ISES WP Developing Countries English

Renewable Energy Futurefor the Developing World

Whi

te P

aper

Written by Dieter Holm, D.Archunder contract to the International Solar Energy Society

http://whitepaper.ises.org

WP_2006.qxd 01.02.2006 15:41 Uhr Seite 3

WP_2006.qxd 01.02.2006 15:41 Uhr Seite 4

1

Contents

Foreword 2

Executive Summary 3

Summary of Policies 6

Renewable Energy Defined: Energy from the Sun 7

Aim, Scope, Delimitations 8

Introduction: The Developing World in the Global Energy Transition 9

Why it is Essential to Transform the Developing World Energy Systems Now 13

Renewable Energy Resources: Technology Status and their Sustainable Potential 16

National and International Drivers of Renewable Energy Application: Setting National targets within Global Guard Rails 24

Policies to Accelerate the Application of Renewable Energy Resources in Developing Countries 30

The Need for Research and Demonstration 45

Examples of National Policy Models 48

Conclusions 54

Acknowledgements and References 55

About the Author 56

Annexure A 57

Abbrevations 58

WP_2006.qxd 01.02.2006 15:41 Uhr Seite 1

2

Foreword

Renewable energy in various forms hasbeen used in human activities since timeimmemorial. The history of the humanrace and the progress of civilization havehad much to do with the use of energy,but in the last 200 years rapid transitionshave taken place essentially from a re-gime based on renewable sources ofenergy to those forms that have a finitestock across the globe. It was reallywhen some voices in the 1960s and ’70sin some corners of the world articulatedconcerns on the limits to growth that the inexhaustibility of the earth’s finiteresources was called into question.However, concerns of this nature werequickly dismissed by those who sawthem as a futile reinvention of Malthusianeconomics by pointing to the power oftechnology and innovation. It was con-tended that technological change hasestablished the ability of human beingsto counter scarcity of any input in theproduction process through innovationand substitution between differentresources.

It was after the oil price shock of 1973 -74, triggered by some unusual geopoli-tical forces, that the world started look-0ing at the limits of global resources atleast in respect of energy. Consequently,it was in the mid 1970s, that this field at-tracted funds and concerted efforts for

the development of technological meansby which untapped renewable resourcescould be harnessed on a large scale aspossible substitutes for fossil fuels. Theenthusiasm for renewable energy usecontinued through the mid 1980s, butwith the crash in oil prices in 1985, aseason of neglect set in, which haslasted almost two decades. Even thoughin real terms oil prices today are lowerthan what was registered as a peak atthe end of the 1970s, they have risensharply enough to require a reevaluationof global strategies for the productionand use of energy across the globe. Thenew interest in renewables is also drivenby projections of the future, with thespectre of continuing growth in demand,particularly in the U.S, China and India,and perceived sluggishness in the growthof global oil reserves and production ca-pacity.

The human race is, therefore, ready tolook at renewable energy within this newcontext, particularly since a great deal of growth in the demand for energy willcome from the developing countries.Since the infrastructure being put in placeand the economic options being exercis-ed in the developing countries do permitsome choices for greater use of renew-able energy, an assessment of the futurethat lies ahead and the opportunities that

exist for bringing about a transition tonew sources of energy needs consider-able debate and discussion. The WhitePaper developed by ISES, embracingvarious aspects of this subject, providesan extremely useful document for deba-te and discussion, which could be of value not only in exercising publicpolicy choices, but also for business andindustry in evaluating opportunities forlong-term investment decisions. Hence,it is indeed heartening that ISES has de-veloped this White Paper, which fits verywell into the need for an authoritativedocument, that could stimulate furtherdebate and analysis to assist in the transition towards a sustainable energyfuture in the developing countries andthe whole world. However, it is impor-tant to emphasize that any discussionand debate has to lead to action andimplementation of renewable energyprogrammes, by which a transition isachieved in reality towards greater useof renewable energy sources.

Dr. R. K. PachauriDirector-General, The Energy and Resources Institute (TERI) &Chairman, Intergovernmental Panel on Climate Change (IPCC)

WP_2006.qxd 01.02.2006 15:41 Uhr Seite 2

Executive Summary

For the hasty reader: The essence of the White Paper is contained in the section on "Policies to Accelerate the Application of Renewable Energy Resources in Developing Countries".

This White Paper presents a rationale

for apposite and effective governmental

policies on renewable energies in the

developing world. It also provides ade-

quate scientific information to make

rational and accountable energy policy

choices within this context, in support

of sustainable development.

While fully acknowledging the substantial

barriers restraining the developing world,

the paper also highlights the momentous

and unique window of opportunity, as

well as the concomitant grave responsi-

bility this places on the shoulders of pre-

sent energy policy decision-makers. A

potential role of the industrialised nations

in our common future is indicated.

The paper endorses the thesis of the

earlier global ISES White Paper titled

“Transitioning to a Renewable Energy

Future”, stating that “a worldwide effort

to generate the renewable energy transi-

tion must emerge at the top of national

and international political agencies, star-

ting now”.

A Summary of Policies is presented,

followed by Renewable Energy Defined:

Energy from the Sun describing that

essentially all energy derives from the

sun, including the fossil fuels that have

been the base of a short-lived and ener-

gy-flagrant period in our history.

The Aim, Scope and Delimitations sets

the definitions and context of the develo-

ping world in the global village, which is

illustrated by the worldwide reaction to

the Tsunami catastrophe of December

2004. Our common future has not rea-

ched that level of newsworthiness – yet.

The Introduction – The Developing

World in the Global Energy Transition

explains that developing nations have

underdeveloped energy infrastructures,

but need not follow the western pattern

of centralised power stations with exten-

sive, costly and vulnerable networks.

While the developing world has uneven

fossil resources, it is blessed with more

evenly distributed underdeveloped (and

largely unmapped) renewable energy

sources.

This offers a unique opportunity of

technological leapfrogging, using the

Kyoto Protocol’s Clean Development

Mechanism where advanced and tech-

nical know-how and resources of the

industrialised nations can facilitate the

growth of domestic work opportunities,

thereby helping to achieve sustainable

development and the millennium goals

in the developing world.

Artificial and persistent market distor-

tions ignore the social, environmental

and military costs of fossils. Where

developing countries indulge in nuclear

adventures, the costs always by far

exceed public tax monies invested in

sustainable energy. Their insurance is

not covered by private companies, but

by the unsuspecting citizens.

A combination of energy conservation,

energy efficiency and renewable energy

seems to be indicated in a world of

material want where it is not always easy

to practise global solidarity. The inevita-

ble transition to renewable energies has

to be immediate, rapid, orderly and

sustained. This requires suitable policies

as suggested in this White Paper.

Why it is Essential to Transform the

Developing World Energy Systems Now

treats the new key drivers: energy

poverty and poverty eradication, risk

avoidance and energy volatility, as well

as the protection of the natural life sup-

porting systems. Government policy

options include the creation of a sup-

portive climate for the necessary policies

and legislation by creating more energy

awareness, energy labelling of applian-

ces, using the Kyoto Protocol, and

ensuring the national and regional secu-

rity of supply through renewables.

Renewable Energy Resources: Tech-

nology, Status and their Sustainable

Potential provides essential information

for policy purposes. About two thirds

of the global hydropower potential is

located in the developing world. How-

ever, there are serious caveats, as docu-

mented by the World Commission on

Dams (WCD 2000). The technology is

mature.

Bio-energy is the energy mainstay of

many developing countries, and is in-

creasingly being harvested in an environ-

mentally unsustainable way. Convention-

al bio-energy use is mostly inefficient,

socially inequitable and detrimental to

health.

Wind energy has become cost competi-

tive with conventional energies in leading

countries. It has shown rapid develop-

ment and cost reductions. The interme-

diate term potential in the developing

world is considerable.

3

WP_2006.qxd 01.02.2006 15:41 Uhr Seite 3

Of all renewables, solar thermal energy

is considered to be practically unlimited

in the long-term, and is a very abundant

resource in the developing world. Con-

centrated solar thermal power plants

produce most of the world’s energy

derived from direct radiation. The pro-

spect for these technologies and solar

upwind chimneys are good.

Grid-connected application is the fastest

growing sector of photovoltaics (PV).

While the service life is more than twen-

ty-five years, its modularity renders it

suitable for incremental applications.

Further cost reductions are projected.

The fact that PV systems are currently

not cost-competitive with subsidised

grid electricity has led some developing

countries to introduce stand-alone PV

systems in impoverished remote rural

areas where service, maintenance of

batteries and social acceptance must be

expected to be difficult.

Solar water heating is an established

technology that can be manufactured

in the developing world, provided stan-

dards are maintained. The capital costs

are higher than conventional gas and

electric push-through or storage geysers,

but the life cycle costs are lower. Com-

bined solar water and space heating

(combi) systems are not yet established

in the developing world.

Geothermal energy can be used in near-

surface applications through the mature

heat-pump technology. Underground

heat below 100 °C is applicable in space

heating, and – at higher temperatures –

for electricity generation. Considerable

waste heat streams occur.

Solar cooling of buildings, agricultural

products, food and medicine is critical in

the developing world. Yet, the technolo-

gy is underdeveloped.

Solar buildings are of great importance

because of their long life cycles (longer

than power plants) and the combined

effect of urban and global warming on

inefficiently designed air-conditioned

buildings can be dramatic.

The landlord dilemma and inadequate

building regulations (codes) aggravate

this problem. Regulations should stipula-

te CO2 emissions. Integrated resource

planning balances the supply, storage

and consumption (demand-side mana-

gement) of resources like water, material

and energy services. The old wasteful

paradigm of government-driven energy

supply is still prominent in many develo-

ping countries.

Transport energy consumption in dis-

persed developing countries is mostly

supplied by imported fossil fuels with a

notable impact on national economies.

Policy options are domestic fuel produc-

tion, technology improvements, informa-

tion technology, mode switching and

energy conscious spatial planning of

towns and regions.

National and International Drivers of Re-

newable Energy Application: Setting

National Targets within Global Guard

Rails highlights poverty alleviation through

job creation as a primary policy driver.

Renewable energies produce consider-

ably more jobs than fossil energies.

Distributed generation is more cost-

effective, more environmentally benign,

more secure and more energy-efficient

because it reduces line losses and uses

both electricity and rejected heat. Solar

Rural Enterprise Zones can facilitate

sustainable development.

National renewable energy and energy

productivity targets should be challen-

ging as to attract academics, entrepre-

neurs and investors. They must also

be of sufficient long-term scope for the

inertia of bureaucracy and the educa-

tional system.

Market liberalisation and privatisation of

national energy systems is not the pan-

acea.

National transition paths to sustainable

energy should be bounded by Global

Guard Rails or limits of socio-economic

and environmental damage that should

not be exceeded. An illustrative road-

map highlights eradication of energy

poverty, revision of World Bank policy,

promotion of socio-economic develop-

ment, combined regulatory and private

initiatives, protection of life-supporting

systems, improved energy productivity,

20 % renewable energy by 2020, and

phasing out nuclear by 2050.

4

Executive Summary

WP_2006.qxd 01.02.2006 15:41 Uhr Seite 4

Policies to Accelerate the Application of

Renewable Energy Resources in Devel-

oping Countries are drawn from appro-

priate international experience. This

section represents the core of this White

Paper to which the reader’s attention is

directed with special reference to imple-

mentation. Long-term stability of targets

and transparent, simple policies endor-

sed by a White Paper are highlighted as

success factors. Where electric power is

mostly derived from fossil fuels, the

renewable energy pricing systems (grid-

feeder law) is a proven success and

more suitable for developing countries

than the quota system because of their

achievement of targets, investor friendli-

ness, job creation in domestic industry,

geographic and ownership equity, diver-

sity of technology, diversity of supply,

costs, prices and competition, financial

security, ease of implementation and

flexibility. However, the pricing system

has not been applied to off-grid energy

technologies.

The Kyoto Protocol is an opportunity to

be grasped by developing nations.

Financial support in the form of pay-

ments, tax credits, low interest loans,

lowered import duties should preferably

focus on energy production rather than

subsidies to investments on the supply

side. They should be tied to technology

standards. The playing field should be

levelled for renewable energies.

Standards for renewable energy genera-

tion sites and for buildings are a

necessity. Government can and should

facilitate the transition by its own procu-

rement programmes.

Education, training, information and

demonstration should be increased,

preferably with international partner-

ships.

Buy-in of stakeholders (individuals, coo-

peratives, business) enhances progress

and obviates time-consuming and costly

delays.

The need for Research, Development

and Demonstration motivates the urgen-

cy of renewable energy R&D, which had

more than halved from 1980. Seventy

percent went to nuclear fission and

fusion research, yielding disproportion-

ably low outputs. The budget share of

renewables was less than 10 %, and

was only a fraction of the budget for fos-

sil fuel R&D. The funding for renewable

energy R&D has to be increased by one

order of magnitude. Non-technical and

technical research themes are identified,

including cooperative priorities.

Examples of National Policy Models

illustrates the German and Chinese

renewable energy laws, with comments.

Conclusions, Acknowledgements and

References conclude the paper.

5

WP_2006.qxd 01.02.2006 15:41 Uhr Seite 5

Summary of Policies

Key stakeholders have to be aware ofthe interactions of energy with poverty,the environment and peace. Campaignsprioritising energy conservation, energyefficiency and renewable energy need to be addressed to energy decision-makers. Developing countries have spe-cific policy priorities and options. Afterhaving assessed the national renewableand non-renewable energy resources,as well as the energy services needed,including the traditional ways of satisfy-ing these needs, the following policiesare applicable:

1. Establishment of transparent, con-sistent long-term targets and regulatory frameworks

The Kyoto Protocol offers uniqueopportunities of integrating deve-lopment and energy aims.A national and regional RenewableEnergy and Energy Efficiency WhitePaper guides other stakeholders inthe public and private sectors, andattracts both national and interna-tional energy investors.It is important to obtain buy-in fromthe key stakeholders, and publicisethe White Paper widely, using themost appropriate communicationmedia for the local and internationalaudience. Orderly rural energisation throughintegration of cost-effective grid

extension and equitable access torenewable energy services in off-grid areas, supporting developmentin production, health and educationshould be planned and implemen-ted. Integrated resource planning, inclu-ding the subsets of IntegratedRegional, National, Provincial andLocal Energy Planning are necessa-ry stepping-stones in the energytransformation.

2. Financial interventions and incentives

Governments have the power andobligation of building domesticcapacity and job creation throughrenewable energy production pay-ments, rebates, low-interest loansand guaranties fixed to technologystandards.The playing field bet-ween entrenched and emergentrenewable energies should be levelled.

3. Government supported renewableenergy technology

Government and regional authori-ties should encourage renewableenergy technology standards andenergy efficiency appliance labelling. Governments as prominent ownersof buildings and other energy con-

suming systems should lead byexample. Government should encourage andlegislate obligatory site reservationsfor renewable energy installations,grid connection, and low carbonbuilding codes. Government should introduce reve-nue neutral environmental taxes,replacing income tax in an orderlylong-term plan.

4. Research, Development andDemonstration, and education.

The greatest part of public energyreasearch, development & demon-stration (RD&D) should be alloca-ted to energy efficiency and rene-wable energy, with special empha-sis on opportunities of leapfroggingwith respect to building new long-term infrastructure, e.g. transport,buildings and distributed cogenera-tion.

5. Encouragement of stakeholder/public ownership, participation and pride

The transition to sustainable energysystems needs to be understoodand implemented on a broad base.This requires the sustained buy-inof all key stakeholders, and theircommitment and pride.

6

WP_2006.qxd 01.02.2006 15:41 Uhr Seite 6

Renewable Energy Defined: Energy from the Sun

Ever since we first saw earth from space,our mind-set changed fundamentally:We now appreciate our beautiful andfragile blue planet floating in hostilespace, precariously balanced in orbit by our life-supporting sun.

The sun’s energy is THE energy source. It is certainly not an alternative energy.All terrestrial life, and most marine life,depends on the sun’s generous energy.

It also drives the gigantic energies of theocean currents. All wind energy is reallysolar energy. The immense energy of allrivers and waterfalls comes from the sundriving the great evaporation cycle toform rain clouds, which are transportedby solar energy driven winds. The reple-nishing source of hydropower is solarenergy. So is tidal, wave and futureocean current power.

Photosynthesis is energised by solarenergy and plants are at the base of ourfood chain, supporting all levels of life,including our own. All organic or bio-mass materials derive from solar energy.

The sun has been, and will be, the pri-mary energy source on earth and oursolar system.

On the other hand, man has devisedmethods to extract energy that is notderived from the sun. Currently, nuclearenergy contributes about 6.8 % to theworld’s primary energy, and geothermal0.112 %. For ages, humankind lived by the daily rhythm of the sun. The dis-covery of fire brought a revolutionaryway of using the sun’s energy stored infirewood. Today, this is the dominantform of conveniently concentrated sunenergy used in many developing coun-tries.

The beginning of the industrial revolutionwas energised by solar energy in theform of mechanical power from wind-mills and water wheels, later replaced by wood-fired steam. Coal, oil and gashave become the main primary energycarriers during the last century and areconcentrated forms of solar energy thathas been stored over 500 million years.It took only about one century for human-kind to spend the easily accessible partof this finite resource in a rather ineffi-cient way. A significant dependent infra-structure has been built around this,from the oil exploration to extraction,refineries, pipelines, filling stations andengines.

When we talk about coal, oil and gas“production” we tend to mislead oursel-ves because energy cannot be produ-ced. Removing these finite resourcesfrom the earth’s crust is “exploiting” or“robbing”, as the coal miners say morehonestly.

Our current commercial energy systemuses concentrated and finite resources,which are in the hands of a few. Thetechnology to exploit these diminishingresources has become cheaper duringthe course of the last century througheconomies of scale, supported by go-vernment protection and infrastructureinvestments.

With solar energies, the natural resour-ces are diffuse, and more evenly spreadover the world. The resources are freelyavailable to all and sundry. But the capi-tal costs of the technologies to harnessthe free energies are currently often abarrier because the economies of scalehave generally not yet taken effect.

The pressing challenge and top priorityto humankind is to move away fromsquandering the sun’s stored energy bytransitioning to the universal use of re-newable energy from the sun.

7

WP_2006.qxd 01.02.2006 15:41 Uhr Seite 7

Aim, Scope, Delimitations

This White Paper is inspired by the ethicof the responsibility placed on the deci-sion-makers of the developing nations.In a world of present material want, it isnot always easy to practice global soli-darity on issues about the future.

The purpose is to highlight the growingworldwide momentum in renewableenergy policies and application, to sharethe lessons learned that are applicableto the developing countries, to identifythe benefits already known to accruefrom these early steps, and to assessthe most appropriate policies to guidethe transitioning of developing countries.The scope of the White Paper pertainsexclusivwely to developing countries.

There are various ways of defining these.The World Bank (2003) uses world de-velopment indicators, one of which isthe annual gross national income percapita. This indicator is then used togroup nations into “low income”, “lowermiddle income”, “upper middle income”and “high income” categories.

The United Nations Development Pro-gramme (2003) categorises 137 “De-veloping Countries”, 49 ”least developedcountries”, 27 “central and easternEurope and the Commonwealth ofIndependent States” (CIS), 30 “OECDcountries”, and 24 “high-income OECDcountries”. For the purpose of this WhitePaper the UNDP term “developing andleast developed countries” will be used(Annexure A). The term “developingworld” is used to describe a total group,while “developing nations” is understoodas a synonym. Some writers also referto the “third world”.

Geographically, the developing countriesare concentrated in Latin America, Africaand southern Asia, where about threefifths of the world’s population live.

Many are former colonies, speakingEnglish, French, Portuguese and Spanishnext to their indigenous languages.

This White Paper is written for an inter-national organisation, and builds onexperience gained in both worlds.

The paper is mainly addressed to theenergy policy decision-makers, but alsoto stakeholders interacting with them.Therefore, technical details have beenkept to the essentials needed for infor-med debate and decision-making.

While great care has been taken to pre-sent objective data obtained from manyscientific sources, the style deliberatelyavoids overkill with references. Essentialsources have been given at the end ofthis paper.

Structure of what follows

The introduction is followed by contextu-alising the developing world in the globalenergy transition, and the motivation ofits urgency. This is followed by an outli-ne of the relevant technologies and theircurrent status, as well as an explanationof the drivers towards renewable ener-gies and the need to set national targetswithin global guard rails.

The main part of the text pertains topolicy options and market based incenti-ves. The contribution of research, deve-lopment and demonstration is indicated,followed by examples of national renew-able energy policies.

8

Terminology, units, and conversion factors

The International Standard Organisation’s(ISO) Système International (SI) units havegenerally been used. In energy parlance,work performed at a rate of 1 Joule/second(J/s) is one Watt (W) of power. One Wattover one hour is one Watt-hour (Wh). Onethousand Watt-hours is one kilowatt-hour(kWh). While this is the familiar unit of electri-city, the SI consistently uses the Joule, inincrements of thousands:

kilo = 103

Mega = 106

Giga = 109

Tera = 1012

Peta = 1015

Exa = 1018

One kWh is 3.6 MJ or 3.414 Btu (British thermal unit).One kWhe is one kWh of electrical energy.One kWht is one kWh of thermal energy.One Quad (1015 Btu) converts to 1.055 EJ.One Million-tonnes-oil equivalent (Mtoe) is 41.868 PJ.

Temperatures are measured in degreesCelsius (°C); temperature differences inKelvin (K).Where United States dollars (US$) are men-tioned, the values relate to the context time. UK spelling is used.Abbreviations have been reduced to a mini-mum and are found at the end of the WhitePaper.

WP_2006.qxd 01.02.2006 15:41 Uhr Seite 8

9

Introduction: The Developing World in the Global Energy Transition

The majority of the global population livesin the developing world. It is in the directglobal interest that the renewable energytransition be immediate, rapid and orderly.This requires shouldering the responsibili-ty of both national policies and internatio-nal cooperation.

It has often been stated that if the de-veloping world were to follow the energyprofligate example set by some industria-lised nations, the global impact would be devastating. The developing nationsaccuse the industrialised nations of de-stroying the environment by over-con-sumption, while the industrialised nationsaccuse the developing nations of destroy-ing the environment by over-population.Both are right.

As the world moves towards the globalvillage in terms of modern communica-tion, the sense of sharing one planetincreases, as illustrated by the worldwidereaction to the recent Tsunami catastro-phe. Concerns about our common futurehave not reached that level of newswor-thiness yet.

There are very pronounced dissimilaritiesbetween developing countries withrespect to prosperity and stability resul-ting from foresight, methodical planning,initiative, tenacity, responsibility, entre-preneurship and discipline. There aresuch large dissimilarities in the rate anddirection of change that the term develop-ing countries becomes questionable. Onthe other hand, there are similarities:

The economies of developing countriesare heavily dependent on agriculture –often at the subsistence level, with miningwhere mineral resources have been explored. Beneficiation through seconda-ry industries is rarely found, but tourismplays an important role.

Infrastructure is often elementary, with ascarcity of skills in engineering and tech-nical or professional skills to execute itsdesign, building and maintenance.

Biomass Supply as a Percentage of Total Primary Energy Supply, 1971 and 2001

Region 1971 [%] 2001 [%]OECD 2 3Non-OECD Europe 4 5Latin America 31 18Asia 48 25Africa 62 49(IEA, 2003 in Karekezi, 2004)

Renewable Energy Markets in Developing Countries

Application Indicators for existing installations and markets (as of 2000)

Rural residential & Over 50 million households are served by small-hydro community lighting, village-scale mini-grids.TV, radio & telephony 10 million households receive lighting from biogas.

1.1 million households have solar PV home systems or solar lanterns.10 000 households are served by solar, wind and diesel hybrid mini-grids.There are 200 000 household wind generators in China.

Rural small industry, Up to 1 million water pumps are driven by wind turbines,agriculture, and other and over 20 000 water pumps are powered by solar PV.productive uses Up to 60 000 enterprises are powered by small-hydro

village-scale mini-grids.Thousands of communities receive drinking water from solar PV powered purifiers and pumps.

Grid-based bulk 48 000 MW installed capacity produces 130 000G Wh power per year (mostly small hydro and biomass, with some

geothermal and wind).More than 25 countries have regulatory frameworks for independent power producers.

Residential & 220 million households have more efficient biomass stoves.Commercial cooking 10 million households have solar hot water systems.& hot water 800 000 households have solar cookers.Transport fuels 14 billion litres per year ethanol vehicle fuel is produced

from biomass.180 million people live in countries mandating mixing of ethanol with gasoline.

(Adapted from: Martinot et al, 2002 in Johansson, 2004)

WP_2006.qxd 01.02.2006 15:41 Uhr Seite 9

Introduction: The Developing World in the Global Energy Transition

The human cultural aspects and arts oflanguage, crafts, politics, religion areoften more appreciated and nurtured.This includes the fine art of manipulatingpotential donors.

Unsurprisingly, statistics and data in the developing world are problematic.Agricultural products are often bartered;income statistics of the secondary eco-nomy are hard to come by. Surveys areinfrequent and discontinuous, since small businesses have no incentive torespond to surveys, let alone report theirincomes.

While the primary energy source for manymillions in the developing world is fire-wood and biomass, it is increasinglybeing used unsustainably. The transitionto sustainable energies and the simulta-neous elimination of material poverty

poses a huge challenge to the develop-ing world – and the industrialised world.

