Sern Literature Review 2012

REEEP / Sustainable Energy Regulation Network – July 2012

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SERN Literature Review 2012

An Annotated Bibliography and Reference Guide on Regulation and Sustainable Energy

Dr Xavier Lemaire

Energy Institute – University College London


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RENEWABLE ENERGY AND ENERGY EFFICIENCY: Literature Review on Regulation

Introduction The Renewable Energy and Energy Efficiency Partnership (REEEP) promotes the wider use of renewable energy and energy efficiency as a means to greater energy security, economic development, social equity and environmental protection. REEEP is an active global coalition that structures policy initiatives for clean energy markets and facilitates financing for energy projects. REEEP is uniquely placed among global initiatives to drive the integration of renewable and energy efficient systems into national and global energy policy. REEEP is supported by funding from the governments of Austria, Ireland, Italy, the Netherlands, Spain, the United Kingdom and the United States and the European Commission. A priority area for REEEP is therefore the promotion of policies and regulatory mechanisms that support renewable energy and energy efficiency (sustainable energy). REEEP has produced via its Sustainable Energy Regulation Network – SERN this update of a review conducted by SERN of the existing literature on regulation and sustainable energy. It is a selection of 100 documents that gives a good grasp of current debates and outcomes resulting from academic research and consultancy work on this issue. Such information is essential to understand what are the best mechanisms and policies that will facilitate sustainable energy. This document is an update of literature review conducted in 2008. It has been coordinated by Dr Xavier Lemaire, Energy Institute, University College London and abstracts have been written by Anna Song and Lloyd Hill for the first edition and by Daniel Kerr and Yenny Hinostroza Paredes for the present edition. Updates of this document can be found on the community REEEP website: http://www.reeep.org/830/sern.htm SERN July 2012


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Table of contents Section A. Power Sector Reform and Regulation 4 1. Best Reform Practices 4

2. Implications for Sustainable Energy 1 0 3. Regulation for Distributed Generation 14 4. Lessons for Developing Countries 17 Section B. Energy Services for the Poor – Rural El ectrification 20

Distributed Generation in Developing Countries Section C. Renewable Energy Policies, Technologies and Markets 25 Section D. Energy Efficiency 31 Section E. Energy Economics

1. Energy Subsidies 33 2. Energy Costs 35

Section F. Regulatory Mechanisms to Promote Renewa bles 1. Quota systems (ROC, RPS) 38

2. Feed-in tariff design 41 3. Comparisons of different mechanisms 47

Section G. Kyoto mechanisms 49 Section H. Further readings 51 Section I. Book reviews 58


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Section A. Power Sector Reform & Regulation Section A1. Best Reform Practices

Annotated Reading List for a Body of Knowledge on the Regulation of Utility Infrastructure and Servic es

Mark Jamison, Sanford Berg, Farid Gasmi and José Távara, World Bank, 29 October 2004.

This publication represents an attempt to establish a standard body of knowledge on utility regulation. The reading list has been produced in the wake of the post-1980 wave of reforms in infrastructure sectors and the growth in the number of regulatory agencies around the world. Whereas numerous training programmes have been developed to train people working in newly formed regulatory agencies, the authors note the lack of recognized measures of expertise and the absence of a standard body of knowledge. This reading list is therefore intended to fill this gap, by summarizing the basic principles and best practices that have been developed over the years, and by providing case studies of regulation in different contexts.

The annotated reading list consists of core references (covering broad, cross-sectoral knowledge), sectoral references (intended for sector specialists) and other references (aimed at those who wish to develop in depth expertise on specific topics). After an initial overview of utility regulation and a chapter dedicated to general concepts, the references are explored in separate chapters focusing on: market structure and competition; financial analysis; regulating overall price level; tariff design; quality, social and environmental issues; information issues; and regulatory process.

Best Practices Guide: Implementing Power Sector Reform

The Regulatory Assistance. This manual is a comprehensive guide on the discussion of some important issues that are critical for the successful implementation of the power sector reform. The market-based reforming requires concerted efforts from different parts of the systems: the economical, social and political systems. Economic related issues include the economic justification for utility regulations, supported by the discussion of cost based ratemaking, licensing the utility, industry restructuring and performance based regulation (PBR). Political issues concerned here are those institutional arrangements such as functions and responsibilities of regulatory commissions, as well as the independence of the commissioners. Social issues, in a broad sense, discussed by this report, are environmental and consumer protection issues. Management issues covered by this report primarily focuses on an integrated resource planning (IRP) and, independent Power Production and Competitive Bidding.


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Regulatory Institutions in Liberalised Electricity Markets

International Energy Agency, 2001. This book-length publication begins with the assertion that institutional reform is fundamental to developing and sustaining a competitive electricity market. It nevertheless notes the existence of varying national approaches to institutional reform. The objective of the book is therefore to explore contrasting approaches to the reform of the electricity supply industry (ESI). Given the co-existence of several regulatory institutions with authority over any given ESI, specific attention is dedicated to four issues: the autonomy and independence of each institution; the allocation or responsibilities; the creation of co-ordination mechanisms; and the governance and management of institutions. Following a general analysis of regulatory institutions, the bulk of the book is dedicated to a survey of institutional reform trends in fourteen IEA member states: Australia, Austria, Belgium, Canada, Czech Republic, Denmark, Finland, France, Germany, Greece, Hungary, Ireland, Italy and Japan. Beyond a broad categorization of regulatory approaches, no attempt is made to compare different models and identify “best practices” in electricity regulation. The book does however identify key trends and policy implications.

Regulation by Contract: A New Way to Privatize Electricity Distribution?

Tonci Bakovic, Bernard Tenenbaum and Fiona Woolf, Energy and Mining Sector Board Discussion Paper No. 7, World Bank Group, May 2003. The paper explores the concept of “regulation by contract” and the potential benefits that this form of regulation offers to developing countries in the reform of their electricity sectors. The paper begins with an initial exploration of recent debates on the merits of regulatory independence and regulation by contract, before presenting a detailed discussion of real-world regulatory experiences in Latin America and India. Particular attention is given to regulatory problems experienced in Brazil. Subsequent chapter explore the management of risk and approaches to dispute resolution. The authors argue that in the context of a worldwide movement towards power sector reform, the growing recognition of the role that an “independent regulatory agency” can play in depoliticizing the tariff-setting process has been qualified by a growing consensus that “independence is not enough.” Independence, by itself, does not create regulatory commitment, for which reason the authors argue the case for a regulatory contract, which is defined as a political contract that must be negotiated by political authorities. The regulatory contract is in essence a pre-specification of “the formulas and procedures that determine the prices that a distribution company will be allowed to charge for the electricity it sells.”


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Integrating Independent Power Producers into Emerging Wholesale Power Markets

Fiona Woolf and Jonathan Halpern, World Bank, November 2001. This article explores the process of integrating independent power produces into emerging wholesale electricity markets in both developed and less developed countries. A particular focus falls on power purchase agreements (PPAs) with independent power producers (IPPs) in contexts where a wholesale electricity market is being introduced. The three broad issues covered in the paper are: policy goals associated with IPP programmes and wholesale electricity markets; approaches to reconciling existing IPP contracts with emerging power markets; and the design of new IPP contracts that better facilitate integration into electricity markets. The authors argue that the onus is on governments and regulators to manage a process that is perceived to be fair and to implement a well thought through communications strategy. This requires the sound design of market structures and rules. A brief case-based overview of international experience with the integration of IPPS is provided in an annex.

Institutional or Structural: Lessons from Internati onal Electricity Sector Reforms

Guy Holburn and Pablo Spiller, published in E. Brousseau and J. Glachant (eds), The Economics of Contracts: Theories and Applications, Cambridge University Press, 2002. This chapter explores the relative significance of structural and institutional changes in the electricity sector for the process of attracting long-term private investment. The widespread privatization of national electricity sectors since 1980 has resulted in considerable debate on the design of "optimal" restructuring policies. The authors argue that there is in fact little evidence supporting arguments in favour of specific models of restructuring. They argue that "the sector's 'regulatory governance' regime is more important for attracting long-term private investment than the specific choice of industrial structure." Beginning with a discussion of the "utilities problem", the paper explores issues associated with economies of scale and scope in the electricity sector and suggest reasons why electricity infrastructure pricing tends to be politicized. This is followed by a discussion of various "myths" associated with the "optimal" restructuring of the electricity sector. The subsequent discussion of the impact of regulatory governance is based on three case studies: El Salvador, the United Kingdom and the United States.


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Electricity Market Reform – An IEA Handbook

Caroline Varley and Gudrun Lammers, International Energy Agency, 1999. This handbook begins with the observation that the electricity supply industry is being reformed in nearly all IEA countries. The primary objectives of the handbook are therefore to describe changes in the industry and its regulatory structure and to identify key issues and lessons for the market-orientated reform of electricity supply. Separate chapters are dedicated to: an overview of the electricity sector; key issues in regulatory reform; transition issues in regulatory reform; the expected benefits of reform; and conclusions and recommendations. In addition to the economic goals of improved economic efficiency, lowered costs and consumer prices and greater economic growth, the authors argue that electricity reform can also help to meet other key public objectives, notably security of supply and environmental protection. To these ends they recommend that governments expand the scope of competition in the power sector. Key elements of the reform process that need to be considered are the power sector's ownership, its structure and the regulatory structure. With respect to ownership they recommend corporatisation and, in the long run, privatization. As regards the structure of the industry, two basic models of competition are recommended: the competitive pool model and the grid access model. The authors note the need for regulation, particularly with respect to transmission, which remains a natural monopoly. They nevertheless recommend that governments review regulations at regular intervals and ensure that they remain market compatible.

Vers de nouvelles organisations du secteur électriq ue: les réformes, les acteurs et les expériences [Towards New Organizations in the Electricity Sector: Reforms, Actors and Experiences]

Institut de l’énergie et de l’environment de la Francophonie (IEFP), 2005. This publication represents a geographically diverse and interdisciplinary attempt to explore the politics of sustainable energy in francophone countries, wherein due consideration is given to the appropriation of renewable energy technologies and the increased provision of access to modern energy services. The book comprises multiple authored articles, which range in scope from the conceptual exploration of electricity sector reforms to specific case studies of the reform experiences of selected Francophone countries. Key conceptual issues explored include: the role of the state in a competitive market for electricity; the role and responsibilities of the regulator; the juridical basis of different institutional forms; and the application of neo-institutional economics to competitive market reforms. Many of the chapters focus on the experiences of francophone African countries: these include broad comparative studies and case studies of Gabon, Mali, Morocco and Senegal. Other case studies explore electricity sector reforms in Québec and Romania.


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The British Model in Britain: Failing slowly

Steve Thomas, Energy Policy 34, 2006, pp. 583-600. The post-1990 reform of the electricity sector in Britain has had a powerful demonstration effect on energy sector reforms in other countries and the World Bank has become a powerful advocate of the "British Model", the cornerstones of which were the liberalization and privatization of electricity industries. In this article the author explains why, despite the apparent success of the British reforms (as measured by declining energy prices during the 1990s), the reputation that the British Model enjoys is not justified. The British experience with electricity sector reform is described and assessed in terms of three criteria: the competitiveness of the corporate structure; the efficiency of the wholesale electricity market; and the extent to which retail electricity competition has resulted in the efficient allocation of costs. The author argues that, with respect to the key objectives of creating efficient markets at both wholesale and retail level, the reforms have failed. The symbolic effect of the reforms is explained in terms of declining electricity prices during the 1990s, due to factors external to the operation of the new markets that were created. The author argues that the privatized industries have become increasingly uncompetitive – "moving dangerously close to an oligopoly" – and that, while large consumers have benefited, this has come at the expense of smaller consumers and particularly the poorest among them.

Competition in Electricity Markets

Carlos Ocaña, International Energy Agency, 2001. Drawing on the experience of OECD countries, this IEA report explores the development of choice and competition in the electricity supply industry (ESI). The report begins by noting that the many different approaches to ESI reform are converging on four elements: the rapid introduction of full consumer choice; an obligation to provide non-discriminatory Third-Party Access (TPA) to the transmission and distribution networks; unbundling of transmission; and liberalization of the electricity trade. The report presents a review of ESI reforms in OECD countries, before exploring issues relating to unbundling, markets, networks and policy frameworks. A fundamental pillar of effective ESI reform is consumer choice, i.e. giving all consumers the ability to choose their electricity supplier. The author argues that consumer choice helps to discipline market players, as dissatisfied consumers can switch suppliers. Lifting barriers to market entry and changing the rules is however not enough, as the report notes that the major challenge that early reformers have had to face is ensuring a sufficient number of competitors. The procedures associated with market orientated regulation therefore need to be "radically different" from those needed without competition.


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Contracts and the Institutional Environment for Electricity Reform

Albert Danielsen, Nainish Gupta and Peter Klein, Elsevier Science Inc, 1999. This article draws on literatures from law and economics to explore the extent to which a breach of contract in the electricity sector may be considered optimal. The concept of “efficient” or “optimal breaches” is explored within the context of a more general discussion of contrasting “institutional environments” and with particular reference to arguments developed in new institutional economics. This discussion forms the basis of the subsequent discussion of contract breaches in the United States. In terms of the Public Utility Regulatory Policies Act of 1979 (PURPA) many utilities negotiated contracts with non-utility generators (NUGs). The authors argue that, with recent technological developments and the introduction of competition into electricity markets, these contracts have become economically nonviable. The authors consequently explore the conditions under which the renegotiation or the “optimal breach” of these contracts may constitute the most appropriate solution. More specifically they argue the case for using an “expectation damages rule”, which “tends to promote optimal contract performance and optimal breach.”


