Renewable Energy Targets and Policy Strategies in Mekong Countries Policy and Incentive Mechanism for Renewable Energy Development in EEP Mekong Countries.

Renewable Energy Targets and Policy Strategies in Mekong

Countries

Policy and Incentive Mechanism for Renewable Energy Development in EEP Mekong Countries

20 November 2012Melia Hotel Hanoi, Hanoi Vietnam

Dr. Romeo PacudanTeam Leader ADB TA 7679: Promoting RE, clean fuels and EE in the

GMSLahmeyer International GmbH

Structure of Presentation

• Formulating Policy Framework for RE Development

• RE Targets• Technology specific targets• RE technologies• Policy interventions• Support Mechanisms• Final Remarks

test

Preparatory Studies

• Resource assessments

• Site, project identification

• Technical, economic, financial studies

• Institutional and market studies

• Others (stakeholders)

Goal Setting

• RE targets• Objectives• Impact

studies• Financial

implications

Barriers Analysis

• Techno-Economic

• Non-economic barriers

Support Mechanisms

• Incentives• Risk

insurance• Soft loans

and guarantees

• Technical assistance and capacity building

• Technology transfer

• Sources of financing

1. Formulating Policy Framework for RE DevelopmentRE planning and policy setting process

2. RE Targets

Source: REN21, 2012

• 118 countries with targets in 2012

• More than half are from developing countries

• Mostly renewable electricity targets

• Others – (1) % share of final or primary energy supply; (2) installed capacity; (3) heat supply; (4) biofuels targets

• Recently, many countries have increased their targets

2. RE and Biofuels Policy Targets in the Mekong

Lao PDR (2025)

Thailand (2021)

Myanmar (2020)

Cambodia (2015)

ASEAN (2015)

Vietnam (2020)

0 5 10 15 20 25 30 35

30

25

20

15

15

5

9.5

2

percent (%)

Cam

bod

iaR

ura

l ele

ctr

icit

y

su

pp

ly b

y 2

01

5

Lao P

DR

Tota

l en

erg

y

con

su

mp

tion

by

20

25

Myan

mar

Tota

l p

ow

er

gen

era

tion

in

sta

lled

cap

acit

y

by 2

02

0

Th

ailan

dTo

tal

en

erg

y

con

su

mp

tion

by

20

21

Vie

tnam

Ele

ctr

icit

y

pro

du

cti

on

by 2

02

0

AS

EA

NEle

ctr

icit

y i

nsta

lled

cap

acit

y b

y 2

01

5

(in

clu

din

g

hyd

rop

ow

er

an

d

bio

fuels

)

