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  • 8/6/2019 Grounding Green Power: Bottom-Up Perspectives on Smart Renewable Energy Policy in Developing Countries

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    Climate & energy PaPer SerieS 2011

    grounding green Power

    Bottom-uP PerSPeCtiveS on Smart renewaBle

    energy PoliCy in develoPing CountrieS

    lutz weiSCher, davida wood, athena BalleSteroS, Xing Fu-BertauX

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    2011 Te German Marshall Fund o the United States. All rights reserved.

    No part o this publication may be reproduced or transmitted in any orm or by any means without permission in writing

    rom the German Marshall Fund o the United States (GMF). Please direct inquiries to:

    Te German Marshall Fund o the United States

    1744 R Street, NW

    Washington, DC 20009

    1 202 683 2650

    F 1 202 265 1662

    E [email protected]

    Tis publication can be downloaded or ree at http://www.gmus.org/publications/index.cm. Limited print

    copies are also available. o request a copy, send an e-mail to [email protected].

    gmF Pp Ss

    Te GMF Paper Series presents research on a variety o transatlantic topics by sta, ellows, and partners o the German

    Marshall Fund o the United States. Te views expressed here are those o the author and do not necessarily represent the

    views o GMF. Comments rom readers are welcome; reply to the mailing address above or by e-mail to [email protected].

    wri wk Pps

    WorldResources Institute Working Papers contain preliminary research, analysis, indings, and recommendations. hey arecirculated to stimulate timely discussion and critical eedback and to inluence ongoing debate on emerging issues. Mostworking papers are eventually published in another orm and their content may be revised.

    ab gmF

    Te German Marshall Fund o the United States (GMF) is a non-partisan American public policy and grantmaking institu-

    tion dedicated to promoting better understanding and cooperation between North America and Europe on transatlantic

    and global issues. GMF does this by supporting individuals and institutions working in the transatlantic sphere, by conven-

    ing leaders and members o the policy and business communities, by contributing research and analysis on transatlan-

    tic topics, and by providing exchange opportunities to oster renewed commitment to the transatlantic relationship. In

    addition, GMF supports a number o initiatives to strengthen democracies. Founded in 1972 through a gi rom Germany

    as a permanent memorial to Marshall Plan assistance, GMF maintains a strong presence on both sides o the Atlantic. In ad-

    dition to its headquarters in Washington, DC, GMF has six ofces in Europe: Berlin, Paris, Brussels, Belgrade, Ankara, and

    Bucharest. GMF also has smaller representations in Bratislava, urin, and Stockholm.

    ab wri

    Te World Resources Institute (WRI) is an environmental think tank that goes beyond research to create practical ways to

    protect the Earth and improve peoples lives.

    ab hBF

    Te Heinrich Bll Foundation is afliated with the German Green Party. As part o the Green political movement it has

    developed worldwide as a response to the traditional politics o socialism, liberalism, and conservatism. Te main tenets are

    ecology and sustainability, democracy and human rights, sel-determination and justice. HBF places particular emphasis

    on gender democracy, meaning social emancipation and equal rights or women and men. As a green think tank and an

    international policy network, the Heinrich Bll Foundation is active in ecology, democracy and human rights worldwide

    with 30 ofces across the globe.

    tsc C B i

    Tis paper would not have been possible without unding rom the ransatlantic Climate Bridge, an initiative o the German

    Ministry or Foreign Aairs to connect and support those working to address the challenges o climate change, energy

    security, and economic growth at the local, the state, and the ederal level in the United States and Germany.

    On the cover: (Le) A man works on power line rom a microhydro power source to E Wi Jo village in Tailand. (Right)

    anzanian engineers and policymakers visit a solar arm in central Tailand built using Tai-made solar panels. Photos by

    Chris Greacen.

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    Grounding Green Power

    Bottom-Up Perspectives on Smart Renewable Energy Policy

    in Developing Countries

    Climate & Energy Policy Paper Series

    May 2011

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  • 8/6/2019 Grounding Green Power: Bottom-Up Perspectives on Smart Renewable Energy Policy in Developing Countries

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    Grounding Green Power 1

    DEVELOPING COUNTRIES IN THE RENEWABLE

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    Executive Summary

    Case study countri

    Brazil

    India

    Indonesia

    Kenya

    Mexico

    Morocco

    Mozambique

    South Africa

    Sri Lanka

    Philippines

    Tanzania

    Thailand

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    PRINCIPLES OF SMART RENEWABLE

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    Case study countri

    Brazil

    India

    Indonesia

    Kenya

    Mexico

    Morocco

    Mozambique

    South Africa

    Sri Lanka

    Philippines

    Tanzania

    Thailand

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    The German Marshall Fund of the United States6

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    Grounding Green Power 7

    DEVELOPING COUNTRIES IN THE GLOBAL

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    Figure 1: Projected Growth in Global Electricity Capacity, 2008-2035

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    19 Pv, Green Growth.

    20 D Tpk H A, B cc y c vp c, ClimatePolicy 8, 2 (2008): 135151

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    The German Marshall Fund of the United States10

    b y pcy p pjc-by-pjc ppc

    Cp j c v

    , c c cvz

    b p v

    v pc21 Pcb -

    k vp c b

    cp cc b c

    c b y , bc

    y c v p

    v c, c jb

    c, xp

    22

    O j b b y py-

    vp c c

    c cp cv

    I c v cc-

    y py b by -

    v pjc, c p b

    by pbc pcy23 I vp c,

    c c c

    cc vp v py,

    c bz c pp

    c c ;

    ky b cv -

    21 T c b(xc y) v c c k v b y pcy k pcS REN21, GSR 2010; J F Kk, T H, LWc, It Should Be a Breeze: Harnessing the Potential ofOpen Trade and Investment Flows in the Wind Energy Industry,PIIE WRI Wk Pp (W, DC: P I I Ecc W Rc I,Dcb 2009); J F Kk , Toward a Sunny Future?Global Integration in the Solar PV Industry, PIIE WRI WkPp (W, DC: P I IEcc W Rc I, My 2010)

    22 WRI c b PV y c c pc c pcb v b b cp p v c c c jb pp c b, - S Kk, H-, Wc, It Should Be a Breeze, Kk ,Toward a Sunny Future?

