3     Is (early) harmonisation a preferable policy option?

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3.3     How do (harmonised) support instruments perform under imperfect framework conditions?

As stated previously, policy options discussed above related to a possible harmonisation of RES support are applied assuming “perfect” framework conditions. This includes the assumption that currently prevailing non-economic barriers are fully mitigated in the near future (i.e. already by 2013). To facilitate deeper understanding on how support instruments perform under imperfect conditions, a sensitivity assessment was conducted assuming that harmonised feed-in premiums and uniform quotas are used under “imperfect” conditions where non-economic barriers remain in place partly. Thereby the direct impact was studied, that is assuming no change of the initially defined policy design, as well as a variant where the design of support instruments was modified subsequently in order to (again) achieve given RES targets. While the first variant indicates generally the decrease in RES deployment due to imperfect framework conditions, the latter variant shows the necessary adaptation of financial support in order to “bring RES back on track” to meet the conditioned RES target (under the new “imperfect” framework conditions).

Figure 3-3 offers a summary of key outcomes related to this assessment, illustrating the change of main indicators on deployment, cost and benefits for the assessment variants compared to their corresponding default case (of harmonised feed-in premiums or of uniform quotas with mitigated barriers).

The direct impact of “imperfect” framework conditions (i.e. less “perfect” than the ones initially anticipated by the policy maker) for the instruments assessed can be summarised as follows:

• In the case of feed-in premiums a decrease of deployment (-10% compared to default) is apparent, and, consequently, also a reduction of related costs and benefits in similar or stronger magnitude.
  
  
• In the case of uniform quotas deployment is less affected (i.e. only -4.1% compared to default) but costs and expenditures increase substantially. For example support expenditures are expected to increase by 23% compared to default.

Figure 3-3: Comparison of policy performance under imperfect framework conditions: Indicators on yearly average (2011 to 2020) deployment, cost and benefits of new RES installations (2011 to 2020) for selected policy options (feed-in premium and uniform quota) under imperfect framework conditions (i.e. barriers partly remaining), expressed as deviation to the default case (of mitigated non-economic barriers.

The necessary adaptation in policy design, that is mainly an increase of financial incentives to facilitate a stronger expansion of alternative generally more expensive RES technologies, to end up with a similar RES deployment than in the default case has a strong impact on the resulting cost and expenditures:

• In the case of feed-in premiums both additional generation cost and support expenditures increase by about 31% (compared to default).
  
  
• The increase of additional generation cost is less pronounced (+21%) for harmonised uniform quotas but support expenditures are strongly affected (+66%).

Summing up, it can be concluded that feed-in tariffs appear more sensitive to changing framework conditions than quotas with respect to the resulting RES deployment. Contrarily, in the case of quotas a strong sensitivity is applicable for the resulting cost – i.e. in particular support expenditures will increase significantly if framework conditions are less perfect than anticipated by the policy maker.