Vaishnavee Suresh | 1001397990 | 9 Nov 2018

ECO314 Assignment 3
Renewable Programs and Residential Electricity Prices

Market Share of Renewables

100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
Switzerland Netherlands Finland Norway New Zealand

Residential Electricity Prices

25

20
US centts / kWh

15

10

0
1990 1995 2000 2005 2010

Switzerland Netherlands Finland Norway New Zealand

See appendix for details.

Vaishnavee Suresh | 1001397990 | 9 Nov 2018

Finland
In 2010, Finland enacted the National Renewable Energy Program in accordance to EU directives.
This Program implemented Feed in Tariffs for electricity from wind, biogas and wood chip;
Biofuels promotion in transportation; Actions to promote forestry and energy from wood chips;
Renewable energy and energy efficiency requirements for buildings; Energy subsidy for
households installing solar heating systems

In 2016, the National Energy and Climate Strategy of Finland for 2030 (NECSF) was passed
through. The main policy change was the abolition of the current premium tariff system for wind
power production and the introducing a tendering system.

The strength of this program is evident in the fact that renewable sources electricity generation
targets for 2020 were already achieved in 2014. The NECSF introduction of tendering indicates
that there will be higher efficiency in the renewables market as a tendering system allows the
market to allocate resources efficiently.

Weakness of this program is the lack of support for increasing renewables in the transportation
sector. Currently, oil “accounts for almost 90 per cent of fuels used in road transport.”1 There
are no large programs in place to promote liquid biofuels or electric traffic. (Currently, there is a
quota system and tax break that supports biofuels)

Netherlands
In 2011, Netherlands established a Feed in Program which promotes renewable energy sources
used for electricity, renewable gas and heating purposes. The SDE + provides a feed-in premium
(FIP) subsidy that covers the difference between wholesale market prices of electricity and the
cost price of electricity from renewable sources. It encompasses a system of phased admission
with escalating base tariffs, which favours low cost RES options. Besides the premium scheme,
investments in renewable energy technologies are supported via loans and various tax benefits.
For offshore wind, a tendering scheme is available under the SDE+.

Innovation in energy is also supported through innovation contracts between private companies,
universities, and R&D institutes.

One of the key strengths of the Netherlands Renewable Energy Program is its collaborative
approach. In 2013, The Energy Agreement for Sustainable Growth was signed. It is a negotiated
plan between the government and dozens of organisations and interest groups to propel
Netherlands towards the energy transition. The Agreement includes several ambitious energy
targets. One interesting feature is increasing the renewable energy generation share in the total
energy mix through an active support of the offshore wind deployment. The goal is to add 4.45
GW by 2023 of offshore wind capacity.

1
https://energia.fi/en/advocacy/energy_policy/renewable_energy
Vaishnavee Suresh | 1001397990 | 9 Nov 2018

New Zealand
New Zealand enjoys the advantage of a diverse and considerable supply and of renewable-energy
resources, which contributes to the majority of electricity output. This is a big reason explicit
support schemes for renewable energies are minimal in New Zealand, unlike many other OECD
member countries, as renewable energies are already competitive with fossil-fuelled equivalents.
Most renewable electricity projects rely on existing market mechanisms while some sectors, such
as solar water heating, are in receipt of low levels of support.

On the other hand. New Zealand has relatively strong energy efficiency policies, including
minimum energy performance standards and energy rating labelling requirements in place for
appliances and equipment. The New Zealand Emissions Trading Scheme (NZ ETS) is New
Zealand’s key tool for reducing emissions and meeting our emission reduction targets. The
compliance monitoring programme for these policies is robust, which contributes to meeting the
level of energy efficiency improvements expected from the sectors.

In 2014, Research and Development Funding Programmes were put into place to further develop
renewable energy (primarily wind and geothermal). However, investment in energy technology
research and investment in New Zealand is traditionally at the lower end of the OECD scale in
terms of New Zealand dollars spent per unit of gross domestic product (GDP).

Norway
The Kingdom of Norway is the third-largest exporter of carbon-based energy in the world, after
Russia and Saudi Arabia, and it is also a global leader in combating climate change (national
targets go beyond Kyoto Protocol, for example). In many ways, Norway already is a lower-carbon
economy than most others due to the widespread use of electricity (including heating).

The Kingdom of Norway promotes renewable energy through a quota system including a
certificate trading scheme. The Norwegian approach to emissions trading is exemplary as the use
of auctioning went well beyond the EU average and the overall cap on emissions was tighter than
that set by EU member states. Also, a CO2 tax is used to regulate offshore activities, onshore
activities and transport sector measures.

