How Fit are Feed-in Tariff Policies? Evidence from the European Wind Market
Feed-in tariffs have become the most widely used policy instrument to promote renewable energy deployment around the world. This paper examines the relation between tariff setting and policy outcome based on wind capacity expansion in 35 European c...
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| Format: | Policy Research Working Paper |
| Language: | English en_US |
| Published: |
World Bank, Washington, DC
2013
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| Online Access: | http://documents.worldbank.org/curated/en/2013/02/17390570/fit-feed-in-tariff-policies-evidence-european-wind-market http://hdl.handle.net/10986/13185 |
| Summary: | Feed-in tariffs have become the most
widely used policy instrument to promote renewable energy
deployment around the world. This paper 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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