Are Green Electricity Certificates the Way Forward for Renewable Energy? An Evaluation of the United Kingdom's Renewables Obligation in the Context of International Comparisons

Abstract

The author analyses the performance of the United Kingdom's ‘Renewables Obligation’ (RO) in the context of other renewable energy procurement regimes. Prevailing wisdom suggests that market-based procurement regimes for renewable energy are more cost-effective than fixed-price (‘feed-in tariff’) arrangements. In addition, market-based regimes are thought to favour corporate, rather than locally owned, schemes. However, the analysis in this paper disputes these strands of conventional wisdom. An analysis of the returns to wind-power developers under the British market-based RO and the German ‘renewable energy feed-tariff’ (REFIT) reveals that financial returns per MW of installed capacity are much higher in the case of the market-based British RO than in the German REFIT. On the other hand, there is evidence that cultural factors are a bigger influence on the patterns of ownership of wind-power schemes than whether procurement systems are market based or fixed price.

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