Evolution from the renewable portfolio standards to feed-in tariff for the deployment of renewable energy in Japan

Yanli Dong and Koji Shimada

Renewable Energy, 2017, vol. 107, issue C, 590-596

Abstract: Following the dominant firm-competitive fringe model, this paper analyses the response of Japan’s nonrenewable electricity utilities to the renewable portfolio standards (RPS) and feed-in tariff (FIT) scheme. The output of electricity from renewable energy sources (RES-E) is primarily correlated with the magnitude of the RPS requirement and the fixed tariff. Nonrenewable firms suffer a reduction in revenue due to increased RES-E production under both schemes. The RPS requirement has direct impact on the renewable energy certificate (NEC) price. If the incumbent nonrenewable electricity utilities gain market power in both electricity and NEC markets, they can suppress the RPS quota to preserve their vested benefits. In the FIT scheme, the above-market RES-E generation cost is passed on to consumers via a surcharge. Since grid-connected RES-E accelerated rapidly under FIT, nonrenewable electricity utilities would face a substantial increase in costs to maintain network reliability due to the intermittent and variable nature of RES-E technologies. The Japanese government should therefore take measures to ensure variable renewable power occupies a higher share of the electricity system, and to do so in a cost-effective manner.

Keywords: Renewable energy; Subsidy mechanisms; Theoretical analysis; Japan (search for similar items in EconPapers)
Date: 2017
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (32)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0960148117300940
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:renene:v:107:y:2017:i:c:p:590-596

DOI: 10.1016/j.renene.2017.02.016

Access Statistics for this article

Renewable Energy is currently edited by Soteris A. Kalogirou and Paul Christodoulides

More articles in Renewable Energy from Elsevier
Bibliographic data for series maintained by Catherine Liu ().