Microeconomic Analysis for the Formation of Renewable Energy Support Policy: the Case of wind Power Sector in Lithuania

Economic research of renewable energy sources (RES) intensified in recent years through implementation of the European Union Directives and the following Regulations. Incentives for wider use of RES are declared both in the European Union and in Lithuanian laws. However, it may be stated that there is lack of research, which would give answers to questions on economic assumptions that would link energy policy to economic results and would justify benefits of the use of RES technologies on a national scale. Thus, this paper aims at presenting methodological principles of wind power technologies assessment based on economic indicators. The impact of wind power technologies implementation on the economy was estimated based on microeconomic analysis method. Levelised cost of energy approach was used to compute wind power prime cost. Economic indicators were computed. The research results disclosed that investment subsidy and feed-in tariffs are attractive support measures for the investor. They could be used to promote wind power sector development in Lithuania in the future. Energy policy decision making should be based on the economic assessment principles. Wind power support schemes and support levels should be reconsidered taking into account the net benefits of wind power technologies. Wind power technologies are beneficial to economy due to their impact on profit, income-based taxes, electricity import substitution and CO2 savings.