    23 REN21, GSR 2010

    c k -c b - y pb

    Hv, vp

    c c W-

    cpv b y

    pcy c p c c p, xp

    by v - b by p

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    b vp cy

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    b y pcy p

    b c b y c-

    , y c bc cy vb

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    c c v

    S b y pcy vp

    c c c xp k b

    y cy pc c

    Hv, b xpc vp

    c p cy qp

    T - b

    b xpc c b k

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    c py b

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    b c y y

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    k c , c

    c, c pcp T

    24 W ky by pcy b, cp 4

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    Grounding Green Power 11

    c b y c b c

    c c c25

    PRINCIPLES OF SMART RENEWABLE

    ENERGY POLICY

    W b y pcy he set

    of rules, regulations, and government actions that

    lead to an increased share of renewables in total elec-

    tricity consumption in line with a countrys develop-

    ment objectives.

    My vp c v y xp- b y pc

    by pjc-by-pjc-ppc, b

    k c c

    v py c B

    xpc 12 c y c

    p Rb Ey

    Pcy Wkp x ,

    ky pcp b y

    pcy c b T ky pcp

    by c b T x cp

    c pcp pp

    pcc

    1. Smart renewable energy policy is a compre-

    hensive package. Dvp cy xp

    pcp kp

    c j b y

    py cv c-

    R, b y pcy

    k cc b cx

    b p S b y

    pcy v c b v-

    c p c ,

    v c c, -b cc c, cc

    cpcy

    25 O b b k by c, Kk, H, Wc,It Should Be a Breeze, Kk , Toward a SunnyFuture?

    2. Smart renewable energy policy is basedon clearly defined objectives. Wkp

    pcp pcy

    b c

    A c c b,

    bjcv

    p , b c c

    cy vp, y cc,

    cc vp A c c-

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    b y pcy cb

    cy b vp p

    3. Smart renewable energy policy encour-

    ages private investment. T b

    kp pcp,

    pp by x -

    b y pcy, pc v

    pc y v

    pv v by p cv

    pcb k c T c

    v k v b ccz

    , , :

    L cv b c

    k c b

    pv bkby pjc;

    L c

    c z pjc ;

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    The German Marshall Fund of the United States12

    Box 1: Transparency, Accountability, Participation, and Capacity (TAP-C)

    T Eccy Gvc Iv (EGI), j pjc WRI Py Ey Gp,

    vp vc k z TAP-C pcp pcy, cc-

    by, k pcp, cpcy vp b pcy

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    Transparency and access to information: pc v c

    c cz Ab pcy c cpv, ,

    vby

    Participation: p v k p c-k c ,

    ppcv, p pb F pcp c cc v

    pc pbc

    Accountability and redress mechanisms: x c cy b v

    c c-k, yc c p

    pc, b c c j, y pc p k-

    Capacity: cpcy v c c y py,

    by pv cc c-k pc, cpcy cv

    cy (pcy NGO ) yz pcp cvy1

    1

    Ap T Eccy Gvc Tk: Bck B Pcc P Accby EccySc J 2007 EGI j pjc WRI Py Ey Gp

    L y b y

    k, b b

    p c, b

    cc b,

    c pv b - cp-

    v v26

    26 T , , k vp by p xpc b y c v pv p pcy b y M-v I Cc RbE Gy 2004 S Ky H, UnlockingFinance for Clean Energy: The Need for Investment Grade Policy,Ey, Ev, Dvp P Pp(L: C H, Dcb 2009), 8 Dc BkC C Av pp c,z pcy, vy cy S DBC C Av, Paying for Renewable Energy: TLC atthe Right Price. Achieving Scale through Efficient Policy Design (N Yk: Dc Bk Gp, Dcb 2009), 15

    4. Smart renewable energy policy is cost-effec-

    tive. I by kp pcp

    pbc y b p c

    y v bck by

    py, xpy,

    cy pcy bjcv Bc

    bjcv c c, xp, v

    - pc c pp

    c vp

    pcp cy

    x py c, b

    c c pcy v vb-

    z

    5. Smart renewable energy policy encourages

    innovation. Exp kp

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    Grounding Green Power 13

    c pp by b py, pv

    c y cpv

    p T b

    c c

    pv pc, by,

    y b y c-

    b c c

    bc p pc

    -v v T,

    v v c

    c c v-

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    : c vp,

    , py, 27

    W v

    y pp c vp-

    p, kp pcp

    v by b,

    cyc pc, c

    ppy c,

    y y O c v

    v by b c b by

    y cv v c-cv- pc c

    27 S T, P Z, C Ly, Innovationand Technology Transfer: Framework for a Global Climate Deal(E3G C H, Nvb 2008), p://3/p/c-c/3-p-c-v--cy--k---b/

    6. Smart renewable energy policy is designedthrough transparent, accountable, and

    participatory processes. A b c

    b, kp pcp

    cvy xp ck p,

    p, ccb c-k

    pc cv

    c pcy p Cvy,

    bc pcp ccy

    c vc b b

    c T pcp pcy,

    ccby, k pcp,

    cpcy (TAP-C, Bx 1)

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    The German Marshall Fund of the United States14

