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Frontiers of Environmental Science & Engineering

ISSN 2095-2201

ISSN 2095-221X(Online)

CN 10-1013/X

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Front Envir Sci Eng    2012, Vol. 6 Issue (3) : 403-411    https://doi.org/10.1007/s11783-011-0350-2
RESEARCH ARTICLE
Costs and prices for renewable energy development in industrialized countries and applications to China
Hugo SALAMANCA, Miao CHANG(), Xin TIAN
School of Environment, Tsinghua University, Beijing 100084, China
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Abstract

Developing renewable energy is now becoming a hot topic as it is important in dealing with climate change issue and energy supply issue. With the growing demand of energy, it has become urgent to develop the effective policies and measures that would enable people to maintain the living standards. Among all the measures, price is an essential one. In order to evaluate the costs and prices of the electricity from renewable energy sources (RES-E) and their effects to the market, this paper firstly focus on the extra costs of the RES-E by breaking it into four parts, including investment, construction, connection and operation. Then, the policy choices made in some typical industrialized countries are examined to find answers to the problems RES-E can raise. Finally, the choices made in China are examined in comparison to industrialized countries so as to determine how the current situation could be improved.
Keywords renewable energy      public policy      costs      prices      renewable portfolio      feed-in tariff     
Corresponding Author(s): CHANG Miao,Email:changmiao@tsinghua.edu.cn   
Issue Date: 01 June 2012
 Cite this article:   
Hugo SALAMANCA,Miao CHANG,Xin TIAN. Costs and prices for renewable energy development in industrialized countries and applications to China[J]. Front Envir Sci Eng, 2012, 6(3): 403-411.
 URL:  
https://academic.hep.com.cn/fese/EN/10.1007/s11783-011-0350-2
https://academic.hep.com.cn/fese/EN/Y2012/V6/I3/403
Fig.1  Role of government and market in FIT and RPS or Quota system
FITRPScapital subsidies, grants, or rebatesinvestment excise, or other tax creditssales tax, energy tax, or VAT reductiontradable renewable energy certificatesenergy production payments or tax creditsnet meteringpublic investment, loans, or financingpublic competitive bidingstarting year of major policies
China××××××2006
Germany××××××1991
Spain×××××1994
Japan×××××1992
UK××××1990
Italy×××××2002
France×××××××2001
Denmark×××1993
USA××××××××
Tab.1  Regulation choices in industrialized countries
policyinvestmentconstructionconnectionoperation
FITtariffs are set over a long period (10 to 20 years) creating stability and security for investorstariffs are fixed to ensure investors a certain profit (8%). The larger the project, the higher the benefits. different tariffs are set for different technologies to encourage production of a wide array of sourcesthere is an obligation for electricity facilities to accept RES-E. The extra costs are shared among all usershere some incentives are needed as it is difficult for electricity facilities to know in advance how much electricity is going to be provided
RPSthe demand is fixed by quota or by a number of green certificates. Investment will be made so as to minimize the costs of productionthe number of certificates for a kW produced can change according to the technology so as to encourage its developmentin command and control systems, if the right amount of certificates is not provided there are economic penaltiesit is the responsibility of project developers that there are no extra costs arising from the connection to the grid or the use of the RE
Tab.2  Answers given by FIT and RPS to the four steps
Fig.2  Consumer incentives and producer subsidies choices
name of the policytypetargetsectoryear
Guangxi Zhuangzu Autonomous Region One Million Mu Bio-Fuel Forest Project?public Investment?bioenergy?transport2008
Shandong Province One Million Rooftops Sunshine Plan?public investment?solar photovoltaic?multi-sectoral policy2008
?regulatory instruments?solar thermal
Hainan Province Plan for the Construction of Wind Farms?public investment?wind?electricity2007
Shandong Province energy fund?public investment?solar thermal?heating and cooling2007
Support for Biogas Projects?public financing (eligible farming families are financed to get biogas digester)?bioenergy?electricity2006
Preferential Tax Policies for Renewable Energy?tax reductions (foreign capital)?bioenergy?electricity2003 (expanded in 2007)
?solar photovoltaic
?consumer and producer tax reductions?wind
Wind Power Concession Program?public competitive biding / FIT?wind?electricity2003
Support for fuel ethanol production? tax and VAT reduction?bioenergy?transport2002
? capital subsidies
Reduced VAT for renewable energy?VAT reduction?bioenergy?electricity2001 (expanded in 2003)
?Wind
Brightness Program?public Investment?hydropower?electricity1996
?solar photovoltaic
?wind
Tab.3  China’s recent regulations concerning wind, solar and biomass energy
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