Legal Frameworks for Renewable

Policy Analysis for 15 Developing and Emerging Countries

Published by: Preface ii 3 Country Profiles: Spreadsheet Data, Summaries, Analysis 27 Abstract iii 3.1 Spreadsheet Analysis 28 3.1.1 Spreadsheet Data 30 Introduction 08 3.2 Textual Analysis 44 1 How to use the data structure for analysis 11 3.2.1 Brazil 44 1.1 Understanding the methodological approach 12 3.2.2 Chile 50 1.2 The Policy Design Cycle 12 3.2.3 53 1.3 Giving Policy Advice Based on the Methodology 15 3.2.4 57 3.2.5 Ethiopia 63 2 Theoretical Overview: Existing RE Support Instruments 17 3.2.6 66 2.1 Feed-in Tariffs 18 3.2.7 India 71 2.2 Renewable Portfolio Standards or Quotas 19 3.2.8 Indonesia 78 2.3 Tradable Certificates 19 3.2.9 Kenya 83 2.4 Net Metering 20 3.2.10 Mongolia 88 2.5 Public Investment, Loan or Financing 20 3.2.11 Morocco 91 2.6 Public Competitive Bidding 21 3.2.12 96 2.7 Capital Subsidies, Grants, Rebates 21 3.2.13 South 101 2.8 Investment or Other Credits 21 3.2.14 Thailand 105 2.9 Sales, Energy or Tax or VAT Reduction 22 3.2.15 108 2.10 Energy Production Payments or Tax Credits 22 4 Conclusions 115 2.11 The Role of Barriers on RE Support Instruments 25 Appendix 119 Glossary 120 References 122 Abstract

Preface Abstract

Renewable (RE) hold the key to a through technical cooperation we can only Need for Good Practice in RE support schemes in different national contexts, allowing climate friendly energy future and an energy give advice according to the requirements of policy makers to derive concrete action out of a supply that is sustainable and secure in the long our partners. Decisions on tariffs, complex set of influencing factors. term. Since the Bonn Renewable Energy Confe- for example, are often very political and for- Due to the growing importance of renewable rence in 2004, numerous developed and develo- eign advice can only exert a certain amount of energy on global scale, a need for effective sup- The methodology is valid for any policy type. ping countries have increasingly set targets for influence. Nevertheless, we must endeavour to port policies arises in many countries. Often, The Policy Design Cycle defines five levels of the utilisation of renewable energies in meeting continually improve our advisory services, and policy instruments showing good results are general design criteria to be considered for their power supply needs. In order to reach this report should contribute to this process. highlighted as ‘good practice’, and thus recom- consistent and thus effective renewable energy their targets, many countries have designed and mended for adoption in other countries. How- sources support policies: implemented a variety of policies, strategies and The study is part of the work of the GIZ pro- ever, such a transfer of ‘good practice policies’ instruments. Our initial assessment was that ject on ‘Technology cooperation in the energy often stays behind expectations or leads to 1. definition of renewable energy sources only a few countries had implemented these sector’ commissioned by BMZ. In addition to failure. Therefore, independent from the type targets; comprehensively enough to reach their self-set the report, we have also produced a spreadsheet of instrument, it is most important for policy 2. definition of a strategy for reaching the targets. providing comprehensive information on the makers to understand: targets; countries analysed. This is available separately. 3. definition of concrete measures for imple- • Why do policies work (or do not)? To verify our assessment, we compiled a com- menting the strategy; prehensive overview of the progress made in We would like to thank Ecofys GmbH • Which factors of influence are relevant for 4. enforcement and monitoring; establishing legal frameworks for renewable for all their hard work on the study, as well as success or failure? 5. evaluation of compliance. energies in 15 partner countries of German our colleagues in the various partner countries • How can these factors be isolated and their development cooperation. This overview is for their invaluable input. effect be understood in detail? presented here. In some of the countries, GIZ The Policy Design Cycle is not assessing policies is – on behalf of the Federal Ministry for Eco- For improving RE policy design on an inter- in a sense of a ranking between good and less nomic Cooperation and Development (BMZ) Holger Liptow Stephan Remler national level, an indicator based approach is good practice, but it helps to determine and – advising partners on creating an enabling required, analysing the functioning principles evaluate their general functioning principles, Technology Cooperation in the Energy Sector environment for renewable energies. Of course, behind policies immaterial of their respective which, if complying with the criteria given, fa- Department of , Energy and Transport Deutsche Gesellschaft für Internationale Zu- type (i.e. feed-in tariff, quota etc.), allowing to cilitate good results under any policy approach sammenarbeit (GIZ) GmbH answer these questions individually for each and country context. policy context and set priorities in policy advice accordingly. Theory and Practice

Methodology To further illustrate current approaches and re- lated difficulties in RE policy making, the study The theoretical fundament for this analysis gives a brief overview on the ten most common is a simplified concept of the “Policy Design types of policy instruments, highlighting diffe- Cycle”1, originating from the scientific approach rences in theory and practice and the general of “Theory Based Policy Analysis”2 . The Policy role of barriers. Design Cycle defines pragmatic categories for consistency and effectiveness of RE support

1 a scientific approach developed under the project AID-EE. 2 developed by Blumstein et al. (1998). ii iii Abstract

Analysis of RE policies in 15 countries prioritizing as such) or the origin massive) implementation problems and, where Stakeholder commitment across several policy of deadlocks for RE (e.g. unresolved ambitious targets are in place, they will not lead areas is required to establish a modus operandi According to the Policy Design Cycle, country conflicts between RE tariffs and possible price to their compliance. on how to deal with structural changes due to analysis is based on an indicator-based, compa- effects in various countries). RE deployment. Although often evident, these rison-focused approach, assembling all availab- As a consequence, international policy support gaps are not sufficiently in the focus of further le data in standardised form. Key questions (maturity of the policy frame- activities, currently often focusing on design political action. Therefore, international action Core part of the study is a complex, spreadsheet work, degree of successful implementation, and implementation of concrete instruments, should develop a broader focus to address such based data structure. The country specific text successful financing, condition of the electricity might be more effective where analyzing in the strategy gaps. chapters must be read as accompanying frame- network, as well as potential barriers) allow first place and at broader level if the instrument work, on the one hand explaining the methodo- isolate information serving as indicators for chosen for a country fits to its target/level of Financing of policy approaches is a general logical approach, on the other hand summari- market development. An overview matrix with ambition and other influencing factors. problem throughout many countries. Even if zing key information of the current situation in filter options, both on a country and indicator a government’s commitment to RE goes far the respective countries. level, provides a synthesis of all information, Commonly, failure of instruments does not enough to accept certain related price increa- which allows a detailed comparison of most only result from insufficient design of a single ses, the overall amount of cost due to paradigm Based on the data structure, the current sta- relevant aspects. Nevertheless, the user has to be policy instrument, but goes in fact beyond: ma- shifts in the energy system (e.g. grid infrastruc- tus of renewable energy support in fifteen aware that despite the standardized approach jor gaps concerning a consistent political strate- ture investments) may exceed available funding. countries (Brazil, Chile, China, Egypt, Ethiopia, most data must be read in a qualitative sense, gy to reach the respective target can be detected Further advice should be provided especially Ghana, India, Indonesia, Kenya, Mongolia, Mo- i.e. not being comparable 1:1, and thus requi- in most of the countries examined. This applies on the option of financing RE support policies rocco, Philippines, South Africa, Thailand, and ring additional interpretation according to the especially if interference with other policy areas through the mechanism of NAMAs (National Tunisia) is examined. In addition, for ten of the context of their use. occurs, e. g. cost for RE conflicting with social Appropriate Mitigation Actions). fifteen countries (Brazil, Egypt, Ghana, India, welfare policies focusing on low energy prices. Indonesia, Kenya, Morocco, Philippines, South Main conclusions Africa, and Tunisia) the study performs policy analyses and identifies potential future fields of The main result of the study consists of a action to help improve local renewable energy structured mapping of individual strengths and support. weaknesses of RE policies against the respec- tive background of a country, i.e. their success Purpose of the data structure and the accom- in comparison to each country’s individual panying text is to provide an insight into each ambition. This is supportive to strategic con- country’s individual stage of RE policy making, siderations on setting focus in international structured along a homogeneous set of criteria. collaboration and on how to prioritize further The aim of the study is neither an assessment of potential activities. A main conclusion derived good or bad policy approaches nor a ranking of from country data gathered in this context, market attractiveness. The overarching purpo- and compared to the Policy Design Cycle, is se is to create a more systematic approach for that in none of the country examples all levels understanding stages of RE policies in hetero- have been addressed. With respect to the single geneous contexts, to be applied and adequately levels, the study shows that RE target setting is interpreted by competent users. part of policies of nearly all countries exami- ned, but considerably varying in the degree of In addition, the country data provide a rich ambition. stock of information for mutual learning on RE policies, both on successful individual approa- Most countries have established some type of ches designed according to country specific RE support instrument. Options chosen vary situations (e.g. the auctioning of RE capacity in considerably, most common are public ten- Brazil) and on differing motivations of coun- dering, tax rebates, and feed in tariffs. Most tries where to set their focus on RE (e.g. Ethiopia of these instruments are facing (sometimes

iv v Introduction

analyses and identifies potential future fields that include summaries of the findings of these Introduction of action to help improve the local renewable countries. For ten countries, separate subchap- energy support. These recommendations are ters disclose policy analyses and recommen- tailored to the work of the Deutsche Gesell- dations that identify gaps and conclusions schaft für Internationale Zusammenarbeit on future requirements for renewable energy Due to the growing importance of renewable Purpose of the data structure and the accom- GmbH (GIZ) in these areas. development in the respective countries. The energy on global scale, a need for effective sup- panying text is to provide an insight into each conclusions also point at possible future areas port policies arises in many countries. Experts country’s individual stage of RE policy making, The first chapter gives the reader an understan- of GIZ engagement in the promotion of sound often take so-called “good practice examples”, structured along a homogeneous set of criteria. ding of how to use the data structure for poli- policy frameworks. which promise high effectiveness and effici- To prevent misinterpretations, it must be high- cy analysis. It includes the explanation of the ency, as the basis to design similar polices for lighted at this point that the aim of the study methodological approach of the study, the Policy The fourth chapter summarizes the findings of other countries, hoping that they would work is neither an assessment of good or bad policy Design Cycle, and explores the opportunities this the study and draws conclusions on the scope as successfully in the target country as in the approaches nor a ranking of market attractiven- theoretical model offers to provide policy advice. of potential further international activities as country of origin. Yet, the practical transfer of ess. The overarching purpose is to create a more provided by GIZ. these policies is often very problematic and, in systematic approach for understanding stages In the second chapter, the study provides an many cases, even leads to complete failure. This of RE policies in heterogeneous contexts, to be introductory overview of the most common Gaps in data availability are visualized in the is because each country has a unique political, applied and adequately interpreted by compe- and successful policies for renewable energy data structure. In contradiction to a merely text economic, and social setting that heavily influ- tent users. support, including descriptions of prominent based study, they can be used in a constructive ences the functionality and impact of policies. instruments such as feed in tariffs (FiTs), re- way (such as by pointing at future needs for There are different administrative structures, Key questions (maturity of the policy frame- newable portfolio standards/quotas (RPS), or information gathering) and additional informa- varying stakeholder interests, different market work, degree of successful implementation, schemes of public competitive bidding. This tion can be filled in any time without changing conditions, or simply contrary political goals successful financing, condition of the electricity section functions as an insight for readers into the overall structure. that affect the success or failure of a policy. In network, as well as potential barriers) allow the the availability of existing policies and discloses addition, many papers that have been prepared isolation of information that can serve as indi- their theoretical functionality. A synoptical tab- in recent years lacked the possibility to effec- cators for market development. Moreover, an le then presents advantages and disadvantages tively compare parameters that are essential overview matrix with filter options, both on a of the presented policy options. An additional for successful renewable energy support be- country and indicator level, provides a synthesis subchapter portrays barriers on RE support cause their text-based nature limited authors in of all information, which allows a detailed com- instruments that policymakers usually need to addressing all relevant aspects. parison of most relevant aspects. Nevertheless, address in the design of renewable energy poli- the user has to be aware that despite the stan- cies. Such challenges – the subsidizing of fossil This study does not try to take best practice dardized approach most data are still not com- fuels, technical problems, or a monopolized examples as the basic principle for its argu- parable 1:1, i.e. the result is qualitative analysis electricity market, for instance – occur in many mentation. Rather, it builds up on an indi- requiring additional interpretation according to emerging renewable energy markets. cator-based, comparison-focused approach, the context of their use. assembling all available data in standardised The third chapter focuses on the presentation form. Core part of the study is a complex, Based on the information collected in the of the information and conclusions found in spreadsheet based data structure.3 Therefore, spread-sheet, the following text describes the the research on the selected countries. Split into the following text should be understood just as current of renewable energy support two major subchapters, the first part presents an accompanying framework, on the one hand in fifteen developing and newly industria- the information composed in the spreadsheet, explaining the methodological approach, and lized countries, which are Brazil, Chile, China, providing a comprehensive table with the on the other hand summarizing key informa- Egypt, Ethiopia, Ghana, India, Indonesia, Kenya, entire collected data. The spreadsheet itself tion of the current situation in the respective Mongolia, Morocco, Philippines, South Africa, with its functionality for sorting, filtering, and countries. Thailand, and Tunisia. In addition, for ten of the comparing data can be found in the annex to fifteen countries (Brazil, Egypt, Ghana, India, this document. In the second part, the raw data 3 The spreadsheet based data structure can be downloaded Indonesia, Kenya, Morocco, Philippines, South of the spreadsheet is converted into a textual on the GIZ homepage via this link: Africa, and Tunisia) the study performs policy format, providing 15 separate country chapters http://www.giz.de/Themen/de/4552.htm

08 09 1 How to use the data structure for policy analysis How to use the data structure for policy analysis

1.1 Understanding the methodolo- 1.2 The Policy Design Cycle In addition, as an important precondition a 3 Definition of concrete measures for imple- gical approach sound barrier analysis needs to be performed menting the strategy: The theoretical fundament for this analysis before starting the process. As long as policy- Taking into account the analysis of existing The main difficulty for all stakeholders involved work is a simplified concept of the “Policy makers do not remove these barriers or address barriers (precondition) and having dealt in policy design is to understand: Design Cycle”, a scientific approach developed them properly, all following steps will be with them under a strategy (level 2), suitable under the European Union (EU) project AID-EE. negatively affected. Assessment of the respec- policy instruments for reaching the targets a) Why do policies work (or do not)? The Policy Design Cycle itself has its origin in tive policy approach will attest a low degree of (level 1), need to be developed. The instru- b) What are the main influencing factors? the concept of “Theory Based Policy Analysis”, maturity. ments should be complementary to each c) How can these be isolated and their developed by Blumstein et al. (1998). The Policy other and form a consistent package. Appro- relevance be understood? Design Cycle defines pragmatic categories for When policy makers design policies according priate administrative structures for imple- consistency and effectiveness of RE support to the Policy Design Cycle, they need to take mentation need to be developed. Staff needs These questions have to be answered individu- schemes in different national contexts. into account the follow criteria: to be well instructed and supportive to the ally for each policy to determine which action instrument. All other relevant stakeholders makes sense and how priorities are to be set. The Policy Design Cycle is not assessing policies 1 Definition of renewable energy sources need to be involved in a discussion process As this analysis of many different aspects may in a sense of a ranking between good and less targets: of the planned policy, even those who might become rather complex, the application of the good practice, but it identifies the general func- Targets are a key element for determining be opposed. Their remarks should be taken Policy Design Cycle (details see below) facilitates tioning principles, which, if addressed comple- the expectations to any policy instrument. into account. the structuring of this process. The methodolo- tely, will lead to good results under any policy A target reflects an explicit vision of policy gy is valid for any policy and country contexts. approach. makers to develop RE. A strong target 4 Enforcement and monitoring: Each policy can be analysed along five steps of should therefore be ambitious, but at the A legal and institutional for compliance. If all five steps are considered to Therefore, the Policy Design Cycle defines five same time realistic. To generate an impact, a enforcement and ensuring compliance full degree, any policy - regardless of type or levels of general design criteria to be conside- target has to be specific, measurable, and needs to be established. A robust structure scope – is consistent in itself and therefore able red for consistent and thus effective renewable time-bound (e. g. double the share of rene- for monitoring (independent institution to lead to effective results. energy sources support policies: wable energy in electricity production from with access to all relevant data, following a 12 % to 25 % by 2020 compared to 1990). It transparent process subject to public repor- In most countries and regarding most existing 1 definition of renewable energy sources should be as concrete as possible when ting) has to be established already in the set- policies (sometimes even successful ones) the targets; defining the expected impact (e. g. generati- up phase of the instruments. steps of the Policy Design Cycle are not fully 2 definition of a strategy for reaching the on targets are more explicit regarding mea- covered. Applying the methodology allows to target; surable effects than capacity targets). 5 Evaluation of compliance: identify gaps and to better understand incon- 3 definition of concrete measures for imple- In addition to monitoring, a regular (e. g. sistencies. Subsequent to this analysis, specific menting the strategy; 2 Definition of a strategy for reaching the every 3-4 years) evaluation of the results answers can be elaborated on steps a country 4 enforcement and monitoring; target: achieved has to be performed. The assess- should take towards an improved, consistent RE A well designed strategy has to provide pre- ment process must be transparent, indepen- 5 evaluation of compliance. support system. cise answers on how to achieve the targets. dent and fair. It should be executed by an Both the technical and economic potentials independent institution not tied to any of of RE and appropriate technologies for the stakeholders involved (i. e. not from Definition of Renewable Energy Sources Targets using them in the most efficient way need administration, etc.). The results of to be identified, same as stakeholders to be the evaluation should be used in a defined Definition of a Strategy for Reaching the Target involved. Necessary tasks and and prompt amendment process of the policy. must be defined, taking into consideration Definition of Concrete Measures for Implementing the Strategy deficiencies of current work programs and institutional structures. It is important to Enforcement and Monitoring consider possible antagonistic interests in Policy Design Cycle Policy other policy areas (e. g. budget effects) and Evaluation of Compliance define a modus operandi to prevent dead-

Figure 1: Structure of the Policy Design Cycle locks.

12 13 How to use the data structure for policy analysis

1.3 Giving Policy Advice Based on the In the above example, it becomes obvious that Example: Germany’s RE Feed-In (EEG) Methodology not only the instrument (i.e. step 3) is designed in an inappropriate way, but rather the strategy The German Renewable Energy Act (EEG) is one of very few policies in which all steps of the Applying the Policy Design Cycle on a (step 2) has significant weaknesses. Providing Policy Design Cycle have been applied consequently. This is one of the reasons why it ranges country’s RE policy might show the following financial support to RE on the one hand but among the most successful RE support policies worldwide, independent from the type of in- typical situation: fearing price increases on the other hand is strument, the law contains both, the support scheme as such and strategic legislation. Germany likely to lead to a deadlock. Therefore, under a passed the act in 2000 and revised it regularly in subsequent years to respond to changes in the 1 Step 1: The country has set itself an thorough strategy, e.g. a corridor for price deve- market and to RE technology improvements. Applying the Policy Design Cycle, the law shows ambitious RE target, acknowledging in lopment could be defined, accompanied by cal- the following features: general the positive effects RE may have culating expected positive welfare effects of RE, on its . to raise acceptance. The introduction of proper Step 1: Germany has set medium-term as well as long-term RE targets, which all focus on the 2 Step 2: The country has issued a policy monitoring procedures (step 4) can additionally relative share of RE in electricity . By 2020, Germany aims to consume at least 35 % paper, called energy strategy, drafting the facilitate this. Similarly, default administrative of its electricity from RE sources. By 2050, this share should rise to 80 %. transition towards higher RE shares. procedures should be defined under a strategy. Step 2: The EEG, contains relevant strategic elements on how to meet targets with the instru- 3 Step 3: The country has a policy instrument ment of a feed in tariff. On potentially conflictive issues, default procedures are defined, e.g. a in place but experience has shown that Transferring this into reality is definitely far maximum duration of administrative procedures, a standardized methodology for assessment deployment figures are far below the more complex than these examples. Giving ad- of ecological impact, a partition mode of potential RE sites among municipalities, a cost sharing amount required for target achievement. vice must therefore always follow the individual mechanism among involved parties, etc. 4 Step 4: No official monitoring process is reflections of experts dealing with a given set of in place. information. The gap analysis will not deliver a Step 3: The feed-in tariff, i.e. the support instrument as such, legally guarantees a minimum 5 Step 5: No independent evaluation process blueprint for defining required action (and must tariff specific to each RE technology. Any power producer will receive it over a 15/20-year period is established, but government analysis not be misunderstood in this way), but it will and has a legally guaranteed grid access under a standardized procedure. RE has priority to shows that investment security is too low help qualified users to better structure and un- conventional sources, i.e. all RE electricity generated is actually fed in. To finance the instrument, due to missing legal status of the instru- derstand this multitude of influencing factors, consumers pay a surcharge on the electricity price. For cost control and stimulation of competi- ment, the amount of financial support is tiveness, a degression of tariffs for newly installed appliances takes place each year. and define appropriate next steps and priorities too low due to expected negative price of action. effects, and administrative procedures are Step 4: The law comprises continuous monitoring processes, such as an independent examinati- unclear and lengthy. on of price effects. The working group on RE-statistics AGEE-Stat, an independent expert body commissioned by the Federal Ministries of Economy and of the Environment, records data and delivers statistics for renewable energy. Giving advice on improving such situation should not limit itself to mending the perceived Step 5: The law prescribes an independent evaluation of its effects: target achievement, tech- deficiencies of the support instrument. Rather, nology developments, tapping of potentials etc. have to be examined every 3-4 years, leading to a thorough gap analysis of all steps of the Policy regular official revisions of the law (and a.o. to tariff adjustments if required). Design Cycle should be performed first. For this As a result, the main success factor of the EEG is not merely the amount of tariffs paid. Of even purpose, all available information on the RE importance, the law is consistent due to complementarity of its modules. It works effectively, tackling even controversial issues by a default modus operandi, and thus providing a high degree support system and accompanying general in- of investment security. formation on the must be gathe- red and then be allocated to one of the steps of the Policy Design Cycle. As the availability and quality of information may vary considerably per country, information gaps as such must also be taken into account as weaknesses regarding coverage of the steps of the design cycle.

14 15 2 Theoretical Overview: Existing RE Support Instruments Theoretical Overview: Existing RE Support Instruments

With respect to step 3 of the Policy Design Cyc- Typical advantages of well-designed feed-in significant impact on RE deployment. The most period in order to guarantee future demand le, the choice of an appropriate support instru- tariffs are: evident deficiency of such feed-in regimes is for renewable energy. Penalties need to be ment, a couple of common approaches are to be the amount of tariffs, considered insufficient significantly above green certificate prices and distinguished. It must be remarked that these • high effectiveness; by investors. In fact, other aspects influencing enforcement should be guaranteed. In an oligo- approaches differ considerably in theory and • investment security/bankability due to gua- investment security (e.g. missing legal status or polistic market, the penalty can lose its effec- practice. Furthermore in practice not only one, ranteed return on investment and long term limited grid access) are often neglected. tiveness if obliged parties manage to negotiate but a mix of instruments might be implemented. perspectives; for certificate purchase that foresee Depending on the local initial situation, the costs • high stimulation of dynamic (domestic) One of the most prominent examples of a well the recycling to be paid to them. As a result, a of fossil fuels and renewable energy technologies markets for renewable energy equipment working feed-in tariff is the German EEG – see large share of the penalty paid by the obliged and the respective strategy, a country may im- and encouragement of technical innovation, section 2.2. Of the countries examined in this party is returned to its budget. plement one instrument with the aim to substi- job creation and increased efficiency/cost study, China, parts of India, Indonesia, Kenya, tute it by another after a predefined period. reduction potentials. Mongolia, and Thailand have a feed-in tariff in In order to have markets functioning well, mar- place, but only in Mongolia and Thailand at the ket design, size and competition are key parame- Here, an overview on the theoretical features Disadvantages are direct cost effects increasing status of a law. ters. If there are too many barriers on the supply of the ten most common support instruments the electricity price for end consumers or the side (e.g. grid access, siting problems), no real is provided. Some reference is given to examp- need of considerable funding from state budget. supply can be generated. This in turn could re- les where the instrument is applied in practice. Furthermore disadvantages are the difficulty 2.2 Renewable Portfolio Standards sult in high prices for only few projects realised. While the first 6 instruments display primary to predict, to control and especially to timely or Quotas measures, the last 4 (2.7 through 2.10) are com- adjust the penetration speed. A too slow adjust- Most prominent examples for successfully wor- plementary measures that support stronger ment of too high tariffs may effect in unfore- Quota obligations, also called renewable obliga- king quota systems are Sweden and Norway, instruments. seen (and unwanted) relative and absolute parti- tions or renewable portfolio standards impose a both combining their approaches with trada- cipation of the different variable sources, higher minimum share of RE in the overall electricity ble RE certificates (see below) and moving to a than expected direct and indirect costs as well mix. Governments can impose this obligation joint (i.e. cross border) system as of 2012. The 2.1 Feed-in Tariffs as local and systematic grid stability effects. This on consumers, retailers, or producers of power. A main success factor for these systems is a very may also result in effects on energy planning, quota obligation system is often combined with shallow supply curve, i.e. a high availability of The key feature of a feed-in tariff is a guaran- price signals and incentives in the conventional tradable green certificates (see below), although relatively cheap (compared to non RE capacity) teed payment of a fixed (minimum) price per ki- electricity markets. A belated adjustment may be this does not necessarily have to be the case. RE potentials. lowatt-hour (kWh) to renewable energy power harsh on a still developing industry sector that Financial support for the producers of renewa- Of the countries examined in this study, Chile producers. The most relevant design criteria for formerly enjoyed excessive growth rates. There- ble energy electricity is often provided through is applying a quota obligation system, same as an effective feed-in tariff are: fore feed-in tariffs are rather difficult to design penalty payments that parties need to pay in parts of China and India. In the Philippines, it is and numerous aspects need to be considered. case of non-compliance. The financial value of planned but has not been implemented yet. • Guaranteed and preferential grid access and electricity from renewable energy sources (or dispatch of electricity from renewable energies Feed in tariffs seem to work best in countries green certificates) is determined by the level of • Sufficient minimum feed-in tariffs where the long-term reliability and continuity the quota obligation, the size and allocation of 2.3 Tradable Renewable Energy • Legal security for beneficiaries, as for instan- of public policies as well as the legal security the penalty, and the duration of renewable ener- Certificates ce the amount of feed-in tariffs guaranteed for individual and relatively small investors are gy power being eligible under the quota system. by law over a sufficient period over which relatively high. A regulating authority guarante- Appropriate fine-tuning of a quota obligation Renewable energy quota obligations often use the tariff is paid (at least to amortize invest- eing a levelled playing field for all power produ- system is of utmost importance for effective tradable renewable energy certificates (REC) as ment cost; preferably it should cover the cers should be in place. promotion of electricity from renewable energy additional feature to stimulate cost efficient so- time of the equipment) sources. If the quota obligation is set too low, or lutions among renewable portfolio standards/ • Individual feed-in tariffs for each renewable In practice, feed-in tariffs often do not fulfil if the penalty is too weak or not enforced, there quotas (also see above). Obligated parties (e.g. energy technology some or even all of the criteria given above. will be only insufficient stimulation to initiate utilities) generate renewable energy certifica- • Cost reduction potential (degression) Currently 87 states have introduced feed-in new renewable energy power projects. tes for the amount of kWh produced. If more tariffs4, but only about a dozen of them have electricity from renewable energy sources is An additional precondition that applies to other Obligation levels need to be set well in advance produced above the minimum requirements of policies as well is a timely and transparent per- and the quota itself needs to cover a sufficient the quota, exceeding certificates can be sold to 4 REN21 Global Status Report 2011 mission process.

