It is costly to keep nonpayers from enjoying a public good, and one’s consumption of a public good does not affect another’s ability to consume the good. Public good:Ī public good is a good that is non-excludable and non-rivalrous. Many public goods are typically provided by natural monopolies, such as electricity, railway, and water. Natural monopolies occur when economies of scale reduce production costs, such that one firm can produce at lower costs than multiple firms. Governments and utilities provide guaranteed purchase contracts for electricity generated from renewables the particular tariffs may change over time to track the development of technology and cost reduction.

Feed-in tariffs:įeed-in tariffs provide incentives for the generation of renewable electricity. It is distinct from the prevailing generation of electricity at large centralized facilities. Distributed generation:ĭistributed generation involves the production of electricity from many small energy sources (including, for instance, natural gas turbines and solar photovoltaic panels). It is different from energy efficiency, which involves using less electricity to perform a particular task. Demand response:ĭemand response is a means of reducing customer consumption of electricity in response to supply conditions. Cost-benefit ratios are also used to evaluate a policy relative to the status quo or an alternative policy formulation. It measures the timeline of expected costs and benefits associated with policy implementation, discounting future values to produce a net present value. Cost-benefit analysis is an economic approach to policy evaluation.

Cost of micro grids by technology ren21