Philippe Menanteau

Prices versus quantities: choosing policies for promoting the development of renewable energy

Abstract Now that the risks of climate change have been confirmed and the European States have declared their willingness to pursue ambitious objectives for producing electricity from renewable energy sources, it becomes crucial to take a look at the relative efficiency of the different incentive schemes used. Such schemes may focus on quantities—defining national targets and setting up bidding systems, or quota systems providing for green certificate trading—, or they may focus on prices—feed-in tariffs. Clearly, these instruments are much the same as those used in environmental policies, with similar discussion involved in their choice. Whatever the system chosen, the role of the public authorities is quite specific: to stimulate technical progress and speed up the technological learning processes so that ultimately renewable energy technologies will be able to compete with conventional technologies, once the environmental costs have been internalised. A comparison of instruments must thus take into account the characteristics of the innovation process and adoption conditions—uncertainties regarding cost curves, learning effects—which means also looking at dynamic efficiency criteria. The authors examine the efficiency of the different incentive schemes for the development of renewable energy sources, both from a theoretical point of view by comparing price-based approaches with quantity-based approaches, and from a practical point of view by looking at concrete examples of how these different instruments have been implemented. The paper concludes that a system of feed-in tariffs is more efficient than a bidding system, but highlights the theoretical interest of green certificate trading which must be confirmed through practice, given the influence of market structures and rules on the performance of this type of approach.

How to promote renewable energy systems successfully and effectively

This paper summarises the major recommendations and conclusions of the third Forum of the European Network on Energy Research (ENER) which took place in June 2002 in Budapest. The major perceptions of this meeting as well as the most important conclusions and recommendations for energy policy makers are compiled in this summary. The statements compiled in the following represent a consensus within the ENER Network while on some questions differences in perception and analysis persisted.

Learning from Variety and Competition Between Technological Options for Generating Photovoltaic Electricity

Abstract PV technology is of major interest for the energy sector because it offers the possibility of generating renewable electricity, using a resource that is widely available throughout the world, and without producing noticeable environmental externalities. The performance of the technology has progressed significantly over the last 20 years, thanks to learning effects, which have enabled PV diffusion to be extended beyond the initial niche markets. If this learning process can be maintained, PV may become an efficient technology for electricity generation and contribute to a sustainable world energy supply. Different technologies are competing in the production of PV cells. This paper analyses the mechanisms whereby one technology (crystalline silicon) has become established in a dominant position by using a knowledge base shared with the electronic components industry. The increasing diffusion of PV applications in new market segments as a result of public policies is then discussed, along with the resulting reinforcing mechanisms in favor of silicon technology. Given the limited progress margins remaining on this technological trajectory, a discussion is finally presented of new, more promising PV technologies and their possibilities for overcoming this lock-in situation and extending the current PV learning process.

From energy labelling to performance standards: some methods of stimulating technical change to obtain greater energy efficiency

In the household electrical appliances sector, the purchasing behaviour of the consumers is sensitive to different attributes (price, brand, aesthetics, appliance features, etc.), but rarely to the energy-efficiency criterion. This represents a strong constraint to the diffusion of efficient appliances. In this paper, the authors present the main types of instruments used to compensate for this apparent lack of concern, through actions stimulating demand or encouraging the supply of more efficient products. International experience in lighting or electrical appliances sectors is investigated as well as French programmes. The conclusion insists on the complementary nature between these different instruments and suggests to combine them according to the existing industrial, technological or competitive contexts.

Can negotiated agreements replace efficiency standards as an instrument for transforming the electrical appliance market

Abstract Without reinforced energy saving policies, residential consumption of electricity will increase sharply over the next 20 years, in particular, as a result of expected growth in the specific uses of electricity. The main problem is not a lack of energy-efficient technologies, which do indeed exist for electrical appliances, but one of slow diffusion of existing technologies due to the weakness of the price signal and the purchasing behaviour of consumers. In association with energy labelling, minimum energy performance standards have proved to be very effective in stimulating technological progress and organising market transformation. But standards also suffer from long and often difficult implementation periods because of the resistance of the industrial sector. For manufacturers, similar results could be obtained more easily and more rapidly with voluntary agreements because they introduce flexibility margins in the achievement of commitments. This paper analyses the specific advantages of voluntary agreements for improving energy efficiency in the domestic appliances sector. We conclude that voluntary agreements may be an effective instrument for market transformation in certain conditions, but the alternative of regulatory measures must remain a credible, realistic threat if voluntary agreements are to have a really significant impact on performance improvement.

Efficiency Standards versus Negotiated Agreements in the European Electrical Appliance Sector

In association with energy labelling, minimum efficiency standards have proved to be very effective in stimulating energy efficiency. But standards also suffer from long and often difficult implementation periods because of the resistance of the industrial sector. This paper compares efficiency standards and energy labelling with voluntary agreements in the domestic appliances sector. We conclude that VAs may be an effective instrument for market transformation in certain conditions: the most important is that alternative of regulatory measures must remain a credible, realistic threat if Vas are to have a really significant impact on performance improvement.