SIMULACIÓN DE COBERTURA

Recently, the renewable energy sector has been growing faster than the rest of the economy, both in Europe and globally (Jäger-Waldau et al., 2011). In the beginning, the largest barrier to the spread of green technologies were their high costs, in comparison to conventional energy production methods, because that made them economically non-competitive. In order to promote their spread, countries introduced political measures and incentives to make sure renewable projects yield appropriate returns. This strongest, economic barrier should be handled by the policymaker creating a stable and profitable environment for investors and hence promotes further growth in the industry (Ragwitz et al. 2007).

With technological development, certain technologies have become capable of competing in the free market, given that the energy source and market conditions are both ideal. Thus, thanks to the incentives in place and to technological development, the economic barrier seems to become less of a problem (IEA, 2008). In a 2012 survey of 72 business executives from the energy sector, 80% agreed that by 2030,

88

neither onshore wind farms, nor biomass power plants, nor PV power stations will need extra support from the state, as they will be competitive without (PWC, 2012). In the absence of mandatory targets, and active policies and reliable support systems that would help us meet those targets, there is no market for renewables (Fouquet, 2012). In 2005, there were „only‖ 55 countries globally that had a political instrument in place for promoting renewables (REN 21, 2010); this figure grew to 109 by early 2012 (REN 21, 2012).

Nonetheless, with green energies becoming increasingly widespread and competitive, the non-economic barriers that originate in the very characteristics of renewable energy sources and the structure of energy systems and that may hinder future growth or lead to excessive/distorted prices keep on gaining in importance. Our analysis of the efficiency of renewable energy promotion systems led to the conclusion that the role of non-economic barriers in their success may be greater than that of the type of incentive (quantity vs. price-based) used to eliminate the economic barrier (International Energy Agency, 2011). Even the most motivating feed-in tariff system of the world could be in vain, for if non-economic barriers are substantial, then the development of the renewable sector will fall short of expectations, of what

other countries with similar feed-in tariffs might possibly achieve38.

Drawing from the above, we may want to give a summary of potential non-economic barriers; Lamers grouped them into the following categories (Lamers, 2009):

Barriers arising from regulatory and political uncertainty: may originate in flaws in strategic plans or the insufficient transparency of political decisions and legislation.

Institutional and administrative barriers: lack of strong, dedicated institutions, unclear roles and responsibilities, tedious and non-transparent licensing procedures.

Infrastructural barriers: mainly depend on the flexibility of the power grid, largely influence the potential uptake of energy from renewable sources.

38 _{We will come back to that issue later, when analyzing the Hungarian regulation in the empirical part}

89

Financial barriers: lack of financial opportunities and instruments that suit renewables.

Market barriers: which put renewable energies at a disadvantage to fossil fuels. May originate in subsidies to fossil fuels, asymmetric information and, of course, environmental and social external costs getting ignored.

Barriers related to environmental awareness and training: insufficient knowledge about the availability of renewables and related opportunities, workforce not sufficiently trained in green technologies.

Barriers related to reception and environment: society is often unduly mistrustful of new technologies, and planning requirements have a tendency of being too strict, as well.

The social acceptance of renewables in the European Union is considered to be favorable, for according to a 2011 Eurobarometer survey, it was the promotion of renewable energies that received the highest acceptance score (71%) among the European population. The 2020 target of a 20% share of renewables was perceived as feasible by 57%, too ambitious by 19% and 16% even believed it was too low (Eurobarometer, 2011).

In Europe, there are two main barriers worthy of our attention (Jäger-Waldau et al., 2011). Firstly, current economic and social systems are based on the centralized production of energy from conventional sources and matching distribution systems, which only allow for one-directional energy flow. Decentralized renewable energy production capacities, at the same time, would require a power grid capable of bi- directional energy flow in order to optimally exploit weather-dependent renewables. After all, whenever the sun is not shining, households with solar panels need to draw electricity from the grid, while at times when their PV generation exceeds their instantaneous use, the difference could and should be fed into the network.

The second main barrier, according to the study, originates in the somewhat special financing needs of renewable power stations. These investment are more expensive than conventional ones, that is, they require a high capital investment to start up, whereas their per-unit cost of operation tends to be relatively low and well- predictable. Their raw materials are cheap or even free, as they do not usually have to

90

pay for the energy source they utilize (e.g. wind, sun). Fossil-fired power plants, on the contrary, require a lower investment per unit of capacity, but their operation costs

are much higher and more volatile39 due to their raw material expenses. Accordingly,

the risks associated with these two types of technologies are different, as well, and efforts to compare them through standard net present value calculations are bound to yield inaccurate conclusions (Jäger-Waldau et al., 2011).

The strength of these barriers may vary between technologies40 and countries, or

even regions. The individual barriers might interact with each other, potentially even reinforce each other effect.

Thus implementing the right promotion system is not the only task of the policymaker, but they also need to pay attention to other barriers that arise with the spread of green energies, as those may undermine the success of even the most carefully designed promotion systems.