It should be stressed that the developingworld is not simply a poor man’s versionof the industrialised world. It is not aworld predominantly driven by the beliefin the protestant work ethic, entrepre-neurship and personal responsibility orby the money value of time. It does notbelieve that all human issues can ultima-tely be solved in a technological manner. In general, women are the maintainers oftraditional culture values where the wealof the family in the household plays thecentral role.

In stable communities, the religiousgrouping or the tribe is often the ultimatereference and authority, while the house-hold with the extended family is the lastresort when things fall apart.

The insight that the developing worlddoes not necessarily have to followdown the energy route of the industriali-sed nations, but can learn from theirexperience and mistakes, offers a uni-que opportunity. This is enhanced bythe Kyoto Protocol’s Clean DevelopmentMechanisms.

Combining the rapid advancement ofrenewable energy technologies in theindustrialised world with the largelyuntapped renewable energy resources,while building local capacity in the deve-loping world, will demand a concertedeffort of both parties.

The neo-colonial treatment meted out bysome of the industrialised nations to thedeveloping nations has led to growingbitterness. In this framework theone–sided interpretation of “liberalised

10

Women in the South

Women carry a physical and metaphorical burden in energy provision.In rural areas, it can mean spending several hours a day collecting fuel-wood loads of 20kg or more. In urban areas, it can mean juggling withtight household incomes to buy charcoal or kerosene. Many of thesetasks are demanding of both human energy and time, and they dispro-portionably affect women’s health compared to men’s. For example,the higher level of lung and eye diseases suffered by women as com-pared to men are attributed to the longer hours of exposure to smokein kitchens (Smith, 1999). Fuel collection also reduces the time womenhave available for contributing to other aspects of livelihood strategies.

Women in the South are also responsible for a number of other survivaltasks needed to sustain the household, such as water collection andfood processing. Again, many of these tasks are demanding of bothhuman energy and time. Energy interventions, many using renewableenergy, are available that would do much to reduce the drudgery invol-ved in these daily household activities. A number of the tasks wouldeasily be served by diesel engines for example; the preparation ofmany staple root crops takes an hour of vigorous pounding, whichcould be simply replaced by milling. The renewable energy communityneeds to play more attention to the promotion of bio-fuels, such asbiogas and vegetable oil, as a diesel substitute. The whole issue ofwomen’s time and effort saving (that is, the reduction of drudgery)seems not to receive the attention it deserves. Reducing women’sdrudgery by providing improved access to energy services for lighting,cooking and productive activities should have a significant positiveeffect on women’s education, literacy, nutrition, health, economicopportunities, and involvement in community affairs which, in turn, willbenefit all family members. (Clancy, 2004)

Energy and women in the developing world

Of the 1.3 billion people who live in poverty, 70 % are women; andapproximately one third of households in rural areas have femaleheads. Many of these women are more disadvantaged than men insimilar circumstances, for example women’s access to and controlover resources such as land, cash and credit is more limited thanmen’s. Women’s technical skills are often less than men’s, for examplecompared to men, women’s reading levels are lower and they haveless experience with hardware. This means that when making energyinterventions to help people move out of poverty, the ability of womento respond is more restricted than men, and special elements need tobe included in projects and programmes to address these gender dif-ferences to ensure that anyone who wishes to participate and benefitis not excluded on the grounds of lack of assets.(Clancy, 2004)

Energy Project Contributes to Women’s Empowerment in Kenya

Thirteen women’s groups (200 people) have been trained in makingstoves in the Rural Stoves West Kenya project, and many have alsobenefited from business management training. Production is estimatedat 11 000 stoves annually; the profit generated by the stoves is com-parable to wages in rural areas. As a result, the women potters havegained in status, self-confidence, and financial independence.(ITDG, 1998 in Clancy 2004)

WP_2006.qxd 01.02.2006 15:41 Uhr Seite 10

trade”, where powerful nations seethemselves as being above the interna-tional law, unilaterally abrogate inter-national conventions and regard theworld’s natural resources as their birth-right, has undermined the esteem thatthe industrialised world used to enjoy. Inthis vein, the question arises what developmental benefit will remain in thedeveloping oil rich countries once theprecious black gold has been exploited.The irony is that these countries happento have exceptional renewable energypotential.

Fortunately, the governments of a fewindustrialised nations have taken thelead of the inevitable energy transforma-tion that is likely to bring sustaining bene-fits to the developing nations. The earlybirds will not be sorry.

A global race towards renewable energy(RE) has already started. Some nationsand some international corporations arepositioning themselves to take advanta-ge of the inevitable transition, and of theconcomitant new technologies. There isno time to be lost, since the peak of oilproduction is most likely to occur withinthe current decade (Heinberg, 2003).The later the transition, the more painfulit will be.

The cycle of change in energy technolo-gies has been shown to last about half acentury, or two human generations. Thatis the planning horizon of wise govern-ments. Long-term thinking is what setsthe true statesman apart from the merepolitician.

In contrast with the private sector, go-vernments think of both the short- and

long-term risks and opportunities. It willbe shown that the long-term risks ofrenewable energy policies are signifi-cantly lower than policies built on fossilfuels. Since renewable energy technolo-gies have been tested for feasibility inthe world markets, and since appositepolicies have been tried and tested, thenear-term risks of adoption are lowerthan those of procrastination. Laggardsin the transition are not retarded bytechno-economic or resource barriers,but by a lack of awareness, informationand political vision or will.

Initially, the visible growth of a new ener-gy technology seems imperceptivelyslow. When it reaches about 16 % mar-ket penetration, development happensin leaps and bounds until saturation isreached. By 2030 we can expect toobserve renewable energies in the main-stream.

11

Women’s Time and Physical Energy, not Fuelwood, are the Key Needs

A study by Mehretu and Mutambira (1992) measured the time andenergy used by different family members in transport connected withregular household activities. Chiduku Communal Area in easternZimbabwe is a resource deficient area with a high population density.There is no electricity, and kerosene, which is used only for lighting, isvery expensive.

Seven routine trip-generating household activities were considered:

Activity Total week’s Female Female Energyhousehold share of Contribu-

[kWh] time [h] tion [%] [kWh]Fetch water 10.3 9.3 91 2.15Do laundry 1.3 1.1 89 0.26Fetch firewood 4.5 4.1 91 0.92Graze livestock 7.7 3.0 39 1.44Water livestock 6.9 2.3 39 1.28Visit local market 15.0 9.5 63 3.08Visit regional market 0.3 0.2 61 0.07(Clancy, 2004)

Kenya Ceramic Jiko (Improved Charcoal Cookstove)

The Kenya Ceramic Jiko (KCJ) is one of the most successful Africanstove projects. It is made up of a metal cladding with a wide base anda ceramic liner. At least 25 percent of the liner base is perforated withholes of 15mm diameter to form the grate. The stove has three potrests, two handles, three legs and a door controlling the airflow. Thestandard model weighs about 6kg, which means it can be carriedaround easily (KENGO, 1991; Karekezi and Kithyoma, 2002).This stove is used for cooking and space heating. The KCJ directs 20to 40 percent of the heat from the fire to the cooking pot, replacingstoves with only 10 - 20 percent efficiency. Open cooking fires, yieldefficiencies as low as 10 percent (Kammen, 1995). The cost of thestove is about US$ 2, which makes it accessible to the majority of theurban population in Kenya, although this cost does not include fuelcosts (charcoal).Manufacturing the KCJ is now a relatively mature cottage industry. Asexpected, the level of specialisation in the manufacture of the stovehas increased, as has the level of mechanisation. A division of labour isnow discernable. Shauri Moyo is the principal artisan production centrein Nairobi, where there are artisans who purchase clay liners and metalcladdings, assemble and retail complete stoves to customers. Thereare mechanised manufacturers and semi-mechanised producers inNairobi. It is estimated that mechanised producers are manufacturingclose to 3 200 liners a month. Semi-mechanised producers are nowproducing an estimated 10 600 liners per month.Based on achievements to date, the KCJ is considered to be a suc-cess story. However, there are constraints, with quality control beingone. It is estimated that the market penetration in Nairobi is 50 %.(Karekezi, 2004)

WP_2006.qxd 01.02.2006 15:41 Uhr Seite 11

Introduction: The Developing World in the Global Energy Transition

When coal fired steam engines were ingeneral use, the first petrol driven machi-nes were met with ridicule. Powerfulvested interests in the established tech-nology tried to influence public opinionand government decision-makers tobelieve that future will be very much likethe present, only more so.

Today, we know that the tide is turninginexorably towards renewable energies.There will be winners and losers, andthe major losers will be the ones domi-nant today.

To the developing nations – too often atthe receiving end of global trends – thistransition offers unique opportunities.

Significant population or businessgrowth happens in many parts of thedeveloping world, but relatively lowinvestments have been sunk in infra-structure. Instead of now investing inthe technology of the past, developingnations can leapfrog to the applicationof the most modern renewable energytechnologies (RETs). Using cellulartelephones instead of expensive andvulnerable old copper wired landlines,illustrates the point. The concept ofbig centralised coal or gas-fired powerstations is likely to be outmoded forthe developing world, regardless ofwhat their pundits may say.

Developing countries stand to benefitfrom the Kyoto Protocol and CleanDevelopment Mechanism (CDM). It is still too early days to see how thisagreement unfolds in reality, but it isto be expected that CDM projects willincrease the use of renewable ener-gies. The downside is that govern-ments might hesitate to implementsustainable energy policies for fear offalling prey to the “additionality “ clause of CDM.

Most developing countries are situatedin areas with high renewable energyresources, notably wind and solarradiation.Solar radiation and other renewableenergy resources are more equallydistributed than oil, coal, gas or urani-um. This means that by transitioningto renewable energy, developingnations are less exposed to importedenergy costs. Renewable energiesalso reduce the pressure on fossilfuels and are therefore less exposedto armed conflicts over scarceresources.

Developing nations generally haveinvested little in energy R&D. Thisrepresents a disadvantage becausepatents and royalties have to be paidfor. Many contending patents that willshape the next decades have alreadybeen developed and registered. Butthe developing nations do benefit frommature technologies without havingcontributed to the R&D costs.

The transition to renewable energies has been retarded by the inertia ofestablished systems and by artificialgovernment endorsed market distortionspersistently subsidising the fossil andnuclear industries. Today’s fossil basedenergies appear to be cheap becausethey do not account for the real social,environmental or military costs of theseenergies. Accounting for these factorswould double fossil energy prices inmany parts of the world (van Horen,1996).

Furthermore, governments routinelygrant massive direct as well as indirectsubsidies through protecting monopo-lies, granting financial backups, ignoringthe value of chemical feed-stocks andthe value to future generations.

Where developing nations indulge in nuclear ventures, their costs to the tax-payer always by far exceed publicmonies invested in sustainable energies.Nuclear energies can never hold theirown in free energy markets. Meanwhile,the serious accidents of Three MileIsland and Chernobyl have happened insupposedly sophisticated countries,where levels of technological and safetyawareness are said to be higher than indeveloping countries - not to mentionthe risks of terrorism and unresolvedproblems with decommissioning andspent fuel storage. The insurance ofsuch venture is not carried by privateinsurance companies, but by the unsu-specting citizens.

Nuclear hydrogen production used to beproffered as a future possibility. However,less expensive methods through renew-ables have been found.

It seems that nuclear not only has a badpress but also has rather limited justifi-cation in the developing world where it isunsuitable for rural energisation. Ruralenergization is linked to poverty eradica-tion, the major priority of the developingworld.

A combination of energy conservation,energy efficiency and renewable energiespresents a much more environmentally,socially and economically sustainableenergy path in the developing world.

12

WP_2006.qxd 01.02.2006 15:41 Uhr Seite 12

Why it is Essential to Transform the DevelopingWorld Energy Systems Now

The key drivers of the transformation inthe developing world are poverty eradi-cation, risk avoidance and protecting ofnatural life supporting systems. Theseconcerns are shared with the industri-alised world, but the priorities differ rad-ically. In the developing world the mostpressing issue of poverty overshadowsother considerations.

Energy and poverty

Improved access to clean modern energy in developing countries is a fun-damental step to poverty reduction andkey to attaining the United Nations Mill-ennium Development Goals. About 2.4billion people, notably in rural areas ofAsia and Africa, depend on traditionalbiomass in the form of firewood, char-coal, harvest residues and dung usedfor cooking and heating.

About 35 % of the energy typically de-rives from these sources. In parts ofAfrica, it reaches 90 %. As a rule, thisbiomass is burned with low efficienciesof only 10 to 15 %, while high levels ofindoor pollution from open fires lead tohealth problems of the persons exposed,mostly women, children and the elderly.

According to the World Health Organ-ization, air pollutants and emissions fromburning biomass and coal cause thedeath of 1.6 million people annually, significantly more than the number ofdeaths ascribed to malaria.

Women, who have to bear the house-hold chores of firewood gathering, forfeitthe opportunity of education and thepotential of gainful employment. Bettereducation of women and higher house-hold incomes are powerful factors in stabilising the number of children borninto the poverty trap.

The unsustainable use of firewood is a contributing factor to desertification,which again accelerates the downwardpoverty spiral.

Poverty in rural areas hampers access toelectricity that is associated with moderncommunication and information tech-nology. It also constrains the productiveapplication of energy, especially in thesecondary and tertiary value adding sectors.

Renewable energy has been demonstra-ted to deliver clean, sustainable andcost-effective energy services, providinga necessary - albeit insufficient - basefor poverty reduction and development.

A rapid and sustained transformation toenergy efficiency and renewable energyis an absolutely essential stabilising steptowards development and the improve-ment of the quality of life.

Risk reduction

Conventional energies and systems have associated risks. These may relateto price volatility, economic and socio-political instability, insecurity, develop-ment and technical failure.

Most developing nations are coal and oil importers, exposed to the volatility of markets. The risk of price volatility to macro-economies is considerable and can destabilise whole regions(Awerbuch, 2003).

There are currently no reasons to believethat the prospects for lower oil price vol-atilities and prices are auspicious.Therefore, developing countries produ-cing their own renewable fuels are betterbuffered.

In addition, imported fossil fuels (ornuclear energies) entail money flows leaving the country. A primary reason forthe national debt of developing countriesis attributable to imported fuels, which

13

The results of this new technique areastounding:

Rich natural colour (reddish) to the fruit, 35 % more oil content, absolutely no burntsmell, large batches, and an incredible 50 - 60 % saving of the fuelwood. Using similar low cost gasifier-based systems forthermal applications in rural agro-basedindustries like ginger, tobacco, cashew, cango a long way in alleviating the problem ofrapid deforestation caused by inefficient useof fuelwood. It can also create additionalincome in these sectors.(Karekezi, 2004)

tonnes of fuelwood is wasted every year for drying large cardamom in Sikkim alone,owing to the primitive curing technique,which involves burning of big logs of wetwood in traditional ‘bhatti’ – brickwork ormasonry ovens – and passing the resultingsmoke through a thick bed of cardamomplaced on a mesh structure made of bam-boo lattice. Apart from consuming largeamounts of fuel wood, the traditional tech-nique results in non-uniform drying, leadingto poor quality cardamom that has a charred and smoky appearance, low oil con-tent, and burnt smell. Besides, the primitivesmoking method, the risk of raw materialcatching fire is high, as flame control is very poor.

Large Cardamon

Researchers at The Energy and ResourcesInstitute (TERI), New Delhi, have now per-fected an entirely new way of drying andcuring the spicy Large Cardamom cashcrop. Presently, over 250 systems could befound in the fields of Sikkim. Used widely inIndia as a main spice ingredient in Mughalcuisine and other non-vegetarian dishesthroughout the country, large cardamom iscurrently priced around Rs 70 000 a ton.Pakistan, Afghanistan and the middle eastare the main export markets.

The traditionally, popular large cardamomcuring techniques result in inordinate a-mounts of wastes of both raw material andfuelwood. An estimated 20 000 metric

WP_2006.qxd 01.02.2006 15:41 Uhr Seite 13

effectively amounts to job opportunitylosses to the national economy. Un-employment deepens poverty and oftenadds to social and political instability.

Those developing nations that are rich in fossil energy resources have oftenmade the bitter experience that theirnational security is at risk. Political andmilitary interventions by powerful inter-ests present an undeniable threat tosmaller nations, and to world peace.Reducing dependency on regionallyconcentrated oil reserves represents acontribution towards reducing the risk of local and global armed conflicts. Ironi-cally, such armed conflicts are extremelyenergy intensive and eventually have tobe paid for.

Conventional centralized power stations,especially nuclear power stations, trans-mission lines and substations presentthe risk of easy targets to terrorism.Developing nations are not immune tosuch attacks. Distributed energy genera-tion through renewable energy is practi-cally invulnerable, since potential targetsare distributed, small, modular and easilyreplaced.

Many dispersed renewable energypower producers not only reduce therisk of terrorism but also ensure buy-inof numerous small-scale stakeholderswho directly benefit from feeding energyinto the grid.

This reduces the risk of NIMBY (Not In My Back-Yard) or BANANA (BuildAbsolutely Nothing Anywhere NearAnything) objections to independentpower producers. Where local farmers,cooperatives and individuals are encou-raged to feed renewable energy into thegrid, local resistance is much reduced.Mini PV power stations on consumers’roofs do not expose utilities to the risk ofprolonged, acrimonious and very costlyland acquisition and approval procedu-res.

While many developing nations may haveaspired to the “ideal” of the nineteenthcentury technical approach of the elec-tricity grid, the dramatic blackouts in theUnited States on 14 August 2003 madepeople aware of the risks involved. Withinabout 150 minutes five key transmissionlines, three coal-fired power plants, ninenuclear power plants, and an importantswitching station, were not functioning.Eventually over 100 power plants (inclu-ding 22 nuclear) in the US and Canadawere off line. No less than 50 millionAmericans and Canadians were withoutpower, leaving a wake of US$ 5-6 billiondamage. An investment of US$ 6 billionin renewable energy would not only haveavoided the loss, but also would proba-bly have put the US on the map as arenewable energy nation. Barely onemonth later it was Italy’s turn, leaving 58 million Italians without power. Boththe USA and Italy are highly industriali-sed countries with excellent renewableenergy resources. Technical failures ofprolonged blackouts and brownouts arecommonplace in the developing world,adding an element of frustration and riskto grid power users and potential investors.

Protection of natural life supportingsystems

Subsistence and commercial agriculture,as well as (eco)tourism are the economiclife-blood of most developing countries.

According to the world’s most know-ledgeable scientists of the Intergovern-mental Panel on Climate Change (IPCC),the bulk of global warming of the last 50 years is attributed to human activitiesand is strongly fossil energy related.

The impact of climate change on agri-culture, tourism, health (tropical disea-ses) will be more severe in developingcountries than on the rest of the world.This was illustrated by the recent floodshighlighting how rising water levels andsudden climate events can take develo-ping countries by surprise. Such climatechanges will cause large-scale uprootingand migration of entire regions’ popula-tions.

While of the worst global polluters situa-ted in the northern hemisphere mighteven benefit from a warmer climate, theywill find themselves swamped by climatefugitives who literally have nothing tolose.

The long phase delay of the global cli-mate system conceals its insidious natu-re. By the time the voting citizens realisethe irreversible impact of climate chan-ge, it is much too late for political action.Therefore the precautionary “no regrets”principle imposes an obligation ongovernments to act without delay. It isnot inconceivable that neglecting thisobligation today may lead to litigation infuture.

14

Why it is Essential to Transform the Developing World Energy Systems Now

WP_2006.qxd 01.02.2006 15:41 Uhr Seite 14

Government policy opportunities

Developing countries enjoy unique policyopportunities of using the Kyoto Protocoland the growing global energy aware-ness to implement their own develop-mental and security of supply agendas.

The Kyoto Protocol officially came intoforce on 16 February 2005. It is desi-gned as a mechanism, which can helpindustrialised nations to achieve theiragreed Greenhouse Gas (GHG) reduc-tion targets by buying into relativelycheaper carbon reduction initiatives inthe developing world, thereby alsomaking a contribution to much neededdevelopment. It is not intended to replace DevelopmentAid of Direct Foreign Investment. ADesignated National Authority (DNA) hasto be appointed by the host country toensure that the Clean DevelopmentMechanism (CDMs) does satisfy thenational sustainable development crite-ria. Local Non-Government Organ-isations (NGOs) normally play a crucialrole in representing civil society’s voice.An important further aspect is the“Additionality” condition, stating that itmust be shown that the project is addi-tional, meaning it would not have happe-ned without CDM support. However, theunderstanding is that this clause shouldnot discourage developing nations fromintroducing renewable energy policies.The current phase needs to be renewedin 2012, and the expectation is that thescope will have to be enlarged if it is tomake a significant impact. While there ispresently not much experience to learnfrom, it seems that transaction costs arehigh. This initiative has the potential tobecome a major driver of changetowards renewable energy and energyefficiency.

As energy awareness increases, peoplebecome more discerning buyers of ener-gy consuming products. The fuel con-sumption of motor vehicles illustrates thepoint: Energy efficient vehicles success-fully take market share from gas-guzz-lers.

Energy labelling of appliances, motorsand even buildings contributes to lowe-ring the national energy intensity, andhence improves the international compe-titiveness of those proactive nations.Governments have an opportunity toenhance their international competitive-ness by introducing mandatory CO2

ratings on energy consuming systems.This improves efficiency while ensuringthe national growth of work opportuni-ties.

The production of all commodities andconsumables, from bricks to tomatoes,requires energy. This is called the embo-died energy content. Products that aremade energy efficiently, using locallyproduced renewable energy, or recycledmaterials obviously contribute to thenational energy stability and economicgrowth.

The prices of conventional fuels do nottell the truth, because they do not reflectthe “external” costs. These are the long-and short-term health costs, environ-mental costs and lost opportunity costsborne by all society, whether they bene-fit from the energy consumption or not.Currently we choose to ignore this realcost. Ironically, a society that could putmen on the moon contended that exter-nal costs are too difficult to calculate.Governments have an opportunity toestablish and update the externalitycosts of conventional energies. If thetrue external costs are included in fossilfuel prices on a net present cost basis,then even more renewable energy tech-nologies are cost competitive than thecurrent ones.

For governments in the developing worldthere is a distinctive advantage in havingobjective baseline figures of externalcosts, including carbon dioxide equiva-lent emissions, as this greatly expeditesCDM procedures.

The above instrument can be used toenhance the national security of energysupply through renewables.

15

Energy efficiency improvements

In the near future, the amount of primaryenergy required for a given energy servicecould be cost-effectively reduced by 25 to35 percent in industrialised countries (thehigher figure being achievable by moreeffective policies). In transitional economies,reductions of more than 40 percent will becost-effectively achievable. And in mostdeveloping countries – which tend to havehigh economic growth and old capital andvehicle stocks – the cost-effective improve-ment potential ranges from 30 to more than45 percent, relative to energy efficienciesachieved with existing capital stock.However, when this potential is made use ofthere will still remain 20 to 40 percent in 20years time due to technological progress.(Johansson et al, 2004)

WP_2006.qxd 01.02.2006 15:41 Uhr Seite 15

This section provides an overview ofrenewable energy technology optionsand their potential contribution to energysustainability, as well as their impacts.The German Advisory Council of GlobalChange (WBGU 2004) recently publis-hed a detailed global analysis, which isused in the following:

Hydropower

Worldwide, about 45 000 large damshave been built for electricity generation,flood protection, water storage, agricul-tural irrigation, navigable waterways and recreation. As a result of economiesof scale, approximately 97 % of hydro-electric plants have a capacity in excessof 10 MW.

The potential in the industrialised worldhas mostly been utilized, delivering 19 %of the world’s electricity and the lion’sshare of today’s commercial renewableenergy. This constitutes about one thirdof the global potential of 150 EJ, whilstthe remainder is untapped in the develo-ping world, mainly South America, Asiaand Africa.

Hydroelectric technology is mature andextremely reliable, but requires very highinitial investments, with low maintenancecost. Its design life is more than a centu-ry. Natural and pumped storage damsare suitable for peak electricity demand.Hydropower is cheap – if calculated inthe conventional manner.

Unfortunately, large dams do have neg-ative side effects: Land and ecosystemsare lost, drainage systems and sedimen-tation are radically altered. Annually, 0.5 - 1 % of capacity is lost through siltation, which is also lost downstream,impacting significantly on its biodiversityand estuary stability. Organic material,rotting in shallow reservoirs of warmregions, releases GHGs. Modern damshave a failure rate of 0.5 %, excludingthe effects of climate change, war andterrorism. In warm climate areas, damslead to a tenfold increase in bilharziosis.Other increased health risks are malaria,encephalitis, Rift Valley fever, filariosis,blue-green algae and mercury leachatepoisoning.

Other renewable energy sourcesproducing the same energy output, likewind and solar energy, would cover lessland than the Assuan Dam in Egypt.

During the last century, 30 - 80 millionpeople were adversely affected by largedams. More than 1.1 million people willbe evicted by the Three Gorges Dam inChina. Awareness of the social and eco-logical risks of large dams and the politi-cal resistance to them has increased.The World Commission on Dams (WCD2000) highlights the sustainability pro-blems and preconditions.

Dams with a capacity of less than 10 MW are considered to be less pre-carious. Given the above considerations,the current hydropower could be increa-sed sustainably by 12 EJ/a by 2030 and15 EJ/a by 2100 (WBGU 2004).

Renewable Energy Resources: Technology Status and their Sustainable Potential

16

Strategic Principles in the Construction of Dams

1. Gaining Public AcceptanceWide public acceptance of key decisions is imperative for equitable and sustainable waterand energy resources development.

