Donnerstag, 28. Februar 2013

How fit are feed-in tariff policies? Evidence from the European wind market

● By Fan Zhang, World Bank ● 

Feed-in tariffs have become the most widely used policy instrument to promote renewable energy deployment around the world. A recent Policy Research Working Paper of the World Bank examines the relation between tariff setting and policy outcome based on wind capacity expansion in 35 European countries over the 1991-2010 period. Using a dynamic panel data model, it estimates the long-run elasticity of wind deployment with respect to the level of feed-in support. The analysis finds that higher subsidies do not necessarily yield greater levels of wind installation. Non-economic barriers and rent-seeking may have contributed to the weak correlation. On the other hand, the length of feed-in contract and guaranteed grid access are important determinants of policy effectiveness. A one-year extension of an original 5-year agreement on average increases wind investment by 6 percent annually, while providing an interconnection guarantee almost doubles wind investment in one year.

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LEXEGESE Editor's note: The World Bank authorizes the use of this material subject to the terms and conditions on its website http://www.worldbank.org/terms.

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