READy: Renewable Energy Action on Deployment: policies for accelerated deployment of renewable energy

By IEA-RETD, Rolf de Vos and Janet Sawin

Are you developing strategies for a future sustainable energy supply? Are you designing policies to deploy renewable energy technologies in your country? Are you looking for new tools and measures to make your policies more effective? Are you planning to make decisions on renewable energy investments in certain countries and are you checking their policy robustness?

Let the IEA guide you into successful, efficient and effective policies and decisions for accelerating deployment of renewable energy. Learn about the six policy actions that are essential ingredients for your policy portfolio:

• Alliance Building
• Communicating
• Target Setting
• Integration in economic policies
• Optimizing  existing instruments and
• Neutralizing disadvantages on the playing field

This book shows why and how successful renewable energy strategies work. Many recent and actual examples of best cases and experiences in policies--based on literature and interviews--show how policies can best mobilize national and international renewable energy business and the financial institutions, while creating broad support. The book is an initiative of the IEA-RETD, an international agreement between nine countries to investigate and accelerate the deployment of renewable energy deployment.

• Presents you with a variety of policy options that have been proven to accelerate the deployment of renewable energy technologies
• Based on experiences around the world at the local, regional and national levels
• Includes the IEA’s ACTION star, a decision-making tool for developing a consolidated renewables policy framework
• Find inspiration in this guide’s depiction of the significant renewable energy developments to date and the many examples of successful policies featured

• Language: English
• Publisher: Elsevier Science
• Release date: Dec 31, 2012
• ISBN: 9780124055360

Book preview

Table of Contents

Cover image

Title page

Copyright

Dedication

Foreword

Accelerating renewable energy technology deployment

About IEA-RETD

IEA-RETD Objectives and Target Groups

Disclaimer

READy: Renewable Energy Action on Deployment

Six Policy Actions for Accelerated Deployment

Ready to Get on Track

The Change Needs to Start Now

Current Trends are the Basis for Further Acceleration

New Priorities in Energy Investment

Policies are Needed to Overcome Barriers, Challenges, and Misperceptions

Improving the Risk-Reward Ratio to Attract New Financing

READy to Learn from Exemplary Policies

Action Star Recommendations

Alliance Building to Lead the Paradigm Change

Communicating and Creating Awareness on all Levels

Target Setting at all Levels of Government

Integrating of Renewables into Institutional, Economic, Social, and Technical Decision-Making Processes

Optimizing of Policy Instruments

Neutralizing of Disadvantages and Misconceptions

Roadmap To READy

List of Case Studies

Figures

Tables

Part One: Trends and Outlooks

Chapter One. Global and Regional Trends in Renewable Energy

1.1 Renewable Energy Markets

1.2 Electricity Market Trends: Rapid Growth

1.3 Transportation Market Trends: A Mixed Picture

1.4 Heating/Cooling Market Trends: Slow Awakening of the Sleeping Giant

1.5 Investments Increasing at all Development Stages

1.6 Cost Trends and Future Prospects

1.7 Policy Trends

1.8 International Players

1.9 Near-Term Market Outlook

1.10 Global Wind Market Projections

1.11 Global Solar PV Market Projections

1.12 To Get Ready for the Next Step

Chapter Two. What Is Possible and by When?

