Accelerating the Energy Transition The Renewable Energy Business Environment in the top-7 Emitting Countries Praveen Kumar Panna MSc Thesis in the Department of Electrical Engineering, Mathematics and Computer Science: Graduation Report Accelerating the Energy Transition: The Renewable Energy Business Environment in the top-7 emitting countries Praveen Kumar Panna Student Number: 4655400 Thesis Committee Members Chair and 1st Supervisor: Prof. Dr. Kornelis Blok 2nd Supervisor: Dr. ir. Jaco N. Quist 3rd Supervisor: Dr. ir. Arno H.M. Smets This thesis is available in an electronic version at http://repository.tudelft.nl/ Delft, The Netherlands October, 2019 Copyright © Author The cover photo is clicked by the author himself ( near Delta Park Neeltje Jans, The Netherlands) Accelerating the Energy Transition The Renewable Energy Business Environment in the top-7 Emitting Countries Praveen Kumar Panna (4655400) Supervisors: Prof.Dr.Kornelis Blok Dr.ir.Jaco N. Quist Dr.ir.Arno H.M.Smets Department of Electrical Engineering, Mathematics and Computer Science Delft University of Technology In partial fulfilment of the requirements for the degree of Masters Sustainable Energy Technology Delft, October 2019 I would like to dedicate this thesis to my loving parents . Acknowledgements I feel glad and humbled, as I look back to all those beautiful memories, and people, who accompanied and helped me in the journey of writing this thesis. I would like to thank my supervisor Prof. Dr Kornelis Blok for his expert suggestions, continuous guidance, and support, for pushing me towards my limit and at the same time keeping me grounded, and for helping me to bring the thesis to its current form. Thanks to Dr.ir. Jaco N. Quist, for his supervision and guidance, and for helping me to understand the appropriate usage of the theories of economics. I am grateful to Dr.ir. Arno H.M.Smets, for not only for this thesis but also for designing the excellent MSc. SET programme, and for accompanying us throughout the journey of the Master’s programme, since day one. I would also like to thank Dr.ir. JL (José) Rueda Torres for his expert inputs and contributions in designing the technological preparedness hierarchy. Thanks to Dr Ksenia Letova (Skoltech), for providing data about Russia, which was quite useful for this research. The seemingly arduous journey becomes melodious and sweet when you have a bunch of friends, whom I consider as my greatest gifts during the last two years in TU Delft. Thanks to Ir. Amanda and Yasmine, two beautiful and brilliant ladies, for inspiring me and for the making the colossal and never-ending projects of TU Delft seem like a walk on comfy grass. Raghavendran Raman! You are the best gift Delft has given me. My army of friends from Church, you made my journey in TU Delft like a song, your presence created the melodies and harmonies. A special thanks to my family in India, who are my strong roots and branches, because of whom I can bloom and bear fruits. A heart-warming thanks to my parents Sh. Stanislas Panna and Mrs Silvia Panna, my sister Pranita, brother-in-law Parimal, and our new bundle of joy Pranit Paul. Above all, I would like to thank God, for giving me this great opportunity, for adding these beautiful people in my life, for the moments of joy, and for the moments of perseverance, for being the Lamp unto my feet and a Light unto my path. Praveen Kumar Panna Delft, October 2019 Summary Combating climate change is one of the most urgent tasks for the present generation. The transition of the current energy sector may play a crucial role in combating climate change by cutting down considerable GHG emissions. Solar PV and wind power generation technolo- gies offer a unique solution, due to their technological maturity, and capability to de-couple the growing energy demand with the emissions linked to fossil-based power generation. Although these renewable energy (RE) technologies observed tremendous growth in the last decade, they contributed towards 16% of the total installed capacity and 6.7% in the generated electricity in 2017. Hence, there is a clear need to accelerate the energy transition to limit global warming to 1.5°C. Further, since the power sector is heavily capital-intensive and the current technological- policy-market system is designed to support the conventional power system, it is crucial to create a conducive business environment to accelerate the deployment and power generation through solar PV and wind power. Furthermore, the energy transition of the power sector of the top-7 countries with the highest emissions has the potential to reduce around 29% of global emissions, which led to the research question, "How good is the business environment for renewable energy in the top-7 emitting countries?". Literature Review: Literature review revealed that the business environment of renew- able energy may be referred to the macro-business environment existing in a country, which is composed of or affected by the political and legal structure, laws and policies, macroeconomic scenario, and the combination of all the external forces and situations, which are outside of a business but have influence on the deployment of renewable energy. It also suggested that the binding RE consumption directives, motivations for economic development, suitable RE policies, economic factors, and technological factors may contribute towards driving the RE deployment. Hence, the literature survey systematically collected and presented the concept of the business environment, factors of PESTEL framework, interactions among pertinent factors, and policy and regulatory indicators designed by the World Bank and International Energy Agency (IEA). Methodology: Based on the literature survey, the RE business environment framework was developed to map and assess the renewable energy business environment of a country. viii The framework incorporates the external-business environmental factors such as the national political will for the adoption of renewable energy (RE), RE policy and regulatory environ- ment, economic incentives for RE, industrial growth, technological preparedness for high share integration of variable RE, and interactions among these factors. This research further explores these interactions among factors. Results and Analysis: The developed framework was applied to the power-sector of China, the USA, India, Russia, Japan, Germany, and South Korea. The results captured a snapshot of the current status of the RE business environment in the concerned countries, which were compared, analyzed, and discussed. The RE business environment also showed a close resemblance to the current growth in the RE industry. Countries in the order of decreasing conduciveness of the RE business environment were Germany (good, RE industry growth factor > 66%), Japan, China, and the USA (moderate, between 33% and 66%), South Korea and India (low, below 33%), and Russia (extremely poor, 2.5%). The strong influence of the technological preparedness on the RE industry in Germany is also restricting the accelerated deployment of renewable energy due to the technological limitations in the country. Japan’s strong influence of the good economic incentives have boosted the RE deployment share, and with the present influence of the political will and the technological preparedness on the RE industry, these two latter factors need to be strengthened to expand the domestic RE market. China needs to strengthen the limited power dispatch capacity between the generation centres in the northern and northwestern China to the load centres in the central and eastern China, as due to the strong influence of technological preparedness on the RE industry, the limited capacity is restricting the further RE deployment. The RE industry of the USA is supported by the strong influence of the mandatory RPS scheme (in some states) on the RE industry, however, needs strengthened political support. The good influence of the RE policy on the RE industry (along with moderate economic incentives) is driving the RE deployment in South Korea; however, accelerated deployment is restricted by the influence from the political will which is supporting a low targetRE share. Political will, which is one of the main drivers in most countries, could not sufficiently influence the RE policy and the RE industry in India. Inconsistencies and weak influence of the RE policy on the economic incentives and the RE industry are observed in India. All the necessary interactions among factors are absent in Russia along with the insufficient influence of the existing capacity based renewable support scheme (CRESS) on the RE industry. Discussion & Conclusion: The research fulfils the purpose by providing an overview and a broad understanding of the renewable energy business environment in the top-7 countries responsible for the highest GHG emissions. Although, the research revealed limitations in the methodology, factor ix selection, interactions, comprehensiveness and depth of the framework, concurrence with the observed growth in the RE industry validates the findings. The results validate the initial expectation and assumption, that in order to create a conducive renewable energy business environment, it is crucial to strengthen the factors of the RE business environment, and these factors must be able to influence (interact with) each other positively, and such healthy interactions create a conducive business environment for the growth of renewable energy, as observed in Germany. On the