Proposal Papers for Policy Making and Governmental Action toward Low Carbon Society

LCS-FY2016-PP-13

Study on Risk Analysis of Photovoltaic Systems and Design of a Novel Institutional Policy for Promotion of Renewable Energy Using Real Options Approach

Summary

 The impact of the 2011 Fukushima Daiichi Nuclear Power Plant accident increased the momentum for introduction of renewable energy. As a consequence, the feed-in tariff (FIT) system was enacted in 2012.

 The FIT obligates the power transmission and distribution companies to procure renewable energy for a fixed period at a fixed price. However, the public burden due to cost of purchase has become heavier. Furthermore, since there are suppliers who do not operate immediately after FIT certification, the introduction of renewable energy is being delayed. In this document, we aim to balance reducing the public burden and increasing the amount of renewable energy, by using real option analysis to propose an optimum certification period and purchase price.

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