Transaction Cost Economics of Regulations to foster Renewable Energy Sources in the Electricity Sector

• Renewable portfolio standards (RPS) and minimum price standards are two systems to foster the market dissemination of renewable energies in the electricity sector. Transaction Cost Economics brings forward that the contractual relations in real structures have to be investigated to judge on the efficiency of governance structures. This paper seeks to do so by comparing governance structures created by the Texan RPS and the German EEG as an example for a successful minimum price standard. Analysis suggests that differences in static efficiency between both regulations are not as big as economic theory would suggest. The need to safeguard long-term investments establishes long-term contracts as the prevailing form of governance in the Texan RPS, thus limiting competition. On the other hand, the German EEG provides a large range of freedom to the power generators giving them strong incentives to optimise both the investment and the operation of a power plant.

Subject headings

TEKNIK OCH TEKNOLOGIER  -- Naturresursteknik -- Energisystem (hsv//swe)

ENGINEERING AND TECHNOLOGY  -- Environmental Engineering -- Energy Systems (hsv//eng)

Keyword

Transaction Cost Economics

Regulation

Publication and Content Type

kon (subject category)

ref (subject category)