Cost-efficiency benchmarking of European renewable electricity support schemes

• Published in: Renewable & sustainable energy reviews 2018-12, Vol.98, p.217-226
• Main Authors: Mezősi, András, Szabó, László, Szabó, Sándor
• Format: Article
• Language: English
• Subjects: Data envelopment analysis; Economic analysis; Renewable energy; Support schemes
• ISSN: 1364-0321; 1879-0690
• DOI: 10.1016/j.rser.2018.09.001

This paper assesses the cost efficiency of renewable electricity (RES-E) support schemes in Europe for the 2000–2015 period based on data collected by CEER from national regulators. A cost efficiency indicator (CEI) and Data Envelopment Analysis (DEA) were applied to measure the economic efficiencies of RES-E support schemes in Europe for the two most deployed renewable technology: photovoltaics and wind. The proposed CEI provides a relative and comparable measure of economic efficiency of support, measuring the cleaned (net of whole sale price) unit support value of RES-E production over consumption. The DEA assessment includes more input variables measuring economic performance of EU member states in RES-E support, where the levelised cost of electricity (LCOE) served as input alongside the CEI. After a detailed literature review introduces previous studies on both types of efficiency measures for renewable deployment the results are presented and explained. This study reveals that although the performance of PV support improved rapidly in the time period, wind generated electricity remained more cost efficient. The DEA found wind support schemes in North European countries (Norway, Sweden, Ireland and Denmark) and PV support schemes in Romania, Malta, Cyprus and Italy to be notably cost efficient. Some of these countries are the traditional large-scale producers (like Denmark or Italy) but ‘newcomers’ also performed well due to technology learning resulting in low entry costs. The DEA shows that financing conditions are perhaps as important as resource endowment in determining cost efficiency of support schemes across EU countries. Based on the outcomes we conclude with recommendations to improve the design for more market oriented RES-E support schemes as required by new EU legislation. •Economic analysis of the renewable energy support schemes in the last 15 years in the EU.•Financial and economic implications of the support policies in the EU countries.•The EU RES support schemes move away from the administrative support schemes to market oriented ones.•The identified front runner schemes, technology cost trends and countries help designing the new schemes.•Bring closer the physical and finance markets for RES projects by closing the RES finance cost gap..