2. Comprehensive Options AssessmentAlternatives to dams do often exist. Needs for water, food and energy should be assessedand objectives clearly defined. Furthermore assessments should involve a transparent andparticipatory process, applying economic, social and ecological criteria.

3. Addressing Existing DamsOpportunities exist to improve existing dams, address remaining social issues and strengthen environmental and restoration measures.

4. Sustainable Rivers and LivelihoodsUnderstanding, protecting and restoring ecosystems is important to protect the welfare of all species and foster equitable human development.

5. Recognising Entitlements and Sharing BenefitsNegotiations with adversely affected communities can result in mutually agreed and legallyenforceable mitigation and development provisions. However, affected people need to beamong the first to benefit from the project.

6. Ensuring CompliancePublic trust and confidence requires that the governments, developers, regulators and ope-rators meet all commitments made for the planning, implementation and operation of dams.

7. Sharing Rivers for Peace, Development and SecurityDams with a trans-boundary impact require constructive cooperation and good faith negotia-tion among riparian states.

(World Commission on Dams, 2000 in Johansson et al, 2004))

WP_2006.qxd 01.02.2006 15:41 Uhr Seite 16

Bioenergy

Only one percent of the radiation fallingon plants is used in photosynthesis. Yet,this is the basis of the food chain onearth and the enormous source of bioenergy.

A major part of the developing worldsurvives on freely collected traditionalbioenergy in the form of firewood, har-vest residues and dung. This is a far cryfrom the sustainable use of modern bio-

energy technologies like biodiesel, bio-ethelene, wood pellets, municipal andindustrial waste gas, biogas, methaneand energy crop agriculture.

Of the global potential land area, deserts(19 %) and sloped land areas steeperthan 30° (11 %) as well as agriculturalland (12.5 %) must be excluded. Thiseffectively leaves 322 million hectares(2.5 %), yielding 6 - 7 t/a dry weight onaverage (WBGU: 60).

The sustainable potential is about 100 EJ/a, of which 40 % would comefrom wood, and 36 % from energycrops. A notable 38 % of the globalpotential is already being utilized. (Table 3.2.9 WBGU: 60)

Biomass is being used unsustainablywhen consumption is higher than thenatural replacement rate. In Asia thenon-sustainable use is 20 %, in Africa30 %, and in Latin America 10 %. Thisdestroys forests, degrades soils, reducesbiodiversity and harms watercourses,the destruction of which impacts onnatural life-supporting systems, includinghuman existence.

Indoor air pollution from open fires cau-ses intolerable health effects on abouthalf the world population, mostly womenand children. About 1.6 million die annu-ally. For every child that dies as a resultof air pollution in Europe 270 die inSouthern Africa.

The global longer-term productionpotential of traditional biomass isestimated at 5 EJ/a.

17

Potential Energy Savings in Developing Countries from Improved Cookstoves

Rural household Efficiency Energy Maximum fuel-bioenergy use Improvements savings wood savings

[Mtoe] [%] [Mtoe] [Mtoe]China 198 20-30 40-59 180India 168 20-35 34-59 178Latin America 28 10-40 3-12 36Africa 116 30-40 35-46 141(IEA, 2001 in Karekezi, 2004)

Biomass-based Power Generation in Developing Countries

1995 2010 2020ChinaBiomass-based power generation (TWh) - 0.4 0.7% of total electricity generation - 1.7 % 1.8 %Biomass used in power generation (Mtoe) - 0.1 0.2

East AsiaBiomass-based power generation (TWh) 0.3 0.6 1.5% of total electricity generations 0.0 % 0.0 % 0.1 %biomass used in power generation (Mtoe) 0.3 0.7 1.7

South AfricaBiomass-based power generation (TWh) - 4.6 7.3% of total electricity generation - 0.4 % 0.4 %Biomass used in power generation (Mtoe) - 2.0 3.1

Latin AmericaBiomass-based power generation (TWh) 9.6 13.1 17.1% of total electricity generation 1.2 % 0.9 % 0.8 %Biomass used in power generation (Mtoe) 3.3 4.5 5.8

AfricaBiomass-based power generation (TWh) 0.3 0.6 0.6% of total electricity generation 0.1 % 0.1 % 0.1 %Biomass used in power generation (Mtoe) 0.4 0.8 0.8

Total developing countriesBiomass-based power generation (TWh) 10.2 19.3 27.1% of total electricity generation 0.3 % 0.3 % 0.3 %Biomass used in power generation (Mtoe) 4.0 8.1 11.7

(IEA, 1998 in Karekezi, 2004)

WP_2006.qxd 01.02.2006 15:41 Uhr Seite 17

Wind energy

In the developing world, very good windsites are found in the Southern tip ofLatin America, with good coastal siteselsewhere. Many wind sites in the deve-loping countries have not been asses-sed. In some cases weather stations’data are unreliable as a result of sur-rounding urbanisation, or lack of calibra-tion.

Small wind speed differences make avery big difference because the energycontained in the wind increases with the cube of the wind speed. A maximumof about 59 % of the energy can beextracted (Betz number). For this reason,good wind sites are important, and this has contributed to the interest inoffshore wind parks. Modern horizontalaxis machines have thin aeroplane typeblades whose tips are moving fasterthan wind speed. The nacelle containsthe generator, with some designs nee-ding no gearbox. Their mean ratedcapacity has grown within three deca-des from 30kW to 3MW, with 5MWunits in the offing. Owing to wind fluctu-ations, the average annual output is 20 - 25 % of the rated power on landsites, and 30 % offshore. Operatingwind speeds are from 3 - 25m/s, andthe average service life is twenty years.

Other, more familiar, branches of windenergy technology are the Americanwindmill and small-scale wind chargers.The former has enabled agricultural acti-vities, wild life conservation and humanhabitation in many areas of the develo-ping world.

The footprint land-use of this technologyis minimal since the land can be usedfor agriculture, often providing welcomelocal incomes. Modern turbines havealready greatly reduced noise pollution,which is less than traffic noise. Theimpact on birds has been studied exten-sively, and is significantly less than thatof existing transmission lines and motori-sed traffic. Opponents have objected to

18

Renewable Energy Resources: Technology Status and their Sustainable Potential

Electricity production from biomass

Bagasse is the by-product from sugarcane crushing; It corresponds to around 30 % (in weight,50 % wet, LHV=1 800 kcal/kg) of sugarcane. This is used for cogeneration (thermal/electricenergy) in the sugar/alcohol mill. Because bagasse production is high (for an average Brazilianproduction of 300 million tonnes of sugarcane, 90 million tonnes of bagasse are produced), itsuse has always been inefficient. Low-pressure (20 bar) boilers and low efficiency steam turbi-nes are common in most Brazilian mills. Also, both thermal and electric energy consumption inthe sugar/alcohol process are high: Around 500 kg of steam (at 2.5 bar) and 15 - 20 kWh ofelectricity per tonne of crushed cane.

Until the end of the 1990s there was no interest from the owners of sugar mills in selling sur-plus electricity generation to the grid. Local utilities also did not consider this option seriously.Despite the commercial availability of more efficient cogeneration systems, cultural aspects andthe lack of an institutional framework hampered implementation. Today the situation in Brazilhas changed. The Brazilian Development Bank (BNDES) launched a programme, allowing special credits for biomass power plants selling electricity to utilities or engage in its direct com-mercialisation, encouraging the introduction of more efficient technologies.

In the interlinked system, the energy sector’s reformulation process, conceived at Federal level,has accorded special status to renewable energy sources. A recently approved Federal Law10438/02 creates incentives for alternative electricity generation (PROINFA - Programa deIncentivo a Fontes Alternativas).

The PROINFA plan is divided into two phases. In the first two-year phase, long-term contracts(of 15 years) are supposed to be made over 3 300 MW by the Eletrobrás (Holding of theBrazilian Power System). The fixed amount is supposed to be achieved equally by the followingenergy sources: wind power, small hydropower projects and biomass. Acquisition of this ener-gy will be defined by the economical value for each specific technology. This value is set by theMinistry of Mines and Energy, but has to represent at least 80 % of the average national tariff tothe end user.

After the first 3 300 MW, the second phase will begin. A programme is designed so that thewind energy, small hydropower and biomass will achieve 10 % of the Brazilian power produc-tion. This goal is aimed to be reached within the next 20 years, as in the first phase with contracts over 15 years. The price of the purchased energy is determined by the economicvalue of the reference competing energy source, defined by the average costs of owner pro-duction by new hydropower projects with an installed capacity over 30 MW and new gaspower stations. Again, the Ministry of Mines and Energy determines the price. The regulation ofthe PROINFA has been established in December 2003, and presents some inconsistent points,such as the definition of the economical value and environmental issues. (Coelho et al, 2003)

In Argentina there is a similar programme, which aims at a target of 8 % renewable energy inthe national mix by 2013. It includes wind, solar, geothermal, tidal, small hydro (up to 15 MW)and biomass. (Salvatori, 2003)(Karekezi, 2004)

WP_2006.qxd 01.02.2006 15:41 Uhr Seite 18

the visual intrusion of large scale movingobjects in the landscape. Shadows andreflections have also been regarded asvisual interference.

Even under current distorted marketconditions, wind generated electricity iscost competitive in many areas and itsenergy payback period is short. Despitea stagnant phase of the world economy,the wind industry showed very stronggrowth.

Of the global technical wind energypotential (1 000 EJ) about 140 EJ maybe sustainable.

Solar energy

In contrast with the previous technolo-gies, direct solar energy is regarded asbeing practically unlimited. It is alsoabundant in the developing world, whereits distributed nature is a bonus, giventhe underdeveloped state of the serviceinfrastructure and man-made energydistribution networks.

Concentrated solar heat (CSH)

The largest existing centralized systemsuse parabolic troughs that focus sunlightonto evacuated glass tubes carrying theheat to conventional steam turbines viaa heat exchanger. They produce chea-per centralised power than photovoltaicsystems (PV). Other variants directlygenerate steam in the focal pipes.Another variant uses flat mirrors in aFresnel arrangement, focussing sunlighton passive absorber units. Yet anotherhas static primary troughs with mobilesecondary reflectors achieving very highsolar concentration ratios. All thesesystems are eminently suitable for com-bined heat and power generation (CHP)and take advantage of the establishedmass market of the conventional steamcycle. Supplementary power can beprovided by gas or, preferably, by anysuitable renewable energy.

Parabolic dish power plants

Parabolic dishes track the sun and focusthe radiation on, say, a sterling enginethat drives a pump or generator. Mostcurrent units are stand-alone systems of10 kW nominal capacity. This capacityrepresents a useful size for remote ruralapplications and farms. Currently, unitscannot yet be bought off the shelf.

Solar power towers

An extensive field of three-dimensionallymovable mirrors (heliostats) concentra-tes solar radiation onto a central receiversituated on top of a tower. There theheat exchange medium (air, water, salt)is heated to 500 - 1 000 °C, driving agas turbine or combined cycle plant.Molten salt is envisaged as a heat storage medium in some cases. Typicalgrid-connected units would be 200MWe.

Solar chimneys/Green Towers

A large greenhouse surrounding a highchimney heats air that moves up thechimney, driving a wind turbine at thebase.

In the Green Tower variant the green-house doubles up as an agriculturallyproductive unit. Thermal storage enables24-hour energy delivery. The units wouldbe 200 MWe, grid-connected.

Photovoltaics

Photovoltaic (PV) cells make up modu-les, are placed in arrays and convertsunlight into direct current electricitywithout any moving parts. The semicon-ductor materials are encapsulated andsealed hermetically. A long service life ofmore than 25 years and usually equalwarranty periods make this moderntechnology increasingly attractive. Withsuitable electronics, PV systems can be

grid-connected or stand-alone, wherethey can also be used for water pum-ping or other mechanical work. A storage battery is normally optional forgrid-connected systems, but is a neces-sity for stand-alone systems that needautonomy. No battery is required forwater pumping and other daytime work.

PV arrays do not emit vibrations, noisesand pollutants during their operation.This means they can be integrated intonew and existing buildings, which thenbecome energy exporters instead ofconsumers.

PV cells are made of silicon, the secondmost abundant material on earth. How-ever, scarce indium and tellurium areused in some cells. In sunny developingcountries the embodied energy paybackperiod is 18 months – an extremelyshort time in view of its proven servicelife.

It is relatively easy to add PV units to anexisting system, as demand grows (highmodularity).

The fact that PV systems are not cost-competitive with subsidised grid electri-city has lead some developing countriesto introduce stand-alone PV systems,also called solar home systems (SHS) inimpoverished remote rural areas wheresystem maintenance and social accep-tance must be expected to be proble-matic. By contrast, excellent marketpenetration is being achieved internatio-nally in grid-connected applications ofless sunny countries, where governmentpolicy provides an enabling environment.In the developing world with frequentgrid brownouts and blackouts, PV unin-terrupted power systems (UPS) makesense.

Solar Water Heating

In developing countries, water heatingconstitutes 30 - 40 % of the householdenergy consumption. In most cases, this

19

WP_2006.qxd 01.02.2006 15:42 Uhr Seite 19

is achieved by inefficient wood fires, gas or fossil fuel generated electricity.Instantaneous (“push through”) waterheaters are more efficient, but add con-siderable peaks to the municipal distri-bution system. Many electrical storageheaters in developing countries havehigh annual energy standing losses inexcess of 25 %. Such poor performanceis tolerated where energy prices arecheap or subsidised, where there is noenergy labelling, or where users do notpay for the value of hot water.

Solar Water Heaters (SWHs) normallyconsist of a collector and a water stora-ge unit. There are various establishedtypes:

Unglazed collectors consist of simpleblack plastic absorbers through whichwater flows, driven by a thermosyphonor a circulation pump. In low temperatu-re applications of swimming pools, agri-cultural applications and space heating,such systems achieve high efficienciesof 70 % for low temperature rises at lowcost. Unglazed collectors can also beused for night cooling.

Glazed flat plate collectors have aslightly lower efficiencies than unglazedcollectors at low temperature, but withhigher temperature differences betweenthe inlet and outlet temperatures, theyperform significantly better. If the collec-tor surface is treated with a selectivecoating, radiation losses are reduced.The average nominal efficiency of collec-tors is 67 %.

Evacuated tube collectors are collec-tors with an outer glass mantle maintai-ning a vacuum. The inner collector maybe a single blackened tube containingthe heated medium (wet tube), twotubes (feed and return) or an adjustableselective fin with a heat pipe. Evacuatedtubes can reach the boiling point ofwater and have almost constant efficien-cies of 67 % across all temperature differences between inlet and outlet temperatures.

General

Direct or open loop glazed flat platesystems can be used in thermosyphon,pumped and integral units. With directsystems the water in the collector andthe storage unit is the same. This ischeaper, but may cause frost, corrosionand scaling problems, unless suitableprecautions are taken.

In indirect systems a closed fluid loopcirculates through the collector, preven-ting frost, clogging and erosion, but itsinitial capital cost is higher.

With solar combi systems the services ofdomestic hot water and space heatingare rolled into one. This innovation re-duces the need for summer backupwater heating, but this is not yet esta-blished in the developing world.

All water heaters, including solar waterheaters, require maintenance of varyingdegrees.

The technology is mature and standardsare available, yet conventional plumbersmay not be familiar with them.

Although the availability of piped hotwater is often thought to be a low priority in low-income households, thehygiene implications should not beunderestimated. Clean hot water for clo-thes washing and food preparation canhardly be classed as luxuries.

20

Renewable Energy Resources: Technology Status and their Sustainable Potential

Geothermal

Underground heat below 100 °C can be used for water and space heatingpurposes. At higher temperatures steamcan be used to generate electricity, but considerable waste heat streamsoccur. Alternatively, cold water can bepumped into hot rocks or into deepmines, whence it returns as hot water.Where steam or hot water emergesnaturally, the used water should bereturned, since it often contains CO2

and other contaminants. Some of thesetechnologies are under development.

Another approach uses near-surfaceheat through heat pumps, whose tech-nology is mature. These systems shouldhave a Coefficient of Performance (COP)of at least 3.6 if coal fired electricity isused in order to make up for the energytransformation losses. In addition, theenvironmental impact of extracting/adding heat to the environment shouldbe considered carefully. The global geothermal potential is estimated at 30 EJ/a.

WP_2006.qxd 01.02.2006 15:42 Uhr Seite 20

Solar cooling

A high cooling load triggered the peakdemand problem in California. The spacecooling demand grows as income levelsand comfort demands increase, and iscompounded by global warming andurbanization. It is not unusual that fairlyinefficient air conditioners are used tocool thermally inefficient buildings. Manyscenarios postulate that the developingnations will follow the same route.

Solar space cooling would offer theattraction of the maximum coolingdemand coinciding with the maximumsolar radiation. Regrettably, the techno-logy is underdeveloped. Solar cooling for food and medicine would satisfy an

urgent need in hot and tropical coun-tries. Cooling of food and medicinesrequires little energy, but has a signifi-cant impact. A heat pump must rejectheat to the environment. Therefore themachine must be driven at a higher tem-perature than the ambient temperature(the condensers of fridges emit heat). Ifthe same heat pump is used for heating,then there is no heat rejection.Therefore, cooling by one degree Kelvinrequires about three times more energythan heating by one degree Kelvin.

Solar in Buildings

From cradle to the grave, buildings areresponsible for a significant proportion ofthe international energy consumptionand peak demand. The procurement ofraw materials, production of buildingmaterials, transport, cutting to size, pla-cement, maintenance, demolishmentand recycling all consume energy. Somebuilding materials/components are inor-dinately energy intensive, like aluminium,plastics, cement and clay products.Other materials like wood, thatch andearth are environmentally and energy-wise more neutral.

Buildings are energy consumers withlonger life cycles than most power stations. Edifices constructed up to two thousand years ago are still in usetoday. The energy and maintenancecost incurred during a building’s life are many times more than the initialerection costs.

With the advent of artificially cheap, fos-sil generated electricity in the developedworld, architects started designing envi-ronmentally questionable buildings thathad to be made habitable by mechanicaland lighting engineers. They found theseinteresting and lucrative business oppor-tunities. There was neither chance norincentive for the engineering fraternity toenlighten the architects because theprofessional fee structure and the pro-fessional risk minimization both rewardover-design of artificial lighting and airconditioning plant, instead of rewardingenergy efficiency and the use of renew-able energy.

This way of designing prestigious buil-dings was transferred to the developingworld, symbolising progress and moder-nity. Consequently, we find the sameinappropriate building design from thesub-artic to the tropical regions.

Traditional rural houses in warm andcold regions incorporate the climaticbuilding knowledge of generations.

21

Modern Biofuel Use in the Latin America Transportation Sector

Examples of the use of biofuels for transportation sector in Latin America Countries can befound in Brazil (with the alcohol programme) and in Argentina (with the biodiesel programme).Brazil’s alcohol programme has recorded notable successes.

The Brazil programme was initiated in 1975 with the purpose of reducing oil imports by produ-cing ethanol from sugarcane. It now delivers significant environmental, economic and socialbenefits. It has become the leading biomass energy programme in the world. Ethanol is used incars as an octane enhancer and oxygenated additive to gasoline (blended in a portion of 20 to26 % anhydrite ethanol in a mixture called gasohol), or in dedicated hydrated engines. Since1999, the Brazilian government eliminated control on prices, and hydrated ethanol is sold for60 to 70 percent of the price of gasohol at the pump station, due to significant reductions inproduction costs. These results show the long-term economic competitiveness of ethanol fuelwhen compared to gasoline (Goldemberg et al, 2002).

The world leader on alcohol production continues to be Brazil, where alcohol prices are com-petitive, and the development of the new flexible fuel cars (FF) promotes greater ethanol use byproviding flexibility to consumers. Ethanol has made a valuable contribution to the developmentof the country’s agro-industry. Moreover, the increased use of alcohol as a transport fuel appe-ars to have contributed to the reduction of air pollution in mega-cities such as Sao Paulo(Coelho, 2003).

The Brazilian initiative experienced ups and downs as a result of the world oil and sugar mar-kets. This seems to indicate that it would be prudent to diversify the alcohol feedstock intonon-food producing plants. According to the Bariloche Foundation, there are four biodieselplants in Argentina using sunflower, cotton and soybean as feedstock(www.bariloche.com.ar/fb).

A Federal Law in Columbia requires the addition of 10 % of ethanol to standard gasoline. By2006, the seven largest cities in Colombia are expected to switch to gasohol. Gasohol fuel willbe introduced in other cities of the country in tandem with the development of sugar-alcoholagro-industry. About 700 million litres of ethanol will be required per year, corresponding to 150thousand hectares of sugarcane crops (Campuzano, 2003).(After Karekezi, 2004)

WP_2006.qxd 01.02.2006 15:42 Uhr Seite 21

These buildings require a minimum ofenergy over their life cycles.

Town planning and industrializationmind-sets of the previous century led to energy intensive urban settlementswith ineluctable long-term fossil fuel driven commuting built in.

Today, building tradesmen and energyintensive building materials are transpor-ted to remote building sites to erect buil-dings that are cheap to build but expen-sive to run. The problem is deepenedthrough the landlord-tenant dilemma,where the tenant suffers the consequen-ces of energy-inefficient buildings.

Informal or illegal settlements like shan-tytowns or favelas typically have buil-dings of poor thermal performance. Re-sidents resort to highly polluting wood,coal, dung fires, or stolen electricity.Such “non-technical losses” also add tohigh electrical peak demand problems.Curitiba in Brazil has demonstrated at-tractive and energy efficient alternatives.

Solar water heaters and combi systems,combining water and space heating canreduce the national peak electricity de-mand by 18 %. The resultant GHGsaving is substantial.

Using renewable energy and energy effi-ciency in buildings is techno-economi-cally feasible, and significantly cheaperthan building new power stations. Newglazing and insulation materials are ente-ring the market. Daylighting producesless unwanted internal heat than mostelectric lighting. The unwanted rejectheat of inefficient appliances and machi-nes like printers and photocopiers has tobe removed by air conditioners in officebuildings in warm climates. Town plan-ning and integrated resource planningoffers great opportunities, especially incountries with underdeveloped infra-structures.

Transport

Worldwide, few nations produce theirown transport fuels. This has significantimpacts on national economies, notablyin the developing world. In principle, onecan focus on the improvement of currentvehicle technologies, development ofnew technologies, harnessing of infor-mation technology, mode switching andspatial planning.

Improvement of current vehicle tech-nologies through more efficient drivetechnologies is a standard planning stra-tegy of all European motor-vehiclemanufacturers (optimised combustion,ceramic components, refined ignition,valve management, turbo chargers). Afurther enhancement of 50 % is consi-dered techno-economically feasible.Reductions of mass and rolling resi-stance may produce CO2 reduction of 6 % and 1 % respectively. Some ofthese technology gains may be lost by a snap-back, in that people would be

22

Renewable Energy Resources: Technology Status and their Sustainable Potential

Ethanol Production in Africa

In Africa, ethanol production from maize crops, called SATMAR, wasundertaken in South Africa during the 1940s. Sasol’s coal-to-synfuelproduction, later, superseded this production. Experimental biodieselproduction from sunflower seeds by the SA Department of AgriculturalEngineering was not followed up.

Large-scale ethanol production has also been implemented inZimbabwe, Malawi and Kenya, countries that do not have indigenousoil reserves and rely on oil imports. Ethanol production in Zimbabwestarted in 1980 at Triangle Ltd, a sugar company located in the north-eastern Zimbabwe with an annual production capacity of 40 millionlitres. On commissioning, the blending target of ethanol/gasoline for thecountry was 15:85. But by 1993, the blending ratio stood at 12:88.The ethanol production programme has contributed significantly to theZimbabwean economy. Benefits include reduced gasoline imports byabout 40 million litres, increased incomes of about 150 cane farmersand availability of a market for molasses, which was formerly a wasteproduct (Scurlock et al, 1991b; Hall et al, 1993)

In Malawi, the Ethanol Company Limited (ETHCO) is the sole producerand distributor of ethanol. Commissioned in 1982, ETHCO has a distil-lery capacity of 17 million litres annually, producing 13 million litres ayear. Originally, it was mandatory for all the gasoline used in the coun-try to be blended with ethanol. In 1993, the blending ratio was 15:85.

However, this ratio has not maintained due to differences betweenETHCO and the oil industry concerning acceptable market shares andpricing of ethanol in relation to imported gasoline. Available evidencedemonstrates that the plant has helped to reduce use of scarce con-vertible currency revenues on oil imports and assisted in solving thesugar company problem of safe disposal of molasses, which was pre-viously a hazard to the environment (Kafumba, 1994; Gielink, 1991).

Kenya’s interest in ethanol was spurred by the oil crisis in the early1970s, when the country was keen to exploit locally available energysources. Consequently, the Agro-Chemical and Food Cooperation(ACFC) was established in 1978, with the objective to utilise the surplusmolasses. Located in Murohoni, near three sugar factories, ACFC hadan installed capacity of 60 000 litres a day with a daily average outputof 45 000 litres. The target blending ratio was 10:90. The plant createdboth direct and indirect employment for about 1 200 people. In addi-tion, it partially reduced dependence on imported fuel supplies. Majorchallenges that have faced the programme include drought and poorinfrastructure, affecting yield and transportation of the cane to proces-sing points. Above all, lack of government commitment and absence ofclear-cut production, blending and marketing policies eventually led tothe cessation of ethanol use for transportation purposes (Omondi,1991; Kyalo, 1992; Okwatch, 1994; Baraka, 1991).(Karekezi & Ranja, 1997; Karekezi, 2002 in Karekezi, 2004)

WP_2006.qxd 01.02.2006 15:42 Uhr Seite 22

inclined to drive more kilometres becau-se the costs per kilometre have beenlowered.

