Switching From Green Certificates to Feed-in-Tariff Subsidies

There are two systems of renewable subsidies implemented in Europe. Some countries such as Poland, Sweden and Romania decided to base their subsidies on green certificates systems, while the others prefer various options of feed-in-tariffs. The paper describes the experience from the introduction of the green certificate system in Poland to support the development of Renewable Energy Sources (RES). Significant profits obtained in the RES market encouraged the investors to allocate their capital in renewable production causing the oversupply of green energy and a large drop of certificate prices. After several years of the green certificates system operation, the Polish authorities decided to introduce new feed-in-tariff subsidies. This move has resulted in the parallel operation of both systems causing some ambiguities. The paper discusses a general question what subsidy system could be the most appropriate for renewable production to satisfy the EU climate and energy policy targets.