In this project various concepts of promoting renewable energy were drawn up against the background of newly liberalising energy markets. Basically, voluntary firm-level activities was contrasted with mandatory regulations on the federal level. The ZEW was to concentrate on a regulatory assessment of any mandatory policy instruments. In particular, the variety of instruments (i.e. quota, tender, and supply models) was checked against the requirements of Germany´s political economy model as well as to their conpatibility in terms of the existing renewable energies regulation.

Indeed, the generation of electricity from renewable energy sources is tied into several aspects of political leadership. The comparative regulatory assessment of the available instruments resulted in the conclusion that specifically tendering models hardly appear to be able to perform the concurrent resolution of environmental, technological, and regulatory interests in a market conform way. From the regulatory point of view pay-as-you-go financed supply models and quota schemes along with certificate trading seem instead to more beneficial. With respect to supply models the status quo of the discussion in Germany may require revision of tenable markeing responsibilities over immediate purchase quantity guarantees. At least market conformity of renewables regulation makes this claim. With respect to market conformity the quota models clearly outperform the other regulatory variants. In particular, German policy is well advised to shift from current supply to quota models if the European Commission proves capable of following through with proposed internationalisation of national renewables markets. Taking to this scenario of a newly introduced quota model in Germany some detailed analysis of quota variants demonstrates that, economically, producer´s liability is to be preferred over that of consumers. Moreover, as long as a clear-cut accounting scheme with respect to the environmental gains from CO2 reductions is lacking on the international level, the national quota validation framework should accept foreign certificates only under warranted electricity supply. At the onset of quota regulation only those providers exceeding a certain minimum capacity (e.g. 5 MW) should be held to marketing their product on their own behalf. Those providers operating within the minimum will be granted a purchase quantity guarantee at a minimum price mirroring avoided cost, as already has been agreed upon. Later on, such entitlements can be reduced and finally withdrawn as the establishment of market mechanisms in the quota trading system takes place.