In per-capita terms, public funding for all energy RD&D is the third-highest among the IEA
member countries. Enova SF is a state enterprise whose main goal is to contribute to reductions
in greenhouse gas emissions and increased security of supply for energy and aid technology
development by providing investment aid and conditional loans to projects within those fields.
The Energy Fund is partly financed by means of a levy on the electricity grid tariff.

However, one key weakness is that other policies to reduce emissions, ranging from waste
management, urban and transport planning to building standards and educational programmes
need to be further developed in order to build long-term capacity.
Vaishnavee Suresh | 1001397990 | 9 Nov 2018

Switzerland

The main legislation regulating renewable sources of electricity productions us the Switzerland
Energy Act of 2016. The act specifies the principles of feed-in of electricity, self-consumption, and
the feed-in tariff system as well as investment grants related to PV, hydroelectricity and biomass.
The act confers the right to the government to issue directives regarding the energy consumption
of goods produced in series; energy demand in buildings as well as supply; and self-consumption
of commercial entities. The act specifies the rules regarding measures for support and
encouragement in line with the objectives of the Energy Act. Feed-in tariff are available for the
following technologies: hydropower, photovoltaics, wind energy, geothermal energy, and
biomass.

In order to offset the financial implication of the high exploration risk inherent in geothermal
power projects of Switzerland, up to 60% of the total sunk subsurface development cost of
prospecting, finding and testing the resource may be reimbursed through the Guarantee
Scheme or Investment Aid for Prospecting and Exploration.

The Technology Fund for Innovative Technologies fund was created by the federal government
to promote innovative technologies that reduce greenhouse gas emissions and the consumption
of resources, support the use of renewable energy and increase energy efficiency. The fund’s
loan guarantees lower the hurdle for innovative companies to get the necessary financing in place.

However, one key weakness of the renewables program is the lack of investment in education
on sustainable habits.
Vaishnavee Suresh | 1001397990 | 9 Nov 2018

Web-Based Materials
1. Freakonomics: Two (Totally Opposite) Ways to Save the Planet (Ep. 346) -
http://freakonomics.com/podcast/save-the-planet/

In this episode of the popular economics podcast Freakonomics, two opposing approaches to
dealing with Climate Change are examined. One group are the environmentalists who advocate
a grassroots change in our consumption is the answer to our climate change issue. The second
group are technologists who are confident human ingenuity can solve just about any problem,
and so advocate more global solutions.

2. Saving Energy: It’s also about culture -

https://www.sv.uio.no/sai/english/research/projects/overheating/news/2013/winther-
wilhite.html

The importance of technological development and innovation to reducing CO2 emissions and
making our energy consumption more sustainable has been well-known for at least half a
century now. However, the rate of policy adoption and private sector investment across the
world has been quite slow. There are several factors that contribute to this including market
forces, developing countries, economy and security concerns, geopolitics etc. However, the
culture and norms plats a big role in adopting/developing more sustainable technologies. For
example, In Norway, generating a cozy ambience in houses by using lots of little lights around
the room is a deeply embedded in the culture. This has led to the highest per capita energy use
for lighting in the world, and an increase in electricity prices is probably not going to have a high
impact on light bulb consumption (as the demand curve is likely to be more inelastic).

This article highlights the importance of taking an anthropological (and a multi-disciplinary) lens
to energy policy review.

3. How Big Data Analytics is Disrupting the Energy Industry -

https://www.disruptordaily.com/big-data-analytics-disrupting-energy-industry/

The global average electricity consumption for households with electricity was roughly 3,500
kWh in 2010. 2 Typical house wastes 30 percent more energy than an efficient one does. One
important way of improving efficient use of energy is by leveraging the large of data being
collected by the energy sector. This article lists some ways that utility companies are using big
data to improve operation efficiencies, drive down costs and reduce carbon efficiencies.

2
http://shrinkthatfootprint.com/average-household-electricity-consumption#OCoS7PoFI7z261xY.99A
Vaishnavee Suresh | 1001397990 | 9 Nov 2018

Appendix
1. Solar, Wind, hydro, Biomass, and Geothermal are grouped together as Renewable energy
2. Electricity generated from main activity producer power plants and autoproducers
3. Data Source: IEA (2018), "OECD - Electricity and heat generation", IEA Electricity
Information Statistics(database), https://doi.org/10.1787/data-00457-en (accessed on
07 November 2018).