The Rationale for Policies promoting Renewable Energy Sources and Policy Outcomes in two National Contexts

Essay, 2011

24 Pages, Grade: 1.7

Ron Böhler (Author)










‘The transition from conventional energy to renewable energy is a no-brainer. If we stick doggedly with fossil fuels, we lose. If we try to wait until they run out, and continue to simply tinker with renewables, we lose. Only by getting our most basic need right, by transitioning to using energy sources that are free, limitless, and are environmentally, socially and geopolitically benign can we win-win-win.’

If Miguel Mendonça (2007, p.xx) is to be believed, the promotion of renewable energy sources1 (RES) should not only be a desirable counter-strategy to deal with unstable gas and oil prices, insecurity of energy supply, excessive import dependencies and last but not least toxic greenhouse gas (GHG) emissions leading to climate change. Furthermore, the wish for either sudden energy transition strategies – as can be seen for instance in Germany after the devastating accident at the Japanese Fukushima I Nuclear Power Plant in March 2011 – or a long-dated step-by-step agenda pays off economically, is ecologically sustainable and socially fertile. To put it simply: there are pragmatic and persuasive arguments for the promotion of renewable energy sources (RES) beyond normative aspirations that aim at a ‘cleaner future’. Apparently, the energy transition still dashes against either inert political will or deficient implementary measures (Haas et al. 2004, p.837). Paradoxically, so will be argued in this essay, there are good reasons to get over fossil fuels (coal, gas and oil) and nuclear energy. This multi-dimensional approach will be applied to two resembling national contexts with varying political outcomes, namely Spain and Portugal. Spain is today often attributed to a pioneering role in the usage of ‘green electricity’ whereas Portugal progresses visibly, but falls short of its potential (Navarro 2008).

1 Special reference will be given to the generation of electricity from renewable sources (RES-E).

The variety of RES range from wind, sunlight, biomass and geothermal heat to rain, tides and waves (hydropower). Notwithstanding their massive importance for EU energy consumption, some energy carriers such as biomass and hydro are seen to be ‘deadlocked’ (Del Río Gonzaléz 2008, p.2917), while the promotion of wind power among EU member states is well researched (Szarka 2007; Strachan et al. 2010). Hence, the case here shall be made for solar energy, with special reference to the promotion of photovoltaic (PV) power systems due to their suspected potential for further energy transitions in Europe. Being the ‘fastest growing power-generation technology in the world’ (REN21 2010, p.19), corresponding policy outcomes on the Iberian Peninsula will be illustrated and assessed.

Rational policy-making aims at effective problem-solving strategies based on cost-benefit-calculations. Decisive is not which particular policy may in total terms maximize the outcome, but which one is optimal in relation to costs that accrue from this policy. The underlying question of rational choice theory thus is, why political decision-makers should prioritise a certain ‘path’ of policy-making over others. A rationale has thus always been assessed with regard to the effectiveness and efficiency towards a desired or intended political outcome. The Spanish and Portuguese National Renewable Energy Action Plans portray an adequate guideline for further analysis.

The outline of the paper is as follows: The first section provides a general overview of economic, ecological and social benefits that RES come along with and which justify their extensive promotion in national context, referring in particular to PV-generated solar power. Subsequently, the specific interests of Spain and Portugal to promote RES shall be examined within their individual national context. The second part assesses effectiveness and efficiency of Spanish and Portuguese political efforts, in particular their individual renewable energy feed-in tariff (REFIT/FIT) support schemes, along a range of socio-political and economic parameters.


Assessing the overall rationale for promoting RES to generate and use ‘cleaner energy’ requires a multi-dimensional approach taking into consideration social, economic and environmental factors. As will be seen below, all three dimensions are expedient to increase the total share of renewables among national energy economies. While the social and economic benefits of an ongoing switch towards green electricity generation are still contested by rational cost-benefit calculations, their effect on ecological sustainability is beyond question. When it comes to RES promotion, scholars agree that each national socio-economic and techno-political context is unique (cf. Slijm 2002) and geographical and weather conditions are decisive for the kind of technological deployment within the energy mix (Reiche and Bechberger 2004, p.844). Hence, a generic theoretical framework is helpful, but success and failure of support schemes have to take notice of national peculiarities. Specific reason shall thus be given to the Spanish and Portuguese socio-political context.


Szarka provided a convincing summary of the antagonistic strife between non-renewable and increasingly scarce energy sources such as oil, gas and coal as well as the ‘loose cannon’ uranium and on the other hand non-depletable energy resources (2007). While he referred particularly to wind energy, the general argumentation can easily be adapted to solar energy generation and other RES as well: While non-renewables are often attributed to ‘produce pollution and waste, [being] subject to depletion, leading to higher costs in the interim [and causing] insecurity of supply’, the latter ones are described as ‘“green”, “clean”, and “friendly”, since in use they produce no atmospheric pollution or hazardous waste, are inexhaustible and “free”, leading to stabilisation of costs [and] increase security of supply, due to indigenous production’ (Szarka 2007, p. 51). Therewith, two intertwined dimensions of renewable energy promotion are brought together, an ‘economic frame’ with a focus on affordable electricity prices and secured energy supply vis-à-vis an ‘environmental frame’ aiming at ecological sustainability (ibid.).