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Section A2. Implications for sustainable energy

Long-term Electricity Supply Systems Dynamics – a Historical Analysis

G. Verbong, E. van der Vleuten and M. Scheepers, SUSTELNET, 2002. This article examines the historical development of European electricity supply systems using a “multilevel model” as a framework of reference. The rise of electricity supply systems is explained in terms of the interplay between developments at three levels of socio-technical change: the level of technological niches or protected technological spaces; the level of socio-technical regimes; and the deeper structural trends in the “socio-technical landscape.” The authors argue that recent trends constitute a paradigm shift in electricity supply. They note that the recent concern to create a level playing field between centralized and distributed generation is quite remarkable – a retreat from the centralizing concerns of the 1950s and 1960s. They nevertheless argue that the “critical problems of each era are formulated against the realities of the preceding era." For this reason, recent attempts at reform are constrained by two forms of path dependency: technical or network related path dependency; and social or actor-related path dependency.

An Outline for Developing Regulatory Road Maps

E. van Sambeek, M. Scheepers, A. Wals, SUSTELNET, 2003. This report provides a framework for the development of regulatory road maps. The report forms part of the SUSTELNET research project, which is dedicated to analyzing the technical, socio-economic and institutional dynamics of the European electricity system and markets. In this context a road map is defined as a guide to the development of a desired future state of market organization. In this case the desired state is a "level playing field" for centralized and distributed generation. The framework is developed in the first section of the report, which is subdivided into sections focusing on network regulation and market access. The final section suggests a step-by-step process for developing regulatory road maps. Five steps are suggested: the definition of a starting point; the development of scenarios and a background story line; the identification of the final status of the regulatory framework; back casting of regulatory steps; and the description of actions and responsibilities.


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Removing Barriers to Sustainable Energy from Regulation of Liberalized Energy Markets – the UK a s a Case Study

Catherine Mitchell, Paper given at VROM Workshop, Netherlands, Warwick Business School, 2000. This paper explores the ways in which the introduction of liberalization to energy industries may be beneficial or non-beneficial to sustainable energy. Set against the background of European Union Directives – which establish a framework for opening markets – the paper explains the regulatory drivers placed on electricity companies as a result of the liberalization process and their implications for sustainable energy. After a brief overview of liberalization within Europe, the UK environment and experience with liberalization is analysed. The paper evaluates the drivers for certain characteristics of liberalization in Europe and discusses the benefits and disadvantages for sustainable energy which arise from liberalization. The author argues that the development of sustainable energy requires that European member states establish forms of liberalization that ensure competition down to, and including, the distribution level. If barriers to distributed energy are not removed at this level, sustainable energy is unlikely to be valued. Barriers of this kind are identified in the UK case, and the policy response to these is examined. It is argued that European member states should "pick and mix" the constituents of their respective liberalization packages.

The Evolving Relationship between Liberalization, t he Regulator and Renewable Energy Development in the UK, 1990 – 2002.

Catherine Mitchell, Journée du Cuepe, Geneve, 19 April 2002. This article traces recent policy and regulation trends in the UK electricity market. In so doing it explores the manner in which the official understanding of “liberalisation ” has changed between 1990 and 2002. Beginning with the Electricity Act of 1990, the author explains how the separation of the electricity system into three operations (generation, transmission, and distribution & supply) was premised on the establishment of an energy regulator whose primary function was to promote competition. This began to change after the election of the Labour Party in 1997. The new government was critical of the regulatory system’s tendency to pursue competition “too much as an end in itself”, at a time when other objectives (notably environmental objectives) were being placed on the energy policy agenda. The author argues that recent policy measures – notably the Energy Policy Review (2001) and the Renewable Obligation (2002) – demonstrate a growing recognition of the tension between economic objectives and environmental or social objectives. These measures also signal a “maturing of the understanding of the impacts of liberalisation.


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Neutral Regulation – The Vital Ingredient for a Sustainable Energy Future

Catherine Mitchell, Energy and Environment, 11(4), 2000, pp 377-389. This article explores the possibility of introducing “neutral regulation” of the energy market in the UK and the potential role that this can play in promoting sustainable energy. The author argues that the current regulatory system institutionalizes barriers to the take-up of sustainable energy. The result is an increasingly apparent tension between the two key drivers of UK energy policy: (1) increasing competition and lower energy prices, and (2) increasing concern about climate change and the need to reduce emissions. The article explores a number of direct and indirect means of supporting the development of markets for renewable energy in the UK. These include the possible role that “tradable green certificates” may play in developing distinct markets for “conventional physical electricity” and “greenness.” With respect to regulation, the author explores various strategies aimed at the development of a neutral system, which is defined as one which tends to “neither favour nor disfavour centralized or distributed power or any particular actor but would promote least cost decisions, while at the same time meeting quality standards.” A key feature of this system would be a more active role for distribution network operators (DNOs). The article explores numerous other potential features of a new electricity system.

Revisiting Electricity Reform: The Case for a Sustainable Development Approach

Navroz Dubash, Utilities Policy, 11, 2003. This article explores the recent transformation of the conventional wisdom on the structure and operation of the electricity sector, and the associated trend towards power sector reform. The trend towards a relatively uniform model of power sector reform nevertheless masks contrasting reasons for reform in developed and developing countries. The article focuses specifically on the drivers of electricity reforms in the developing world and on the potential for social and environmental benefits from electricity reform. The author argues that power sector reforms in industrialized states have been driven largely by technological factors; technological developments have resulted in reduced economies of scale and undermined the traditional assumption that electricity is a natural monopoly. By contrast, reform in developing countries has been driven by the demand for capital and problems associated with public sector management. Social and environmental concerns have therefore not played a significant role in this process. It is therefore argued that social and environmental concerns need to be factored more explicitly into reform processes.


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Electricity Reform: Social and Environmental Challenges

Njeri Wamukonya (ed.) United Nations Development Programme, 2003. While electricity sector reform began in the 1970s, the pace of power reform increased considerably during the 1990s. The drivers of reform in developing countries have differed from those in developed countries. This publication explores these differences and focuses specifically on the social dimensions of electricity supply. The book consists of multiple authored chapters focusing on regional perspectives and country-specific case studies. The final section explores the social and environmental accountability of power sector reforms. The editor notes the emphasis on consumer choice in developed countries, and the tendency to justify the shift to a market orientated framework on the basis that it is most efficient. The problem for developing countries is that this justification is not always supported by the evidence, and that the measures associated with market reforms have had negative social consequences. Moreover, the validity of conventional power sector performance indicators is questioned, "on the basis that they do not necessarily capture the underlying social and environmental dynamics that are critical for development." It is therefore argued that a "socio-political-economy" should be the overarching framework within which reform is designed and implemented.


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Section A3. Regulation for Distributed Generation

Performance-Based Regulation for Distribution Utilities The Regulatory Assistance Project, December 2000. This report provides regulators and their staffs with practical advice on performance-based regulation (PBR) for distribution utilities. It focuses, in particular, on how to design and evaluate PBRs that encourage deployment of cost-effective distributed resources - both smaller-scale dispersed generation and end-use efficiency. Most commissions will confront PBR issues in the context of a particular utility proposal. This report can be used as practical guides for those who find some particular proposals relevant to their own situations, or it can also be used as a general guideline for the most important issues concerning PBR. Based upon the general guidelines, this report presents a designing and evaluation framework, suggesting a three-step procedure: articulating the goals, designing a structure (incentives schemes and mechanics) to meet the identified goals, and ‘getting the numbers right’. It highlights the importance of revenue-driven structure as a strong investment incentive, and the influence from risk factors and the inflation.

A Review of Four European Regulatory Systems and their Impact on the Deployment of Distributed Generation

Peter Connor and Catherine Mitchell, SUSTELNET, October 2002. This report provides a comparative overview of the regulatory regimes in four EU member states: Denmark, Germany, the Netherlands and the United Kingdom. The findings presented in the report are the product of the first phase of the SUSTELNET research project, a consortium of ten research organizations dedicated to studying the technical, socio-economic and institutional dynamics of European electricity supply. The main objective of the SUSTELNET project was to develop "regulatory road maps for the transition to an electricity market and network structure that creates a level playing field between centralized and decentralized generation and network development." This report covers two main aspects of the electricity supply systems in Denmark, Germany, the Netherlands and the United Kingdom: the impact of economic regulation on distributed generation (DG); and regulatory characteristics which appear to be most favourable and most malign to the deployment of distributed generation. The report is divided into sections exploring governance, network issues, incentivisation of DNOs, and the selling of Electricity. The report notes the extent to which current regulation tends to favour the centralized production of power.


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Development of Criteria, Guidelines and Rationales for Distribution Network Functionality and Regulation

Uwe Leprich and Dierk Bauknecht, SUSTELNET, 2004. This work package develops the basic ideas required for an adequate regulatory framework for distribution network operators (DNOs). Aimed specifically at the member states of the European Union, the intention is to identify key principles within this framework, which may help states in the process of mapping out regulatory strategies. The authors define an "adequate regulatory framework" as one that established a level playing field on which distributed generation may compete with large scale power generation. This is defined as the "leading principle" or "rationale" for DNO regulation, while the remaining principles form the basis of a set of guidelines. The article is structured around two main sections: firstly, a discussion of the economics of distributed generation; and secondly, a set of guidelines for DNO regulation. The former includes a discussion of the costs and benefits of distributed generation, general ideas for the allocation of costs and benefits, and the allocative role of regulations and markets. The guidelines include a discussion of regulatory objectives, as well as the regulatory and transition process.

Review of Technical Options and Constraints for Integration of Distributed Generation in Electricit y Networks

Soren Varming, Christian Gaardestrup and John Nielsen, SUSTELNET, 2001. This paper explores the technical options and constraints associated with the drive to integrate distributed generation into current electricity networks. These issues are located within the context of an emerging "paradigm" change: the shift from a passive distribution infrastructure towards the large scale integration of dispersed generators. The paper begins with a discussion of the general characteristics of distributed generation technologies. This is followed by an analysis of issues associated with DG interaction with the electricity network, and the possibilities for the large scale integration of distributed generation and the redesign of the grid. Referring specifically to European Union member states, the authors note the wide range of technical standards for the connection of distributed generation. There is therefore considerable scope for standardization, which – it is argued – will make it easier to integrate distributed generation and improve the functioning of the internal market for DG-technologies. The key finding is that distribution networks can no longer be seen as "passive appendages to the transmission network, but that the entire network must be designed and operated as a closely integrated unit." One implication of this is a more active role for distribution network operators (DNOs).


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New Approach in Electricity Network Regulation – An Issue on Effective Integration of Distributed Generation in Electricity Supply Systems

M.J.J. Scheepers and A.F. Wals, SUSTELNET, 2003. This report presents the results of the analytical phase of the sustainable electricity networks (Sustelnet) project, the main objective of which is to "develop regulatory roadmaps for the transition to an electricity market and network structure that creates a level playing field for centralized and decentralized generation and network development." After providing a general introduction to distributed generation, the report discusses the values associated with distributed generation and the prospects for future development. The last two sections of the report are dedicated to rationales and principles for a future regulatory framework, and to possible regulatory strategies. The authors argue that there is general agreement that "a level playing field" involves markets and regulation that provide neutral incentives to centralised versus distributed generation. Long term regulatory strategies are therefore needed for the transformation of current regulatory frameworks, so as to provide new regulations that will level the playing field in electricity supply, allow for greater use of distributed generation and create incentive for DNOs to innovate.

Distributed Generation in Liberalised Electricity Markets

Peter Fraser, International Energy Agency, 2002. This publication explores the economics of distributed generation (DG) relative to centralized distribution through high-voltage transmission systems. The current market status of DG technologies in selected OECD countries is assessed. Policy issues affecting distributed generation in four countries – Japan, the United states, the Netherlands and the United Kingdom – are evaluated in terms of the "three Es" of energy policy: economic efficiency, environmental protection and energy security. It is argued that, while distributed generation is not yet ready to replace existing systems, "there are changes in regulations and market rules which would ensure that it finds its proper place." The book begins with a summary of current distributed-generation technologies and the economics of distributed generation. Particular attention is given to the significance of the relative price of retail electricity compared with fuel costs in determining the competitiveness of the various DG options. The market status of these options is then examined in each of the four OECD countries. Separate chapters are also dedicated to policy issues and the future of distributed generation. The concluding section provides a number of general recommendations for integrating distributed generation into liberalised electricity markets.


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Section A4. Lessons for Developing Countries

Institutional Designs and Regulatory Reforms in the Energy Industries – an International Comparative Perspective and Lessons for Brazil

Helder Queiroz Pinto Jr. Centre for Brazilian Studies, Oxford, 2001. This paper explores the variety of regulatory frameworks in the energy sector. Against the background of the structural and institutional changes that were made in more than a hundred countries during the 1990, the author argues that the comparative study of these changes is difficult, given: that the changes are very recent; that some of the reforms have been subject to revision; and the existence of a variety of regulatory frameworks and institutional designs. This paper therefore represents an attempt to develop a comparative approach to these changes in the energy sector. The focus falls on the manner in which regulatory attributions vary in three respects: the institutional arrangements; the market structures; and the regulatory instruments. The first section explores different approaches to energy regulation, focusing particularly on the historically influential role that American and British reforms have played. This is followed by a discussion of the variety of energy regulation agencies and a case study of reforms in the Brazilian energy industries.

