do shifts in renewable energy operation policy affect efficiency: korea’s shift from fit to rps and its results

Abstract

South Korea’s new and renewable energy (NRE) policy experienced a drastic shift from the Feed-in Tariff (FIT) to the Renewable Portfolio Standard (RPS) in 2012. This study looks at the changes in the efficiency of NRE policy in this transition through DEA (Data Envelopment Analysis) and MI (Malmquist Index) methods, using investment for NRE technology development and for NRE dissemination as input factors and the number of firms, the number of employees, and the volume of NRE power generation as output factors. The results show a temporary drop in efficiency in 2012 during the transition period for the NRE industry as a whole. However, apart from those energy types with ulterior factors, the implementation of RPS increased the technical change (TC) of most NRE types. Furthermore, the findings highlight that, among South Korea’s three focal NRE industries—photovoltaic, wind power, and fuel cell energies—only fuel cell energies showed an increase in efficiency over time. South Korea’s policy shifts from FIT to RPS and the resulting effects on NRE policy’s efficiency provide a useful reference and guideline for government decision-making on NRE policy changes.