The economic focus of RES promotion relies on cost-efficient utilisation in order to overcome the strong market positions that conventional energy resources traditionally have, because national energy agendas tend to be historically ‘locked in’ in certain techno-institutional paths favouring fossil fuels and nuclear energy. As a result, these carriers optimised application and efficiency in recent decades and for a long time remained broadly resistant against intermittent technological change that threatens the inertia of the system (Schmidt and Marschinski 2009, p.436; cf. Lafferty and Ruud 2008, p.17-18). Subjacent market dynamics thereby inherit the dilemma that ‘the choice of one technology can be self-reinforcing to the point where it completely dominates the market […] making penetration by alternatives such as renewable technologies difficult, even when they are superior’ (Cowan and Kline 1996, p.1). Path-dependent lock-ins, not least due to decades-long lifetimes of fossil-fired power stations, trap cleaner energies in an alleged pitfall of economic inefficiency and thereby produce market failures.

From this vantage point, financial and knowledge-based support mechanisms pursued by national governments to promote RES do not unilaterally put conventional energy resources at a disadvantage, but in fact correct those market failures. On their way to take necessary steps from a near-market position to mainstream market embeddedness, RES nevertheless have to demonstrate their financial competitiveness for both investors and end-consumers. Beyond a doubt, scale economics teaches that the costs per produced unit drop with higher output quantity (cf. Scrase and MacKerron 2009, p.91). Applying this to energy markets, the hidden rationale for promoting RES lies in establishing an artificial market for the generation and supply of renewable energy that becomes self-supporting after a while. Lafferty and Ruud described in their promising book ‘Promoting Sustainable Electricity in Europe’ (2008) a pattern to analyse the promotion of RES-E that took into account technology- and market-related factors as well as contextual and local-regional variables. The objective was to contest the structural-institutional ‘journeys’ once taken by national energy markets and to create new paths, ‘where the barriers inherent in path dependence must be overcome by altering the defining “media” of the dominant energy system’ (ibid., p.19). Following their meshing techno-market cycles, promotional schemes are necessary prerequisites to set a renewable energy sector in motion and which at length turns into a self-perpetuating market (ibid., p.13-17).

Whether renewables can reach price levels comparable to those of conventional energies without state-funded support schemes, is still controversial. Price-related cost-benefit-calculations may endorse a continuance of fossil fuels, but ‘[p]ortfolio approaches can show that the diversifying effect on the risk profile of the system as a whole will often have such a large value that the economic result is that renewables are the best option for new investment, viewed from the perspective of minimising system expected costs’ (Scrase and MacKerron 2009, p.99). That is to say that fossil fuels and nuclear power may be less expensive in the short run, but are very cost-intensive allowing for ‘environmental and social externalities’ and, for instance, the long-term storage of nuclear waste with a half-life of approximately 24.000 years (Schuh 2011). Despite the obvious reason that depletable resources make growing energy diversification and some day replacement inevitable. RES are free, limitless and hence guarantee stable and predictable prices for both producers and end-consumers.

Political projects need public support in order to get a foothold in society. This applies in particular to RES policies that target consumers to prioritise cleaner energy resources over traditional ones. In this regard, two aspects are of importance: Firstly, RES promotion schemes should on the one hand result in lower or at least equal and stable end prices for consumers compared to conventional energies. Secondly, they should additionally enjoy trust and acceptance among the population (Wüstenhagen et al. 2007). In many cases, like Szarka points out, social acceptance and activism is often an issue of ‘story-lines’ that illustrate conventional energies as overly powerful ‘Goliaths’, compared to RES as an oppressed ‘David’: Such ‘characterisation provides a strategy that is both defensive and aggressive. It is defensive in that it portrays rivals – notably the nuclear industry – as powerful and unscrupulous predators. It is aggressive in that the expansion of wind power is expected to be at the expense of competitors’ (2007, p.56).


Studies show how RES, especially photovoltaic, can be seen as a proper tool to better sustainability of the energy market. Petrovic and Wagner evaluated PV systems, among other comparable renewables, along seven indicators such as competitiveness and energy security related risks (2007). In short, the study rates recyclable PV technologies as having a clear sustainable effect compared to conventional carriers, providing profound energy security in relation to the high geopolitical hazards of conventional resources or the technical and supply-sided risks that wind energy implicates and finally having a paramount ‘employment effect’ (ibid,. pp.324-327). Notwithstanding, it is necessary to point out that PV systems are not yet economically competitive with either fossil fuels or wind energy due to high investment costs.


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The Rationale for Policies promoting Renewable Energy Sources and Policy Outcomes in two National Contexts
University of Bath
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rationale, policies, renewable, energy, sources, policy, outcomes, national, contexts
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Ron Böhler (Author), 2011, The Rationale for Policies promoting Renewable Energy Sources and Policy Outcomes in two National Contexts, Munich, GRIN Verlag,


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