Renewable Energy Policies and the Design of Electricity Market for Energy Transition: Benefits, Challenges, and Strategies

Energy transition aims to reduce national greenhouse gas emissions. Policies that promote renewable energy and the electricity market design influence energy transition at a countrywide level. Policy instruments include feed-in tariffs (FITs) and renewable portfolio standards (RPSs) that have been adopted worldwide. FITs and RPSs function by guaranteeing a fixed price and setting a minimum amount of renewable energy. In addition to policies, the electricity market affects the promotion of renewable energy, with which electricity markets are classified into regulated and deregulated markets. Compared to a regulated market, a deregulated market is more likely to provoke competition between suppliers, which is propitious for developing renewable energy. This article covers the following topics: (1) the effects of government policies on energy transition; (2) how different types of electricity markets work and their potential to promote the use of green electricity; and (3) a case study of an electricity market, in which policy instruments were used to encourage green electricity, and efforts paid by the government and citizens towards an energy generation profile of less emission and more renewable electricity.