Renewable energy efficiency improvements

Globally, there is general recognition that improvements in energy efficiency and energy savings are very important for climate change and clean renewable energy management. Many governments and companies have recognised that additional energy savings can help to reduce fossil fuel consumptions plus promote renewable energy applications. Many governments have enacted new energy efficiency targets and policies. These have led to continued investments in energy efficiency improvements and renewable applications. These have included incremental investments in energy efficiency in building, industry and transportsectors. A good example is that the global energy efficiency and renewable investments have increased significantly to over USD200 billion per year.

Energy efficiency improvements have been more marked in the developing and emerging economies in comparison to developed economies. A key reason is that most of the emerging economies have been growing faster than developed economies and have greater scopes for improvements. In addition, the developing economies have more opportunities for energy efficiency improvements than developed economies, such as with the construction of new buildings and infrastructures.

Different countries have enacted appropriate energy efficiency targets and new policies so as to provide drivers for energy efficiency improvements. An increasing number of countries have set new energy efficiency targets plus adopted new energy efficiency policies and standards. Innovations in energy improvement technologies and financing have also played important roles in the improvements. A good example is the introduction of new financial incentives to channel additional funding towards energy efficiency by different countries.

Global renewable electricity power policy overviews

Globally, the electricity power generation sector has continued to be the prime area of focus for renewable energy policy support in both emerging economies and developed countries. This is mainly due to its large size plus its big impacts on countries and communities. Feed-in tariffs (FITs) have remained the most widely utilised form of regulatory support for the renewable power sector. In addition, various tenders, including competitive bidding or auctions for renewable energy, have been fast becoming the most rapidly expanding form of support for renewable energy project deployments. Tenders have fast become the preferred policy tool by various countries to support the deployment of large-scale utility projects. Their improved transparency, governance and management efficiency aspects have been attractive to governments plus stakeholders from both the public and private sectors (REN, Global Status Report, 2018).

Good country tender examples included Malawi and Zambia who have both held their first renewable energy tenders. China has also tendered 5.5 GW of renewable capacity recently as part of its 13th Five-Year Plan for renewable investments. Some countries, including Poland, Greece and Slovenia, have adopted hybrid policy schemes that have supported small-scale renewable projects through FITs and larger renewable projects through competitive tenders.

Decision makers in many countries have continued to favour using various policy tools to facilitate the integration of variable renewable generation into their national energy systems. Many countries have introduced new support mechanisms and revised existing policies in their efforts to respond to the changing political, societal and market conditions and demands. Feed-in policies, including feed-in tariffs (FITs) and feed-in premiums (FIPs), have traditionally been the most prominent form of regulatory policy support for renewable power promotion by different governments. Recently, many countries around the world,

Renewable policy development management 115 including some in Europe and Asia, have started to shift away from these policies. For large-scale project deployments, some countries have replaced these feed-in mechanisms with auction-based procurement. Feed-in tariff (FIT) policies have continued to remain in force in many countries for the deployment of small-scale utility installations.

Policy makers have continued to adjust their FIT rates as the technologies become more cost competitive. The European Commission (EC) approved revisions to several feed-in mechanisms proposed by its EU member countries. These changes have often included the adoption of market premiums for large-scale projects. The EU has also announced plans to remove priority dispatch rights for new renewable energy projects.

In Asia, several countries have reduced their feed-in rates. A good example is China which has reduced its FIT rates by 13-19% for solar power. At the same time, China has kept its distributed generation FIT rates unchanged. Another good example is Japan which has reduced its solar FIT rates by 11% for 2016. Looking ahead, Japanese government is studying plans for further FIT rate cuts of 20% or more in the next three years.

In Africa, modifications have also been made to the feed-in policies in various African emerging economies and developing countries. A good example is Ghana which has announced plans to update its solar PV FIT rates. Kenya has announced its intention to transition away from FITs to tendering. Egypt has announced a new phase of its FIT programme, including requirements for 30% of financing for solar PV projects and 40% of financing for wind power projects to come from Egyptian sources.

Looking ahead, tendering via competitive bidding or auctions for renewable energy will likely become the most rapidly expanding form of support for renewable energy project deployment in emerging economies and developed countries globally. These have also become the preferred policy tools by various governments to support the deployment of large-scale renewable projects. Public and private sector stakeholders have preferred the tender approach due to its improved transparency, better governance and higher management efficiency aspects. Most new renewable energy tenders have been held for solar PV projects, and to a lesser extent for wind and geothermal power projects.

Asia has been home to some of the largest renewable tenders by capacity recently. A good example is that China has tendered 5.5 GW of renewable energy capacity in 2016. This was a significant increase from 1 GW of renewable capacity that was offered for tendering in 2015. India has also held a tender for the deployment of 1 GW of new solar PV capacity. Indonesia has also held a tender for 680 MW of new geothermal capacity spread across six local regions.

Tenders and FITs have also increasingly been implemented alongside one another. In Europe, this has been driven by the EU State Aid guidelines, which have led to policy changes in EU member countries. They are attempting to meet the new requirement to shift towards tendering for new larger renewable projects. A good example is that Poland’s Renewable Energy Law has replaced the existing green certificate scheme with a mix of tenders for large-scale projectsand feed-in payments for small-scale projects up to 10 kW. National solar PV tenders have also been held in France and Germany. The Netherlands has held solar power tenders and two rounds of offshore wind power tenders.

In Africa, Nigeria has adopted new renewable policies which are similar to the multi-pronged approach established in Europe. The Nigerian government has introduced a new tender system for renewable projects larger than 30 MW whilst also formally retaining its FIT rates first announced in 2015. Both Malawi and Zambia have held their first renewable energy tenders in 2016. Malawi has held tenders for four solar PV plants with a cumulative capacity of 70 MW. Zambia has held solar tenders for a total of 100 MW of solar projects. These have resulted in a record low solar bid price for Africa at USD0.06 per kWh for a 25-year solar power PPA.

In the Middle East and North Africa (MENA) region, Morocco has called for tenders totalling 1 GW for its large-scale renewable energy projects. Elsewhere in the MENA region, the Palestinian Energy Authority has launched its first tenders in 2016. It is aiming to boost its installed solar PV capacity by as much as 100 MW. Saudi Arabia has also launched a 100 MW solar PV tender as part of its new Saudi Vision 2030 national plan. Iraq has also just announced a tender for a 50 MW solar PV project (Saudi Arabia, Vision 2030, Riyadh, 2016).

In Latin America, Argentina has held its first tenders under its RENOVAR programme. It has awarded 2.4 GW of renewable energy in 2016 together with a green investment fund to help secure renewable investments. Chile has held its largest power auction to date to supply 12,430 GWh of renewable electricity annually for 20 years. This should meet about one-third of Chile’s total future clean energy needs. Wind power received 40% of the available capacity in the auction together with the world’s lowest price for solar PV generation at USD29.10 per MWh.

In Central America, El Salvador has launched tenders for 100 MW of solar power capacity and 50 MW of wind power capacity. Additional tenders and auctions have also been held in Guatemala, Honduras, Panama and Peru. Mexico has selected 23 bidders to develop its USD4 billion new clean renewable power projects. These new renewable projects are mainly in the solar PV and wind power sectors.

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