About 150 countries have implemented some sort of dedicated policy for supporting renewable energy deployment. Renewable energy support policies come in many forms: feed-in-tariffs, production and investment tax credits, contracts for difference, net metering schemes, and others. Some of these are highly successful and others totally ineffective. Some are very cost-efficient while others have led to public expenses of several hundred billion USD. Collectively, they have helped bring down the cost of wind and solar energy from hundreds of USD per Megawatt-hour to USD 20-60 per MWh, and have increased investments so that today more renewable energy capacity is installed every year than conventional electricity generation capacity.
The objective of this course is to develop an in-depth understanding of policies for renewable energy development, in particular deployment support schemes such as feed-in-tariffs, tax credits or auctions. Students will learn the “why” and the “how” of support policies, understand the theory and generic principles in renewable policy design, and investigate some country-specific policies. The focus of this class is on policy but it also touches on economics and finance.
The first part of this course discusses how support schemes can, or cannot, be understood as a type of climate policy. We will also discuss the “why” question of support policy (Should renewable energy production be supported?), using insights from environmental economics such as externalities and internalisation instruments. We then discuss policy design (How should support schemes be designed?). In particular, we will focus on the design of auctions for renewable energy and on the implications of exposing renewable energy investors to market risks. In the final sessions of the course we will discuss the energy policy frameworks of Germany, the European Unio,n and selected emerging countries.
This course is for 2nd year MIA and MPP students only.