Epsilon Archive for Student Projects

Abstract

This paper presents a quasi-experimental study which was performed to evaluate a Swedish policy in support of small-scale electricity production. The policy was in effect during the first three years of the 21st century. The policy was a per unit subsidy on kWh produced between November 1st 1999 and April 30th 2003 and aimed to help small-scale producers until the electricity certificate system was implemented in 2003. The certificate system was meant to support renewable energy producers which included small-scale producers and encourage increased production from renewable sources. The aim of this paper was to evaluate the effect the subsidy had on the development of the renewable energy production, thus evaluating an indirect goal of the subsidy. The evaluation was done by comparing the production of wind power in Sweden with a synthetic Sweden, without the subsidy, which was created by using the synthetic control method (SCM). Wind power production was utilized to measure the effect since the production in Sweden at this time mainly consisted of small-scale producers who were eligible for the subsidy.
The results of the study show no effect on Swedish wind power production due to the subsidy and it is not possible to capture any increase in production volumes during the first years of the certificate system either. A number of placebo tests were also performed to ensure the robustness of the method. The lack of effect from the subsidy highlights a need for more comprehensive analysis to develop a more successful policy design for any future polices in the field.