REN21 - Concepts of Renewable Energy Policies

The different instruments of renewable energy policy can be combined in various ways to form a comprehensive renewable energy policy. Different renewable energy concepts can be distinguished according to the scope and the degree of intervention.

There is hardly any country that has no policy at all in favour of renewables. Although many developing countries do not have a significant national programme destined specifically for promotion of renewable energies (RE), they generally do incorporate renewables in programmes for rural energy, electricity sector expansion, etc. Scattered non-aligned and non-coherent renewable energy projects, however, have not proven successful, even when carried out with support from international cooperation.
A number of countries have started limited renewable energy programmes, combining, in a targeted way and for a specific market or technology, measures in awareness raising, capacity building, and R&D with the deployment of renewable energy technologies (RET) through individual projects on the ground. The deployment may be partially or totally financed through public sources. However, partnerships with the private sector are becoming increasingly commonplace applying first concession and market access schemes. The International Action Programme of the Bonn renewables 2004 Conference and its follow-up by the REN21 Secretariat showcase such programmes from Egypt, Pakistan, Uganda and other countries. Such programmes may constitute an important first step and become the basis of a larger effort. Support from multilateral and bilateral international cooperation, the Global Environment Fund (GEF), and carbon markets is available and used in the areas of R&D, economic development and trade, financing, and policy formulation.
In the past, many industrialised countries have approached renewable energy policies from the technology development side, restrained to research and development (R&D), awareness building, information and capacity building. However, the expectation that energy suppliers would take these technologies up and introduce them into their appropriate markets have mostly not materialised.

Realising that important barriers existed for the commercialisation of RETs, the focus of policies shifted towards markets. There are basically two approaches which are applied in addition to the elements of R&D, capacity building etc:

One approach concentrates on improving the relative competitive situation of RET in given markets. There is a wide array of financial incentives suitable to lower the cost or provide a premium to renewables. Indirectly, also a policy to internalise external cost of competing fossil energy supply has this function. Such policies which aim at levelling the playing field are effective in countries where the market entry barriers for renewable energies have already been reduced significantly (e.g. federal US policies)
Another, more forceful approach is geared towards market transformation. With such policies the rules within relevant markets are adjusted in order to assure not only access for RET, but actually support RET to achieve a significant market share. Important components of such transformation efforts are mandated market policies such as price guaranties in feed in laws, quotas in renewable portfolio standards and, to a lesser extent, public bidding and green certificates.

In general, experience has shown that the most effective lever is the demand-pull. This not only makes the renewable energy share grow, but triggers dynamic effects which sustain the competitiveness of RET: As markets expand and industries grow, more private initiative and money is drawn into private research and development, and economies of scale are achieved.

The International Energy Agency (IEA) has pointed out serious deficiencies in public R&D for RET in its 2006 report Link to an external resource Renewable Energy – RD&D Priorities. In order to accelerate the deployment of RET through focussed international cooperation, the IEA has established a new implementing agreement on Renewable Energy Technology Deployment following the Bonn renewables 2004 Conference.