Incentivizing Renewable Energy Deployment: Renewable Portfolio Standards and Feed-In Tariffs

KLRI Journal of Law and Legislation, Vol. 1, 2011

56 Pages Posted: 20 Feb 2012

See all articles by Lincoln L. Davies

Lincoln L. Davies

Ohio State University (OSU) - Michael E. Moritz College of Law

Date Written: February 14, 2012

Abstract

Two legal instruments for promoting renewable energy production - renewable portfolio standards (“RPSs”) and feed-in tariffs (“FITs”) - are in use across the globe. Many studies pit these policies against each other, treating them as either-or options. Some analyses suggest that FITs have been more effective at increasing use of renewables-powered electricity. At the same time, nations using FITs have continued to modify their laws, and there is some empirical evidence that RPSs are effective at incentivizing renewables deployment. This article explains how FITs and RPSs work, surveys the empirical literature surrounding their implementation, and conceptualizes their mechanics. It suggests that the policy design of both FITs and RPSs are critical to their efficacy. Specifically, each type of law has several critical design parameters. For FITs, these are (1) the tariff price level, (2) price structure, and (3) payment duration. For RPSs, these are (1) the renewables target, (2) compliance speed, (3) jurisdictional reach, and (4) resource eligibility. The article concludes that, if designed properly, RPSs and FITs might be most effective if used in tandem as complementary instruments, rather than seen as mutually exclusive alternatives.

Keywords: Renewable Energy, Feed-In Tariff, Renewable Portfolio Standard, Electricity, Technology-forcing Regulation, Sustainability, Climate Change

JEL Classification: K10, K20, K23, K29, K32, Q20, Q28, Q38, Q40, Q41, Q42, Q48, L94, O31, O32

Suggested Citation

Davies, Lincoln L., Incentivizing Renewable Energy Deployment: Renewable Portfolio Standards and Feed-In Tariffs (February 14, 2012). KLRI Journal of Law and Legislation, Vol. 1, 2011, Available at SSRN: https://ssrn.com/abstract=2007935

Lincoln L. Davies (Contact Author)

Ohio State University (OSU) - Michael E. Moritz College of Law ( email )

55 West 12th Avenue
Columbus, OH 43210
United States

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