Development of new technologies isevident in hybrid drives and batteriesalready appearing on the market, poten-tially doubling the fuel efficiency. Theseare important stepping-stones to the fullfuel cell technology.

Fuel cell vehicles will reduce emissionsby nearly 100 %. Hydrogen produced byrenewables is the ultimate goal. The cur-rent production of hydrogen is energyintensive.

Natural gas is a cleaner fuel than coal,petrol and diesel. This just might buffer a transition to sustainability. Leaking gas pipes may be more than a meretheoretical risk in the developing world.Harnessing of information technologyhas already produced better traffic flowsand can also enhance goods handlinglogistics. There is the chance that bettertraffic efficiency will lead to an increaseof road traffic.

Effective mode switching and integrationshould lead to a higher market share ofthe more energy efficient rail mode, as anational policy. Spatial planning andmodern settlement planning offersopportunities to pedestrianise use bicy-cles, efficient public transport, densifica-tion and mixed land-use.

Summary

The technologies of hydropower, sugarcane ethylene, landfill gas, passive solarbuilding design, solar water heating,wood pellets and wind energy havebeen demonstrated to be cost competi-tive, even with the current skewed mar-ket. Concentrating solar power, tidalwave and ocean power, green tower,biodiesel and innovative renewable ener-gy driven vehicles are in intermediatedevelopment stages. The renewableenergy based hydrogen technology isstill under development. Photovoltaicsare cost competitive in rural areas, butthe largest current market penetrationand growth is in urban grid-connectedapplications. Building integrated PV(BIPV) offers opportunities of Balance ofSystem (BOS) cost reductions.Global renewable energy resources arepractically inexhaustible. While currenttechno-economics are generally less ofa constraint than socio-political issues, itis expected that the eventual resourcelimitation of some technologies, togetherwith environmental considerations maylead to ceilings of renewable energytechnologies, except solar energy and,perhaps, ocean energy which are unlimi-ted for all practical purposes.

23

WP_2006.qxd 01.02.2006 15:42 Uhr Seite 23

National and International Drivers of RenewableEnergy Application: Setting National Targetswithin Global Guard Rails

Poverty alleviation through renew-able energy jobs

Reducing poverty and unemploymentare high priorities in the developing world.It is beyond dispute that the rising tide of renewable energies offers more newwork opportunities than the fossil andnuclear technologies. The full implicationsof this fact still have to be realised by thedeveloping nations.

By definition, developing nations haveunderdeveloped energy infrastructures,offering a golden opportunity to createnew sustainable jobs in the modern re-newable energies technologies, ratherthan investing in sunset technologies oraccepting cheap discarded technologiesfrom the developed world.

Potentially, creating jobs in new renewa-ble energy infrastructure in the develo-ping world can be combined with theClean Development Mechanism of theKyoto Protocol.

Locally manufactured water heaters cre-ate low capital and low risk work oppor-tunities, with the greater job creation op-portunities being situated in the businessside of selling, installing and servicingSWHs. Jobs in manufacturing SWHs are

costlier and less secure. Main barriers tohigher market penetration in the develo-ping world are lacking awareness ofpolicy makers, plumbers and end users;lack of trained installers/service crafts-men; lack of national standards/test faci-lities, and lack of means to overcomethe initial cost barrier.

CDM financing at US$5/ton CO2 wouldreduce the cost by only 10 %, whichseems disappointingly little. Replacingconventional all-electrical geysers withcombi SWHs would typically reduce thenational peak demand by 18 %. SinceSWHs are cheaper than building newhighly mechanised generation capacity,it is in the national economic interest toimplement this least cost job creatingoption.

Ironically, the best-publicised examplesof renewable energy job creation comefrom the developed world where naturalresource conditions are less favourable.In Germany about 40 000 new renew-able energy electricity jobs have beencreated in only 12 years to 2002, whilethe nuclear industry supplying 30 % ofthat country’s electricity only employed38 000 people. Germany expects tocreate 250 000 to 350 000 new renew-able energy jobs by 2050.

In the US the potential employment of300 000 people by 2025 in PV alone iscomparable to major computer indu-stries like Dell Computer of Sun Micro-systems.

If the US State of Wisconsin bought fossil fuel energy it would be forfeiting 45 000 local jobs – a severe blow to thestate economy. By producing localrenewable energy, 2.5 US cents kWhwould be ploughed back.

With each direct new job that is created,there is an economic multiplier that reflects the induced spin-off by indirectjobs created. A study by the US Depart-ment of energy revealed that a 10 MWp

PV fabrication plant near San Franciscowould produce a multiplier effect of 500 %. These multipliers also bringregional developmental benefits as wellas tax incomes to state coffers.

24

If South Africa generated just 15 % of thetotal electricity use in 2020 by using renew-able energy technologies, it would create 36 400 direct jobs, without taking any workaway from the coal-based electricity industry.

Over 1.2 million direct and indirect new jobswould be generated, if a portion of SouthAfrica’s total energy needs, including fuels,were sourced with renewable energy tech-nologies by 2020.

Summary of direct and indirect jobs from renewable sources in 2020

Technology Direct Jobs Indirect Jobs Total JobsSolar thermal (10 % of target) 8 288 24 864 33 152Solar Photovoltaic (0.5 % of target) 2 475 7 425 9 900Wind (50 % of target) 22 400 67 200 89 600Biomass (30 % of target) 1 308 3 924 5 232Landfill (5 % of target) 1 902 5 706 7 608BiogasWhere 150 000 residential biogas digesters 1 150 2 850 4 000are installed in rural areasSolar Water HeatersIncludes the manufacture and installation 118 400 236 800 355 200of the equivalent of a 2.8 m2 solar water heater on each house in the countryBiofuelsIncludes 15 % ethanol and diesel substitution 350 000 350 000 700 000TOTAL 505 923 698 769 1 204 692(Banks & Douglas, 2005)

WP_2006.qxd 01.02.2006 15:42 Uhr Seite 24

New energy infrastructure

Developing nations may soon find thatrenewable energy powered DistributedGeneration (DG) and Combined Heatand Power (CHP) Plants Cogenerationcreate local jobs, are environmentallymore benign, and are not dependant onthe weaknesses (maintenance, theft,sabotage, terrorism, political manipula-tion) of a centralised generation systemwith a network that becomes prohibitive-ly expensive as it moves into remoterural areas.

The typical energy conversion chain los-ses of conventional systems (from minedcoal to water heated by an electric sto-rage geyser) are significant: only about10 % of the coal’s original energy endsup in the hot water as useful energy.With conventional incandescent lightingthe useful percentage may be less than2 % in light energy service. All the rest ispollution in the form of ash, SOx, NOx,CO2 and other greenhouse gases, aswell as reject heat.

Distributed generation plant can be builtin smaller increments, closely followingthe demand profile. By contrast, this isimpossible with conventional powerplants, which come in big chunks, tyingdown big chunks of capital, long beforeit is actually needed. National resourcesthat have not been sunk in useless sur-plus generation capacity can be used formuch-needed development programmes.

By developing DG in rural areas it ispossible to start secondary industries inrural areas, thereby assisting beneficia-tion, adding value to local products andcreating local jobs. This, in turn, maystem the tide of rural depopulation andurban squatters – both serious socialissues with developing nations.

DG systems generate heat and powerat, or close to, the point of consumptionand are much more efficient than the old centralised fossil-fired power plantsbecause they use the electricity as wellas the heat that is normally rejected at fossil plants. They also reduce line

losses dramatically. These line lossestypically range from 10 % to as much as50 %, not counting “non-technical los-ses” (euphemism for power theft).

This concept aims to adapt availablemodern technology of distributed gene-ration to the needs of the developingnations instead of trying to convincedeveloping nations to buy ready-madewestern world technology models. Inthis way, renewable energy contributestowards sustainable development andthe democratisation of power in bothsenses of the word.

Solar Enterprise Zones (Nicklas, 1998)integrate technical, social and environ-mental benefits. Such Solar EnterpriseZones start with Distributed GenerationSystems, and then link these by mini-grids, which eventually are interlinkedwith national or regional networks,adding diversity of supply.

25

Cogeneration in Mauritius

The Mauritanian experience in cogeneration is a success story in Africa. Through extensive use of cogeneration in Mauritius, the country’s sugar industry is self-sufficient in electricity andsells excess power to the national grid. In 1998, almost 25 % of the country’s electricity was generated largely using bagasse, a by-product of the sugar industry (Deepchand, 2001).By 2002, electricity generation from sugar estates stood at 40 % (half of it from bagasse) of the total electricity demand in the country (Veragoo, 2003).

Government support and involvement has enabled the development of a cogeneration pro-gramme in Mauritius. The Sugar Sector Package Deal Act (1985) was enacted to encouragethe production of bagasse for the generation of electricity, while the Sugar Industry EfficiencyAct (1988) provided tax incentives for investments in electricity generation, and encouragedsmall planters to provide bagasse for electricity generation. Three years later, the BagasseEnergy Development Programme (BEDP) for the sugar industry was initiated. In 1994, theMauritanian Government abolished the sugar export duty, which served as an additional incentive to the industry. A year later, foreign exchange controls were removed and the con-solidation of the sugar industry was accelerated. These measures have resulted in the steadygrowth of bagasse-based electricity in the country’s electricity sector.

This has reduced dependence on imported oil, enhanced diversification in electricity generationand improved efficiency in the power sector in general. Using a wide variety of innovative reve-nue sharing measures, the cogeneration industry has worked closely with the Government ofMauritius, ensuring that substantial benefits flow to all key stakeholders of the sugar economy,including the poor smallholder sugar farmer. The equitable revenue sharing policies of Mauritiusmay provide a model for ongoing and planned modern biomass energy projects in Africa.(Veragoo, 2003; Deepchand, 2001 in Karekezi, 2004)

WP_2006.qxd 01.02.2006 15:42 Uhr Seite 25

National Renewable Energy Targetswithin Global Guard Rails

Responsible governments consider ourcommon future - and have a stronghand in shaping it.

A sign of good leadership is the gift ofsetting inspiring long-term goals. Thesedetermine the framework, challengingthe best national forces to come for-ward. Targets must be sufficientlydemanding to justify long-term commit-ments of entrepreneurial person power,resources and money by industry andacademia. They must also be of suchduration as to allow the educational andbureaucracy systems to adapt.

It seems that in the past many develo-ping nations were inclined towards centralist, rather than decentralised deci-sion-making models. This tended to goalong with centralist government utilitymonopolies that were forced to deliverelectrical power at non-sustainable pri-ces, serving political expediency.Inevitably, ends did not meet and cor-ners were cut, leading to brownouts andblackouts at great national costs.

Interestingly, the alternative model ofradical market liberalisation and privati-sation forced down the throat of manydeveloping nations, while initially produ-cing cheaper energy and discouragingend-user frugality, did not seem to faremuch better in the long run. It is not thepanacea.

26

National and International Drivers of Renewable Energy Application: Setting National Targets within Global Guard Rails.

International organisations with energy agendas

The Global The GEF (through implementing agencies) operates more than 100 pro-Environmental grammes for the promotion of energy production and consumption fromFacility (GEF) RE (backed by private sector development and sometimes by energy sector

reform), mainly with a domestic scope. Projects do not address issues suchas taxation, subsidies or trade law on a global scale.

The UN system The Un Regional Economic Commissions play an important capacity buildingrole in the respective regions (e.g. United Nations Economic Commission forEurope (UNECE) or the United Nations Economic and Social Commission forAsia and the Pacific (UNESCAP). Globally, the United Nations DevelopmentProgramme (UNDP) is an important actor (cf. the Global Network on Energyfor sustainable Development, the UNDP Initiative for Sustainable Energy(UNISE), and the World Energy Assessment. Many other specialised UNagencies have addressed RE within their niche (for example the United Nations Department ofEconomic and Social Affairs (UNDESA), the World Health Organisation(WHO), the United Nations Educational, Scientific and Cultural Organisation(UNESCO), and the Food and Agriculture Organisation of the United Nations(FAO)). UNDESA has developed RE projects in the context of Agenda 21,and signed an agreement with e7, founded by global electricity companies,and dedicated to develop rural energy. The Commission on SustainableDevelopment (CSD) includes energy as a major component of its work planfor the coming years. The recently established Global Village EnergyPartnership (GVEP) focuses on access to modern energy services by thepoor. The UN considered energy as one of five key areas for particular focus(“WEHAB”): Water, Energy, Health, Agriculture and Biodiversity) for theJohannesburg World Summit on Sustainable Development (WSSD).

The World Summit The WSSD Plan of Implementation, while not binding, is the international on Sustainable instrument with the most extensive references to renewable energy and Development energy efficiency yet produced by the world community. It focuses on (WSSD) development, implementation, technology transfer and rapid commer-and its Plan of cialisation of RE. It sees energy as key to the eradication of world poverty, Implementation and to change of unsustainable consumption and production patterns. (and the An example of a governmental initiative coming out of WSSD is the Resulting “type II” Johannesburg Renewable Energy Coalition. More than 20 type II (public-partnerships) private) partnerships are active in RE, for example the Renewable Energy

and Energy Efficiency Partnership (REEEP). Another multi-stakeholder organi-sation is the International Sustainable Energy Organisation (ISEO).

Non-Governmental The NGO community ranges from green advocates (most environmental Organisations NGOs have a work programme on energy and climate change), to NGOs (NGOs) focusing specifically on energy, to consumer interest groups. Examples are

the International Solar Energy Society, the World Energy Council, the WorldCouncil for Renewable Energies, the World Wind Energy Association, theInternational Network for Sustainable Energy. Some charitable foundationsalso support RE activities.

The research This group includes a wide variety of actors, ranging from fundamental community research at universities to applied research to technology development spe-

cifically for commercial purposes.The private sector Individual companies involved in energy supply (utilities, increasingly working

in more than one country), technology supply and research and develop-ment (R&D), but also groups such as industry associations (e.g. Eurelectric)and the World Business Council on Sustainable Development.

(After Steiner et al, 2004)

WP_2006.qxd 01.02.2006 15:42 Uhr Seite 26

The international context: GlobalGuard Rails

National targets are not set in a vacuum,but are informed by the internationalcontext.

The German Advisory Council on GlobalChange (WBGU) produced a compre-hensive report “World in Transition –Towards Sustainable Energy Systems”(2004), introducing the innovative con-cept of Guard Rails bounding the pathstowards global energy sustainability.“Guard Rails” are those levels of dama-ge, which can only be crossed at intole-rable cost, so that even short-term utilitygains cannot compensate for suchdamage. There are six economic andfive ecological guard rails. These arereadily understood (see box).

Global guard rails are not goals. Theyrepresent minimum requirements thatneed to be met if the principle of sustai-nability is to be adhered to.

A test run demonstrates that turningenergy systems towards sustainability istechnically and economically feasible.

Independently of the WBGU, Donald WAitken, PhD, of the Union of ConcernedScientists (2005) comes to the sameconclusion.

His suggested pace is 10/20/50 % ofrenewable primary energy by 2010/20/30. This has also been corroborated by the European Renewable EnergyCouncil, stating that renewable energycould supply even 50 % of the global energy by 2040.(www.erec-renewables.org)

27

Global guard rails for sustainable energy policy

Socio-economic guard railsAccess to advanced energy for allIt is essential to ensure that everyone has access to advanced energy. This involves ensuringaccess to electricity, and substituting health-endangering biomass use by advanced fuels.Meeting the individual minimum requirement for advanced energyThe Council considers the following final energy quantities to be the minimum requirementsfor elementary individual needs: By the year 2020 at the latest, everyone should have at least550 kWh final energy per person and year, and by 2050 at least 700 kWh. By 2100 the levelshould reach 1 000 kWh*.Limiting the proportion of income expended for energyPoor households should not need to spend more than one tenth of their income to meet elementary individual energy requirements.Minimum Macroeconomic developmentTo meet the macroeconomic minimum per-capita energy requirement (for energy servicesutilised indirectly) all countries should be able to develop a per-capita gross domestic pro-duct of at least about US$ 3 000, in 1999 values.Keeping risks within a normal rangeA sustainable energy system needs to build upon technologies whose operation remains with-in the “normal range” of environmental risk. Nuclear energy fails to meet this requirement,particularly because of its intolerable accident risks and unresolved waste management, butalso because of the risks of proliferation and terrorism.Preventing disease caused by energy useIndoor air pollution resulting from the burning of biomass, and air pollution in towns andcities resulting from the use of fossil energy sources causes severe damage worldwide. The overall health impact caused by this should, in all WHO regions, not exceed 0.5 per centof the total health impact in each region (measured in DALYs = disability adjusted life years).

Ecological guard rails

Climate protectionA rate of temperature change exceeding 0.2 °C (0.2 K) per decade, and a mean global temperature rise of more than 2 °C (2 K) compared to pre-industrial levels are intolerableparameters of global climate change.Sustainable use10 - 20 per cent of the global land surface should be reserved for nature conservation. Not more than 3 per cent should be used for bioenergy crops or terrestrial CO2 sequestra-tion. As a fundamental matter of principle, natural ecosystems should not be converted tobioenergy cultivation. Where conflicts arise between different types of land use, food securitymust have priority.Protection of rivers and their catchment areaIn the same vein as terrestrial areas, about 10 - 20 % of riverine ecosystems, including their catchment areas, should be reserved for nature conservation. This is one reason whyhydroelectricity – after necessary framework conditions have been met (investment in research, institutions, capacity building, etc.) – can only be expanded to a limited extent.Protection of marine ecosystemsIt is in the view of the Council that the use of the oceans to sequester carbon is not tolerable, because the ecological damage can be major, and knowledge about biologicalconsequences is too fragmentary.Prevention of athmospheric air pollutionCritical levels of air pollution are not tolerable. As a preliminary quantitative guard rail, it couldbe determined that pollution levels should nowhere be higher than they are today in theEuropean Union, even though the situation there is not yet satisfactory for all types of pollu-tants. A final guard rail would need to be defined and implemented by national environmentalstandards and multilateral environmental agreements.

(WBGU, 2004)

* Comment: This may be on the high side for warm Latin American Countries,

if improved energy efficiency is accounted for

WP_2006.qxd 01.02.2006 15:42 Uhr Seite 27

Key findings of the WBGU study are:

The transition will only work with in-tensified capital and technology trans-fer from industrialised to developingcountries. Market maturity of renew-able energy (RE) and energy efficiency(EE) needs to be accelerated in theindustrialised countries for instance,through raising and redirecting R&Dresources, demonstration and imple-mentation strategies. This aims toreduce the entrance barriers to all,especially the developing nations.

Worldwide cooperation and conver-gence of living standards are likely tofacilitate rapid technology develop-ment and dissemination.

Binding CO2 reduction commitmentsare a prerequisite.

Further GHG reduction policies byother sectors (e.g. NOx and NH4 fromagriculture) are required.

450ppm of CO2 may not be sufficientfor climate stabilisation, and shouldnot be taken as a safe stabilisationlevel.

An alternative reduction path by fossiland nuclear energy entails substantial-ly higher risks and environmental impacts, and is more costly, mainlybecause of CO2 sequestration costs.

In a system with a long time lag, the next two decades offer a rapidlyclosing window of opportunity.Procrastinating will cost disproportio-nately much more and cause moresocial, political, economic and envi-ronmental problems. We can onlyguess what irreversible damage thecurrent decision-makers will have toanswer for.

The currently most cost-effective tech-nologies like wind and biomass haveto be used to the hilt in the short andmedium term.

Efficient use of fossil fuels is part ofthe transition, in particular the efficientuse of natural gas.

A certain amount of carbon seque-stration in geological caverns will benecessary during this century.

A roadmap with goals and policy optionsfor the transformation highlights the following

Eradicating energy poverty and esta-blishing minimum global supply,

Establishing a new World Bank policyto integrate energy in poverty reduc-tion strategies as well as strengthe-ning regional development banks,

Promoting socio-economic develop-ment,

Combining regulatory and private sec-tor initiatives,

Protecting natural life-supportingsystems. This means reduced globalCO2 emissions by at least 30 % from1990 levels by 2050. For industrialisednations this entails a reduction of 80 %, while developing and newlyindustrialised countries’ emissionsshould rise by no more than 30 %,

Improving energy productivity (GDP to energy input ratio) of initially 1.4 %annually improvements is required, followed by 1.6 %, to reach triple cur-rent productivity by 2050 from 1990levels. This requires international stan-dards of fossil-fuelled power stations,and 20 % renewable energy basedelectricity in the EU by 2012; manda-tory labelling; phased-out non-renew-able energy subsidies and primaryenergy targets for buildings,

Expanding renewable energy substan-tially from the current 12.7 % to 20 %by 2020, and

Phasing out nuclear by 2050, withstricter monitoring of all sites.

28

National and International Drivers of Renewable Energy Application: Setting National Targets within Global Guard Rails.

WP_2006.qxd 01.02.2006 15:42 Uhr Seite 28

29

Land availability for Food and Fuel

The availability of land for the production of biomass in developing countries is determined by the demand on land for food production. With increasing population, food production andconsumption in developing regions is expected to increase (FAO, 1995). Estimates by theResponse Strategies Working Group of the IPCC indicate that the use of land for food produc-tion in developing regions (Asia, Africa and Latin America) will increase by 50 % by the year2005 (IPCC, 1996). In addition, the demand for biomass energy is also expected to increasewith population increase. Estimates by the WEC indicate that by 2100, about 1 700 millionhectares of additional land will be needed for agriculture, while about 690 - 1 350 million

hectares of additional land would be needed to support biomass energy requirements (UNDP,2000). The challenge, therefore, is sustainable biomass supply to meet growing energydemand, without taking up land for food production. Some of the options for avoiding the com-petition for land between food and fuel are: increasing food production on current agriculturallands; the establishment of large tree plantations and, the use of modern forestry practices(IPPC, 1996). (Sudha & Ravindranath, 1999 in Karekezi, 2004)

International actor organisations in RE

Intergovernmental Examples include the International Energy Agency (IEA, affiliated with theorganisations, whose OECD), the Organizacion Latinoamericana d’ Energia (OLADE) and theprimary activity is energy Charter Conference and Treaty. On the one hand, these organ-energy related isations have expertise, a governmental support base, and in some case

the authority to make binding rules. On the other hand, membership ofmost of these organisations is limited geographically or otherwise (thoughtheir activities and studies undoubtedly influence also non-members), andnone have RE as a main focus.

The World Bank These are significant players, with an important RE impact in developingGroup (including countries. They finance a significant number of RE projects throughout thethe International world, ranging from technological assistance to energy sector reform, Finance Corporation), sometimes with private sector co-financing. A well-known project of theand the Regional International Bank for Reconstruction and Development (IBRD) is ESMAP Development (Energy Sector Management Assistance Programme), promoting anBanks environmentally responsible role of energy in poverty reduction and eco-

nomic growth.Regional Examples include the European Union (EU), the Association of Southeastorganisations Asian Nations (ASEAN), the Southern African Development Community

(SADC), and Asia-Pacific Economic Cooperation (APEC).(Steiner et al, 2004)

WP_2006.qxd 01.02.2006 15:42 Uhr Seite 29

Policies to Accelerate the Application of Renewable Energy Resources in Developing Countries

Our current global and national energysituation is the result of past energy policies and subsidies that largely persistinto the present. Fossil fuel and nuclearprices are not the result of free marketmechanisms, nor do they reflect theirtrue costs.

Energy users benefiting from currentcheap energy prices typically do notbear the cost and consequences ofexternalities and modern warfare.

Such market distortions built up seriousand pervading barriers to renewables.Further cost barriers lie in their relativelyhigher capital cost, import duties, currentlack of economies of scale, lack ofaccess to affordable credit, selectivepunitive grid connection costs, lack ofstandards, and lack of training and awareness.

In developing countries the barrier ofperceived investor risk is even higherdue to political, regulatory and marketstability uncertainties.

In addition, well-intended donor projects,inconsistent short-term governmentinterventions, poor technology andmaintenance, and unrealistic promises of universal grid access have also dis-torted markets for renewables in manydeveloping countries.

Policies and measures have to copewith these realities and must not onlyovercome the barriers, but also providean enabling environment for the sus-tained growth of renewable energies.Such an enabling environment entailsthe conditions of the macro-level natio-nal market, the meso-level energy mar-ket and the micro-level sustainable ener-gy market.

Each supra-system sets the boundaryconditions for its sub-systems. For ex-ample the legal, political, financial, infra-structural, bureaucratic and economicmacro-economic supra-frameworkdetermines the boundary conditions to

a national energy market sub-system. In turn, the national energy market setsthe boundary conditions to its sub-system, the sustainable energy market.Conversely, each sub-system feeds itssupra-system with resources, energyand information.

It follows that an intervention at only onelevel working in only one direction (eitheronly bottom-up or top-down) is doomedto failure. The developing world bearswitness to many well-intended local bot-tom-up NGO-driven grassroots projectfailures, and as many abandoned top-down government-driven restructuringprogrammes – often advised by interna-tional interests. Countries that are trans-forming successfully have enabling policies at many levels (IIEC). A sustain-able renewable energy market prosperswhen there is not only a renewable energy push from the supply side, butalso a demand pull from the energy con-sumers’ side. Sawin (2004) prepared anauthoritative paper on lessons learned.

Lessons learned

Before discussion details of policies, itshould be noted that there is a substan-tial body of knowledge that has beenaccumulated by the world leaders inrenewable energy. Developing nationscan profit from that experience by adjusting it to their own local contexts.

