Keywords: promotion strategies, financial incentives, renewable energy
Financial incentives to promote renewable energy systems in European electricity markets: a survey
Renewable energy systems may contribute to sustainable development. Therefore, one of the challenges for energy policy is to ensure that renewable energy options have a fair opportunity to compete with other supply resources. This paper presents a survey on promotion mechanisms to enhance the market penetration of renewable energies in European electricity markets. Strategies include rebates and tax incentives, regulated rates, system benefit charges, bidding-oriented mechanisms and various types of green pricing programs. The paper concludes that efficient promotion mechanisms should focus on incentives per kWh generated rather than on rebates on the investment in generating capacity (kW), and that there is no one single program type which has the best application to the promotion of all renewable technologies. For example, enhanced buy-back rates work as a dissemination strategy for wind energy but they do not work for photovoltaics.