Renewable Energy Policy and Economic Impacts in Power Generation
Summary
Renewable energy policy has become central to power-generation strategies worldwide, driven by the imperative to decarbonise electricity systems, enhance energy security and foster sustainable growth. Instrument design spans market-based mechanisms—such as carbon pricing, auctions and feed-in tariffs—to regulatory mandates like renewable portfolio standards and grid-integration requirements. These policies have reshaped investment patterns, directing capital towards wind, solar and emerging technologies such as offshore arrays and battery storage. Economically, the rapid scale-up of renewables has delivered falling levelised costs of electricity, stimulated manufacturing and construction employment, and diversified industrial supply chains. Simultaneously, system operators are adapting market rules to manage variable output and ensure reliability through capacity markets, ancillary services and demand response. While policy support has mitigated early-stage risks and attracted private finance, it has also raised questions about subsidy design, cost-allocation to consumers and potential stranded assets in incumbent fossil-fuel infrastructure. The interplay of international and national policy frameworks highlights the importance of coherent, long-term signals to balance investment certainty with evolving technology costs. Lessons from diverse jurisdictions underscore the need to align fiscal incentives with grid flexibility and social equity objectives, ensuring an inclusive and economically resilient energy transition.
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Renewable Energy Policy and Economic Impacts in Power Generation publication trend
The graph below shows the total number of articles in renewable energy policy and economic impacts in power generation across all publications each year (not limited to Nature Index journals).
Technical terms
Feed-in tariff: A guaranteed payment mechanism that sets fixed rates for renewable producers for each unit of electricity delivered to the grid.
Levelised cost of electricity (LCOE): The per-unit cost of building and operating a power plant over its lifetime, accounting for capital, fuel, operations and maintenance.
Renewable portfolio standard (RPS): A regulatory requirement that obliges power suppliers to source a specified share of output from renewable energy.
Capacity market: A mechanism to remunerate generators for maintaining available power capacity to ensure system reliability during peak demand.
Ancillary services: Support functions—such as frequency regulation and voltage control—required to maintain grid stability as renewable penetration increases.
References
- Linkages between the Promotion of Renewable Energy Policies and Low-Carbon Transition Trends in South America’s Electricity Sector. Energies (2022).
- Framework for Investment in Electricity Distribution to Enable Energy Transition. Energies (2025).
- Analysis of Chinese investment in renewable energy generation in Brazil. Frontiers in Energy Research (2024).
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