Template-Type: ReDIF-Article 1.0
Author-Name:  Federico Boffa, Stefano Clò, and Alessio D'Amato
Title:  Investment in Renewables under Uncertainty: Fitting a Feed-in Scheme into ETS
Classification-JEL: F0
Volume:  Volume 37
Issue:  Bollino-Madlener Special Issue
Year:  2016
Abstract:  We analyze incentives to invest in renewable energy technologies induced by the overlap of two types of policies: feed-in schemes and carbon mitigation instruments. We find that results differ markedly depending on the specific types of policies in place, reflecting different impacts of uncertainty.  As a result, the recent reform to the EU-ETS system that has established the Market Stability Reserve (MSR), effective in 2019, requires to appropriately fine-tune the direct RES-E support schemes. We show that this may involve moving away from feed-in tariffs towards feed-in premia. Our results suggest that the schemes currently adopted in Germany and in Italy, broadly based on feed-in premia for large generators and on feed-in tariffs for the small ones, could well fit also the post-MSR EU carbon mitigation policy. To the contrary, other countries (e.g. France and the U.K.) may have to modify their support schemes as the MSR will become operational. 
Handle: RePEc:aen:journl:ej37-si2-Boffa
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