The England and Wales Electricity Model – Option or Warning for Developing Countries

John E. Besant-Jones, Public Policy for the Private Sector, The World Bank, June 1996. This brief article has two broad objectives. The first is to summarize the “radical transformation” of the electricity supply industry that took place in England and Wales during the late 1980s and the early 1990s. Secondly, after noting the tendency to underestimate the demonstration effect of a successful power model, the author summarizes the potential benefits and risks facing attempts to introduce the England and Wales electricity model (“the E&W model”) to developing countries. The article begins with a discussion of the key “innovative features” of the E&W model, before comparing this model with influential systems developed in other countries. This is followed by a discussion of six general lessons for power sector reform. Finally, the relevance of the E&W model to developing countries is elaborated in terms of five features that may prove beneficial to developing countries. These are in turn contrasted with a number of issues that undermine the feasibility of the model in developing countries.


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Reforming Power Markets in Developing Countries: What Have We Learned?

John E. Besant-Jones, Energy and Mining Sector Board Discussion Paper No. 19, World Bank, September 2006. This paper explores the experiences and lessons learned from the reform of power markets in developing countries and transition economies. It explores the extent and outcomes of power market reforms, both in developing countries that have performed well and in those that have performed poorly. After summarizing the context of power market reforms in developing countries, separate sections are dedicated to: enterprise restructuring and corporate governance; market structure and governance; regulation of power markets; and access and affordability to electricity services. The final section explores issues relating to the implementation of power market reform. The author argues that power market reform in developing countries should be assessed in terms of three outcomes: better service quality for electricity consumers to support economic growth and welfare; improvement in the government's fiscal position; and more affordable access to electricity for the poor. He argues that a key lesson learned is the "importance of country and power market starting conditions for reform, since these conditions determine the initial – and often subsequent – scope and composition of reform."

The California Experience with Power Sector Reform – Lessons for Developing Countries

The World Bank, April 2001. This report provides an overview of the California electricity reforms that were introduced after 1998 and suggests lessons that can drawn from this process for developing countries planning power sector reforms. In 1998 California introduced competition to its retail and wholesale power markets, but this was followed my major crisis between 2000 and 2001. This paper argues that the California crisis offers valuable lessons for developing countries on "what not to do" in the reform of power sectors, and counters the interpretation that the crisis resulted from the risks of reform per se. The paper is divided into three sections. It begins with an initial overview of key features of the 1998 California power sector reform. The first section of the main text then provides a discussion of lessons that developing countries can draw from the California power crisis. The final section then provides a description of the specific reforms that were initiated in California and reviews the factors that led to the crisis.


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Electricity Sector Reform in Developing Countries: Implications for Renewable Energy Dr Keith Kozloff, REPP Research Reports, 2, March 1998. In the face of growing demand for electricity and the increasingly apparent environmental problems associated with carbon emission, energy sector reform in developing countries will need to address the potential of renewable energy sources. This article anticipates a trend towards the abandonment of centrally planned, state-owned electricity systems in developing countries and explores the impact of electricity sector reforms on markets for renewable energy. The article begins with an assessment of the current state of renewable energy markets in developing countries. This is followed by a discussion of “pre-reform” power sectors and an assessment of three major types of power sector reform: commercialization, privatization and restructuring. The possible impact of these different types of reform is discussed in separate sections focusing on bulk power markets and distributed markets. The article concludes with a number of recommendations for the promotion of renewable energy in developing countries.

Global Electric Power Reform, Privatization and Liberalization of the Electric Power Industry in Developing Countries

R.W. Bacon and J. Besant-Jones, Energy & Mining Sector Board Discussion Paper Series, Paper No. 2, June 2002. This article explores the recent trends associated with the movement to privatize and liberalize the electricity sector in developing countries. It begins with an analysis of the forces driving this movement. These include changes in technology affecting the generation and distribution of electricity, as well as poor performances in numerous state-run electricity sectors and an “increasing awareness” of the economic benefits that private sector competition can bring to the industry. After examining the principle reasons for reform, the article summarizes the key elements and sequencing issues associated with electricity sector reform. The next section provides a global perspective on the progress of reforms in developing countries. Noting the powerful demonstration effect of electricity sector models in Chile, England and Wales, and Norway during the 1980s, particular attention is given to sector reforms in Eastern Europe and countries of the former Soviet Union, Africa and the Middle East. The final sections explore the overall impact of reform on the electricity sector and economies as a whole, before concluding with a synopsis of the lessons learned for power-sector reform.


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Section B. Energy Services for the Poor – Rural Ele ctrification Distributed Generation in Developing Countries

This section gives few examples of documents on energy efficiency policies. For a complete set of documents, please refer to the document “SERN Literature Review 2010 - An Annotated Bibliography and Reference Guide on Off-grid Regulation and Rural Electrification available at: http://www.reeep.org/830/sern.htm

Energy Access: Assessment of Energy Reforms – Case Studies in Latin America and the Caribbean

Roberto Kozulj, Nicolás Di Sbroiavacca and Daniel Bouille, Global Network on Energy for Sustainable Development (GNESD), April 2004. This article explores the relationship between poverty and energy sector reforms in Latin America and the Caribbean (LAC). The article is based on the results from Phase 1 of a broader project, Energy Access: Assessment of Energy Reform – Case Studies for Latin America and the Caribbean, which explores two broad aspects of the impact of energy sector reforms: access and affordability. Access to energy was evaluated in terms of three indicators: national electrification levels, national electrification rates, and electricity consumption per capita. Affordability was measured in terms of two variables: electricity tariffs and household electricity expenditures as a percentage of household income. The article is structured around case studies of three countries: Argentina, Peru and El Salvador. The authors explore both the direct and indirect impact of power sector reforms on the poor and emphasize the significance of the latter. The concern for the indirect effects of reform grew following the realization of problems associated with the indicators intended to measure access to the poor. Thus, the authors argue that, while it is difficult to measure the direct impact of energy reforms (notable with respect to access) on the poor, the indirect affect on the poor – through the association of electricity sector reforms and macroeconomic policies – are clearly evident. They argue that the reforms have affected the capacity for generating employment, increased foreign indebtedness, and resulted in corrective policies that have worsened the problem of poverty.


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Energy Access Theme Results: Energy Services for the Poor in West Africa Sub regional technical report by ENDA-TM Energy Programme, Senegal, 2004. This study examines the role of macro-economic reform and its impact upon the poor people’s access to electricity in two Western African countries: Senegal and Mali. In attempt to alleviate the poverty that suffocates the West African countries, the Structure Adjustment Programmes (SAPs) is used as a leverage to promote economic reform. As the prerequisite of getting funding from multilateral co-operation donors, these SAPs were designed to be implemented in tandem with sector reforms. This study specifically focuses on assessing the implementation of SAPs in these two countries, and evaluating the changes in service quality in term of electricity access for the poor. Despite the limitations of the data collected, this studies shows that the Governments of both countries appears have no explicit polices for the poor, and no indication that the poor have been specifically considered. Government control over the electricity sector seems to concern more with profitability of their activities. The study also reveals that the poor could have been negatively impacted by reforms.

Increasing Energy Access in Developing Countries: The Role of Distributed Generation The Business Council for Sustainable Energy, US Agency for International Development, May 2004. In an attempt of reduce energy costs, and attract private capital and improve service, many developing countries are gradually opening their electricity market. But many of them are struggling to make utilities economically sustainable and force the governments re-evaluate their energy strategies. Distributed Generation (DG) is provided as a solution. The pre-condition of DG is an open electricity market. This report examines the role played by DG in increasing energy access in developing countries. It discusses five issues: (1) distributed generation technologies; (2) the fit and unfit of distribution generation and developing countries’ contexts; (3) regulatory and policy considerations; (4) the implications of economic and financial incentives for DG; and (5) indirect investment on DG via investing in human capital, education and outreach. Distributed energy technologies covered by this paper are Fossil Fuel, Renewables (solar, wind, biomass and biofuel etc.). Each technology has its side effects, and their diffusion have to be tailored according to the variance of national contexts, such as consumption behaviour, utility system features, cost types, environmental impacts. There are also some regulatory and policy issues that needs to be taken into consideration, where economic and financial incentives are key matters.


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Banking on DE – International Financial Institution s and Cogeneration

World Alliance for Decentralized Energy, March 2005. This article begins by noting that decentralized energy (DE) holds great potential for the development goals laid down by three major multilateral funding agencies: the World Bank Group (WBG), the Asian Development Bank (ADB), and the Inter-American Development Bank (IADB). The article begins by exploring the benefits of three types of decentralized energy: energy recycling systems, on-site renewable energy systems; and high efficiency cogeneration / combined heat and power. The empirical study that forms the basis of this report is principally concerned with cogeneration. Most of this article is dedicated to reporting on a research project that sought to assess the commitment to cogeneration on the part of the three international financial institutions (IFIs) listed above. This commitment was measured qualitatively – through an assessment of IFI policy and documented commitment to cogeneration – and quantitatively – by way of an attempt to measure the proportion of the bank’s portfolios that were dedicated to cogeneration. After summarizing the methodology employed in the study, the report explores the findings with respect to each of the three IFIs, before presenting its conclusions and recommendations.

Expanding Electricity Access to Remote Areas: Off-Grid Rural Electrification in Developing Countries

Kilian Reiche, Alvaro Covarrubias and Eric Martinot, WorldPower, 2000. This article explores the potential contribution that off-grid rural electrification can make to the estimated two billion people in developing countries that remain without access to electricity. The authors begin with a discussion of two broad categories of technological options currently available for off-grid electrification – minigrids and isolated systems – before outlining current World Bank Group off-grid rural electrification programmes. Considerable attention is given to financing options and models of market intervention available to developing countries – and notably the off-grid concession model. Argentina is presented as a successful case study of the off-grid electricity concession approach. The authors argue that – given the high costs of grid extension – off-grid electrification provides an "alternative solution for many low-demand users." They argue that the declining cost of off-grid technologies have resulted in a growing market niche for small types of rural energy-service companies. New technologies provide new opportunities to address two key concerns in developing countries: "how to derive the most benefit from a liberalized and unbundled energy sector while ensuring environmental sustainability and improving access for the poor."


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Regulatory Approaches to Rural Electrification and Renewable Energy: Case Studies from Six Developing Countries

Eric Martinot and Kilian Reiche, Working Paper, World Bank, June 2000. This paper describes a range of regulatory approaches to stimulating the provision of electricity services among rural off-grid populations in developing countries. The paper explores that concession approach to rural off-grid electrification, using both conventional and renewable energy resources. The author notes that the concession approach is a relatively recent rural development practice, and that implementation lessons are consequently not yet available. The study’s findings are therefore based on project designs and expected results in six case studies. The six case studies that form the basis of the findings presented in this paper are: the PAEPRA Programme and the World Bank/GEF “Renewable Energy in the Rural Market” project in Argentina; decentralized rural energy projects in Benin and Togo; the Cape Verde Energy and Water Sector Reform and Development Project; the Photovoltaic-Based Rural Electrification Project in Peru; and Renewable Energy-Based Rural Electrification under the Population Participation Law in Bolivia. After describing the cases the paper explores issues related to tariffs and subsidies, and service quality. The authors argue that, while concessions are an attractive solution in countries with no existing energy service providers or very small markets, the regulatory, institutional and financial challenges are large. There is therefore some way to go in the evolution of best practices for contracting, operating and regulating rural energy service concessions.

A Review of International Literature of ESCOs and F ee-for-service Approaches to Rural Electrification (So lar Home Systems)

Energy & Development Research Centre, University of Cape Town, July 2003. This interim report is a product of the project "Supporting innovation in the delivery of energy services to the rural poor: off grid electrification via concessions in rural South Africa," which was established in the wake of the South African government's decision (in 1999) to adopt a concession model and fee-for-service approach to non-grid rural electrification. The purpose of the report is therefore to examine the literature on solar home systems, focusing particularly of countries that have adopted similar fee-for-service approaches. The evaluation of the literature covers four key issues: the rationale for (and objectives of) using a concession approach; the design and allocation of concessions; the extent and allocation of regulatory tasks; and technical service and standards.


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The authors note the paucity of literature detailing the institutional environment required to support the implementation of the concession approach. Particular attention is therefore given to the problem of institutional capacity at national (government) and local (energy service companies (ESCO)) levels. Among the capacity issues explored is the potential role that subsidies can play in the creation of business potential in poor rural areas. The report contains an appendix, which summarizes and evaluates (in terms of relevance to South Africa) the fee-for-service approaches adopted in Argentina, Benin and Togo, Bolivia, Botwana, Brazil, Cape Verde, Chile, China, Dominican Republic, Fiji, Ghana, India, Indonesia, Kiribati, Laos PDR, Mali, Mexico, Morocco, Namibia, Nepal, Peru, Philippines, Senegal, Sri Lanka, Tuvalu, Zambia and Zimbabwe.


