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Banding: A game changer in the Renewables Obligation scheme in the United Kingdom

Yunfei Wang, Jinke Li, Nigel O'Leary Orcid Logo, Jing Shao Orcid Logo

Energy Economics, Volume: 130, Start page: 107331

Swansea University Authors: Yunfei Wang, Jinke Li, Nigel O'Leary Orcid Logo, Jing Shao Orcid Logo

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Abstract

The Renewables Obligation scheme was implemented in the UK in April 2003 to support electricity from renewable sources and was designed as technology-neutral to encourage competition. As less developed technologies were disadvantaged, banding was introduced in April 2009 to provide differentiated su...

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Published in: Energy Economics
ISSN: 0140-9883
Published: Elsevier BV 2024
Online Access: Check full text

URI: https://cronfa.swan.ac.uk/Record/cronfa65457
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Abstract: The Renewables Obligation scheme was implemented in the UK in April 2003 to support electricity from renewable sources and was designed as technology-neutral to encourage competition. As less developed technologies were disadvantaged, banding was introduced in April 2009 to provide differentiated support to different technologies. A similar feature was used in other countries but its positive impact has not been identified empirically. This is the first quantitative study to examine the impacts of banding based on time series data from March 2002 to December 2018 in the UK, focusing on onshore wind, offshore wind, and solar. This study considers the impacts of banding via its feed-through effect on the markups and then investors' decisions on renewable projects, instead of considering it as an independent policy intervention. The counterfactual analysis shows that, if banding was not introduced, the offshore wind would remain silent for extended periods, then the UK might have difficulty in achieving its target for renewable generation. Besides, the costs of the RO scheme would be less, but additional fuel costs would be added to cover the generation gap.
Keywords: Tradable green certificates, Renewables obligation, Banding, Counterfactually analysis, Wind generation, Solar generation
College: Faculty of Humanities and Social Sciences
Funders: Swansea University
Start Page: 107331