An Analysis of The Optimal Design Of Feed-In Tariff Policy For Photovoltaic Investments in Turkey
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The system that generates electricity by directly utilizing solar energy is called photovoltaic (PV) system. In recent years, many countries started to generate electricity by utilizing renewable energy sources to increase their energy supply and to slow down global warming. Considering the current external dependence of Turkey for energy, it is thought that generating electricity from renewable energy sources, especially solar energy, could bring positive results in various aspects. These aspects consist of the reduction of carbon emissions, the provision of energy security, and the creation of new jobs that are safer. Many incentive mechanisms are being implemented around the world to enhance investments in renewable energy sources. The most common one is feed-in tariff (FIT) mechanism. FIT is the long-term agreement between governments and firms investing in solar energy, where governments guarantee to purchase the energy produced by firms. This thesis aims to reveal the optimal FIT design for PV investments in Turkey. Therefore, a questionnaire was designed on the basis of choice experiment (CE) to find out preferences and marginal willingness to pay (MWTP) of investors. The questionnaire was conducted on people working in solar energy firms. After data collection, the MWTP was calculated by using the coefficient obtained from mixed logit model. According to econometric estimations, while FIT design with longer contract duration creates positive MWTP for PV investments, low payment amount per kWh, tax policy for imported PV panels and license fee decrease the attractiveness of PV investments. Key Words: Solar Energy, Photovoltaic Systems, Feed-in Tariff, Choice Experiment, Mixed Logit Model, Willingness to Pay.