    Planning and Developing a Strategy

    3Table 1: Renewable Energy Targets

    in Different Countries

    Country Target

    Brazil N

    India15% RE by 2020; 41 GW by 2017, 72

    GW by 2022

    Indonesia5% , 5% b, 5%

    RE by 2025

    Kenya N

    Mexico 66% RE by 2012

    Morocco 2 GW 2 GW by 2020

    Mozambique

    100 MW , 125 MW

    y, 3 b p, 79,000

    PV y c

    South Africa 10,000 MW RE by 2013

    Sri Lanka 10% -cv RE by 2015

    Philippines A 6,972 MW by 2030

    Tanzania N

    Thailand N

    Sc:P v b y pcy kp, p:///vp-cy-b N:

    T Ppp py T I by v, b p S

    T v cp c k b y pcy c

    c

    pcp bv p-

    Ec cp

    ky , c by xp

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    c pp b ppc

    LESSONS LEARNED:

    SUCCESSFUL POLICY NEEDS A PLANI xp py b,

    v, cy, pv v

    c cc b k

    T p pv pcby

    p pc y p

    v cc p -

    , , b v

    cy, c xpc b

    Official renewable energy targets are a crucial

    first step. T c

    c by py ccy

    cv cx

    cy vb c cpc D

    ccy, c pv v

    vby by pc c

    b y py My vp

    c v b y (

    Tb 1)28

    S c v c -

    b y v p x,

    28 I b kp pcp xpcc cc b c,k c k pc b c c cpcy cc by I , pcy b p y c

    c India29 O c, c Indonesia

    v c30

    Y ppc

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    Philippines cy c

    c b y cpcy by

    6,972 (MW) b 2010

    2030 T c b bk by

    cy, xp c P-

    29 S K, Cy C Sy: I (p Rb Ey Pcy Wkp, WRI, W, DC,Nvb 22, 2010), p:///vp-cy-b

    30 Fbby T I Rb, Scaling Up Renew-able Energy Investments. Lessons form the Best Practice Modelsin Indonesia (W, DC: Bk I C, Jy2010)

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    Grounding Green Power 15

    pp, 1,420 MW , 985 MW , 4,167 MW y, 200 MW b,

    80 MW , 120 MW c y

    R j pz b,

    cc by cv

    b k Ppp p

    pc by p

    pc S A31

    Planning can grow more sophisticated as deploy-

    ment expands; for serious scale up of renewable

    energy, long-term planning will be necessary.

    F v cc pjc y FT p,

    y pcv

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    y y

    y b pv I , c-

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    xp c,

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    y

    Thailand p cc p

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    pc (VSPP) b-p

    vp b y c

    cc , v

    p pj-

    c I SPP/VSPP c pbc p b

    y vp p cy pc

    31 P H M, Cy C Sy: Ppp(p Rb Ey Pcy Wkp, WRI,W, DC, Nvb 22, 2010), p:///vp-cy-b

    , -v c T NGOk ccy v VSPP c c

    ppy p T p

    vp p b 200732

    I Jy 2010, South African v

    b vp I Rc

    P (IRP 2010) c bjcv

    b y vp x 20

    y T S-Ac IRP xp

    cpv ppc c

    pjc, c vby, c

    b c y, b ppy 33

    Planning decisions need to be based on a trans-

    parent and sound assessment of the full cost of

    different options. Lv py

    c y q -

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    p pc c p

    c , c y c

    p c A , c

    b pv cv v-

    , xc

    32 Gc Mb, Country Case Studies: Thailand &Tanzania. Feed-in-Tariffs and Small Power Producer Regulations.

    33 H Tp, Status of renewable energy implementation inSouth Africa with a focus on the REFIT and the role of Multi-lateral Development Banks (W, DC: W RcI, Nvb 22, 2010), p:///vp-cy-b

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    The German Marshall Fund of the United States16

    cpcy34

    I c p pz c x c

    v Ty p

    c vb c

    b k z v

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    vp p, Thailand y

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    D TAP-C ccp, T NGO

    v vp v p vp-

    p k vc

    c

    p c-k pc

    W c pbc cy p p,

    y p pp c vc

    34 T Eccy R: Pvz B Scz C Rk, Cc SGc C Gc, Pacific Affairs V 77, 3,F 2004 A Mq, T O Dvp S Ac Ey Pcy, Uvy Cp T, J 2006p 168 A c c C Ek B Bbby G N P Cb CpT Fb 26 2010

    v - p35

    The planning process benefits from transpar-

    ency, accountability, and stakeholder participa-

    tion. Pbc cy

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    z xp y ,

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    vccy, p v v

    p p p pc pbc cy

    35 T NGO vp -k vyc c 14 c vc Eccy Gvc Iv k ppy Tp pc T c b - k k vc y c-k, y pv pcy pc pbc p B c-k pcy c VSPP ppy pT p vp p pp by T cvcy cb - ,c- b y, c c-c c c pjc pp cy: 54,005MW 8,535MW Pby Spk Nvk, Hy Pbc Pcy F, 14 A Acp Cc, Bkk 2010:p://ccyvc//2010/12/-14----cp-cc

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    Grounding Green Power 17

    I Jy 2010, South African vb vp I Rc

    P (IRP 2010) c bjcv

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    Cv cy z Thailandv

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    36 Tp, Status of renewable energy implementation in SouthAfrica with a focus on the REFIT and the role of Multi-lateralDevelopment Banks.

    p pc (VSPP) ppyp T P Dvp P

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    cy, 54,005 MW 8,535 MW37

    INTERNATIONAL SUPPORT: CAPACITY

    DEVELOPMENT, INSTITUTION-BUILDING, AND

    TECHNICAL ASSISTANCE FOR SOUND POWER-

    SECTOR PLANNING

    I c pv cc -

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    c F xp, Gb Ev

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    37 P by Spk Nvk, Hy PbcPcy F, 14 A Acp C-

    c, Bkk 2010: p://ccyvc//2010/12/-14---cp-c-c

    38 Tp, Status of Renewable Energy Implementation in SouthAfrica with a Focus on the REFIT and the Role of Multi-LateralDevelopment Banks, 2010; S Nk A B-, Investing in Sustainable Energy Futures. MultilateralDevelopment Banks Investments in Energy Policy, WRI Rp(W, DC: W Rc I, 2010)

