Price To Quantity Shifts For Harnessing Sunshine:Moving From Feed-in Tariffs To Renewable Energy Certificate Markets For Utility-scale Photovoltaics

In response to climate change,the air quality impacts of pollutant emissions,and other significant environmental impacts,countries have been increasing efforts to lessen their dependence on fossil fuels by developing renewable energy technologies.This will reduce fossil fuel consumption and cut greenhouse gas emissions.Feed-in tariffs(FITs)are price-based policies designed to encourage renewable energy production,typically by offering cost-based compensation in long-term contracts to renewable energy producers.Feed-in tariffs policies have been employed in more than fifty countries for nearly three decades.Eighteen out of twenty-five European countries have introduced feed-in tariffs policies,including Denmark and the Netherlands.However,feed-in tariff policies tend to be costly.They lead to fast-growing financial burdens on governments.Policy makers in countries such as Denmark and the Netherlands(where environment protection plays a key political role)therefore have an incentive to explore new ways to replace FIT policies,in order to further encourage the development of solar energy.Renewable energy certificate(RECs)trading schemes,which are quantity-based support mechanisms,are regarded as a viable substitution for feed-in tariff policies.Both Denmark and the Netherlands have struggled to move toward renewable energy certificate trading schemes.This thesis explores the transition from price-based feed-in tariff policies to quantity-based renewable energy certificate trading schemes.It examines why this shift has occurred,and the factors that influence such a transformation.Importantly,in both Denmark and the Netherlands,this shift was primarily caused by the significant financial burden associated with feed-in tariff policies.This thesis also analyzes how market participants(including power producers,consumers and government)will be affected in the electricity market.China is also currently undertaking such a transition,shifting from FITs to a RECs trading scheme.In this thesis,an empirical analysis is conducted for China,using the electric sector analysis software System Advisor Model(SAM)developed by the National Renewable Energy Laboratory(NREL)in the United States.Production costs of solar electricity and corresponding economic value of RECs/subsidies flowing to the solar PV sector under four different scenarios are analyzed,utilizing provincial-level investment costs and solar energy conditions.The RECs market scenarios require considerably lower levels of financial support than that found under FITs-and,importantly,these are born by different stakeholders within the system.An idealized RECs trading scheme could meet national solar goals with a production price of CNY 6.8 billion,compared with CNY 8.7 billion under the current FIT approach.However,the RECs market size is actually larger than the FIT subsidy,reaching CNY 6.8 billion(compared with CNY 6.4 billion for the FIT)under idealized market conditions—with the key difference being that the RECs market purchases are assumed by other stakeholders.As constraints are added to the idealized free trading RECs market,the production cost continues to increase while the market size decreases,which means that the liquidity of RECs declines as the scenario becomes more realistic.Besides the increase in subsidy costs under RECs,production costs are lower due to trading,which indicates that RECs market can also ease the tightened capital flows within the solar sector.Most importantly,the government does not need to suffer the significant financial burdens associated with FIT.