Academic journal article Management & Marketing

A Comparative Study on the European Renewable Energy Sources Facing Globalization

Academic journal article Management & Marketing

A Comparative Study on the European Renewable Energy Sources Facing Globalization

Article excerpt

Abstract. One of the main issues of designing strategies in renewable energies domain is the one of estimating the effects that different support mechanisms may have on investment flows. When designing these strategies, public authorities aim to achieve maximum efficiency by attracting local and foreign investors over the entire value chain of the branch and at the same time minimizing the overall cost of energy infrastructure. However, despite the good intentions underlying their origin, these efforts can sometimes lead to energy projects that are not technically, economically and socially feasible. The previous experience of pioneer countries in the field and a careful analysis of the context in which these practices have been developed can contribute to making more realistic and effective strategies. Therefore, in the first stage, this paper aimed to do a literature review regarding policies to encourage the renewable energy sector, then a comparative study has been conducted, in order to analyze the context and the key strategic decisions grounded by several EU pioneer countries in the field and effective ways of action for emerging economies such as the one of Romania have been identified. In order to study how public policies and other factors are particularly influencing the investors' strategies, the last stage consisted in a thorough interview with an expert consultant in renewables. Based on the information received, a questionnaire has been sent to three international companies in the renewable field, in which different investment scenarios have been proposed. It was found that the structure of the initial energy mix has a significant influence on the possibilities for further action. Thus, the reorganization of the energy sector requires considerable efforts in developing the technological, financial and legal framework. Among the multitude of financial mechanisms that can be used, a Feed-In-Tariff combined with green certificates and a guaranteed access to the grid appear to be by far the most attractive measures.

Keywords: renewables, strategies for the development of renewables, sustainable development, emerging markets (Romania), energy mix, Feed-In-Tariff.

1. Renewables in the age of globalization

Globalization is the central phenomenon of our time, entailing flows of capital, business products and applicable intellectual property. It has a sweeping cross- border environmental impact and it implies trade-offs in natural resources utilization. Renewables must find their place in this world-wide changing economy as a solution to growing energy demands and as a competitive source of capital attraction. This paper focuses on several key ways in which renewable energy can be more fully integrated into the national and global energy markets.

1.1. Encouraging the renewable sector through state policies

If in many industries the production and application of new technologies is entirely left to market forces, in those industries on which the national autonomy and security depend - as is the case with the energy industry - the public policy makers become important stakeholders. This leads to an additional complexity, added to the one caused by the technological uncertainty. In these situations, the implementation of new technologies cannot be understood without a thorough investigation of the role of the state. An interesting context is the one of those technologies which have already proven to be technologically and economically feasible in industrialized countries and which successful entrepreneurs might be interested (under certain conditions) to apply in emerging markets (Nemet, 2009; Leitner et al., 2010; Huberty and Zysman, 2010). In this case, we can practically ignore the technological uncertainty and remain with the following main question: "What factors of a national energy strategy can influence a firm's strategic decisions, causing it to invest in building renewable capacities on that market? …

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