Long-term commitment, targetsand consistency

The renewable energy transition doesnot happen automatically once a policyhas been formulated. Experience hasshown that considerable, consistentinterventions of all types into energymarkets were needed before meaningfulrenewable energy results started to be inevidence.

There are several case studies in thedeveloped and developing world illustra-ting the harmful effect of on-again-off-again renewable energy policies. The US

Production Tax Credit has been allowedto expire several times, creating cyclesof boom and bust. This sent rippleeffects of worker lay-offs and loss ofinstitutional memory down the system.Potential investors tend to shun suchuncertainties (Gipe, 1998).

In India, conflicting and inconsistent statepolicies, aggravated by state electricityboard regulations, delayed renewablesdevelopment (CSE, 2002).

By way of contrast, Germany has learn-ed to develop more consistent policies.These were rewarded with remarkablemarket development, in spite of lessauspicious environmental and worldeconomy conditions. Consistent policiesfoster domestic industries and jobgrowth. This, in turn, contributes to poli-tical stability and to the national econo-my. Consistent policies are also cheaperto administer. Both savings eventuallyaccrue to stakeholders in the nationaleconomy.

With the globalization of the economy,investors have a large choice where tobe involved. They invariably buy wherethey perceive long-term stability andconsistent government policies.

For developing countries that are oftenperceived to be politically less than sta-ble, the important lesson is to counter-act this reputation by unequivocal, firmpolicy commitments.

Good laws and consistent enforce-ment

Good intentions are not good enough.The effectiveness of positive interven-tions depends on whether they aretaken seriously. If a developing nationdoes not have the political will and capa-city to implement them, then the bestpolicy models are of no value. Therefore,renewable energy policies should beeasy to understand and implement,otherwise they will harm more than help. While there is a certain degree of agree-ment on the desirability of sustainable

30

WP_2006.qxd 01.02.2006 15:42 Uhr Seite 30

energies, the individual means of movingtoward that goal are legion.

Develop reliable, predictable market conditions

Denmark, Germany, Japan, Spain, andBrazil have demonstrated that the secretto steady and meaningful renewableenergy price reductions lies in the crea-tion of transparent and steady markets.Under such conditions, small and medi-um enterprises can afford to enter thearena. These enterprises provide thecore of employment, and invest in signi-ficant research and development. Theyalso represent the drivers that lower thedomestic price-learning curve, whichmay differ from international markets.

Redress market failuresEnergy markets never have been fullyopen or competitive. “Liberalizing thenational energy market” as propagatedby some quarters, is often a way of sel-ling national assets to larger internationalplayers. Typically, the result has been a temporary drop in energy prices untilthe surplus generating capacity was eroded, while “sweating the assets”.Then system collapses or price shocksthreaten – not to mention the local workplaces lost – a clear sign of market fail-ure. At that late stage, government hasto intervene to control the damage –often in a crisis management mode.

Renewable energy supportive policiesare not only justified because of socialand environmental benefits, but also toredress other market distortions favour-ing fossils and nuclear in the past century.

Renewable Energy Feed-in (pricing)systems most successful

To date, feed-in policies have achievedthe greatest market penetrations ofrenewable energy, produced the mostcost-effective renewable energy, estab-lished local industries, built domesticmarkets, created work places, andattracted small and big private investorsas well as bankers.

By contrast, quota systems have beenmore volatile, tending to boom and bustmarkets where foreign industries, back-ed by steady policies in their homecountries, have an edge over the locals.Quota systems could not achievecheaper energy prices.

Feed-in systems most suitable fordeveloping countries

While quota systems demand intricatetendering procedures and are not im-mune to corruption, feed-in systems arecharacterized by simple, transparent andcost-effective procedures most suitablefor developing countries. These trans-parent systems effectively combat thereputation of political instability and fraudthat developing countries often have tocontend with.

Policy mechanisms

There are five categories of relevant policy mechanisms.

1. Regulations governing market/elec-tric grid access and quotas manda-ting capacity/generation

2. Financial interventions and incentives

3. Industry standards, planning permits and building regulations(codes)

4. Education and information dissemination

5. Public ownership and stakeholderinvolvement

These will now be considered in moredetail.

1. Regulations governing market/electric grid access and quotas mandating capacity/generation

Preferential access to the grid is asimportant as initial incentives to theintroduction of renewables. There aretwo general types of regulatory policiesfor grid access: One mandates the price,the other mandates quotas.

1.1 Feed-in tariffs or pricing systems According to the feed-in law, electri-city grid operators (or utilities) areobligated to accept electricity gener-ated by renewable energy, and payfixed minimum tariffs (prices). Pricesare related to the specific renewableenergy production costs that gener-ally are higher than current fossil fuelgenerated power.Prices are differentiated accordingto technology, size and location.This avoids that only the currentlycheapest technology (e.g. windenergy) is promoted. It also pre-vents that only certain areas (e.g.sunshine belts) are developed.Finally, it also encourages equitableaccess to all investors, ranging fromthe poor single parent householdwith PV on the roof, to the multimegawatt offshore wind farm devel-oper.Payments are guaranteed over typi-cally twenty years, declining annu-ally, and are adjusted bi-annually tonew entrants. The declining pricereflects the price-learning curve,keeping industry on their toes. Thisattracts long-term investors andalso encourages participants to joinearly – a decisive developmentalconsideration.Utilities also qualify for the grid-fee-der prices.There is a standard contract be-tween the grid-feeder and the griddistributors, who then simply distri-bute the extra cost over all nationalend users.

31

WP_2006.qxd 01.02.2006 15:42 Uhr Seite 31

Policies to Accelerate the Application of Renewable Energy Resources in Developing Countries

This pricing system is in use inmany countries including Denmark,Germany, Spain, Austria, Portugal,Greece, France, Ireland, SouthKorea, Brazil, Czech Republic and is in the process of being imple-mented in a modified form in China.By far the best renewable energymarket successes have been a-chieved where pricing systems arein place. Pricing systems did nottake off where the duration of con-tracts was too short, the tariffs weretoo unattractive, the site conditionswere too restrictive or the connect-ing charges were exorbitant.“Net metering” or “reverse metering”is a variant of the above, wherebyexcess renewable power is fed intothe grid at the going retail price,which is less than the renewableenergy feed-in prices. In some cases, producers receive paymentfor each kilowatt-hour, in othersthey are only paid up to the pointwhere their production equals con-sumption. Understandably, the net meteringsystem without other financial incen-tives, does not suffice for significantmarket penetration, and could beconsidered a transitional phase tothe full grid-feeder pricing system.Japan, Thailand, Canada and manyUS States use net metering. If the system peak demand coin-cides with the maximum productionof grid-connected PV systems, forexample, it would be more attractiveto base net metering tariffs on time-of-use.

1.2 Quotas - mandating capacity/ generationThis is the reverse of pricing sys-tems. Instead of government fixingthe price, it fixes the target andtrusts that the market will determinethe price. A government may man-date a minimum share (quota) ofcapacity or energy to come fromrenewables. This mandate can be

placed on producers, distributors orend consumers.Quotas can be applied to grid-con-nected and off-grid electricity, aswell as other renewable energieslike biofuels or solar thermal energy.Compared to the feed-in system,there is relatively less experiencewith electricity quotas, and none inthe developing world.There are two variants for electricitygeneration:obligation/certificate/RenewablePortfolio Standards (RPS) systemsand tendering systems. The RPSsystem is used in 13 US Stateswhereby generators are obligated to produce a target (quota) of renewable energy-based electricity,either leaving the choice of techno-logy to the producer or by prescrib-ing specific renewable energy tech-nology shares. Producers receivecredits “Green Certificates (CERTs)”,“Green Labels” or “Green EnergyCredits (RECs)” for the renewableenergy produced. Credits have tobe verified independently and maybe tradable or sellable to even outdeficits/surpluses of obligations. If aproducer does not meet his obliga-tion at the end of the period, he hasto pay a penalty. This leaves theoption to the producer of either pro-ducing the green power or of payingthe penalty, if this costs less. Hecan also choose to go out of busi-ness at the end of the period.Governments will only see whathappened at the end of the period.With the tendering system, govern-ment sets targets as well as a maxi-mum electricity price. Tenderers(bidders) submit offers for thesecontracts. The abandoned Non-Fossil Fuel Obligation (NFFO) of theUK was such a system. Govern-ments may set separate tenders forvarious renewable energy technolo-gies, if they do not wish to propa-gate an energy monoculture. Norm-ally, tenders are assigned from the

lowest one upwards until the quotais filled. Government subsidises thedifference between the market refer-ence and the winning tender. BothRPS and tender systems are ofshorter duration than the typicaltwenty-year pricing system. Quotasystems are in use in Japan, theUK, Italy and Australia.

1.3 Discussion of systemsSome of the discussions about thepricing and quota systems seem tobe more of an ideological nature,with capitalistic-minded protagonistspunting for the quota system in thebelief that the market is the final arbiter, while socio-environmentallyorientated ones tend towards thepricing (grid-feeder) system, in thebelief that the market fails to recog-nise the common good. Developingnations cannot always afford theluxury of such debates. The questionis rather what fits and what works inthe real world.

1.3.1 Renewable energy capacity andgenerationSeen from the government per-spective, it appears that prices aredetermined with pricing systems,while energy output is said to beuncertain. Conversely, quotas aredetermined with quota systemswhile prices are said to be uncer-tain. To governments of develo-ping nations, steady energy pricesare more important than preciselyachieving predetermined renew-able energy quotas at a predeter-mined date. In addition, policiescan be adjusted if governmentswish to adjust the pace of renew-able energy market transformationthrough a pricing system. With quota systems there is a riskthat the politically determined paceof renewable energy introductionmight be grossly unrelated to thetechno-economic state of thetechnology in a given country.

32

WP_2006.qxd 01.02.2006 15:42 Uhr Seite 32

Fact is, that countries with pricingsystems have regularly outperfor-med the national targets.Furthermore, governments are notthe only participants in the energygame. National and internationalinvestors, developers and entre-preneurs are needed in the devel-oped, and even more so in thedeveloping world. These peopleremain in business because theyunderstand how to assess risks.Pricing systems are less risky toentrepreneurs than quota systems.Since the developing world tendsto have poor risk ratings, it makessense to opt for a system that isalso favoured by developers andinvestors.Even in developed countries this is the case. While more than 45countries built wind turbines –some in very good wind regimes –during the 1990s, just three ofthese, with pricing systems (Ger-many, Denmark, Spain) accountedfor nearly two thirds of the newadditions during the decade. Afterthe introduction of the pricesystem in 1994, Spain raced tothe second position in world rank-ing by 2002.Interestingly, PV was not as suc-cessful in Spain, although the grid-feeder law was similar to Ger-many’s, but major barriers of utilitygrid-connections and an obstruc-tive law demanding PV owners toregister as generating businessesadded enough bureaucracy to sty-mie progress. Likewise, onerousbuilding approval procedures, tur-bine spacing rules and capacityceilings hampered development inFrance.

1.3.2 Innovation, domestic industriesand benefits accruedIt has repeatedly been argued thatprice systems discourage innova-tion and competitiveness. In realityit appears that, once companies

achieve a level of income, theystart investing in R&D to enhancetheir competitive edge and increa-se profits, thereby furthering radi-cal innovation. This happens at nocost to government – that is thetaxpayer.Under quota systems, the surplus– if any - tends to accrue to theend-user, with the producer nothaving sufficient margin to invest inthe uncertain future inherent in

the quota and tender systems. Even worse, overseas companiesthat have grown strong on pricingsystems at their home base, com-pete successfully in foreign coun-tries with quota systems.The transaction costs and stop-and-go nature of quota systemsdiscourage the establishment ofnational industries and limit thegrowth of jobs within the country.Of the persons working in windenergy worldwide, approximately75 % live in the EU, and about halfare in Germany.

1.3.3 Geographic and ownership equityUnder quota systems the cheap-est projects dominate, gravitatingto the geographic areas where thecheapest renewable energy sour-ces and renewable energy techno-logies are available. It also tendstowards the momentarily mostcost effective technology, leavingother potentially better future tech-nologies under-capitalised. The RPS also favour large, capital-intensive companies who canafford to manipulate the market inorder to eliminate smaller competi-tors. These are serious issues in devel-oping countries with weak andnascent industries.The price system does not havethese disadvantages. The Nether-lands started a voluntary quotasystem, but soon found that thelion’s share of contracts went to

foreign bidders, and stopped thesystem. The fact that pricing lawslower the market entry barriers tosmall producers, while at the sametime welcoming large investors, is of immense interest to developingcountries wishing to attract foreigninvestors while fostering the smal-ler domestic industries. Pricing laws also enhance the par-ticipation of local farmers andcommunities. This grows localownership and buy-in, while redu-cing the NIMBY syndrome.

1.3.4 Technology and diversity anddiversity of supplyBecause quota systems focus onthe cheapest technology, there islittle or no diversity of energy sup-ply. This implies that learning curves of other technologiesremain static. It also means that anation is exposed to vagaries ofthe climate. An over-reliance onwind energy may entail a seriousrisk if there happens to be a poorwind year. Similarly, an over-expo-sure to hydropower bears greatrisks, as has repeatedly been illu-strated in a number of cases withAfrican hydropower schemes. Thisexposure is increasing with theeffects of climate change in thedeveloping world. There is notenough experience with diversifiedquota systems to justify their useby developing nations.

1.3.5 Costs, prices and competitionIn theory one would expect a lackof competition and higher energyprices with the feed-in law system.However, in real life the economiesof scale and the better predictab-ility of the market led developers toinvest in R&D, enhancing competi-tiveness and cost reductions. Inaddition, the declining tariffs of thefeed-in law ensure lowering electri-city prices. Several studies confir-med this: a BET-study estimates

33

WP_2006.qxd 01.02.2006 15:42 Uhr Seite 33

Policies to Accelerate the Application of Renewable Energy Resources in Developing Countries

that the extra cost to Germanelectricity consumers attributableto the pricing law was only 0.11€cent/kWh in 2000, and is predict-ed to be only 0.19 €cent/kWh in a decade if the renewables sharedoubles (Lackmann, 2003). This amounts to € 8 annually perhousehold (EoG, 2003). A thirdstudy (Uh, 2003 & 2004) estimatesthe additional costs at 0.25 €cent/kWh in 2001. These are figu-res that disappear in the noise.Environment Daily (2003) analystsfind that feed-in renewables arecheaper than those produced byquota or green-certificate systems. Nitsch et al (2001/02) present evi-dence that national initiatives likethe feed-in law reduce prices morerapidly through the national learn-ing curves. This encourages localmanufacturing, competition andsecondary business. It also avoidsthe need for a plethora of subsi-dies, e.g. in agriculture. By spread-ing the costs over all national elec-tricity consumers, the light burdenis carried equitably.The rapid reductions of bid pricesascribed to the quota system(from US$ 0.189/kWh to US$0.043/kWh [Wiser et al, 2000])must, in part, be ascribed to thefeed-in policies in other countrieswere costs were driven down byR&D (Moore & Ihle, 1999) and inpart, because the NFFO condi-tions were improved, including longer project periods (Kleiburg,2003). Also, using the NFFO bidsas a gauge may be misleadingbecause many bids never material-ised, either because of local resis-tance, or bidders found projectsless attractive as more detailemerged.Quota systems tend to reduceparticipation to a limited number ofplayers, which can lead to cartelsand abuse of market power (Epey,2000). Quota-based systems arenot inherently cheaper, nor are

pricing systems inherently morecostly (Sawin, 2004:13). A morerecent comparison by CambridgeUniversity (Butler and Neuhoff,2004) in the wind energy sectorbetween the UK quota systemwith the German pricing system(RE feed-in law) - allowing for thebetter wind regime in the UK -conclusively found the German pri-ces to be lower.

1.3.6 Financial securityUnder the pricing system, thelong-term certainty resulting fromguaranteed prices (typically 20years) causes companies to investin technology R&D, to train staff,and maintain resources and servi-ces with a longer-term perspec-tive. This in turn makes it moreattractive to financiers. For exam-ple, in Germany banks lobbied theBundestag for a continuation ofthe pricing laws in 2000.By contrast, quota systems har-bour political and proceduraluncertainties. The stop-go renew-able energy politics of many coun-tries are disruptive to industry andunnerve potential investors. Pre-paring tenders adds an element ofrisk and cost that many potentialdevelopers cannot afford (Menant-eau et al, 2003). This is of greatconcern in developing countrieswhere the local industries areunderdeveloped and often cannotcompete with established globalplayers in a capital-intensive envi-ronment. The fact that governmentofficials in developing countries are often challenged by tenderprocedures, exposes local biddersand developers to additionaluncertainty.Certificates can fluctuate signifi-cantly with the volatility of the mar-ketplace, the stock market or thevicissitudes of weather conditions.Adding floor and ceiling prices tocertificates may help to stabilizeprices (Meyer, 2003). But then,

this means moving towards thepricing system. It also increasesthe complexity and cost of thesystem. In summary, it appears that pricingsystems provide greater securitythan quota systems, particularly indeveloping countries, becausethere is greater doubt about futuremarkets in renewable energy certi-ficates (Frost, 2003). Targets setunder the quota system are toodependent on political stability,adding to the perceived and realinvestor hazard in developingcountries. With pricing systems thefuture price and terms are known.

1.3.7 Ease of implementation

Pricing laws are easy to administerand enforce, and they are highlytransparent. For obvious reasons,this is absolutely crucial to develo-ping nations. In Germany, inde-pendent research institutes facili-tated the setting of tariffs for eachrenewable energy technology andtheir future decrements over time.Government only has to overseethe process.Under the quota system, therequirements are much moredemanding. First, realistic targethave to be established. This re-quires detailed market surveys, re-newable energy resource assess-ments, future energy demand andprice analyses and scenario plan-ning. Developing nations typicallydo not have the data, expertise,resources and time for these exer-cises. The risk of setting the quota targettoo low is that local economies ofscale will not be attained, meaningthat national industries never reachcritical mass. Jobs are lost and thecosts to the national economy areconsequential. If the target is too high, prices willbe pushed up dramatically whilelong-term investors will not neces-

34

WP_2006.qxd 01.02.2006 15:42 Uhr Seite 34

sarily be attracted because theyknow that the next round will bemuch lower. Setting quota targetsdemands knowledge of cost andlearning curves of various techno-logies for developing renewableenergy technologies – not a meanfeat (Barry & Jaccard, 2001).After this, governments, or theiragencies, must certify producers,issue certificates, monitor compli-ance, institute penalties and act incase of non-compliance, includingconcomitant litigation. This sup-ports the argument that quota/cer-tificate systems, by their nature,are more complex, difficult toadminister, and open to manipula-tion – and that such problemscould even be more pronouncedin developing countries (Frost,2003).On the other hand, the cost-equal-izing aspects of the grid-feeder lawhave also been attacked as beingneither transparent nor simple(Saghir, 2003). In summary, bidding processesare bureaucratic, cause high trans-action costs, and are time-con-suming for both developers andpublic authorities (Wagner, 2000;Goldstein et al, 1999). This makesthem inappropriate for developingnations.

1.3.8 FlexibilityPricing systems fix prices of newentrants into the market. Thismeans that new entrants have cer-tainty about the price over thecontract duration. Should agovernment find that the price wastoo high/low, it can easily adjustthe price to new entrants.With the quota system it is not aseasy to tamper with targets andtimetables because lead-times ofseveral years are required.

35

1.4 Summary

Pricing (feed-in) systems

PositiveMost successful at developing renew-able energy markets & domestic in-dustries with social, economic, envi-ronmental and security benefitsEncourages establishment of large – as well as small – and medium-scaleparticipantsLow transaction costsEase of entryLow cost to governmentEase of financingFlexible to changes in technology and marketAppropriate for developing countries

Negative Tariffs need adjustment to reflect learning curveNot applied for non-electrical renew-able energies

Quota system

PositiveFavours currently cheapest technologyonlyAims for definite renewable energymarket shareAttractive to established global marketplayersApplicable to all renewable energies

Negative High risk and low margins retardsinnovationFavours big global players, disadvant-ages small domestic participantsMisses opportunities for domestic jobcreation, equitable economic develop-ment in rural areas and local environ-mental improvementConcentrates on areas of best resour-ces, missing out on distributedaccess, and evoking NIMBYTends to stop-and-go cycles, dama-ging domestic developmentTarget sets upper limit for develop-mentComplex design, administration anddefault enforcementHigh transaction costsPoor flexibility in short-term changesUnsuitable for developing nationsHigher energy costs than feed-in energy

WP_2006.qxd 01.02.2006 15:42 Uhr Seite 35

Policies to Accelerate the Application of Renewable Energy Resources in Developing Countries

2 Financial incentives Financial incentives are one way inwhich governments can address theenergy market failures, thereby attempt-ing to level the playing field.These incentives may take the form oftax credits, rebates, investment or pro-duction support as implemented in mostdeveloped countries.

2.1 Tax relief2.1.1 Investment and production

tax credits (PTC)These can cover either the totalinstalled costs or the plant costsonly. They are designed to en-courage investment in renewableenergy technologies.Reductions of the income tax bur-den are only interesting to thosewith a relatively high income –hardly the dominant problem inthe developing world. In the USA (1980s) and India(1990s) investment tax breaks helped to jump-start the windindustry, but also lead to fraudu-lent practices and the use of sub-standard design. The tax cycle –and not the renewable energymarket demand – tends to in-fluence the flow of investments inrenewable energy. PTC only worked in those US States withadditional incentives (Sawin,2001). As a result of this exper-ience there has been a generalmove towards production incen-tives, which are output-related,rather than input-related. Output-related incentives also tend toensure better performance andmaintenance.The exception may be technologyinnovation where PTC seemsappropriate.

2.1.2 Other forms of tax reliefRelief of environmental taxes orcarbon taxes is a more impactrelated incentive, as is accelerateddepreciation. Import duties can bereduced on renewable energy

technologies until domestic indus-tries are sufficiently established,but have to be within WTO lines.

2.2 Rebates and paymentsJapan has provided rebates on theprice of PV capacity installed, com-bined with low interest loans andpublic education. These must betied to technology standards. California initiated production pay-ments per kWh output. Providedsuch payments are high enough andare guaranteed over a sufficientlylong period, these payments have asimilar effect as pricing systems(Sawin, 2003). Payments and rebates are prefer-able to tax breaks because theyaccrue to all income levels. Theyproduce a more even growth thanthe sudden income tax reduction/evasion driven end-of-tax cycle in-vestments. Rebates and paymentson their own do not suffice to stim-ulate the market (Haas, 2002).Rebates and payments should alsobe output related.

2.3 Low-interest loans and guarantiesIt has been argued that finance, rather than technology innovationdrives down the renewable energycost curve. In Germany long-termlow-interest bank loans are refi-nanced by the Federal Government(Twele, 2000).In the developing world many, manymore poor people could have ac-cess to renewable energies, if theyhad access to reasonable loans.Renewable energy loans are feasibleif the monthly loan repayments arecomparable to the current monthlyexpenditure on candles, paraffin(kerosene) and appliances. Withoutsuch finance only two to five percentof the population in the DominicanRepublic, India, Indonesia and SouthAfrica could have access to modernenergy, while it would be 50 % withsuitable loans (Eckart et al, 2003).This is a tenfold increase.

Such schemes tend to be countryand culture specific. Vendor drivenlay-byes or credits normally have noquality assurance or product qualityguaranties. Regular monthly cashinstalments cannot be expected inagricultural and fishing communitieswhere the income is seasonal.The fee-for-service system driven bygovernment appointed concession-aires in South Africa received amixed reaction from government.

2.4 Addressing subsidies and prices ofconventional energyDuring the mid 1990s, US$ 250 - 300billion of subsidies were paid eachyear to the fossil fuel and the nuclearindustries of the world (UNDP, 2000).Even current global subsidies forconventional energies remain manymagnitudes higher than those forrenewable energies (Geller, 2003).Surprisingly, about 80 to 90 percentof these global subsidies to the fossilfuel and nuclear industries are paidout by the developing world (Sawin,2004). Those countries that canleast afford it thus keep their energyprice unrealistically below the truecosts of production and delivery. Eight developing countries thataccount for one quarter of the world’s energy use, subsidize fossilsby US$ 257 billion, equalling 11 % of their combined economic output(OECD/IEA, 1999). Even small subsidies for petroleumproducts in developing countries cansend out the wrong signals anddirect nations down unsustainableenergy paths, eventually trapping thepoor. Subsidies, if at all granted,should have sunset clauses andshould enable the recipients to atransition to renewable energies.The developing world spends US$20 billions each year on high-riskparaffin lamps, candles and batter-ies. Of the diesel transported toremote regions, two thirds to threequarters is spent on transport(Perlin, 1999). US$ 50 to 60 billion

36

WP_2006.qxd 01.02.2006 15:42 Uhr Seite 36

are projected to be spent on subsi-dised power projects in the develop-ing world until 2030 (UNEP, 2000).Even if all subsidies on fossils wereto be stopped forthwith, the inertiaof the government subsidies in exist-ing infrastructure is still biasedtowards nuclear and fossils. Mostly it would be better policy tochannel resources towards energyefficiency, energy conservation and

renewable energies. Instead of tryingto find new money streams to subsi-dise established sunset technolo-gies, the existing streams should bereallocated to renewables.Governments in developing coun-tries are large energy consumersthrough their energy inefficient build-ings, vehicles, transport systems,military and infrastructure. It followsthat they could lead by example.

