Comparison Of The FIT And RPS Policies And Analysis Of Renewable Energy Investment Strategies Under Uncertainty

With the increasing scarcity of traditional fossil energy and the growing problem of environmental pollution,developing the renewable energy industry has become the dominant way for government to deal with energy and environmental issues.Therefore,governments have enacted relevant incentive policies to encourage investment companies to invest in renewable energy industries,which are mainly divided into price-based policy tool and quantitative policy tool.Feed-in tariff(FIT)and Renewable Portfolio Standard(RPS)are the most commonly used regulatory policies.In recent years,although there have been many studies on comparative analysis and investment in renewable energy between the two policies,few scholars have considered uncertain factors,and discussed the investment strategies of different policies for renewable energy in uncertain environments.Thus,the purpose of this paper is supplement the lack of research in these areas.Through a two-stage model,this paper compares the effects of feed-in tariff(FIT)and renewable portfolio standard(RPS)on developing renewable energy industry under uncertainty.The results show that the FIT can have higher expected output and expected profit,and lower market prices.But the risks of output and profit are even greater.By contrast,the output and the profit will remain stable and the carbon emissions will be less under RPS.In addition to these,we can further find that FIT is suitable for the early stage of the development of renewable energy industry,and once the industry is mature,the government should adopt RPS to ensure the healthy development of the renewable energy industry.Based on the comparison results of the two policies,this paper compares the impact of renewable energy policies on renewable energy investments in uncertain environments.First of all,in terms of the types of investment companies,the FIT is suitable for venture capital firm that pursue high returns and has the ability to withstand high risks,and the RPS is suitable for professional investment companies with certain technical level;secondly,in terms of investment scale,compared with the RPS policy,the investment scale of enterprises under the FIT policy is larger;thirdly,in terms of risk-revenue,Investment companies with the same degree of risk aversion can choose more investment projects under the RPS policy than the FIT policy.Finally,in terms of use of investment funds,under the FIT policy,investment companies should initially focus on increasing production,expanding the market,and turning to investment technology when market participants are saturated,and under the RPS policy,investment companies should focus on improving technology and reducing production costs from the initial stage of investment.Nowadays,at the time of the transformation of China's renewable energy policy,the conclusions of this paper will provide some directive help for both government and investment companies.Moreover,this paper also contributes to the study of the relationship between policy and investment strategies under uncertainty.