University Magdeburg, Faculty of Economics and Management.
    6. Matthew Tisdale & Thilo Grau & Karsten Neuhoff, 2014. "Impact of Renewable Energy Act Reform on Wind Project Finance," Discussion Papers of DIW Berlin 1387, DIW Berlin, German Institute for Economic Research.
    7. Thilo Grau, 2014. "Geplante Ausschreibungen für die Förderung von Strom aus erneuerbaren Energien," DIW Roundup: Politik im Fokus 50, DIW Berlin, German Institute for Economic Research.
    8. Winkler, Jenny & Magosch, Magdalena & Ragwitz, Mario, 2018. "Effectiveness and efficiency of auctions for supporting renewable electricity – What can we learn from recent experiences?," Renewable Energy, Elsevier, vol. 119(C), pages 473-489.
    9. Riaz Uddin & Hashim Raza Khan & Asad Arfeen & Muhammad Ayaz Shirazi & Athar Rashid & Umar Shahbaz Khan, 2021. "Energy Storage for Energy Security and Reliability through Renewable Energy Technologies: A New Paradigm for Energy Policies in Turkey and Pakistan," Sustainability, MDPI, vol. 13(5), pages 1-17, March.

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    More about this item

    Keywords

    Feed-in tariff; tender; solar photovoltaics;
    All these keywords.

    JEL classification:

    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
    • Q42 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Alternative Energy Sources
    • Q48 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Government Policy

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