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    The German Marshall Fund of the United States18

    k c GIS yz bc , - 39

    I c y, W Bk Ey Sc

    M Ac P (ESMAP)

    c c, c

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    c vp p vy y

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    39 p://p/_p/7217_pppA8Fp

    40 W Bk, p://p/p/vv

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    Grounding Green Power 19

    y p pjc p by41

    Pcyk c c b v yp

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    bck

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    y Tb 3 z cv c-

    c y c

    In many situations, feed-in-tariffs are the most

    appropriate generation-based incentives to

    encourage private investment in renewable

    energy. T FT y c-

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    pcy, vy, cy pc v k I

    41 S p c RbEy Pcy Wkp, vb p:///v-p-cy-b

    42 REN21, GSR 2010, 23

    Designing Generation-Based Incentives

    4SELECTING A GENERATION-BASED INCENTIVE

    T p

    b k p b c

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    Policymakers need to choose an appropriate

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    p pc T c FT India, Philippines, South Africa, Sri

    Lanka p pc (SPP)

    p Thailand Tanzania I

    c Brazil India, p

    pc b pc p k

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    The German Marshall Fund of the United States20

    Table 2: Generation-Based Incentives for Renewable EnergyIncentive Mechanism Defnition Advantages Disadvantages

    Individual Power Purchase Agreement (PPA)

    A PPA cc b ccy ( p p pc, IPP) by( p, y, , ccy pp),pcy c c ccy bb: , pc, y,c 1

    A cy xpc b bcpcy

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    Feed-in Tariff (FiT)

    T v p- p pc b p PPA

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    Renewable Portfolio Standard (RPS)

    T v cv c b y, c c by , PPA, , y y, bypc Rb Ey Cc (REC) I

    REC y, b p pc p k pc, b p c c b y pc, cc b p T

    cv by RPS by cc y pvcpc

    continued next page

    Av c , p by k

    Pv cy v

    U by cy, y v xpv pjcyp cy

    b ( y b vp xc xpv )

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    Grounding Green Power 21

    Sc: L Rv2

    1 I b xpc pc PPA c b U c pc PPA v pjc PPA, pc cv c- b

    2 O v -b cv c REN21, GSR 2010; K S Cy, T C, CKyck, Feed-in Tariff Policy: Design, Implementation, and RPS Policy Interactions, Tcc Rp NREL/TP-6A2-45549(G, CO: N Rb Ey Lby, 2009); IEA PVPS (I Ey Acy Pvc PSy P) 2009 P Dv G-Cc PV P: I Ey Acy; H R 2001 RvRp P S Eccy Rb Ey Sc EU C B: Ep C-; H, T E 2006 Photovoltaic Incentive Design Handbook. Np, CA: C P Rc; L JI, W RH (2007)F Rb Ey Tcy Iy: A I Cp W Iy Pcy Spp Mc- Ey Pcy 2007;35(3):184457; Rz, M, H, A, Rc, G, Fb, T, H, R, Hb, C, M, PE, J,SG, C, R, V, M, Rc, G, Kvc, I, Hy, B, 2007 A pz by pp c Ep ccy k, OPTRES F Rp, K; M, PE, A, H, G,A, Bc, I (2009) T Ecc W P W Ey: T Fc P T Avb p://-y--c/c//Cp3p

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    cc45

    44 M, PE, A, H, G, A, Bc, I (2009)The Economics of Wind Power. Wind Energy: The Facts PartThree. Avb p://-y--c/c-//Cp3p

    45 DB C C Av, Paying for Renewable Energy:TLC at the Right Price. Achieving Scale through Efficient PolicyDesign. T p FT RPSc, Cy, C, Kyck, Feed-in Tariff Policy.

    Table 2: Generation-Based Incentives for Renewable EnergyIncentive Mechanism Defnition Advantages Disadvantages

    Competitive Bidding

    I y Cpv B, p- pjc c b p pc b vp Wv c pc cc vp pjc b p

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    43 DB C C Av, Paying for Renewable Energy:TLC at the Right Price. Achieving Scale through Efficient PolicyDesign.

    (continued)

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    The German Marshall Fund of the United States22

    FT pv c

    c y c, y v b byIndia, Kenya, South Africa, Sri Lanka,

    Tanzania, Thailand( Tb 3) b

    c by vp c,

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    46 S DB C C Av, GET FiT Program: GlobalEnergy Transfer Feed-in Tariffs for Developing Countries, p 53-57 vv -- Ky,S Lk, S Ac, T, Tz T N- Eccy Ry C Rq Pp pp U S T Dv-p Acy vp k p ppc c PPA b y pjc, N Rb EyIPP Fk, Sc Nb 2010-11022A, vb p://bv/p/TDA/TDA1/TDA1/2010-11022A/, cc Mc 26, 2011

    b pcp y cccy c pv v-

    vp c T

    qy cc

    b FT cy

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    k

    Competitive bidding can result

    in lower prices and be an appro-

    priate incentive mechanism forlarge-scale projects. By ,

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    b v-

    ppy b b cp c

    v c b c cp-

    v b pc T vb pc

    pvy x pc T

    v 77 US c/kW p

    p c

    A 2010 cyp (146 167 c) pjc v-

    p Bz x-pc c

    B c b qp

    cp c ,

    Bz y c cv pc

    Table 3: Generation-Based Incentive Mechanismsin Different Countries

    Country FiT RPSCompetititve

    Bidding

    Brazil N N Y

    India Y Y Y

    Indonesia Y N N

    Kenya Y N N

    Mexico N N N

    Morocco N N Y

    Mozambique Uvp N N

    South Africa Y N N

    Sri Lanka Y N N

    Philippines Y Y N

    Tanzania Y N N

    Thailand Y N N

    Sc: P v b y pcy kp, p:///vp-cy-b

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    Grounding Green Power 23