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Section C. Renewable Energy Policies, Technologies and Markets

Guide to Decentralized Energy Technologies

World Alliance for Decentralized Energy, 2003. The World Alliance for Decentralized Energy (WADE) was established in June 2002 by energy professional from around the world "who believe the ruling central generation paradigm is no longer optimal, and that moving to decentralized generation will improve standards of living and reduce environmental damage." While decentralized energy (DE) is unlikely to replace central power entirely, this report argues that the DE component of global power generation will increase dramatically in coming years, and that this will produce both economic and environmental benefits. This guide is intended to accelerate this transition by outlining WADE's policy recommendations (summarized in the form of "WADE's Seven Guiding Principles for Effective Electricity Regulation") and through the provision of a standard source of information on both the technologies and the economics of their operation. The guide is structured around the two broad categories of decentralized energy: cogeneration of heat and power; and on-site renewable systems and energy recycling technologies. Separate chapter are dedicated to: technologies associated with cogeneration (steam and gas turbines, reciprocating engines, Stirling engines, microturbines and fuel cells); 'recycled' energy technologies; and renewable DE technologies (small scale hydropower and photovoltaics).

The Renewable Energy Policy Manual John Armstrong, Jan Hamrin, U.S. Export Council for Renewable Energy. Strategic capital investment in electricity generating and the global warming demands a deregulated framework for renewable energy. They are the underlying assumptions for a rational-analytical framework presented by this manual, which assumes a potential objective shared by the governments and the private sectors. An “unbundled, competitive electricity market.” and “arms-length” market infrastructure are increasingly in favour, allowing competitive sales of electricity or services among companies in renewable energy generation, transmission and distribution. Among the 193 nation states and 57 overseas territories and dependencies, there are countless combinations and permutations of electricity systems, determined by the national contingency factors. This manual seeks to identify those issues that are the most relevant to countries that are seeking to attract private capital for their renewable energy. The manual makes an attempt to identify the structure indicating the applicability of the discussion to countries that incorporate that particular structure, as well as to give recommendations of more universal application.


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The international financial community has significant capital available for investment in energy projects. But an increasing number of countries are vying for this capital - and capital is not infinite. To be competitive, a country will be required to demonstrate a legal, political and commercial host environment that reduces risk and provides investors with good reason to believe they will receive a fair and reasonable rate of return on their debt or equity investment.

Renewable Energy Policies and Barriers

Fred Beck and Eric Martinot, In Cutler J. Cleveland (ed.), Encyclopedia of Energy, Elsevier, 2004. This article begins by noting the “explosion of energy policy changes” that occurred around the globe during the 1990s. These changes have been driven by economic, environmental, security and social concerns, and have in turn had a profound influence on renewable energy. The article therefore explores the barriers that have traditionally faced renewable energy policies, before focusing on the manner in which these obstacles have been addressed within six broad categories of energy policy. The barriers to renewable energy are subdivided into three broad categories. Firstly, under “costs and pricing”, the author considers the difficulties associated with comparing the price of renewable and other energy sources. Secondly, legal and regulatory factors are explored. Finally, factors influencing the market performance of renewable energy sources are considered. The remainder of the article is dedicated to a detailed inventory of recent developments in six broad policy categories: renewable energy promotion policies; transport biofuels policies; emissions reduction policies; power sector restructuring policies; distributed generation policies; and rural electrification policies. The authors argue that many of the policies could still be considered “experimental” in nature. Of the policies surveyed, those considered most favourable to renewable energy development are: (a) direct equipment subsidies and rebates, net metering laws, and technical interconnection standards in the case of solar PV; (b) investment tax credits, production tax credits, and European electricity feed-in laws in the case of wind; (c) grid-access and wheeling policies supporting independent power producers and third-party sales in the case of biomass and small hydro power.


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System Change – Drivers and Requirements for a Sustainable Energy Policy

Catherine Mitchell, Warwick Business School, 2002. This article constitutes a broad reflection on how a sustainable energy policy would differ from a “business-as-usual policy”, i.e. one which reflects a continuing preoccupation with “old” energy. The author begins by making a distinction between “drivers”, or factors pushing policy change, and the “requirements” that will be central to a new energy system. The author lists a number of reasons why conventional energy systems continue to dominate. While acknowledging that economics still favours conventional generation, she nevertheless takes issue with the fundamental principle of energy policy in the UK: that “delivery mechanisms for sustainable energy should be external to the electricity or energy market place so that the electricity (or energy) market can function according to competitive rules.” She goes on to argue that system change will require a recognition that independent economic regulation and government policies will often be in conflict. Policies will therefore need to be based on trade-offs between economic and environmental objectives.

National Policy Instruments: Policy Lessons for the Advancement & Diffusion of Renewable Energy Technologies around the World (Thematic background paper)

Janet Sawin, International Conference for Renewable Energies, January 2004. This paper explores national energy policies in an attempt to establish which policies have been most effective in promoting renewable energy. The focus falls primarily on grid-connected electricity and vehicle fuels, but also looks briefly at the remote uses of photovoltaics (PVs) and heat systems. The paper is structured around an exploration of five major categories of policy mechanisms: regulations governing market access; financial incentives for renewable energy; industry standards; education and information dissemination; and public ownership and stakeholder involvement. The author argues that it is essential to create the conditions that allow for the development of sustained markets and industries. To this end a long-term, consistent and clear government commitment to renewable energy is imperative. A combination of policies is required, although feed-in – or pricing systems – are singled out as particularly effect instruments for facilitating the growth of economies of scale in renewable energy technologies. The paper concludes with a number of recommendations specific to developing countries.


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A Comparison of Wind Power Industry Development Strategies in Spain, India and China

Joanna Lewis, Centre for Resource Solutions, 19 July 2007. This paper compares the manner in which three companies – situated in Spain, India and China – became domestic leaders in the wind industries of their respective countries. After a brief overview of the global wind industry, the paper presents case studies of India, Spain and China, and concludes with a comparative analysis of the three countries. Each of the case studies explores the policy environment for wind energy and the business practices of the leading wind turbine manufacturer. The manufacturers studied are Suzlon (India), Gamesa (Spain) and Goldwind (China). The paper explores the manner in which the three manufacturers grew to become nationally preeminent, focusing specifically on the acquisition of technology, technological know-how and intellectual property rights. This is explored within the context of constrains imposed upon the local industries by national and international property law. The success of Suzlon, in particular, highlights the significance of an increasingly popular model of innovation practices for transnational firms.

Monitoring and Evaluation of Policy Instruments to Support Renewable Electricity in EU Member States

Mario Ragwitz, Gustav Resch, Thomas Faber and Claus Huber, Fraunhofer Institute Systems and Innovation Research, Energy Economics Group, 2005. This report examines the policy instruments that are intended to promote the development of electricity from renewable energy sources (RES-E) in the individual member states of the European Union. These measures have been adopted in accordance with the EU commitment to increasing the proportion of electricity produced from renewable energy sources to 21% in the EU-25 (22% in the EU-15) by 2010. The first objective of the report is therefore to describe the support instruments for renewable electricity (e.g. feed-in tariffs, investment grants, tender schemes, and quotas based on tradable green certificates), that are currently being implemented in the individual EU member states. The authors also assess the effectiveness of these instruments and identify minimum criteria for determining effective and efficient support instruments. The report notes that "the support level offered to RES-E is still very heterogeneous among the EU countries and certainly too low in a number of Member States, i.e. sometimes below long-term marginal costs." The best progress towards the targets established in terms of the RES-E directive was achieved in countries with stable support systems and low overall barriers to the development of RES-E – notably Denmark, Finland, Germany and Spain. Referring to specific measures, the report notes that the effectiveness of "innovative technologies like wind energy, agricultural biogas and photovoltaics" has been the highest in countries with feed-in tariffs as their main support system.


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Policies to Promote Non-hydro Renewable Energy in the United States and Selected Countries

Energy Information Administration, Washington, February 2005. Interest in the development of renewable technologies began as a response to the energy crises of the 1970s. Since then a growing concern about the environmental effects of fossil fuels has emerged as an additional factor driving new policies aimed at promoting renewable energy technologies. This article examines policies designed to encourage the development of non-hydro renewable energy in four countries – Germany, Denmark, the Netherlands and Japan – and compares these to policies adopted in the United States between 1970 and 2003. The article begins with an analysis of the regulatory measures, financial incentives and R&D initiatives adopted at federal level in the United States. These are then compared to measures adopted in California, where – prior to 1990 – most of the growth in US non-hydro renewable capacity has occurred. The situation in the United States is then compared with policy trends in the four industrialized countries listed above. Each section presents detailed graphical representations of energy production trends. The article concludes with an overall comparison of national policies on non-hydro renewable energy, focusing particular attention on three issues: political commitment, public opposition and structure of policies.

Renewable Energy Markets in Developing Countries

Eric Martinot, Akanksha Chaurey, Debra Lew, José Roberto Moreira and Njeri Wamukonya, Annual Review of Energy and the Environment 27, 2002, pp. 300-348. This article explores the recent development of energy markets in developing countries and the growing role that renewable energy is playing in sustainable development programmes. The authors note that support for renewable energy has been building among those in government, multilateral organizations, industry, and nongovernmental organizations (NGOs) pursuing energy, environment, and development agendas, and that there is increased recognition of the contribution renewable energy makes to rural development. While most of the literature of renewable energy tends to focus on supply technology (e.g., solar, wind, biomass), this article is intended to contribute to a small, but growing literature that approaches renewable energy from a market or end-use perspective. The article begins with a discussion of the recent paradigm shift from "technologies to markets" – otherwise described as a shift from donor aid to the promotion of sustainable markets. This is followed by a discussion of regional experiences with markets for the various type renewable sources. The paper concludes with a discussion of lessons learned from contrasting market experiences and a summary of specific markets that show promise of expanding – notably rural residential lighting, grid-based power production and productive and community applications.


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Renewables 2007: Global Status Report

REN21 Global Policy Network, 2008. This report provides an integrated perspective on the status of renewable energy worldwide in 2007. Renewable energy accounts for 18% of the world's final energy consumption. This figure includes traditional biomass, large hydropower and "new" renewables (small hydro, modern biomass, wind, solar, geothermal and biofuels). The report focuses specifically on new renewables, which represent 2.4% and are growing rapidly in developed countries and in some developing countries. This focus is justified in terms of "their large future potential and the critical need for market and policy support in accelerating their commercial use." The report covers global trends in markets, investments, industries, policies and rural (off-grid) renewable energy. The intention is to provide a global snapshot of current trends, for which reason the report provides no analysis or discussion of issues. Separate chapters are dedicated to: a global market overview; investment flows; industry trends; the policy landscape; and rural (off-grid) renewable energy.

The Evolving Renewable Energy Market

Rodney Janssen, International Energy Agency. This publication explores the changing status of renewable energy sources and technologies. It discusses the momentum for renewables in terms of the growing recognition that “we cannot project today’s energy system into the long-term future." The future development of renewable energy technologies is therefore explored in terms of the development of new energy industries and markets, and in terms of the energy policies that may facilitate the development of these. It is argued that most proponents of renewable energy recognize that renewable energy “cannot and will not replace fossil fuels, at least, for the next 50 years or so.” Renewable energy can and should, however, play a much larger role than is currently the case, and for this to happen the new sources must receive the same policy advantages that conventional fuels currently enjoy. The authors also explore possible ways in which the costs associated with renewables may be reduced, including targeted R&D, strategies for establishing economies of scales; and the reduction of transaction costs.


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Section D. Energy Efficiency,

This section gives few examples of documents on energy efficiency policies. For a complete set of documents, please refer to the document “SERN Literature Review 2011 An Annotated Bibliography and Reference Guide on Energy Efficiency and Demand Side Management” available at http://www.reeep.org/830/sern.htm

Energy Efficiency Policy Toolkit

Cheryl Harrington, Catherine Murray and Liz Baldwin, The Regulatory Assistance Project, 2006. This publication presents a “compendium of tried and true regulatory policies”, which are intended to support the development of cost-effective and clean energy within both electricity and gas systems. The authors are explicitly not concerned with reasons why clean energy policies should be adopted. The policy options cover four primary areas: energy efficiency; renewable energy; distributed resources; and rate design. The measures are all drawn from the constituent states of the USA. The authors argue the case for considering energy efficiency as a resource, on a basis equivalent to that of supply side resources at all levels within the electric system. They argue that “using untapped efficiency is the single most effective step energy and energy market regulators can take to reduce environmental pollution, power costs and price volatility.” They also note the significant role that energy “champions” – e.g. a governor, legislative leader or utility commissioner – have played in US states with successful clean energy policies.

Promoting Energy-efficient Products: GEF Experience and Lessons for Market Transformation in Developing Countries

Sabrina Birner and Eric Martinot, Energy Policy 33, 2005. The Global Environment Facility (GEF) has allocated more than $90 million to eight projects promoting energy-efficient products in developing and transition countries. This paper draws on developing country experiences with market transformation based on GEF project designs, and suggests lessons relevant to market transformation programmes. The article is structured around case studies of market transformations in three countries: Mexico, Poland and China. This is followed by a suggested "menu" of market transformation interventions and a discussion of eight principles for designers of future projects. The proposed menu for the design of market transformation programmes consists of fifteen "generic types of intervention", which are based on a broad distinction demand-side and supply-side interventions. According to the authors, experience shows that a successful market transformation programme acts as a "catalyst to enhance existing market forces", through the simultaneous provision of a "supply push" and a "demand pull" for a particular technology. It is argued that new institutions and regulatory changes are among the most important outcomes of sustained market transformation.


