Governments offering financial incentives to renewable energy generation technologies must do more work to make this support more cost effective, the International Energy Agency said Wednesday.
Feed-in tariffs, a direct subsidy paid to renewable electricity generators based on the amount of energy produced, have proved to be the most effective mechanism to support wind and solar power between 2001 and 2009, the IEA said in a report on the state of the industry.
However, the amount of power generation capacity eligible for these tariffs must be carefully controlled, to avoid the cost of subsidies rising excessively, the IEA warned. This has occurred with subsidies for solar photo-voltaic panels in the Czech Republic, said Didier Houssin, the IEA's Director of Energy Markets and Security.