The Evolution of Renewable Energy Price Policies Based on Improved Bass Model: A System Dynamics (SD) Analysis

Many countries in the world have implemented many price support policies to promote the development of renewable energy, and there are evolutionary processes between different policies at different stages of national development. Existing literature has less research on the internal mechanism and alternative process of renewable energy price policies’ evolution process. In view of this, this paper innovatively introduces the classic model of innovation diffusion theory, the Bass model, into the renewable energy price mechanism, and improves it on the basis of the traditional Bass model, and then proposes a system dynamics (SD) simulation based on the improved Bass model to study the evolution process of the renewable energy price policies. This paper mainly studies the evolution process of the policies from feed-in tariff (FIT) to renewable portfolio standard (RPS), and takes China’s wind power industry as an example to simulate the model. The results show that FIT can effectively and quickly evolve to RPS based on the internal influence of the interaction among power generation enterprises and the external influence of government behaviors. All the power generation enterprises will implement RPS, and the amount of green power enterprises eventually grows steadily and slowly. In addition, increasing the decline rate of FIT subsidy and RPS unit fine can effectively promote the evolution of RPS policy, and also improve the amount of green power enterprises and the activity of the tradable green certificates (TGC) trading market.