The U.K. and California are good examples of the two general approaches to support renewables in a competitive industry structure that includes retail access. These approaches, raising money and raising demand, are not mutually exclusive. Once collected, several alternatives have been presented to distribute and spend monies in a manner that promotes acquisition and development of a diverse set of renewable resources. In the case of the U.K., these collected monies are allocated to generators via a competitive bidding process. Other ways to distribute funds are through standard contracts and production credits.
Standard contracts specify the general terms and conditions under which power is to be purchased.
They can be effective in reducing the time and transaction costs spent in the competitive bidding process. Standard contracts can accommodate unique characteristics and costs of renewable projects by including provisions that pay a price premium for different renewable technologies. Denmark, for instance, sets a standard price for a number of selected renewable technologies. Developers know at any point in time the price they will be paid for electricity from a given renewable resource. California's portfolio standard is the best example.