18 19 Theoretical Overview: Existing RE Support Instruments

other parties which have not yet fulfilled their of pioneering renewable energy primarily upon ties to single projects. Of the countries examined renewable energy sources projects. Especially quota targets. This is attractive when the certifi- fragmented consumers, who do not have the in this study, public investment has been practi- new technologies, smaller projects or project cate price is lower than: bargaining power when negotiating with utili- ced in some form in Brazil, China, Chile, Egypt, developers without a proven track-record often ties (e.g. grid operator, energy producer). Ethiopia, Ghana, India, South Africa, and Thailand. experience difficulties in obtaining commercial • the development cost for own projects and loans at reasonable conditions. Governments • the penalty for non compliance, i.e. ideally Net metering vary strongly from can increase commercial viability of projects si- least cost options for RE electricity deploy- country to country, mainly with respect to the 2.6 Public Competitive Bidding gnificantly by offering capital subsidies, rebates, ment are developed first. period within which credits can be used for low interest loans or loan guarantees. compensation of purchased electricity (e.g. rela- National governments (or other institutions, e.g. However, as explained above, if the quota ob- ting to varying seasonal peaks). obligated parties under a quota system) often Such funding for specific technologies is offered ligation is set too low, the penalty is too low or aim at developing renewable energy potenti- either directly through state-owned banks or not enforced; no trading of renewable energy The most prominent example of a net metering als (e.g. potential sites for wind farms) under a through subsidies to commercial banks. It can certificates will take place. The value of RE elec- scheme is that of California for photovoltaic tendering scheme. A call for tender asks project also be provided by international development tricity in the market will be low, causing insuf- power, where it is combined with other support developers to submit bids to develop renewa- banks or through international climate funds. ficient stimulation of new projects. instruments. Of the countries examined in this ble energy projects. Tenders usually specify the The loans are characterised by reduced interest study, it is currently discussed in Morocco, Bra- capacity and/or production to be achieved and rates and/or longer repayment periods and can zil and the Philippines. can be technology- or even project/site-specific. be combined with a rebate on the last amor- 2.4 Net Metering Winning parties are usually offered standard tization rates (e.g. depending on performance long-term purchase contracts while the price criteria) or other direct capital subsidies. Net metering aims at encouraging customer 2.5 Public Investment, Loan or is determined competitively within the ten- investment in renewable energy technologies. Financing der procedure. In such schemes to accomplish Governments can also only offer loan gua- Usually it entails small renewable energy facili- investment security for private investors it rantees for certain projects. In that case, the ties, e.g. (PV), wind and home fuel In certain contexts, renewable energy projects is important to announce long-term tenders government guarantees debt repayment to the cells. “Net” refers to the basic mechanism: elec- can be financed directly through state authori- including the specific amount for each techno- lending bank, thus reducing risk and hence tricity meters record both electricity consump- ties. This can e.g. make sense for the erection of logy that will be put out for tender each year. interest rate (e.g. 1 to 2 %), debt term and debt tion and electricity provision by consumers. demonstration or reference projects with a risk service conditions of the loan. What remains after deductions (electricity sur- and payback structure not viable for commer- The advantage of such system is site develop- plus or consumption) is the basis for the actual cial investors. Under monopolistic energy mar- ment according to cost efficiency criteria. On In practice capital subsidies for RE remain often electricity bill. This way, consumers can balance ket conditions, renewable energy investments the other hand, competition of bidders may quite unspecific regarding their actual impact. their consumption and production of electricity are often in fact public investments, e.g. when result in price dumping and subsequent delays They are easy to introduce by government and end up with a balanced account (and thus a subsidised energy prices do not allow genuine or shortfalls of site developments, as specific decision in tax regimes where a broad variety balanced bill) or even receive a retail credit. This investment by the . site risks are not fully calculable beforehand. of exemptions already exists. Therefore, they credit can either be billed on a monthly basis or To minimize possible negative impacts, strict are common in practice, but in most cases lack include a monthly roll over of kWh credits. However, for broader sector deployment, attrac- development requirements need to be imposed effectiveness as not based on detailed analysis of tiveness to commercial investors is inevitable. on bidders, leading to iteration of tenders if specific economic parameters for RE investment. Net metering is most feasible when generation Under competitive conditions, public investment performance is insufficient. cost of photovoltaics electricity (or other small is generally less efficient than private sector enga- In the countries examined in this study, capital renewable energy sources) is equal or even che- gement. Therefore public investment should be Examples for public competitive bidding repre- subsidies are applied to some degree in Chile, aper than the average retail price (based on pro- restricted to those areas where markets have not sented in this study are Egypt, Morocco, Tunisia, China, Ghana, India, Indonesia, South Africa, ductivity and/or supported by public subsidies). yet developed or cannot deliver an appropriate and South Africa. Thailand, and Tunisia. technical framework for projects (e.g. grid infra- On the one hand, net metering is technically structure), and policy should rather create favou- easy to realise, because it works solely as an rable legal conditions for private investment. 2.7 Capital Subsidies, Grants, Rebates 2.8 Investment or Other Tax Credits accounting procedure and requires no special metering. On the other hand, this mode of In practice, public investment is the most unspe- Interest rates and repayment periods of loans Investment tax exemptions (also called tax relief renewable energy incentive places the burdens cific way of promoting RE, in fact limiting activi- have a major impact on the overall cost of or tax credits) reduce the tax burden of a pro-

20 21 Theoretical Overview: Existing RE Support Instruments

ject. An investment tax exemption is linked to 2.9 Sales, Energy or Excise Tax or VAT nal funding of projects and b) its incentive for framework. For example, the Production Tax installed production capacity, initially increasing Reduction generating a maximum of renewable energy. Credit in the has stimulated con- the overall performance of a project independent However, the success of the system fully de- siderable deployment of especially wind energy, of its subsequent performance (compare below: pends on (annual) availability of state funding, but continuous success has been impaired by production tax credits). Its effect is similar to that Except for investment or production tax credits, irrelevant of targets or other the stop-and-go nature of the policy. of an investment subsidy, which is paid up-front governments can politically improve the compe- on the basis of installed capacity. titiveness of projects by reducing the related con- sumption (value added tax (VAT) or energy Overview of most prominent support policy options for renewable energy In project finance, an investment tax exem- tax). Flexible/accelerated depreciation schemes ption has a favourable impact on the debt/ allow writing off a project faster (or differently) structure under the same debt service than usually would be allowed. Doing so, the tax Notable advantages Notable disadvantages requirements. Investment tax credits provide a benefit of depreciation can be maximised by the high incentive for developing of new projects, equity provider, provided this equity provider ƒƒ High effectiveness ƒƒ Higher electricity prices ƒƒ High investment security ƒƒ Difficult policy-design (e.g. difficult but do not take into account operation over has a net income that is large enough to absorb Feed-in tariff ƒƒ Strong market dynamic control of penetration speed; false lifetime, in the worst case leading to a waste of this tax deduction. In general, an accelerated de- design may lead to over- or under- public funding due to underperforming or non preciation scheme will result in a higher overall estimated expansion rates operational projects. I.e. at least at an aggrega- net present value of the project. ƒƒ Strong market-orientation ƒƒ Lower effectiveness than FiT particu- ted level, the economic efficiency (amount of Renewable Portfolio ƒƒ Less government intervention larly in case of a weak penalty system funding compared to result achieved) of invest- In practice, the same applies to sales, energy or Standard /Quota ƒƒ Easier policy-design than FiT ƒƒ Not necessarily cheaper than FiT ment subsidies is less favourable than in those excise tax/VAT reductions as to capital subsidies schemes aiming at performance of the projects. (see above): they are easy to introduce but often Capital Subsidies/ ƒƒ Facilitates investment in renewable In addition, like all tax credits, such schemes very unspecific, and often adopted together Grants/Rebates energy projects depend on government budgets and are thus with the first. subject to frequent political negotiations and Of the countries examined in this study, China, ƒƒ Reduces investment cost ƒƒ May keep power producers from ƒƒ Suitable for utility-scale investments operating if tax credits are only annual budget constraints. Frequent policy Egypt, Ghana, India, Indonesia, Morocco, South Investment or other available for investment (not for changes increase risks in the project develop- Africa, and Thailand have in place some kind of tax credits operation) ment phase and hinder the development of a tax reductions. ƒƒ Less attractive to small-scale renewable . investors

Alternatively, fiscal incentives could be an- 2.10 Energy Production Payments or ƒƒ Allows power producers achieve ƒƒ May keep power producers from Tradable Renewable higher share of RE in their electricity investing in RE themselves nounced and be guaranteed for a couple of Tax Credits Energy Certificates mix through trading years in advance. They could theoretically be (REC) ƒƒ Helps green power producers receive financed through a surcharge on energy con- Electricity production tax exemptions (also additional benefits sumption, which adapts automatically to the called tax relief or tax credits) or similar pay- amount of support paid, like it is done in some ments (e.g. premiums) reduce the cost of a Energy production ƒƒ Fair to high effectiveness ƒƒ Lower investment security than FiT payments or tax ƒƒ Can complement investment tax as weaker legal basis feed-in schemes. This would increase stability project in relation to the amount of electricity credits credits and reduce regulatory risk, but on the other production. Economic performance and thus hand limit governmental influence on the bud- return on investment/bankability is increased, ƒƒ Less complex than FiT ƒƒ Lower financial benefit than FiT get. Therefore, it is to be considered rather as a i.e. the equity provider is the beneficiary. Net metering ƒƒ Lower cost than FiT ƒƒ Not suitable for utility-scale theoretical design option. installations While an investment tax exemption (see abo- Public investment, ƒƒ Facilitates investment in renewable Additionally the specific reduction or exemp- ve) has a favourable impact on the debt/equity loan or financing energy projects tion of import duties may lead to a decreased structure of project finance under the same up-front investment and can therefore form a debt service requirements, the production tax ƒƒ Strong market-orientation ƒƒ Applicants may bid too low to win Public Competitive complementary measure to support RE. exemption has not. The two key advantages of ƒƒ Competitive prices the tender; may lead to non-comple- Bidding such schemes are a) simple and direct additio- ƒƒ Check on capacity addition tion of project or

22 23 Theoretical Overview: Existing RE Support Instruments

Overview of renewable energy support policies in assessed countries 2.11 The Role of Barriers on RE • Absence of banks able to provide investors Deployment with loans to invest in renewable energy Public power projects, which usually have higher Regulatory Policies Fiscal Incentives Financing incremental cost (lack of bankability); Concluding this section on types of RE support instruments in theory, it must be stressed that • A lack of clearly allocated institutional irrelevant of the type of instrument, RE support responsibility (e.g. many different actors can only work if fundamental barriers to RE are involved in the implementation of policies targeted, such as: or realization of projects). If there is no poli- Certificates payment Bidding tical agreement among stakeholders about other taxes Net metering Net Feed-in tariff Feed-in • Subsidised electricity prices, making the objectives and procedures, institutional dis- loans, or grants loans, Capital Subsidies, Subsidies, Capital Standard/Quota Grants, or Rebates Grants, Energy production production Energy duction tax credits - or pro Investment Reductions in sales, in sales, Reductions energy, Co2, VAT, or VAT, Co2, energy, Public investment, Public investment, Public Competitive Public Competitive Energy

Tradable Renewable Tradable support of renewable energy appear too agreement can impede or slow down a fast Renewable Portfolio Renewable costly; promotion of renewable energy; Brazil    • Subsidies for fossil fuels, leaving RE at non • Technical issues, such as a grid that is inca- Chile     competitive level; pable of absorbing increasing shares of fluctuating power from renewable energy China       • Monopolized electricity markets, which pre- sources or a grid that cannot provide enough vent or impede new power producers from control energy; Egypt     entering the market; • Civil opposition against renewable energy, Ethiopia  • Strong intervention of the government often caused through competing interests in the electricity markets (as for instance, in use (e. g. using for power  Ghana in the form of public utilities which enjoy production vs. production); some unfair advantages compared to private large-scale renewable energy power        India actors); also cause environmental destruction and can have negative influence on people’s Indonesia       • Inexperienced stakeholders and the unawa- (large dams, for instance). reness among policy makers of the econo- Kenya   mic, social, and environmental benefits of Mongolia   renewable energy support. Often stakehol- ders consider renewable energy an expen- Morocco    sive investment without acknowledging the short- and long term benefits of it; Philippines         

South     Africa

Thailand    

Tunisia   

24 25 3 Country Profiles: Spreadsheet Data, Summaries, Analysis Country Profiles: Spreadsheet Data, Summaries, Analysis

This study chose fifteen developing and newly Following the methodology of the Policy renewable energy in power generation. The the basis for subsequent policy analysis and industrialized countries for examination. These Design Cycle, structuring the data along these category “Indicators for potential barriers” policy recommendations the tool allows the are Brazil, Chile, China, Egypt, Ethiopia, Ghana, indicator-based categories enables the reader therefore looks at financial questions, which are reader to filter and compare specific aspects of India, Indonesia, Kenya, Mongolia, Morocco, to isolate information that serve as indicators often among the most crucial conditions for framework conditions for renewable energy in Philippines, South Africa, Thailand and Tunisia. for the development of the renewable energy investors. They include data on the existence of the analysed countries. In combination with The relevant criterion for this selection was the market and in particular, for the maturity of the import duties on renewable energy equipment, the textual analysis, the spreadsheet provides a current, past, and (planned) future involvement existing support policies. interest rates, inflation, and possible price incre- tool for easily identifying fields of action for the of GIZ in supporting frameworks for the pro- ases that occur with renewable energy support. respective government, but more importantly motion of renewable energy in these countries. The category “Indicators for the maturity of in this context, it helps to identify possible areas the policy framework” is policy-focused and The spreadsheet is composed of the attached of engagement for GIZ. This study also examines 10 of the 15 coun- looks at the existence and definition of rene- spreadsheet-based tool. Apart from forming tries in detail, performing policy analyses and wable energy targets, the existence and types of pointing out to potential future fields of action support instruments, the existence of a rene- to improve the support of renewable energy wable energy strategy, and provides the reader in these countries: Brazil, Egypt, Ghana, India, with information on the status of the renewable Indonesia, Kenya, Morocco, Philippines, South energy market (capacity/share of renewable Africa, and Tunisia. They have been selected for energy installations). deeper analysis due to the good access and high availability of information on renewable energy The category “Indicators for the degree of in these countries. Moreover, much of the work successful implementation” is a market and of the German Federal Ministry for Economic policy-focused section of questions, concentra- Cooperation and Development (BMZ) in deve- ting on indicators that reveal the successful im- lopment cooperation focuses on these states. plementation of a policy framework. Questions include the legal status of the support instru- ment, the capacity added under the instrument, 3.1 Spreadsheet Analysis the existence of local suppliers for renewable energy technology, and the degree of decentra- The underlying source for identifying condi- lisation of power production. tions for the successful promotion of renewable energy in electricity production is a complex, The category “Indicators for successful finan- spreadsheet based data structure. This spreads- cing” looks at the measures countries imple- heet collected relevant data to determine mented to absorb the cost that occur with the successful promotion of renewable energy for support of renewable energy. Such measures all 15 countries and structured them along five often include the use of international financial categories: means, the introduction of taxes, or apportion- ment procedures. 1 Indicators for the maturity of the policy framework (policy-focused) The category “Indicators for the condition of 2 Indicators for the degree of successful im- the electricity network” provides information plementation (policy-, market-focused) on the interconnection of the national grid, 3 Indicators for successful financing electrification, and institutional responsibilities (financial) in the electricity market. 4 Indicators for the condition of the electrici- ty network (technical, market-focused) Eventually, it is also important to ask about potential barriers that exist in a country that 5 Indicators for potential barriers (financial) might impede a successful promotion of

28 29 Country Profiles: Spreadsheet Data, Summaries, Analysis

3.1.1 Spreadsheet Data

Brazil Chile China Egypt Ethiopia Ghana India Indonesia Kenya Morocco Mongolia Philippines South Africa Thailand Tunisia RE No Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes target

Definiti- No generation- 2024 (gen): 10 2020 (gen): 3 % 2020 (gen): No generation- 2020 (gen): No national 2025 (gen): 15 % No generation- 2020 (gen): 2020 (gen): No generation- 2030 (gen): 9 % 2022 (gen): 2016/´30 (gen): on of based target. % (non-tech- (non-techno- Hydro: 6 %; based target. 10 % (non- generation- (non-techno- based target. 20 % (non- 20-25 % (non- based target. (non-techno- 14 % (non- 11 %/25 % nology speci- logy specific; Wind 12 %; technology based target logy specific; technology technology logy specific); technology (non-techno- target 2020 (cap): 2013 (cap): 2030 (cap): 2020 (cap): fic; excl. large excluding large Solar/Bio- specific; (RPS on state excluding large specific). specific). Hydro: 5 %. specific) logy specific) Hydro: Wind: 0.8 GW; Geothermal: Hydro: 6.9 GW; hydro). Until hydro). mass/Geother- including small level; 1-14 % in hydro). 121.6 GW (incl. 2015: 4 GW. 2020 (cap): No capacity- Wind: 1.9 GW; 2030 (cap): 2022 (cap): 2016/´30 (cap): 2014: 5 %, then mal: 2 %. hydro). 2010/2011). 6.5 GW of 2020 (cap): Hydro: 10 GW; 2025 (cap): Wind: 2 GW; based target. Solar: 0.3 GW; Hydro: 7.7 GW; Wind: 0.7 GW; Wind: incremental small hydro); Hydro: 2020 (cap): 2018: 0.45 GW 2015 (cap): 2012 (cap): Hydro: 0.5 GW Solar: 2 GW ; Biomass: Wind: 9.2 GW; Solar: 0.5 GW; 0.5/2.7 GW; increase by 0.5 Wind: 430 GW; Wind: 7.2 GW Geothermal. Hydro: Hydro: (small hydro Hydro 2 GW 0.3 GW; Solar: 9.6 GW. Biomass: Solar: % until 2024. 11.5 GW; Wind: 200 GW; 2.3 GW; 54.6 GW; only); (= 42 % of Geothermal: 3.7 GW. 0.3/ 1.7 GW; Biomass: No capacity Biomass: Wind 0.05 GW. Wind: Wind: 0.25 GW; capacity). 3.5 GW. 0.25/0.3 GW 9.2 GW. based target. 30 GW; 17.6 GW; Solar: 0.87 GW; other Solar 50 GW. Biomass: Biomass: 3.2 GW. 0.81 GW; Geothermal: 9.6 GW. Extent Auctions are 8 % in the first For 2010, the Currently the zero (in 1st Not yet begun, Only four At the moment Partly. 45 % for 2012, Existing ins- Targets only in 2009 1,816 MW of 1.5 % of inst. to which entirely within year of rene- New Energy- share is bet- year), eve- but VRA states met (2010), energy Capacity not 30 % for 2020 tallations are recently approx. targeted capa- Cap. Provided target is schedule. wable energy objective (RE + ween 10 and rything still announced their target for supply mix doubled. Focus predominantly defined 300 GWh were city already by wind energy fulfilled portfolio stan- nuclear) of 12 %, strongly under con- investments as the 2009/10 comprises: on geother- small hydro generated by exists. plus a little dard (2010) = 10 % came depending struction or of 2011 in PV period 49.7 % , 20.1 % mal through and PV plants. renewables contribution of 3 % more than short of 1.7 %. on the water planning and wind gas, 24.5 % Geothermal 50 MW wind grid-connec- the binding reserves. and 5.7 % Development park is under ted PV quota of 5 % renewable Company. construction. energy

Current 2010 (gen): 2010 (gen): 2010 (gen): 2010 (gen): 2010 (gen): 2010 (gen): 2008 (gen): 2009 (gen): 2008 (gen): 2010 (gen): 2010 (gen): 2010 (gen): 2010 (gen): 2010 (gen): 2010 (gen): share of 86.3 % 8 % (38 % incl. 17 % 10.1 % 98 % 68.8 % (1 % 15.5 % 8.8 % 61.6 % 15.4 % (incl. 4.6 % 26.2 % 5 % (incl. large 7.8 % 1.6 % large hydro/ excl. Large large hydro) hydro) RES in 2010 (cap): 2010 (cap): 2010 (cap): 2010 (cap): 2011 (cap): conventional hydro) 2009 (cap): 2010 (cap): 2010 (cap): 2010 (cap): 2008 (cap): 2010 (cap): electri- Hydro: Hydro: Hydro: Hydro: 2 GW Hydro: <0.1 GW RE) Hydro: 3.5 GW Hydro: 2009 (cap): Hydro: 3.4 GW; 2010 (cap): Hydro: Hydro: city 86.7 GW; 213.4 GW; 2.8 GW; 2010 (cap): 41.8 GW; (including 0.8 GW; Hydro: Biomass: Hydro: 2.1 GW; 3.5 GW; 0.06 GW; Wind: 0.8 GW; 2010 (cap): Wind: 44.7 GW Wind: 0.5 GW; Hydro: 1.2 GW Wind: 0.01 GW of Geothermal: 1.3 GW; 0.1 GW; Biomass: Solar: Wind: Biomass: Hydro: (14 GW not Solar: 14.9 GW; small hydro) 0.2 GW. Wind: 2.5 GW. Geothermal 0.1 GW. 0.03 GW; 0.05 GW. 4.5 GW. 0.2 GW; operational); 0.01 GW. Biomass: 2.0 GW. Biomass: Wind: 0.2 GW; Biomass: 2.8 GW. 1.6 GW. Biomass: 4 GW; 0.2 GW. Solar: 0.6 GW.

Regu- Yes Yes Yes No No No Yes Yes Yes Yes Yes No Yes Yes Yes latory support scheme for RE Indicators for the maturity of the policy framework the policy of the maturity for Indicators

30 31 Country Profiles: Spreadsheet Data, Summaries, Analysis

Brazil Chile China Egypt Ethiopia Ghana India Indonesia Kenya Morocco Mongolia Philippines South Africa Thailand Tunisia Type of Public compe- Public invest- Public compe- Public compe- Public invest- Public invest- Public invest- Sales, energy Investment Net metering, Public compe- Details not Public compe- Public compe- Investment support titive bidding, ment, loans titive bidding, titive bidding, ment, loans ment, loans ment, loans or excise tax or or other tax Sales, energy titive bidding, available titive bidding, titive bidding, or other tax schemes Public invest- or financing, Public invest- Public invest- or financing, or financing, or financing, VAT reduction, credits, Feed- or excise tax or Feed-in tariff Public invest- Public invest- credits, Capital in place ment, loans or Investment ment, loans ment, loans Sales, energy Sales, energy Energy Investment in tariff VAT reduction ment, loans ment, loans subsidies, financing, Net or other tax or financing, or financing, or excise tax or or excise tax or production or other tax or financing, or financing, grants or reba- metering (PV) credits, Capital Energy Sales, energy VAT reduction VAT reduction, payments or credits, Capital Sales, energy Sales, energy tes, Feed-in subsidies, production or excise tax or Capital subsi- tax credits, subsidies, or excise tax or or excise tax or tariff grants or reba- payments or VAT reduction dies, grants or Tradable RE grants or reba- VAT reduction, VAT reduction, tes, Renewa- tax credits, rebates certificates, tes, Feed-in Capital subsi- Capital subsi- ble portfolio Sales, energy Sales, energy tariff dies, grants or dies, grants or standards or or excise tax or or excise tax rebates, Feed- rebates, Feed- quota VAT reduction, or VAT reduc- in tariff in tariff Investment tion, Invest- or other tax ment or other credits, Capital tax credits, subsidies, Capital sub- grants or reba- sidies, grants tes, Renewable or rebates, portfolio stan- Renewable dards or quota, portfolio Feed-in tariff standards or quota, Feed- in tariff Detailed Compare Compare Compare Compare Compare Compare Compare Compare Compare Compare Compare Compare Compare Compare Compare measures indicators indicators indicators indicators indicators indicators indicators indicators indicators indicators indicators indicators indicators indicators indicators of support below below below below below below below below below below below below below below below imple- mented Name of • Electric • Ley 20.257 • Renewable • Existing wind • NAMA plan; • National • Electricity • • Feed-in • Law 13.09 - • Renewable • No regula- • Public Com- • Feed-in • Law No. support Power (RE standard Energy Law projects were • FiT Procla- Electrifica- Act, 2003 (30/2007) Tariffs Policy auto-produc- Energy Law tory support petitive Bid- premium 2004-72/ scheme Auctions: and obliga- (2005 and supported mation still tion Scheme • Tariff Policy • Geother- tion (type of scheme in ding (2011) for renewa- Law No. „Leilões de tion - quota) April 2010) through draft (not and RE Fund Act (2006) mal Law net metering) place yet • Feed-in Tariff ble power 2009-7 Energia“ • Ley 19.940 • Feed-in grants and low yet in place); - if the Law is • CERC Tariff (27/2003) • Future • Feed-in Refit (2009), “Adder” on Energy (2008, 2009, (access tariffs (2009, cost loans; duty exem- passed. for RES • Ministerial tendering Tariff to be abandoned (2007) Efficiency 2010, 2011) of small 2010, 2011) • Other sup- ption on RE • Small pro- Regulations No. through ONE implemented • Small and • Decree • PROINFA generators • Various other port is listed equipment. grammes for (2009) 1122 K/30/ and MASEN soon. Very Small 2009/362 (2004) to electricity in the DRAFT PV in private • Tariff for MEM/2002 Power on Renewa- market, and RE law homes RES Regula- • Ministerial Purchase ble Energy exemption • The first ten- and public tions/Orders Agreements and Energy from trans- der for a wind buildings. specified by No. 002/ (2006) Efficiency mission tolls) park will be SERCs 2006 • ESCO Ven- Premiums • Ley 19.657 closed in Nov • RPO-REC • Ministerial ture Capital (geother-mal 2011; the int- Framework Regulation Fund concessi- roduction of No. 269- ons, under a FiT scheme 12/26/600. revision) will only take 3/2008 • Ley 20.365 place after • Special (tax credits the outcomes Allocation for solar of tenders Fund (DAK) thermal have been for rural systems evaluated electrification Indicators for the maturity of the policy framework the policy of the maturity for Indicators

32 33 Country Profiles: Spreadsheet Data, Summaries, Analysis

Brazil Chile China Egypt Ethiopia Ghana India Indonesia Kenya Morocco Mongolia Philippines South Africa Thailand Tunisia Name of • Village support Empower- scheme ment Pro- gram (Green PNPM)al Regulation No. 269- 12/26/600. 3/2008 Frame- • 2010-2019 • (Non-Con- • Renewable • National • Last formal • Strategic • Electricity • National • Energy Act of • Loi No. 13.09 • National • National • White Paper • National • National work/ PDE ventional Energy Law Energy energy National Act of Energy 2006 (2009) for Renewable Renewa- on Renewa- Renewable Energy strategic • Plan for Renewable (2005 and Strategy policy from Energy Plan 2003; Management • Sessional renewable Energy Pro- ble Energy ble Energy Energies Efficiency Energy policy Energy Law: April 2010) (2008) 1994 2006-20 • India • 2011 Master Paper No. 4 energies - gram (2005) Program • Integrated Development and Renewa- Expan- Ley 20.257) • Five • Growth and • Ghana Nati- Energy Plan for on Energy of • Loi 2-94- • National • Philippine Energy Plan Plan ble Energy sion/Plano 2004 Year-Plans Transfor- onal Energy Policy the Accele- 503 for the Renewable Energy Plan • Integrated Programme Decenal de mation Plan Policy (IEP) 2006; ration and electricity Energy Law • Renewable 2008-2011 Expansão Expansion of sector. (2007) Energy Act Plan • Tunisian de Energia 2010-2015 • 11th Five- Indonesian • A new frame- New and 2010-2030 Solar Plan (Ministry of • NAMA Plan Year Plan • Economic work is under Mines and Renewa- Growth Energy)- consideration ble Energy Strategic • Energy Law Programme Energy Plan/ of 2007 (1997/2000) Plano Nacio- • Blueprint nal de Ener- Energy Policy gia (Ministry (2005) of Mines and Energy)

Financial Since auc- Not applicable Surcharge of Does not exist 621.25 billion See above, The “Energy FIT Allowance 33 MUSD is In terms of volume tions are the to RE quota. CNY 0.008/ as such, but: IDR ~ 69 consult Development (0.3c) x Current allocated from inst. Cap., the of sup- normal way of However, seve- kWh since 1 Offgrid solar million USD document if Fund” is Consumption Government‘s only notable port contracting, ral incentive Dec 2011. PV projects (including the necessary. equipped with (59b KWH) ENCON contribution scheme there is no mechanisms investment establishment 1 Billion $. It = USD 172 FUND to the comes from special support are in place to support is of self-suf- is used by the million ESCO fund. wind energy. scheme attend specific 30 % capital ficient energy government 233 MUSD For wind barriers. subsidy (on villages) to support the allocated from energy the the base price development Government‘s legal frame- declared by of the energy ENCON FUND work is a MNRE), if sector in for soft loans- net-metering the project multifold way: revolving fund. mechanism, is located in e.g. recapi- 1.7 MUSD for so consumers remote, back- talisation of investment reduce their ward districts ONE, incentive grants for electricity bill. the capital scheme for , MSW, subsidy incre- energy effici- solar hot water ases to 70-90 ency etc. projects. %. Indicators for the maturity of the policy framework the policy of the maturity for Indicators

34 35 Country Profiles: Spreadsheet Data, Summaries, Analysis

Brazil Chile China Egypt Ethiopia Ghana India Indonesia Kenya Morocco Mongolia Philippines South Africa Thailand Tunisia Support No No Yes Yes no details No Yes No Yes No Yes no details no details Yes No scheme available available available determi- ned by law

Capacity Details not 0-2500 MW more than Details not 0-2500 MW Details not Details not Details not 0-2500 MW Details not 0-2500 MW Details not 0-2500 MW 0-2500 MW Details not added available 10000 MW available available available available available available available under support scheme

Local sup- Yes No Yes Yes Yes Yes Yes Yes No Yes No Yes Yes pliers of RE-tech- nology

Name of Correia Goldwind, A new turbine PV, Hydro, ProWater PV modules First Philec Wattanapisarn suppliers Camargo Dongfang, manufactu- compo- (hydropower), (200 kWp per (Solar Home Company, (Hydro),Koblitz Suntech, Yingli rer for small nents for all PT LEN (solar year), Cables, Systems, just Bangkok Solar (Hydro and hydro power is technologies PV) SWH (2) starting) Co., Ltd., and Biomass),Wob- also currently others … ben setting up (Wind),Tecsis (Wind)

Degree of Low Low Low Middle Low Low Middle Middle Low Low Low Middle Low Low Middle decentrali- zation

Additional Law 19.940 Large hydro 4 opt. for sel- Incentives for The first pri- There is an comments opens up is the main ling RE: 1. to establishing vate invest- extra “adder” (1) spot market focus; off- the distribu- companies ment in RE is in 3 for smaller shore is not tion company in industrial a 50 MW wind in Southern electricity relevant (land- at tariff fixed zones (e.g. park by the Thailand and companies and locked coun- by SERC, 2. Oujda) Mongolian pri- for electricity systems, ensu- try); Biomass selling RECs vate company from rene- ring the right power requires at power Newcom. wable energy to connect to IPP (e.g. sugar exchanges for diesel oil distribution industry), & ELEC to replacement. networks, which is neg- distribution exempting lected by the company; them from government; 3. selling main transm. Solar PV is ELEC & RECs tolls (inst. only off-grid at power smaller so far. exchanges, 4. 20 MW). selling electri- Decree allows city to Third small pro- Party and/or ducers to Captive User negotiate independently. Indicators for the degree of succesful implementation succesful of the degree for Indicators

