Joint discussion paper series in economics 13-2011
The share of renewable energies in the electricity sector ('green' electricity production) relative to overall electricity supply has been growing steadily over the last years in most industrialized countries. This expansion was due to economic support either by subsidies or quota requirements for green energy. Without such support, green electricity would not be competitive to electricity supply from conventional production capacities ('black' electricity production) - e.g. coal and gas fired or nuclear power plants. In this paper, we study the effects of the two most prominent forms of economic support: surcharge-financed guaranteed Feed-in Tariffs (sfgFIT) that are most common in European, and proportional quotas which are implemented in several U.S. American jurisdictions.