The paper “On the effectiveness of feed-in tariffs in the development of solar photovoltaics” by Elbert Dijkgraaf, Tom van Dorp, and Emiel Maasland has been published in the latest issue of The Energy Journal. In line with the results found in the existing literature, the authors find a positive effect of the presence of a FIT on the development of a country’s added yearly capacity of PV per capita. However, this study shows that the literature underestimates the potential impact of FITs, as the effect of a well-designed FIT is much larger than the average effect of the currently applied FITs. Not only the height of the tariff is important, but also the duration of the contract and the absence/presence of a cap have an impact. The authors also show that consistency greatly affects the effectiveness of FITs. Consistency is especially important when the tariff of a FIT is low. The total effect of a FIT can be seven times larger if it is well designed. The results are robust for differences between countries with respect to the availability of other policy instruments, the use of nuclear or hydro power and the level of CO2 emissions. Download the article here.
