Comparison of the Effects of RPS and FIT on Renewable Energy Generation

Abstract

This paper investigates the effectiveness of FIT and RPS at promoting renewable energy generation. It is shown that a higher fixed price under FIT always increases renewable energy generation, whereas under RPS a higher quota (proportion of renewable energy generation) does not necessarily increase renewable energy generation; further it may decrease renewable energy generation under a certain condition. When the same policy objective (proportion of renewable energy) is attained under each system, it turns out that FIT results in more renewable energy generation than RPS.