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State budget independent, market-based instruments to finance renewable heat strategies

: Steinbach, Jan; Seefeldt, Friedrich; Brandt, Edmund; Bürger, Veit; Jacobshagen, Ulf; Kachel, Markus; Nast, Michael; Ragwitz, Mario


Energy and Environment 24 (2013), No.1-2, pp.195-218
ISSN: 0958-305X
ISSN: 2048-4070 (Online)
Journal Article
Fraunhofer ISI ()
policy instrument; renewable heating; financing renewable energy sources

At present, expanding the use of renewable energy sources for heating (RES-H) relies predominantly on publicly funded support instruments. As these are subject to subsidy cuts and suspensions, these instruments do not provide long-term security for investors and technology suppliers. Although feed-in tariffs and quota-based systems are the major support schemes for renewable energy sources in the electricity sector, similar policy designs have not been applied to RES-H. This paper presents and evaluates three different policy instruments which have the potential to finance RES-H without using public funds: a physical quota system for biomass, a technology-based quota system (Portfolio Model) and a remunerationbased system (Premium model). The assessment suggests that while the Portfolio Model and the Premium Model are both promising policies to enhance RES-H deployment, there is greater acceptance among stakeholders for the Premium Model.