Cost-Effectiveness and Incidence of Renewable Energy Promotion in Germany

Over the last decade Germany has boosted renewable energy in power production by means of massive subsidies. The flip side are very high electricity prices which raises concerns that the transition cost towards a renewable energy system will be mainly borne by poor households. In this paper, we combine computable general equilibrium and micro-simulation analysis to investigate the cost-effectiveness and incidence of Germany's renewable energy promotion. We find that the regressive effects of renewable energy promotion could be ameliorated by alternative subsidy financing mechanisms which achieve the same level of electricity generation from renewable energy sources.

Keywords: renewable energy policy, feed-in tariffs, CGE, microsimulation

JEL Classification: Q42, H23, C63

Suggested Citation: Suggested Citation

Böhringer, Christoph and Landis, Florian and Tovar Reaños, Miguel Angel, Cost-Effectiveness and Incidence of Renewable Energy Promotion in Germany (January 15, 2017). ZEW - Centre for European Economic Research Discussion Paper No. 17-004, Available at SSRN: https://ssrn.com/abstract=2910355 or http://dx.doi.org/10.2139/ssrn.2910355