The discussion on whether and bow to continue support for almost mature renewable electricity (RES-E) technologies, such as onshore wind and PV, has recently intensified. In this paper we analyze arguments in the literature in favor and against the phase-out of renewables support in the context of increasingly competitive RES-E tecbnologies. We conclude that there are good reasons to continue dedicated RES-E policies beyond 2020 for those technologies. Dedicated RES-E support can provide a predictable, secure investment framework that lowers the risk premiums required by investors and therefore reduces the capital costs of RES-E. In addition, there are still significant cost reduction potentials for these technologies. The increased use of renewables has multiple socio-economic benefits in addition to climate change mitigation. These arguments are still valid when looking at the current market situation characterized by oversupply and low prices on both the CO2 market and some power markets in Europe. Since renewables are not the main reason for the current oversupply, it would not be effective to take actions towards restoring market equilibrium in the form of radical or overall phase-out of RES-E support.

European Member States increasingly use tenders combined with competitive bidding to allocate renewable electricity support payments to renewable electricity market actors. This article contributes to the European policy debate by exploring which principal design features and context factors increase or reduce the effectiveness and cost-effectiveness of renewable electricity auctions. Volume control is among the key aims of implementing an auction, but potentially low project realisation can harm reaching the targeted volume. Qualification requirements and/or penalties are useful auction design elements to increase the implementation rates of selected projects. However, there are risks associated with these measures, which in turn increase prices. Auctions also aim at increasing (static) cost-effectiveness of renewable electricity support, which may be influenced by three main factors: first, the level of competition in the auction; second, the mitigation of speculative over- or under-bidding; and third, the level of allocation and delivery risks borne by the bidders. The article explores the fundamental trade-off in auctions between encouraging high project implementation rates (to ensure volume control) and minimising the bidder's risk (that may result in higher bidding prices). Based on theoretical insights and supported by empirical renewable electricity auction examples, it identifies factors that can influence the success of an auction but also shows there is no exact blueprint for a good auction design.

With Directive 2009/28/EC, the European Parliament and Council have laid the grounds for the policy framework for renewable energy sources (RES) in the European Union until 2020. The aim of this paper is to look more closely beyond 2020, well in advance, contrasting and analysing potential RES policy options that are currently being discussed. Generally the assessment includes RES in all energy sectors but a topical focus is put on renewable electricity, specifically within the discussion of policy options for a harmonisation of RES support. The results of the policy assessment indicate that cooperation and coordination among Member States appear beneficial to tackle current problems in RES markets, and fruitful for the period beyond 2020. By contrast, "simplistic approaches" to RES policy harmonisation, for example via a uniform RES certificate trading, are not suitable to ensure substantial future RES growth.

European governments have agreed to increase the share of renewable energy in final energy consumption to 20% by 2020. A crucial question for policy makers is how to mobilise the additional capital investments in RE and which consumer expenditures are involved. The article describes policy options for reducing renewable energy technology (RET) project costs as well as consumer costs, based on research conducted in de Jager et al., 2011 and Rathmann et al., 2011. The results show that risk-sensitive RET policies are crucial for attracting sufficient RET investments until 2020 and achieving the targets cost-effectively. They not only reduce the RET financing costs, but also the project development costs and market gap. There are also other options that can significantly reduce the RET support costs, i.e. the adjustment of support levels to generation costs, phasing out subsidies for conventional energies, and the cost-optimisation of the supported RET portfolio, either through increased cooperation between member states or through changes in the supported technology mix. Overall, further improvement and coordination of existing policy frameworks seems more promising than drastic system changes, as the latter would create additional uncertainties and potentially negative effects on RET growth and project costs. (C) 2013 Elsevier Ltd. All rights reserved.

The core objective of the RE-Shaping project is to assist Member State governments in preparing for the implementation of Directive 2009/28/EC (on the promotion of the use of energy from renewable sources) and to guide a European policy for RES (renewable energy sources) in the mid- to long term. The past and present success of policies for renewable energies will be evaluated and recommendations derived to improve future RES support schemes. The core content of this collaborative research activity comprises: Developing a comprehensive policy background for RES support instruments; Providing the European Commission and Member States with scientifically based and statistically robust indicators to measure the success of currently implemented RES policies; Proposing innovative financing schemes for lower costs and better capital availability in RES financing; Initiation of National Policy Processes which attempt to stimulate debate and offer key stakeholders a meeting place to set and implement RES targets as well as options to improve the national policies fostering RES market penetration; Assessing options to coordinate or even gradually harmonize national RES policy approaches. This report marks the end of the research project RE-Shaping and summarizes its research activities, results, and recommendations.

The Directive 2009/28/EC on the promotion of the use of energy from renewable sources (RES) sets the overall target to reach 20% renewable energy in gross final energy consumption in 2020. This target is broken down into binding individual Member State targets. Reaching these targets will require a huge mobilization of investments in renewable energies in the coming decade. In order to improve financing and coordination with a view to the achievement of the 20 % target, Article 23 (7) of the Directive requires the Commission to present an analysis and action plan with a view to: (a) The better use of structural funds and framework programmes; (b) The better and increased use of funds from the European Investment Bank and other public finance institutions; (c) Better access to risk capital; (d) The better coordination of Community and national funding and other forms of support; (e) The better coordination in support of renewable energy initiatives whose success depends on action by actors in several Member States. This report presents the results of the title project. The study provides an up to date and thorough assessment of the costs of renewable energy and the support and financing instruments available for renewable energy R and D, demonstration projects and large-scale deployment. This includes details of each Member State's expenditure (via grants, support schemes, loans etc.) and use of Community funds, including loans of the EIB (European Investment Bank) and the EBRD (European Bank for Reconstruction and Development). It also explores the possible instruments for use in the future and constraints in the capital market, which hinder the development of renewable energy. Finally, it develops recommendations for improving financing and support instruments, improving the sector's access to capital, and closing the financing gap for reaching the 2020 targets. The chapters of the report represent separate tasks: (1) Costs of renewable energy technologies; (2) Overview of available support instruments and support expenditures in the Member States; (3) Current and planned EU funding inside and beyond the EU; (4) Cost scenarios for reaching the 2020 RES objectives; (5) Evaluation of financing instruments, support instruments, and the sector's access to capital; (6) Review and evaluation of existing and alternative support and financing instruments: reducing the costs of reaching the EU 2020 targets; (7) Conclusions and recommendations.

