Microeconomic Analysis for the Formation of Renewable Energy Support Policy: the Case of Wind Power Sector in Lithuania

Abstract

Economic researches of renewable energy sources (RES) intensified in recent years only through the implementation of European Union Directives. Incentives for wider use of RES are declared both in the European Union and in Lithuanian laws. However, it may be said that there is lack of researches, which would answer questions about economic assumptions that would link energy policy to the economic results and would justify benefits of the use of RES technologies on state-wide. Thus this paper aims at presenting methodological principles of wind technologies assessment based on the economic indicators. The impact of wind technologies implementation on economy was estimated based on the microeconomic analysis method. Levelised cost of energy approach is used to compute wind electricity prime cost. Economic indicators are computed. The research results disclosed that investment subsidy and feed-in tariffs are attractive support measures for the investor. They could be used to promote wind electricity sector development in Lithuania in future. Energy policy decision making should be based on the economic assessment principles. Wind power support schemes and support levels should be reconsidered considering the net benefits of wind technologies. Wind technologies bring benefits to economy through their impact on profit, income-based taxes, electricity import substitution and CO₂ savings.

DOI: http://dx.doi.org/10.5755/j01.ee.29.2.13626