Transcript Markets, Barriers and Opportunities for Renewable Energy

Markets, Barriers and
Opportunities for Renewable
Energy in APEC Economies
Lydia La Ferla
Energy & Security Group
May 14, 2004
OVERVIEW
 Market: Demand, Supply, Benefits
 Barriers: Technological, pricing,
policy, market
 Incentives: mandatory, cost/pricing,
 Recommendations
The Market: APEC 1990-2020
35000
30000
25000
Billions (1990 US$)
Rapid Regional Economic
Growth: 3.5% pa -$12.5$32 trillion
Expected Economic Growth:
 N. America 3.2%pa
 S.E. Asia 4.9% pa
 Latin America – driven by
strong investments in
Europe & US
20000
15000
10000
5000
0
1990
N. America
1999
L.America
N.E Asia
2010
Year
S.E Asia
Oceania
2020
China
Russia
The Market: Energy Demand
7000
6000
5000
4000
Mtoe
 Total Energy Demand
Expected increase from
3.6 to 6 Btoe
 Main Drivers for total
energy : population growth
and increases in living
standards
 Main Drivers for RE:
emission reductions, cost
reductions, performance
improvements, policy and
regulatory incentive
programs, and energy
security
3000
2000
1000
0
1990
N. America
1999
L.America
2010
N.E Asia
Year
S.E Asia
2020
Oceania
China
Russia
The Market: Energy Supply
– 36% oil
– 27% coal
– 22% natural gas
9000
8000
7000
6000
5000
Mtoe
 RE
- 1.2% (exc. Hydro)
1999;
 Fossil Fuel
4000
3000
2000
1000
0
1990
1999
Coal
Oil
2010
Year
Gas
2020
NRE
APEC Primary Energy Supply (1990-2020)
Benefits of Renewable Energy






Recouped RE Investment
Localized Employment/Income
Enhanced Country Prosperity
National/Global Environmental Benefits
Increased Access in Rural Areas
Reduced Need for Grid Capacity
The Barriers
What are the Barriers?
 Costs and Pricing of RE
 Policy and Regulatory Climate
 Market and Investment Climate
The Barriers: Costs/Pricing of RE





High up-front development and capital costs
Continued subsidies for fossil fuels
Need for long amortization periods on loans
Small scale
Inadequate valuation of environmental
externalities and input/electricity costs
The Barriers: Policy and Regulatory
Climate
 Harmonization of policies
 Incentives that reflect stages of RE
technology development
 Complex government approval processes
 Lack of national/local policy coordination
 Pricing incentives
The Barriers: Market/Investment
Climate
 Lack of in-country capacity
 Lack of awareness of costs, benefits, and
applications of RE
 Investor reluctance and risk perception
 Lack of stimulus for private sector
participation
 Lack of information on and access to
financing
The Barriers
How to Mitigate the Barriers to Financing?









Use of “smart” subsidies
Pool/share risks
Support credit needs of consumer
Manage and operate funds locally in local currency
Encourage public/private partnerships
Work with IFIs to leverage RE investments
Support productive uses of RE
Tailor policy and regulatory measures to specific market
Use mix of policies to design RE promotion strategies
The Opportunities
Public Intervention to Scale-Up RE Financing
 Successful Policy Incentives
-reduce costs and provide regulatory certainty
-promote voluntary investments
-encourage IPPs
-promote public investment/market conditioning
-develop rural electrification
-support of entrepreneurship
Draft Recommendations
Adoption of policy and regulatory reforms
Development of Financial Mechanisms
Coordination, capacity-building, info.sharing
Draft Recommendations
 Adoption of Policy and Regulatory Reforms
– -Structure incentives for market sustainability
– Tailor policies to various stages of RE
technology development
– Develop new cost assessment methods
– Harmonize technical standards
– Ensure consistency of existing/future policies
– Adopt procedures to evaluate programs to
reflect “best/good practice”
Draft Recommendations
 Development of Financial Mechanisms
Work with multilateral/bilateral organizations to increase
lending in RE to:
1.Establish standardized procedures for project assessment and
review
2. Integrate RE lending with agricultural, health, education,
housing lending
3. Include environmental/social costs in program design
4. Encourage to continue to provide seed funding and technical
assistance
5. Design risk sharing and mitigation instruments
Draft Recommendations
 Coordination, Capacity-Building, Information
Sharing
– -Produce and disseminate info. Database on
“best practices”
– Establish market facilitation network to promote
RE investments
– Work with local financial institutions to establish
consumer/microcredit facilities and training
– Increase awareness of costs, benefits and
applications of RE