This article evaluates the status of current RES deployment, policies and barriers in the EU-27 member states and compares it to the required to meet the 2020 targets. The evaluation relies strongly on the quantitative deployment status and policy effectiveness indicators. European RES deployment and policy has progressed strongly in recent years, but the growth here has been mainly driven by effective policies in a small or medium number of top runner countries. Across Europe, the highest average policy effectiveness over six years was reached for onshore wind (4.2%), biofuels (3.6%) and biomass electricity (2.7%), while in the heat sector, all technologies score below 2%. Comparing the recent progress to the required growth for meeting the 2020 target, it appears that some countries largely exceed the interim targets of the RES Directive 2009/28/EC. Despite this, Europe will need additional policy effort to reach the 2020 target. Critical success factors include implementing effective and efficient policies that attract sufficient investments, reducing administrative and grid related barriers, especially in currently less advanced countries, upgrading the power grid infrastructure, dismantling financial barriers in the heat sector, realising sustainability standards for biomass, and lowering energy demand through increased energy efficiency efforts.

In June 2009, a new EU directive on the promotion of renewable energy sources (RES) entered into effect. The directive 2009/28/EC, provides for three cooperation mechanisms that will allow member states to achieve their national RES target in cooperation with other member states: statistical transfer, joint projects, and joint support schemes. This article analyses the pros and cons of the three mechanisms and explores design options for their implementation through strategic and economic questions: How to counterbalance the major drawbacks of each mechanism? How to reflect a balance of costs and benefits between the involved member states? The analysis identifies a number of design options that respond to these questions, e.g. long term contracts to ensure sufficient flexibility for statistical transfers, a coordinated, standardised joint project approach to increase transparency in the European market, and a stepwise harmonisation of joint support schemes that is based on a cost-effective accounting approach. One conclusion is that the three cooperation mechanisms are closely interlinked. One can consider their relation to be a gradual transition from member state cooperation under fully closed national support systems in case of statistical transfers, to cooperation under fully open national support systems in a joint support scheme.

In December 2008, the European Council and the European Parliament agreed on a final compromise for a new European renewable energy directive. One of the most debated issues prior to this compromise was the design of “target flexibility mechanisms”, which should allow member states with low or expensive renewable energy potential to partly fulfil their national renewable energy target in other countries. This article traces back the political discussion that has led to the evolution of the different flexibility options. It then evaluates the most prominent flexibility mechanisms against a set of qualitative criteria. It concludes that free or restricted certificate trade based on guarantees of origin (GOs) – as proposed earlier by the European Commission – is not a viable option due to some “knockout” criteria, despite other potential advantages. The mechanisms that have replaced GO trade in the final compromise – joint projects, joint support schemes and statistical transfer between member states – provide less flexibility, but score better against a number of other important criteria. The crucial question for the coming years is how their utilisation can be facilitated. One first step might be that proactive member states define open design issues for implementing the mechanisms.

The analysis of different global energy scenarios in part I of the report confirms that the exploitation of energy efficiency potentials and the use of renewable energies play a key role in reaching global CO2 reduction targets. An assessment on the basis of a broad literature research in part II shows that the technical potentials of renewable energy technologies are a multiple of today's global final energy consumption. The analysis of cost estimates for renewable electricity generation technologies and even long term cost projections across the key studies in part III demonstrates that assumptions are in reasonable agreement. In part IV it is shown that by implementing technical potentials for energy efficiency improvements in demand and supply sectors by 2050 can be limited to 48% of primary energy supply in IEA's Energy Technology Perspectives baseline scenario. It was found that a large potential for cost-effective measures exists, equivalent to around 55-60% of energy savings of all included efficiency measures (part V). The results of the analysis on behavioural changes in part VI show that behavioural dimensions are not sufficiently included in energy scenarios. Accordingly major research challenges are revealed.

The article examines how renewable electricity (RES-E) producers are integrated into the electricity market under the support legislations and regulatory frameworks of Germany, Spain, and the UK. Focus is on wind power, which faces the highest market integration challenge of all RES-E. The analysis shows that the three countries follow contrasting approaches of exposing RES-E producers to the market risks of forward electricity markets, balancing markets and system planning requirements. Risk exposure is highest in the UK and lowest in Germany. From a policy maker's perspective, there is a trade-off between a “high risk” and a “low risk” approach. When RES-E face high market risks, a higher level of financial support is required to stimulate RES-E development than in a low risk environment, but the exposure to market risks may also give an incentive to make efficient use of the respective market, thus limiting the indirect costs to society. The special characteristics of wind energy, however, put natural limits to the response of wind power plants to market prices and locational price signals and will increasingly influence electricity markets and grid infrastructure. These interdependencies should be recognised in the design of RES-E policies and market regulations.

The WWF report shows that G8 plus 5 countries have even greater energy efficiency potentials in these sectors and that endorsing these targets is technically and economically feasible for all countries. It estimates the efficiency potential for the transport sector at 25-50 per cent, for the building sector at 30-45 per cent, and for the power sector at 4-45 per cent by the year 2030, depending on the country.

This is the final version. Available from International Association for Energy Economics via the DOI in this record