    I b pjcvp c c z

    v, v y

    vy pc cpcy c F xp,

    bv cpcy c pjc

    Bz cv c (PROINFA)

    0255 R G N

    2009, cpcy c b 0451 0490

    c I pjc

    ccy p

    c, b y cpv

    Bz47

    I China, v b y c vp

    b pc , v-

    p b b pjc c

    b cp C -

    b

    c y cy b FT

    y b pc

    c c pc 48

    LESSONS LEARNED:

    GENERATION-BASED INCENTIVES CAN

    BE MADE MORE COST-EFFECTIVERb y cv y py,

    xpy,

    A c, y b c-cv pb

    b , by cy

    bjcv c py,

    by v c c I -

    b cv cy pp by

    , v

    c c

    c-cv

    y B, c p c

    c-cv pc b c-

    v My p c FT,

    47 S P, Status of Brazilian Renewable Energy Policy.

    48 J L, P S, H G, 2010 China Wind PowerOutlook (Bj: C Rb Ey I Ac-, Gb W Ey Cc, Gpc, Ocb 2010)

    y y p-c-b cv

    Governments can increase the cost-effectiveness

    of renewable energy support by reducing fossil

    fuel subsidies. A cp

    c b, v c

    c c-cv b

    y pc T c y

    v py , by c

    b

    T c bjcv b y

    pcy 1) b c b

    , y c cp

    , 2) b vp c

    by cv c p Y,

    cp y k by

    b pv

    T xc b y

    k T IEA c

    cp b $312 b -

    200949 Bc c b

    c cc, v

    c c c b c cc Nv,

    b IEA k q v

    p b y

    pp 200950

    T b c b pb,

    c p b b pbc

    49 I Ey Acy, O EccC-p Dvp, W Bk, The Scopeof Fossil-Fuel Subsidies in 2009 and a Roadmap for Phasing OutFossil Fuel Subsidies, IAE, OECD, W Bk J Rp

    Pp G-20 S, S (P, W, DC,Nvb 11, 2010)

    50 Ax M, F F Sb A 12 T Spp Rb, Sy S, Jy 29, 2010, p://bbc//2010-07-29/--b--12--pp--b-y- N cc b v 12 , bc b IEA 2008 F pp c 2009; c 1:7

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    The German Marshall Fund of the United States24

    b c b pb y pc F, b

    v c y Sc,

    y c cpv vby -

    b, y b p

    pp p b cp S

    b y pcy

    c c b R-

    b bc cpv pbc

    bc vb b

    y pp

    Hv, y y pcy c, b pc b cy

    c W y v

    bk b ppy

    v pp c, cvy

    pv bc y

    p51 Acc c by Gb

    Sb Iv, b

    b cc k pc

    cc , , c

    cpy pc y

    cy pc (c pp

    p, p p c, - vy

    y ppy), vp cc

    y k

    b pc, c c

    pcy b

    pc52

    Deciding how to fund an incentive mechanism

    raises political and equity challenges that may be

    more easily navigated with help from the TAP-C

    principles. W p pv -

    51 I Ey Acy, O EccC-p Dvp, W Bk, The Scopeof Fossil-Fuel Subsidies in 2009 and a Roadmap for Phasing OutFossil Fuel Subsidies.

    52 T L, Cp B, B P, Strategiesfor reforming fossil-fuel subsidies. Practical lessons from Ghana,France, and Senegal(Wp, Mb: I I Sb Dvp, 2010), 8

    b y pc -bcv, py p I c

    b p ccy c,

    b p pbc b, by xpy,

    cb

    ppc I pbc c c

    py p p, c bv T

    bv pc p

    b cy c T pcy

    p vp c,

    k ccy c pv

    p cc bc y vc A

    xpc c cv c 1990 v , p

    c xp b y

    c c T bv

    pc p c b , xp,

    by c bck p

    p y bck ,

    y c v

    ccy cp53

    I c y c, b

    p v b v v pc

    p A c Cp 5, -p ccb pc

    p c c p

    cv c ccp qb

    W Brazil -b c-

    v cpp FT, p c

    b ppc, p c by

    vy y c y

    cp bv 80 k 54

    I Indian M,

    pc b c

    53 Nvz Db, Power politics: equity and environmentin electricity reform, WRI Rp (W DC: WRc I, 2002); S Nk, S Dx, Nvz K Db, Empowering people: a governance analysis ofelectricity, WRI Rp (W DC, P, I: WRc I, Py Ey Gp, 2007)

    54 S P, Status of Brazilian Renewable Energy Policy.

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    Grounding Green Power 25

    p b y cv-

    ccy c 55

    I Thailand, c c

    90kW p v cv

    ccy c Pc pc b-

    c,

    qy, p K b T T My

    Ey Ey P Pcy Oc (EPPO)

    yz pc VSPP & SPP -

    py :

    $000233/kW y 20102011

    $000894/kW y 20122016

    $000710/kW y 20172022

    T , vy pc, pcy p,

    v b v T Hv,

    by p (c T)

    cc b, c vy v b

    p, pbby c56

    A price premium that decreases over time can

    drive performance improvement and cost reduc-

    55 N R, Distributional Impacts of Climate Change Miti-gation in the Electricity Sector: Case Study of Maharashtra, India,D Wk Pp (S, CA: S Uvy,2010)

