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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, feed-in tariffs 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.
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.
Under the newly proposed Renewable Energy Directive, EU-27 Member States would commit to delivering additional renewable energy, meaning that they would collectively generate 20% of energy from renewable sources by 2020. The requirements for each Member State are recommended to be linked to their Gross Domestic Product (GDP). The proposal of the new RES-E Directive offers two options for inter-Member State cooperation, based on the assumption that it may be advantageous to develop additional renewables in EU Member States with a good resource basis to meet the target in Member States with higher a GDP. Member States can:
- transfer the GO for renewables between governments, or
- implement a system for private international trade of GO.
However, there are significant implications related to interactions of GO trade with national RES-E support mechanisms and international trading and transfers, as well as in terms of credible responses in the case of non-compliance.
When using the GO concept under RES-E support schemes, the following aspects must be taken into consideration and further studied and discussed:
- Consumer trust in the market is inevitable for the success of further renewable energy developments. It should not be possible to double sell the ´green value´ or double count towards target achievements. Therefore, it is recommended that all renewable electricity, regardless of whether it has received direct government funding, should be certified by a GO and, if support is received, this should be indicated on the GO.
- The current fragmented situation leads to confusion, since some EU Member States include the ‘green value’ of renewable energy production in the support scheme and others include it in the guarantee of origin. So, in the future, the status of the GO must be clarified:
- either they should all be immediately redeemed when the support is received (thus all attributes are included in the support scheme); or
- they should all be issued separately to reflect the ´green value´ (and thus be rendered transferable).
The issues mentioned above are currently being fiercely debated in the European RES-E policy community. It is important that the implications and interactions of GO trade with several existing national RES-E support mechanisms are fully understood before such a scheme is implemented.
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