36 37 Country Profiles: Spreadsheet Data, Summaries, Analysis

Brazil Chile China Egypt Ethiopia Ghana India Indonesia Kenya Morocco Mongolia Philippines South Africa Thailand Tunisia Financing Apporti- Apporti- CDM, Appor- International Details not Details not Details not International Apporti- International CDM Details not International Taxes International scheme onment onment tionment Donor, CDM available available available Donor, Taxes onment Donor available Donor, Appor- Donor, Taxes in place procedure procedure procedure procedure tionment procedure for ndicators I successful financing National Yes No No Yes Yes No Yes No Yes Yes Yes No Yes No Yes intercon- nection grid

Additio- Sistema There are Grid system The grid is The national But the Four out • One main There is a Import of There are three The transmis- Interconnec- nal com- Interligado two mayor is fragmented subdivided power utility transmission of five grid on national high electricity main islands sion system in tion line exists ments (2) Nacional interconnec- into six regi- into six maintains network regional Java-Bali voltage grid, from Russia grids (Luzon, South Africa to hydro power (SIN) ted systems onal power geographi- two different at 69, 161 grids are • PLN operates there are inter- for frequency Visayas, consists of plant in Laos. (SIC, SING), grid clusters, cal zones, power supply and 225 kV intercon- more than connectors to stabilisation Mindanao), of high voltage which how- all of which namely , systems: voltage levels nected 5,233 power neighbouring during evening which Luzon overhead ever are not operate Canal, Delta, the inter- is intercon- (NEWNE plants with countries peak load. and Visayas power lines. interconnec- rather inde- Alexandria connected nected. grid), one a combined There are also are integra- Voltages on ted to each pendently. and West system (ICS = southern capacity of some inter- ted, Mindano this transmis- other. The Interregional Delta, Middle national grid) grid is 24,960 MW connection not, the main sion grid range two smaller interconnec- Egypt and and the self- discon- (an average grids between islands in the between systems tions are Upper Egypt. contained nected, plant size is Mongolia and Visayas are 132 kV and (Aysen, weak. Cross- The country’s system (SCS but con- about 5 MW) China. interconnected 765 kV. Magallenes) regional trade entire = several nection is • fragmented to each other consist of of electricity territory is isolated area envisaged country several isola- in 2009 covered. grids). latest by makes a ted systems represented Some iso- 2017 compre- only 4 % of lated ISPs hensive grid the total exist. difficult and electricity expensive to production. construct

Percen- 98 % ca. 98 % 11.5 Million 99.5 % According to 54 % 64.5 % 2009 - 66 % 55-60 % urban, rural electri- In Mongolia 70 % Approx. 73 % >98 % 99.5 % tage of (2010) people were the govern- (2010) (2008) 5-1- % rural, fication 96.5 there are 678 (2008), The popula- without access ment, 41 % national % in 2009; thousand government tion con- to electricity in have access, 20-25 % overall approx. households, aims to achieve nected to 2009 compared which means 98 % and nearly universal the grid to a popula- a distribution 400 thousand access to tion of 1,319 line passes households are electricity by Millions. Thus through or connected to 2012. the percentage nearby the the grid (60 %). of people with municipality. Out of 333 no access to The estimated counties of 21 electricity is number of provinces 318 0.87 %. households counties are with electricity connected to connection is transmission about 14 %, lines. but only 1-2 % in rural areas. Indicators for the condition of the electricity network the electricity of the condition for Indicators

38 39 Country Profiles: Spreadsheet Data, Summaries, Analysis

Brazil Chile China Egypt Ethiopia Ghana India Indonesia Kenya Morocco Mongolia Philippines South Africa Thailand Tunisia State No No Yes Yes Yes Yes Yes Yes No Yes Yes Yes Yes Yes Yes owned power grid

Additional ONS (state Electricity Two state EEHC conti- GRIDCO is The Power PT Perusa- See above “ONE” produ- Central Energy The Electric Eskom owns, EGAT owns Grid operator com- owned) reali- market com- owned grid nues to own the grid ope- Grid Cor- haan Listrik ces around 28 System (CES): Power Indus- operates and and operates is STEG ments (3) zes dispatch, pletely pri- companies: over 90 % rator (trans- poration of Negara (PLN) %, IPP-JLEC unbundled try Reform Act maintains the transmis- grid is owned vatised and “State Grid of Egypt‘s mission). ECG India Ltd - monopoly around 45 % Western 2001 laid the the national sion lines, by various liberalised Corporation generating is the largest (PGCIL) is operator of and Gas-CC- Energy System foundation for transmission whereas the companies, (unbundled) of China” capacity. distributor. the largest transmis- Tahaddart (WES) and the unbund- grid on both distribution and energy since 1982. (SGCC) and Transmission VRA-NED, transmission sion and 22 % of electri- Eastern Energy ling of grid and the generation grid is owned producers are However, “China Sou- and distribu- distributor company distribution city and is the System (EES): generation. and the trans- and operated another group transmission thern Power tion remain for northern in India. grid operator bundled The process mission level, by Provincial of market sector is Grid” (CSPG) a mono- Ghana is still Similarly, on HV-level. of generator distribution Electricity players. considered poly under part of VRA, in distri- disposal from level is highly Authority a natural the EEHC but a lower bution, the the grid owner fragmented (PEA). mono- umbrella; customer state-level is still ongoing with roughly poly, and is vertical and base. corporations 180 licensed therefore horizontal or boards municipal regulated. unbundling (SEBs) own distributors of genera- nearly tion, trans- 95 % of the mission and distribution distribution network. took place in 2001. National Yes Yes Yes Yes Yes Yes Yes Yes Yes No Yes Yes Yes Yes No regulato- ry body

Additional Electric Comisión State Electri- Egyptian Elec- Ethiopian Public Utilities Central Power Market Energy MEMEE, The Energy Energy National Energy com- Energy Agency Nacional de city Regulatory tric Utility and Electric and Regulatory Electricity Regulator Regulatory Ministry of Regulatory Regulatory Energy Regu- Regulatory ments (4) (ANEEL) Energía, CNE Commission Consumer Agency Commission Regulatory (Bapeptal Commission Energy, Mines, Authority Commission lator South Commission (SERC) Protection (PURC) Commission - Badan Pen- Water and Africa (NERSA) Regulatory (CERC) gatur Pasar Environment; Authority Tenaga Listrik) EU and WB are working with MEMEE for an independent regulator Indicators for the condition of the electricity network the electricity of the condition for Indicators Import No Yes Yes Yes No no details Yes Yes No Yes No Yes Yes Yes No duties for available RE equip- ment for potential for Indicators barriers

40 41 Country Profiles: Spreadsheet Data, Summaries, Analysis

Brazil Chile China Egypt Ethiopia Ghana India Indonesia Kenya Morocco Mongolia Philippines South Africa Thailand Tunisia Additio- Only not natio- In May 2010, The duties for Since 2010 In general: Ministry Within the Duty free Most of the nal com- nally available China remo- RE equipment there is an from 5 % to of Finance framework importation of equipment has ments (5) technologies ved import have been exemption for 40 %. For most Regulation No. with EU, RE machinery, been imported are exempted duties on wind lowered to RE compo- RE-Techno- 21/2010 and import duties equipment from another from import and hydro 2 %. nents, but cus- logy it‘s redu- 24/2010 will be reduced and materials country; how- taxes. For wind equipment. toms officials ced to 5 %. step by step within the first ever, if there is power, only are not suffici- Geothermal- 10 years an application turbines with ently aware of ground-source for BOI status, nominal power this and try to heat pumps there is some above charge duties, are exempted tax exemption. 1.8 MW may especially for from basic be imported. parts which customs duty can also be and special used for other additional purposes. duty. Interest 12 % 5 % 6 % 9 % more than 13 % 12% 7 % more than 12 % 12 % 1% 6% 7 % 5 % rate 15 % 15 % Annual 7 % 1 % 6 % 12 % more than 9 % 9 % 6 % 12 % 2 % 5 % 1 % 4 % 4% 3 % inflation 15 % Rate of 60-80 % 80-100 % 0-20 % 0-20 % 0-20 % 0-20 % 60-80 % Details not 20-40 % 20-40 % 0-20 % Details not 0-20 % 40-60 % 0-20 % liberali- available available zation5 Price No No Yes Yes Yes Details not Yes No Yes See below Yes No Yes Yes No increase available because of RE support Additio- As renewable No increase Pressure from Price increases The expansion Without having Grid extension The RE law Absorption Feed-in tariff nal com- sources com- expected the govern- due to higher of RE in the proper studies will be done by foresees a capacity is calculated ments (6) pete with all (according ment to generation is available, a ONE‘s budget Renewable of grid still considering other sources to different improve the costs of all mostly sup- price decrease with support Energy Fund under review the caps for in auctions, simulations). grid leads to forthcoming ported by the might be expec- of bi- and but this fund therefore no different there are no investments of RES plants government. ted. It depends multilateral is not yet in estimate for technologies- special price US$585bn bet- compared to The govt pro- on the caps in donors. place. additional grid additional effects from ween 2009 and existing large vides subsidy the FiT, and costs available renewable renewables. 2020 by SGCC HPP. and/or grants the price per energy pro- and RMB500bn for some tech- unit. Least Cost jects will yuan nologies. The Power Deve- require new (US$77.24bn, govt is also lopment Plan caps and new as of 24. June responsible of Govt sug- calculation of 2011) from to enact some gests costs of the feed-in CSPG between regulations so alternatives at tariffs. 2011 and 2015. that RE utili- 11-12 US-cent/ zation/manda- kWh in the long tory prevails run. Many RES are cheaper. ROI con- Details not 10 % Details not Details not Details not Details not more than Details not more than Details not Details not 12 % more than 15 % Details not ventional available available available available available 15 % available 15 % available available 15 % available power supply Indicators for potential barriers for Indicators

6 Table 2: Overview of the spreadsheet data of all studied countries . The spreadsheet based data structure can be downloaded on the GIZ homepage via this link: http://www.giz.de/Themen/de/4552.htm. 5 As a proxy for independent market access we use the share of private sector (` companies´) in the electricity sector. 6 For more details on the information provided in this table, refer to the textual analysis in the following chapter (3.2). 42 43 Country Profiles: Brazil

3.2 Textual Analysis ments it with additional information. Sum- and 0.4 % wind. The total renewable energy ca- Almost all existing capacity and maries of the findings are provided in each of pacity amounted to roughly 92.1 GW including a current project pipeline, which was to be com- To provide an easy to read and more detailed the 15 country chapters, while for 10 coun- large hydropower or 9.1 GW excluding large pleted in 2011, have been commissioned under version of the data collected in the spreads- tries this chapter performs policy analyses hydro. In 2010 Brazil’s total installed capacity this policy. The program initially envisioned the heet, this chapter extracts the most important and identifies provisions on future need for from all sources added up to 109.6 GW. construction of 3.3 GW of additional RE capaci- information of the spreadsheet and comple- action. ty until 2007, and was later extended to 3.6 GW By 2020, Brazil aims to have installed a total RE to be completed by 2011 (1.4 GW wind, 1.1 GW 3.2.1 Brazil capacity of 142.3 GW, of which large hydropower biomass, and 1.1 GW small hydro). RE power is shall comprise 115.1 GW, wind power 11.5 GW, sold under purchase agreements of 20 years to 3.2.1.1 Summary biomass power 9.2 GW, and small hydropower the public power utility Electrobrás. 6.5 GW. The country enacted a relative target of 16 % from non-large hydro RE sources in power In 2008 and 2009 respectively, Brazil passed Current share and capacity of renewable energy All sources capacity by the same target year (compared to Electric Power Auctions schemes (Leilões de 8 % in 2010; the relative share of large hydro Energia) for biomass and wind energy. Under Hydro Wind Solar Bio- Geother- Others Total shall thus be diminished from 75 % to 67 %). both policies, producers and utilities enter long- mass mal term power purchase agreements, lasting 15 Strategy/Instruments years for biomass and 20 years for wind power. Generation 80.0 %* 0.4 % <0.1 % 5.9 % <0.1 % <0.1 % 548.8 TWh (2010) The central strategic goals of Brazilian energy Tariffs are determined in the competitive pro- policy are to diversify the country’s generati- cess of a public auction. Since the start of both Capacity 86.7 GW * 0.8 GW <0.01 GW 4.5 GW <0.01 GW <0.01 GW 109.6 GW on mix by reducing the dependence on large programs more than 3.8 GW of wind energy (2010) hydropower and its power output volatility, and have been commissioned. Additional tenders to achieve a cost-efficient increase of generation worth several GW are scheduled for the future. capacity. To achieve this goal, in recent years The first wind parks that receive funding under Targeted share and capacity of renewable energy All sources Brazil has preferred low-cost options, e.g. using this program were planned to start operation wind, biomass, and small hydropower under fa- on 1 January 2012. Hydro Wind Solar Bio- Geother- Others Total vourable conditions. Plans for Energy Expansion mass mal are published regularly, representing strategic In 2003, Brazil initiated an electrification Generation n/d n/d n/d n/d n/d n/d n/d framework policies for the development of the program called “Luz para todos” (Light for All), (2020) energy sector. The most recent one is the Plano which aimed to provide access to electricity for Decenal de Expansão de Energia 2020. Similar to 10 million people within five years. The pro- Capacity 121.6 GW + 11.5 GW n/d 9.2 GW n/d n/d 171.1 GW (2020) previous versions, it defines capacity-based RE gram achieved its goal in 2009; as of 2010 a total goals (see above) as well as interim goals. RE are of 12 million people have benefitted from the *including small hydro (capacity: 3.8 GW) and power/capacity from Itaipu hydro dam. +including 6.5 GW of small hydro. addressed comprehensively and their expansion program. is highlighted as top priority for national energy Introduction/Overview demand. As the main political focus is set on policy. Importantly, the plan aims at phasing Additionally, various tax incentives, loans and Brazil already has – through large hydropower - reducing the dependence on large hydro, other out of power plant construction until grants as well as reduced import duties on RE a remarkable RE share in power generation, but RE are only partly benefitting – and in this 2014. It foresees a specific budget of Euro (EUR) equipment are in place. is facing a specific challenge: its dependence on setup directly competing with fossil and nuc- 68 billion (BRL 165 billion) for the expansion Currently, no regulative support policy is in large hydropower and the resulting, weather- lear. Depending on the market situation, this of RE power production in the period between place for solar or geothermal RE power. dependent fluctuations in power output. Policy may lead to decreasing RE shares and growing 2011 and 2020. makers have therefore envisaged a diversifi- importance of the non RE sector. Achievements cation of the national electricity mix, among Earlier, in 2002, Brazil implemented the PROIN- Between 2005 and 2010, large hydropower others by promoting alternative renewable Electricity Mix/Targets FA support scheme for wind, biomass and small capacity increased by roughly 7 GW, medium energy technologies. However, Brazil has also In 2010, Brazil’s mix con- hydropower (Programa de Incentivo às Fontes hydropower by 2 GW, wind power by 0.9 GW, been investing in fossil fuel-based and nuclear sisted of 80.0 % large hydro, 5.9 % biomass, 3.2 % Alternativas de Energia Eléctrica/Incentive Pro- and small hydro power by 0.1 GW, totalling power to respond to its quickly rising power oil, 2.9 % , 2.8 % nuclear, 1.5 % coal, gram for Alternative Sources of Electric Energy). 10 GW. Almost all of the existing biomass power

44 45 Country Profiles: Brazil

capacity has been added in this period. Today, the top five countries worldwide with respect 3.2.1.2 Policy Analysis and Expected Brazil has the fourth largest RE power capacity to RE investment. The country has been able to Need for Action worldwide and is the second largest market for build up a strong domestic wind power industry. biomass power. Brazil is also a leading player in Ernst & Young’s Renewable Energy Country At- ethanol and production. tractiveness Indices of August 2011 rated Brazil Current status of Brazil in the support of renewable energy the 11th most attractive market in terms of RE. No regulatory policy; public competitive bidding, tax reductions, public In the same period, Brazil added 10 GW, the Instruments same amount as from RE, of fossil fuel-based RE support in Brazil has not negatively affected investments/loans/grants thermal power capacity. Another 12 GW of ad- electricity prices, particularly as the auctio- Policy Design Cycle Targets Strategy Instruments Monitoring Evaluation ditional non-RE capacity (fossil and nuclear) is ning process is leading to competitive power scheduled to come operational until 2015. purchase agreements for biomass and wind Target Reaching Likely, targets not too ambitious yet power projects. For instance, in an auction of Electricity Market/Barriers/Attractiveness August 2011, the average price per Megawatt Since the 1990s, Brazil has carried out two hour (MWh) for the commissioned wind power nologies and implemented effective support In terms of power sector reforms, Brazil has major reforms to liberalise its electricity sector. plants was 41€, i.e. lower than the average tariff instruments. Even though these instruments built an attractive regulatory and technical While formerly state-owned utilities and power awarded to a hydropower and two natural gas only apply to specific technologies and depend environment facilitating target achievement. producers have traditionally been dominating power plants in an auction of the same month. on governmental action they have led to a fast First, liberalisation of the electricity market has the market, an increasing number of priva- Moreover, Brazil’s strong currency has reduced construction of new capacity and guaranteed allowed new power producers to enter the mar- te actors have entered both production and cost for imported RE equipment over the last competitive electricity prices. In elaborating a ket and compete with public power producers; distribution of power. Today, about 40 % of all years. As a result, wind power has become one successful strategy, Brazil’s achievements are today’s increasing competition in the Brazilian power producers are private. The four big public of the cheapest power sources in Brazil. Kilo- ambivalent. On the one hand, the government’s power market reduces the market influence utilities Eletrobrás, CESP, Cemig, and COpel, hour (KWh) prices paid for wind energy overall concept on transformation of its power of the four public utilities. Secondly, Brazil has dominate the remaining share of production. currently are the cheapest worldwide. sector is consistent and implies the necessary improved and extended its power grid over the The public agency Agência Nacional de Energia regulative and technical adaption to allow high- last ten years, having established the technical Elétrica (ANEEL) is responsible for regulating GIZ Activities and Experience er RE penetration in power supply. On the other basis for integrating RE electricity into the po- and controlling generation, transmission, and In Brazil, GIZ has been active in the Technical As- hand, Brazil’s overall energy policy is not in line wer system. The country’s focus on centralized distribution of power. sistance program “Renewable Energy and Energy with the effort taken in the power sector, parti- electricity production (large hydropower dams Efficiency”, which supports the implementation cularly as the country is increasingly investing and biomass power plants; wind farms are most- The liberalization of the power market has ena- of Brazilian policies. Core activities (in collabo- in domestic oil and natural gas resources. ly built near to power consumption centres) has bled RE producers to participate in the market. ration with Eletrobrás and Empresa de Pesquisa also helped Brazil evade addressing much of the Bureaucratic obstacles in the licensing process Energética [EPE]) are capacity development mea- Due to Brazil’s very high share of hydropower issues that occur with an extensive use of decen- were affecting the initial phase but have been sures for governmental institutions and techni- in power generation, the country does not face tralised power production. Thirdly, the Brazilian removed in the meantime. Moreover, due to cal experts, assistance in the implementation of pressure to transform its electricity supply to a government has focused on providing support the extension and improvement of the national national programs and the support for demons- more sustainable basis. The incentive to spe- to competitive RE technologies only. While this grid, the integration of large amounts of RE tration projects. For example, several solar PV cifically invest in RE is comparatively low. As a strategy rules out support for other RE tech- (including wind power) is no longer regarded pilot projects have been realized, among them result, Brazil’s ambitions in the definition of RE nologies, it has helped avoid higher electricity as major challenge to grid stability. Yet, there a 1 MW PV system on the roof of the Petrobas targets have been moderate. Between 2010 and prices often occurring under regimes of fixed ta- is still 15 to 17 % of all electricity lost during Electrosul headquarters in Florianopolis. An im- 2020, the targeted RE share in total capacity is riffs or subsidies. Moreover, as auctioning power transmission, leaving huge potential for further portant lesson learned from these activities was to remain constant at 83 % but investments in plant concessions has been a common procedu- improvement and efficiency increase. that knowledge about PV is still quite limited, large hydropower will decrease to the advan- re in Brazil for a long time, policy makers did not even among energy experts. Additionally, GIZ tage of wind, biomass, and small- and medium need to design a new and complex regulatory Due to its attractive policies for wind, biomass has organized events to raise awareness for RE, hydro capacity. Brazil aims to stop investments bill, circumventing political conflict and delay and hydropower, as well as its growing econo- developed a marketing strategy for solar electri- in fossil fuel-based and plant that might arise from such a process. my, Brazil has been able to attract many natio- city and a solar label, which indicates the amount construction in the mid-term (in 2013 and 2015 nal and international companies to invest in RE of generated for the end-user. respectively). power projects. Today, the nation ranks among Brazil has defined targets for different RE tech-

46 47 Country Profiles: Brazil

The strategy to support hydro, wind and bio- accelerates of the rainforest and From the perspective of the Policy Design Cycle, of renewable energy in power production in mass power only, however, implies disadvanta- drives food prices up. policymakers in Brazil could address the fol- the future. To provide regulative and finan- ges as well. When considering Brazil’s excellent As a result, there are still challenges that Brazil lowing issues to improve framework conditions cial support for solar power in order to spur solar power potential, for instance, the country faces on its way to consistent RE support, even for the renewable energy electricity market. electrification is an additional aspect. might miss an important opportunity. The if remarkable achievements have already been Energy Expansion Plan 2020 does not foresee made. It will be necessary to establish a well • Given the tremendous dynamics in Brazil’s • Increase the use of renewable energy in non- investments in grid-connected solar power ca- designed monitoring system allowing integra- growing energy demand, developing impro- power and non-transport sector (e.g. heating pacity and does not address the technology as a ted planning of power capacity in response to ved planning and monitoring tools to keep and cooling) to decrease the use of fossil fuels potential energy source. From a short-term eco- increasing power demand. As Brazil’s economy track of the country’s rising energy demand in primary energy. nomic perspective the argument of higher cost and population is growing quickly, future po- is important. This will help to ensure ambi- of PV and (CSP) might wer demand might exceed current projections tious but realistic target setting. Adapt • Address technical issues, such as by impro- be relevant, particularly as there are already and additional capacity might become necessa- auctioning policies flexibly so that plan- ving grid infrastructure to decrease electri- some competitive RE technologies. Yet, consi- ry. Over the last few years, several adjustments ned renewable energy capacity can meet city loss. dering that many experts forecast solar power for the projected need of additional capacity demand. to be the cheapest technology on the long run became necessary, including the doubling of the Existing GIZ activities partly address the above and that the global PV industry already provides wind power capacity goal from 6 GW to • With respect to the rapidly growing energy mentioned challenges. However, GIZ might roughly 350 000 jobs today, Brazil might fall 11.5 GW by 2019/2020. Moreover, the Plan for demand, supporting renewable energy tech- consider engaging in complementary areas, short of the long-term economic and structural Energy Expansion expects final energy con- nologies apart from hydro, wind, and bio- such as improving the information basis on advantages that evolve with early investments sumption to grow by more than 55 % between mass power should be considered too. This demand forecast, strategy and adaptation of (local expertise, a strong industry, domestic 2011 and 2020. Therefore, there is a strong need will allow Brazil to maintain its high share instruments. equipment production etc.). In addition, Brazil for tools allowing early identification of additi- could miss the opportunity to be a potential onal capacity demand and an according adjust- regional supplier of solar power equipment for ment of support policies. South America. Brazil should give solar power a more impor- While Brazil renounced the construction of tant standing in the future. While to a great ex- fossil fuel based and nuclear power plants after tent, it is comprehensible that an emerging eco- 2013 and 2015 respectively and aims to focus on nomy is concerned about cost of energy supply, the expansion of RE in power supply, it is still Brazil also needs to envision long-term techno- investing heavily in the exploitation of fossil logical developments and the potentials it has fuels for export purposes and their use in other for using solar power in electricity production. sectors. Between 2010 and 2020, the share of As module prices for photovoltaic installati- fossil fuels in final energy demand will even in- ons are dropping quickly and a domestic solar crease by 0.8 % to 48.2 %. Moreover, Brazil aims industry potentially employs ten thousands of to become a major oil and natural gas exporter people (as in China, the United States or Ger- in the future by exploiting reservoirs in the many, for instance), Brazil should also envision South Atlantic Ocean. With this strategy, Brazil this technology as an eligible energy source. creates additional competitors to the RE sector, Positively, the regulation authority ANEEL has potentially weakening its market position. started the elaboration of a feed-in regulation for photovoltaic installations with a capacity up Brazil’s RE strategy is also attracting oppositi- to 1 megawatt (MW). on from environmental organizations and the local population. Large hydropower dams, for Since there are great wind potentials in the poor instance, have destroyed vegetation and the Northeast of the country, a focus in capacity in- 5

habitats of indigenous people. The massive use stallation on this region could bring important of biomass for power and fuel production also social and economic development to this region.

48 Country Profiles: Chile

3.2.2 Chile wable energy. There are no technology-specific The central support instrument to make use of or capacity-related targets in place. this opportunity is the so-called Non-Conventi- 3.2.2.1 Summary onal (Ley 20.257) – a RE Strategy/Instruments quota obligation for power producers that Chile Facing a projected average annual growth rate passed in 2008 and came into effect in 2010. of 5.4 per cent in power demand between 2007 It requires all utilities with a capacity of more Current share and capacity of renewable energy All sources and 2030, Chile will need to add capacity of than 200 MW to generate 5 % of their electricity Hydro Wind Solar Bio- Geother- Others Total roughly 600 MW per year to keep pace with from non-conventional renewable energy sour- mass mal demand. This represents a considerable chal- ces from 2010 onwards. Affected utilities are al-

Generation 0.8 %* 0.6 % <0.1 % 0.8 % <0.1 % <0.1 % 56.7 TWh (2010)

Capacity 0.2 GW * 0.2 GW <0.01 GW 0.2 GW <0.01 GW <0.01 GW 17.0 GW (10/2011)

Targeted share and capacity of renewable energy All sources

Hydro Wind Solar Bio- Geother- Others Total mass mal

Generation 10 % (non-technology specific; excl. large hydro) n/d (2024)

Capacity n/d n/d n/d n/d n/d n/d n/d (2024)

* excluding large hydro >20 MW, 5.7 GW incl. large hydro.

Introduction/Overview other renewable sources7. The total renewable Chile is one of Latin America’s advanced coun- energy capacity excluding large hydropower tries with regard to RE support, having im- plants with capacities over 20 MW amoun- plemented a renewable portfolio standard as ted to roughly 0.6 GW in October 2011. The its major regulatory support mechanism – an country’s total installed capacity was 17.0 GW, instrument that only a few transition econo- most of it provided by coal and natural gas po- mies use to support RE in electricity produc- wer plants, diesel/other fuels generators, and tion. The country also passed some additional large hydropower plants. minor RE policies. However, Chile is missing a comprehensive strategy that would encompass By 2024, Chile aims at increasing the share of a long-term RE vision for electricity supply. ‘non-conventional’ RE (i.e. other than large hyd- ro) in power production to 10 %. If this objective Electricity Mix/Targets was reached, it would represent a four-fold lenge to power producers, who need to invest in lowed to trade with third-party companies and In 2010, Chile produced 2.3 % of its electrici- increase compared to the current share of rene- new plants, and to public authorities in charge non-compliance is sanctioned with a surcharge ty from non-conventional renewable energy of planning future power capacity. However, on every megawatt hour (MWh) not obtained sources, consisting of 0.8 % small hydro, 0.8 % 7 According to Law 20.257 Chile classifies non-conventional rene- the upgrading of the generation system also from non-conventional renewable sources. wable energy (Energías Renovables No Convencionales, ERNC) as biomass, 0.6 % wind, and a marginal share of all renewable energy excluding large hydropower (>20 MW). The represents an excellent opportunity for Chile Between 2010 and 2014, the quota remains share of renewable energy including large hydropower in electri- to increase its investment in renewable energy. constant at 5 %. It increases by 0.5 % annually city production was 38 % in 2010.