    56 A p cc C Gc Cc S Gc P T, Mc 2011

    Table 4: Wind Project Developers Cost Submissions Before the Electricity Regulatory Commissionin the Indian State of Andhra Pradesh

    Client Submission Date Cost per MW (in million Rs)

    Gujarat Alkalies and Chemicals Ltd. Mc 2007 514

    Chennai Port Trust Ap 2007 536

    Rajasthan State Mines & Minerals Ltd Ap 2007 516

    ONGC Gujarat J 2007 608

    Bharat Electronics Ltd J 2007 745

    Sc: IWEA

    tions. T b y pcy

    k y c c cpv cv y c T,

    v p pjc

    c v F xp, Gy

    C, FT py ck pjc

    pc vc y b

    FT pjc y57 T

    c p k k v

    xpc , k c, c-

    c vp c py b

    I c py vc,

    c v pv vb v

    , p v pv

    c pc y pvy

    cp pv Hv,

    c , k v-b-

    z py58 S ,

    xp c c c vc

    vp , b FT bc

    pp, pcyk c c c

    c p v v

    57 F G c, BMU, 2009 EEG Payment

    Provisions (B: F My Ev, NCv Nc Sy, A 16, 2008), p://b-///p/ppc/p/_v_p F C c, C Pbc U C, F-T Pc, Feed-in-Tariff Price, , p://cpccv/PUC/y/Rb/F-+T+Pc

    58 F c p- c c, Kk , Toward a Sunny Future?, 13-14

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    The German Marshall Fund of the United States26

    Getting the price right at the beginning, based onan assessment of the technology, market condi-

    tions, and resource availability, is critical for the

    success of a FiT. A pc c FT

    pc ,

    by c pc k

    A C Ey, G Gvc,

    R F c-cv by WRI, I,

    Py Ey Gp (Py)59 Cp T

    My 2010, S Ac, I,

    Mxc c cc b c vby cy p-

    c c p -

    v

    I I, y c y

    c b by v pjc

    vp FT v Hv,

    y c, v y, p

    vby qp pv

    Tb 4 cp c b by v

    pjc vp A

    P Eccy Ry C

    (APERC) p T

    b c 45 pc

    b c T xp

    yy ccy

    y c pp

    FT60

    Sy, C Eccy Ry

    C (CERC), v S

    Eccy Ry C I,

    cy c FT PV I 2010,

    FT by CERC 18 pc

    59 Py p c vccy b M, I I Ac ccy b Cp T, S Ac

    60 Rj Dk, Renewable Electricity and Governance Cases from India (W, DC: W Rc I,Nvb 22, 2010), p:///vp-cy-b

    by y c Gj Y Gj cc c

    500MW cpcy pc (

    Tb 6)61

    FiTs are most effective if they are set at a rate that

    reflects the cost of generation of the specific renew-

    able energy technology. In order to save scarce

    resources, they can also be set at a price that only

    reflects the utilitys avoided cost, but this will limit the

    FiTs impact. Icv c bjcv

    cy y p c-

    bjcv c c cy, pp b

    cy pcc

    I Thailand Tanzania, S P Pc

    (SPP) pv -

    cc, -

    z p pc T pcc

    b y c

    c cc ccy

    Tz b py y

    v c v vp

    py b y

    p O , T py c-

    y-pcc vp

    v c

    I Tanzania, p SPP b

    v c y Tz

    q p , pcy

    , pc

    ycc T p ,

    Tz y pc cpcy

    c y cy pc-

    , p xpv

    F SPP cc ,

    cy y c, b

    c b b pb Oy b 2

    pc pp Tz

    61 Ib

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    Grounding Green Power 27

    Table 5: Renewable Energy Online or with PPAs SignedUnder the Thai VSPP and SPP Programs, as of October 2010

    VSPP (MW) SPP (MW) Total (MW)

    PPA signed Generating PPA signed Generating PPA signed Generating

    Solar 2,020 16 90 - 2,110 16

    Biogas 85 69 - - 85 69

    Biomass 2,108 710 70 583 2,178 1,293

    Municipal

    Waste

    95 32 - - 95 32

    Mini/micro

    hydro

    6 1 - - 6 1

    Wind 67 0 - - 67 0

    Total 4,381 830 160 583 4,104 1,364

    ccy S v by

    11 - by y

    I c, SPP y

    y py -

    , b b cv

    b c-y vp Ay,

    PPA p p v b ,

    c p p p by ,

    cc k, c-yp, b pc p T c

    b c b y

    c vp pjc

    b y62

    Thailands SPP Vy S P Pc

    (VSPP) c c 1992

    2002 pcvy v b cc

    v 1,300 MW b y

    cpcy (S Tb 5)63 Sc Dcb

    2006, p FT by

    p v c, c - , by cy yp by

    62 Gc Mb, Country Case Studies: Thailand &Tanzania. Feed-in-Tariffs and Small Power Producer Regulations.

    63 T Vy S P Pc (VSPP) p pp p 10 MW ccy xp T S PPc (SPP) pp 10 MW 90 MW

    z A p-kW b pv

    pjc -p cc

    , pc

    k pvc v

    c y v cc T -

    pv v y p

    cy yp P - ,

    vy VSPP - v

    VSPP p p c2002 Bc p b b

    v c, y pjc b

    pjc, b, py k, cp

    T cy-pcc - c

    cy vy pp64

    Caps can be used to control the cost of an incen-

    tive mechanism. FT vp c

    vy cpp T cp cy

    c p v py,

    c by, b c

    vb c c Cp c v v cy;

    k pjc y c

    cp p cp, v-

    64 Gc Mb, Country Case Studies: Thailand &Tanzania. Feed-in-Tariffs and Small Power Producer Regulations.

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    The German Marshall Fund of the United States28