3. Industry standards, planning per-mits and building codes

Developing nations have reasons fortheir fear of becoming dumping sites ofinferior energy technologies. The essen-tial standards for promoting renewableenergies are technology standards andcertification, siting and permit standards,grid connection standards, and buildingregulations (codes).

Industrial standards foster fair competi-tion and build investor confidence. Newtechnologies like PV and wind turbinesdemand new standards of performance,durability, safety and compatibility withexisting systems. They also facilitateexport and import, which necessitateswidespread agreement like the EU SolarKeymark for solar water heaters or theISO standards. Some cultures are lesskeen on standardisation, arguing that itstifles innovation by being too prescrip-tive. Hence the modern Nordic trend istowards the integration of performanceand deemed-to-satisfy standards.

Siting standards and environmentalimpact assessments can delay the pro-cess of establishing renewable energytechnologies. For instance, all kinds ofobjections have been lodged againstwind turbines, some with ulterior moti-ves, and some with genuine concerns.In one country, the Government’s ownWind Energy Demonstration Project wasdelayed no less than four years, costingabout € 3 M. To avoid repetitive and fruitless efforts, of both protagonists andopponents, standard procedures havebeen developed. Both Denmark andGermany have required municipalities(local authorities) to identify renewableenergy sites – e.g. for wind turbines – inadvance, and have placed restrictionson their proximity to buildings, lakes andother sensitive areas.

These proactive policies have been amajor positive factor in reducing uncer-tainty and fruitless expenditure of timeand money. The opposite happened in

37

Innovative Finance mechanisms and Partnerships for Energy Provision

UNEP’s African Rural Energy Enterprise Development (AREED) initiative, funded by the UnitedNations Foundation, seeks to develop sustainable enterprises that use clean, efficient andrenewable energy technologies to meet the energy requirements of the poor. AREED providesenterprise development services to entrepreneurs and early-stage funding, in the form of debtand equity, to help build successful businesses that supply clean energy technologies and ser-vices to rural African customers.

The Renewable Energy and Energy Efficiency Fund (REEF), which became operational in March2002, was launched by the World Bank together with support from the Global EnvironmentalFacility and several other private and public sector groups. It is the first global private equityfund devoted exclusively to investments in emerging market renewable energy and energy effi-cient projects.

GEF funding for the Grameen Shakti organisation in 1998 enabled it to offer improved creditterms, increasing the payment period for solar home systems from one to three years. This hada significant effect on demand between 1997 and 1998. Grameen Shakti sold 1 500 systemsin 2000, it installed 2 000 to 2 500 systems. Grameen Shakti believes that after three or fouryears of profitable growth, it will be able to obtain financing from commercial banks. Thus, useof GEF financing to support a high risk project, which is unable to attract commercial financingon its own, can result in significant growth and provide the means by which organisations canobtain commercial financing.

The Public-Private Advisory Infrastructure Facility (PPIAF), a multi-donor technical assistancefacility aims at helping developing countries to improve the quality of their infrastructure throughthe use of private sector resources. This has now been operational for three years and hasattracted support from twelve donors, including the UK Department for International Develop-ment (DFID). Current demand exceeds resources, and DFID is seeking to build on this success.

DFID launched the Emerging Africa Infrastructure Fund (EAIF) in January 2002, with and initialcapital base of US$ 300 million, in order to provide long-term debt finance for infrastructure insub-Saharan Africa. The feasibility study for the facility showed an immediate need for US$ 11billion of investment. There is obviously scope to increase the capital base of EAIF and to es-tablish a similar mechanism to cover urgent needs in the poorer countries of Asia (and possiblyelsewhere).(DFID, 2002 in Christensen, 2004)

WP_2006.qxd 01.02.2006 15:42 Uhr Seite 37

Policies to Accelerate the Application of Renewable Energy Resources in Developing Countries

the UK. A Code of Practice developedby the Australian Hydro Association mayalso help.

Grid-connection standards are neededfor safety and technical reasons, butalso because both the consumer andrenewable energy producer loads canvary, if produced by intermittent sour-ces. Favourable renewable energy sitesmay not necessarily be located at thepoint of consumption. In the past, someutilities tried to block renewables byimposing onerous connection or wheel-ing conditions. Some had creative linecharges for access, even if it is notused. Governments, acting in the nation-al and global interest must establishstandards under which renewable ener-gy developers pay only the direct gridconnection costs, not for the line upgra-des necessitated by the additional capa-city. Feeders to the grid should also onlypay for the transmission service theyactually use. Finally, renewable energybased electricity (except biofuel-based,ocean current, geothermal hot dry rocks(HDR) and – potentially – solar up-windchimneys) should always have prioritygrid-access because it cannot be defer-red. Other dispatchable sources likeopen cycle gas turbines, hydro and –possibly – compressed air as well asgyroscopic dynamic storage can easilybe ramped down as required. Conven-tional coal fired power stations have poorload following characteristics. Good gridinterconnectedness and better demandand supply prediction are required.

Building regulations (codes) should pro-mote energy efficiency and the use ofrenewables, calculated over the cradle-to-grave life cycle of all buildings. Energy intensive materials/componentsshould be used with discrimination, andshould be recycled as far as practical.The use of local and natural low energymaterials leads to buildings with lowerembodied energy, and should be en-couraged by policy, research, trainingand regulation.

In the warmer developing countries,domestic water heating and food pre-paration are predominant in housing,while space and water heating take thefirst position in colder regions. It is acommon fallacy to assume that all lowlatitude areas are hot. In fact, averagetemperatures conceal the reality thatinland deserts are bitterly cold at night,and high mountains within the latitudes30°N and 30°S even used to carrysnow.

Barcelona, Spain instituted an ordinancerequiring that all new or to be alteredbuildings satisfy 60 % of their hot waterconsumption by SWH. Alternatively, buildings must be wired for PV instal-lations.

The effects of this law are dramatic andcarry no costs to the fiscus.Energy efficient appliance rating is a wayof achieving efficiency, and enhancingenergy awareness. In addition, this sim-plifies the introduction of renewableenergies. Buildings represent invest-ments with a longer lifetime than mostpower stations, and can be distributedenergy generators in their own rightinstead of being consumers. For thispurpose, it is necessary to have solaraccess regulations.

The use of daylighting and energy effi-cient compact fluorescent lights (CFL)renders the use of PV significantly lesscostly.

Governments often are embarrassed byinformal settlements, which are seen tobe hotbeds of crime as well as a visibleevidence of failed social programmes.However, bulldozing such settlementsdoes not remove the reason for theirgrowth, which lies in the necessity of thelow-income population to be close towork opportunities or surmised workopportunities. This is denied to them bythe dogmatic and out-moded town plan-ning that forbids mixed land-use, pontifi-cating that you must not live near yourwork.

Integrated resource planning optimisesthe long-term use of all resources, bethey natural (water, earth, energy,waste), social (expertise, patents, com-mitment) or economic (money, credit).Legislation aimed at integrated resourceplanning in urban settlements and archi-tecture is a common good to be consi-dered at the local, municipal, provincial,national and international levels. Energy is used in buildings to achievecertain energy service levels (illumination,comfort). These target levels should beclimate and season adjusted, realistic forthe given task, and not solely industry-driven.

In artificially conditioned buildings, theuse of economy cycles and variablespeed drives should be mandatory.National building regulations should

38

Egypt:

The New and Renewable Energy Agency (NREA) was established in 1998 as a governmentR & D body working under the Ministry of Electricity. The primary objectives in establishingNREA were:

to contribute to Egypt’s need for increasing the share of renewables in the power supply mixto conduct various research projects on issues pertaining to renewable energy technologiesto act as a renewable energy focal point and counterpart agency for all international organi-zations interested in the renewables sector in Egyptto advise the Ministry of Electricity on renewable energy technologies and their applicationsin the countryto collaborate with other government and non-government institutions in various researchprojects.

(Christensen, 2004)

WP_2006.qxd 01.02.2006 15:42 Uhr Seite 38

encourage performance-related designsaimed at peak demand, and CO2 reduc-tion. This will enhance innovation in insu-lation materials (vacuum insulation hasten times the thermal resistance of conventional insulation), better glazing,phase change materials, thermal storageand day-lighting, as well as energy effi-cient artificial lighting and appliances. The use of obligatory energy efficiencylabels of buildings creates energy aware-ness, reduces fruitless consumption andcreates jobs.

Solar rights (solar access) should belegislated.

The use of energy efficient transport likerail, efficient vehicles, speed limits andmulti-use planning must be regulated.

4. Education and information dissemi-nation

The mere availability of renewable ener-gy resources, incentives, technology,capital, expertise and government policydoes not suffice if there is insufficientend-user awareness. Germany has lesssunshine than France, and less windresource than the UK. But its applicationof renewable energies is so much morebecause of the general awareness of the German population (Hua, 2002).

Initial failures have created negative perceptions in some countries. Thesecan be overcome by concerted infor-mation efforts by governments, NGOsand industry.

Educational institutions have a task ofenlightening the new generation aboutenergy’s role in socio-economic devel-opment and the environment. For ex-ample the Indian Solar Finance CapacityBuilding Initiative enlightens Indian bankofficials about solar technologies, encou-raging investment. Likewise, communi-cation and information initiatives are inplace.

The International Solar Energy Societycontributes to knowledge disseminationthrough conferences, workshops, publi-cations, and summer schools. It alsomaintains international electronic net-works for the dissemination of informa-tion. Finally, it recognises and awardsexceptional achievers in furthering thescience and application of renewableenergies.

5. Public ownership, cooperativesand stakeholders

Many developing nations have a strongtradition of communal public ownershipand cooperative initiatives. This does not yet seem to be the general trendwith renewable energy generation in the developing world.

In Denmark and Germany cooperativesplay an important role as owners anddevelopers of renewable energy. Thereis even a woman cooperative called“Windfang”. Local farmers pool resour-ces and obtain an additional harvestfrom renewable energy. This greatlyenhances local buy-in and support.

At least 340 000 German individualsinvested about € 12 million in renewableenergy projects (PREDAC, 2002/03).Middelgrunden is co-financed by a utilityand thousands of Danes.

Munich’s large roof-mounted PV plantwas financed by enthusiastic private citizens (Maycock, 2003).

39

India

The rising price of oil led to the revival of interest in renewable energy in India. In 1981, theGovernment of India established a Commission for Additional Sources of Energy (CASE) inthe Department of Science and Technology. In 1982, a separate Department of Non-Conventional Energy Sources (DNES) was created in the Ministry of Energy. Ten years later,in 1992 a separate Ministry was founded, the only country in the world to have an exclusiveMinistry for Non-Conventional Energy sources (MNES). The primary role of MNES in theRenewable Energy sector is to

promote renewable energy technologiescreate an environment conducive to promoting renewable energy technologiescreate an environment conducive for commercialisation of RETsrenewable energy resource assessmentresearch and developmentdemonstrationextension

(Christensen, 2004)

Gender Approach Leads to Greater Project Efficiency: Case Study PV Solar Homes inGuatemala

Fundación Solar, while operating a PV project in Guatemala, found that mostly men attendedthe training sessions on equipment maintenance, and those women who did attend, merelystood by and watched while their husbands got involved in hands-on activities such as changing the batteries. As a consequence, when the PV system needed maintenance, suchas topping up the batteries, and the men were not at home, the women did not have theskills or confidence to take the appropriate action, which had a negative influence on the long-term durability of the system. Fundación Solar saw much better overall system care(and hence project performance) when they took specific action to train the women in systemmaintenance. This was achieved at home while the men of the household were out. By takingthis approach to training, the NGO created an environment in which the women were notafraid to make mistakes or to ask questions.(Wides, 1998 in Clancy, 2004)

WP_2006.qxd 01.02.2006 15:42 Uhr Seite 39

Local participation in solar mini-grid pro-jects in Nepal and Indian islands haveplayed a decisive role in avoiding theft(BBC News, 2000).

Conclusions and recommendations

Developing nations wish to occupy theirrightful place in the concert of nations.Renewable energies will play an impor-tant role in their transition path to sustai-nable development.To fulfil this role, apposite policies areindicated. To date, pricing systems(feed-in laws) have accounted for themost rapid and sustained market trans-formations, while creating work placesand driving down the cost through tech-nology advancement, economies ofscale and cost-effective finance. Thishas triggered private investments, there-by lightening the load on government.Quota systems have not fared as well,having a preponderance to stop-and-gomarkets. The two systems are not com-patible.Complementary combinations of well-matched policies are required. Reducingreal and perceived risks is a crucialcomponent.Not all stereotypes of the developingnations are necessarily correct. Forinstance, it cannot be assumed that alldeveloping nations inherently strivetowards a current western value system.Nor can it be assumed that the provisionof electricity automatically leads to de-velopment. Furthermore, there is wide-spread confusion about energy andelectricity, which are assumed to besynonyms. This confusion has beendeepened by expectations created bypopulist political over-promises like theslogan “electricity for all”. In a developing country with a large,highly dispersed and poor rural popula-tion the political slogan “electricity for all”is understood to mean “grid electricityfor all”. However, the realities of the costof grid extension, the low productiveconsumption and low-income levelstend to render this a promise that can-not be fulfilled. Creating expectationsthat cannot be fulfilled is a dangerousgame. Rural communities expecting“real grid power” tend to reject solarhome systems as an “inferior” option.They do not see these being used by

40

Policies to Accelerate the Application of Renewable Energy Resources in Developing Countries

Stakeholders in energy for sustainable development

STAKEHOLDER1 Legislative

authorities/elected officials

2. Governmentmacroeconomicand develop-ment planners

3. Governmentenergy authorityor ministry

4. Energy regula-tory bodies

5. Market coordi-nation agencies

6. Non-energygovernmentalauthorities/ministries

7. Energy supplyindustry

8. Entrepreneursand productiveindustries

9. Energy equip-ment and end-use equipmentmanufactures

10. Credit in-stitutions

11. Civil society/non-govern-mental organi-sations

12. Energy spe-cialists andconsultants

13. Academia andresearch or-ganisations

14. Media

Public buy-in engenders public pride andavoids obstruction or vandalism. It alsosupports government renewable energypolicies when these periodically comeunder pressure from vested less environ-mentally friendly energy lobbies.

FUNCTION/ACTIVITIESSet national political priorities; social, economic, and environmentalgoals; legal framework conditions.

Define development goals and macro policy; general economic policies; crosscutting issues; subsidies and trade policy; sustainabledevelopment goals, and frameworks.

Set sectoral goals; technology priorities; policymaking and standard-setting functions; legal and regulatory framework; incentive systems;federal, state, and local level jurisdiction. Have monitoring and oversight functions; implement the regulatoryframework; administer fees and incentives.Dispatch entities; have operational coordination functions, interfacewith industry investors; information brokers.Sector policies; crosscutting issues; interrelation with energy policies; public sector energy consumers; require energy inputs for social services provision.

Private companies and public utilities; manage energy supply, electricity generation; fuels management and transport; financesome R&D.Business development; economic value added; employment generation; private sector energy consumers.

Supply equipment for the energy industry and other industries, in-cluding vehicles and appliances; impact energy end-use efficiency;adapt/disseminate technology; finance some R&D.

Financing options for large- and small-scale energy generation; capital provision for energy using enterprises; financing options for household energy consumers. Consumer participation and awareness; oversight and monitoring;environmental and social advocacy; equity considerations.

Strategic advice, problem definition and analysis; systems develop-ment; specialist services delivery; options analysis; information shar-ing.R&D, knowledge generation, and sharing; formal and informal educa-tion; technical training; technology adaptation, application, and inno-vation.Awareness raising, advocacy; information sharing; journalistic inqui-ry, watchdog functions; monitoring, public transparency.(Bouille & McDade, 2002 in Christensen, 2004)

WP_2006.qxd 01.02.2006 15:43 Uhr Seite 40

41

Rural Electrification

The two largest outside supporters of ruralelectrification (REL) programmes have beenthe World Bank (WB) and USAID. During the1970s and 1980s these two agencies lent orgranted some US$ 1.9 billion for 40 REL projects in twenty countries, accounting forsome 60 percent of the actual expendituresof US$ 11.5 billion for these projects. Be-cause of lingering doubts about their econo-mic soundness, the two agencies undertooka thorough review of these projects in theearly 1990s. While the rationale for this eval-uation and the detailed findings have beenpublished elsewhere, a number of useful les-sons were drawn by this study:Unfortunately, as it turned out, in the majorityof cases the various projections of beneficialresults were far too optimistic and, in addi-tion, often based on faulty methodologies. Asa result, even the far more modest net bene-fits identified after the event, compared withpredicted expectations, were subject todoubt and, in several important cases, strongly negative.

Taking into account the experiences of thepast, as well as those of the present, such asthe massive multi-million households SouthAfrican Electrification Programme, it is clearthat electrification by network expansion intolow-density, rural areas faces severe costconstraints and cannot be supported econo-mically. This is so because consumption bythese users is limited to the high-value spec-trum of electricity uses, which, by themselves,cannot justify the high cost of network con-nections. As a five-year longitudinal study ofthe Eskom electrification programme hasshown, “The most frequently bought applian-ce is a television set and entertainment equip-ment, such as hi-fi, radio and tape recorder,whereas the switch to electrical cookingappliances is very slow.” These uses of elec-tricity, however, can be comfortably accom-modated by lower cost, freestanding SolarHome Systems (SHS). They do not requirenetwork electricity supplies.

These findings are of fundamental impor-tance for the planning of electrificationstrategies for low income, low-density (or rural) regions of the world. Rather thanproceeding with costly, and, in mostcases, non-economic strategies of net-work-by-wire expansions, individual household installations, focussing on hose

families who financially are able and inter-ested in obtaining the benefits of electrifi-cation, appear to be much more soundand far more sustainable.

Given this conclusion, four issues must bestressed:

Supplies should be prioritised* to thosefamilies and households who both appreci-ate the value of the services provided andwho are willing to pay for them from theirown, discretionary income. This suggestsselectivity – rather than full area coverage.To identify those selective potential users,some form of “sacrifice” is needed as anexpression of interest on their part, i.e. asignificant down payment on or prior toinstallation, to indicate their future willing-ness to pay for the services provided. Thisprinciple holds regardless of the questionwhether or not the installation is partiallysubsidised by the government, donor aidagencies or development foundations, orby other electricity users (through utilitycross subsidies, for example).Where credit sales of equipment (or leasingarrangements) are part of the off-grid elec-trification programme, means must befound to protect the supplier from non-payment. The recent French and SouthAfrican technological development of timedependent metering equipment and micro-chip anti-theft devices hopefully will help toachieve this objective.Needs for heat energy (e.g. cooling and/orrefrigeration), have to be met from othersources. The systematic development ofLPG or kerosene distribution networks(including credit sales of respective appli-ances), preferably in conjunction with asystematic PV programme, should be ableto satisfy these needs.

Once the above development principles aretaken into account, a number of specific policy approaches and directions becomeapparent.

Limit system expansion by wire to those(largely urbanised or urbanising areas)where current income and expected in-come growth of the population promise tocover at a minimum the operating costs ofthe system, with strong indication that within the life expectancy of the installedreticulation and house connection equip-ment average demand and resulting

revenue will grow sufficiently to cover theinitial capital expenses as well.For all other regions, develop off-grid utilitysystems that are based on the use of PVequipment (both local battery loading sta-tions and freestanding home PV units havedemonstrated favourable economics inselected applications). Where warrantedand where concentrated local demand ishigh enough, small grid systems based onPV, wind, biomass, small hydro or hybridunits may offer cost-effective solutions. To increase market penetration, creditsystems should be developed (includingextended leasing arrangements), that en-able households to participate in the pro-gramme. These credit systems (minuspublic subsidy contribution, if any) must bebased on a rigorous assessment of the wil-lingness and ability to pay by each of theprospective users. This requires pre-electri-fication socio-economic surveys. It alsomeans that the complete area coverage ofall households should be rejected as anobjective of off-grid electrification program-mes. If this selectivity principle is not adhered to, the chance of having manynon-paying customers is very high, in-creasing average system costs to unsus-tainable levels. This risk of non-payment isindependent of any theft protection devicesor time related metering equipment thatmay be incorporated into the credit-finan-ced equipment.A balance must be found, by experimenta-tion, of the required size of the initial downpayment, the type and timing of periodicpayment (which may be income related –e.g. after harvesting in agricultural areas,but not monthly) and the credit duration.The objective should be to capture in agiven region as many households as possi-ble that are willing and able to pay, in orderto reduce average after-service and main-tenance costs. Where possible, PV developments shouldbe combined with household cookingequipment programmes (LPG or kerosene,mainly) to provide cooking heat under thesame credit rules that apply to the PVequipment. This would provide a secondaryincome source for the after-service, main-tenance and supply infrastructure that isessential for the survival of the programme.

(Schramm in Holm & Berger, 1998)

*This sensible recommendation may not be palatable to those populist politicians who like to go electio-neering with “electricity for all”, while fully knowing that this is a false promise.

WP_2006.qxd 01.02.2006 15:43 Uhr Seite 41

technology leapfrogging. Leapfrogginghas been successfully demonstrated bymodern cell-phone technology that doesnot require the huge investment of theold-fashioned landlines.Once the potential resources and needsare known, and given sufficient stake-holder awareness and political support,the priority policy recommendations fordeveloping nations are:

1. Establish transparent, consistentlong-term renewable energy tar-gets and regulatory framework,preferably a pricing system (grid-fee-der law), creating an investor friendlyenvironment. This could start with netmetering. Internalise externalities inthe pricing system. Set targets, notceilings.

1.1 The Kyoto Protocol opportunityAlthough the Kyoto Protocol can be criticised in many ways, it offers anopportunity to developing nations.

Accede to (sign) the Kyoto ProtocolEstablish a Designated NationalAuthority with dedicated, well-trainedstaff and powerful linkages to theministries of energy and environmentEstablish the Carbon EmissionBaseline and disseminate to stake-holdersEstablish the National DevelopmentCriteria, avoiding political opportun-ism, and disseminate to stakeholdersEncourage programmes rather thanprojectsReduce the very high transactioncosts by facilitating and supportingnational NGOs and consultancies, andby enhancing competitionCarefully consider “Additionalities”,and monitor it closely.Publicise results widely.The window of opportunity of majorCO2 emitters like China, India andSouth Africa may be over by 2012.Use it now.

1.2 Renewable Energy and EnergyEfficiency White Paper

A national White Paper demonstratesthe intentions of government. It is animportant document to other ministriesas well as to international and nationalplayers.

Provide Motivation for White Papere.g.:

a) Sustainable social development– Poverty reduction through

domestic job creation– Gender issues– Health issues

b) Sustainable economic develop-ments– Diversity of energy supply– Reduced price volatility of

imported energy– Security of domestic supply– Growth of domestic industry,

export and expertise– International competitiveness– Reduced risks of armed conflict

and terrorismc) Sustainable environmental

development– Protection of tourism assets– Improvement of health (dis-

eases, air pollution)– Protection of water and agricul-

tural resources – Contribution to global climate

stabilisation

Set renewable energy targets, notceilings e.g.

Set targets and dates for improvingnational energy productivity (reducingnational energy intensity). Set targets and dates for orderlyphase-in of revenue neutral environ-mental tax.Set targets and dates for fossil andnuclear phase-out – if any.

42

Policies to Accelerate the Application of Renewable Energy Resources in Developing Countries

the well-to-do population sector. SHSscannot provide the heating energy serv-ices. If grid extension suddenly appearsin areas that had recently been providedwith solar home systems after lengthydeliberations, the credibility of the autho-rities and their policies become question-able.

In developing countries the priority ofelectrification should be for productiveuses (industry, business), health (clinics,hospitals), education (schools, training),with social and amusement and resident-ial provisionally last.

People of the developed and developingworld require energy services like heat-ing, cooling, lighting, and/or movingobjects. The energy service of heatingmay be provided by the sun, a fire or el-ectric heating. Of these, electricity is themost highly ordered and most expensiveform. Therefore it makes better sense touse other clean energy forms like solarand clean biofuels for energy services ofheating buildings, water and food.

Electricity by itself does not provide newincome sources. As has been shownrepeatedly, electricity follows rather thanleads economic development (Schramm,1998).

While life without easy access to elec-tricity seems unthinkable today, weacknowledge that current civilisation isbut a short period in the course of thehuman race of about a million years. Thegreat past achievements of China, theAmericas and the Mediterranean, includ-ing North Africa, cannot be ascribed tothe use of electricity.

That much is certain: the developingworld cannot follow the energy path ofthe USA, even if it wanted to. There aresimply not enough fossil resources, norcan the world absorb the environmentalimpact. This insight, combined with thefact that the energy infrastructure indeveloping countries is presently under-developed, gave rise to the concept of

Minimum Minimum renewable final energy

year energy target per capita 2010 10 % 100 kWh/a2020 20 % 500 kWh/a2050 50 % 700 kWh/a

WP_2006.qxd 01.02.2006 15:43 Uhr Seite 42

Establish pricing policy (feed-in law)for grid-connected renewable energy,including future price reductions.Establish energy (not investment) taxcredits with future reductions.Establish renewable energy produc-tion tax rebates or refunds linked totechnology standards.Facilitate/provide long-term low inter-rest loans with government refinanceto renewable energy technologies,tied to standards. Equalise the subsidy playing field forgrid-connected and non-connectedfossil and renewable energies, by redi-recting funds to renewable energy.Set technology standards, alignedwith EU and ISO renewable energystandards.Mandate municipalities/local authori-ties to identify renewable energy sitesand to execute environmental impactscoping studies.Establish energy efficiency and renew-able energy building regulations(codes) adapted to local climates.Streamline consultants’ professionalfees based on CO2 reductions, not onmechanical plant expenditureEstablish policy for all levels of govern-ment to lead by example in govern-ment procurement programmes,based on life cycle energy use. Commit to a renewable energy andenergy efficiency strategy, prioritisinglocal conditions. Do not attempt tointroduce renewable energy technolo-gies in remote rural areas before theyhave been thoroughly tested, promot-ed, accepted and established in grid-connected areas.

