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Policy Recommendations for the Design Criteria of RES-E Support Instruments

CONSIDERATION OF A DYNAMIC PORTFOLIO OF RES-E SUPPORT SCHEMES

Regardless of whether a national or international support system is concerned, a single instrument is not usually enough to stimulate the long-term growth of RES-E. Since, in general, a broad portfolio of RES technologies should be supported, the mix of instruments selected should be adjusted accordingly. Whereas investment grants are normally suitable for supporting immature technologies, FITs are appropriate for the interim stage of the market introduction of a technology. A premium, or a quota obligation based on TGC, is likely to be the most relevant choice when:

• Markets and technologies are sufficiently mature;
• The market size is large enough to guarantee competition among the market actors;
  
• Competition on the conventional power market is guaranteed.

Such a mix of instruments can then be supplemented by tender procedures, which are very efficient, for example, in the case of large-scale projects such as offshore wind.

STRIVING FOR OPTIMAL RES-E INSTRUMENT DESIGN IN TERMS OF EFFECTIVENESS AND EFFICIENCY

Most instruments still have significant potential for improvement, even after the minimum design criteria described above have been met. A few examples of such optimisation options follow.

• In a feed-in system, a stepped design can clearly increase the economic efficiency of the instrument, especially in countries where the productivity of a technology varies significantly between different technology bands.
• In quota systems based on TGCs, the technology or band specification that is currently being tested in Italy (based on technology-specific certification periods) and in Belgium (based on technology-specific certificate values) may be a relevant option for increasing both the instrument's effectiveness and its efficiency. However, such technology specification should not be carried out by setting technology-specific quotas and separating the TGC market, as this would negatively influence market liquidity. Furthermore, the risk premium might go down if minimum tariffs were to be introduced in a quota system.