    c cc pjc v I

    pbc c bc vb,

    xp cb, x cpp

    FT c b c p by c

    cpy v cp

    Cp v cpcy b pp pc, c, India Philippines; cp

    x b pjc z

    , c, Sri Lanka, Thailand, Tanzania,

    India N S M

    Combining different generation-based incen-

    tives can also help control the cost of renewable

    energy policy. T b

    -b cv

    c pjc yp F xp,

    FT b c b

    ppc c c yb pjc B cy

    RPS cpv b

    c, xp y c

    cy b c

    pjc c yp pjc

    c pjc vp FT

    bc c

    I q c REC c-x

    FT, v p pc xby

    c y y bv b

    pb Sc x India cy c Philippines65

    I Ppp, b

    REC b y b

    y c cv by FT, c

    A FT pjc vp

    cy c y

    , India b c

    c b y xp A p

    N S M, cpcy

    500 MW pjc b ppv FT by

    CERC D p pjc

    vp, CERC p v c

    65 K, Cy C Sy: I

    Table 6: Different Rates for Solar PV in India Under FiTs and Competitive Biddingin Gujarat and at the National Level

    Commission Date Levelized Cost

    per kWh (US$)

    without tax

    benefts

    Levelized Cost per

    kWh (US$) with

    tax benefts

    Discrepancy

    Gujarat State

    Electricity Commission

    (GERC) solar PV FiT

    Jy 2010 - 028 -

    Central Regulatory

    Commission (CERC)

    solar FiT

    Mc 2010 040 03318 pc

    GERC

    Central Regulatory

    Commission (CERC)

    competitive bidding

    NSM

    Nvb 2010 027 (v) -

    32 pc

    FT

    by

    C

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    Grounding Green Power 29

    c pc b 32 pc FT y pvy ( Tb 6)66

    Incentives need to be designed in a way that

    limits speculation by imposing penalties or

    canceling permits if no generation projects are

    built. Mc b

    c b cv c

    pc cc p

    F xp cpcy

    b pp p pc

    p qy, cp

    v ppy p cy vp pjc

    pc v p I

    pp, c b bck

    cpcy cy b W-

    c p pc,

    xp by p c p pjc

    b p pc -

    I Thailand, cp pp p

    pc VSPP p

    y vp pjc

    I y cq PPA cv

    c y pjc vp

    T c cy b pc

    py T pb

    by c A b

    b pjc v 100 kW q,

    pjc pc p y

    c c cv

    cy-pcc -- p O-

    y b67

    66 Dk, Renewable Electricity and Governance Casesfrom India.

    67 Gc Mb, Country Case Studies: Thailand &Tanzania. Feed-in-Tariffs and Small Power Producer Regulations.

    INTERNATIONAL SUPPORT: CAPACITY-BUILDING

    AND INTERNATIONAL PUBLIC FINANCE

    TO ADDRESS INCREMENTAL COSTS WITH

    PREDICTABLE GENERATION-BASED INCENTIVES

    A pcy v, cv c,

    k b vp

    c vv,

    pbc c I v pp

    b y pc, y v

    c y pp pc-b c-

    v T vv b cpcy b

    cc c p-

    c-b cv c cv A

    xpc p-

    FT x vp , S-

    S xc y b ppp c

    b cpcy c (

    Bx 2)

    Pv pbc

    c cv c

    vv c c v

    p I b ppc

    , b c v vpc c p b

    vp

    Mc pv v -

    k xpv c

    -b cv c

    pp c b vy cv v v

    c T H Lv

    Avy Gp L T Fc c

    by UN Scy G c

    vc k c c

    c c pv cp by v k

    p68 Sv z

    v pp k FT vp c

    68 H Lv Avy Gp L T Fc, Reportof the Working Group 7, p 21

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    The German Marshall Fund of the United States30

    b pp c T

    , v c v -

    b y vp c bc ypcv k , FT c b

    p k Hv, b

    FT c b p cp

    b y pcy c p

    py b

    cb vp b, py

    xpy vp c b

    c c A - pbc c c

    pv pc p O

    b pp, GET FT ccp,

    vp by Dc Bk C C

    Av ( Bx 3)

    Box 2: South-South Exchange of Experiences Between Thailand and Tanzania1

    T b S-S xc xpc b T Tz,

    c T xpc vy p pc (SPP/VSPP) p

    T p Tz vp SPP ppp cx T

    p c T Tz c, ppcb c-

    , , p c p SPP c vp

    c c, c U S, cb c-

    y cp cv vy pb B b cc SPP

    c vp vp c Tz vp

    ky b

    I Mc 2010, W Bk p pv b Tz T k cp T VSPP p T cp

    Tz My Ey c, y , pv cy -

    y y, c, pjc vp T k cc q T

    cp, y c c p v

    y v SPP A pjc vp b cy Tz b

    cc k cv b p Bkk, c

    qp Fc My Ey c ($16 ) -

    c v y by cc bk p jp

    pc by cc

    A xc k y p b y Tz W T pcy

    T y p VSPP p T y pp cz VSPP p FT

    cc A p, T y c v b Tz y

    p SPP c pv c c pp SPP cc

    Chris Greacen, Palang Thai

    1 F v, C Gc, South-South Policy Transfer: Thailand & Tanzania (W, DC: WRc I, Nvb 22, 2010), p:///vp-cy-b

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    Grounding Green Power 31

    Box 3: The GET FiT Program

    T Gb Ey T F- T P (GET FT) ccv by Dc Bk

    C C Av (DBCCA) Jy 2010 p v U

    N Scy G Avy Gp Ey C C (AGECC) p

    ccp v b y v vp 1 DBCCA p

    GET FT, pp c pbc-pv pp pp b

    b y c-p y cc

    T GET FT ccp b p pv b - pp v 160

    xp cp b-p, pv c ppcv b y c

    vp k2 I by xp b p p , by

    vb c cy p vp b y

    T GET FT v c yp pp: 1) c pbc c

    c b y cv, 2) k c

    c, 3) c cc c -c b c

    b v pjc vp

    Sc b y pc b p c vp cy cx, GET FT

    pp p

    pp pcy

    by -

    (F 2)