1.3 Publicise and workshop the draftWhite Paper widely, obtaining buy-inof the national stakeholders and drawing the attention of internationaldonors, investors and developers

43

Before Rural grid Electrification (REL) this was expected to:

Act as catalyst for agricultural, industrial and commercial development of rural areas, includ-ing electricity for irrigation pumping;Replace more costly and qualitatively inferior energy sources, such as kerosene for lighting,diesel for engines, irrigation pumps and generators;Improve the standard of living of the rural poor;Stem out-migration from rural to urban areas; andRedress urban/rural biases.

(Schramm, 1998)

After REL, it appeared that:

Electrification by itself had not been a catalyst to economic development. In fact, what couldbe deduced from a comparison of the more with the less successful REL schemes is that isthat electrification should follow, rather than attempt to lead, regional economic develop-ment.The impact of REL on agricultural growth was often overestimated as it was, for example, inThailand, Indonesia, India and Bolivia.There was little evidence that electricity by itself resulted in new agro-industries, commercialor small-scale industrial activities.The provision of network electricity was by far the most costly form of energy supply for low-density, low-demand rural areas, compared with other options. If its real costs would havebeen charged to users, it would have been unaffordable to most of them, unless they al-ready had a reasonable and growing income base of their own.REL in general did not contribute to the alleviation of poverty. It benefited mainly the higherincome groups.Electricity did replace more costly energy sources in some cases: however, this was only sobecause in almost all cases electricity was heavily subsidised, while the alternatives generallywere not. One result of this subsidisation was that observed demand growth was more rapidthan it would have been otherwise, making REL projects in physical terms (i.e. number ofconnections) appear to be more successful than they would have been without subsidies.The large subsidies for REL imposed a heavy financial burden on the utilities (or their othercustomers through cross subsidies) even in those cases in which projects were justified eco-nomically. REL tariffs rarely covered more than 15-30 percent of estimated costs of supply.Real costs of electricity supplied through REL projects were very high, averaging 20 UScents/kWh; in addition, in most cases these costs were still underestimated because the lowREL load factors, large distribution losses and the additional burden imposed during peakperiods which, as, for example, in supply-constrained systems such as in India and Pakistan,contributed heavily to power rationing and outages. Such outage costs to other users wereclose to US$ 1/kWh or more in many cases.REL improved the perceived quality of life for those able to afford it.There was no impact of REL on stemming migration from rural to urban areas; indeed, theopposite could well be true, largely because the increased access to information pointed togreater opportunities elsewhere.REL did not contribute to the conservation of fuelwood because electricity was rarely usedfor cooking or heating; where it was (by a few higher income households) its use would pro-bably have been substantially reduced if tariffs had been adjusted to cover the actual costsof electricity supply.

From that it was concluded that a disaggregation of rural energy into their sub-componentsmay well have shown that a mixture of other supply options (including a judicious, smallamount of electricity from decentralised sources for highly specific and limited uses) might havebeen far more cost effective than network REL in regions with low population and at as lowstage of economic development.(Schramm, 1998)

WP_2006.qxd 01.02.2006 15:43 Uhr Seite 43

Policies to Accelerate the Application of Renewable Energy Resources in Developing Countries

In rural areas, focus on energy serv-ices for income generation, healthimprovement and education. Extendmini-grids from workshops, clinics andschools. These are serviced by dedi-cated resident staff.Initially use the selective ownershipmodel for houses, assisted by subsi-dies equal to grid-connected ones,plus financial incentives listed under“policy priorities”.Once the ownership market has beensaturated, consider “fee for service”model for energy services.Measure and GIS maps:Identify potential consumers Assess RE potential– Tidal/wind map– Hydro map– Solar map– Geo thermal map– Gas map

a) landfillb) biofuelsc) natural biogas

– biofuels, woodlands, agriculture,peat and waste

Appoint independent evaluators, andfeedback regularly at agreed intervalsto policy makers. Admit mistakes andrecognise successes. Promote local production.

Develop a Long-term NationalIntegrated Energy Plan within theNational Integrated Resource Plan,taking care not to confuse energyservice requirements with energy carriers or energy technologies.Prioritise energy awareness, energysaving measures and energy efficien-cy. They are more cost effective thanproviding new generation capacity.Implement energy labelling for energyconsuming systems and buildings byusing internationally established labelsand proven campaign methods.Integrate grid-connected electrificationwith rural energisation strategies,rapidly introducing renewable energiesthrough the grid-feeder law. This esta-blishes renewables in a market sectorwhere the public can afford it and ismore open to innovation. By associa-tion, renewable energy technologiesbecome status symbols. Grid-connect-ed installations require little back up,and are within easy reach of installersfor repairs and maintenance.Capacity, standards and reliability ofindustry are built faster and moresustainably.Identify areas of grid extension andpublicise, using GIS maps.As soon as sufficiently confident capa-city has been established throughgrid-connected renewables, initiatecomprehensive rural energisation (notonly SHS) in concentrated solar enter-prise zones.Set and insist on proper technologystandards and codes of practice ofbuildings, appliances and equipment.Integrate education and research.Implement financial incentives.Initiate joint ventures.

2. Institute supportive finance mecha-nisms through production paymentsrather than tax credits on invest-ments. Institute long-term, low inter-est loans rather than investment taxcredits. Fix rebates to output units,not to cost percentages. All subsidiesshould be tied to standards and gra-dual reduction/phase-outs. Introducerevenue neutral environmental taxesaccording to a long-term plan, andadhere to it.

3. Establish, maintain and enforcestandards for technology, siting, buildings and grid-connection. Leadby example.

4. Support Research, Developmentand Demonstration of renewablesas well as education and dissemina-tion. Acknowledge failures and learnfrom them. Create centres of excel-lence.

5. Encourage stakeholder/publicownership, participation and pridein the process and products.

Implementation strategy

The transition from policy to strategy isnot always clear-cut. Many actions canbe developed in parallel:

Launch targeted awareness cam-paigns aimed at decision makers.Conduct baseline study to establishenergy usage, and benchmark withcomparable best practiceInvolve grass-roots stakeholders andpotential renewable energy cooperat-ives. Their buy-in is crucial.Include regional stakeholders of neigh-bouring countries

44

WP_2006.qxd 01.02.2006 15:43 Uhr Seite 44

The Need for Research, Development and Demonstration

Research, Development and Demon-stration (RD&D) are the foundation forprogress and change toward sustainableenergy systems that eradicate energypoverty in the developing countries, pro-tect the global life-supporting systemsand reduce the risk of geopolitical con-flicts over fossil fuel resources.

Countries with the most visionary RD&Dinitiative will be the future technology lea-ders. Motivated by the world oil shock of1973, the European Union saw energyas a high priority and dedicated the larg-est investment block of the five-year frameworks to energy research. Theenergy research budget of 23 IEA mem-ber countries reached a maximum ofUS$ 13 billion in 1980, after which date it sank to only 38.5 % of its peak. About70 % of this budget was spent on nuclearfission and fusion research, representingan enormous subsidy to those indus-tries, which is in no relation to their out-put. Strangely, when confronted with a TRANSPORT OIL crisis, they went forNUCLEAR ELECTRICITY. Also, the budget allocated to fossil fu els has con-sistently been about twice the renewableenergy budget, illustrating the influenceof entrenched industry lobbies in theEuropean Union where environmentalawareness is said to be high and grow-ing. Only 10 % went to renewables and energy efficiency. In view of thestrategic importance of renewables, this is disconcerting.

The disaggregated budget for renew-ables also shows a maximum in 1980,falling to 30 % in 1998, with the relativeshare of biomass and PV growing. Un-derstandably, there was a strong call atthe Renewables 2004 Conference inBonn that the renewables R&D budgetshould be increased by at least by anorder of magnitude.

A few EU nations invest in the bulk ofrenewable energy R&D. Information onR&D activities in developing countries is quite limited. It appears that countrieslike China, India, Brazil, South Africa,

Egypt and a few others do have indivi-dual energy programmes. However, noevidence could be found of concertedmultinational research programmes bythe developing world that reflect thestrategic importance of renewables tothe developing world.

Most developing nations are currentlynot on a sustainable energy path andare facing increasing energy and envi-ronmental pressures caused by popula-tions with growing energy demands.

Luther (2004) has presented an updatedoverview of the RD&D challenges: Since the price experience curves (or“learning curves”) of renewable energytechnologies are also driven by R&D, itis imperative to direct concerted fundingtowards these research initiatives. Twomain approaches need to be followed:

New technologies for the developingworld like biogenic bottled gas as de-centralised sustainable energy carrier,low-cost energy efficient houses andbuildings, additional storage schemesfor high quality energy, and techno-logy transfer.Significant cost reductions of existingrenewable energy technologies: higherefficiencies, longer lifetimes, lessmaintenance, reduced environmentalimpact. This RD&D work has to be

steered and synchronised with the markets because there is a considerabletime lag between laboratory and market. Research and Development is neededon non-technological and on technologi-cal aspects.

Non-technological aspects: e.g. economic, sociological, and political

The market penetration of renewableenergies is neither directly related tothe availability of renewable energyresources, nor to the availability ofrenewable energy technologies. Other,partially undefined aspects seem toplay a role. Therefore priority shouldbe given to identify these drivers orbarriers including R&D on:– The way innovation processes work– Development of sustainability in

dicators– Model projects and dissemination

(e.g. strategic EU/North Africa part-nership, biogenic bottled gas infra-structure, energy efficient low-costhousing, rural energy, and one mil-lion hut energisation in developingcountries)

– Economics and financing– Optimal CDM & JI applications– Externalities of nuclear and fossil

energy

45

Renewable Energy Paradigms

Old ParadigmTechnology assessmentEquipment supplyfocusEconomic viabilityTechnical demon-strationsDonor gifts ofequipmentProgrammes andintentionsCost reductions$/kWh

New ParadigmMarket assessment

Application, value-added, and user focus

Policy, financing, institutional, and social needs and solutionsDemonstrations of business, financing, institutional and social models

Donors sharing the risks and cost of building sustainable markets

Experience, results, and lessons

Competitiveness on the market placeEnergy services

(Adapted from: Martinot et al, 2002 in Johansson, 2004)

WP_2006.qxd 01.02.2006 15:43 Uhr Seite 45

– Effects of energy market liberalisa-tion and globalisation

– Best practice benchmarking ofnational renewable energy policies,programmes, finance procedures

– Accelerated capacity building– Awareness, acceptance, access

and affordability– Data, statistics and resource

assessment– Energy and human health– Income-generating energy services

Technological aspects

Since there is no single silver bullet, re-newable energy technology researchhas to follow an integrated broad-spec-trum approach. Three categories areidentifiable:– Technologies that are currently appli-

cable for world-wide cost-effectiveapplication (energy efficient buildings,off-grid PV, biomass, commercial solarwater heating in warm countries)

– Technologies in need of minor deve-lopment for entry into new or largermarkets (solar thermal power stations,

upwind chimneys, wind energy in de-veloping countries, biomass-based synfuels)– New technologies with a view to long-

term energy sustainability (RE hydro-gen, better batteries and other storagesystems, as well as ocean current,wave and tidal power)

The first two renewable energy catego-ries can be grouped under the headingsof electricity generation, heating, coolingand daylighting, solar buildings, fuels,and crosscutting technologies.

Electricity generationExisting renewable energy technolo-gies require RD&D in specific areas:– Wind: off shore potentials, extreme

climates, developing world adapta-tions

– PV: cost reductions, optical concen-tration, innovation, building integra-tion

– Solar thermal: thermal storage, directevaporation, hybrids, automation

– Hydro power: risk assessment,environmental impacts

– Biomass: cogeneration, stirlingcycle, systems integration, food/energy

– Geothermal: exploration, efficientlow temperature converters, wasteheat utilisation

– Maritime: durability of tidal, wave,current, thermal systems

Heating, cooling, daylighting– Solar water heating: long-term

storage– Solar cooking: thermal storage,

price reduction– Solar cooling: absorbents, systems,

hybrids– Biomass: local species, alien in-

vaders, system integration– Geothermal: cogeneration, improv-

ed heat pumps, long-term storage

Solar buildings– Embodied energy: cradle-to-grave

energy content, reduce, recycle,reuse

– Shell insulation: vacuum insulation,benign insulation

– Solar optimised windows: daylight-ing optimisation, improved insulation

46

The Need for Research, Developmentand Demonstration

Innovations on Brazilian charcoal production

Brazil has one of the best technologies for the implementation of de-dicated eucalyptus forests in the world. Large-scale industrial use ofeucalyptus includes pulp and charcoal production, and technologieswere developed to reduce pulp and steel production costs. Due tofavourable weather conditions, genetic selection, and improved plant-ing technologies, average yields of about 22 t/ha.a (dry basis) are usualfor eucalyptus.

The forest division of the steel industry, Mannesmann – MAFLA inBrazil – has developed a rectangular kiln of high capacity. This kilnhas a tar condenser that allows recovery and further distillation of high-

value by-products. Gases can also be recycled and used as fuel in thecarbonisation process. In comparison with traditional kilns, the tech-nology presents higher productivity, higher yields, improved charcoalquality and partial mechanisation. Most of the rectangular kilns develo-ped in Brazil are large enough to accommodate trucks inside, reducingtime for loading and unloading.

A conceptually similar kiln was developed by the steel industry BelgoMineira between 1991 and 1998. In comparison with traditional kilns,results of the R&D programme show that the new technology reducesinitial capital costs and labour, while improving charcoal quality.

On the other hand, the steel industry ACESITA developed a program-me to modernise charcoal production and consumption. This program-me included the development of a continuous carbonisation retort, i.e.a kiln in which heating is promoted by circulating gas. During testing,the measured yield was 35 percent, while the maximum yield for char-coal production – depending of the wood composition – is estimatedbetween 44 and 55 percent (dry basis). The same company developeda rectangular kiln with a charcoal production cost 15 percent lower thantraditional kilns. As a part of the same R&D programme, a continuousprocess of pyrolysis for charcoal production and liquids recovery wasdeveloped until the mid 1990s. Theoretically, continuous kilns allowbetter control of the process and, as a consequence, production ofbetter quality charcoal. Gases produced by pyrolysis are recovered and burned, supplying energy for the process, while liquids are also re-covered – including tar – and can be used in the production of chemi-cals. According to test results, the yield of charcoal was estimated as33 percent (dry basis). It is important to mention that this R & D pro-gramme was conducted while ACESITA was a state-owned company;the pyrolysis plant, for instance, was dismantled after the company’sprivatisation. (Coelho & Walter, 2003 in Karekezi, 2004)

WP_2006.qxd 01.02.2006 15:43 Uhr Seite 46

– Heat/cold storage: phase-change,air-ground heat exchangers, nightventilation

– Heating, ventilation, air conditioning:efficient compact solar units

Fuels– Biogenic fuels: cheaper biodiesel,

biogas separation, fuel cell feed-stock

– Hydrogen: solar methane reforming,advanced electrolyses

– Solar chemistry: photo-biological/chemical hydrogen and energies

Cross-cutting technologies– Distributed generation/grid design:

advanced DSM, electronics, fluctua-tions, and also investigations intomeans of adding high penetrations of intermittent RE generators into theelectricity distribution and transmissionnetworks.

– Off grid systems: advanced diagnos-tics, metering, maintenance

– Energy meteorology: satellite prognos-is, smart pro-active buildings

– Impact assessment: recycling techno-logies, material resources

– Energy storage: innovative batteries,hydrogen storage, kinetic storage,superconductors

– Energy efficiency: labelling, improvedmotors, LED lighting, testing

– Planning: solar access right, integratedresource planning, solar cities

– Standardisation: international standards,codes of practice

– Education: centres of excellence, re-search partnerships, curricula, systems

– Cooperation: R&D partnerships, jointprogrammes, internet fora

Today, developing countries generallyare not strong in research and develop-ment. There has been a tendency to relyon imported technologies, patents andexpertise. This often brought along withit a reliance on imported fuels. Thetransport technology complex illustratesthe point.

However, developing countries like Brazilhave managed to build their own indige-nous renewable energy synfuel techno-logy as well as its associated vehicletechnology. South Africa continued todevelop the German Fischer-Tropschprocess for producing liquid fuels fromcoal. This has now been extended tocleaner natural gas-to-liquid applicationsand is extendable to renewable ener-gies.

The Chinese solar water heating markettransformation with evacuated tubetechnologies from Germany is anotherillustration how research and develop-ment partnerships can lead to resound-ing successes.

The growth of research and develop-ment capacity of renewable energies inthe developing world can fortuitously beintegrated with CDM initiatives.

47

WP_2006.qxd 01.02.2006 15:43 Uhr Seite 47

Examples of National Policy Models

This section covers one regional andtwo national policy models.

Latin America

Political Commitments

The Latin American and Caribbean re-gion agreed in May 2002 on the follow-ing proposal for target and timeframeson renewables to:

“Increase in the region the use of renew-able energy to 10 % as a share of totalby 2010” (Draft of the Final Report of the7th Meeting of the Intersectional Com-mittee of the Forum of Ministers ofEnvironment of Latin America and theCaribbean, Sao Paulo, May 2002)

Paragraph 19 of the World Summit onSustainable Development (WSSD) Planof implementation adopted in Johannes-burg reads as:

19. Call upon Governments, as well asrelevant regional and internationalorganisations and other relevant stakeholders, to implement, takinginto account national and regionalspecificities and circumstances, therecommendations and conclusionsof the Commission on SustainableDevelopment concerning energy forsustainable development adopted atits ninth session, including the issuesand options set out below, bearing inmind that in the view of the differentcontributions to global environmentaldegradation, States have commonbut differentiated responsibilities.This would include actions at alllevels to:c) Develop and disseminate alternati-

ve energy technologies with theaim of giving a greater share ofthe energy mix to renewable ener-gies, improving energy efficiencyand greater reliance on advancedenergy technologies, including cleaner fossil fuel technologies.

d) Combine, as appropriate, the increa-sed use of renewable energy resour-ces, more efficient use of energy, greater reliance on advanced energytechnologies, and the sustainable useof traditional energy resources, whichcould meet the growing need for ener-gy services in the longer term toachieve sustainable development;e) Diversify energy supply by develo-

ping advanced, cleaner, more effi-cient, affordable and cost-effectiveenergy technologies, hydro includ-ed, and their transfer to develop-ing countries on concessionalterms as mutually agreed. With a sense of urgency, substantiallyincrease the global share of re-newable energy sources with theobjective of increasing its contri-bution to total energy supply,recognising the role of nationaland voluntary regional targets as well as initiatives, where theyexist, and ensuring that the energypolicies are supportive to develop-ing countries’ efforts to eradicatepoverty, and regularly evaluateavailable data to review progressto this end.“

(Karekezi, 2004)

48

WP_2006.qxd 01.02.2006 15:43 Uhr Seite 48

Section 3: Obligation to Purchase andPay Compensation(1) Grid operators shall be obliged to

connect to their grids electricity ge-neration installations as defined inSection 2 above, to purchase elec-tricity available from these installationsas a priority, and to compensate thesuppliers of this electricity in accor-dance with the provisions in Sections4 to 8 below. The obligation shallapply to the grid operator, whose gridis closest to the location of the elec-tricity generation installation, providingthat the grid is technically suitable tofeed in this electricity. A grid shall beconsidered to be technically suitableeven if – notwithstanding the priorityto be granted pursuant to the firstsentence above – a grid operatorneeds to upgrade its grid at reasona-ble economic expense to feed in theelectricity; in this case, the grid opera-tor shall be obliged to upgrade its gridwithout delay if this is requested by aparty interested in feeding in electrici-ty. Grid data and data of the electricitygeneration installation shall be disclo-sed where this is necessary for thegrid operator and the party interestedin feeding in electricity to do theirplanning and to determine the techni-cal suitability of a grid.

(2) Pursuant to Sections 4 to 8 below,the upstream transmission grid operator shall be obliged to purcha-se, and pay compensation for, theamount of energy purchased by thegrid operator in accordance withclause (1) above. If there is no do-mestic transmission grid in the areaserviced by the grid operator entitledto sell electricity, the next closestdomestic transmission grid operatorshall be obliged to purchase and paycompensation for this electricity asspecified in the first sentence above.

49

The German Renewable EnergyGrid-Feeder Law

This Act has a proven and very success-ful track record, and could be emulatedwith great benefit: Items in squarebrackets pertain specifically to Germany.

Act on Granting Priority o RenewableEnergy Sources(Renewable Energy Sources Act)

Section 1: PurposeThe purpose of this Act is to facilitate asustainable development of energy sup-ply [in the interest of managing globalwarming and protecting the environmentand to achieve a substantial increase inthe percentage contribution made byrenewable energy sources to powersupply in order at least to double theshare of renewable energy sources intotal energy consumption by the year2010, in keeping with the objectivesdefined by the European Union and bythe Federal Republic of Germany.]

Section 2: Scope of Application(1) This Act deals with the purchase of,

and the compensation to be paid for,electricity generated exclusively fromhydrodynamic power, wind energy, solar radiation energy, geothermalenergy, gas from sanitary landfills,sewage treatment plants, mines, orbiomass within the territorial scope ofthis Act or [within Germany’s exclusi-ve economic zone], by utility compa-nies which operate grids for publicpower supply (grid operators). [TheFederal Ministry for Environment,Nature Conservation and NuclearSafety] shall be authorised to laydown rules – in agreement with the[Federal Ministry of Food, Agricultureand Forestry as well as the FederalMinistry of Economics and Techno-logy] – by adopting an ordinance.Which shall be subject to approval by[the German Bundestag]. Said ordi-nance shall specify what substances

and technical processes used in con-nection with biomass fall within thescope of application of this Act; in addi-tion, the ordinance shall lay down therelevant environmental standards.

(2) This Act shall not apply to electricity1. produced by hydro-electric power

plants and installations fuelled bygas from landfills or sewage treat-ment plants with an installed elec-trical capacity of over 5 MW, or by installations in which electricityis generated from biomass, withand installed electrical capacity ofover 20 MW, and

2. produced by installations of whichover 25 per cent is owned by the[Federal Republic of Germany orone of Germany’s federal states],and

3. produced by installations for thegeneration of electricity from solarradiation energy, with an installedelectric capacity of over 5MW. Inthe case of installations for thegeneration of electricity from solarradiation energy which are notattached to or built on structureswhich are primarily used for pur-poses other than the generation ofelectricity from solar radiationenergy, the upper capacity limitspecified in the first sentenceabove shall be 100 kW.

4. New installations shall be instal-lations, which were commissionedafter [add: date of entry into forceof this Act]. Reactivated or mo-dernised installations shall be considered as new installations ifmajor components of the installa-tions were replaced. Modernisa-tion work shall be deemed to bemajor if the modernisation costsamount to at least 50 per cent ofthe investment cost required tobuild a completely new installa-tion. Existing installations shall beinstallations, which were commis-sioned prior to [add: date of entryinto force of this Act].

WP_2006.qxd 01.02.2006 15:43 Uhr Seite 49

Examples of National Policy Models

Section 4: Compensation to be Paidfor Electricity Generated from Hydro-dynamic Power, Gas from Landfills,Mines, and Sewage Treatment PlantsThe compensation to be paid for electri-city generated from hydrodynamic powerand gas from landfills, mines and sewa-ge treatment plants shall amount to atleast [7.67 cent] per kilowatt-hour. In thecase of electricity generation installationswith an electrical capacity of over 500kilowatts, this shall apply only to the partof the total amount of electricity fed induring a given accounting year whichcorresponds to the ratio of 500 kilowattsto the total capacity of the installation inkilowatts; the capacity shall be calcula-ted as the annual average of the meaneffective electrical capacity measured inthe various months of the year. Theprice to be paid for other electricity shallbe at least [6.65cent] per kilowatt-hour.

Section 5: Compensation to be Paidfor Electricity Generated fromBiomass(1) The following compensation shall be

paid for electricity generated frombiomass:1. At least [10.23 cent] per kilowatt-

hour in the case of installationswith an installed electrical capacityof up to 500 kilowatts.

2. At least [9.21 cent] per kilowatt-hour in the case of installationswith an installed electrical capacityof up to 5 megawatts.

3. A least [8.70 cent] per kilowatt-hour in the case of installations with aninstalled electrical capacity of over 5 megawatts; however, this provisionshall not be effective before the dateof the entry into force of the ordinan-ce specified in the second sentenceof Section 2 (1).

The first clause of the second sentencein Section 4 above shall apply mutatismutandis.

(2) As of [1January 2002], the minimumcompensation amounts specified in(1) above shall be reduced by onepercent annually for new installationscommissioned as of this date; theamounts payable shall be rounded toone decimal.

Section 6: Compensation to be Paidfor Electricity Generated fromGeothermal EnergyThe following compensation shall bepaid for electricity generated from geo-thermal energy:1. At least [8.95 cent] per kilowatt-hour if

the installation involved has an instal-led electrical capacity of up to 20megawatts, and

2. At least, [7.16 cent] per kilowatt-hourif the installation involved has aninstalled electrical capacity of over 20 megawatts.The first clause of the second senten-ce in Section 4 above shall applymutatis mutandis.

