Promotion Instrument for Electricity from Renewables

The Promotion Instrument for Electricity from Renewables (PIER) provides both a capital subsidy and a guaranteed tariff for renewable electricity fed into the grid and RD&D measures as incentives for renewable electricity generation. Projects are selected through a public competitive tender procedure where subsidies are awarded based on lowest capital cost for each technology type. The capital subsidies are capped at 7% rate of return for fifteen years. In addition, electricity from these systems benefits from a guaranteed market at a guaranteed buy-back rate for fifteen years. Capital investment subsidies for biomass, for example, were disbursed through the District Heating Promotion Act (ended in 1996). Biomass subsidies totalled ATS 192.4 million (in 1997, 1 US$ = 12.2 ATS) in 1996 and ATS 142.8 million in 1995. These funds were disbursed via two programmes including incentives for biofuel production and the District Heating Promotion Act. Capital subsidies of 8% are available for the construction, restoration or enlargement of small (0.5-10 MW) hydro systems, and subsidies of up to 25% are available for micro hydro (< 0.5 MW) systems that are both remote and environmentally friendly. In addition to federal promotional measures, provincial authorities may also provide subsidies or favourable loans for biomass heating plants.