    I c c,GET FT cb

    pbc c

    bv-k c

    b ccy

    p c,

    c

    pc ccy

    k pc

    T bz v

    c c -

    1

    F pp, DB C C Av, GET FiT Program: Global Energy Transfer Feed-in Tariffs for DevelopingCountries, vb bccc

    2 GET FT b p pp c vp by: A Hc Wk Gp L- Cpv Ac, E-p C J Rc C, UN Dp Ecc Sc A, Ep Rb Ey Cc Gpc, W F Cc, W W Ey Ac, I Rb Ey Ac, PjcCy

    3 DB C C Av, GET FiT Plus: De-Risking Clean Energy Business Models in a Developing Country Context, F-c Rp (N Yk: Dc Bk Gp, 2011)

    Targeted GET

    FiT SupportGET FiT Solution

    Avc

    F- T

    Pv pp py bv-kp by pc y

    vc - -,ccz, b c

    LP PcA(PPA)

    U p pc p-FTy c c c c, c v -cy ck c

    M- O-G App-c

    Ap FT pcp c p-c-b cv cz - y , pcy -, c

    Figure 2: Project types addressed under GET FiT.3

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    The German Marshall Fund of the United States32

    W p

    c FT x , x

    c c T C

    Dvp Mc (CDM), cb-k

    c c Ky Pc,

    xp pc-b

    c pv c k

    k pv ( c,

    c b c c pv k pc)69 Cb

    vp pv-c

    v b vp

    c I 2009, v b -

    (, b, yp) c

    23 pc CDM k70

    69 H Lv Avy Gp L T Fc, Reportof the Working Group 8

    70 W Bk, State and Trends of the Carbon Market, 2010;H Lv Avy Gp L T Fc,Report of the Working Group 8, p20 I b

    y c pc y v CDM pjc b b CDM pjc vp A b pp CDM p b c p-c v pjc pc, xpc c pc, c c v c pc xc pcI c, y b pv byp z ppc b- pjc-by-pjc b c

    T c pcz

    vp bk c

    pp c c v p

    vb pv cc-

    c c p c py

    -cb c T C Iv-

    F (CIF) c v

    xp k by v p

    vp c b p bcv y c cy T

    $63 b b Jy 2008

    p 2012, c

    W Bk vp-

    bk T c pp by

    j c v

    U K, U S, Jp A

    My 2011, 14 v v p

    CIF T bk ($476

    b) c pp py

    c y c k -

    v c (GHG)

    jc vp c71

    71 Pycp, C Learning from the Climate Investment Funds,World Resources Institute, Nvb 2010, p:////2010/11/-c-v-

    c pv c cp b c c b b

    y pjc43I pv c c cv, GET FT ccp

    c k by v

    pcy c

    W pp - pc, GET FT v cz,

    pcpv ppc pp b y I c c, pbc c c c

    cv , cc c b bz ppp pp

    b T GET FT ccp p c c b xby

    p pcc cx c b c b, , b b

    Christina Hanley, Meister Consultants Group

    4 F c py c, : DBCCA (2010), GET FiT, p 18

    Box 3: The GET FiT Program (continued)

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    Grounding Green Power 33

    T CIF, C TcyF (CTF), c b pp vp

    c v p c j

    pp c

    c q -

    pp My p pb

    p c c pp

    -b / y cc c

    c c b b pv c

    v p by -c

    pcc c c c

    b y pc (c FT

    p) vp cy

    I , W Bk ESMAP

    c vv c c-

    , cc c

    pp -c c b

    p vy y ppy c

    z-cb cy p72 I vp

    k Ac xp c c

    c p c p c

    FT p

    Pv x FT

    c vp c b

    cv y v

    x pc FT vp

    y c b pcc

    vp , cpp, c-

    y-pcc, cb FT pv

    vy cy v Bc

    cc c c, vp c-

    v b FT

    p

    F xp, c Tz SPP

    b c b y

    c pp vp

    pjc b y Tz

    c p cy-b

    SPP p , b ky

    72 W Bk, p://p/p/vv

    pp b b 73

    I c c, c p b

    b vp cy py

    c p

    pp c-p

    y:

    FT c c c

    c

    FT b v c

    b cy-pcc c

    Cp cpcy pp by FT

    c v cp

    73 Gc Mb, Country Case Studies: Thailand &Tanzania. Feed-in-Tariffs and Small Power Producer Regulations.

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    The German Marshall Fund of the United States34

    LESSONS LEARNED:

    SMART RENEWABLE ENERGY POLICY NEEDS

    STRONG INSTITUTIONS, SOUND PROCESSES,

    AND WELL-DESIGNED REGULATIONS

    Spy pv -b cv

    cv c c b

    cp c p

    b y py A b

    v p pc

    p

    I pv p, WRI vp -

    k b b y v z pcy-

    k c y

    pcy74 B x pc, -

    , cpc ccy

    c c b pbc pv v-

    b y p,

    pp k p

    y cy c p b

    pv ccy vc

    cc, c v c

    ( Bx 4)

    Any generation-based incentive needs to be part

    of a broader set of power sector rules and regula-

    tions. F xp, cc y

    b q p

    cc b y pjc

    T cc bc -b cv

    y p pc c pc

    p , b

    p pjc c cc A

    xp cy b

    v cy ,

    p, c by pjc

    74 Nk B, Investing in Sustainable EnergyFutures. Multilateral Development Banks Investments in EnergyPolicy

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    The German Marshall Fund of the United States40

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    The German Marshall Fund of the United States42

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    Grounding Green Power 45

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