Minimum prices for green certificates and technology adoption - Solar Energy in Belgium

Summary

Promoting the adoption of renewable energy systems lies at the heart of our transition towards a clean future. Finding out what drives the adoption of such technologies is therefore of the upmost relevance. Regions in Belgium implemented policies that reduced uncertainty regarding future profits for specific solar PV installations. A green certificate market was already in place all over the country, but from 2008 up till 2014, small-scale installations could have the right to sell their certificates to network operators at a guaranteed price. The intuition behind a guaranteed price is to increase certainty for households regarding future benefits from the adoption of solar panels. To explore how relevant such policy was, this thesis investigate the effect of the variation in guaranteed price on the installed capacity per inhabitant. A time and regional fixed effects model has been used in order to perform such analysis.

As a result, a marginal increase in certainty was significantly associated with an increase of 0.22 watts per inhabitant. To better understand these results, one should look at the direct effect on households’ adoption. For an average household, an increase in future profit certainty of 100€ per year would correspond to a 15% increase in installed capacity. The total cost of these policies amounted to approximately 10 billion euros over 16 years and therefore raise another question, was it really worth it?