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    The Price of Policy Risk - Empirical Insights from Choice Experiments with European Photovoltaic Project Developers
    (Institute for Economy and the Environment, Univ. St. Gallen, 2011)
    Luethi, Sonja
    ;
    Managing the transition to a renewable energy future is an important policy priority in many countries. Solar photovoltaic (PV) technology is expected to make an important contribution, but due to relatively higher cost, its growth to date has been largely driven by public policy, notably feed-in tariffs. Feed-in tariffs have been implemented in various countries, however with widely differing outcomes in terms of installed PV capacity. Previous research indicates that the level of policy risk may be an important driver for differences in renewable energy policy effectiveness. More specifically, we suggest that investors who take a decision between PV investment opportunities in different countries carefully weigh feed-in tariff-induced returns against a set of policy risks, and choose the country with the most favorable risk-return profile. We empirically test this model based on a stated preference survey among European PV project developers, consisting of 1575 choice decisions by 63 investors. The findings of our study demonstrate that risk matters in PV policy design, and that a "price tag" can be attached to specific policy risks such as the duration of administrative processes or uncertainty induced by an approaching capacity cap. Governments can build on our empirical results to design policies that will be effective in attracting private PV investment, while at the same time maintaining efficiency by providing an adequate compensation for policy risk.
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    Effective Deployment of Photovoltaics in the Mediterranean countries: Balancing Policy Risk and Return
    (Elsevier Ltd., 2010-06)
    Luethi, Sonja
    Although the Mediterranean region is blessed with abundant solar resources, photovoltaic energy currently represents a very small share of power production. In Germany however, a much less sunny country, the photovoltaic (PV) industry is booming. This country has become a front runner in the adoption of PV because of effective policy incentives. Based on a cross-case study analysis of the German, Spanish and Greek PV markets, this paper investigates factors determining the effectiveness of PV policies. Our analysis shows that, above a certain level of return, risk-related factors (such as policy instability and administrative hurdles) play a more important role in influencing investment decisions than return-related factors (such as the level of a feed-in tariff).
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    The price of policy risk - Empirical insights from choice experiments with European photovoltaic project developers
    (Elsevier B.V., 2012-07-04) ;
    Luethi, Sonja
    Managing the transition to a renewable energy future is an important policy priority in many countries. Solar photovoltaic (PV) technology is expected to make an essential contribution, but due to relatively high cost, its growth to date has been largely driven by public policy, notably feed-in tariffs. Feed-in tariffs have been implemented in various countries, but with widely differing outcomes in terms of installed PV capacity. Previous research indicates that the level of policy risk may be an important driver for differences in renewable energy policy effectiveness. This paper suggests that project developers who make a decision between PV investment opportunities in different countries carefully weigh feed-in tariff-induced returns against a set of policy risks, and choose the country with the most favorable risk-return profile. This model is empirically tested by a stated preference survey among European PV project developers, consisting of 1575 choice decisions by 63 investors. The findings demonstrate that risk matters in PV policy design, and that a "price tag" can be attached to specific policy risks, such as the duration of administrative processes or uncertainty induced by an approaching capacity cap. Governments can build on these empirical results to design policies that will be effective in attracting private PV investment, while at the same time maintaining efficiency by providing an adequate compensation for policy risk.
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    Scopus© Citations 131