50 51 Country Profiles: China

to reach 10 % by 2024. In 2010, the new centre- Access to electricity reaches almost 100 %. There higher financial compensation. A feed-in law or various potentiality maps, pre-feasibility stu- right government even announced to raise this are two large interconnected grids (Sistema a net-metering policy could be an option; yet, dies, site surveys, environmental impact assess- target to 20 % by 2020 although the government Interconectado Central (SIC) and Sistema In- legislators could also modify the existing quota ments, assistance for ministries for preparation has not yet provided a legal framework for this terconectado del Norte Grande (SING), which to be technology-specific. By setting individual of several pilot projects, etc.). With regard to announcement. represent 99 % of all subsystems, and two grids targets for each renewable energy source Chile policy advice, GIZ has helped to analyse and im- of smaller size in the more remote parts of the could incentivize stronger investments in solar prove detailed regulatory frameworks, support By introducing an RE quota obligation as its country. power. public relations, and facilitate capacity building major regulatory policy, Chile is an exception in the public sector. Furthermore, it is currently among emerging economies, which often opt Attractiveness to investors can be assessed to GIZ Activities and Experience developing mid- and long term energy scena- for a mix of policies or feed-in tariffs. However, be fair. One critical barrier has been the rather GIZ has developed many activities in Chile on rios (reflecting economic efficiency, energy considering the market liberal economic tradi- low investment security that the Chilean quota consulting level. It has supported projects on RE security, and environmental factors). Lessons tion of the country the quota obligation suits regime provides. Other than under feed-in laws, electricity for hydro, wind, solar (photovoltaics learned from these activities include that there into the structure of the electricity system and there is no determined tariff, which power pro- and CSP), bio- and . Among is remarkable interest from the private sector to the energy policy. ducers can rely on for their renewable energy them are analysis of potentials, the setup of develop projects and there is huge potential for electricity. While this leads to more market- wind and solar measurement stations, proces- further engagement in this sector. Chile also passed some additional minor laws oriented prices, it is more difficult for investors sing of data for subsequent use by ministries, for the promotion of renewable energy such as to determine the profitability of the plants. In the Ley 19.940, which grants small generators addition, Chile already has a very high market access to the electricity market and exempts concentration that makes it difficult for new them from transmission tolls, and Ley 19.657 competitors to enter the market. 3.2.3 China on geothermal concessions (currently under revision). Another barrier exists for solar power investors. 3.2.3.1 Summary To date, the Chilean government has refrained Achievements from introducing a support policy for photo- In 2010, all utilities were able to fulfil the voltaic or concentrated solar power, particu- portfolio standard reaching a share of 8 % from larly due to the argument of high cost. Chile’s Current share and capacity of renewable energy All sources renewable energy in their electricity generation electricity prices are among the highest in Latin Hydro Wind Solar Bio- Geother- Others Total 8 mix. Most of the electricity was produced by America, resulting from limited domestic ener- mass mal small hydropower (<20 MW of capacity), wind gy carriers and subsequent needs for import, in and biomass plants. Between 2007 and 2011, electricity production mainly covered by natu- Generation 15.7 %* 0.7 % <0.1 % 0.6 % <0.1 % <0.1 % 3663 TWh Chile installed an additional capacity of ral gas from Argentina. As a result, Chile focuses (2009) 0.34 GW of non-conventional renewable energy only on RE technologies competitive to existing Capacity 213.4 GW 31.1 GW* 0.9 GW 4 GW <0.1 GW n/a 974 GW capacity (added renewable energy capacity power generation (therefore choosing a rene- (2010) including large hydro: 0.62 GW). wable portfolio standard as main support inst- rument). In the long term, however, the use of Electricity Market/Barriers/Attractiveness solar power could be beneficial for the country, Targeted share and capacity of renewable energy All sources Since 1982, the Chilean energy market is com- particularly because of its excellent potential pletely liberalised, providing a high level of in the north of the country (both for photovol- Hydro Wind Solar Bio- Geother- Others Total competition, market-oriented electricity prices, taics and concentrated solar power). If applied, mass mal and very limited government intervention. experts expect cost for PV and CSP to decrease Generation 3 % (non-technology specific; excluding large hydro) n/d Today, there are 31 utilities, 5 transmission rapidly, accompanied by good employment (2020) companies, and 36 distributing companies. opportunities in the solar industry same as Capacity benefits from decentralized electricity produc- 300 GW 150 GW 50 GW 30 GW n/d n/d n/d# (2020)+ tion. To tap this potential, Chile would need 8 Only utilities with a capacity greater than 200 MW are obliged to fulfil the renewable portfolio standard. These utilities reached the to introduce policies rewarding solar power * an additional 13.6 GW were not connected to the grid +hydro, wind, solar targets were recently increased, but have not been mandate even though the national share of renewable energy is investors with higher investment security and legally laid down yet. #1,700 GW estimated. only 2.3 %.

52 53 Country Profiles: China

Introduction/Overview China also defined targets for final energy nation-wide photovoltaics feed-in tariff, on the all power capacity additions to satisfy its incre- Due to China’s ambitious and comprehensive consumption from “non-conventional renewa- other hand, is still lacking as the law is effective asing demand, the country’s past achievements renewable energy strategy implemented in ble energy sources” (which include renewable only for a few months yet. Other important laws and future goals must be considered impressive the last ten years, the country is today one of energy and nuclear power). Standing at 8.3 % in in place are capital subsidies, a wide range of tax and ambitious. Since 2005, when renewable the world’s fastest growing renewable energy 2010, an increase to 15 % by 2020 is targeted. credits and reductions, public funds and loans, energy (excluding hydro) was almost non- markets and is home to one of the strongest a policy that removes import duties from wind existent in the country, China has doubled its renewable energy industries. Based on a variety Strategy/Instruments and hydro technological equipment, a renewa- installed renewable energy capacity every year. of instruments to support renewable energy in Since 2005, China has a clear and comprehensi- bles premium, public competitive bidding, and There is no other country in the world, aiming the electricity and heat sector (mainly consis- ve renewable energy strategy claiming a leading investment in research and development. at similar amounts of added RE capacity. Howe- ting of public grants and loans, but also feed-in role for the country in renewable energy pro- ver, investments in power production from coal tariffs), particularly hydro-, wind-, and biomass motion. The centrepiece of this strategy is the Achievements even surpass those in renewable energy by far. power, have been prospering in the past. Yet, Renewable Energy Law of 2005, which acts as After capacity additions of roughly 120 GW or a Therefore, the share of renewables (excluding in spite of these developments, China’s ener- a framework for the long-term promotion of relative increase of 92 % between 2005 and end large hydro) will remain at low level. Since some gy sector is not on the way to become entirely renewable energy. It regulates the priority of of 2010, China today has a total installed rene- years, China is also the world’s largest CO2 green. Rather, by taking into consideration the renewable energy over electricity from con- wable energy capacity of 250 GW thus being emitter with 7,032 million tons of CO2 emit- tremendously rising energy demand and huge ventional sources and defines the country’s the world’s largest RE market. Hydro and wind ted in 2008. Estimating that this amount will investments in conventional power capacity, renewable energy targets. Since its revision in power are particularly strong sectors, represen- increase even more dramatically in the future under current policies renewable energy will 2010, operators are now legally obliged (rather ting 98 % of the capacity. and considering the country’s overall energy play a minor role in the country’s future electri- than “requested” as worded in the early version strategy – even though ambitious in terms of city generation mix. of the law) to give priority to dispatch power Comparing China to other emerging economies renewable energy – it is not in sight that China from renewable energy and are confronted with and considering the tremendous need for over- will soon have a low carbon energy supply. Electricity Mix/Targets penalties in case of non-compliance. The law In 2009, China produced 17.0 % of its electricity also puts special focus on the support of rural from renewable energy sources, consisting of off-grid renewable electricity generation and 15.7 % large hydro, 0.7 % wind, 0.6 % biomass, mandates the National Energy Administration and a marginal share of other renewable sour- to define annual targets for renewable energy ces. Coal has been the dominant source for elec- power generation. The Renewable Energy Law tricity supply with a share of roughly 80 %. Total also aims at the heating sector by increasing the renewable energy capacity (including large dissemination of solar thermal installations. hydropower) in 2010 amounted to 249 GW. The country’s total installed capacity was 974 GW. Besides the Renewable Energy Law, the 11th and 12th Five-Year Plans are further important By 2020, China targets to increase the share of strategic papers for the support of renewable non-large hydro renewable energy to 3 % (from energy. Both plans explicitly consider RE pro- 1.3 % in 2009) of all electricity generation. China motion a fundamental pillar to become a know- also set capacity-related goals for each renewab- ledge-based economy in the future and to boost le energy technology, of which hydro and wind growth, as well as to help create and strengthen power will receive the greatest attention. Within the domestic renewable energy industry. 10 years, the country aims to install an additio- nal 87 GW of (large) hydro and 119 GW of wind To implement its strategy and goals, China has power to reach capacities of 300 GW and enacted a diverse portfolio of specific measures. 150 GW respectively. Both targets were incre- In 2009, 2010, and 2011, respectively, feed-in ased to 430 GW and 200 GW recently but have tariffs for on-shore wind, biomass, and pho- not yet been officially communicated or legally tovoltaics were enacted. Both the feed-in laws laid down. Solar power shall provide 50 GW and for on-shore wind and biomass have proven to biomass power 30 GW of capacity by 2020. work relatively successful. Experience for the

54 Country Profiles: Egypt

Electricity Market/Barriers/Attractiveness tional investors currently consider China the 3.2.4 Egypt Despite the wide range of existing renewable world’s most attractive country for renewable energy policies, China is facing some significant energy investments, according to the most 3.2.4.1 Summary barriers that slow down or impede the dissemi- recent Ernst & Young Renewable Energy Coun- nation of renewable energy. On the one hand, try Attractiveness Indices. Notwithstanding the highly regulated energy market, dominated existing problems in licensing processes, the Current share and capacity of renewable energy All sources by five public power companies, allows national country attracted a record $49 billion of new authorities easily to implement political goals, financial investments in renewable energy in Hydro Wind Solar Bio- Geother- Others Total making RE promotion very effective so far. 2010 compared to only $25 billion flowing into mass mal However, on the other hand, the absence of pri- the United States, which ranked second. Generation vate market players and competition can lead to 9.3 % 0.8 % <0.1 % <0.1 % <0.1 % <0.1 % 139 TWh (2009) increasing inefficiency and higher production In addition, the country’s huge investments in cost. Coal, for instance, available in huge quan- renewable energy over the past few years have Capacity 2.8 GW 0.5 GW 0.01 GW <0.01 GW <0.01 GW <0.01 GW 22.8 GW tities in the country, is heavily subsidised just led to a lift-off of the domestic renewable ener- (2009) as well as electricity prices, which do not reflect gy industry, which today counts to the strongest market prices and are kept artificially low by in the world. Mentioned as one of the “seven the government. In 2007, the average electricity strategic industries” in the 12th Five-Year Plan, Targeted share and capacity of renewable energy All sources price for residential costumers was Yuán (CNY) the renewable energy industry is a key sector for 0.42/kWh (0.047 EUR/kWh9). China also collects spurring economic growth and creating jobs. Hydro Wind Solar Bio- Geother- Others Total a surcharge on its electricity price of CNY 0.008/ Notably, the Chinese photovoltaics industry has mass mal kWh (0.0088 EUR/kWh) from all electricity con- evolved to play a dominating role in the world Generation 5.8 % 12 % 2.2 % n/d n/d sumers (except from agricultural users in Tibet) market; also, the flourishing wind industry is (2020) to finance renewable energy. increasing its global market share. Both sectors Capacity n/d 7.2 GW n/d n/d n/d n/d n/d are mainly under control by public enterprises. (2020) Serious problems result from the current Chi- nese power grid. Fragmented into six regional GIZ Activities and Experience clusters with relatively weak interconnectivity, Activities of GIZ in China include wind power Introduction/Overview plants produced 9.3 %, wind plants 0.8 %, while cross-regional trade of electricity represents research and the support of training centres in Largely reliant on fossil fuels in power pro- natural gas power plants covered the large only 4 % of the total electricity output. As a cooperation with Chinese agencies. GIZ also duction and experiencing a rapidly increasing majority of the remaining 90 %. There are also result, wind turbines in less-developed regi- offers advisory services to government depart- power demand, Egypt has taken some steps on some small heavy fuel oil-based power plants. ons equivalent to a capacity of roughly 2 GW ments responsible for expanding wind energy RE promotion during the last few years. Wind Total RE capacity amounted to roughly 3.3 GW are either not connected to any grid or out of in China. In addition, GIZ has carried out a energy has received great attention by the Egyp- in 2009; total installed capacity in the country function as their electricity output cannot be project to improve the use of biomass in biogas tian government, but there is also increasing was 22.8 GW. absorbed and transmitted. Moreover, 11 GW of plants. Activities included technical and institu- public interest in using the country’s excellent wind power capacity had not received commer- tional improvement of pilot projects, capacity solar potential. However, legislation in the past By 2020, Egypt aims to produce 12 % of all elec- cial certification from licensing authorities by building, and systematic knowledge manage- has mostly targeted large-scale installations tricity from wind power, 5.8 % from hydropo- year-end 2010. China will invest CNY 1 trillion ment on level. GIZ has supported while policy makers have left aside or even wer, and 2.2 % from (PV and CSP), (EUR 115 billion) between 2009 and 2020 in the improvement of national regulations via policy prevented the support of electricity generation which in total would represent a share of 20 %. improvement of the grid (building interconnec- advice (to alter existing regulations towards from appliances of smaller size. If Egypt wants The country did not define specific capacity-fo- tions, overhauling existing lanes, connecting performance-based subsidies). GIZ experience to achieve its renewable energy targets for 2020, cused goals except for wind power, which shall rural areas). has shown that the success of renewable energy however, providing support for both, small- and supply 7.2 GW of capacity by the target year. projects heavily depends on the motivation of large-scale installations will be necessary. There is also a medium-term goal for solar RE market attractiveness is high. Supported local public actors. power: by 2017, concentrated solar power and by its far-reaching long-term policies, interna- Electricity Mix/Targets photovoltaic installations shall provide 0.15 GW In 2009, Egypt generated 10 % of its electricity of capacity, whereas CSP will play a more im- from renewable energy sources. Hydropower portant role, representing 87 % of this amount. 9 1 EUR = 9 CNY

56 57 Country Profiles: Egypt

Egypt also implemented a goal for the share of As of end-2011, the National Energy Strategy Regarding other renewable energy technolo- the CDM mechanism, co-financed by Germany, renewable energy in primary energy, aiming to has not entered the second phase yet and no gies, progress has been limited. Hydropower, , Spain, EC and the European Investment achieve 14 % by 2020. feed-in tariff is in place accordingly. However, for instance, has not received large investments Bank. the Egyptian Electric Utility & Consumer Pro- in recent years; most of its potential is alrea- Strategy/Instruments tection Regulatory Authority (EGYPTERA) has dy used. Furthermore, photovoltaic was just In terms of attractiveness, Egypt does not offer Between 1981 and 2005, the country’s energy developed a feed-in tariff for small wind parks slightly expanded, achieving a total capacity of many opportunities for renewable energy demand has increased by almost 5 % annually (<40-50 MW) and small PV installations 0.01 GW in 2009. Potentials of other renewable investments yet. Besides the projects allocated and the country has responded to this challenge (<30 kW), that is currently being examined in energy technologies have not been examined in under the regime of public competitive bidding by intensifying the use of fossil fuels in electri- the Ministry of Electricity and Energy. Likely depth yet. and some large-scale CSP projects, there is a city supply. However, with the National Energy it will come into force in the middle or in the particular lack of incentives for small-scale po- Strategy of 2008 Egypt tries to reverse this deve- second semester of 2012. The feed-in tariff takes Electricity Market/Barriers/Attractiveness wer projects. Furthermore, political instability lopment by reducing the use of natural gas and into account the prices that achieved in the Since vertical and horizontal unbundling of in 2011 has affected the investment climate. oil in power production and promoting rene- projects that have been commissioned under generation, transmission, and distribution of wable energy. Particularly, wind power receives the tendering system. power in Egypt took place in 2001, there is no GIZ Activities and Experience much attention by the strategy as the country legal monopoly in the Egyptian electricity mar- GIZ is very active in supporting renewable has excellent wind potentials (mainly in the There are also some tax reductions available ket any more. However, a reality check reveals energy related projects in Egypt, currently being Western Bank of Gulf of Suez). The strategy sets for renewable energy equipment and spare that the state-owned Egyptian Electricity Hol- involved in four major projects: generation- and capacity-based targets for the parts from customs duties and sales taxes, as ding Company (EEHC) still owns and controls year 2020 (see above) and calls for the elaborati- well as grants and loans for renewable energy more than 90 % of the market. As the country’s • JCEE (energy policy support for the Ministry on of two regulatory policies for RE support, na- projects. In August 2011, the cabinet decided to six largest energy producers, the transmission of Energy); mely a public competitive bidding scheme for implement a fund for renewable energy. Inter- company, and the nine utilities are all part of wind projects and a feed-in tariff. Both policies ministerial committees are currently discussing EEHC, in fact the holding has control over all • RCREEE (regional centre for renewable are to be implemented in two phases, whereas various concepts for the fund. sectors in the electricity system. Some market energy and energy efficiency); the tendering system was established first and actors operate in isolated or semi-connected the feed-in tariff announced to be implemented Achievements areas. • MED-EMIP (support on policy level for after a period of review. The strategy includes Since 2004, Egypt has added roughly 0.45 GW of renewable energy and energy efficiency; EU some minor provision on energy saving and new wind power capacity, making it the most The national power grid is supplying Egypt’s International Services program); energy efficiency and calls for a reform of the advanced country in Africa and in the Middle entire territory. As a result, electrification is very electricity sector. East in grid-connected wind power generation. high, providing 99.5 % of the population access • MED-ENEC (energy efficiency in the buil- The Zafarana Wind Farm holds the largest share to electricity. In terms of integrating the targe- ding sector; EU International Services In July 2009, shortly after the approval of the of these capacity additions, growing from 2004’s ted quantities of renewable energy electricity program). National Energy Strategy, the Supreme Council 0.14 GW to today’s 0.52 GW. Additional wind into the transmission network, the National of Energy introduced a system of public compe- projects of 0.54 GW are scheduled to come into Renewable Energy Agency (NREA) claims that With respect to the support of wind power in titive bidding for large-size installations. Under operation until 2014 and projects of another the grid should not encounter major problems. electricity production, GIZ has elaborated three this law, the Egyptian government opened a 0.58 GW are already financed. There are tenders Currently, the transmission company is con- individual support policies, including a compe- first round of tenders worth several hundred announced for more than 1 GW of capacity. ducting studies on future impacts of renewable titive bidding scheme, a feed-in tariff for small megawatts of capacity and allowed potential energy integration with a special focus on wind wind farms, and public project development, investors to hand in proposals for wind projects Egypt has invested in concentrated solar po- power. such as joint ventures with the private sector. in the country. Successful projects receive long- wer plants. In 2010, the Kuraymat Integrated GIZ has supported the development of the term power purchase agreements of between Solar Combined Cycle Power Plant with a solar Authorities have not yet reported negative “Wind Energy Yield Forecast System”. Past and 20 and 25 years by the national transmission thermal power capacity of 0.02 GW became effects on electricity prices. To lower investment current policy advice includes the elaboration company. The law also enables producers to operational. The plant combines natural gas and operation cost, Egypt has registered the of a renewable energy master plan (with a focus sell certificates that result from the reduction combustion with thermal solar power. There Zafarana wind farm as a Clean Development on wind and solar), the establishment of a “Cer- of emissions of these plants. Evaluation criteria are also some similar projects currently under Mechanism (CDM) project in cooperation with tificate of Origin” system, the establishment of include privilege for local components. consideration or in more advanced stages of Japan, Denmark, Germany and Spain. The Hurg- an Energy Consumers Association, and capacity development. hada wind farm also receives support under building activities. GIZ also assisted in the orga-

58 59 Country Profiles: Egypt

nizational development of EGYPTERA, NREA, also helped Egypt to make use of international than 650 MW of wind power capacity annually owned companies are key areas to be addressed and the cabinet’s bureau for energy efficiency. climate support mechanisms by assisting in the between 2010 and 2020. To achieve the goal, in this process. Today, fossil fuels as well as Besides promoting energy saving campaigns elaboration of CDM projects, CDM Programmes Egypt will need to open up new areas for wind electricity prices are heavily subsidized, leading and several activities to improve intra-govern- of Activity (PoA), and Nationally Appropriate development, improve tendering, facilitate to energy/electricity prices far below normal mental communication processes, GIZ has Mitigation Action (NAMA) projects. administrative process and attract an increasing market levels. Cost transparency is essential to number of private investors. public acceptance of RE. Therefore, for further RE expansion, a clear picture about the real cost 3.2.4.2 Policy Analysis and Expected Egypt will likely be forced to foster the instal- of different energy technologies is needed. Mo- Need for Action lation of small-scale PV appliances and wind reover, an effective market reform must lead to power parks of smaller size as well in order to a levelled playing field for independent power meet its objectives. This could be achieved by producers with companies under the holding of No regulatory policy; capital subsidies, tax reductions, public investments/ Instruments complementing tendering of large-scale pro- EEHC (third party access). A successful feed-in loans/grants, sporadic public competitive bidding jects with the announced feed-in tariff, which is tariff will have to set very clear regulations on Policy Design Cycle Targets Strategy Instruments Monitoring Evaluation expected to be enacted in mid or the second se- grid access for independent power producers mester of 2012. Additional financial incentives and guarantee the feed-in of their electricity. Target Reaching Very unlikely, as neither instruments nor a strategy are in place. such as low-interest loans, grants, and extra tax The same applies to the Unified Electricity Law, incentives that allow investors to reduce cost which policy makers are currently revising and could be important accompanying measures. which will realistically be implemented in 2013. Egypt has defined renewable energy targets, (if provided by CSP only; a higher share of aiming to expand wind power ambitiously and PV would afford additional capacity due to Future legislation will have to address two addi- The feed-in tariff should also take into account to increase the overall share of renewable ener- the lower capacity factor), it is questionable if tional challenges: Egypt’s excellent potential of solar power. The gy in power production. However, the country Egypt can install such a large amount without feed-in tariff that is scheduled to be implemen- has not yet defined a comprehensive strategy to adequate capacity planning. Although at pre- 1) The government announced to use experi- ted in 2012 will probably not provide support reach these targets, particularly concerning ef- sent, NREA plans to build a CSP project with a ence from public competitive bidding to deter- for solar power but only for small wind parks. fective policy instruments and a legal reform of capacity of 100 MW until 2017 and some other mine the amount of feed-in. Generally, this can Small-scale PV, however, could cover much of the electricity market (including liberalization, projects are under preparation (in cooperation be helpful, but tariffs achieved in auctioning the electricity demand in private homes and cutting subsidies, etc.). The instruments cur- with the EU and other international donors and often represent the lowest level of possible thus help to decentralize electricity supply. rently in place will probably not lead to target banks), many more projects need to be develo- prices and cannot be applied to other projects Egypt’s strong solar would keep cost compliance. Additionally, there is no regulatory ped within the next years to assure the installa- without adjustment. Due to strong competition largely in line and could help create a domestic framework for the promotion of small-scale tion of the necessary capacity. Additionally, this in tenders, projects often turn out to be on the solar power industry at the same time. If Egypt power projects. process will need to be done at much higher edge of profitability. Moreover, tenders nor- took a lead here, its solar industry could func- pace than in the past. mally target regions with very good RE condi- tion as a future supplier for other countries in Egypt has formulated a 20 % RE goal in electri- tions. In a feed-in tariff, however, policy makers the region. city production by 2020, being composed of Egypt will therefore need to undertake more have to ensure that also projects under less 12 % from wind power, 5.8 % from hydropower, comprehensive capacity planning for both favourable circumstances receive an attractive In terms of institutional reform, clearer respon- and 2.2 % from solar energy (PV and CSP). While PV and CSP (as it does for wind) and improve tariff to operate economically. Since EGYPTERA sibilities between the ministries will contribute policy makers also set a capacity-based objec- corresponding policies in order to achieve the has gained extensive experience during the last to a more coherent RE policy and thus provide tive for wind power (7.2 GW by 2020), no such 2020-goal for solar. This could include a strong, two years with the elaboration of the feed-in more investment security. Especially conflicting capacity-related goal exists for solar power (the legally established public tendering scheme tariff draft, it can be estimated that the final law interests between the Ministry of Electricity and capacity of hydropower will probably remain at which seeks attracting private investments will incorporate such considerations. Energy and the Ministry of should today’s level, particularly since its potential is through regular auctions and which provides be addressed. GIZ’s approach to help strengthen already largely exploited). Considering that a sufficient investment security. The same applies 2) Introducing a feed-in tariff and facilitating EGYPTERIA as a sectoral institution (and thus 2.2 % share from solar power by 2020 would to wind power: while wind power development the market entrance of independent power avoid being in the line of conflict of both mi- at least require about 1.67 GW10 of capacity has been advancing faster than solar power in producers must go in line with a reform of the nistries) is an approach to commence bringing the past, the goal of 7.2 GW by 2020 remains a Egyptian electricity sector. Subsidised electri- together the ministries in RE support. huge challenge: Egypt will need to install more city prices and the de-facto monopoly of state- 10 Assuming an output of 5 TWh and capacity factor of 34 %.

60 61 Country Profiles: Ethiopia

Finally, effective RE support policies depend on GIZ addresses important areas through existing 3.2.5 Ethiopia political stability. Due to the current political activities (such as in the projects JCEE, RCREEE, transformation it is unclear if progress on RE MED-EMIP, and MED-ENEC) and will continue 3.2.5.1 Summary can be achieved in the coming period and thus participation in these projects. With respect if the 2020-targets can be met. Officials, how- to the Policy Design Cycle, further activity ever, state that despite the political transfor- could be directed on a consistent RE strategy, mation Egypt will continue its investments in subsequent instruments as well as monitoring Current share and capacity of renewable energy All sources renewable energy. and evaluation. For instance, as there is a lack Hydro Wind Solar Bio- Geother- Others Total of knowledge about cost of the implementa- mass mal Concluding, for a broader RE deployment in tion of a feed-in tariff, GIZ might intensify its Egypt, a potential need for action arises on the engagement in raising awareness and providing Generation 98 % <0.1 % <0.1 % <0.1 % <0.1 % <0.1 % 7.7 TWh following issues: detailed information on potential costs of such (2010) a policy (e.g. by conducting studies). In this con- Capacity 2 GW <0.01 GW <0.01 GW <0.01 GW <0.01 GW <0.01 GW 2 GW • Pursue the enacting and implementation of text, GIZ Egypt’s activity in consulting stake- (2010) the feed-in tariff. The law should allow sup- holders on adjusting industry electricity prices port of a broader range of renewable energy to increase competitiveness of RE, is another technologies (than the existing policies) and important and helpful activity. Consultancy on Targeted share and capacity of renewable energy All sources should include specific support e.g. for PV. how to liberalize the energy sector might be another field of activity, same as on institutio- Hydro Wind Solar Bio- Geother- Others Total • Design the Unified Electricity Law in a way nal reform. mass mal that a non-discriminatory environment for Generation n/d n/d n/d n/d n/d n/d n/d independent power producers is established. (2015) Further liberalize the electricity sector to Capacity increase the participation of private actors 10 GW 0.8 GW* n/d n/d 0.45 GW+ n/d n/d (2015) and decrease subsidies. Beyond n/d n/d n/d n/d n/d n/d n/d 2020

* by 2013. + by 2018.

Introduction/Overview Electricity Mix/Targets Ethiopia is one of Africa’s poorest countries Between July 2009 and July 2010, 98 % of all and at the same time called “Africa’s power electricity generated in Ethiopia originated house” since it strongly promotes hydropow- from hydropower plants, the rest coming from er. The country intends to drastically increase small fossil fuel based and other RE plants. In electrification and boost economic growth in other words, the total RE capacity of approx the future, aiming to increase its current power 2 GW (July 2010) is almost equivalent to the capacity by a factor of five within five years and overall capacity. wanting to become a net exporter of electricity. Yet, the country’s focus on building large hydro- By 2015, the country targets to add an impres- power dams leaves aside the promotion of other sive 8 GW of hydropower capacity, mainly by RE technologies. Its current hydro-focused building large-scale hydropower plants. It also energy strategy and the lack of adequate inst- aims to increase the current (marginal) wind ruments represent major barriers to RE sources power capacity to roughly 0.8 GW by 2013 and other than large hydro. geothermal capacity to 0.45 GW by 2018. Apart from these energy sources, Ethiopia has not de-

62 63 Country Profiles: Ethiopia

fined any long-term renewable energy targets. Achievements From an economic point of view, the focus on not known if and when this policy will become Due to the dominance of hydropower, which Ethiopia has excellent potentials for energy hydropower provides several benefits. As a poor effective. will soon generate more than 99 % of all power generation (calculated 45 GW of hydropower developing country, Ethiopia’s primary strate- in the country, there are no generation-based capacity). During the last five years, the country gic interest is to spur development and reduce At the same time, the need for and potentials of targets either. was able to tap already some of it by completing poverty, trying to avoid any negative impact small-scale energy production are huge: as rural 1.4 GW of large-scale hydro projects, bringing on the national budget. Due to the country’s electricity access is almost non-existent, off- Strategy/Instruments the country’s total capacity to about 2 GW extended system of rivers and lakes, hydropo- grid installations could improve access to elec- Ethiopia’s main energy legislation is the Growth in 2010. With the assistance of international wer is the most appropriate energy techno- tricity in rural areas (where grid connections and Transformation Plan 2010/11 – 2014/15. donors, some low-capacity logy to achieve these goals at moderate cost. might be expensive), facilitate the emergence of Even though it is conceptualised as an overall plants and other minor renewable energy pro- Even though it is foreseen that the newly built small businesses, and partly substitute firewood, economic plan with strategies and goals for a jects went online as well. hydropower stations will lead to slightly higher thus mitigating deforestation. variety of industrial sectors, energy plays an electricity cost, Ethiopia will be able to bring integral part in it. Investments in hydroelectric Another ten large projects with a capacity of in additional revenues by exporting of excess GIZ Activities and Experience power, i.e. additional capacity, are the central 5.6 GW have already been commissioned and electricity to neighbouring countries. The work of GIZ in Ethiopia has focused on po- objectives the government is pursuing for the are scheduled to start operation in 2015 or licy and strategy development as well as advice energy sector. Expansion of RE is highlighted earlier. Additionally, Ethiopia plans to build the However, this setup represents a central - on legislation and regulation. GIZ also realizes in the plan as the first strategic direction for Grand Ethiopian Renaissance Dam, Africa’s lar- rier to small-scale decentralised RE. Typically, off-grid pilot projects (currently solar and mini- the energy sector. It also aims at extension of gest hydroelectric power plant with a capacity independent power producers run projects of hydro) and it has supported stakeholders in the distribution lines, electrification, energy effici- of over 5 GW. If all these plants are built in time, smaller size and they need additional financial planning of a large-scale wind farm. In addition, ency/ and limiting wastage their capacity would exceed the target defined support to operate their facilities economically. numerous capacity building measures have of power. It also includes a blending target for in the Growth and Transformation Plan. Ethi- Without a liberalised electricity market, ade- been carried out, including the setup of renewa- ethanol and biodiesel. opia also commissioned projects to reach the quate policies, and the political will to allow ble energy centres at four national universities wind power and geothermal targets. such energy production, there is only little and solar and mini-hydropower training cen- Ethiopia elaborated a Nationally Appropriate opportunity for small-scale solutions in Ethio- tres. GIZ has also provided institutional support Mitigation Actions plan (NAMA; agreed under Electricity Market/Barriers/Attractiveness pia. Currently, the Ministry of Mines and Energy to new solar and hydropower associations. the Copenhagen Accord) where it fortifies its As a low-income developing country, Ethiopia is elaborating a draft for a feed-in tariff, but it is strategy for the promotion of renewable energy is facing serious technical and structural bar- towards the United Nations Framework Con- riers related to renewable energy. According to vention on (UNFCCC). the IEA, the electrification rate of the country is very low with only 17 % of the populati- Besides the Growth and Transformation Plan, on having access to electricity. In rural areas, Ethiopia passed some minor laws that target the coverage even only reaches 1-2 %. Moreover, promotion of renewable energy: in 2003, the government influence on the electricity market Ethiopian parliament passed the Rural Elect- is strong, through the public Ethiopia Electric rification Fund with the aim to promote rural Power Corporation. Under this constellation, off-grid electrification. Since 2010, there is an market access is difficult for new competitors exemption of duty in place for renewable ener- and independent power producers. gy equipment. However, most of the country’s major energy laws date back to the 1990s. Ethi- The main structural barrier for the promotion opia has no feed-in tariff, renewable portfolio of renewable energy other than large hydro standard, or another comparable policy promo- in the country is the government’s de facto ting specific renewable energy technologies. focus on large hydropower (capacity of wind and geothermal power is targeted to increase substantially but there are neither adequate policies, skilled labour force for maintenance, nor much experience with these technologies).