Lao P

DR

Each

for

bio

die

sel

an

d b

ioeth

an

ol

20

25

10%

Myan

mar

Com

bin

ed

bio

fuels

b

y 2

02

0

8%

Th

ailan

dO

il s

ub

sti

tuti

on

by

20

21

44%

Biofuels Targets

RE Targets and achievements

3. Technology Specific TargetsThailand (2021) ‘Alternative Energy Development Plan’

biomass

solar

hydropower

wind

biogas

MSW

ocean and tidal

geothermal

0 500 1000 1500 2000 2500 3000 3500 4000

1796

257

96

7.3

170

27.5

0

0

3630

2000

1608

1200

600

160

2

1

MW

biodiesel

ethanol

new for diesel

0 5 10 15 20 25 30

2.79

1.25

0

5.97

9

25

million liters/day

Biofuels Targets and achievemen

ts

RE Targets and achievements

3. Technology Specific TargetsLao PDR (2025) ‘Renewable Energy Development Strategy’

small hydropower

wind

biomass

biogas

MSW

solar

0 50 100 150 200 250 300 350 400 450

11.3

0

3.5

x

0

0.1

400

73

58

51

36

33

MW

biodiesel

ethanol

0 50 100 150 200 250 300 350

0.5

0

300

150

million liters/year

Biofuels Targets and achievemen

ts

RE Targets and achievements

3. Technology Specific TargetsVietnam (2030) ‘Power Development Plan 7’

biomass

SHP + pumped

wind

0 1000 2000 3000 4000 5000 6000 7000 8000 9000

150

600

30

2000

8200

6200

MW

RE Targets and achievements

3. Technology Specific TargetsFlexibility and ‘Raising the Bar’

Thailand’s REDP: Past

Source: Dr Sinsukprasert 2012

Source: Dr Sinsukprasert 2010

Vietnam’s Wind Power Planning

Thailand’s AEDP: Present

Source: Dr Nguyen Anh Tuan 2012

4. RE TechnologiesTechnology maturity, costs and rationale for policy interventions

so

lar

PV

bio

ma

ss

win

d

MS

W

ge

o-

the

rma

l

co

al

na

tura

l g

as

lan

dfi

ll

ga

s

$-

$50.00

$100.00

$150.00

$200.00

$250.00 $232.90

$138.10 $129.80 $104.40

$74.90 $70.10 $59.80 $57.30

conventional renewable

externalities

CostReductions from learning

PolicyInterventions

4. RE TechnologiesSolar PV technological learning curve

5. Policy InterventionsTechnology maturity and incentive mechanisms

Source: UNEP-SEFI 2008

R&D Funding Public FundingFiscal Policies

Regulatory Frameworks

5. Policy InterventionsTechnology maturity, financing and incentive mechanisms

Source: UNEP-SEFI 2008

R&D Funding Public FundingFiscal Policies

Regulatory Frameworks

6. Support MechanismsFinancial incentives

R&D FundingPublic Funding

Fiscal Policies

Regulatory Frameworks

• Public investments• Loans, grants• Competitive

bidding

• Capital subsidy, rebate

• Tax incentives• Energy payments

• Feed-in Tariff• RPS, Quota and

Obligations• Net Metering• Tradable Renewable

Energy Certificate

SWBHAUSNE ITA

DKA J

DK E HL

AUSACH

D

FI B NEITA SW

LJCAUS

DCH PUS ITA

HFALITAUK

PUS K NEDKE

B SWD

GRCH NOIR C

CZ

F UKNONEGR

LTUSC DK

SWAIR ITA P E

NZ

DK US ITAH

A PNE

C UKT K GR

SWD CH J NOF

LB

CBD K T H

NZGR

IRF L

USFI PAAUSITADK

UKJ

NZ F

IR

NOUK

EU

GR

CZ

J

K

NONECH

SWE

CZ KB

EFI

AUS

CZ

FID

FI K

NO UK

1970 1973 1976 1979 1982 1985 1988 1991 1994 1997 2000 2003

Tradable

Certificates

Obligations

Incentive

Tariffs

Tax

Measures

Investment

Incentives

RD&D

Voluntary

Programs

AUS - Australia C - Canada FI - Finland GR - Greece ITA - Italy L - Luxembourg NO - Norway SW - Sweden UK - United Kingdom

A - Austria CZ - Czech RE F - France H - Hungary J - Japan NE - Netherlands P - Portugal CH - Switzerland US - United States

B - Belgium DK - Denmark D - Germany IR - Ireland K - Korea NZ - New Zealand E - Spain T - Turkey

SWBHAUSNE ITA

DKA J

DK E HL

AUSACH

D

FI B NEITA SW

LJCAUS

DCH PUS ITA

HFALITAUK

PUS K NEDKE

B SWD

GRCH NOIR C

CZ

F UKNONEGR

LTUSC DK

SWAIR ITA P E

NZ

DK US ITAH

A PNE

C UKT K GR

SWD CH J NOF

LB

CBD K T H

NZGR

IRF L

USFI PAAUSITADK

UKJ

NZ F

IR

NOUK

EU

GR

CZ

J

K

NONECH

SWE

CZ KB

EFI

AUS

CZ

FID

FI K

NO UK

1970 1973 1976 1979 1982 1985 1988 1991 1994 1997 2000 2003

Tradable

Certificates

Obligations

Incentive

Tariffs

Tax

Measures

Investment

Incentives

RD&D

Voluntary

Programs

AUS - Australia C - Canada FI - Finland GR - Greece ITA - Italy L - Luxembourg NO - Norway SW - Sweden UK - United Kingdom

A - Austria CZ - Czech RE F - France H - Hungary J - Japan NE - Netherlands P - Portugal CH - Switzerland US - United States

