From FIT to FIP: assessing the impact of feed-in policies on renewable development in Germany

ABSTRACT

By adopting the autoregressive-distributed lag error correction model, we examine both the short- and long-term impacts of feed-in policies on renewable energy deployment. The estimation results show that the feed-in premium scheme achieved its objective of encouraging the market integration of wind energy but discouraged and retarded investment in solar power technologies. Compared to the market mechanism, fixed price feed-in policy creates greater investment security for solar power projects.

KEYWORDS:

• Feed-in premium
• Feed-in tariff
• renewable energy
• market integration
• autoregressive-distributed lag

JEL CLASSIFICATION:

• C10
• Q28
• Q48

Disclosure statement

No potential conflict of interest was reported by the author(s).

Notes

¹ In this study, RE sources include solar, onshore, and offshore wind power.

² Direct marketing obligation exceptions have been granted to RE plants with installed capacities below 500 kW since August 2014. The obligation targets were extended to power plants with installed capacities above 100 kW from January 2016.

³ Hitaj and Löschel (2019) adopted a similar approach.