64 Country Profiles: Ghana

3.2.6 Ghana 0.05 GW of wind power capacity shall be ins- liament currently debates about a Renewable talled by 2013. In the long term, Ghana aims Energy Law. 3.2.6.1 Summary to maximise the share from non-large-hydro renewables (<0.1 GW) in electricity generation In terms of financial incentives, import duties, from today’s nearly 0 to 10 % by 2020. There are and value added tax exemptions exist for wind no capacity-related goals for this period cur- and solar power generating systems. Reduced Current share and capacity of renewable energy All sources rently in place. import duty of 5 % is applicable to technical equipment for both technologies. Hydro Wind Solar Bio- Geother- Others Total Strategy/Instruments mass mal Ghana has adopted two important framework In cooperation with international organiza- policies for RE support in electricity produc- tions, Ghana’s government has also implemen- Generation 68.8 % <0.1 % 10.2 TWh (2010) tion: the Strategic National Energy Plan 2006-20 ted two programs that target the installation of and the Ghana National Energy Policy of 2010. small PV appliances in households and public Capacity 1.2 GW <0.01 GW <0.01 GW <0.01 GW <0.01 GW <0.01 GW 2.2 GW The Strategic National Energy Plan 2006-20, buildings. These programs are known as the Re- (2010) implemented in 2006, is the country’s most newable Energy Services Programme (RESPRO) important multi-sectoral framework policy. and the Ghana Energy Development and Access It aims to contribute to the development of a Project (GEDAP). Targeted share and capacity of renewable energy All sources well-functioning energy market and formulates a pathway for the energy sector until 2020. The Achievements Hydro Wind Solar Bio- Geother- Others Total mass mal plan considers RE an important pillar in the Although future prospects seem good (until country’s energy mix, helping to improve rural 2014 several large hydropower and a large wind Capacity 2.3 GW 0.05 GW* n/d n/d n/d n/d 5.0 GW electrification, decrease the use of firewood for power project expect completion), hardly any (2015) cooking and heating and slow down defores- concrete impact has been achieved until to- tation. It defines long-term goals for RE share day. There is some success in rural areas where Generation n/d 10 % (non-technology specific; including small hydro) n/d (2020) in power production (see above) and aims to various off-grid, small-scale appliances have achieve a penetration of 30 % of rural electrifi- been completed with the help of international Capacity n/d n/d n/d n/d n/d n/d n/d (2020) cation with RE technologies by 2020. The plan donors. also includes various recommendations, a.o. * by 2013. the enactment of a feed-in tariff and financial The main reasons for currently stagnating RE incentives. promotion are the lack of adequate support policies and low purchasing power of the popu- Introduction/Overview Electricity Mix/Targets The Ghana National Energy Policy of 2010 is lation. In addition, interest rates on bank loans Ghana has passed two central strategic, energy- In 2010, Ghana produced 68.8 % of its electricity the most recent framework policy. Addressing are high and imported equipment is expensive. related papers in the recent past, both aiming at from hydro energy. The rest, 32.2 %, was pro- RE deployment, waste-to-energy management, There is lack of expertise and skilled staff able RE to become more important in the country’s duced in thermal power plants combusting oil, and energy efficiency, it calls for introducing to install renewable energy power appliances. electricity mix. While the country already diesel, and natural gas. Almost no non-hydro adequate policy instruments for the support generates much of its electric power from large renewable energy power plant was connected of RE in power production. In particular, the Electricity Market/Barriers/Attractiveness hydro dams, decentralised, smaller-scale RE to the national grid. RE capacity amounted to paper suggests that the country should put Ghana’s electricity sector is liberalised but in entered the political agenda in recent years to 1.2 GW, entirely provided by two large-scale focus on promoting mini hydro, pointing to fact, state-owned companies dominate or have develop rural electrification and diversify power hydropower dams. Thermal power plants nomi- the country’s excellent potentials and identify- large influence on production, transmission, as supply. Ambitious targets have been formulated nally accounted for 0.87 GW, but many of these ing more than twenty sites for suitable power well as distribution of power. 87 % of all power and several measures to translate this vision are out of function. generation. capacity is owned by the public company Volta into reality have been suggested, but no concre- River Authority (VRA), which also controls part te policy has come into effect yet. Until 2015, Ghana aims to install an additional As of mid 2011, no concrete follow-up such as of electricity transmission through its subsidi- 1.1 GW of hydropower to reach 2.3 GW of total a feed-in tariff or similar regulative policy has ary Volta River Authority - Northern Electricity hydroelectric generation capacity. Additionally, been enacted yet. However, the national par- Department (VRA-NED). The national grid is

66 67 Country Profiles: Ghana

operated by the state-owned transmission com- to electricity. Moreover, off-grid solutions often Ghana puts focus on increasing the share of Reports say that the policy has the potential to pany GRIDCo. can be more cost-effective in small villages small-hydro and wind power. The country incentivize RE growth effectively. Obviously where a connection to the national grid might has passed two important long-term frame- due to unclear political priorities it has taken From a technical point of view, the country’s be too expensive. work policies on energy, forming the country’s five years since the passing of Strategic Natio- grid is characterised by both big challenges and strategy in renewable energy promotion and nal Energy Plan 2006-20 to take up this issue opportunities for the promotion of renewable In terms of investment attractiveness, a major call for structural reforms and the elaboration (facilitated also through GIZ support on desig- energy. obstacle is the lack of an effective policy that of support policies. However, to date none of ning the bill). For long, the strongest RE driver On the one hand, the electricity network is would award power producers with cost bene- these policies have been implemented, resulting has been Ghana’s insufficient power supply poorly established and inefficient, often close fits and a stable environment for investment. In in very little achievements in the promotion of (frequent power cuts due to droughts affecting to breakdown. Power outages and forced shut- the past, mostly international donors engaged renewable energy. large hydropower). Recently, other RE advanta- downs are very common in Ghana. Fluctuating in building RE projects. Private investors, on the ges such as rural electrification and combating RE power output – especially from wind and contrary, have remained reluctant. In terms of defining renewable energy targets deforestation entered the political agenda. solar power – adds another challenge to the Ghana passed a fairly ambitious goal of 10 % grid. Major investments in the modernisation of Under these very limited RE activities, no nega- from renewable energy in its electricity pro- The first step towards effective RE support Ghana’s transmission network will be needed to tive effects on the electricity price or national duction by 2020. This goal does not include the will be a thorough design and implementation bear the input of large amounts of RE electricity. budget could be observed. share of large hydropower plants, which usually of the Renewable Energy Law. This includes On the other hand, the poor establishment of represent a share of between 60-70 % in pow- guaranteed grid access for independent power the grid provides attractive opportunities for GIZ Activities and Experience er generation. There are also capacity-related producers and connection within an appropria- off-grid, independent power production in GIZ is currently preparing a policy-related pro- short-term goals for large-scale hydro and wind te time span. Producers must receive the deter- areas not connected so far. As Ghana only has ject, which envisages the support of the Minis- power. mined tariffs, possibly co-financed by a rene- a an electrification rate of 54 %, there are large try of Energy in developing regulations for the wable energy fund and international funding. potentials to use solar, wind, and other natural implementation of the Renewable Energy Law. Ghana has also invested considerable effort in Eventually, it will be of particular importance resources in rural areas to provide people access the past in formulating a roadmap to make its to create a fair and supportive environment electricity sector more sustainable. The country for new market actors to be able to compete passed two comprehensive framework policies, with the public utility VRA. This includes the 3.2.6.2 Policy Analysis and Expected the Strategic National Energy Plan 2006-20 and reduction and elimination of subsidies on both Need for Action the Ghana National Energy Policy of 2010. production and consumption.

However, from an in-depth perspective, these In a second step, it will be necessary to conti- Instruments Tradable RE certificates, tax reductions two papers have not been strong and compre- nuously evaluate the functioning of the law, hensive enough to incentivize effective RE pro- observe price development, adapt tariffs, or Policy Design Cycle Targets Strategy Instruments Monitoring Evaluation motion. Hence, setting up a renewable energy make changes to the policy if necessary. Stake- Target Reaching Very unlikely, as neither instruments nor a strategy are in place. support strategy does not only mean elabora- holders must be familiar with its regulations, ting ambitious framework policies but also re- requiring awareness raising activities. Moreover, quires concrete instruments for implementing the purchase of renewable energy equipment the strategy. Moreover, sufficient funding for RE needs to be alleviated. projects, making use of international cooperati- on, liberalizing the domestic electricity market, In a third step, fiscal incentives should be at- etc. would be further steps under an effective a tached to the feed-in tariff, allowing equipment strategy. Ghana has not tackled these issues so to become affordable to investors and private far, i.e. especially in this field a need for future households. This goes in line with a support for action arises. construction companies specialized in renewa- ble energy installations. In September 2011, a debating process in Par- liament about the Renewable Energy Law (this law will introduce a feed-in tariff) has started.

68 69 Country Profiles: India

These steps must be accompanied by a long- • Broaden fiscal incentives to renewable 3.2.7 India term strategy to successively liberalize the energy technologies apart from wind and electricity sector. The influence of state-owned solar. Elaborate additional incentives, as for 3.2.7.1 Summary company VRA on production and transmission instance income tax cuts for producers and of power needs to be reduced and more private consumers of renewable energy. There is a actors allowed participating in the market. variety of options available. Current share and capacity of renewable energy All sources Concluding, an effective RE promotion in • Possibly build up partnerships with other Ghana will require a number of further policy countries in Africa, which have already Hydro Wind Solar Bio- Geother- Others Total related activities. If implemented successfully, gained experience with feed-in tariffs and mass mal benefits like increased reliability of the electrici- build up cooperation. Promote the sharing Generation 13.8 % 1.7 % <0.1 % 0.2 % <0.1 % <0.1 % 830 TWh ty system, higher electrification and less reli- of information and experience. (2008) ance on firewood and oil will further increase Capacity political acceptance. Accordingly, policy makers After the parliament passes the Renewable 41.8 GW* 14.9 GW <0.01 GW 2.8 GW <0.01 GW <0.01 GW 182 GW (8/2011) could envisage the following focus areas in or- Energy Law, the ministry will likely involve GIZ der to meet Ghana’s renewable energy goals: in the promotion and implementation of this framework. The above-mentioned focus areas • Pass and implement the Renewable Energy for policymakers all represent possible areas of Targeted share and capacity of renewable energy All sources Law. Guarantee favourable and fair con- activity for GIZ, including work on not only de- Hydro Wind Solar Bio- Geother- Others Total ditions for private power producer and fining targets and a strategy, but also additional mass mal improve competition in the market. Reduce support instruments. Apart from the envisaged both production and consumption subsidies project to support the implementation of the Generation n/d n/d n/d n/d n/d n/d n/d for conventional power sources to create cost Renewable Energy Law, future action by GIZ (2012) transparency for renewables. Ensure suffici- might include, for example, the development Capacity 54.6 GW 17.6 GW <0.1 GW 3.2 GW n/d n/d 225 GW ent funds to finance the provisions of the of monitoring tools and recommendations (2012) law; increase the use of international mecha- with respect to the Renewable Energy Law as Beyond n/d n/d 20 GW+ n/d n/d n/d n/d nisms and funds to help finance the system. well as supporting regional networks to foster 2020 Continuously improve the law and dissemi- knowledge exchange with respect to feed-in nate information about benefits of the policy. tariffs. * large and small hydro. ino federal targets. +by 2022.

Introduction/Overview alternative in the country. Rather fossil fuel- India, having the second largest population of dominated power production will shape India’s the world, is facing similar energy challenges electricity production in the future. like its neighbour China: within the next few decades, tremendous amounts of new gene- Electricity Mix/Targets ration capacity will be necessary to meet its In 2008, India produced 15.7 % of its electricity quickly rising energy demand. At the same time, from RE, of which 13.8 % were generated in fighting climate change requires low-carbon hydropower-, 1.7 % in wind-, 0.2 % in biomass-, energy technologies. India aims to respond to and a marginal share in other renewable energy this challenge with its comprehensive renewa- power plants. The dominant source in India’s ble energy strategy that puts particular focus on overall electricity supply was coal with a share the promotion of hydro, wind, and solar power. of more than two thirds of all generation However, from an overall perspective, India’s (68.5 %). Natural gas power plants contributed energy strategy will not make renewables – alt- 10 %, oil-based power plants 4.1 %, and nuclear hough ambitiously supported - a major energy power plants generated 1.8 %. Total RE capa-

70 71 Country Profiles: India

city (including large hydropower) as of August The Electricity Act defines a national electricity valid instrument for fulfilling the RPO target by Achievements 2011 amounted to 59.8 GW of grid-connected policy, an electricity tariff policy and a plan for the ‘Obligated Entities’. As of end 2010, India was the world’s fifth lar- installed capacity, with only hydro, wind, and making ideal use of energy resources including gest non-hydro renewable energy market with a biomass (agro-residues and ) power RE. In compliance with the specific policy mea- In 2002, in order to encourage investments, total renewable energy power capacity of contributing considerable shares. The country’s sures, the tariff policy has been notified in 2006. India introduced an investment tax reduction 16.8 GW (54 GW including large-hydro). Re- total installed capacity was 182 GW, as of Sep- The policy has also specified the role of Regula- in the RE sector that allowed investors to claim presenting 10.1 % of the country’s total power tember 2011. tory Commissions. They may set the Renewable an ‘Accelerated Depreciation Benefit’ of up to capacity, these installations contributed to Purchase Obligation (RPO) targets, taking into 80 % of the project cost. Further, in 2008, with 4.1 % of the overall electricity generation By the end of the current 11th Five-Year Plan in consideration the availability of renewable an objective to increase the renewable energy (15.7 % including large-hydro). March 2012, India targets to have a total hydro energy resources in the region and its impact on injection in the grid, the Ministry of New and capacity of 54.6 GW, 17.6 GW of wind power retail tariff. In 2011, in order to encourage the Renewable Energy (MNRE) has introduced the In March 2011, four years after the implemen- capacity, 0.05 GW of solar capacity, and 3.2 GW deployment of renewable energy the country ‘Generation Based Incentive’ Scheme for the tation of the 11th five-year plan, additional of biomass capacity. India has not defined any has specified the framework for Renewable wind and solar energy sector, trying to put a renewable energy capacity of 10.7 GW was national generation-based targets (there are Energy Certificate Mechanism. The mechanism stronger focus on linking financial support to installed, achieving 76 % of the 2012-target. As generation-based targets on state level, varying shall enable the obligated entities meeting their operation and maintenance. Both policies are defined in the plan, wind power has evolved to significantly) and no long-term targets going RPO targets through purchase of Renewable mutually exclusive; investors may avail benefits be the fastest growing of all renewable energy beyond the year 2020 - except for solar power, Energy Certificates. either under Accelerated Depreciation Benefit technologies. Overall renewable capacity is gro- which should provide a capacity of 20 GW by Under the provisions of the Electricity Act, 2003, or the Generation Based Incentive Scheme. wing quickly too, increasing its capacity share 2022. the Central Electricity Regulatory Commission There are also reductions/exemptions on im- by more than 8 % points since the initiation of India aims to increase solar hot water produc- specifies a framework for the determination port duties for renewable energy technology. the 11th plan. tion from 2.8 GWth as of January 2011 to of a feed-in-tariff for ‘inter-state’ sale and the 10.5 GWth by 2017 and 14 GWth by 2022. purchase of renewable energy. Whereas, for the promotion of renewable energy in respective Strategy/Instruments States i.e. ‘intra-state’ sale and purchase of re- India laid down its long-term strategy for the newable energy, the State Electricity Regulatory energy sector in the Integrated Energy Policy Commissions’ specifies regulation and/or order Report of 2006, which addresses the develop- for determination of a feed-in tariff for elec- ment of the country’s energy supply but also tricity generated from wind, small hydro, solar outlines measures and long-term perspectives photovoltaics, solar thermal, non-fossil fuel for renewable energy. The general regulative based cogeneration, and biomass-based power framework for the electricity market is the Elec- projects. The term of the power purchase agree- tricity Act of 2003, which regulates the access of ment between the generator and the purchaser renewable energy to the electricity grid. shall essentially depend on the framework esta- blished by the appropriate commission, e.g. the In the 11th Five-Year Plan – the most impor- Central Electricity Regulatory Commission spe- tant source for short-term goals on renewable cifies the terms of power purchase agreement energy - India set quite ambitious targets for as 13 years for all technologies except for small the development of renewable energy by March hydro (<5 MW; 35 years) and solar photovol- 2012 (see above). It also includes a 1 GW off-grid taics/thermal (25 years). As for the RPO frame- capacity objective (0.95 GW wind, 0.05 GW so- work, almost 26 State Electricity Regulatory lar) by the same target year. The National Solar Commissions, exercising their power vested Mission encompasses 20 GW of grid-connected, under the Electricity Act, 2003 have specified including utility scale and rooftop projects and the targets taking into consideration the avai- 2 GW of off-grid capacity by 2022. lability of renewable energy potential in their States together with its impact on retail tariff. The framework recognises RE Certificates as a

72 Country Profiles: India

Electricity Market/Barriers/Attractiveness To date, there have been no reports on the effect 3.2.7.2 Policy Analysis and Expected Since India has proclaimed to increase the of renewable energy support on electricity pri- Need for Action share of RE substantially in its energy mix, the ces or the national budget. Yet, there are funds country’s energy market has become attractive for solar photovoltaics power projects in rural for both, domestic and international enter- areas that cover between 30 and 90 % of the Feed-in tariff, renewable portfolio obligation, tradable RE certificates, prises, to invest in renewable energy projects. investment cost. Instruments capital subsidies, investment/production tax credits, tax reductions, public Between 2009 and 2010, financial investment financing, public competitive bidding rose by 25 % to EUR 2.7 billion with 60 % flow- GIZ Activities and Experience Policy Design Cycle Targets Strategy Instruments Monitoring Evaluation ing into wind projects. Moreover, the Indian GIZ has been active, for example, in a develop- renewable energy industry is growing rapidly, ment partnership between the private biogas Target Reaching Very likely to achieve short-term targets; unlikely to achieve 2020-solar target. creating more than ten thousands of jobs in the company EnviTec and the public company country. India’s largest manufac- MPPPL. EnviTec has delivered expertise and turer Suzlon is now one of the global players, technology for biomass fermentation, while competing with European, Chinese, and U.S. MPPPL has planned the respective installati- Renewable Energies already play a role in of the plan. The achievement of the National companies. The wind industry employs rough- ons and runs them. GIZ has provided contacts, India’s power system, although less than in Solar Mission’s goal of 20 GW of solar capacity ly 10,000 people. There are also more than 10 knowledge management and has ensured the other emerging economies such as China or by 2022, however, is less likely. According to domestic solar module manufacturers in India, relevant supply chain for the project. This has Brazil. A strategy has been defined on how to two studies, India will by far not be able to fulfil especially due to the ambitious targets set in led to local capacities to produce components reach the targets, based on an integrated policy this goal (and neither the interim goals) with the Jawaharlal Nehru National Solar Mission for large biogas plants, but experience has approach and an ongoing reform of the elec- the current set of policies. One study projects a act (short: National Solar Mission). The country shown that the realization of projects has been tricity sector. India has also passed concrete capacity of only 0.1 GW by 2022; another study also has a very strong small-scale hydropower confronted with severe delays, e.g. due to locally support mechanisms for implementing the estimates 1.8 GW in the next five to six years. manufacturing industry. specific market structures. strategy even though some of these laws are not designed appropriately to allow an efficient In terms of initiating a comprehensive strategy As in many other developing and emerging In another program, GIZ promoted vegetable support. India encounters problems with the that guarantees successful long-term RE sup- countries, India is facing some technical chal- oil motors and biogas motors combined with enforcement of the existing policies. It has a port, India has established various key elements. lenges related to deployment of renewable generators. Activities included intensive consul- good monitoring system in place. First, the Electricity Act of 2003 is an important energy. The national transmission and distri- ting for energy committees in villages and the step towards a functioning renewable energy bution networks, for instance, require rein- technical development of motor technology. Besides its target for solar power, India has not support as it pushes liberalization and compe- forcement, accompanied by measures to reduce Currently, GIZ supports the establishment of a defined long-term targets (beyond 2020) for tition in the domestic electricity market. It has network losses. Currently, approximately 32 % model system for waste-free electricity supply other renewable energy technologies yet. Goals helped to unbundle production, transmission of the electricity is lost during transportation in 25 communities, which includes the inten- in five-year plans do not exceed its respecti- and distribution of electricity, rationalize tariffs, and transmission. In peak seasons, wind power sive dialogue with the local population and the ve time horizons and they neither do in the and bring transparency into electricity sub- farms in Tamil Tadu (where most wind capacity local public administration. existing renewable portfolio obligations of the sidies. An increased number of private actors is installed) are often put off-grid due to limited states. Although many observers believe that have been entering the market, resulting in a available grid capacity. Even though the coun- A third program, which concentrates on rural India will continue on its path of promoting re- share of 19 % of private participation in the try has established a smart grid task force and electricity supply, includes activities such as the newables, the lack of long-term goals alienates power generation market. For a continued strongly invests in grid improvement further development of an operator model for commu- investors and is one reason for why India is not success of renewable energy promotion, it will efforts might be necessary to overcome these nity nets/off-grid systems, market development as successful as China in attracting renewable be necessary to continue liberalisation of the obstacles. for renewable energy in the agriculture sector energy investments. Indian power market. and policy advice for general frameworks (e.g. feed-in tariff). When analyzing the feasibility of India’s exis- Second, the Integrated Energy Policy Report, ting renewable energy targets, the short-term probably the most important and comprehen- goals can be considered realistic. The five-year sive strategic policy, provides well-designed plan’s goal for renewable energy capacity ad- guidelines for the support of renewable energy. ditions is largely on track with an achievement It emphasizes the need of renewable energy rate of almost 76 % one year before the ending to increase energy independence, accelerate

74 75 Country Profiles: India

electrification, and to create jobs. It also cites a but then lacking proper operation and mainte- Mission has given necessary spurt to the Solar • While portfolio obligations are strongly ori- renewable energy potential and cost analysis, nance, as the way of support provides no incen- Energy segment. The country is witnessing ented towards competition and the market, demands better grid integration, enlargement tive for operation. The policy puts heavy focus positive results and the State of Rajasthan only, feed-in tariffs are characterised by stronger and enhancement, and stresses the need for on investment, trying to increase wind power has received application worth 17000 MW for regulation and fixed tariffs. As India imple- better efficiency measures and higher energy capacity rapidly, but neglected making sure that developing the Solar Projects from various mented both such policies, the management savings. All these elements are important for a these plants were operated properly. In 2007, project developers. The Central Electricity of their co-existence will be a central chal- success in the long run. India’s wind farms had an average load factor of Regulatory Commission has specified Indian lenge. 17 % (some regions only have 10 %) which is si- Electricity Grid Code framework encouraging With regard to the definition of concrete mea- gnificantly lower than those of other large wind the generation from Wind and Solar Energy • In order to encourage investment in the sures to implement the strategy and achieve markets such as the United States, Spain, or Projects. renewable energy sector, the long-term goals the targets, India has a large portfolio of diffe- Germany (all above 20 %). Although the central should be stated and states should specify rent policies to foster renewable energy which government announced the Generation-Based Further, India is among the few countries that long term RPO target lasting until beyond address various different renewable energy Incentive Scheme which provides for availing have introduced the Renewable Energy Certi- 2020. technologies and types of support. Among them the incentive for amount of electricity gene- ficate Mechanism for encouraging the deploy- are feed-in tariffs, renewable portfolio obli- rated and fed into the electricity grid, most of ment of Renewable Energy. It is likely that such • Suitable policy and incentive measures gations, certificate trading, tax credits, import the applications are still commissioned under mechanism shall support large-scale deploy- to encourage developers switching from duty exemptions, auctioning, loans, a the more profitable investment tax reduction ment of renewable energy and essentially investment-based regime to a generation- obligation, and a rural electrification program. policy. overcome geographical constraints to harness based incentives regime so that plants are available RE sources. However, the following to- actually operated and produce electricity. However, some problems exist with the imple- With respect to the National Solar Mission’s pics could be possible future actions for Indian Focus more on generation-based than mentation of these laws. Due to its organizatio- goal to increase solar capacity up to 20 GW by policy makers: capacity-based targets. nal structure as a federal republic, Indian states 2022, the MNRE has announced policy measu- enjoy strong constitutional competency in the res for rapid deployment of solar energy in the • It must be ensured that states implement Existing GIZ activities could be extended along power sector. Therefore, states have to imple- respective segment. Solar projects worth the policies efficiently and that the envi- the above mentioned challenges for the In- ment renewable energy laws – a process that is 620 MW (PV: 150 MW & CSP: 470 MW) have saged target is achieved. Further, there dian government. This includes policy advice often not overly effective. Since 2006, almost been allotted under Batch I/ Phase I of the should be stronger enforcement provisions on penalty systems, on the co management of 26 out of 28 states have introduced renewable National Solar Mission which are under const- for non-compliance. Setting of a minimum feed-in tariffs and portfolio obligations, and purchase obligations for renewables (with quo- ruction. Guidelines, for solar project developers goal under the portfolio scheme could be a on elaborating long-term renewable energy tas between 1 and 14 %). Only 4 states achieved willing to participate in Batch II/ Phase I of the possible first step. scenarios. their respective goals in the 2009/2010 period. National Solar Mission have been announced Earlier, only 3 states had a penalty system in by MNRE targeting solar photovoltaic capacity place that sanctions non-compliance with the of 350 MW. It can be expected that solar energy RPO targets; in all other states not meeting the will develop into many grid connected and off- target remains unsanctioned. However, the sta- grid rooftop applications even on mid and small tes have revised their RPO framework after the sizes. Even though the 2009 passed feed-in tariff introduction of the Renewable Energy Certifica- might help to speed up installations and attract te Mechanism. In addition, the implementation more investments, it remains uncertain if the of feed-in tariffs has not been accomplished in goal can be achieved without additional effort. all states. As of August 2011, the country only had 0.04 GW of grid-connected photovoltaic sys- Moreover, some policies were found not to tems whereas the solar water heating collector be very effective, not meeting the envisaged area was approximately 4.67 million square objective, particularly with regard to the pro- metres. motion of wind power. It has been observed Nevertheless, India is among the top five that investors installed wind farms availing the nations in terms of wind energy installations. tax depreciation benefits from the Government, Further, the Jawaharlal Nehru National Solar

