Increasing marginal costs and the efficiency of differentiated feed-in tariffs
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Increasing marginal costs and the efficiency of differentiated feed-in tariffs. / Lancker, Kira; Quaas, Martin F.
In: Energy Economics, Vol. 83, 2019, p. 104-118.Research output: Contribution to journal › Journal article › Research › peer-review
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TY - JOUR
T1 - Increasing marginal costs and the efficiency of differentiated feed-in tariffs
AU - Lancker, Kira
AU - Quaas, Martin F.
PY - 2019
Y1 - 2019
N2 - We study optimal subsidies for renewable energy (RE) generation to internalize external benefits from inter-temporal learning-by-doing spillovers, taking into account increasing marginal costs at the industry level due to limited availability of sites suitable for RE. We find that the optimal RE subsidy is differentiated according to productivity and derive a condition on production and spillovers under which less efficient, i.e. more costly, technologies should receive higher support, as common in actual policy-making. We show that such a support of technological diversification is optimal if (i) productive sites are scarce, which limits future utilization of knowledge and if (ii) technologies mature rapidly with little further scope for learning. Prima facie evidence for these elasticities for Germany, Denmark and UK suggests that support for technology diversification is the optimal approach for these countries. (C) 2019 The Authors. Published by Elsevier B.V.
AB - We study optimal subsidies for renewable energy (RE) generation to internalize external benefits from inter-temporal learning-by-doing spillovers, taking into account increasing marginal costs at the industry level due to limited availability of sites suitable for RE. We find that the optimal RE subsidy is differentiated according to productivity and derive a condition on production and spillovers under which less efficient, i.e. more costly, technologies should receive higher support, as common in actual policy-making. We show that such a support of technological diversification is optimal if (i) productive sites are scarce, which limits future utilization of knowledge and if (ii) technologies mature rapidly with little further scope for learning. Prima facie evidence for these elasticities for Germany, Denmark and UK suggests that support for technology diversification is the optimal approach for these countries. (C) 2019 The Authors. Published by Elsevier B.V.
KW - Learning spillovers
KW - Subsidies
KW - Industrial policy
KW - Renewable energy
KW - Feed-in-tariffs
KW - Differentiation
KW - RENEWABLE ENERGY POLICIES
KW - TECHNOLOGY POLICIES
KW - ELECTRICITY PRICES
KW - WIND
KW - RESOURCE
KW - SUPPORT
KW - POWER
KW - TEMPERATURE
KW - TRANSITION
KW - STRATEGIES
U2 - 10.1016/j.eneco.2019.06.017
DO - 10.1016/j.eneco.2019.06.017
M3 - Journal article
VL - 83
SP - 104
EP - 118
JO - Energy Economics
JF - Energy Economics
SN - 0140-9883
ER -
ID: 348163364