Regulatory and policy options to encourage development of ...

MODULE 9: RENEWABLE ENERGY: REGULATORY AND POLICY OPTIONSpage 9.47Determine the feed-in tariffsOnce the generation costs per technology are known, the level of the feed-in tariff can befixed accordingly.Policy considerationsThe level of the tariff can finally be influenced by the explicit political decision to stimulaterenewable deployment. For instance a national government can decide to introducehigher feed-in tariffs to reach a certain share of renewable electricity by a given year, orto activate a virtually non-existent sector, or to establish the renewable energy policy asan umbrella policy aiming to improve on other policies such as energy poverty, education,health care and gender issues.ExamplesThe following examples intend to illustrate the methodology to calculate the feed-in tarifffor some of the green electricity production technologies, rather than describing in detailthe existing mathematical models. The presented calculations are highly simplified inorder to visualize the methodology, as they take into account only a few of the differentrelevant variables. It is stressed that further modelling is required when actually fixing thefeed-in tariff levels for a given country.On-shore wind energyFirst thing to do is to determine what a typical wind energy project in the given countryor region would look like. In this example a following typical project 3 is considered:Capacity (kW e) 1500Full load hours/year 2000Investment cost (€/kW e) 1100Operation and maintenance cost 40(€/kW e/year)Interest rate r ( per cent) 6.5Duration of support t (years) 10Feed-in tariff (€/kWh) ?3Only “investment cost” and “maintenance cost” could be seen as generally applicable. “Full loadhours” depend on site-specific wind data and need to be measured on a case-by-case basis. A roughestimate can be made based on national or regional wind data, whenever available. “Interest rate”can vary depending on financial markets conditions. “Duration of support” is a design element of thefeed-in scheme and can vary according to the technology. For instance the duration is typically 10years for wind, and 20 years for PV.