Subsidy Design And Influencing Factors Study Of Renewable Energy Generation

The high subsidies price of renewable energy generation has brought heavy burden on the government financial expenditure,how to reduce the subsidy price and effectively encourage investors to invest in the industry is particularly important.Based on the Renewable Portfolio Standard(RPS)and carbon trading mechanism,this paper analyzes the problem of the optimal government subsidy price.Specifically includes the following:Based on the detailed analysis of benefit relationship between government and investors,this paper takes investor’s preference toward renewable energy generation as the asymmetric information and a principal-agent model is established which takes the government as the principal and the investors as the agent.We have studied the optimal subsidy level under symmetric information and asymmetric information.Then we have modified the model after the concept of RPS and carbon trade.At last we have also analyze the influencing factors in each model.The study shows the asymmetric information is the main reason to make subsidy failure.The implementation of RPS and the carbon trade market internalize the external benefits which acts as a reasonable way to increase investor’s benefit and reduce subsidies.Technological innovation is the key factor in promoting renewable energy generation industry in both feed-in-tariffs and RPS incentive policy.According to the results of the study it is recommended that the government should choose probability subsidies instead of accurate subsidy and strengthening the supervision to avoid "information distortion".With the development of renewable energy power industry,carbon trade market based on RPS will become the main incentive policy rather than subsidy.The government should establish rewards and punishments system and maybe the punishment will dampen investment intentions.And the government should provide a stable investment environment to strengthen investor’s confidences.