A Review of Challenges in Implementing UK's New Feed-in-Tariff: Relevance for "Market Premium" Discussions in Germany?
Discussions in Germany over the future of feed-in-tariffs (FiTs) for renewables are in full force. One of the market support designs under considerable debate is the so-called “Market Premium” FiT, which Germany put in place at the beginning of 2012 as a voluntary option, while still making its longstanding fixed FiT available to renewable energy producers. Germany’s Market Premium FiT is a version of what the UK is developing to replace its current renewable obligation/quota scheme: a new “Contract-for-Difference” (CfD) FiT. The challenges the UK is experiencing, in terms of the management of policy and market risk and other considerations, are of particular relevance to the current debate in Germany over “fixed versus market premium” FiT offerings for renewables. This paper is intended to inform discussions about future market support policies for renewables, as investment in these resources will need to steadily grow in the coming years to meet Germany’s aggressive Energiewende targets. More generally, the lessons learned from the UK experience are relevant to all countries across Europe as the power system progressively decarbonises.