DefinePK

Abstract

Since the last two decades, many countries have passed regulations to encourage renewable energy (RE) electricity generation due to policy driven environmental such as rising concerns over climate change and pollution, national security risks associated with fossil fuels, a desire to promote innovation and increase the competitiveness of new energy sources. The Feed-in-Tariff scheme (FiT) and the competitive auctions are the most common successful support schemes that have been implemented. Numerous investors interested to bring growth of the technology because of the high profitability due to high FiT rate, but it will influence the end-user. However, competitive auction through bidding round may lower the prices and have potential to discover real production cost of RE. This study reviews the scenario and the use of the competitive auction mechanism and FiT scheme for the promotion of power generation from RE technologies, also provides an overview of the policy frameworks and support mechanisms scheme in several countries including the Association of South East Asian Nation (ASEAN). A reform should take into account the merit order effect caused by renewable energy sources even the feed-in of electricity generated by renewable energy sources lowers the wholesale price, since they offer electricity at close to zero marginal costs. Overall, the interaction of policy design, electricity price, and electricity production cost are more important determinant of RE electricity generation development than policy enactment alone.