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Least Cost Planning: Should Utilities Invest in Ene rgy Efficiency rather than in New Supplies?

Ann Davison, Oxford Institute for Energy Studies, 1991. This paper explores the concept of "least cost planning" (also known as "integrated resource planning" in the US) and explains its lukewarm reception in the United Kingdom. It is argued that in some circumstances it may be more profitable for a utility to encourage its customers to use less electricity (or water or gas) that it is for the utility to sell a larger quantity of its product. Least cost planning involves a more sophisticated analysis of demand, which would include an analysis of customer behaviour and end-user technologies that effect consumption. The author notes the suspicion that the concept has evoked in the United Kingdom, and attributes this in part to the role that the environmental lobby has played in promoting the concept. This suspicion is nevertheless countered in two ways. Firstly, least cost planning is defined as a method and not a solution. It requires that "the cost of reducing demand is compared with the cost of providing new supplies. It does not lay down in advance that new supplies are always a bad thing, nor that they are necessarily unprofitable." Secondly, it is argued that the concept applies to the utility as an entity, rather than to society as a whole. The concept must be assessed at this level, and any benefits that accrue to society are incidental to this process.


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Section E. Energy Economics Section E1. Energy Subsidies Reforming Energy Subsidies – Opportunities to Contribute to the Climate Change Agenda United Nations Environment Program, Division of Technology, Industry and Economics, Geneva, Switzerland, 2008. The problem of reforming energy subsidies for different fuel sources, in order to promote the reduction in greenhouse gas emissions from fossil fuels and foster sustainable energy use, is a clear and present one for the global energy sector. Subsidising the use of fossil fuel can lead to unfair market conditions for new sustainable energy projects. This report seeks to highlight the various types of energy subsidies used in global contexts, and how they can be used to promote sustainable development, through investments in non-environmentally-damaging practices, and the cessation of investments in proven detrimental practices. The report begins by explaining some of the key factors behind the relationship between energy and sustainable development, including the environmental and social impacts of sustainable energy, before highlighting the role that public policy can play in promoting sustainable development. Secondly, the report explains the mechanics of some energy subsidy models, investigates the scale of energy subsidies globally (an estimated US$220 billion in 2005), and highlights the effects that subsidies can have on consumers, the market and the environment, including case studies from India and Spain. Finally, the report explains some of the factors relating to the design and reform of subsidies, including the grounds for subsidisation of an energy source, issues that may trigger subsidy reform, how best to overcome barriers to reform, and the cost-effective subsidisation of electrification. Case studies involving German coal subsidies and Chilean rural electrification are also provided.


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Removing Subsidies – Levelling the Playing Field fo r Renewable Energy Technologies Jonathan Pershing, Jim Mackenzie, World Resources Institute, Washington D.C, U.S.A, March 2004 This thematic background paper on energy subsidies was provided for the International Conference on Renewable Energies, Bonn, 2004. The reform of energy subsidies to promote increased renewable energy uptake and encourage sustainable development is seen as a necessity to further advance the global uptake of renewable energy sources. This paper seeks to quantify some of the factors associated with traditional subsidy models for fossil fuels, then makes recommendations for their reform, and explains the implications these reforms would have for the renewable energy sector. Recommendations include the creation of targeted, transparent incentives, and the diversification of subsidy aims, including the breakdown of technical, market, and administrative barriers. The paper begins by defining energy subsidies, and the rationales behind their use. Secondly, an investigation into the economic and environmental effects of subsidies is performed, including details of some well-known case studies for countries such as Germany, the U.S. and Japan. Finally, the report details a wide-ranging set of actions aimed at reforming ineffective energy subsidy factors, and levelling the playing field for renewable energy. These include actions aimed at technical barriers, market impediments (for example, the lack of quantification of market externalities in renewable energy), and administrative impediments, including social and environmental concerns. The report concludes with a summary of key recommendations for energy subsidy reform, including improved process transparency, and recommended subsidy regression time-scales.

Energy Subsidies: Lessons Learned in Assessing Their Impact and Designing Policy Reforms United Nations Environment Programme, Geneva, Switzerland, 2003 Information on energy study models, both successful and unsuccessful, is of great use to policy- and decision-makers globally. This report aims to analyse in detail the issues relating to energy subsidies and their reform, including methods for defining and quantifying energy subsidies, and measuring their effects. The report also includes 8 case studies from countries and groups of countries around the world, analysing various types of subsidy for a number of sectors, including district heat, coal generation, and electricity subsidies. An discussions into the principles behind designing and implementing energy subsidy reform, and the potential barriers to reform, is also had, as well as an extensive analysis of the findings from the country case studies.


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The report begins by defining the analytical framework used in the country case studies, including methods for defining, measuring and analysing the effect and impact of energy subsidies. The range of analysed countries is wide, and covers both developed (OECD, Korea) and developing/transition economies (Senegal, Iran). Some examples of the case studies covered include district heating subsidies in Russia, oil subsidies in Indonesia, the effect of subsidy reform in Iran, and the impact of removing energy subsidies in Chile. The report goes on to assess the economic, social and environmental effects for each case study, before recommending a holistic, long-term approach in the design and reform of energy subsidies. The report concludes by defining the principles of subsidy reform, including targeting, efficiency, the need for a clear rationale, and transparency.


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Section E2. Energy Costs

Energy Sources, Production Costs and Performance of Technologies for Power Generation, Heating and Transport An EU Energy Security and Solidarity Action Plan – Commission of the European Communities, Brussels, Belgium, 13th November 2008 The challenge of delivering a secure, sustainable and clean supply of energy to Europe is a crucial one in the coming years. This report provides a comprehensive analysis of the technologies available for the gamut of energy sources, both conventional and renewable, as well as analysis and projections for the production cost of electricity, net efficiency, lifetime greenhouse gas emissions, and fuel price sensitivity for each technology, based on 2007 data. This information was originally used for the Second Strategic EU Energy Review (SEER). The report also contains a comprehensive explanation of the methodology behind these calculations, broken down according to each technology's intended purpose; power generation, heating, and road transport. Part 1 of the report contains the three main tables that were used in the SEER, with high and moderate fuel price scenarios provided for the three sectors. Part 2 contains an extensive in-depth analysis of the equations used in calculating the tabulated data, as well as the variables taken into account, their definitions, and why they were chosen. Supplementary tables are also provided for the power generation and heating sectors, containing a wealth of additional comparison factors, including life-cycle GHG emissions, overnight specific capital investments, operation and maintenance costs on an annual basis, installation lifetime, and others.

The Cost of Generating Electricity - A Commentary o n a Study carried out by PB Power for the Royal Academy of Engineering Royal Academy of Engineering, London, U.K The electricity market in the United Kingdom has often been described as complex, and accurately calculating the costs of generation for various energy sources in use in the country has been difficult, due to a range of direct and indirect subsidies, varying costs of transmission and distribution, and other factors. This report, commissioned by the Royal Academy of Engineering, aims to derive the true costs of generating electricity from various fuel sources. The methodology used in this report begins with the known, observed costs of building and operating various types of power station in the U.K, then derives the costs of electricity production via a common financing model, with a nominal discount rate of 7.5%.


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The report begins with defining the power sources analysed in the study, and gives costs in pence per kWh for firm generation, with standby generation costs for intermittent sources. Then, a comparison is made between various traditional base-load sources and renewable sources, and the effect of a ±20% change in fuel price on the costs of electricity is calculated for all sources. Finally, the report investigates the effect that the introduction of carbon emission allowances would have on the costs of generating electricity. The report concludes by recommending areas of further study, including scrutiny of the commercial claims of nuclear power, and financing risks for renewables, as well as identifying key factors to consider in balancing the U.K energy mix, including the security of supply, environmental impacts, and social concerns.

Projected Costs of Generating Electricity – 2010 Edition IEA/OECD Nuclear Energy Agency, Paris, France, 2010 This report seeks to provide a comprehensive resource for policy makers, industrial professionals, and the academic community, for the expected costs of baseload electricity generation calculated as a levelised cost of electricity (LCOE), from data provided by global industry experts. This covers both traditional and renewable energy sources, including those with variable output, and covers all IEA member states. Also included are a wide range of sensitivity and boundary analyses, to provide context to the cost generation data. Part 1 of the report begins with an explanation of the methodology used in calculating the LCOE, as well as the key assumptions used in this calculation. An overview of current power generation technologies follows, as well as a technology-by-technology comparison of generating costs. The main body of the report consists of country-by-country electricity generating cost data for different technologies, and a median case based on the OECD countries, as a platform for the sensitivity analyses that open Part 2 of the report. These analyses assess the sensitivity of the cost calculations to variations in the underlying assumptions, for example, construction costs, fuel and CO2 costs, and load factors. The remainder of the report is dedicated to other issues surrounding the use of LCOE analysis, including: system integration aspects for variable renewable sources, financing issues, the functioning of actual power markets in relation to the LCOE analysis, and carbon capture and storage. The report concludes with an assessment of the synthesis of this analysis with other studies of the LCOE, and the common lessons learned


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Section F. Regulatory Mechanisms to Promote Renewab les Section F1. Quota systems (ROC, RPS) Review of International Experience with Renewable Energy Obligation Support Mechanisms N.H. van der Linden, M.A. Uyterlinde, C. Vrolijk, L.J. Nilsson, J. Khan, K. Astrand, K, Ericsson, R. Wiser, ECN (Energy Research Center - Netherlands), May 2005.

The quota obligation system is one of three broad policy instruments currently used in EU member states to achieve targets set – in terms of the RES-E Directive 2001/77/EC – for electricity produced from renewable sources. This report provides an overview of the regions where obligation systems have been implemented and provides a detailed evaluation of the obligation systems in the USA, the UK and Sweden. The report is a product of a study commissioned by the Dutch government in an effort to better determine its own position in national and European discussions on renewable electricity support schemes.

The evaluation of the quota obligations systems in the three case studies is based on six criteria: the effectiveness or quantitative impact on RES-E capacity; market efficiency; certainty or the stability of the system as perceived by the RES-E industry; cost effectiveness (defined as the costs per kWh of RES-E); stakeholder support for the system; and equity or the fair distribution of costs and benefits of RES-E implementation among various stakeholders. The authors argue that the evaluation of international experiences with the obligation system "gives rise to a mixed picture. Although an obligation in theory is effective and cost effective, it seems too early to conclude that the system delivers these promises in practice."

The Renewables Portfolio Standard: A Practical Guid e

Nancy Rader, Scott Hempling, prepared for the National Association of Regulatory Utility Commissioners, 2001. This is a practical guide for designing and enforcing the implementation of Renewable Portfolio Standard, a market-based renewable energy obligation supporting mechanism. Designing a RPS involves three big issues: setting the national level of renewable energy goal; selecting the eligible resources; and integrating the state goal into retail seller’s obligations. Enforcing a RPS with efficiency also involves three tasks: clarifying the interdependency of state goals, eligible resources and retail seller obligations; setting effective penalties; and delegating administrative responsibilities to the appropriate agencies.


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This guide provides an integrated approach in handling the development of renewable energy sources for developing counties, a reform framework which takes three major aspects of RE development into one: clean energy sources, development of energy market for RE generation and distribution, and a legislative framework that bind all parties into obligations. The guide suggests the market-based incentives, government elimination of fuel and tariff subsidies, a deployment of unbundled system, and introduction of privatisation and competition are among those indicators for success.

Background on Renewable Portfolio Standards Paul D. Hunt, Climate Change Central, November, 2002. This report is a complication of information on Renewable Portfolio Standards 2002. As background material, it provides the jurisdictional justification and rationale of designing the Renewable Portfolio Standard (RPS). RPS is a bundle of trading rules which obligate each retail seller of electricity to include in its resource portfolio a certain amount of electricity from renewable resource, and also allow the retailers to trade their ‘obligation’. This paper summarises the jurisdictional review of RPS in 6 countries: Canada, USA, the Netherlands, Germany, United Kingdom and Australia. This paper also lists a spectrum of practical and technical considerations underlying the design of RPS. It suggests that progress made in RPS requires continuous action; portfolio of new technology can drastically reduce the total cost for the transition to a low carbon economy. Policy instruments as the leverage of government intervention can reduce the uncertainties for the capital investment on renewable energy, a remedy for market failures.

Efficiency and Sustainability in Restructured Electricity Markets: the Renewables Portfolio Stand ard

Nancy Rader and Richard Norgaard, The Electricity Journal, July 1996. This article explores the twin goals of efficiency and sustainability in restructured electricity markets and refutes the "common misconception" that efficiency must be sacrificed if other objectives are to be attained. The authors begin with a discussion of economic theory – and general equilibrium analysis in particular – in an attempt to explore the relationship between efficiency, equity and public policy. The final part of the paper is dedicated to a discussion of the relative merits of specific policy instruments, before making a specific case for the "Renewables Portfolio Standard."


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Following a discussion of general equilibrium analysis, the authors make a distinction between efficiency and value distribution in a market. Sustainability is an issue of "the distribution of resource rights between generations, not a question of the efficient use of resources per se." Moreover, energy and environmental economists are concerned with a particular type of market failure: the tendency to defer the external costs associated with pollutants to future generations. In the context of this analysis, renewable energy constitutes a type of public good, requiring public policies to address market imperfections and to promote mechanisms that are "competitively neutral." The Renewables Portfolio Standard is presented as an example of such a mechanism.


