  This paper presents a novel analysis of two feed-in tariffs (FIT) under
market and regulatory uncertainty, namely a sliding premium with cap and floor
and a minimum price guarantee. Regulatory uncertainty is modeled with a Poisson
process, whereby a jump event may reduce the tariff before the signature of the
contract. Using a semi-analytical real options framework, we derive the project
value, the optimal investment threshold, and the value of the investment
opportunity for these schemes. Taking into consideration the optimal investment
threshold, we also compare the two aforementioned FITs with the fixed-price FIT
and the fixed-premium FIT, which are policy schemes that have been extensively
studied in the literature. Our results show that increasing the likelihood of a
jump event lowers the investment threshold for all the schemes; moreover, the
investment threshold also decreases when the tariff reduction increases. We
also compare the four schemes in terms of the corresponding optimal investment
thresholds. For example, we find that the investment threshold of the sliding
premium is lower than the minimum price guarantee. This result suggests that
the first regime is a better policy than the latter because it accelerates the
investment while avoiding excessive earnings to producers.
