We derive optimal subsidization of renewable energies in electricity markets. The analysis takes into account that capacity investment must be chosen under uncertainty about demand conditions and capacity availability, and that capacity as well as electricity generation may be sources of...

Many countries have a clear policy objective of increasing their share of renewable energy sources (RESs). However, a major impediment to higher RES penetration often lies in the historically grown structures of a country's electricity sector. In Indonesia, policymakers have relied on cheap...