76 77 Country Profiles: Indonesia

3.2.8 Indonesia 0.25 GW wind power capacity. The country also on and exploitation, duties and taxes, and the passed a non-technology specific generation- purchase of geothermal electricity from private 3.2.8.1 Summary based target for electricity production of 15 % producers by the state-owned utility Perusaha- by 2025 (excluding large hydro). an Listrik Negara (PLN) at a fixed price. Some programs also promote electrification of rural In addition, the country aims to achieve a share areas and small islands. Additionally, the count- Current share and capacity of renewable energy All sources of 17 % from renewable sources in primary ry enacted import duty exemptions and capital energy by 2025 (up from 5.7 % in 2010). subsidies for renewable energy technologies Hydro Wind Solar Bio- Geother- Others Total such as for generators, turbines, solar photovol- mass mal Strategy/Instruments taic cells and panels, and other equipment. Generation 6.6 % <0.1 % <0.1 % <0.1 % <2.2 % <0.1 % 156.8 TWh Indonesia’s most important strategic piece of (2009) legislation for RE support is the Blueprint of Apart from support for geothermal power National Energy Management. Passed in 2005, it production and financial incentives, there is Capacity 3.5 GW* <0.01 GW <0.01 GW <0.01 GW 1.1 GW <0.01 GW 30.9 GW (2009) was the first document of its kind that set both no comprehensive policy creating a regulatory capacity- and generation related long-term tar- framework for other RE support. Only some gets for renewable energy in power production ministerial allow small enterprises Targeted share and capacity of renewable energy All sources (see above). Addressing future developments and business entities to conclude RE power in the whole energy sector, the plan aims to purchase agreements up to 10 MW of capacity. Hydro Wind Solar Bio- Geother- Others Total increase energy efficiency and conservation, as mass mal well as giving renewable energy sources a more Achievements important status in the country’s future energy Without regard to geothermal hydropower, ca- Generation 15 % (non-technology specific; excluding large hydro) n/d supply. The Energy Law of 2007 follows most of pacity additions from renewable energy sources (2025) these concepts and ideas. have been very limited during the past five to Capacity 0.5 GW+ 0.25 GW 0.87 GW 0.81 GW 9.6 GW n/d n/d ten years. Solar, wind, and biomass power for (2025) There are also important provisions in the instance, remain in a one-digit megawatt range * including 0.01 GW of small hydro. +small hydro only. 2011 Master Plan for the Acceleration and although very good potentials exist for all three Expansion of Indonesian Economic Growth, sources. Geothermal power is the only techno- particularly concerning financial support for logy having received significant attention over Introduction/Overview power contributed 6.6 % and geothermal power renewable energy. The policy encompasses a the last years; its capacity increased by roughly Indonesia is one of East Asia’s quickly growing plants 2.2 %. Other renewable energy technolo- planning period of 14 years until 2025. Besides 0.3 GW between 2005 and 2009. economies and will need large amounts of gies did not generate measurable shares. Fossil defining general economic strategies, the paper power capacity in the future to meet the rising fuels represented the major sources in power compromises some important provisions on Electricity Market/Barriers/Attractiveness energy demand of its population and industry. production with coal supplying 27.5 %, natu- renewable energy of legislative, infrastructural, Despite the fact that Indonesia considers RE an As there are excellent potentials for hydro and ral gas 17.7 %, oil 16.2 %, and diesel 6.7 %. The and financial nature. It demands the revision of important source in its future power supply, the geothermal power and long experience with rest (23 %) was power purchased from private the electricity market Law No. 30 to regulate the country’s overall energy policy is still heavi- these technologies, the country can make use producers (without indication of origin). The development of renewable energy and to push ly focused on supporting fossil fuels – both of its great potentials of other RE. Yet, while the total renewable energy capacity as of end 2009 liberalization of the market. It also allocates regulatory and financially. Coal-fired power Indonesian government already implemented amounted to 4.6 GW, representing only a small Indonesian rupiah (IDR) 134.6 trillion (EUR 11.2 production still is in the political focus and is ambitious goals for renewable energy in power amount compared to the country’s total capaci- billion) for renewable energy power plants until considered by the government the most effecti- production and passed some minor policies ty of 30.9 GW. 2025. ve solution to meet the country’s quickly rising for its promotion, the country’s general energy energy demand. Several GW of additional coal policy is still strongly supporting fossil fuels. By 2025, Indonesia aims to have installed a total In terms of concrete instruments and financial power capacity are already under construction grid-connected renewable energy power capa- incentives, Indonesia has enacted five distinct and await completion within the next years. Electricity Mix/Targets city of 11.9 GW (excluding large hydro), consis- laws on the promotion of power production Moreover, the government substantially subsi- In 2009, Indonesia produced 8.8 % of its electri- ting of 9.5 GW geothermal, 0.87 GW solar, from geothermal sources since 2003. These dises fossil fuels and electricity prices. For 2011 city from renewable sources, to which hydro- 0.81 GW biomass, 0.5 GW small hydro, and include regulations on permitting explorati- the country has allocated EUR 10.8 billion (IDR

78 79 Country Profiles: Indonesia

129.7 trillion) for fuel subsidies and EUR 5.5 68.9 billion (EUR 5.6 million) on micro hydro Indonesia has defined targets for renewable in coal-based power capacity, and weak or non- billion (IDR 65.6 trillion) for electricity subsidy. installations and IDR 492.6 billion (EUR 40.2 energy by setting both long-term generati- existent renewable energy support policies. million) for small-scale solar PV rooftop ins- on- and capacity-based objectives. However, to Due to Indonesia’s geography, the national grid tallations. The total budget allocated to RE and achieve these targets, the country would need First, the government exercises strong control is quite fragmented, leaving one third of its po- self-sufficient energy villages was IDR 621.25 a comprehensive strategy and adequate inst- on electricity prices, allocating considerable an- pulation without electricity. A major grid exists billion (EUR 50.7 million). Until 2025, Indonesia ruments – two steps that the government has nual budgets to keep electricity prices low and on the Java-Bali islands, but smaller islands only plans to invest IDR 134.6 trillion (EUR 11.2 billi- not yet implemented. While there are various promote the exploitation, production, and the have limited low-voltage networks. This grid on) for the expansion of renewable energy. laws for the promotion of geothermal power export of fossil fuels, particularly coal, oil, and structure is a major challenge for RE. Without and some minor regulations for other renewa- natural gas. In 2011 alone, EUR 15 billion (IDR technical improvements, it will not be able to Even though there are excellent potentials in ble energy technologies, there is no strategic 182 trillion) were allocated to subsidize fossil bear RE integration. Indonesia for RE, attractiveness for investment or policy concept in place that would allow an fuels and electricity. This has lead to considera- has been very limited in the past, particularly effective support of other renewable energy ble economic disadvantages for RE, requiring If these barriers are overcome, RE could play due to the absence of a well-functioning sup- technologies. On the contrary, Indonesia still cost transparency to be or become competitive. a helpful role in electrifying these islands. port policy. There is not enough incentive for puts heavy emphasis on the promotion of fossil Renewable energy plants can also function international companies to enter the local mar- fuels. Second, the Indonesian government continues as off-grid solutions by replacing small fos- ket and private investors often cannot afford to planning and constructing coal power plants sil fuel-based power installations. Currently, buy and operate renewable energy plants. In the With the strategic Blueprint of National Ener- with several GW of capacity. Even though a re- diesel generators – expensive and dependent past, most of the small-scale renewable energy gy Management Indonesia introduced both lative decrease of fossil fuel share in power ge- on continuous fuel supply – provide most of installations (particularly solar and small hydro) capacity-related and generation-based goals neration is targeted in the future (to the relative the households in remote areas with electrical were built with governmental and international for renewable energy in power production for benefit of RE), there will still be a considerable power. Additionally, connecting remote areas to funds. the long-term. The paper also includes impor- absolute augmentation in capacity due to rising the electricity grid might not always be econo- tant other provisions necessary for successful energy demand. When considering current mically viable. Off-grid, small-scale renewable GIZ Activities and Experience RE support, as it calls for grid and capacity developments and plans in regards to coal and energy plants (such as PV or small hydropower Since more than 20 years, GIZ supports the expansion, improvements in energy efficiency, natural gas capacity additions, it is unclear if the installations), would also allow local people development of mini hydropower projects for and cutting subsidies. Renewable energy is also 2025 RE targets can be met. to gain access to electricity and substitute the rural electrification, including capacity building mentioned in some other energy policy-related purchase of diesel or gas. The government has and technical support of local manufacturers. papers, such as the Master Plan for the Accele- Third, Indonesian stakeholders consider rene- already provided some funds for rural electrifi- ration and Expansion of Indonesian Economic wable energy more a means to improve rural cation and replacing diesel generators. Growth. All these plans see renewable ener- electrification on the country’s smaller islands In 2010, the Indonesian government spent IDR gy taking a stronger relative position in the than a replacement for conventional power country’s future energy supply. In 2011, the Mi- capacity. Much of the (fossil fuel-based) power 3.2.8.2 Policy Analysis and Expected nistry of Energy and Resources created generation capacity is installed on the islands of Need for Action a Directorate General of New Energy, Renewab- Java, Bali, and Sumatra, where the government le and Energy Conservation, acknowledging the does not intend to let RE play a substantial role growing importance of this energy source. in the future. Rather, small-scale PV, biomass (Feed-in tariff), capital subsidies, investment/production tax credits, tax plants, and mini- and micro-hydro installations Instruments reductions, public investments, public competitive bidding Despite these achievements, however, shall help bringing electricity to residents and Indonesia’s RE strategy is not comprehensive companies to rural areas. According to existing Policy Design Cycle Targets Strategy Instruments Monitoring Evaluation yet and will not lead to the projected deploy- policies, only geothermal power will substan- ment. None of the existing strategic papers, tially extend its position in the future in more Target Reaching Rather unlikely, as there is no clear strategy; for some technologies there is no support instrument in place. solely focuses on RE or elaborates concrete developed areas. strategies for an effective RE promotion. Policy makers still consider fossil fuels as the funda- As a result of this strategy, existing policies are mental pillar of the country’s future electricity either obstacles to RE, or unilaterally promo- supply, leading to ongoing subsidies for fossil ting geothermal power, or provide only weak fuels and electricity, considerable investments other RE incentives. The two existing policies,

80 81 Country Profiles: Kenya

Ministerial Regulation No. 002/2006 on Me- RE is in fact a massive initial barrier. The fol- 3.2.9 Kenya dium Scale Power Generation and Ministerial lowing conclusions point to possible areas of Decree No. 1122 K/30/MEM/2002 on Small action in order to achieve a more coherent RE 3.2.9.1 Summary Distributed Power Generation using Renewable framework: Energy, passed in 2002 and 2006 respectively, are basically ineffective and have only led to ca- • Elaboration of an effective support mecha- Current share and capacity of renewable energy All sources pacity increases in a one-digit megawatt range. nism (such as a feed-in tariff) on a strong In addition, rural electrification programs have legal basis that (a) allows reaching the targets Hydro Wind Solar Bio- Geother- Others Total largely been financed by the government and set for 2025; (b) provides incentives for both mass mal international donors and do not contain private domestic and international firms to invest in Generation investment. the country; (c) allows small-scale investors 40.4 % n/a n/a 4.5 % 16.7 % n/a 7.1 TWh (2008) participate in the market; Creation of a fund With the existing portfolio of instruments, it for renewable energy, possibly financed by Capacity 0.8 GW <0.01 GW 0.2 GW <0.01 GW 1.3 GW will be very difficult for Indonesia to reach the higher taxes on fossil fuels; Use of internati- (2008) targets for 2025. An effective policy mechanism onal financing mechanisms should envisage private investment, as well, opening the market and offering reasonable • Work on reducing/eliminating fossil fuel Targeted share and capacity of renewable energy All sources financial benefit to investors and operators of and electricity price subsidies to give rene- RE plants. Regional neighbours, such as Thai- wable energy the opportunity to compete Hydro Wind Solar Bio- Geother- Others Total land, India, or China, for instance, have intro- with these energy sources. mass mal duced feed-in tariffs (among other policies). The Generation n/d n/d n/d n/d n/d n/d n/d National Renewable Energy Board has already • Use of RE potentials in the remote areas of (2030) been negotiating a feed-in tariff with the Ener- the country (smaller islands); Promotion Capacity n/d n/d n/d n/d 4 GW* n/d n/d gy Regulatory Commission, so it might become of electrification through off-grid power (2030) a possible option for Indonesia in the future. solutions; Improvement of technical per- Importantly, the involved parties need to agree formance of the local grid to allow the * not binding. on a sufficient tariff level. In addition, stakehol- integration of power from renewable energy der acceptance has to be strengthened by better installations; Local capacity building and illustrating real cost of RE, possible impact on training for construction and operation staff Introduction/Overview source is thermal power generation, mainly price levels and highlighting the net effect of Among African countries, Kenya has a rather from oil power plants, which account for 38 % long-term benefits (energy independence, faster Apart from existing activities in Indonesia, GIZ high share of above 60 % in RE power produc- of generated electricity and 32 % of installed electrification, employment opportunities, etc.). could get involved along the lines of the above tion. Although Kenya’s geographical location capacity. Geothermal, with a large potential in mentioned challenges. Given the fact that In- offers good potentials for the exploitation of Kenya, had a share of 17 % of electricity and Indonesia as an advanced developing country donesia does not yet perceive renewable energy solar and wind energy, the country currently 11 % of installed capacity. Other RE only contri- has financed economic growth by fossil fuel power production as a fundamental part of its mainly relies on electricity generation from bute 0.3 % of installed capacity, generating 4.5 % exports which might even become more im- energy policy, information and advocacy on hydro sources. As a result, droughts have been of total electricity in 2008. portant in the future. However, as the country’s positive long-term effects of renewable energies increasingly posing a danger to the reliability of population is growing fast and thus its demand might be a promising field of action (for examp- the electricity supply and leading to a growing Kenya does not have an official target for rene- for energy, to increase and avoid le, by conducting market and feasibility studies reliance on diesel generators. wable electricity generation. Its’ relatively high energy price shocks, a parallel RE development as well as studies on possible long-term effects). RE share has developed autonomously, being should be a viable option. Electricity Mix/Targets cost efficient. The Energy Act of 2006 and the Energy generation in Kenya is dominated by currently developed “Vision 2030”, mention RE With respect to the Policy Design Cycle, qui- hydropower, which accounted for 40 % of the as important for ensuring a safe and indepen- te some further activity is required towards a total electricity generated in 2008. When ins- dent power production in Kenya, but do not consistent RE policy. The current focus on fossil talled capacity is considered, hydropower even define any concrete targets. fuels and the subsequent subordinate role for accounted for 57 %. The second largest energy

82 83 Country Profiles: Kenya

The highest potential is attributed to geother- tariffs stated in the policy are maximum tariffs. on are connected to the grid, in rural areas only So far, there are no reports on existing or mal energy, which is to be developed explicitly. Tariffs actually paid are subject to negotiations around 4 %. There, RE can contribute to improve potential financial impacts of RE support on The state-owned “Geothermal Development between the individual plant operator and the this situation, especially in Western Kenya. This electricity prices and the national budget. Some Company” plans to realise up to 5 GW of geo- utility Kenya Power, operating as single buyer might even help to stabilise the grid, facilitating experts assume that under favourable condi- thermal capacity until 2030. on the Kenyan market. It is obliged to connect a better match of supply and demand. Both tions some RE installations could even operate all renewable energy plants to its grid. Kenya government and private sector show interest more cheaply than conventional power plants, Strategy/Instruments Power also has to guarantee priority purchase, in grid integrated RE, and further instruments as observed in for instance. The policy framework for RE in Kenya is main- transmission and distribution for renewable such as net metering are under discussion. ly defined through the documents “Sessional electricity. However, the independent power GIZ Activities and Experience Paper No. 4 on Energy” (2004) and the Energy producers must pay all cost for grid expansion The current RE support, however, is perceived Activities of GIZ in Kenya include involve- Act (2006). and connection. Kenya Power and the plant by potential investors as rather unattractive ment in several public private partnerships, operator agree on a 20 years power purchase due to the reasons mentioned above, including which helped construct a pilot biogas plant and The Ministry of Energy drafts in its “Sessional agreement (the timeline was recently extended potential uncertainty of the framework and the supported German companies in entering the Paper” a policy framework “to promote equi- from previously 15 years). design of the tariffs, which could be improved. Kenyan market. Currently, a public private part- table access to quality energy services at least Further RE deployment might be encouraged nership focuses on flagship projects, which will cost while protecting the environment”. The For renewable technology, a maximum capaci- by several driving factors, such as the acknow- serve for training and policy advice and include timeframe of this paper is 2023. Subsequently, ty is defined for which the tariff will be guaran- ledged good RE potential, comparably high establishing a solar academy in Nairobi. Policy in 2006 the Energy Act of 2006 was released and teed: for wind, the first cumulative 0.3 GW power prices, dependence on imported fuels, advice has led to the adaption of the feed-in the Energy Regulatory Committee came into are supported, 0.2 GW for biomass, 0.1 GW for available technical capacity and on general level tariff for biogas and currently GIZ provides con- effect in 2007. biogas, 0.2 GW for hydropower, 0.5 GW for geo- a relatively good business climate. sultancy for the introduction of net metering. thermal energy, and 0.1 GW for solar. The “Sessional Paper” as well as the Energy Act underline the importance of renewable energy Achievements sources for Kenya for a stable and independent Until now, the feed-in tariff policy only had power supply, but no specific RE target is defi- limited success due to a number of reasons: ned. The Energy Act requires that the “Minister legal security is not sufficient as the feed-in shall promote the development and use of tariff framework only has the status of a regu- renewable energy technologies, including but lation, i.e. it could be changed any time, put on not limited to biomass, biodiesel, bio ethanol, hold or dismissed, different from a law, which charcoal, fuel , solar, wind, tidal waves, hy- at least requires political majorities. In addition, dropower, biogas and municipal waste”. Among the tariffs defined in the policy are defined as other things, a national strategy for RE research maximum tariffs, i.e. actual payments can be is to be developed as well as a framework to lower. The plant operator still has to negotiate enable the efficient and sustainable renewable with a single buyer, i.e. at a weak market positi- energy generation, transmission and marketing. on. However, the government is aware of poten- tial improvements and the support scheme is Resulting from the Energy Act, the Ministry of currently under revision. Energy in 2008 issued a policy on RE feed-in tariffs. Originally, feed-in tariffs were intro- Electricity Market/Barriers/Attractiveness duced for electricity generated from wind, The existence of a national transmission grid biomass and small hydropower. After revision, and the existence of independent power produ- since January 2010 they also provide support to cers (IPPs) form a good general basis for RE de- geothermal sources and solar electricity gene- ployment. However, power production is rather ration. Feed-in tariffs are technology specific, centralized, and a paradigm shift towards a but (except for hydropower) do not differentiate more decentralized approach is currently not in between the sizes of the plants. However, the sight. In urban areas, about 60 % of the populati-

84 Country Profiles: Kenya

3.2.9.2 Policy Analysis and Expected actually covered, but revision and adaptati- mode. Revision of the current feed-in tariff Need for Action on activities took place according to the rules policy could be amended towards an indepen- fixed in the feed-in tariff. In 2009 it became dent evaluation and result in more effective evident that the feed-in tariff could not trigger adaptation. Instruments Feed-in Tariff, Tax reductions RE growth as expected. Only a limited number of independent power producers had applied Concluding, for a more effective RE support, Policy Design Cycle Targets Strategy Instruments Monitoring Evaluation for the tariff. According to project developers, a possible need for action might arise in the Target Reaching the tariff was not covering increasing cost for following areas: equipment and financing. As a result, the Mi- nistry of Energy conducted a review and a new • Define an ambitious but realistic target for policy which prolonged periods to 20 renewable energies in Kenya, keeping in Applying the Policy Design Cycle to the Kenyan this target. However, Kenya does have a strategy years. However, as the policy still does not lead mind the currently high share of large hyd- situation, one aspect is unusual compared to for reaching (unspecified) higher RE shares: in to a significant deployment, further and more ropower and the expected strong growth of other countries: although Kenya neither has an its “Sessional Paper” on energy from 2004, the specific review would be necessary. energy demand. RE target nor a strategy on how to deploy RE Ministry of Energy formulated the strategy to (i.e. not having addressed the first two steps of create a more enabling RE environment. The A potential target to be formulated should re- • Design a strategy explicitly aiming at the Policy Design Cycle), Kenya does have an strategy has established flect some specific circumstances: the vulnera- reaching the previously defined target. This existing support policy – a feed-in tariff. bility of large hydropower, the expected strong strategy should include the required capa- • a rural electrification authority, as renewa- growth in electricity demand and the need for city building (including technology and Although Kenya already has a current share bles are seen as a promising way for rural electrifying rural areas. Looking at the favou- know-how in the field of renewables). of renewables of around 60 %, sustaining and electrification; rable natural conditions of Kenya, renewable increasing it will be a challenge, especially with energies have the potential to tackle these • Improve the current feed-in tariff (for regard to the expected strong growth in elec- • a geothermal development company; challenges. Via the “Vision 2030”, the govern- instance, by strengthening the legal status tricity demand. Meeting this challenge calls for ment has already developed a long-term vision, of the policy or by differentiating tariffs the elaboration of explicit targets and a strategy. • reinforcement of the transmission and dis- potentially to be amended by a time bound, according to the size of the installation) and Furthermore, large hydropower is affected by tribution grid; quantitative target. discuss the introduction of further sup- climate change, drought, deforestation, and port schemes. Security for investors needs increasingly silting dams, which reduce security • the passing of an Energy Act. Subsequent to the definition of a target, Kenya improvement in order to attract necessary of supply. First sign of this vulnerability is the needs to develop a clear strategy to achieve its investments. increased use of diesel generators. The third step of the Policy Design Cycle, (the goals. The country has already achieved an un- implementation of concrete measures for the bundling of the electricity market and allowed Apart from existing GIZ activities, several po- The first level of the Policy Design Cycle is RE promotion), is covered through the feed-in independent power producers. Therefore, the tential fields of action remain according to the the definition of a target. Kenya has not set an tariff enforced in 2008 and amended in 2010. Kenyan strategy should now make better use Policy Design Cycle. For example, given the via- official target for reaching a certain share of Due to the lack of an RE target and a strategy, of private investment. This requires, inter alia, ble interest in supporting frameworks in Kenya, renewables in a specified year, which means the effectiveness of the support instrument increased know how on integrating RE into GIZ might consider engaging in policy advice that an important basic step of a RE framework cannot be measured. However, it is possible the existing grid infrastructure, in combination regarding explicit and ambitious renewable is missing. However, the government does to measure performance against the capacity with a gradual shift to a more decentralised energy targets and the subsequent development mention the importance of renewable energies limits per technology set by the feed-in tariff. electricity infrastructure, resulting in an increa- of a sound strategy. for the country in laws and other official docu- Originally, the policy foresees a review every sed overall situation. ments. In addition, the policy on feed-in tariffs three years after publishing, reaffirming that includes an indirect target as it defines how any changes to the policy will not affect plants Improved support instruments should offer much capacity of each renewable technology already in operation, in order to increase pre- favourable conditions to attract private invest- will receive support via this support scheme. dictability of the system. ment also from abroad, and should in additi- on be attractive for small and medium sized Theoretically, the lack of a target means that Regarding the fourth and fifth step of the Policy projects. Enforcement and monitoring of the there cannot be a specific strategy aiming at Design Cycle, monitoring or evaluation is not support should be established in a transparent

86 87 Country Profiles: Mongolia

3.2.10 Mongolia Strategy/Instruments often is the only energy source and thus highly Mongolia has no consistent strategy or policy improves the quality of life and productivity of 3.2.10.1 Summary framework for RE support, even though the the local people. For instance, after installations country initiated a National Renewable Energy of small hydro power plants, the extension of Program in 2005. Among others, the program the regional power grid (supported by the Ger- defined goals for 2010 and 2020 (see above), man government-owned development bank Current share and capacity of renewable energy All sources brings up the need for establishing an adequa- (KfW) and GIZ), the installation of photovoltaic Hydro Wind Solar Bio- Geother- Others Total te support instrument for renewable energy, power plants (financed by the World Bank), mass mal completing the construction of two mid-size and various capacity building activities, 36 % of hydropower plants, and initiating a 100,000 so- the electricity in the GIZ focus area, the Zavk- Generation 4.2 % 0.2 % 0.2 % <0.1 % 0 % 0 % 3.9 TWh lar systems program. However, the rather brief han province, now result from RE. The Energy (2010) document does not specify in detail how these Regulatory Authority recently agreed on a cost Capacity <0.1 GW 0.8 GW steps can be implemented. covering feed-in tariff for a stand-alone small (2008) hydro power plant in Zavkhan. As a consequence of the National Renewable Energy Program, the country passed the Rene- Electricity Market/Barriers/Attractiveness Targeted share and capacity of renewable energy All sources wable Energy Law in 2007. As the first policy of Major technical barriers complicate RE de- its kind in Mongolia it aims at recognizing and ployment, particularly for mid- and large-scale Hydro Wind Solar Bio- Geother- Others Total supporting renewable energy in power generati- investments. Large parts of Mongolia’s grid are mass mal on. The law, drafted with GIZ assistance, imple- inefficient and require modernization. Trans- ments a feed-in tariff for wind, solar, and small mission lines have to cover long distances and Generation 20-25 % (non-technology specific) n/d (2020) hydropower. Rules for the electricity market in operate with a low power load. This leads to general are set in the Energy Law of 2001. Apart high losses and grid instability, hardly allowing Capacity n/d n/d n/d n/d n/d n/d n/d (2020) from that, no other policies for RE promoti- additional power fluctuations as e.g. caused by on, such as investment tax credits, import tax wind turbines or solar installations. Calculati- reductions, loans, or other financial reliefs, exist. ons exist which show that only a maximum of In 2010, the Mongolian Parliament approved a 0.1 GW of wind capacity can be connected to Introduction/Overview small hydropower plants contributed 4.2 % to new policy to improve the financial situation of the current grid without dangerously destabili- Mongolia started some RE support initiatives this share and wind and solar 0.2 % respectively. the energy sector and to aim for cost-covering zing it. There is a lack of skilled personnel able during the last few years, mainly to speed up Other renewable energy sources played no or tariffs in 2014, which might help renewable to maintain and operate renewable energy po- rural electrification and reduce dependence only a negligible role in the country’s power energy to compete with fossil fuel energy. wer plants, complicating RE supply for remote on imported oil. Yet, current activities are too production. Besides some small generation villages with small populations. Additionally, limited to lead to a broader RE deployment. from oil-based generators, coal accounted for Achievements from a regulative perspective, the electricity Besides the lack of a clear energy strategy for re- more than 95 % of all power generation. The So far, Mongolia has installed a small amount market is monopolised and tariffs are politically newables and structural and technical problems country had a total installed capacity of 0.8 GW of capacity of 0.03 GW, which mainly origi- determined at very low level, making it difficult in the electricity system, there is also political in 2008; the capacity of the renewable energy nates from small hydro and PV installations. for utilities to work profitably. opposition against renewable energy, mainly plants was roughly 0.03 GW. Currently, a private company is also building due to the abundant supply of cheap domestic Mongolia’s first wind farm with a capacity of Currently international donors are the main coal. Without a clear change in the Mongolian By 2020, Mongolia aims to produce 20-25 % of 0.05 GW based on international technical gui- investors in renewable energy projects. Attrac- authorities’ strategy, renewable energy will pro- its electricity from renewable sources, but so delines introduced by GIZ. There are also two tiveness for private investors is very low due bably stay a niche technology in the country. far the government has not implemented any mid-scale hydropower projects scheduled to be to the state influenced market structure. The technology-specific or capacity-related targets. completed within this decade. elaboration of a comprehensive renewable Electricity Mix/Targets energy strategy, coupled with structural and In 2010, Mongolia produced 4.6 % of its electri- Some small-scale RE development has ta- technical reforms, allowing to use also private city from renewable energy sources, whereas ken place in remote areas, where small-scale, capital, would be important to achieve higher independently produced renewable energy RE shares.

88 89 Country Profiles: Morocco

Considering that the sparsely populated coun- cepts, business strategies, organizational struc- 3.2.11 Morocco try has excellent solar potentials and very good tures, maintenance concepts, load management wind potentials and that many Mongolians are models and hydro/diesel hybrid operation. The 3.2.11.1 Summary nomadic people, opportunities for decentra- project has also introduced subsidy schemes lised, small-scale, off-grid electricity generation and cost covering tariffs for rural areas. are manifold. Electrifying remote areas could Current share and capacity of renewable energy All sources thus be a possible area for increased policy focus On a national level, GIZ has been involved in and future investment. drafting laws and regulations, supporting the Hydro Wind Solar Bio- Geother- Others Total promotion of renewable energy through feasi- mass mal GIZ Activities bility studies and pilot projects, and the deve- Generation GIZ in Mongolia has made a substantial con- lopment of training programmes for renewable 12.9 %* 2.5 % <0.1 % <0.1 % <0.1 % <0.1 % 26.5 TWh (2010) tribution to the electrification of the Zavkhan energy, now used by the National Renewable province by accompanying the entire process Energy Center (the national technical compe- Capacity 1.3 GW 0.2 GW <0.01 GW <0.01 GW <0.01 GW <0.01 GW 6.1 GW from design to a financially and technically tence centre), for qualification of developers, (2009) sustainable operation of energy utilities. This operators and service personnel. included the introduction of privatisation con- Targeted share and capacity of renewable energy All sources

Hydro Wind Solar Bio- Geother- Others Total mass mal

Generation 20 % n/d (2020)

Capacity 2 GW+ 2 GW 2 GW n/d n/d n/d 14,6 GW (2020)

* see footnote 8 for more details; +0.4 GW of small hydro by 2015.

