Incentive Regulations for Renewable Energy: A Critical Analysis

Abstract

Regulations tools to incentivize the use of renewable electrical sources are used worldwide, with different mechanisms. This work evaluates the most used ones, based on experiences across the globe, defining them, evaluating their advantages and disadvantages and their impacts in the cost of electricity, in technology prices and in the change of the power generation mix. The discussed methods are Feed-in tariff, compensation schemes (net-energy metering and net-billing), Renewable Portfolio Standards and Renewable Energy Certificates, subsidies, tendering and fiscal measures. After the regulation evaluation, a brief analysis of the encouraged technologies is performed, analyzing how these tools distort the electricity market and the long-term impacts of encouraging the use of variable and inverter-based generation. Also, it is dedicated some effort in discussing the consequences of many incentives, as seen in Germany, Spain and Brazil.