EFFICIENCY AS AN IMPORTANT CRITARIA IN MEASURING RENEWABLE ENERGY POLICY - Наукові конференції
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EFFICIENCY AS AN IMPORTANT CRITARIA IN MEASURING RENEWABLE ENERGY POLICY

21.07.2020 12:45

[Секція 10. Світова економіка та міжнародні економічні відносини]

Автор: Oleh Ozarowski., PhD student, Kraków University of Economics, Poland


Investigating the efficiency and effectiveness of RE policies has become a popular theme among energy economics researchers.  A large number of country-level studies has been carried out across different geographies, RE technologies and policy instruments. Cost-effectiveness or efficiency is usually associated with the lowest cost of support for minimizing RES-E generation and consumer costs, which can be the same or different depending on the chosen energy policy mechanism [1].

According to IRENA, Renewable energy and energy efficiency will play a critical role in reducing emissions by 90 percent by 2050, while fossil fuels will reduce emissions by 10 percent. The study recommends that renewable energy sources should represent 65 percent of the total primary energy supply in 2050, compared to 15 percent in 2015 [2].

Despite the variety of indicators that are used to measure energy efficiency, there appears to be two consumer groups that matter most for this policy: households and manufacturing sectors. Although the energy efficiency of manufacturing industry is not easily comparable among countries, then comparisons of same industries in different countries would provide solid reference for policy makers. Efficiency is mostly measured in a static context, as electric power supplied to end-users at least cost in the short run. Minimization of operational costs requires the ranking of generators in merit-order along their short-run marginal costs, with remunerating every generated kWh at the marginal cost of the integrated supply system [3].

Prior studies have focused on the distinction between policy effectiveness and economic efficiency. The former generally refers to a substantial increase in deployment and investment. The latter emphasizes the fact that capacity should be generated at decreasing competitive cost due to learning but should also be considered from a societal point of view [4]. 

Most of the literature analyzes and compares the efficiency (cost-effectiveness) of different policy instruments like RPS, FIT and tenders or subsidies, which usually rely on various case studies or modeling, some of the studies compare these policies based on their conceptual framework with regard to technology-neutral and technology-specific approaches. There are also research works that assess efficiency in the context of total mix of policy instruments and design elements (for example, FIT rate). Together with effectiveness, effciency can be vital for policymakers in their attempts to promote the deployment of renewables. The scholars use different methodology framework and approaches while evaluating the RE policy efficiency.  

Literature:

1. De Mello Santana, P. H. (2016). Cost-effectiveness as energy policy mechanisms: The paradox of technology-neutral and technology-specific policies in the short and long term. Renewable and Sustainable Energy Reviews, 58, 1216–1222.

2. IRENA. (2017). Perspectives for the renewable energy transition.. Retrieved May 11, 2020 from https://www.irena.org/-/media/Files/IRENA/Agency/Publication/2017/Mar/Perspectives_for_the_Energy_Transition_2017.pdf

3. Del Río, P., Resch, G., Ortner, A., Liebmann, L., Busch, S., & Panzer, C. (2017). A techno-economic analysis of EU renewable electricity policy pathways in 2030. Energy Policy, 104, 484–493.

4. Ragwitz, Mario,et al. (2015): Assessing the performance of renewable energy support policies with quantitative indicators – Update 2015, EC-IEE Project, 2015



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