14PESGM1917, (with M. Perez de Arce) Comparison of some Incentive Policies for Renewable Energy

Market design in most of the countries is based on the concept that prices should give correct incentives for adequate expansion of electricity infrastructure in the long-term and efficient asset operation and demand consumption in the short-term. These goals, however, can only be archived if prices are cost-reflective, which is debatable in markets with cross-subsidies and initiatives that aim to adapt market design for incentivizing investments in renewables such as tax exemptions (mixing taxpayers with electricity consumers). In this context, the objective is to show experiences with distortions that these initiatives can cause on efficient market and system operation, and effective and reliable invest- ment. Panelists will present cases and studies where the presence of external subsidies, cross-subsidies and inefficient feed-in-like tariffs had damaged (or could damage) power system efficiency and reliability. This panel is also chaired by Prof. Hugh Rudnick, PUC-Chile.