Over the last decade, feed-in tariffs offering a stable and favourable price for electricity generated from renewable sources over that generated from fossil-fuels have been employed in support of renewable energy sectors in several European countries. Feed-in tariffs were initially criticised by more market-oriented countries which favoured more complex renewable obligations and tradable certification schemes. Nonetheless, they have become widely recognised for their effectiveness in creation of renewables markets, and have also been taken up by several low and middle-income countries, including Sri Lanka, which introduced such a measure in its energy policy of 2006. More recently, feed-in tariffs have been grouped under the wider heading of Advance Market Commitments (AMCs). Following pilot application in vaccine markets, AMCs have been proposed for wider application in support of low carbon energy markets in developing countries. Analysis of the performance of AMCs in Sri Lanka to date implies that while AMCs may play a role in incentivising market development, they are not sufficient on their own. Additional measures are required in order to overcome other market barriers and enable a sector-wide response if AMCs are to be an effective stimulus.
PISCES Policy Brief No. 5, October 2010. 4 pp.