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ePaper created 2014-06-03, 15:03:20 | version 1.30.01
96 05 DISTRIBUTED RENEWABLE ENERGY ■■ POLICY FRAMEWORKS Across the developing world, there is an increasing realisation that expanding electricity access cannot be achieved through grid extension alone. There is also a growing recognition that national policies, regulations, and targets play a pivotal role in determining the investment and financing models that become prevalent in distributed renewable energy markets.38 As a result, more and more countries are integrating off-grid energy solutions into broader rural development policies and frameworks.39 Increasingly, governments are moving away from top-down approaches and towards frameworks that are broad-based, support local private sector participation in the development and management of energy systems, and provide environments conducive to new investment. Thus far, most policy frameworks developed for improving energy access have emphasised electrification, with only limited focus on clean cooking, heating, and cooling. Policies that promote renewable energy and address barriers to their use have played a critical role in accelerating deployment and attracting investment to this sector. Programmes also continue to advance as institutional, legal, and regulatory frameworks evolve.40 For example, in response to favourable government policy combined with rising consumer demand, Bangladesh has been installing more than 1,000 SHS a day. Similarly, sub- Saharan Africa saw the number of manufacturers selling pico- powered lighting systems increase fourfold between 2008 and the end of 2012.41 Brazil, China, India, and South Africa have taken the lead in developing large-scale, off-grid renewable energy programmes that are making significant inroads into addressing the dual challenges of energy access and sustainability.42 An important success factor for renewable energy initiatives in these countries has been their inclusion in broader long-term rural electrification programmes that are supported politically and backed by substantial and sustained public resource allocations. For example, Brazil’s Light for All programme, completed in late 2013, was a decade-long effort to provide renewable electricity to 15 million people in rural areas. The initiative included an 85% capital subsidy for mini-grids with a focus on renewable energy, allowances for the use of prepaid metering, and the inclusion of rural co-operatives as implementing agencies.43 It was conceptualised and co-ordinated at the ministerial level and implemented through rural electricity co-operatives, with nearly 75% of funding coming from the federal government and the remainder from state governments and executor agents.44 In China, 36 million people acquired access to electricity through off-grid sources between 1998 and 2012. As part of China's 12th National Five-Year Plan, numerous Chinese local power utilities are expected to install individual off-grid PV power plants by the end of 2014 to ensure the establishment of a long- term operation and maintenance management system for these PV plants before the end of 2015.45 Fiscal incentives—such as loans, grants, and tax reductions— have been used successfully by many countries in their off-grid renewable electricity programmes to address the barrier of high upfront costs. While approaches vary by country, the most common practice is to provide subsidies to encourage operators to adopt renewable energy technologies when developing electrification schemes in remote communities.46 Bangladesh, for example, provides grants that cover up to one-third of the capital costs of renewable energy systems along with long- term, low-interest loans with five-year grace periods.47 Mali and Senegal established rural electrification funds to provide financing for renewable energy concessions, with investment subsidies of up to 80% of the upfront capital costs.48 Thailand provides investment grants of 10–30% for biogas and solar water heating projects, including off-grid village-based projects in remote areas.49 In several Brazilian states and a number of other developing countries, distributed renewable energy markets benefit from tax exemptions.50 Long-term and stable policy frameworks are important to encourage the development of mini-grids, as are regimes in which tariffs allow an attractive return on investment.51 A number of countries now support the development of mini-grids with public financing, usually in the form of capital subsidies. Subsidies can encourage private developers to enter markets in which tariffs alone are not commercially sustaining, consumers cannot support the revenues required, or low population density increases the costs of constructing distribution networks.52 Countries with subsidies for mini-grids include Mali, which offers subsidies of up to 80% of investment costs, India (up to 90%), and Afghanistan (90%).53 An increasing number of isolated communities with mini-grids and stand-alone systems relies on renewable energy resources rather than imported diesel fuel.54 However, not all countries support the development of mini- utilities and mini-grids, and in some countries mini-grids are subject to onerous regulations or tariffs that do not reflect actual costs.55 To finance incentives and programmes that support distributed renewable energy, developing countries rely on a blend of public and private sector resources. The most notable public-private partnership projects—based on the volume of SHS and number of solar kits delivered—are in Argentina, Bangladesh, China, India, Indonesia, Mongolia, and Vietnam.56 They are carried out jointly by national governments and major donor bodies, and focus on replacing kerosene lanterns and diesel generators with portable, sustainable, and affordable alternatives.57 Thailand has a particularly progressive strategy in that renewable energy deployment is financed partly through taxes on fossil fuel-based energy consumption, helping to internalise some of the social and environmental costs of fossil fuels and to level the playing field for renewable energy.58