Making the Most of Wind : a Business Perspective on Subsidy Systems in France, Germany, Spain and Sweden

Abstract: Determining which countries are the most financially attractive for businesses to build wind projects is a matter of serious discussion that lacks succinct commentary. To fill this void this paper employs an empirical study of the wind subsidy support systems used by Germany, France, Spain and Sweden. This paper is based on the premise that businesses prefer to build where they can find the highest overall remuneration for their production; recognizing also the need for stability in those payments and businesses’ strong preference for larger early returns on their investments. The paper also analyzes the results and gives recommendations on possible improvements to each country’s system and where businesses should invest.In order to reach their 20-20-20 E.U. goals (European Commission, 2010), countries are encouraging the creation of new green energy projects, and this encouragement is frequently in the form of subsidies. The subsidy types used by the countries reviewed are feed-in tariffs, premiums and a certificate quota system. Each country’s support history is detailed along with the criteria of their respective systems.The countries systems are then compared using actual income and production data for four criteria at three different production levels – 100 percent, 75 percent and 150 percent of actual – and at two different lengths of time, 7 and 20 years. The first criteria of the comparison is total income, the second for variability of payments, the third for timing of payments and the final is the stability of the system itself.The results of this research show that the German and French systems are superior at all levels for their low variability in payment prices and in making larger payments to businesses earlier. They are also generally superior at lower and actual production levels for total income amounts. However, the Spanish options are superior at high levels of production for income and have middling variability levels. The Swedish system generally has the highest levels of variability for the lowest levels of income. Only the Spanish system is considered to be unstable in its political support of subsidies. Based upon the preceding findings are given to each country to improve their relative weaknesses. Also recommendations are given to businesses based upon the quality of the locations wind resources.