State Budget Independent, Market-Based Instruments to Finance Renewable Heat Strategies

  • J. Steinbach
  • F. Seefeld
  • Edmund Brandt
  • Ulf Jacobshagen
  • Markus Kachel
  • M. Nast
  • M. Ragwitz

At present, expanding the use of renewable energy sources for heating (RES-H) relies predominantly on publicly funded support instruments. As these are subject to subsidy cuts and suspensions, these instruments do not provide long-term security for investors and technology suppliers. Although feed-in tariffs and quota-based systems are the major support schemes for renewable energy sources in the electricity sector, similar policy designs have not been applied to RES-H. This paper presents and evaluates three different policy instruments which have the potential to finance RES-H without using public funds: A physical quota system for biomass, a technology-based quota system (Portfolio Model) and a remuneration-based system (Premium model). The assessment suggests that while the Portfolio Model and the Premium Model are both promising policies to enhance RES-H deployment, there is greater acceptance among stakeholders for the Premium Model.