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Section F2. Feed-in tariff design The Spread of Renewable Energy Feed-in Tariffs (REFITs) in the EU-25 Mischa Bechberger, Danyel Reiche. This paper analyses the factors which contribute the wider use of REFITs in EU countries. It employs a multi-levels framework, taking wide spectrum of factors into consideration, from geographical, political, economical and cognitive disciplines. This paper emphasis more on how these factors influence the distribution of REFITs, by looking at some issues: (1) the principal driving forces and obstacles from an increased RES use in the EU-25; (2) favourable design of RES promotion instruments. This paper also looks at how continental contingencies influence the success of such diffusion, from four distinctive perspectives: (1) political condition; (2) natural reserve; (3) Technical condition; (4) cognitive condition. It suggests the long term security provided by REFITs for potential investors are particular efficient if they are designed according to national contingencies. At meanwhile, other factors, such as natural energy resource availability, technical competence, political environment, and mentality and cognitive ability also play their roles in diffusion.

GET FIT Program ‐‐‐‐ Global Energy Transfer Feed ‐‐‐‐in Tariffs for Developing countries Deutsche Bank Climate Change Advisors, New York, 2010. Over the past years, developing world governments and international organizations have proposed national and international funds to finance the large scale deployment of renewable energy and the access to modern energy services in a clean and environmentally friendly manner. A ‘FIT Fund’ combined with risk-mitigation instruments and capacity building efforts, to be financed from sources such as international sponsors, emissions auctioning or climate finance could help to address these needs and overcome barriers such as the lack of financial and infrastructural capacity. The GET FIT Programme (Global Energy Transfer Feed‐in Tariff for Developing Countries) is a green paper covering issues around FIT schemes in developing countries. It combines the existing proposals on funding and provides an example for a FIT programme that supports both renewable energy scale-up and energy access in the developing world through the creation of new international Public-private Partnerships.


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The paper begins with a project level perspective into the challenge of renewable energy in the developing world. The characteristics and the outlining of the potential architecture of a GET FIT Programme are then provided. The paper goes on to present the risks and barriers faced by investors and financers to attract capital and how GET FIT would mitigate these risks, followed by a discussion on the GET FIT role at providing technical assistance to address non-financial barriers. Also questions on the programme impact, capitalization and timeline are explored. Finally, summary tables with developing countries FIT designs are provided.

Evaluation of Different Feed-in Tariff Design Optio ns - Best Practice Paper for the International Feed-in Cooperation Arne Klein, Anne Held, Mario Ragwitz, Gustav Resch and Thomas Faber - Fraunhofer ISI and Energy Economics Group, 2006 The European Union has the objective to increase the share of electricity generated from renewable energy sources (RES-E) to 21 % of the total electricity consumption in the 25 EU Member States by 2010. This is the core element of Directive 2001/77/EC, which requires each Member State to apply appropriate instruments in order to achieve the national target for RES-E. In the past years several instruments to support the electricity generation from renewable energy sources have been implemented in the EU countries, being the feed-in tariff design the most popular one. Among others, Spain and Germany have been applying feed-in tariff systems very successfully, which led to a large increase of RES-E plants in both countries. In the year 2004 Spain and Germany initiated the International Feed-in Cooperation to promote the exchange of experiences and to improve the feed-in system design in EU and other countries. This report is written in the framework of the International Feed-in Cooperation with the goal to describe and analyse the feed-in tariff designs applied in the European Union States. Innovative design options to reduce the electricity generation costs as well as the costs for society are investigated. Furthermore the questions of distributing the costs of RES-E support and how to improve the integration of RES-E into the electricity grid are covered. Best practice examples are analysed and their consequences for RES-E generators and electricity consumers are described. Before the different feed-in tariff designs are illustrated, renewable energy sources are defined and the development of RES-E generation in Europe is outlined. Furthermore the International Feed-in Cooperation is described. This paper is not exhaustive, but it intends to show the wide range of different feed-in tariff designs applied in the European Union. Changes in the legislation of Member States until the end of September 2006 are taken into account in this report.


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A Policymaker's Guide to Feed-in Tariff Policy Desi gn Toby D. Couture, Karlynn Cory, Claire Kreycik, Emily Williams - National Renewable Energy Laboratory, United States Department of State, E3 Analytics – July 2010 Feed-in tariffs (FITs) are the most widely used policy in the world for accelerating renewable energy (RE) deployment, accounting for a greater share of RE development than either tax incentives or renewable portfolio standard (RPS) policies. In the European Union (EU), FIT policies have led to the deployment of more than 15,000 MW of solar photovoltaic (PV) power and more than 55,000 MW of wind power between 2000 and the end of 2009. In total, FITs are responsible for approximately 75% of global PV and 45% of global wind deployment. This report provides a detailed analysis of FIT policy design and implementation and identifies a set of best practices to quickly stimulate the deployment of large amounts of RE generation. This report begins by building on previous analyses of FIT design. It provides a detailed evaluation of a number of policy design options and considers both their relative advantages and disadvantages. The report also explores experience with feed-in tariff policies from the European Union, where the policy has been used for approximately two decades, as well as recent examples of FIT policies in Canada and the United States. Furthermore, the report offers a comprehensive overview of FIT payment design options, FIT implementation options and various approaches to funding the policy. Finally, the report concludes with future directions on FIT policies and implementation options.

A Regulation to Foster Bulk Electrify from Renewabl e Energies in South Africa Sustainable Energy Policy Concepts (SEPCo) The supply with affordable and reliable electricity to the poorest has been top priority in South African energy policy. For the supply in remote areas, RE in off-grid applications have come more and more into focus recently. Reportedly, many electricity consumers are regarding such solutions as inferior to a connection to the central grid putting the blame of the limits of distributed power on the RE generation Thus, albeit a Feed-In regulation addresses primarily the generation of bulk electricity, it is expected that it will also have positive effects on off-grid supply from RE by creating a higher acceptance for RE. This paper provides input to the discussion on Feed-In Tariffs to foster the use of RE in the electricity sector, using the German Renewable Energy Act and its predecessor, the Electricity Feed-in Law, as a guideline.


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In its first section, this report briefly summarises pro and cons of different mechanisms to foster RE electricity. It also recalls why a regulation to foster generation from RE is needed. The report goes on specifying policy design issues of a Feed-In regulation such as: Who should be obliged to purchase the electricity? Which entities should be favoured by the premium remuneration? Which technologies should be favoured? And what principles to set the remuneration level should be followed? Finally, descriptions of the German way to answer these questions are supplementing each section.

FITness Testing: Exploring the Myths and Misconceptions about Feed-In Policies World Future Council and Meister Consulting Group, Inc. – Washington DC, 2009 Although North America has been slow to adopt feed-in tariff policies, this is beginning to change. In 2009, the Canadian province of Ontario (home to 1/3 Canada’s population) enacted a feed-in tariff similar in design to Germany’s. In the United States, California, Hawaii, Oregon, and Vermont each established limited feed-in tariffs in 2009, while Gainesville, Florida, and San Antonio, Texas, announced citywide feed-in tariffs for solar power. Feed-in tariffs have also been proposed in more than ten other US states, and a federal feed-in tariff bill was introduced in Congress. This short report reviews a series of criticisms of feed-in tariff policies drawn from recent published reports, academic literature, and the press. It also argues that in spite of the recent surge in renewable electricity markets, the United States will need to dramatically increase the amount of installed renewable energy in order to improve energy security, create new jobs, and address the growing risks of climate change. The report includes an accompanying survey of counter argument derived from published literature and interviews with governmental representatives and industry experts.


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Feed-in tariffs and a policy instrument for promoti ng renewable energies and green economies in developing countries UNEP, 2012 This report is intended as a resource for policy makers in developing countries to make informed policy decisions about, when and how of FITs and to support nationally appropriate policy measures to scale up renewable energy. The report is also intended to improve the understanding of the potential benefits and challenges for developing countries to design FITs as well as the factors influencing their success, more in depth from the policy and legal foci, whilst also analysing the funding and capacity implications. Throughout the report, FITs are construed as interacting with national energy and non-energy policies in a dynamic manner. Through a general overview of FIT policies and design elements, the report draws broad and qualitative comparisons between FITs and other policy instruments available for scaling up renewables. It then reviews FIT design issues and options, relevant policy considerations, and text from existing laws as references in the form of a Law Drafters‘ Guide. The report also discusses strategies for funding a FIT policy, utilizing both domestic and international resources. In addition, the report examines the human, technological, regulatory and institutional capacity that must be in place in order to successfully implement a FIT. The report adopts a flexible toolkit approach to the design of policies and law drafting for feed-in tariffs in developing countries, and uses systematic links to broader development objectives.

Qualitative Issues in the Design of the GB Feed-in Tariffs Poyry and Element Energy, Oxford, 2009. Since 2002 the UK’s principal form of support for renewable electricity generation has been the Renewables Obligation (RO). The RO has been relatively successful in increasing the deployment of large scale renewables, but the exploitation of small scale renewable electricity projects has remained limited. As a result, the UK’s electricity system currently has a very low penetration of small scale renewables, relative to many other European countries. The burden sharing arrangement agreed as part of the EU 2020 targets for RE commits the UK to increase its share of RE from an estimated 1.3% in 2005 to 15% by 2020. So the UK faces a significant and urgent need to increase the deployment of small scale renewable electricity generation. The Government plans to retain a revised RO as the main support mechanism for bulk electricity and has stated its intent to institute a system of feed-in tariffs (FIT) to address small scale renewables below 5 MW.


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This report provides a comprehensive review of how such a FIT scheme would work and explores the implications of different design options for a FIT scheme in the UK. It seeks to identify the appropriate FIT design, given the UK Government objectives, which would deliver effectively on the take up of small scale electricity producing renewables, while maximising cost efficiency and minimising distortions to the existing RO support system. A detailed literature review is undertaken to offer insights into the development of a FIT scheme. Finally, the report discusses selected EU FIT schemes, in the form of case studies and review of their performance against policy objectives and best practices.


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Section F3. Comparisons of different mechanisms Comparison of Feed in Tariff, Quota and Auction Mechanisms to Support Wind Power Development L. Butler, K. Neuhoff, Cambridge Working Papers in Economics CWPE 0503. With the support of both industrial-level and firm-level data, this paper compares market-based policy regimes that have been adopted to encourage the development of renewable energy sources in two countries: UK and Germany. Focusing on onshore wind sources, this paper carries a preliminary assessment of the impact of the new policies have had, and draw a comparison with the old policies. Each policy is assessed on the basis of price paid and the growth of capacity. It argues the Feed-in-Tariff adopted in Germany does not expose project developers to price competition as much as their counterparts in UK. The difference in price paid for wind energy in the UK and in Germany is much smaller than is generally suggested, once the wind resource is taken into account. By examining the impact of these policies on the price change, and consequentially on the growth of the capacity of renewable energy generation, this paper highlights the role of competition at different stages of the value chains. It suggests that the market uncertainty among competitors should be reduced so that their profit evaluation would be more reliable as a basis of future Feed-in-Tariffs. It also suggests some problems and obstacles in implementing these policies and realising the policy objectives.

Support Schemes for RE – A Comparative Analysis of Payment Mechanisms in the EU

European Wind Energy Association, 2002. This report examines the different payment mechanisms currently used in European Union member states to facilitate the shift to renewable energy technologies. The report is a product of the RE-XPANSION project, whose main objective is to evaluate the various support mechanisms for renewable energy sources. The report begins with a discussion of the European Commission's ExternE project, which has sought to provide a framework for the comparative analysis of the external social costs associated with different energy sources. This is followed by a discussion of promotion instruments, an evaluation of different support schemes, and computer simulations of support mechanisms. The report argues that the widespread failure of electricity retail prices to include the full cost of electricity production constitutes a market failure. Support frameworks for renewable energy sources should therefore be viewed as compensation mechanisms for correcting the market failures. Given the variety of payment mechanisms used by EU member states (including investment subsidies, feed-in tariffs and quota obligations), the report argues that member states should work towards the gradual alignment of the "market clusters" associated with the different types of support mechanism.


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Effectiveness through Risk Reduction: A Comparison of the Renewable Obligation in England and Wales an d the Feed-In System in Germany

C.Mitchell, D. Bauknecht and P.M. Connor, Energy Policy, 34, 2006. This paper analyses two mechanisms in detail: the England and Wales RO (Renewable Obligation) and the German EEG (Erneuerbare Energien Gesetz) with a particular focus on how they reduce risk for generators. It discusses three kinds of risks in delivery renewable energy: price, volume and balancing risks. Risk reduction is seen as a way to reduce cost of capital and increase the efficiency of a support mechanism. The current German feed-in system for renewable energy delivery has a number of advantages for renewable generators in terms of reducing their risk. The effect of this reduced risk is an increase the generators’ ability of financing their investment through the capital market. The RO means more risk for developers than the feed-in mechanism. It curtails the ability of generators to obtain enough funding from non-corporate sources. The limited corporate funding, and the requirement on the back of the assets of other power plants, limited the project initiatives and the further expansion of existing generators.