B - Belgium DK - Denmark D - Germany IR - Ireland K - Korea NZ - New Zealand E - Spain T - Turkey

1970 1980 1990 2000

RD & D

Investment Incentives

Tax Measures

Feed-in Tariffs

Voluntary Programs

Obligations

TradableCertificates

Source: IEA 2005

6. Support MechanismsRE Policy Evolution in Developed Countries: Shift to regulatory policies supported by fiscal incentives

5. Policy InterventionsRE economic and non-economic barriers

Source: IEA 2011

6. Support MechanismsMekong countries

Cambodia Myanmar Lao PDR Vietnam Thailand

Investments by Ministries involved

UtilityInvestments

UtilityInvestments

UtilityInvestments

UtilityInvestments

DemonstrationProjects

DemonstrationProjects

DemonstrationProjects

S & T FundDemonstration

Research,Prototype

Demonstration

Tax Incentives

BOI incentives, low interest loan, capital support

Tax incentives, soft loan, exempt land & environ fees

Feed-in Adder solar, wind, biomass, MSW, biogas

Feed-in tariff (wind), avoided costs for other RE

Information on energy potential

Wind potential information

6. Support MechanismsThailand

Source: Thailand PV Status Report 2012

Investor

PM, MPIPeople Committee

MOIT, MPIPeoples Committee

MPIPeoples Committee

Appropriate MinistriesDept’s

Pre-InvestmentStudy (PFS)

Investment ApprovalFeasibility Study

Approval to Construct Investment License

EvaluationCommittee

Construction

B

CD

E

A

Sign PPAEVN,PC

6. Support MechanismsVietnam

Land and environmental fees exemptions

Tax incentives, duty exemptions

Wind information

Wind Feed-in-Tariff

Source: adapted from Dr Nguyen Anh Tuan 2012

Indonesia FIT

Geothermal 2

00

3

Thailand Adder

(solar,

wind,

SMHP,

bioenergy,

biofuels) 2

00

6Indonesia FIT

small RE 2

00

9

Malaysia FIT

(biogas,

biomass,

SHP,

PV) 2

01

1

Vietnam FIT

wind 2

01

1

Philippines FIT

(wind,

solar,

ROR

hydro,

biomass,

ocean

thermal) 2

01

2

Thailand FIT 2

01

2?

6. Support MechanismsIncreasing use of FIT in the ASEAN

6. Support MechanismsThailand’s feed-in adder and solar PV investments

Source: Thailand PV Status Report 2012

6. Support MechanismsVietnam’s wind policies and wind power development

Binh DinhPhu Yen

Lam DongNinh ThuanBinh Thuan

BR-VTTien Giang

Ben TreTra Vinh

Soc TrangBac LieuCa Mau

0 200 400 600 800 10001200140016001800

51

50

70

1068

1541

6

100

280

93

350

99

300

MW

Wind Power Projects under DevelopmentOver 4,000 MW

Source: adapted from Dr Nguyen Anh Tuan 2012

Ratepayer Funding• E

quivalent Distribution

• Customer Differentiation

• System Benefit Charge

Taxpayer Funding

Supplementary Funding• G

reenhouse gas revenue

• Utility tax credit

Inter-Utility Cost Sharing

Feed-in Tariff Funding

Key Issue:consumer impacts

Key Issue:politicallysensitive

Key Issue:Sufficiencyof funding

Key Issue:disagreementsfrom constituencies

6. Support MechanismsFeed-in tariff funding

Ex: Republic of Korea

Thailand, Malaysia, Indonesia, Japan, Philippines, PR China, India, etc

Ex: Mongolia

7. Final Remarks

Setting of targets

• Ambitious but achievable technology-specific targets founded on realistic technical, economic and market studies

• Responsive to market developments• Supported by a policy or a regulatory decision• Integrated in a RE Plan or Power Development Plan

Mechanisms to achieve the targets• Technology-specific support• Mix of instruments addressing various types of

barriers• Feed-in tariff (FIT) (and its variants) appears to be

gaining acceptance in the ASEAN in general – but its effectiveness needs to be further demonstrated

• Predictable and transparent