Introduction/Overview Electricity Mix/Targets Due to geographic conditions (excellent solar In 2010, renewable energy contributed to radiation and wind potentials, neighbouring 15.4 % of all electricity production in Morocco. to Spain) Morocco generally offers an excellent Hydropower and wind power were the only environment for the expansion of renewab- significant sources, generating 12.9 %11 and le energy and the reduction of the country’s 2.5 % respectively. The rest consisted of electrici- dependency on fossil fuels in power production. ty produced in thermal power plants, coal being However, as many of its neighbour countries the dominant fuel with a share of 41 %, followed Morocco has not yet drawn on this potenti- by natural gas with 11 %, and other fuel/gasoil al, particularly as RE support is perceived as with 17 %. 14.9 % of all electricity was imported. a cost driver. Morocco is still lacking a com- RE power capacity in 2009 amounted to 1.5 GW; prehensive renewable energy strategy, which the total installed capacity was 6.1 GW. would address support for renewable energy in the long-term. Apart from public tendering By 2020, Morocco aims to produce 20 % of all for large-scale wind and solar power projects, electricity from renewable energy sources. To there is no effective support scheme that would provide a strong incentive for investments in 11 In 2010, power production from hydropower plants was small-scale projects. exceptionally strong. The share of hydropower averaged at 5.1 % between 2005 and 2010, ranging between 3.3 % and 9.8 %.

90 91 Country Profiles: Morocco

achieve this objective, the country seeks to have strategy in the sense of the Policy Design Cycle) Achievements solar and wind power that are currently ongo- a total installed renewable energy capacity of that provides a roadmap for the country’s elec- Between 2005 and 2010, Morocco installed ing and planned for the future could change 6 GW (or 42 % of the total installed capacity) by tricity and overall energy sector until 2030. The 0.2 GW of wind and 0.02 GW of hydropower much of this situation. the target year, consisting of each 2 GW of solar, document analyses several aspects of renewable capacity. No grid-connected capacity of other wind and hydro power capacity respectively. energy, including capacity potentials and em- renewable energy technologies has been added. In general, there would be good opportunities Morocco also implemented a 0.4 GW target for ployment and cost saving opportunities. for the emergence of a wind energy industry small hydropower (by 2015) and aims to increa- Currently, there are 0.8 GW of additional wind that could provide employment and contribu- se energy efficiency by 12 % by 2020 compared Except for public tendering of large-scale wind power capacity under development and ano- te to economic growth. Today, there is already to 2010. and solar power projects (the Moroccan Agen- ther 1 GW under planning. MASEN has also an- an industrial producer of pylons, companies cy for Solar Energy is in charge of tendering nounced first tenders for solar power projects. specializing on construction work of wind Strategy/Instruments the targeted 2 GW of solar power capacity; the turbines, and industrial providers for cabling, By setting an explicit target for the share of re- public utility ONE will tender 2 GW wind capa- Electricity Market/Barriers/Attractiveness electronic equipment and carbon fibres. An newable energy in installed electricity capacity city), the option for RE autoproduction is given The Moroccan government carries out a high increased wind energy deployment would open by 2020, Morocco has made a relevant first step under the Renewable Energy Development Law level of control on the domestic electricity mar- opportunities for rotor blade manufacturing in order to promote renewable energy. The 13.09 of 2009. It is based on a preceding law ket through the public utility Office National de in Morocco. Currently, there is only one small 20 %-/42 %-target by 2020 is ambitious, parti- on auto-production and allows independent l’Electricité (ONE), which is both the owner and photovoltaic module provider. cularly considering the current share of rene- power producers to generate electricity from operator of the transmission and of large parts wables, which predominantly consists of long renewable sources for their own use (the policy of the distribution grid. ONE is also a relevant GIZ Activities and Experience existing hydropower plants. As there are excel- is mainly tailored to large industrial producers; actor in power production and a monopolist GIZ activities in Morocco mainly focus on pro- lent wind potentials along the Moroccan Atlan- some limited amounts of excess electricity may from a legal perspective, both regarding its grams that aim to support renewable energy to- tic coast, providing prospective generation sites be fed into the grid). However, since it has come genuine structure (which in large parts is in- gether with energy efficiency, including several for wind parks of several GW of capacity, wind into force, the law has not incentivized a strong transparent) and to future government plan- studies on the domestic potential of renewable power could contribute substantially to reach growth of renewable energy. Initially, the act ning. For instance, all renewable energy power energy (as biomass, photovoltaics, and wind). this goal. Moreover, high solar irradiation offers aimed to bring wind power capacity to 1.4 GW plants with capacity above 2 MW require official An envisaged, future project targets fostering superior opportunities for solar power plants. and photovoltaic and CSP power capacity to authorization to consume their self-produced participation of local companies in the Mo- 0.04 GW by the end of 2012 (these goals were electricity; the same applies to fossil fuelled roccan solar plan by strengthening local value However, target compliance is put into perspec- part of the National Plan for the Development power plants above 50 MW. Moreover, the co- chains. With respect to policy consultancy, GIZ tive as currently there is no coherent govern- of Renewable Energies and Energy Efficiency, existence of individual power producers, which has supported the Ministry of Energy in elabo- ment strategy to achieve the target. Morocco (PNDEREE)) – which was not achieved by far. de facto come into existence through customer rating legislation and regulations on renewable has established two major institutions for RE generation and ONE is not properly defined yet. energy and energy efficiency. Furthermore, promotion (the National Agency for the De- What is seen as a barrier to higher commitment GIZ has accompanied the transformation of velopment of Renewable Energy and Energy of the Moroccan government in introducing a A main technical barrier to renewable energy the Moroccan Centre for the Development of Efficiency (ADEREE) and the Moroccan Agency more effective RE support instrument are con- deployment in Morocco is the grid structure. Renewable Energies (CDER) to National Agency for Solar Energy, (MASEN)) and passed a Rene- cerns about electricity prices, which are already While in the northern part of the country the for Renewable Energy and Energy Efficien- wable Energy Development Law (Law 13.09) as relatively high if compared to the average level construction of wind power plants has triggered cy Development (ADEREE) from a centre for well as a roadmap for solar energy (the Moroc- of income in the country. Existing plans to in- a technical adaption of the grid, the southern renewable energy to an agency, being in charge can Solar Plan). Nevertheless, important strate- troduce a feed-in tariff have not been followed part is still not prepared for the integration of of both renewable energy and energy efficiency. gic issues, prerequisite to target achievement, any further. fluctuating renewable energy power. Major In addition, a knowledge network for educa- have not been tackled yet. These include the effort will be necessary to manage higher RE tion and applied research has been established, lack of an effective support mechanism apart Morocco neither offers to investors attractive shares by enhancing the network and making and management processes in the Ministry of from public tendering, the elaboration of the fiscal incentives for renewable energy pow- use of existing hydro pump storage facilities. Energy have been supported. Lessons learned impacts that a higher share of renewable energy er projects, such as tax or duty reductions on include that limited knowledge of the involved would have on the grid, or concrete policies that equipment (there is a tax deduction for solar Overall attractiveness for domestic and foreign actors is an obstacle to legislative processes. would support capacity expansion of small- water heating appliances). renewable energy investors is low, especially scale installations. Morocco passed a National due to the absence of an effective regulatory Energy Strategy in 2011 (not a comprehensive support scheme. However, both the tenders for

92 93 Country Profiles: Morocco

3.2.11.2 Policy Analysis and Expected increase of electricity demand (e.g. through air gies such as solar and wind power are expected Need for Action conditioning). Energy efficiency should there- to already reach or being close to grid parity, fore play an important part of the renewable a detailed analysis might show the viability of energy strategy, e.g. through integrated supply- a feed-in tariff or production tax credits with and-demand planning in order to reduce both only limited negative impact on electricity pri- Instruments No strong regulatory policy (auto-production); no fiscal incentives; public investments and tendering peak load and uncontrolled growth of con- ces. Nevertheless, it is important to first create sumption. broader acceptance by improving quantitative Policy Design Cycle Targets Strategy Instruments Monitoring Evaluation data on economic performance of different Difficult, particularly in the light of past achievements; weak strategy; public Moreover, planned solar power export from renewable energy technologies and framework Target Reaching tendering could lead to capacity additions but challenge to achieve targets Morocco to the EU and according changes of scenarios. are tremendous. the grid structure is another important possible factor of influence and needs to be reflected Concluding, further development of the exis- accordingly in a strategy. Ideally, by expanding ting legal framework and new promotion Morocco has set targets for the share and this approach is limited investment capacity of interconnector capacity between Morocco and schemes is a key (and a potential field of action capacity of renewable energy in the future, but households. Therefore, the government should Spain, the stability of the Moroccan grid will for GIZ) where it comes to: there is neither a comprehensive strategy nor create incentives such as a “solar credit” pro- be increased, allowing higher penetration of instruments strong enough to achieve these ob- gram that would help households being capable fluctuating renewable energy. • Maintain advisory work on legislation, jectives. In the past, RE have been implemented to afford investments. particularly by promoting a coherent policy mostly through direct government intervention If private sector investment shall play an incre- strategy. Specific emphasis should be laid and investments of the public utility ONE with To overcome the perception of renewable ased role in RE deployment, institutional roles on improving data availability of economic the support of bi- and multilateral donors. If energy deployment being a cost driver, it will require further clarification, e.g. ONE focusing performance of renewable energy, accompa- Morocco wants to achieve its objectives by 2020, be useful to examine and disseminate potential more on grid management and development, nied by analysis of domestic benefit and job however, further policy instruments creating a benefits for the local economy. For instance, the leaving room for independent power producers effects. market for renewable energy technologies will establishment of rotor blade manufacturing in RE generation projects. Such redefinition of have to be introduced. could bring employment and economic advan- tasks must also reflect a paradigm shift towards • Elaborate a regulatory framework for the tages. In addition, stakeholders need to conduct a more decentralised energy system, e.g. when it support of renewable energy (as for instance In a first step, Morocco will have to establish a a more detailed analysis of economic parame- comes to an increased role of domestic pho- a feed-in tariff for wind or net metering for comprehensive and concise renewable energy ters of different renewable energy generation tovoltaics, but also for a better integration of others). strategy. To tackle current barriers, other policy options (e.g. where and when grid parity can be smaller projects. areas than merely energy policy are to be taken reached). • Clarify institutional responsibilities, com- into account. Currently, perception of renewa- All aspects described above need to be incorpo- bined with advice on optimizing the grid ble energy deployment focuses on expected Another important aspect is load management. rated into a coherent strategy with appropriate and general generation structure. financial burdens, while new business oppor- On the one hand, this relates to the overall cost instruments for target achievement, and imple- tunities and options for cost efficiency through effects of renewable energy, but on the other mented accordingly. As Morocco’s renewable • Develop and promote supply and demand a paradigm shift in the energy system remain hand, it prescribes requirements on the grid inf- energy potentials are promising and technolo- monitoring and planning tools. undetermined. The Moroccan government rastructure. Further examination is required on has not followed plans for a feed-in tariff (or the actual impact of fluctuating wind or solar another effective policy instrument) due to the power and an approach for triggering optimised expected negative impact on electricity tariffs, interaction of new and existing power plants but at the risk of missing the target. A budget/ (e.g. complementarities of different wind energy price-neutral option is currently under dis- sites, pump storage capacities, combination of cussion - a net metering scheme for domestic wind power and CSP, etc.) needs to be elabora- photovoltaics - but its implementation is still ted. This information also needs to be reflected unclear. Experts expect a net metering scheme in decisions on adapting the grid infrastructure. to be successful, as grid parity can already be As in many other countries, an immense chal- reached in Morocco. The main constraint of lenge is put on the grid infrastructure by rapid

94 95 Country Profiles: Philippines

3.2.12 Philippines further increase it to 15.3 GW by 2030. There are in the pipeline. Tariff levels are expected to be additional interim goals for 2015 and 2025. A higher than those of neighbouring countries, 3.2.12.1 Summary generation-based target does not exist. covering a support period of 20 years. The law will include targets for each RE technology Strategy/Instruments (ranging from 0.1 GW to 0.25 GW). Mainly for The Philippines have a comprehensive, well- reasons of cost control, a revision of the policy Current share and capacity of renewable energy All sources elaborated renewable energy strategy, consis- is scheduled once a number of projects have Hydro Wind Solar Bio- Geother- Others Total ting of several framework policies originating been realized. mass mal from the ‘Act to Promote the Development of Geothermal Resources’ of 1978. Since the year In addition, the ‘National Renewable Energy Generation 11.5 % <0.1 % <0.1 % <0.1 % 14.7 % <0.1 % 67.7 TWh 2000, political and financial assistance to other Program’ was passed in 2011. It is the most (2010) renewable energy technologies, such as wind, recent and important framework policy for RE Capacity 3.4 GW <0.01 GW <0.01 GW 0.1 GW 2.0 GW <0.01 GW 16.4 GW solar, biomass, and ocean power have entered promotion, supporting “the development and (2010) the political agenda. optimal use of the country‘s renewable ener- gy resources”. The paper considers renewable As an overall energy policy, ‘The Philippine energy “an essential part of the country‘s low Targeted share and capacity of renewable energy All sources Energy Plan of 2009’ presented a sector road- emissions development strategy and (...) vital map until 2030, addressing energy security, to addressing the challenges of climate change, Hydro Wind Solar Bio- Geother- Others Total pursuing effective implementation of energy energy security, and access to energy”. The pro- mass mal sector reforms, and implementing mentoring gram elaborates detailed strategies on how to mechanisms. It highlighted renewable energy as reach the targets set by the Renewable Energy Generation n/d n/d n/d n/d n/d n/d 149 TWh (2020) an important pillar in the future energy supply Act of 2008. Among other important provisions, and set goals for the period until 2030. However, it addresses grid integration of RE power, social Capacity 6.9 GW 1.9 GW 0.3 GW 0.3 GW 3.3 GW < 0.1 GW n/d it also considers other, non-renewable energy and economic impacts, as well as creating an (2020) sources as important for the country’s future attractive environment for a domestic renewa- Capacity 8.7 GW 2.4 GW 0.3 GW 0.3 GW 3.5 GW 0.1 GW 32.6 GW energy supply. ble energy industry. It defines various capacity- (2030) based renewable energy targets for the year Based on the preceding ‘New and Renewable 2030 (see above). Energy Programme (1997/2000)’, in 2008 the ‘Renewable Energy Act’, a comprehensive policy Achievements Introduction/Overview Electricity Mix/Targets targeting RE support beyond geothermal and As concrete support schemes have not been The Philippines own the world’s second largest In 2010, the Philippines produced 26.3 % of hydropower was passed. It contains fiscal- and implemented yet, achievements in the past geothermal power capacity and typically genera- its electricity from renewable energy sources, non-fiscal incentives for renewable energy have been limited. Since 2005, 0.1 GW of hydro- te 25-30 % of all electricity from renewable ener- mostly geothermal and hydropower with shares projects. Fiscal incentives included exemp- capacity and 0.05 GW of additional non-hydro gy sources. This fact is particularly due to invest- of 14.7 % and 11.5 % respectively. Other rene- tions and reductions on income tax, corporate and non-geothermal renewable energy capacity ments throughout the 1980s until the early 2000s. wable energy technologies contributed 0.1 %. income tax, realty tax, and others. In terms of started operation. The capacity of geothermal To intensify its ambitions and widen political and The rest, almost three fourths of all generated regulatory support, the act defined priority for power plants has slightly decreased in this financial support to other RE sources, the count- power, originated from fossil sources: coal purchase, grid connection, and transmission of period. ry introduced major strategic policies since 2008. power plants supplied 34.4 %, natural gas power RE electricity. It mandated the introduction of However, much of these recent ambitions have facilities 28.8 %, and oil-based installations a feed-in tariff within one year, a net-metering The relative share of hydro- and geothermal not materialized yet. Only marginal additions of 10.5 %. The total renewable energy capacity in policy, and a renewable portfolio standard for power in generation has dropped significant- renewable power capacity have come into ope- 2010 amounted to roughly 5.4 GW; the total all electricity suppliers to be established within ly, from 32 % in 2009 to 26 % in 2010. This is ration, as the government has not implemented installed capacity was 16.4 GW. three years. However, until now, none of the mainly due to the completion of a coal power concrete regulatory policies yet. The country is announced policies have been implemented plant and increased operation of other fossil expecting enactment of a feed-in tariff, which By 2020, the Philippines aim to more than yet. The feed-in tariff is scheduled to be enacted fuel-based generation units. In addition, several had been announced for September 2011. double RE power capacity to 12.7 GW and within the next months, same as other policies large hydro power plants were decommissioned

96 97 Country Profiles: Philippines

in 2011, and many others have been operating Apart from technical and economic issues, huge 3.2.12.2 Policy Analysis and Expected at reduced level due to extended drought peri- potentials for decentralised electricity produc- Need for Action ods in Mindanao in recent years. tion exist; particularly on smaller islands of the country (only 70 % of the population has access In the ‘New and Renewable Energy Program’ to electricity yet). Current planning for instance (Feed-in tariff), (renewable portfolio standard), (net metering), capital sub- (see above), covering the period from 2001 to does not reflect the country’s abundant biomass Instruments sidies, investment/production tax credits, tax reductions, energy production 2011, the government targeted an installed RE potential. payments, public investments, public competitive bidding capacity of 8.96 GW by 2012, likely to be missed. Policy Design Cycle Targets Strategy Instruments Monitoring Evaluation GIZ Activities and Experience However, projects of several hundred mega- GIZ activities in Philippines have mainly fo- Target Reaching Rather unlikely, as implemented policies are weak. currently in the planning stage expect cused on implementing concrete measures and approval under the future feed-in tariff. If the projects. In terms of developing comprehensi- feed-in law will have the expected effect, the ve policies, GIZ provided advice to renewable Philippines will add 0.83 GW of additional RE energy development in 2009 and 2010 with a According to the structure of the Policy Design investment in fossil based capacity to meet the power until 2015. focus on the development of feed-in tariffs, re- Cycle, the Philippines have defined renewable country’s rising power demand. gional exchange on renewable energy policies, energy targets, setting specific capacity-related Electricity Market/Barriers/Attractiveness and raising awareness by organizing high-level targets for different renewable energy techno- Delays in design and implementation of inst- With the Electric Power Industry Reform Act, stakeholder symposia. In cooperation with the logies but not setting generation-based goals. ruments have kept RE support behind targeted in 2001 the Philippines started unbundling private sector, GIZ currently implements the The country’s strategy on renewable energy quantities. The Renewable Energy Act of 2008 electricity transmission and generation. Today, program “Renewable Energy in South-East promotion is comprehensive and consists of announced the introduction of a net-metering private companies operate the national power Asia” under the “Renewables – Made in Germa- three major policies passed since 2008. How- scheme, a feed-in tariff, and a renewable port- grid, which is still owned by the state-owned ny” Initiative of the German Federal Ministry ever, concrete support mechanisms have not folio standard within six months, one year, National Transmission Corporation. Disposal of for Economics and Technology. GIZ also envi- been implemented yet (a feed-in tariff has been and three years respectively, but none of them generation capacity is still executed by the grid sages further activities on policy development announced for autumn 2011). enacted so far. The feed-in tariff is likely to be owner. in power generation has and capacity building. Due to huge potential the first policy implemented. reached 81 % and the government aims to in- for renewable energy in the Philippines, there is The Philippines defined technology-specific crease this share further. From a technical per- further demand for policy advice and capacity capacity-based targets for three distinct target The introduction of the feed-in law will allow spective, the grid is not yet in a state to absorb building. periods until 2030, trying to add more than projects in planning stage to receive financial power from the targeted 0.83 GW RE (non-base 10 GW of capacity in this period. Generation- support under long-term power purchase agree- load, such as solar or wind), examinations are based RE goals, which better reflect the relative ments. However, as capacity of planned projects ongoing. position of RE among other sources, have not exceeds by far the volume assigned for the first been formulated. According to experts from the phase of the feed-in tariff (which ranks between Recorded applications for service contracts country12, capacity additions foreseen in the Na- 0.1 GW and 0.25 GW of capacity depending on under the planned feed-in tariff exceed targets tional Renewable Energy Program could reach the technology), the Philippine government by far. Therefore, a high attractiveness of the a share of 50 % in RE power production by 2030, might reconsider capacity caps. While this opti- domestic renewable energy market to priva- mainly based on the traditional renewable on allows the government to adjust tariffs for re- te investors can be expected once the tariff is energies, hydro and geo-thermal. asons of cost control, it might reduce investment established. A photovoltaic industry is already security and lead to projects locked in a pipeline. emerging in the country. Growth potential of Since 2008, the country has enacted three major domestic wind turbine manufacturers can be strategic policies formulating objectives, ne- The proposed feed-in tariff will not provi- expected under a successful feed-in tariff. How- cessitating electricity sector reforms to allow de support for photovoltaic installations of ever, no final decision has been made yet, and RE integration, and pursuing the implemen- household size (considered too expensive in developments all depend on the heights of the tation of support instruments. In parallel, the current stage) but rather focuses on utility scale tariffs and possible tariff cuts in the future. country’s energy strategy also envisages strong appliances. However, as the Philippines have excellent solar power potential and as small- scale photovoltaic installations could help to 12 Energy Secretary Rene Almendras

98 99 Country Profiles: South Africa

promote electrification of abandoned areas, the net metering and renewable portfolio 3.2.13 South Africa stakeholders might reconsider small PV to be- standard policies as determined in the come part of the support scheme in the future. Renewable Energy Act (management of 3.2.13.1 Summary Alternatively, the announced net-metering three distinct RE support policies in parallel policy could act as a cost neutral test scheme is challenging and demands a high level of until further experience on actual cost has accuracy and expertise from authorities). been gathered. The net-metering policy would Current share and capacity of renewable energy All sources need to be accompanied by investment grants • Promote off-grid solutions in rural areas, or other financial incentives to allow private particularly on small islands (improve Hydro Wind Solar Bio- Geother- Others Total investors afford the equipment. This might be policies on rural electrification, provide mass mal coupled to promoting off grid electricity. loans to investors, promote establish- Generation 5 %i <0.1 % <0.1 % <0.1 % <0.1 % <0.1 % 260 TWh ment of local construction firms, perform (2010) Concluding, effective RE policy-making will capacity-building). Capacity require some action in the near future, such as: 0.7 GW# <0.01 GW <0.01 GW 0.1 GW <0.01 GW <0.01 GW 41.8 GW (2010) Given the challenges mentioned above, existing • Ensure on short term a proper implementa- GIZ policy advice activities could be extended tion of the announced feed-in tariff. Con- accordingly. In addition, GIZ could conduct sider supporting small photovoltaics in a market studies and provide technical assistance Targeted share and capacity of renewable energy All sources future amendment and phase-out capacity to grid adjustment/optimisation as well as the Hydro Wind Solar Bio- Geother- Others Total ceilings. elaboration of safeguards for biomass/biofuels mass mal development. • Focus on the evaluation and proper func- Capacity 0.8 GW+ 1.9 GW 1.7 GW 0.1 GW n/d 0.1 GW n/d tioning of the feed-in tariff before enacting (2016)

Generation 5%i 9 % (non-technology specific) 454 TWh (2030)

Capacity 0.8 GW 9.2 GW 9.6 GW n/d n/d n/d 89.5 GW (2030)

Generation n/d n/d 14 %* n/d n/d n/d n/d (2050)

i including hydropower imports from neighbour countries; #including 0.025 small hydro; +including 0.075 GW small hydro; *Solar photovoltaics.

Introduction/Overview initiatives could lead to a RE policy framework in South Africa has long announced to make its the future. electricity production more sustainable, moving away from the heavy dependence on coal to a Electricity Mix/Targets more balanced, sustainable power supply. How- In 2008, in South Africa 5 % of consumed ever, until today the country has not achieved electricity came from renewable energy sour- much progress in the promotion of renewable ces, mainly originating from large hydropower energy, particularly because of lacking adequate imports from Mozambique and Zambia. Dome- support instruments. In addition, the vast coal stic renewable energy power generation did not reserves in the country allow cheap exploitati- play a relevant role. With a share of 90 %, coal on, representing a major obstacle to renewable was the dominant source for electricity produc- energy technologies. Yet, some recent policy tion; nuclear power contributed another

100 101 Country Profiles: South Africa

5 %. RE capacity in 2010 amounted to roughly energy in the final energy demand by 2013. The business as practiced since the early 1970s, buil- customer. Apart from this, there have been no 0.8 GW, of which almost 0.7 GW were provided Integrated Energy Plan included a broader poli- ding and upgrading coal power plants. reports on the impact of renewable energy on by large hydropower. The total installed capaci- cy approach and outlined an overall strategy for the national budget or electricity prices. It can ty was 41.8 GW. the country’s energy supply and demand. South Electricity Market/Barriers/Attractiveness be estimated that additional cost has been rela- Africa also enacted an Energy Efficiency Act in Despite South Africa’s status as the most deve- tively low due to the small additions achieved By 2030, South Africa aims to substantially in- 2005 and an Electricity Regulation Act in 2006. loped country in Africa, the electrification rate during the last years. crease the share of non-hydro renewable energy only reaches 73 %, leaving 3.7 million people in power generation from today’s 0.1 % to 9 %. If The Integrated Resource Plan 2010-2030 is the without access to electricity. As in many other In terms of investment attractiveness, South the target for hydropower was included (which most recent and important piece of legislation developing countries, coverage of rural areas is Africa has attracted interest of domestic and should remain constant at 5 %, including im- in terms of renewable energy support and is a lowest. In terms of liberalization of the elec- international companies after the announce- ports from neighbouring countries), renewable subset of the Integrated Energy Plan of 2003. tricity sector, South Africa traditionally has a ment of the feed-in tariff in 2009. Despite energy would then contribute a total of 14 % to It builds upon the assumption that within the semi-decentralized power distribution sector, the unexpected move towards a competitive the country’s electricity generation. To achie- next two decades South Africa will need with today about 180 different - mostly muni- bidding system and a resulting phase of disap- ve these generation-based goals, South Africa 57 GW of new power capacity, going along with cipal - companies. Unbundling of generation pointment, investor interest remains high. In targets to install roughly 23 GW of additional a diversification of power supply. The plan aims and transmission has not taken place, both the Ernst & Young Renewable Energy Country renewable energy capacity to arrive at 7.7 GW of for strongly reducing its relative dependence dominated by the de facto-monopolist Eskom, Attractiveness Indices of August 2011, South hydropower, 9.2 GW of wind power, and 9.6 GW on coal and promoting alternative forms of which generates more than 95 % of all electri- Africa ranks 26 out of 35 surveyed countries. of solar power by 2030. Total installed capacity electricity generation. To achieve this, it defines city and operates the entire national transmis- for the target year is expected to be twice as long-term generation and capacity based goals sion grid. GIZ Activities high as today’s 89.5 GW. for 2030 (see above) and analyzes various policy Under the focal area energy and climate, GIZ options, sets out future areas for policy action, The heavy reliance of South Africa on coal has recently launched the South African – Ger- Strategy/Instruments and does a cost analysis. represents a major challenge for renewable man Energy Programme (SAGEN). Under the Due to various economic and environmental energy. First, the country can exploit its vast renewable energy component, GIZ supports the issues, South Africa has a clear interest in com- Today, no concrete policies to realise the strat- coal reserves very cheaply, thus being one of the establishment of institutional capacities within plementing its current fossil-fuel focused power egy are in place. A feed-in tariff, introduced in world’s cheapest electricity producers. Second, the Department of Energy, assists in policy generation with renewable energy. Because of 2009, has never been very successful and abolis- the structure of its electricity grid, shaped for formulation and implementation (e.g. of the RE the country’s fast economic growth going along hed again in 2011 (see also below), replaced by centralised power generation from coal, pro- IPP procurement Programme), and advice on with increasing energy demand, huge increases a public competitive bidding program. Subse- vides only little flexibility to fluctuating RE grid and system integration of renewable ener- in power capacity become necessary. In 2007 quent uncertainty among investors resulted sources above certain limits. gy (with a particular focus on solar and wind and 2008, South Africa already suffered a power in very little RE capacity additions. Despite the energy). GIZ also supports South Africa in the supply crisis due to insufficient power capacity. abrupt policy shifts, however, the first round The South African government has planned to establishment of a wind energy research and The state-owned utility Eskom could only react of the competitive bidding program launched pass cost of EUR 0.94 million, resulting from the development (R&D) and training centre in the by planned outages among private and indus- in August 2011 attracted great interest among support of the first 1,000 MW RE capacity, to the Western Cape Region. trial customers. As a reaction, South Africa dis- project developers. cusses the promotion of independent RE power producers and reduced dependence on Eskom. Yet, South Africa is still lacking powerful fiscal policies that offer financial support for invest- 3.2.13.2 Policy Analysis and Expected Already since 2003, South Africa has initiated ment. Even though policy makers passed some Need for Action several strategic framework policies aiming at minor renewable energy subsidies, there are RE promotion in the country’s electricity sector. no comprehensive programs for reduction of The White Paper on Renewable Energy was the investment tax, import duties or other forms of Instruments (Feed-in tariff), tradable RE certificates, capital subsidies, public competitive first of these policies that solely targeted rene- fiscal incentives. bidding wable energy, acknowledging it as an important Policy Design Cycle Targets Strategy Instruments Monitoring Evaluation energy source and aiming to harness it more Achievements ambitiously in the future. It defined non-man- Due to the lack of effective RE support instru- Target Reaching Difficult to determine, as there are only long-term targets for 2030; public datory medium-term targets for renewable ments, power sector investment has followed competitive bidding only recently implemented (no experience).