Are Green Electricity Certificates the Way Forward for Renewable Energy? An Evaluation of the UK’s Renewables Obligation in the Context of Internation al Comparisons Dave Toke, Environment and Planning C: Government and Policy 2005, 23(3), pp. 361-374. This paper analyses the performance of the UK’s ‘Renewable Obligation’ in the context of other renewable procurement regimes. Prevailing wisdom suggests that market-based procurement regimes for renewable energy are more cost-effective than fixed price (‘feed-in tariff’) arrangements. In addition market based regimes are thought to favour corporate, rather than locally, owned schemes. However, the analysis in this paper disputes these strands of conventional wisdom. An analysis of the returns to wind power developers under the British ‘market based’ Renewable Obligations (RO) and The German ‘renewable energy fee-in tariff’ (REFIT) reveals that financial returns per MW of installed capacity are much higher in the case of the market based British RO compared to the German REFIT. On the other hand there is evidence that cultural factors are a bigger influence on the patterns of ownership of wind power schemes than whether procurement systems are ‘market based’ or ‘fixed price’.


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Section G. Kyoto mechanisms

Kyoto Mechanisms: The Role of Joint Implementation, the Clean Development Mechanism and Emissions Trading in Reducing Greenhouse Gas Emissions. J.P.M.Sijm, F.T.Ormel, J.W.Martens, S.N.M.van Rooijen, M.H Voogt, M.T.van Wees, C. de Zoeten-Dartenset, ECN (Energy Research Center), March 2000. Kyoto Mechanisms in the Kyoto Protocol are used to enable Annex 1 countries to reduce the costs of their green house gas (GHG) emission commitments by means of transaction abroad. This study analyses the potential role and impact of the key components of Kyoto Mechanisms, namely Joint Implementation (JI), the Clean Development Mechanism (CDM), and Emission Trading (ET). The three mechanisms serve the same end with different means. JI protects the commitment through investments in GHG abatement projects. CDM maintains the process of institutional capacity building and technology transfers (CDM). ET supervises the redistribution of the emission credits among the Annex 1 countries. Based upon the simulation result, this study argues that the Kyoto Mechanisms are still uncertain under the influence of market factors (transaction cost and risks), and non-market factors such as trade restrictions, strategic behaviour institutional changes etc. Other issues concerns the efficiency of Kyoto Mechanisms are those substantial reduction requirements for Annex I countries, large differences existing in the reduction potentials and costs, and cross subsidiary, for example some countries benefit more than others, etc.

Making Sense of the Voluntary Carbon Market: a Comparison of Carbon Offset Standards

Anja Kollmuss, Helge Zink and Clifford Polycarp, Stockholm Environment Institute, March 2008. Carbon offset markets currently exist in the form of compliance schemes and as voluntary programmes. This report explores the role of the voluntary carbon offset market and constitutes a guide to the most important voluntary carbon offset standards currently available. The Clean Development Mechanism (CDM) is used as a benchmark, and forms the basis of a side-by-side comparison of the most pertinent aspects of nine other standards. Key aspects of this comparison include: the main supporters or stakeholders associated with each standard; the "market share" or size of each standard; and the offset price (i.e. the cost of one offset representing the reduction of 1 tonne of CO2e) of each standard.


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The report also explores the implementation of offset projects, key elements of offset standards, offset transactions, and government action to regulate the voluntary market. Carbon offsetting is increasingly promoted as a way of taking action to alleviate the problems associated with climate change. Moreover, offsetting is considered by many to present a means of simultaneously achieving global emissions reductions and addressing the development needs of the poor. The authors also note criticisms of carbon offsetting, notably the argument that offsetting enables developed nations to perpetuate unsustainable lifestyles by funding carbon projects in developing countries. Different standards represent different responses to these criticisms, for which reason the report concludes with a tabular comparison and discussion of these responses.


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Section H. Further readings Renewable Energy Policy in Germany: Pioneering and Exemplary Regulations, Mischa Bechberger and Daniel Reiche, Energy for Sustainable Development, Vol. III (1), March 2004. The development of renewable energy in Germany has been a great success: 9 % share of green electricity in 2002, world leader in terms of installed wind capacity amounting to 13,512 MW in October 2003 (nearly 40 % of the global capacity), second largest installed photovoltaic capacity in the world (nearly 350 MW at the end of September 2003), European leader in the sale of biodiesel (550,000 tonnes per year at the end of 2002) and in solar heating systems, with 4.75 million m2 of installed systems at the end of 2002. To understand the success it is necessary to know that it results from - besides suitable background conditions - a comprehensive promotion approach which was launched at the beginning of the 1990s and has been given a further boost, since the coming into office of the Social Democratic-Green government in autumn 1998, through a series of promotion measures. Since 1991, with the coming into force of the first German feed-in law, the Act on Supplying Electricity from Renewables (Stromeinspeisegesetz, StrEG), fixed remuneration has been paid to electricity based on renewable energy sources (RES), leading to the market breakthrough in wind energy. Its successor, the Renewable Energy Sources Act (Erneuerbare-Energien-Gesetz, EEG) in April 2000, improved the regulations of the StrEG in many respects and made market entry possible for other renewables such as solar photovoltaics and biomass energy. The positive RES development in Germany can be explained by, besides this key promotion measure which served as a subsidy for the operational costs, several promotion programmes, which supported RES through investment subsidies (in the form of grants or soft loans), tax exemptions (within the scope of the Environmental Tax Reform) or in a more indirect way, through the decision to phase out nuclear energy, by means of information dissemination (i.e., the RES export initiative of the federal government) and corporate financing schemes in the case of wind energy. Can negotiated Agreements replace Efficiency Standards as an Instrument for transforming the Electrical Appliance Market? Philippe Menanteau, Cahier de Recherche N° 28 BIS Mars 2002, Unité mixte de recherche du Centre National de la Recherche Scientifique et de l’Université Pierre Mendès France (UFR DGES) - UMR 5111 IEPE, BP. Without reinforced energy saving policies, residential consumption of electricity will increase sharply over the next twenty years, in particular as a result of expected growth in the specific uses of electricity. The main problem is not a lack of energy efficient technologies, which do indeed exist for electrical appliances, but one of slow diffusion of existing technologies due to the weakness of the price signal and the purchasing behavior of consumers. In association with energy labeling, minimum efficiency performance standards have proved to be very effective in stimulating technological progress and organizing market transformation.


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But standards also suffer from long and often difficult implementation periods because of the resistance of the industrial sector. For manufacturers, similar results could be obtained more easily and more rapidly with voluntary agreements because they introduce flexibility margins in the achievement of commitments. This paper analyses the specific advantages of voluntary agreements for improving energy efficiency in the domestic appliances sector. We conclude that voluntary agreements may be an effective instrument for market transformation in certain conditions, but the alternative of regulatory measures must remain a credible, realistic threat if voluntary agreements are to have a really significant impact on performance improvement Core Indicators for Determinants and Performance of Electricity Sector in Developing Countries, Tooraj Jamasb, David Newbery and Michael Pollitt Cambridge Working Papers in Economics CWPE 0438, 5 July 2004. Since the early 1990s, substantial resources and efforts have been spent on implementing market-oriented electricity reforms in developing countries. While there are important sectoral, economic, and social dimensions involved in electricity reform, empirical analysis and evaluation of reforms have been of limited use for testing the economic rationale of reforms and policy advice. This may partly be attributed to a lack of generally accepted and measured indicators for monitoring the progress, impacts, and performance of reforms and unlike in areas such as health, education, environment, and sustainable development. In this paper we propose a set of indicators as a first step towards filling this gap and developing a coherent framework for studying electricity reform in developing countries covering resource and institutional endowments, key reform steps, market structure, performance, and various impacts. Evaluating the British Model of Electricity Deregulation, Stephen THOMAS, Annals of Public and Cooperative Economics 75:3 2004 pp. 367–398. A key aspect of the 1990 reforms to the British electricity supply industry was the introduction of a formal system of regulation by an autonomous regulatory body. It was expected that replacement of monopolies in some areas by markets and price-setting in monopoly areas using a simple incentive formula would mean that regulation of the industry would be ‘light’. This article examines how regulation has turned out in practice. It concludes that the promise of ‘light’ regulation has not been fulfilled. Regulation of competitive markets is a major regulatory activity; incentive regulation has evolved into a complex and intrusive form of rate-of-return, while regulation of industry structure has allowed the industry to descend into a concentrated vertically integrated structure, at odds with the aims of the reforms.


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Electricity Market Reform Failures: UK, Norway, Alberta and California, Chi-Keung Woo, Debra Lloydc, Asher Tishlerd, Energy Policy 31 (2003) 1103–1115. An analysis of electricity market reforms already taken place in the UK, Norway, Alberta (Canada) and California (USA) leads to our overall conclusion that the introduction of a competitive generation market, of itself, has failed to deliver reliable service at low and stable prices. The market reform failures are attributed to market power abuse by few dominant sellers (especially at times of transmission congestion), poor market design that invites strategic bidding by suppliers, the lack of customer response to price spikes, capacity shortage caused by demand growth not matched by new capacity, and thin trading of forward and futures contracts that are critical for price discovery and risk management. The paper then explains why an electricity market reform can easily fail to deliver the promised gains of better service at lower and more stable prices. The policy implication is that an electric market reform can be extremely risky, and may lead to a disastrous outcome. Thus, it is imprudent to implement such a reform in countries with limited sites for new generation and no indigenous fuels (e.g., Israel and Hong Kong). These countries should therefore consider introducing performance-based regulation that can immediately benefit electricity consumers in terms of lower prices, more stable prices, improved reliability, more choices, while encouraging the electric sector to pursue efficient operation and investment. The Case for International Coordination of Electricity Regulation: Evidence from the Measurement of Efficiency in South America, Antonio ESTACHE, Martin A. ROSSI, Christian A. RUZZIER, World Bank Policy Research Working Paper 2907, October 2002. A decade long experience shows that the monitoring of the performance of public and private monopolies in South America is proving to be the hard part of the reform. The operators control most of the specific information needed for regulatory purposes and have little interest in volunteering their dissemination unless they have an incentive to do so. This paper argues that, in spite of, and maybe because of, a much weaker information base and governance structure, Latin America’s electricity sector could rely on an approach that relies on performance rankings based on comparative efficiency measures. The paper shows that with the rather modest data currently available publicly, such an approach could already yield useful results. It provides estimates of efficiency levels in South America’s main distribution companies between 1994 and 2000. Moreover, it illustrates how relatively simple tests can be used by regulators to check the robustness of their results and strengthen their position at regulatory hearings.


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The Static and Dynamic Efficiency of Instruments of Promotion of Renewables, Dominique FINON and Philippe MENANTEAU, Energy studies review, vol. 12, n. 1. This paper deals with a comparative analysis of the economic and social efficiency of the instruments used to promote renewable energy sources (RES), first from a static standpoint and then using dynamic criteria to assess their ability to stimulate technological progress and cost reduction. First, the instruments are analysed in relation to the classical discussion of environmental policy that opposes price-based instruments versus quantity-based instruments in an uncertain environment (feed-in tariffs as price based system on one hand, quotas + green certificates, competitive bidding as quantity-based instruments on the other hand). Next, the incentives to invest and innovate in the context of each framework are analysed in relation to the sharing of the surplus associated with each of them between producers/constructors and consumers or the public budget. Finally, the paper looks at the overall cost-efficiency of the policies on the basis of each instrument, by referring to factual evidence in European experiences. It concludes that if social preference is attached to climate change prevention and reflected in a high quantitative objective for renewables, sliding scale feed-in tariffs are a good compromise in order to promote technical progress and national RES industry also. The quota/certificate system also presents a number of advantages in terms of static efficiency, but its ability to stimulate innovation still has to be confirmed by experience. Power to the People: Electric Utility Restructuring and the Commitment to Renewable Energy, Michael K. Heiman and Barry D. Solomon, Annals of the Association of American Geographers, 94(1), 2004, pp. 94–116. With electric generation responsible for 41 percent of U.S anthropogenic carbon dioxide (CO2) emissions from energy use, development of clean energy sources is essential if the United States is to reduce release of greenhouse gases and slow global warming. Many proponents of sustainable energy anticipate that electric generation from renewable sources would thrive in a deregulated market, driven by consumer demand for ‘‘green’’ energy and the end of incentives to build large central power plants under the cost-plus profits guaranteed by state utility commissions. This paper examines the flaws in this expectation. After reviewing the highly cyclical nature of U.S. energy policy making in recent decades, the study links the ineffectiveness of policy with the institutional setting. Under electric utility market restructuring, renewable energy generation (wind, biomass, solar, geothermal, and small-scale hydro) must overcome barriers such as price distortions, lack of storage capability, discriminatory transmission system access, and the end of linked utility rate hikes guaranteed to cover the additional expense of renewable generation. In the absence of strong federal leadership, the state commitment to renewable energy has been uneven under utility restructuring. Moreover, nuclear power—the other leading alternative to fossil fuel use—is beset by serious problems. Only renewable energy options offer long-term hope for sustainability. Along these lines, green marketing, renewable portfolio standards, system benefit charges, carbon taxes, public


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power, ‘‘Community Choice,’’ and production credits—all based on recent U.S. and European experience—are critically examined and recommendations made for changing course. At present, during this highly fluid period of utility restructuring, and absent more forceful regulation and demand management, it is dubious whether U.S. electricity market reform can encourage sufficient conversion to renewable energy to stem a rising tide of greenhouse gas emissions. Impact Assessment of the Electricity Act 2003 on the Indian Power Sector, Tripta Thakura, S.G. Deshmukhb, S.C. Kaushika, Mukul Kulshresthac, Energy Policy. 33 (2005) 1187–1198. This paper analyzes the likely impacts of the major policy reforms unveiled by the Government of India for revamping the country’s power sector. The provisions of the new enactment have recently come into force and seek a paradigm policy shift in the form of the Electricity Act 2003. The paper details out the key features of the Act and the likely power industry changes being brought about in the new regime. These changes comprise the structural changes in the power industry as well as the policy issues related to generation, transmission and distribution of power. Also discussed are the other major areas where transformation is sought and impacts are expected: power trading, role of regulator in the new regime, issue of open access, empowerment of the consumers and the environmental issues. Models, Templates and Currents: the World Bank and Electricity Reform, Xu Yi-chong, Review of International Political Economy 12:4 October 2005: 647–673. This paper argues that the standard model for reforming and restructuring the electricity industry advocated by the World Bank does not work, especially in developing and transition economies. The argument is based on the observation that there is one ‘standard’ model that is formulated by economists, elaborated from the reform experience in England and Wales, developed into a template for reform by the World Bank, and then transplanted to developing and transition economies. This template for reform has suffered from many failures and no successes, but is still retained. The question is how the World Bank could have got it so wrong in selling the template worldwide. The first section shows the disconnection between the institutionalized economic research and the reality. The second section discusses how the economic model was translated into policy prescriptions by the World Bank, the major force for pushing the reform. The third section examines briefly the reform experience in Orissa, India and China to show that, first, the template does not work because of original disconnection between the economic ideals and political reality, and, second, even if some ideas of the template might have merits, the template could not be copied as it stands.