Section 7: Compensation to be Paidfor Electricity Generated from WindEnergy(1) The compensation to be paid for

electricity generated from wind ener-gy shall be at least [9.10 cent] perkilowatt-hour for a period of fiveyears, starting from the date of com-missioning. Hence, the compensationto be paid for installations, which,during this period of time, achieve150 per cent of the reference yieldcalculated for the reference installa-tion, as described in the Annex tothis Act shall be at least [6.19 cent]per kilowatt-hour. For other installa-tions, the period mentioned in thefirst sentence above shall be prolon-ged by two months for every 0.75per cent by which their yield staysbelow 150 per cent of the referenceyield. If the electricity is generated byinstallations which are located at least

three nautical miles seawards fromthe baselines used to demarcate ter-ritorial waters and if these installationsare commissioned no later than [31December 2006], the periods speci-fied in the first sentence and in thesecond sentence above shall be nineyears.

(2) For existing installations, the date ofcommissioning as defined in the firstsentence of 1) above shall be [add:the date of the entry into force of thisAct]. For these installations, the peri-od defined in the first 3 sentences of(1) above shall be reduced by half ofthe operating life of an installation asof [add: the date of the entry intoforce of this Act]. If P-V curves arenot available for such installations, anauthorised institution as defined inthe Annex may perform the necessa-ry calculations on the basis of thedesign documents of the type ofinstallation concerned.

(3) As of [1 January 2002], the minimumcompensation amounts specified in(1) above shall be reduced by 1.5 percent annually for new installationscommissioned as of this date; theamounts payable shall be rounded toone decimal.

(4) For the implementation of the provi-sions in (1) above, the [Federal minis-try of Economics and Technology]shall be authorised to adopt an ordi-nance laying down rules for the cal-culation of the reference yield.

Section 8: Compensation to be Paidfor Electricity Generated fromRadiation Energy(1) The compensation to be paid for

electricity generated from radiationenergy shall be at least [50.62 cent]per kilowatt-hour. As of [1 January2002], the minimum compensationpaid shall be reduced by 5 per centannually for new electricity generationinstallations commissioned as of thisdate; the amounts payable shall berounded to one decimal.

50

WP_2006.qxd 01.02.2006 15:43 Uhr Seite 50

(2) By 31 March of each year, the trans-mission grid operators shall determi-ne the amount of energy purchasedin accordance with Section 3 aboveand the percentage share which thisamount represents relative to theoverall amount of energy delivered tofinal consumers either directly by theoperator or indirectly via downstreamgrids. If transmission operators havepurchased amounts of energy thatare greater than this average share,they shall be entitled to sell energy to, and receive compensation from,the other transmission grid operatorsin accordance with Section 3 to 8above, until these other grid opera-tors have purchased a volume ofenergy which is equal to the averageshare mentioned above.

(3) Monthly instalments shall be paid inaccordance with the equalisationamounts and payments to be expec-ted.

(4) Utility companies which deliver elec-tricity to final consumers shall be ob-liged to purchase and pay compen-sation for that part of the electricitywhich their regular transmission gridoperator purchased in accordancewith the provisions of (2) above. Thefirst sentence shall not apply to theutility companies if, relative to thetotal amount of electricity they deliver,at least 50 per cent of the electricityas defined in Section 2 (1) in conjunc-tion with (2) above. The part of theelectricity to be purchased by a utilitycompany in accordance with the first sentence shall be related to theamount of electricity delivered by theutility company will receive a relativelyequal share. The compulsory amountto be purchased (part) shall be calcu-lated as the ratio of the total amountof electricity fed into the grid underSection 3 to the total amount of elec-tricity sold to final consumers; further-more, it is necessary to deduct fromthis sum the amount of electricity

51

(2) The obligation to pay compensationas specified in (1) above shall notapply to photovoltaic installationswhich are commissioned after 31December of the year following theyear in which photovoltaic installa-tions, which are eligible for compen-sation under this Act, reach a totalinstalled capacity of 350 megawatts.Prior to the discontinuation of theobligation to pay compensation asspecified in (1) above, the [GermanBundestag] shall adopt a follow-upcompensation scheme which shallenable installation operators to mana-ge their installations cost-effectively,taking into consideration the declineof marginal unit cost achieved bythen in the field of system engineer-ing.

Section 9: Common Provisions(1) The minimum compensation amounts

specified in Sections 4 to 8 shall bepayable for newly commissionedinstallations for a period of 20 yearsafter the year of commissioning,except for installations which genera-te electricity from hydrodynamicpower. For installations, which werecommissioned prior to the entry intoforce of this Act, the year [2000] shallbe considered to be the year of com-missioning.

(2) If electricity generated from variousinstallations is billed via a commonmetering device, the calculation ofthe amounts of the different rates ofcompensation payable shall be basedon the maximum effective capacity ofeach individual installation. If electrici-ty is generated from several windenergy converters, the calculation ofthe compensation shall – notwith-standing the first sentence above –be based on the cumulative values of these installations.

Section 10: Grid Costs(1) The costs associated with connecting

installations as specified in Section 2above to the technically and econo-mically most suitable grid connectingpoint shall be borne by the installationoperators. The implementation of this connection must comply with the grid operator’s technical require-ments in a given case and with theprovisions laid down in [Section 16 ofthe Energiewirtschaftsgesetz (EnergyManagement Act) of 24 April 1998(Federal Law Gazette 1, p. 730)]. Theinstallation operator shall be entitledto have the connection implementedeither by the grid operator or byqualified third party.

(2) The costs associated with upgradingthe grid exclusively in order to con-nect new installations in accordancewith Section 2 for accepting andtransmitting energy fed into the gridfor public power supply shall be borneby the grid operator whose grid willhave to be upgraded. The grid oper-ator shall specify the concrete inves-tment required by presenting thecosts in detail. The grid operator shallbe entitled to add the costs borne bythem when determining the chargesfor the use of the grid.

(3) Any disputes shall be settled by aclearing centre, which shall be esta-blished within the [Federal Ministry ofEconomics and Technology], with theinvolvement of the parties concerned.

Section 11: Nation-wide EqualisationScheme(1) Transmission grid operators shall be

obliged to record any differences inthe amount of energy purchase andcompensation payments made underSection 3 above and to equalise suchdifferences amongst themselves asspecified in (2) above.

WP_2006.qxd 01.02.2006 15:43 Uhr Seite 51

Examples of National Policy Models

delivered by utility companies in ac-cordance with the second sentenceabove. The compensation as speci-fied in the first sentence above shallbe calculated as the average com-pensation per kilowatt-hour paid byall grid operators two quarters earlierin accordance with Section 3. Electri-city purchased in accordance withthe first sentence shall not be sold atthe compensation paid in accordancewith the fifth sentence, if that electri-city is marketed as electricity pursu-ant to Section 2 or as comparableelectricity.

(5) Each grid operator shall be obliged tomake available in good time to theother grid operators the data requiredto perform the calculations referred toin (1) and (2) above. Each grid opera-tor shall be entitled to request thatthe other grid operators have theirdata audited by a chartered accoun-tant or a sworn auditor appointed bymutual agreement. If no agreementcan be reached, the charteredaccountant or sworn auditor shall beappointed by the President of theHigher Regional Court, which hasjurisdiction at the seat of the gridoperator eligible to receive equalisa-tion payments.

Section 12: Progress ReportBy 30 June, every two years after theentry into force of this Act, the [FederalMinistry of Economics and Technology]shall submit a report – drafted in consul-tation with the [Federal Ministry of Food,Agriculture and Forestry] – on the pro-gress achieved in terms of the marketintroduction and the cost developmentof power generation installations as spe-cified in Section 2 to 8 and of their re-duction rates, in keeping with techno-logical progress and market develop-ments with regard to new installations;furthermore, the Ministry shall propose aprolongation of the period for calculatingthe yield of a wind energy converter asspecified in the Annex, based on theexperience made with the period definedin this Act.

Annex1. The reference installation shall be a

wind energy converter of a specifictype for which a yield at the level ofthe reference yield can be calculatedon the basis of P-V curve (powerwind speed curve) measured by anauthorised institution at the referencesite.

2. The reference yield shall be theamount of electricity which each spe-cific type of wind energy converter,including the respective hub heights,would yield during five years operation– calculated on the basis of measuredP-V curves – if it were built at thereference site.

3. The type of a wind energy convertershall be defined by the model desig-nation, the swept rotor area, the ratedpower output and the hub height asspecified by the manufacturer.

4. The reference site shall be a sitedetermined by means of a Rayleighdistribution with a mean annual windspeed of 5.5 metres per second at aheight of 30 metres, a logarithmicwind shear profile and a roughnesslength of 0.1 metres.

5. The P-V curve shall be the correlationbetween wind speed and power out-put (irrespective of hub height) deter-mined for each type of wind energyconverter. P-V curves shall be deter-mined in accordance with the stan-dard procedure defined in the [Tech-nische Richtlinien fuer Windenergiean-lagen (Technical Guidelines for WindEnergy Converters), rev. 13, as of 1January 2000, published by Foerder-gesellschaft Windenergie e.V. (FGW),Hamburg, or in the Power Performan-ce Measurement Procedure, version1, published in September 1997 bythe Network of European MeasuringInstitutes (MEASNET), Brussels/Belgium], P-V curves which weredetermined by means of a compara-ble procedure prior to 1 January 2000can also be used instead of P-V curves as specified in the secondsentence, providing that the construc-tion of wind energy converters of the

type of which they apply is not initi-ated within the territorial scope of thisAct after 31 December 2001.

6. Measurements of the P-V curves andcalculations of the reference yields ofdifferent types of wind energy conver-ters at reference sites shall be carriedout for the purpose of this Act byinstitutions which are accredited forthe measurement of P-V curves asdefined in 5) above in accordancewith the [General Criteria for theOperation of Test Laboratories (DINEN 45001) of May 1990. The namesof these institutions shall be publishedin the [Federal Official Gazette by theFederal Ministry of Economics andTechnology] for the information ofinterested parties.

52

WP_2006.qxd 01.02.2006 15:43 Uhr Seite 52

CommentsThe implementation of the new lawmanifests the awareness of the PeoplesRepublic of China. Responsibilities andbudgets have been assigned unequivo-cally. Commitments to targets like “10 %, 20 %, 50 % RE by 2010, 2020,2050” are surmised to be in the offing. A long-term renewable energy pricingstructure system is probably being pre-pared. If these crucial dimensions areintegrated, the new law will be the mostadvanced renewable energy law in theworld. The impact on the People’sRepublic of China and the rest of theworld could be trend-setting.

53

The Promotion Law of RenewableEnergy Development and Utilisationof the People’s Republic of ChinaDraft March 2005

The State Council produced a compre-hensive document, covering the applica-tion of renewable energy for electricpower generation, liquid fuels, gas feed-in and heat generation.

1. General PrinciplesThe purpose, scope, rights and obli-gations of using renewable energiesare explained. This is followed by theprinciple of combined governmentpromotion and market orientation.Rural Energisation, R&D, Dissemina-tion & Education, Environmental Pro-tection, Sector Guidance, Honouringand Awarding and Responsibilities are outlined.

2. Resource Management andDevelopment PlanA comprehensive renewable energyresource plan and an integrated re-newable energy development planincluding national, social, economicand environmental development areto be prepared and be open to thepublic.

3. Industry Guidance and TechnologyAdvancementAwareness, standardisation, testingand certification, education, R&D,renewable energy centres, publicity,entrepreneurship and industry associ-ations shall be facilitated.

4. Dissemination and ApplicationGrid-connected power from renew-able energy must be accepted at fullprice by utilities. Independent powerproducers are encouraged.Likewise, remote renewable powerproduction for living or production issupported, as is biomass, biogas andheat, liquid fuels and solar thermal, aswell as cogeneration. For areas with annual sunlight hoursexceeding 1 500 hours, solar water

heaters or piping must be installed onall new or upgradings of residences,hotels, restaurants, hospitals, schoolsand public buildings less than 11 sto-reys high.

5. Price ManagementGovernment decides on feed-in re-newable energy prices by approving,bidding or designing a classified cata-logue.Government approving pertains togovernment constructed and investedprojects. Bidding is applied to con-ventional projects, while the classifiedcatalogue is applied to renewableenergy projects. This is related to thecost of comparable cost levels of thesame kind.

6. Economic IncentiveA Renewable Energy DevelopmentFund shall compensate for the mar-ginal renewable energy costs and shall serve for subsidies in rural areas, biomass, liquid fuels, resourceassessment, technological diffusion,R D & D, pilot projects, equipment,education, training, international co-operation and communication aresupported.Income for the Fund is to accrue fromelectricity, sales, fiscus, profit, dona-tions, and others. Commercial banks are expected tooffer favourable credits to renewableenergy projects.

7. Legal ResponsibilityPenalties for defaulting are set bet-ween 500 000 (approx US$ 60 000)and one million Yuan (approx US$120 000) to power, grid and oil cor-porations, and at 100 000 Yuan(approx US$ 12 000) for defaultingestate developers.

WP_2006.qxd 01.02.2006 15:43 Uhr Seite 53

Conclusions

It appears that in the future energy mix itis unlikely that a single renewable energytechnology will be dominant. It would beunwise to bet on one winner, althoughproponents often would disagree.

Renewable energy is not an end in itself.It is one way of providing energy servicesin a socially and environmentally sustain-able way at least life cycle costs. Integrated energy planning is a subset ofintegrated resource planning, where thesupply of resources are matched withthe demand.

Competition for resources within nationsand between nations does not excludecooperation. In nature, symbiosis andcooperation is more frequent than ex-pected. Entities that are both flexibleand energy efficient tend to be moresuccessful competitors. Therefore, de-veloping nations can improve their well-being by being more energy efficient and less reliant on fossil fuels. The useof renewable energies encourages thistrend. In this way, it is possible to en-hance one’s own benefit while making a contribution to the common good.

It is not unconceivable that new energyrelated accounting systems could deve-lop in future. A first step might be the triple bottom line.

Governments have a longer planninghorizon than individuals and commercialinterests. Their policies are – or shouldbe – built on long-term future visions.Their own investments in buildings andother acquisitions should consequentlyreflect this perspective, based on leastlife cycle cost calculations, including thefull externality costs.

Governments exist within regional, conti-nental and international contexts, whichbring with them mutual interactions andobligations. Some of these help the rapid,orderly and sustained energy transition,others hinder. In their interactions, wisegovernments have to think of, and crea-te, win-win situations.

Although the market is a strong driver,market failures do occur in the field ofenergy. Thus, governments avoid andcorrect such market failures, knowingthe price per kilowatt-hour does notreflect the value of an energy service.

By now, experience has also shown that one cannot rely on a single policy.An optimal system of complementarypolicies and measures is needed. Norcan one expect that Federal or CentralGovernment can do it alone. Variouslevels of government as well as the pri-vate sector have to work in concert, orat least in constructive competition.

Even the best policies are of little use ifthey are not being applied consistently.In the developing world capacities areseverely limited. It follows that renewableenergy laws should be easy to monitorand enforce.

Many independent scientists confirmedthat the transition to renewable energy isnecessary, urgent and techno-economi-cally feasible, although this may seem asunlikely to some as it was unthinkablenot so long ago that man could walk onthe moon.

Times of transition are always turbulenttimes. In such times the most naturalhuman reaction is to panic and cling tothe habitual, procrastinating in the fearof making the wrong decision. However,the decision to procrastinate is also adecision – most often the wrong one.

As the world transitions to the new era,it will not wait for the developing worldto catch up. It is the own choice of indi-viduals, families, communities, compa-nies and nations whether they want tobe losers or winners in the dawning solarage. Some people will look back at ourtimes and smile.

54

WP_2006.qxd 01.02.2006 15:43 Uhr Seite 54

Acknowledgements and References

Van Horen, C. 1996. Counting theSocial Costs, Electricity and theExternalities in South Africa.UCT Press: Cape Town.

WBGU (German Advisory Council onGlobal Change). 2003. The World inTransition – Towards SustainableEnergy Systems. Earthscan: Londonand Sterling, VA.

55

The author wishes to acknowledge thehelp of Dr. Donald Aitken, author of theprecursor ISES White Paper (2000), whokindly offered critique, advice and sup-port.

Input from colleagues of the ISES Boardand Headquarters are gratefully acknow-ledged.

Dr Monica Oliphant initiated and wiselyguided this White Paper in her capacityof Vice-president for Public Affairs ofISES.Henning Holm kindly shared hisexperience in the developing world to the benefit of this White Paper.Prof Ricardo Rüther from Brazil is thanked for his constructive criticism.

As usual, the author takes the responsi-bility for errors.

Core sources used were

Refocus (International Solar Energy SocietyJournal published by Elsevier Science),Renewable Energy World (James &James Science Publishers),

Solar Today (Journal of the American Solar EnergySociety),

Erneuerbare Energie(Zeitschrift für eine nachhaltige Energie-zukunft: Arbeitsgemeinschaft Erneuer-bare Energie, Gleisdorf, Austria),

The World in Transition – TowardsSustainable Energy Systems by theGerman Advisory Council on GlobalChange(WBGU, 2003)

Awerbuch, S. 2003. Risk-Adjusted Costof Electricity Estimates Based onHistoric Fuel Price Risk. RenewableEnergy World. Mar-Apr; 58. James & James: London.

Banks, D. & Schäffler, J. 2005. EnergySustainability: SA challenges andopportunities. SECCP: Johannesburg.

Butler, L. and Neuhoff, K. 2004.Comparison of Feed-in Tariff, Quota and Auction Mechanisms to SupportWind Power Development. CambridgeWorking Papers in Economics CWPE0503. Cambridge: UK.

Goldenberg, J., Pershing, J. Sonntag-O’Brien, V., Luther, J., Christensen, J.,Steiner, A. Johansson, T.B., Karekezi,S., Sawin, J.L. and Clancy, J. 2004.Thematic Background Papers to the “Renewables 2004 in Bonn”.(www.renewables2004.de) These havebeen liberally used.

Heinberg, R. 2003. The Party’s Over –Oil, War and the Fate of IndustrialSocieties. New Society: Gabriola,Canada.

International Institute for EnergyConservation (IIEC). 2004. Global IssuePapers. Transitioning to RenewableEnergy. An Analytical Framework forCreating an Enabling Environment.H. Böll Stiftung: Johannesburg.

Nicklas, M. and Schramm, G. in Holm,D. & Berger, W. 1981. ISES UtilityInitiative for Africa – SelectedProceedings. Freiburg: Germany.

WP_2006.qxd 01.02.2006 15:43 Uhr Seite 55

56

About the Author

Dieter Holm is a consultant in SustainableDevelopment in the Built Environment.He and his family live at the Hartbees-poort Dam near Pretoria in the firstmodern autonomous house in Africabuilt before the first 1970s energy crisis.Next to passive solar heating, heat re-jection and day lighting their home alsofeatures rainwater harvesting, solarwater heating and recycling as well assolar cooking and baking. PV panelspower the household in addition to theoffice and his wife’s woodturning work-shop.

Dieter is an enthusiastic teacher, havingbeen Head of the Department Architec-ture and later of Research and Post-graduate Studies at the University ofPretoria, South Africa. As a director ofHolm Jordaan Holm Architects he co-authored many prize-winning competi-tion entries, the latest of which being thenew HQ for the Municipality of Pretoria.He publishes mainly on the applicationof passive design in buildings, and pro-duced three books.

He is secretary of ISES, director of ISESAfrica, president of the SustainableEnergy Society of Southern Africa, andchairman of the Solar Water HeatingDivision of SESSA.

His work in energy in low cost housingreceived the prize for the residentialcategory with the Eskom Eta AwardCompetition for Energy Efficiency.

Professor Dieter Holm is a regular spea-ker at international and local conferen-ces, radio interviews and TV specialistfeatures.

WP_2006.qxd 01.02.2006 15:43 Uhr Seite 56

ParaguayPeruPhilippinesQatarRwandaSaint Kitts and NevisSaint LuciaSaint Vincent and the GrenadinesSamoa (Western)São Tomé and PrincipeSaudi ArabiaSenegalSeychellesSierra LeoneSingaporeSolomon IslandsSomaliaSouth AfricaSri LankaSudanSurinameSwazilandSyrian Arab RepublicTanzania, U. Rep. ofThailandTimor-LesteTogoTongaTrinidad and TobagoTunisiaTurkeyTuvaluUgandaUnited Arab EmiratesUruguayVanuatuVenezuelaViet NamYemenZambiaZimbabwe (137 countries/areas)

57

Annexure A

GabonGambiaGhanaGrenadaGuatemalaGuineaGuinea-BissauGuyanaHaitiHondurasHong Kong, China IndiaIndonesiaIran, Islamic Rep. ofIraqJamaicaJordanKenyaKiribatiKorea, Dem. Rep. ofKorea, Rep. ofKuwaitLao People’s Dem. Rep.LebanonLesothoLiberiaLibyan Arab JamahiriyaMadagascarMalawiMalaysiaMaldivesMaliMarshall IslandsMauritaniaMauritiusMexicoMicronesia, Fed. Sts.MongoliaMoroccoMozambiqueMyanmarNamibiaNauruNepalNicaraguaNigerNigeriaOccupied Palestinian TerritoryOmanPakistanPalauPanamaPapua New Guinea

Developing and least DevelopedCountries (UNDP 2003 HumanDevelopment Report: MillenniumDevelopment Goals: A compact amongnations to end human poverty. NewYork, Oxford University Press)

Developing countries and 49 least deve-loped countries (in bold)

AfghanistanAlgeriaAngolaAntigua and BarbudaArgentinaBahamasBahrainBangladeshBarbadosBelizeBeninBhutanBoliviaBotswanaBrazilBrunei DarussalamBurkina FasoBurundiCambodiaCameroonCape VerdeCentral African RepublicChadChileChinaColombiaComorosCongoCongo, Dem. Rep. of theCosta RicaCôte d’IvoireCubaCyprusDjiboutiDominicaDominican RepublicEcuadorEgyptEl SalvadorEquatorial GuineaEritreaEthiopiaFiji

WP_2006.qxd 01.02.2006 15:43 Uhr Seite 57

Abbreviations

Abbreviations

°C degree Celsius

BANANA Build Absolutely NothingAnywhere Near Anything

BIPV Building IntegratedPhotovoltaics

BOS Balance Of System

Btu British thermal unit

CDM Clean DevelopmentMechanism

CERT Certificate

CFL Compact Fluorescent Light

CHP Combined Heat and Power

CIS Commonwealth ofIndependent States

COP Coefficient Of Performance

CSH Concentrated Solar Heat

DALY Disability Adjusted Life Year

DG Distributed Generation

DIN Deutsche Industrienorm

DNA Designated NationalAuthority

DSM Demand Side Management

EE Energy Efficiency

EJ Ekta Joule

EU European Union

FAO Food and AgricultureOrganisation

FF Flexible Fuel

GEF Global Environmental Facility

GHG Greenhouse Gas

GIS Geographic InformationSystem

HDR Hot Dry Rocks

IEA International Energy Agency

IPCC Intergovernmental Panel onClimate Change

ISES International Solar EnergySociety

ISO International StandardsOrganisation

K Kelvin

KCJ Kenya Ceramic Jiko

kWh kilowatt-hour

LED Light Emitting Diode

LHV Lower Heat Value

LPG Liquid Petroleum Gas

Mtoe Million tons of oil equivalent

MW Megawatt

MWe Megawatt electrical

NFFO Non-Fossil Fuel Obligation

NGO Non-GovernmentalOrganisation

NIMBY Not In My BackYard

OECD Organisation of EconomicCooperation andDevelopment

PROINFA Programa de Incentivo aFontes Alternativas

PTC Production Tax Credit

PV Photovoltaics

R&D Research and Development

RD&D Research Development andDemonstration

RE Renewable Energy

REC Renewable Energy Certificate

REL Rural Electrification

RET Renewable EnergyTechnology

RPS Renewable PortfolioStandard

SADC Southern AfricanDevelopment Community

SHS Solar Home Systems

SWH Solar Water Heater/Heating

TERI The Energy and ResourcesInstitute

UNDP United Nations DevelopmentProgramme

WBGU Wissenschaftlicher Beirat derBundesregierung GlobaleUmweltveränderung (GermanAdvisory Council on GlobalChange)

WCD World Commission on Dams

WWEA World Wind EnergyAssociation

WSSD World Summit onSustainable Development

58

WP_2006.qxd 01.02.2006 15:43 Uhr Seite 58

59

The International Solar Energy Societygratefully acknowledges Prof Dr Dieter Holm, Secretary of ISES,Director of ISES Africa, and Presidentof the Sustainable Energy Society ofSouthern Africa, who drafted this WhitePaper with input from expert resourcesworldwide, and technical review andinput by the Headquarters and the ISESBoard of Directors.

© ISES & Prof Dr Dieter Holm 2005All rights reserved by ISES and the author

Produced by:ISES Headquarters

Design: triolog, Freiburg

Printed on 100 % recycled paper

WP_2006.qxd 01.02.2006 15:43 Uhr Seite 59

ISESInternationalSolar EnergySociety

Wiesentalstr. 5079115 FreiburgGermany

Phone: +49 – 761 – 45906-0Fax: +49 – 761 – 45906-99E-mail: [email protected]: www.ises.org

"The developing world is not simply the poorman's imitation of the industrialized world"

"Because of its underdeveloped energyinfrastructure and unique RE potential, the developing world - in partnership withthe industrialized world - can leapfrog to RE technologies while benefitting from theKyoto Protocol"

WP_2006.qxd 01.02.2006 15:41 Uhr Seite 2