Policies for the development of RES in the European Union - The Sustainability of Renewable Energy in Europe - page 65

The main factors that influence the learning curve can be grouped into four cat-
egories:

• Positive changes in technology lead to an increase in the learning rate
• Changes in the market such as the entry of new competitors may lead to a varia-
tion of the learning rate
• Government policies that stimulate research and development (R&D)
• Furthermore, the learning rates are a set of learning rates of the parts that make
up the system. For example, the solar panels are made of modules and other
components, each characterized by a learning rate

Generally, learning curves follow the mathematical function through which the
measurement of productivity is linked to a parameter related to the measure of pro-
ductivity itself, the cumulative volume of production, and the learning index. The
learning index represents what percentage varies productivity at each percentage
variation of the volume of production, that is what is the relationship between the
productivity by passing a cumulative volume of production to a multiple.

3.2 Economic Incentives to RES

In order to promote the use of RES, all EU countries have introduced incentives to
stimulate the market. However, every reality has its own rigidity and its structure,
for which the incentives must be able to adapt and be efficient in often very differ-
ent contexts. The governments of the EU countries use a variety of instruments to
promote the adoption of RES.
There are two basic types of environmental regulation: command and control
and economic incentives. These instruments are definitely different in the way they
work, but they face the same objective that is stimulating, both in direct and indirect
ways, the development of RES so that they will be able to compete with fossil fuel
technologies (Held et al. 2006 ).
Command and control regulation involves an authority collecting the informa-
tion necessary to decide the action to control and limit pollution; then, polluting
firms have to accomplish the steps specified by the authority to reduce polluting
emissions and they could resort to the use of RES. Even if the command and control
mechanisms give certainty about the level of pollution emitted by firms, it is much
costlier than other alternatives such as economic incentives.
Economic incentives give more choice to firms by providing an incentive for
the firms to find the best way to reduce pollution, that is, the use of RES and en-
ergy efficiency. There are also voluntary approaches: these kinds of strategies are
based on consumers' willingness to pay premium rates for RES, such as projects
and programs of donation equity. Among economic incentives to improve RES, the
important classification criteria are whether policy instruments are price oriented
or quantity oriented. With strategies based on price, financial support is given to
investment subsidies, soft loans, or tax credits. The financial support is generally