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A Step into the Unknown: Feed in Tariff for Energy Saving, Paolo Bertoldi, European Commission, DG JRC, Italy, Silvia Rezessy, Central European University, Hungary, EEEC 2007 Summer Study.

Feed-in tariff laws guarantee a fixed tariff for electricity generation by renewable technologies and make grid-connection and purchase of green electricity from producers mandatory. Some kind of feed-in tariff has been adopted worldwide by more than 45 countries to promote renewable energies. A well-designed feed-in tariff is now generally considered as a cost-effective way to help the up-scaling of renewable technologies as an alternative/or a complement to a quota system where the obligation relies on the suppliers to source a certain amount of their electricity from RET. Indeed, a guaranteed tariff for a long period allows new comers to access the market and supports otherwise risky investments. In some European countries, white certificate schemes have already been introduced, which combine energy savings obligations with tradable certificates for energy savings from verified projects. It is possible that feed-in tariffs could also be used for energy savings. This innovative paper explores the feasibility and possible establishment of a feed-in tariff for energy savings. After summarizing the support schemes for renewable energy sources, and the existing support schemes for energy efficiency, the paper outlines the potential benefits, but also the potential difficulties linked to the implementation of a feed-in tariff for effective energy savings.

Encouraging Renewable Energy Development: A Handbook for International Energy Regulators, August 2010 - NARUC This handbook aims to introduce what regulators can do to advance renewable energy and provide a review of best practices and consultation around the world with case studies from Armenia, Guatemala, Jordan and the Philippines. The full report is available at: http://www.naruc.org The Electricity Governance Initiative of South Africa – The Governance of Power, Shedding a Light on the Electricity Sector in South Africa – World Resource Institute/Prayas Energy Group, February 2010 The electricity sector in South Africa is a subject of considerable national concern, both in how to meet the spiraling demands for electricity from a growing population, and how to properly establish the governance of ESKOM, the national utility. This report examines the issues within the electricity sector of the country, including a brief description of the history of electricity sector reform in South Africa, an explanation of the current structure of the electricity market, and the status of unbundling and liberalisation in the sector, an analysis of the policy and regulatory process that the country has in place, and an examination of key issues and barriers to further development of the electricity sector in the country.


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Several key findings stand out from the analysis performed in the report. The lack of public input in energy policy planning, the lack of co-ordination between government and governmental department, a lack of role clarity (particularly in the case of the regulator NERSA), and a perceived opacity in the formulation and implementation of legislation are all identified as barriers to the continued development of the electricity sector.


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Section I. Book reviews 1

The Political Economy of Sustainable Energy, Catherine Mitchell, Palgrave - MacMillan, 2008, 236 p. This book analyses the current energy policy of the United Kingdom. It argues that the UK current dominant paradigm – labelled the regulatory state paradigm – will not enable the government to meet its carbon dioxide reduction targets of 20% per cent below 1990 levels by 2010 and of ultimately 60 per cent reduction from 1990 levels by 2050. The regulatory state paradigm suggests that Governments should provide a regulatory framework which ‘steers’ towards a defined general direction and then leaves it to the market to select the means to reach that end. As argued by Prof C. Mitchell, this approach is unlikely to be sufficient given the need to radically redirect the economy in order to respond to the threat of climate change. The government should take a longer term socio-economic view to deliver the technical and industrial innovations required. The central argument is that government cannot leave it to the technology and fuel blind markets and networks, but instead has to make a choice of what kind of energy future it wants, because all innovation is not necessarily good innovation: state intervention is needed to ban consumers or industries opting for new technologies that harm the environment, or cheaper supposedly “green” technologies that are not the most efficient ones. Indeed to achieve this good innovation may need a long-term commitment which the government, locked into the ideology of the free market, is currently not ready to give.

The main difficulty is to move toward a sustainable energy system quickly enough: this implies political choices and not relying on the assumption that the private goals of corporations are close to the social goals of the UK. Indeed according to Catherine Mitchell, the current attitude of the UK government is to focus on large companies, while SMEs and individuals are not seen as central to combating climate change. However, innovation is more likely to come from SMEs and it is better to open the markets to new entrants that to close them. This book gives a substantial critical analysis of current sustainable energy policies of the United Kingdom by a leading expert in the field.

1 Books review from the SERN newsletter.


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Keeping the Lights On – Toward Sustainable Electricity, Walt Patterson, Earthscan, 2007, 195 p. This book gives an historical insight on what has been, what is and what could be an electricity system. It shows how centralized electricity systems will move back to decentralized systems and what would be the benefits of this. It argues that electricity should be less and less traded as a commodity and that the regulatory systems should now evolve and rely on asset based contracts, to include payments for availability of assets at fixed prices with no reference to flows of electricity. This evolution goes along with the process of privatisation. Indeed, the current system - as it is now in countries that have engaged in so-called deregulation - has reached its limits: private generation companies that are only remunerated on the electricity they sell do not necessarily amortize their investments and have few incentives to invest in the improvement of networks, to engage themselves in energy efficiency measures or to provide ancillary services, which - with the increase of the number of actors - could cause a complete collapse of the whole electricity system. Regulators should, according to the author, therefore have a more creative role and implement a framework where everyone can ‘plug and play’ their generation/load and where network-owner operators can become active participants. Feed-in Tariffs – Accelerating the Deployment of Renewable Energy, Miguel Mendonca. Earthscan, 2007. This book gives an overview of the implementation of feed-in mechanisms around the world, explaining why they have been successful in promoting renewables. The first part of the book gives an introduction to the barriers and support schemes to renewables. In the second part, the author shows how in the case of Germany, the introduction of feed-in tariff laws, which at the beginning were considered as benign and non-threatening, needed after their initial success a constant political commitment against the pressure of some of the well-established players of the conventional energy sector. The case of Spain, following a different path from Germany, gives another example of the effectiveness of feed-in tariff laws. This second part ends with the description of the PURPA in the USA, the case of Japan and a brief introduction to the situation in developing countries. The third part presents options for the design of feed-in-tariff and lessons to be drawn for effective implementation of feed-in tariffs. A welcome contribution to the literature on the most widespread mechanism to promote renewables: feed-in tariffs are now implemented in more than 41 countries/states/ provinces around the world.


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Biofuels for Transport – Global Potential and Implications for Sustainable Energy and Agriculture, Worldwatch Institute, Earthscan, 2007, 450 p. This book describes current and new biofuel technologies and for each of them their social, economic and environmental impact. Then it presents the key issues in terms of energy security, implications for rural development and international trade and it describes the effects on climate change and the environment. The last parts focus on the organization of the market and the policy framework with recommendations for decision-makers. Country studies on China, India, Tanzania and Brazil are included. There is a wide range of sources of feedstock that can be grown to produce biofuels with considerable differences in terms of impact, according to the technical process, the location where they are grown and also the organization of the process. The range of estimates, in terms of reducing greenhouse gas emissions, for main first generation biofuels (ethanol, biodiesel) remains large. Furthermore, they remain a relatively expensive means of reducing greenhouse gas emissions with a cost of 135-200 Euros per tonne of CO2 avoided. Furthermore, the rapid expansion of the market of biofuels has a tremendous impact on biodiversity, for instance in Brazil and Southeast Asia, where the expansion of soybean or palm oil growth is being done by clearing rainforests. Second and third generation biofuels should have less negative impact than first generation biofuels, have a more favourable energy balance and need fewer subsidies. Policy options chosen should seek to maximize benefits. For this, decision-makers need to take a comprehensive approach that encompasses all sectors and actors. The development of small-scale biofuels should be explored. Otherwise, a massive scale-up of the production of the current first generation of large scale high tech biofuels could be economically, socially and environmentally detrimental and even possibly accelerate climate change. This book gives a very comprehensive overview of the risks and opportunities associated with the growth of the biofuels market. Voluntary Carbon Markets – An International Business Guide to What They Are and How they Work, Written and edited by Ricardo Bayon, Amanda Hawn, Katherine Hamilton, foreword by Al Gore, 164 p. This book starts by giving a global picture of carbon markets and how voluntary carbon markets work. Then it describes the complex relationship between the voluntary carbon market and the market of renewable electricity certificates (RECs) in the USA. Finally it gives the points of view of various stakeholders (conservationist, project developer, investor, bank) on the voluntary market and some final remarks on the future of this market. Greenhouse gas emissions reduction credits can be accrued through two different types of transactions: in project based-transactions, emissions credits are the result of a specific carbon offset project. In allowance-based transactions, allowances are created and allocated by regulators under a cap-and-trade regime. Participants who reduce their emissions below a required level can sell unused allowances to other participants.


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Carbon markets can be divided into two categories: the compliance market and the voluntary market. Compliance markets are regulated cap-and-trade markets and are underpinned by the Kyoto Protocol. Voluntary markets are mainly project-based transactions, as there is no universal cap. The voluntary carbon market’s lack of regulation means it is fragmented and opaque as it is composed of deals negotiated on a case-by-case basis, but it offers innovative and flexible products with transaction costs far lower than the compliance market. This book gives a useful understanding of the contribution of voluntary carbon markets to control climate change. Electric Capitalism - Recolonising Africa on the Power Grid, David A. Mc Donald (ed.), HSRC Press – Earthscan, 2008, 504 p. This book describes current electricity reforms and status of energy generation per sources of energy with examples drawn mainly from South Africa. It concludes on alternative electricity paths for southern Africa. One of the rare recent books published on electricity reform in Africa. Promoting Sustainable Electricity in Europe- Challenging the Path Dependence of Dominant Energy Systems, William L. Lafferty and Audun Ruud (ed.), Edward Elgar, 2008, 344 p. This book constitutes the final report from a research project, which analyzed the implementation of the so-called ‘RES-E Directives’ in eight selected European countries: Netherlands, Ireland, Denmark, Spain, Austria, Sweden, Norway and Finland. This book monitors progress in each country. A Renewable World – Energy, Ecology, Equality – A Report for the World Future Council, Herbert Girardet & Miguel Mendoca, World Future Council – Green Books, 2009. This book gives a good introduction to greening the economy and dealing with climate change through the use of renewable energy sources in an equitable manner. It postulates the possibility of a relatively smooth change on a vast scale. This book can be downloaded for free at: http://www.worldfuturecouncil.org/a_renewable_world.html


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Selling Solar – The Diffusion of Renewable Energy in Emerging Markets, Damian Miller Earthscan, 2009, 306 p. This book shows how solar photovoltaics in developing countries moved from isolated pilot projects to large scale deployment of several hundred thousand solar home systems. It includes numerous in-depth cases studies from Bangladesh, Indonesia, Sri Lanka, India and China. Written by in insider, it provides policy guidance on how to build sustainable markets for solar systems in emerging countries. Sustainable Energy – without the Hot Air, David JC Mackay – UIT Cambridge, 2009. This “best-seller” in the UK shows how an industrial country like the UK could realistically shift its entire energy system to clean energy sources Full of figures, it has been written in a very clear manner by David MacKay, Professor of Physics at the University of Cambridge. Nine months after publication, David MacKay was appointed Chief Scientific Advisor to the UK Government’s Department of Energy and Climate Change. This book can be downloaded for free at: http://www.withouthotair.com/ Renewable Energy in the Middle East, M. Mason, A. Mor, Springer, 2009. This book focuses on renewable energy needs and policies in a region which is seldom analysed. After an introduction on the security context in the Middle East, it deals with renewable energy in a number of countries. Israel has achieved the highest penetration rate in the world for solar water heaters, with 80% of households using solar water heating systems. Morocco is developing an important wind program and a chapter of this book is dedicated to the description of the policy and institutional framework in place for renewables in this country. The book also contains country case studies, detailing potentialities and current barriers to take up of renewables in Jordan, Lebanon and Palestine. A case study on a desalinisation project with solar in Tunisia is also covered.

Documents

Sern Literature Review 2012