102 103 Country Profiles: Thailand

South Africa has defined generation and capa- based on a stable policy and embedded in a 3.2.14 Thailand city based long-term targets as well as gene- comprehensive strategy, is crucial for investors. ration-related short-term goals. The country South Africa will need to regain credibility and 3.2.14.1 Summary also passed important strategic papers on how prove reliability of its current policies. to promote renewable energy in the country. Same as for the feed-in tariff, no support is However, in terms of implementing instru- provided for small-scale (< 1 MW) and off-grid Current share and capacity of renewable energy All sources ments, policy shifts and a lack of longer term installations. To help increase electrification in experience do currently not allow to measure rural areas and reduce poverty, in the future Hydro Wind Solar Bio- Geother- Others Total target achievement. South Africa should also consider supporting mass mal small-scale projects and off-grid solutions. Generation In terms of target setting, South Africa has defi- 3.9 % 3.1 % 145 TWh (2010) ned capacity-related goals for hydro, wind, and The failure of the feed-in tariff and the subse- solar power as well as a target for the overall quent system shift are expressions of a lacking Capacity 3.5 GW <0.01 GW 0.03 GW 1.6 GW <0.01 GW 0.1 GW* 31 GW share of renewable energy in electricity genera- strategy under the Policy Design Cycle. Expe- (2008) tion by 2030. rience with the public bidding scheme is too short to judge if the overall policy has become South Africa has also elaborated several strate- more consistent.13 Targeted share and capacity of renewable energy All sources gies for renewable energy promotion, starting with the White Paper on Renewable Energy in Currently not addressed sufficiently is e.g. the Hydro Wind Solar Bio- Geother- Others Total 2003 and the most recent capacity expansion role of independent power producers. Further mass mal plan, the Integrated Resource Plan of 2010. All elaboration of the electricity sector law should Generation n/d 14 % (non-technology specific) 215 TWh these papers target various aspects that are promote further liberalization allowing them (2022) necessary for successful support, such as calling barrier-free access to the grid. Capacity n/d 0.8 GW 0.5 GW 4.0 GW n/d 0.6 GW+ 48.4 GW for the introduction of a support policy or pro- (2022) moting research and development. Hence, in terms of a consistent RE support policy, South Africa will have to take additional * including small hydro. +including small hydro, biogas, solid waste, hydrogen. The first concrete support instrument, the feed- action in order to reach its 2030 targets, espe- in tariff adopted in early 2009 was accompanied cially in the following areas: by controversial discussions, culminating sharp Introduction/Overview Electricity Mix/Targets tariff cuts. In early 2011, the National Treasury • Effective implementation of the public Thailand is one of the forerunners in the pro- In 2010, renewable energy sources contributed communicated that pre-determination of ta- competitive bidding scheme. Ensure pro- motion of renewable energy in Southeast Asia, 7 % to Thailand’s total electricity generation, of riffs was not conform with the country’s Public per enforcement of the law to regain trust having implemented a comprehensive long- which hydropower generated 3.9 %, and bio- Finance management Act, which lead to abro- among investors. The support scheme term strategy and a feed-in tariff for renewable mass/other renewable sources 3.1 %. Natural gation of the feed-in tariff eventually. To replace should be embedded in a long-term strategy. energy in electricity production. Due to its good gas-fired power plants cover most of Thailand’s it, the South African government announced a solar irradiation and wide areas of and power consumption (68.1 %); the rest of the scheme of public competitive bidding in mid- • Introduction of a support policy for small- farmlands, excellent potentials for power and electricity consumed originates from coal 2011, providing long-term power purchase installations to allow small producers parti- heat production from solar and biomass exist. plants (18.8 %) and electricity imports (5.2 %). agreements to successful bidders. The first cipate in the market. A feed-in tariff for small In addition, independent power production The total renewable energy capacity excluding tender, opened in August 2011, covered various capacities could be a possible alternative. is widely established in Thailand, which is an large hydropower plants in 2008 amounted to renewable energy technologies. important prerequisite for small- and mid- roughly 1.8 GW, whereas biomass power pro- More than 270 investors have already shown • Curtailed influence of ESKOM and further scale renewable energy generation. However, vided a capacity of 1.6 GW. The country’s total interest. Nevertheless, the announcement of promotion of independent power production. Thailand is also facing some bureaucratic and installed capacity was 31 GW. cutting tariffs and abruptly switching to a new financial barriers that have largely impeded a support scheme discouraged some of the inves- fast dissemination of renewable energy to date. By 2022, Thailand aims at producing 14 % of tors that considered South Africa an attractive 13 In this respect, Department of Energy Deputy Director General, its electricity from non-large hydro renewable RE market. Long-term investment security, Ompi Aphane, stated: “[The involved parties] were not as careful, energy by increasing its renewable generation not as diligent as [they] should have been.”

104 105 Country Profiles: Thailand

capacity to 0.8 GW of wind power, 0.5 GW of technology industry, aiming to encourage new Between 2010 and 2022, the country’s largest country’s power generation is largely depen- solar power, 4.0 GW of biomass power, 0.3 GW alternative energy R&D to achieve economic vi- power producer, the Electricity Generating Au- dent on imported fossil fuels, with roughly of small hydropower, and 0.3 GW of other rene- ability including new technologies for biofuels thority of Thailand (EGAT), plans to construct 90 % of all production generated in natural gas-, wable sources. production and to introduce a model develop- 18 renewable energy projects totalling coal- and oil power plants. Calculations say that ment of Green City to communities for suffici- 164.70 MW. about 60 % of the total energy demand is ori- Thailand also defined a 25 % target of primary ent economy and development. ginating from imports and domestic resources, energy to come from renewable energy by 2022 The third period (2017-2022) aims to enhance Electricity Market/Barriers/Attractiveness soon to be depleted. Thus, price volatility of fos- (up from 2009’s 6.4 %). utilization of new available alternative energy Even though the overall policy framework is sil fuels is an increasing challenge for Thailand’s technologies i.e. hydrogen, bio hydrogenated, considered attractive by many investors (the energy supply. Strategy/Instruments (BHD), extend green city models throughout feed-in premium is the most popular policy), Thailand’s central piece of legislation for RE Thai communities and make Thailand a plat- some strong barriers for investment remain. Renewable energy, on the other hand, could be support is the National Renewable Energy De- form for biofuels and alternative energy tech- More than 3 GW of signed contracts are cur- an option to ensure energy security and reduce velopment Plan (REDP). Designed as a strategic nology exports in the Association of Southeast rently in the pipeline – most of them for solar dependence on foreign energy resources. With paper for the long-term promotion of renewa- Asian Nations (ASEAN) region. energy – and delayed due to bureaucratic obsta- relatively good solar irradiation and large do- ble energy, it was announced in 2008 (passed in cles. With respect to the population’s rather low mestic biomass resources, as well as high poten- 2009) and comprises the period until end 2022. In terms of specific instruments to promote average income, additional high short-term tials for decentralised power production, there It succeeded an earlier policy that set a target renewable energy in electricity production, investment cost of renewable energy represents are still various opportunities for the country to for 2011. The policy defines ambitious targets Thailand enacted a Small and Very Small Power another impeding momentum. Although the achieve its renewable energy targets. The high for renewable energy in electricity (see above), Purchase Agreements act, which regulated the government has announced funding to help number of applications for solar power projects the heating and the transport sector. It comes connection of small producers to the electricity creating a renewable energy industry and intro- under the feed-in tariff has indicated considera- with several, more specific measures, facilita- grid and the sale of their electricity. This policy duced tax reductions, much of the equipment ble interest of investors. Many jobs have already ting the promotion of renewable energy and also acts as base for the feed-in tariff for solar, for renewable energy plants has to be imported been created in the construction industry and attracting investors. Among those are a power wind, waste, biomass, biogas, mini and macro at relatively high prices. Especially biomass use in the agricultural/biomass sector. purchase act, streamlining electricity sales of hydro power, passed in 2007 and amended in is in some cases also leading to controversies: small generators to the grid operator, an eight- 2009. Designed as a premium feed-in tariff, farmers have been protesting against biomass GIZ Activities year corporate income tax exemption, which the law regulates the payment of technology- power projects in areas meant for conventional GIZ supports CDM PoA development for a started in 2009, a 50 % tax reduction guaranteed specific premiums on top of a regular electricity agricultural use. biomass power development programme in for five years after the initial program ends and tariff. Interestingly, it awards power producers Thailand under the Small and Very Small Power the “Adder” cost (Feed-in tariff) for renewab- with an extra “adder” for systems installed in No clear observations of price increasing effects Purchase Agreements scheme. Other activities le power producers. The policy also provides three provinces in Southern Thailand as well as or negative effects on the public budget (dedica- include the support of efficiency improvement investment grants and loans. for systems generating RE electricity replacing ted budgets, see above) due to RE support have of biogas plants and solar thermal hot water diesel in the Provincial Electricity Authority been made so far. Generally, Thailand finances systems in Thailand. To achieve the targets set in the National Re- (PEA) system. renewable energy support by tax revenues newable Energy Development Plan the Thai and financial means received under the CDM In addition, GIZ works on behalf of the initi- government has split the plan into three phases, Achievements mechanism. Additional cost can be expected for ative “Renewables Made in Germany” of the each period defining specific absolute targets Between 2007 and 2010, contracts for 4.3 GW of the future due to necessary investments in grid German Federal Minister of Economics and (as well as dedicated budgets) for the various renewable energy projects were signed under expansion. Technology (BMWi) on renewable energy pro- renewable energy technologies. In addition to the provisions of the feed-in tariff. However, motion and Project Development Programme these quantitative commitments, each phase only 0.85 GW of capacity became operational so Despite the relatively advanced existing RE sup- Southeast Asia. Besides, GIZ conducted capacity puts special political and financial focus on a far. The large majority of the added capacity port, many opportunities for renewable energy building among stakeholders and organized certain area: the first phase (2008-2011) aims to (0.7 GW) came from biomass power plants, investment in Thailand remain untapped. The network meetings. promote commercial alternative energy tech- commissioned under the premium feed-in ta- nologies and high potential energy sources such riff. Solar power installations, which accounted as biofuels, co-generation from biomass and for 2.0 GW of all signed contracts, only provided biogas. The second phase (2012-2016) focuses 0.02 GW. on the development of the alternative energy

106 107 Country Profiles: Tunisia

3.2.15 Tunisia energy (4 %). There is also an energy efficiency Law 2009-7 on Energy Efficiency came into target of 20 % for that year. effect in 2009 and superseded the Law 2004-72. 3.2.15.1 Summary Representing the most important renewable Strategy/Instruments energy policy, it affirms the country’s ambiti- Tunisia’s renewable energy strategy consists of a on to promote RE in power generation and to couple of renewable energy- and energy efficien- reduce the dependence on natural gas imports Current share and capacity of renewable energy All sources cy-related framework policies and instruments, from its neighbour Algeria. Since its revision, Hydro Wind Solar Bio- Geother- Others Total dating back to 2004, updated and complemented the law provides some limited form of net mass mal in subsequent years. These policies target power metering, regulating the feed-in of independent production from wind, the promotion of solar renewable energy power production to the Generation 0.7 % 0.9 % <0.1 % 11.6 GWh thermal installations, and the use of photovol- public utility and grid operator Société Tunisi- (2010) taics in rural areas. While most of them provide enne d’Electricité et du Gaz (STEG). Primarily, Capacity 0.06 GW 0.05 GW <0.01 GW <0.01 GW <0.01 GW <0.01 GW 3.6 GW investors with grants and tax reductions, there it enables large-scale and industrial producers (2010) is no comprehensive regulatory policy in place, to use the electricity network to transmit their such as a feed-in tariff or renewable portfolio self-produced power to supply their production standard. In addition, most of the existing inst- facilities or other electricity consuming entities. Targeted share and capacity of renewable energy All sources ruments and strategic plans focus on short- or The law allows the sale of excessive electrici- mid-term periods (until 2011/2016). ty of up to 30 % of the total annual electricity Hydro Wind Solar Bio- Geother- Others Total production at a market-oriented price. The mass mal In terms of framework policies, the Natio- Tunisian government determines this price in nal Energy Efficiency and Renewable Energy annual terms. Generation 11 %/25 % (non-technology specific) n/d (2016/´30) Programme 2008-2011 is the most recent and important strategic policy. The programme is The Decree 2009/362 on Renewable Energy and Capacity n/d 0.5/2.7 GW 0.3/1.7 GW 0.25/0.3 GW n/d (2016/´30) based on Law 2004-72 and its amendment, Law Energy Efficiency Premiums is the most recent 2009-7, both providing regulations on energy policy in the context of renewable energy sup- efficiency and renewable energy. Tunisia also port. The decree specifies the provisions of the Introduction/Overview 98.7 % of all electricity was generated in natural enacted the Decree 2009/362 on Renewable Law 2009-7 and introduces a subsidy-focused Despite Tunisia’s excellent solar power poten- gas and heavy fuel power plants. The total rene- Energy and Energy Efficiency Premiums, the program providing premiums of between 20 to tials, wind power has received highest poli- wable energy capacity amounted to 0.1 GW; the Tunisian Solar Plan, and established an Energy 40 % of the investment cost to project operators tical attention by the Tunisian government. country’s total installed capacity was 3.6 GW. Efficiency Fund. once projects are operational. Among others, Promoted by a couple of financial incentives, there are grants for buildings equipped with mainly consisting of investment tax reductions, By 2016, Tunisia aims to augment the share of Initiated in 2007 and ending in 2011, the Nati- solar PV installations, cogeneration facilities, and an ambitious strategy to improve energy renewable energy to an ambitious 11 %, which onal Energy Efficiency and Renewable Energy biogas production, and solar thermal in the country, some first renewable would represent more than an eight-fold incre- Programme encompassed a time horizon of heaters. There are also VAT and import tax re- energy projects became operational in recent ase as of 2009. By 2030, the RE share should rise four years and targets improvements in energy ductions and exemptions for renewable energy years. Tunisia has set itself quite ambitious to 25 %. There are also corresponding capacity- efficiency and renewable energy. Among others, equipment. targets, but for reaching them, a comprehensive related targets in place: by 2016, total renewable it intended to promote renewables in rural strategy and effective policy instruments are energy capacity shall rise to 1 GW and to 4.7 GW areas and in the agricultural sector, where they In 2009, the Tunisian government passed the necessary. These policies are currently lacking by 2030. In these scenarios Tunisia pays particu- shall replace fossil fuel based power genera- Tunisian Solar Plan, a comprehensive deve- in Tunisia. lar attention to the expansion of wind in power tors and heating applications, increase biogas lopment plan that promotes 40 public-private production. production, and improve water pumping and partnerships in solar and wind power. Additio- Electricity Mix/Targets . It formulated provisions under nally, it initiates research projects, the creating In 2010, Tunisia produced 1.6 % of its electricity In its National Energy Efficiency and Renewable which investors were awarded with grants of of additional institutions, and various energy from renewable energy sources, whereas hydro Energy Programme 2008-2011 Tunisia also set between 20 to 40 % of the respective project efficiency projects. The plan is covering the pe- and wind power were the only sources with short-term targets for 2011 for the share of re- investment cost. The program also allocated riod from 2010 to 2016, financed by private and significant contribution. newables in total capacity (10 %) and in primary funds to research projects. public funds.

108 109 Country Profiles: Tunisia

Achievements provement of the transmission network will Between 2004 and 2010, Tunisia installed become necessary. Particularly, better wind 3.2.15.2 Policy Analysis and Expected 0.1 GW of wind power, most of these publically forecasting systems and collaboration of neigh- Need for Action financed projects becoming operational in 2009. bouring transmission system operators should By the end of 2011, experts assume that wind be established in order to prepare the power power capacity could rise to 0.18 GW. There are system to an increased penetration of electricity Instruments No regulatory policy; capital subsidies, tax reductions, public investments. additional large-scale projects currently under from renewable energy sources. Policy Design Cycle Targets Strategy Instruments Monitoring Evaluation development or awaiting approval in the appli- cation process. In terms of financing and financial attrac- Target Reaching Very unlikely, as no proper renewable energy strategy nor any effective inst- tiveness, most projects completed during the rument is in place. Throughout the last ten years, Tunisia installed last decade were government financed, and/ more than ten thousand small photovoltaic ins- or supported by international donors. As no tallations on private homes, often being off-grid effective regulatory policy for the promotion Tunisia formulated ambitious mid-term and nors, and largely focused on short-term achie- solutions. These appliances replaced fossil-fuel of renewable energy exists yet, the attractive- long-term goals for renewable energy, both ge- vements. Currently, there is no effective policy generators or were the first power unit in these ness for private investors to build and operate neration- and capacity-related. However, poli- in place that would allow Tunisia promoting households. Apart from solar and wind power, alternative power plants is thus still very low. tical action that would go beyond this first step, renewable energy independent from political however, other renewable technologies have In addition, the current political situation has such as elaborating a comprehensive strategy intervention. not received much attention or achieved pro- contributed to increasing uncertainty among and implementing concrete policies to achieve gress in recent years. potential investors. a successful support of renewable energy, has Tunisia has set up clear, simple and coherent not been taken yet. Hence, most of the present targets. It has four targets in place: a capacity- Electricity Market/Barriers/Attractiveness GIZ Activities and Experience and past political effort depended on individual and a generation-related target, both for 2016 Tunisia’s electricity market is liberalised but Concerning renewable energy (both in the elec- action of the government and international do- and 2030. still dominated by the state-owned utility tricity and the heat sector) GIZ has realized se- STEG, which produces 76 % of all electricity veral solar water heater projects. Moreover, GIZ and provides 86 % of all capacity in the country. activities have focused on wind, photovoltaic, As it owns and operates the national grid, too, CSP and biogas technology. GIZ has developed a its actual influence is even higher. As a result, national support programme for solar and wind opportunities for individual renewable power technology and has implemented several pilot producers to enter the market and operate pro- projects. With respect to wind technology, site fitably have been comparatively low in Tunisia. assessment, wind measurement and feasibility The strong influence of the government on the studies have been realized as well as pre-feasibi- electricity sector has kept electricity prices at a lity studies for PV and CSP. With the organizati- moderate to low level, mainly through subsidi- on of training sessions, mainly for PV, but even zing natural gas. for wind and biogas, GIZ has contributed to capacity building at National Agency for Energy Electrification almost reaches 100 % in Tunisia. Management (ANME), STEG and in the private 99.8 % of the urban population and 99 % of the sector. Lessons learned include the observation rural population have access to electricity. that unclear institutional responsibilities often lead to obstacles with respect to quick project As the quantity of renewable energy electricity realization. is still too small to have a real impact on grid stability, the integration of renewable energy does not yet represent a major technical prob- lem. However, if Tunisia aims to increase subs- tantially the share of renewables to 11 and 25 % in the future (see above) technical im-

110 Country Profiles: Tunisia

However, a strategy and instruments to reach energy sources in the country should be ana- • Further liberalization of the electricity • Improve grid infrastructure, introduce the targets have not been defined yet. There lysed, and, where attractive to be included in a market which would provide grid access to meteorological forecast systems and is no effective policy which would have a big support mechanism. independent power producers. Create an enhance collaboration with neighbouring impact on capacity additions from renewable independent regulatory authority. Reduce transmission system operators (TSOs) to bet- energy sources. Law 2009-7 is a very limited In parallel to financial and organizational sup- government influence in the power sector ter prepare the integration of RE electricity net metering policy, which does not incentivi- port of international donors (e.g. under a NAMA and limit subsidizing energy prices. into the power system. ze power production exceeding consumption. scheme), Tunisia should also tap financial Only 30 % of the total produced electricity resources of private investors. Considerable ca- • Uphold focus on energy efficiency and ela- In addition to existing activities, GIZ might con- is allowed to feed-into the grid for a govern- pacity increase of renewable energy will depend borate corresponding instruments. sider to extend its policy advice along the lines ment-defined, market-oriented price; any on increased private sector involvement. of the above mentioned challenges. Consul- power above this 30 % surplus is not refun- • Build up and intensify cooperation with tancy to develop a feed-in tariff and strategies ded. The Tunisian Solar Plan supports solar Tunisia already has political institutions in other countries in the region to learn from to liberalise the electricity market, as well as and wind power but is limited to rather small place experienced in renewable energy, such as each other, especially in designing laws and fostering regional cooperation and information quantities of capacity. Decree 2009/362 addres- the ANME. These institutions need to receive determining tariffs of a feed-in law. Share exchange might be considered. ses financial incentives for renewable energy further empowerment in the future. In additi- experience about potential barriers. equipment but does not provide a regulatory, on, the electricity sector itself requires further long-term support. reform, particularly by advancing liberalization. The position of independent power producers Because of the absence of effective regulatory needs to be strengthened; they should receive instruments, past achievements in adding RE equal access to the grid by STEG. A national capacity have been very limited and mostly independent regulatory authority could help to lacked participation of the private sector. Most increase transparency in the power sector and projects have been conducted by the govern- strengthen the rights of independent power ment and were financed by public funds and producers. international donor organisations. Private-only investment that would derive from an attractive In 2011, due to the revolutionary changes, the policy, however, has been almost non-existent investment climate declined. For an effective in Tunisia. support for renewable energy and progress in developing support policies, regaining political Other than many developing and developed stability is also a precondition. countries, Tunisia incorporates energy efficien- cy and energy saving in its plan, regarding it as Concluding, important political and structural a top priority, for both sustainability and energy action is necessary to start effective support of security reasons. Yet, as for renewables, Tunisia renewable energy in Tunisia, such as has not implemented comprehensive policies to implement its plans. • Introduction of an effective regulatory policy, to allow renewable energy grow in To reach its targets and establish a consistent the country. Focus on the promotion of solar RE support policy, Tunisia needs to provide an and wind power, but provide incentives for attractive regulatory support scheme to inves- other technologies, too. Maintain indepen- tors, as for example a feed-in tariff or a similar dent programs such as initiated in the Nati- policy. Policy makers should put special focus onal Solar Mission (e.g. the PROSOL-ELEC on wind and solar power promotion, allowing project), but develop regulative support to the country to use its excellent potentials. In guarantee long-term success. addition, to support other renewable energy technologies, the potential of all renewable

112 113 4 Conclusions Conclusions

Summarizing the findings of this study and dra- 4 Most countries have established some focus is needed, raising the importance of 10 Mutual learning among different coun- wing some conclusions on the scope of potenti- type of RE support instrument. Options system changes and highlighting not only tries on effective RE policies should be al further international activities as provided by chosen vary considerably, most common are the cost but also the benefits of RE in more intensified. Doing so, the frequently practi- GIZ, the following aspects are to be highlighted: public tendering, tax rebates, and feed-in concrete terms (for the energy sector as well ced ‘copy-paste-approach’ on instruments tariffs. Most of these instruments are facing as on overall economic level). urgently needs to be replaced by analyzing 1 The data structure, created under this implementation problems and, where ambi- success factors independent from the type as project, has reached a comparatively high tious targets are in place, they will not lead 7 An independent monitoring is hardly ever instrument, as it is facilitated under the Po- level of country information during the to their compliance. Focus of international covered by existing RE support policies, but licy Design Cycle. In this sense, the metho- research process. Both existing data and support is often put on improving support interesting single approaches exist. With re- dological approach of this study should be those missing provide a structured insight policies, but perhaps not questioning suf- spect to general barriers mentioned under 6), applied and developed further in the future. into the respective status of RE policies. This ficiently if the instrument approach chosen more effort on monitoring should be in the can be used both for administering informa- for the country fits to its targets and other focus of further international advice activi- tion and as a comparable overview of policy influencing factors. ties, as it will create more transparency on elements in place or as a gap analysis poin- the actual effects of RE deployment and help ting to potential need for further action. The 5 In most countries, a major gap exists increasing stakeholder commitment. structure allows future updates and amend- concerning consistent strategies to reach the ments where required. respective target (step 2 of the Policy Design 8 Similar to monitoring, an independent Cycle). This applies especially if interference and regular evaluation is not part of any 2 When using the filter options of the data with other policy areas occurs, e.g. cost for support system of the countries examined. structure, multiple overviews and compari- RE conflicting with social welfare policies In some cases, examinations of policies have sons can be generated along various require- focusing on low energy prices. Although of- been executed by public authorities in order ments. As indicated in the introduction, the ten evident, these gaps are not sufficiently in to make adjustments. Introducing indepen- results of those queries have to be read not as the focus of further political action. There- dent evaluations, following scientific crite- an absolute result in the sense of a ranking fore, international action should develop a ria, will increase the outreach of policies and but require some interpretation by qualified broader focus to address e.g. strategy gaps. should therefore be on the agenda of further users. Their main benefit consists of a struc- Successful RE policy implementation does policy advice activities. tured mapping of individual strengths and not only depend on designing the right ins- weaknesses of RE policies in the respective truments but also on defining overarching 9 Financing of policy approaches is a ge- context of a country. This can be supportive strategies why RE could be beneficial or how neral problem throughout many countries. when applying a structured analysis accor- to resolve conflicts of interest between diffe- Even if commitment to RE goes far enough ding to the Policy Design Cycle, leading to rent policy areas. Stakeholder commitment to accept certain related price increases, strategic considerations on setting focus in across several policy areas is required to esta- the overall amount of cost due to paradigm international collaboration and on how to blish a modus operandi on how to deal with shifts in the energy system (e.g. grid infra- prioritize potential activities. structural changes due to RE deployment. structure investments) may be higher than the available financial volume. An interes- 3 RE target setting is part of policies of 6 Strategy gaps often go back to general ting perspective for the future is the option nearly all countries examined in the stu- barriers like subsidized energy prices. If of financing RE support policies through dy. Regarding ambition of the targets, two countries have not sufficiently answered the mechanism of NAMAs (National Appro- trends can be distinguished: half of the for themselves why they should shift their priate Mitigation Actions). Here, a country countries have rather low targets compared energy supply more towards higher RE sha- introducing legal measures can apply for to the respective RE potentials, the other res, accompanied by all necessary paradigm international funding for the related cost, in half following high ambitions, often likely to changes in their supplier structure (e.g. mo- return to meeting emission reductions of a be missed. nopolists vs. independent power producers certain quantity. Further advice should be and all related barriers to a leveled playing provided on this option. field), it is hardly possible to establish an ef- fective RE support. Providing advice, a wider

116 117 Appendix Appendix

kWh Kilowatt hour Glossary MASEN Moroccan Agency for Solar Energy MED-EMIP Euro-Mediterranean Energy Market Integration Project

ADEREE National Agency for Renewable Energy and Energy Efficiency Development MED-ENEC Energy Efficiency in the Construction Sector in the Mediterranean (Morocco) MNRE Ministry of New and Renewable Energy (India) ANEEL Agência Nacional de Energia Elétrica (Brazil) MW Megawatt ANME National Agency for Energy Management (Tunisia) MWh Megawatt hour BHD Bio Hydrogenated Diesel n/a Not available BMWi Federal Ministry of Economics and Technology (Germany) n/d Not defined BMZ Federal Ministry for Economic Cooperation and Development (Germany) NAMA Nationally Appropriate Mitigation Action BRL Brazil Real NREA National Renewable Energy Authority (Egypt) CDER Moroccan Centre for the Development of Renewable Energies ONE Office National de l‘Electricité/National Electricity Office (Morocco) CDM Clean Development Mechanism PEA Provincial Electricity Authority (Thailand) CNE Comisión Nacional de Energía (Chile) PLN Perusahaan Listrik Negara (Indonesia) CNY Chinese Yuán/Renminbi PNDEREE National Plan for the Development of Renewable Energies and Energy Efficiency (Morocco) CO2 Carbon dioxide Programme of Activities CSP Concentrated solar power PoA Photovoltaic CSPG China Southern Power Grid PV Research and Development EEG German Renewable Energy Act/Erneuerbare-Energien-Gesetz (Germany) R&D Regional Centre for Renewable Energy & Energy Efficiency (North Africa, EEHC Egyptian Electricity Holding Company RCREEE Middle East) EGAT Electricity Generating Authority of Thailand RE Renewable energy EGYPTERA National Regulatory Authority for Electricity (Egypt) REC Renewable energy certificates EPE Eletrobrás and Empresa de Pesquisa Energética (Brazil) REDP National Renewable Energy Development Plan (Thailand) EU European Union RESPRO Renewable Energy Services Programme (Ghana) EUR Euro RPO Renewable Purchase Obligation (India) FiT Feed-in tariff RPS Renewable portfolio standard GEDAP Ghana Energy Development and Access Project SAGEN South African – German Energy Programme GIZ Deutsche Gesellschaft für Internationale Zusammenarbeit GmbH SERC State Electricity Regulatory Commission (India) GW Gigawatt SGCC State Grid Corporation of China GWth Thermal gigawatt SIC Sistema Interconectado Central (Chile) IDR Indonesian Rupiah SING Sistema Interconectado del Norte Grande (Chile) IEA International Energy Agency STEG Société Tunisienne d’Electricité et du Gaz (Tunisia) IEP India Energy Policy TSO Transmission System Operator IPP Independent power producer UNFCCC United Nations Framework Convention on Climate Change JCEE Egyptian German Joint Committee on Renewable Energy, Energy Efficiency and Environmental Protection VAT Value added tax Volta River Authority (Ghana) KfW Corporation under (Germany) VRA VRA-NED Volta River Authority - Northern Electricity Department (Ghana)

120 121 Appendix

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126 127 Appendix

Ernst & Young (2011). Renewable energy country attractiveness indices November 2011, available at: Department of and Energy (2010). Annual Report 2009/2010, Department of Minerals and http://www.ey.com/Publication/vwLUAssets/Renewable_energy_country_attractiveness_indices_-_ Energy (South Africa), available at: http://www.pmg.org.za/files/docs/DME %20Annual %20Report Issue_31/$FILE/EY_RECAI_issue_31.pdf %2009-10.pdf

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Ministère de l‘Énergie, des Mines, de l‘Eau et de l‘Environnement (2010). Stratégie Energétique Na- IEA (2011). Global Renewable Energy. Policies and Measures, International Energy Agency, available tionale, Ministry of Energy, Mines, Water and Environment (Morocco), received from GIZ Morocco. at: http://www.iea.org/textbase/pm/?mode=re

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