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Experience of Policy Instruments used to promote renewable energy - Case study of Maharashtra, India

Nath, Baijayanta LU (2008) IMEN56 20081
The International Institute for Industrial Environmental Economics
Abstract
Policy instruments are used to support the introduction and diffusion of renewable energy
technologies as the cost of renewable energy is generally higher than fossil-based energy. The
commonly used policy instruments for supporting renewable electricity are quota-based
system and the price based feed-in system. While quota based systems specify minimum
targets for renewable electricity procurement by electricity suppliers, price based systems
provide fixed selling price for the entire renewable electricity generation over a long time
frame.
This research attempts to study the influence of policy instruments on the renewable sector in
Maharashtra, an Indian state. In Maharashtra, Renewable Purchase Obligation (RPO), a
policy... (More)
Policy instruments are used to support the introduction and diffusion of renewable energy
technologies as the cost of renewable energy is generally higher than fossil-based energy. The
commonly used policy instruments for supporting renewable electricity are quota-based
system and the price based feed-in system. While quota based systems specify minimum
targets for renewable electricity procurement by electricity suppliers, price based systems
provide fixed selling price for the entire renewable electricity generation over a long time
frame.
This research attempts to study the influence of policy instruments on the renewable sector in
Maharashtra, an Indian state. In Maharashtra, Renewable Purchase Obligation (RPO), a
policy instrument similar to feed-in system was operational for two years, from 2004 to 2006.
Thereafter, RPO was replaced by a new instrument called Renewable Purchase Specification
(RPS) in year 2006, which was similar to quota based system.
The renewable sector experienced two different development patterns during the regime of
the two policy instruments. While capacity growth rate increased rapidly under RPO regime,
the same declined sharply under RPS regime. This study looks into the various issues that
influenced the developments in renewable sector during the regime of these policy
instruments.
The results of the study show that the provision of penalty under the RPS for nonachievement
of targets was one of the most significant issues that affected the renewable
sector. While the purpose of penalty was to support renewable growth by ensuring compliance
among the electricity consumers for meeting targets, it instead created barriers to capacity
growth. As the supply of renewable electricity was much lower than what was required to
meet the targets specified under RPS, the price of renewable electricity registered a sharp
increase and the market started favoring the generators. The substantial gap between demand
and supply of renewable electricity indicates that the market was not mature enough to
support competition based RPS system. Based on the findings, it is felt that price based system
would be better than quota based system in such markets which are yet to mature. (Less)
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author
Nath, Baijayanta LU
supervisor
organization
course
IMEN56 20081
year
type
H1 - Master's Degree (One Year)
subject
keywords
quota based, feed-in, renewable electricity, renewable policy
language
English
id
1413787
date added to LUP
2009-06-03 12:57:54
date last changed
2009-06-03 12:57:54
@misc{1413787,
  abstract     = {Policy instruments are used to support the introduction and diffusion of renewable energy
technologies as the cost of renewable energy is generally higher than fossil-based energy. The
commonly used policy instruments for supporting renewable electricity are quota-based
system and the price based feed-in system. While quota based systems specify minimum
targets for renewable electricity procurement by electricity suppliers, price based systems
provide fixed selling price for the entire renewable electricity generation over a long time
frame.
This research attempts to study the influence of policy instruments on the renewable sector in
Maharashtra, an Indian state. In Maharashtra, Renewable Purchase Obligation (RPO), a
policy instrument similar to feed-in system was operational for two years, from 2004 to 2006.
Thereafter, RPO was replaced by a new instrument called Renewable Purchase Specification
(RPS) in year 2006, which was similar to quota based system.
The renewable sector experienced two different development patterns during the regime of
the two policy instruments. While capacity growth rate increased rapidly under RPO regime,
the same declined sharply under RPS regime. This study looks into the various issues that
influenced the developments in renewable sector during the regime of these policy
instruments.
The results of the study show that the provision of penalty under the RPS for nonachievement
of targets was one of the most significant issues that affected the renewable
sector. While the purpose of penalty was to support renewable growth by ensuring compliance
among the electricity consumers for meeting targets, it instead created barriers to capacity
growth. As the supply of renewable electricity was much lower than what was required to
meet the targets specified under RPS, the price of renewable electricity registered a sharp
increase and the market started favoring the generators. The substantial gap between demand
and supply of renewable electricity indicates that the market was not mature enough to
support competition based RPS system. Based on the findings, it is felt that price based system
would be better than quota based system in such markets which are yet to mature.},
  author       = {Nath, Baijayanta},
  keyword      = {quota based,feed-in,renewable electricity,renewable policy},
  language     = {eng},
  note         = {Student Paper},
  title        = {Experience of Policy Instruments used to promote renewable energy - Case study of Maharashtra, India},
  year         = {2008},
}