Take-or-pay contracts for Renewables Deployment

Angus Johnston, Kavali Amalia and Karsten Neuhoff ()

Cambridge Working Papers in Economics from Faculty of Economics, University of Cambridge

Abstract: Renewables require support policies to deliver the European 20% target. We discuss the requirements for least cost development and efficient operation and quantify how different schemes (i) allow for the development of a renewable energy technology portfolio; (ii) reduce rent transfers to infra-marginal technologies or better than marginal resource bases; and (iii) minimise regulatory risk and thus capital costs for new projects. Long-term take or pay contracts minimise regulatory uncertainty, create appropriate incentives for location and operation, allow for efficient system operation and seem compatible with European state aid. We discuss how property rights legislation protects existing renewables investors, and thus can ensure ongoing investment during a transition towards the new scheme.

Keywords: Renewable support policy; Property rights; Transition; Regulatory risk. (search for similar items in EconPapers)
JEL-codes: L50 L94 O31 P14 (search for similar items in EconPapers)
Pages: 29
Date: 2007-01
New Economics Papers: this item is included in nep-ene and nep-reg
Note: Ec
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Citations: View citations in EconPapers (7)

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http://www.electricitypolicy.org.uk/pubs/wp/eprg0707.pdf (application/pdf)

Related works:
Journal Article: Take-or-pay contracts for renewables deployment (2008)
Working Paper: Take-or-pay contracts for Renewables Deployment (2007)
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Persistent link: https://EconPapers.repec.org/RePEc:cam:camdae:0723

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