2.1 Relevant and Authoritative Scenarios

2.2 The Scenarios

2.3 To Get Ready for the Next Step

Chapter Three. Drivers and Barriers

Part Two: Policy Experiences and Lessons Learned

Chapter Four. Policies to Get on Track: An Overview

4.1 Different Policies for Differentiated Markets and Technologies

4.2 Types of Policies—Direct Support

4.3 Types of Policies—Indirect Support

4.4 Efficient and Effective Policies

4.5 Roadmap for Part Two

Chapter Five. Policies for Power Markets

5.1 Overview—Policies for Renewable Electricity

5.2 Regulatory Policies

5.3 Lessons Learned—Policies for Renewable Electricity

5.4 Quantity- and Price-Based Regulations

5.5 Experiences With Quantity-Based Policies

5.6 Experiences with Price-Based Policies—Feed-in Tariffs (FIT)

5.7 Key Elements for Success

5.8 Recommendations for the Electricity Sector

Chapter Six. Transportation Policies

6.1 Overview—Policies for Renewable Transportation

6.2 Lessons Learned—Policies for Renewable Transportation

6.3 Recommendations for the Transportation Sector

Chapter Seven. Heating and Cooling Policies

7.1 Renewable H/C—Why It’s Unique

7.2 Overview—Policies for Renewable H/C

7.3 Lessons Learned: Policies for Heating and Cooling

7.4 Recommendations for the H/C sector

Chapter Eight. Energy Systems Change—Policies for the Transition

8.1 Policies for Transforming the Energy System

Chapter Nine. Local Policies

9.1 Overview of Local Options

9.2 Lessons Learned: Findings from Local Policies

Chapter Ten. Policies for Financing Renewables

Part Three: Getting on Track: Lessons Learned for the Road Ahead

Chapter Eleven. Getting on Track: Lessons Learned for the Road Ahead

11.1 The Urgency for Acting Now!

11.2 The Action Star for Decision Makers

Appendix A. Players in the Field

A.1 International Financial Institutions and National Development Agencies

A.2 Non-governmental organizations

A.3 Private Sector—Industry Groups and Other Players

Appendix B. Renewable Energy Technologies

B.1 Wind Energy

B.2 Biomass and Waste

B.3 Solar Energy

B.4 Hydropower

B.5 Ocean Energies

B.6 Geothermal Energy for Power

B.7 Renewable Heating and Cooling Technologies

B.8. Renewable Transportation Technologies

Appendix C References

References for Case Studies (In Addition to Sources Listed Elsewhere)

Appendix D. Relevant RETD Studies

Abbreviations and Acronyms

Subject Index

Copyright

Elsevier

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225 Wyman Street, Waltham, MA 02451, USA

First edition 2012

© 2012 Stichting Foundation Renewable Energy Technology Deployment. Published by Elsevier Inc. All rights reserved.

The IEA-RETD, also known as the Implementing Agreement for Renewable Energy Technology Deployment, functions within a framework created by the International Energy Agency (IEA). Views findings and publications of the IEA-RETD do not necessarily represent the views or policies of the IEA Secretariat or of all its individual member countries.

No part of this publication may be reproduced, stored in a retrieval system or transmitted in any form or by any means electronic, mechanical, photocopying, recording or otherwise without the prior written permission of the publisher

Permissions may be sought directly from Elsevier’s Science & Technology Rights Department in Oxford, UK: phone (+44) (0) 1865 843830; fax (+44) (0) 1865 853333; email: [e-mail]. Alternatively you can submit your request online by visiting the Elsevier web site at http://elsevier.com/locate/permissions, and selecting Obtaining permission to use Elsevier material

Library of Congress Cataloging-in-Publication Data

Application submitted

British Library Cataloguing in Publication Data

A catalogue record for this book is available from the British Library

ISBN: 978-0-12-405519-3

For information on all Elsevier publications visit our website at store.elsevier.com

Printed and bound in United States of America

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Dedication

This READy book has been authored and edited by Rolf de Vos (Ecofys) and Janet Sawin (Sunna Research), on behalf of the IEA-RETD. The authors thank Kristin Seyboth (Seyboth and associates) for her text contributions concerning renewable heating and cooling. The authors were also assisted and advised by Eric Martinot, by Ecofys consultants and by members of the IEA-RETD Executive Committee in finding the right data, the inspiring case studies and the adequate tone of voice in the book.

Foreword

Accelerating renewable energy technology deployment

Renewable energy technologies are on the verge of a new era. In many countries and regions, renewable energy is already responsible for meeting a substantial share of energy demand. The rapid and substantial progress of renewable energy in recent years has been driven by policies of local, national and regional authorities, in close cooperation with the business community, as well as continued technological innovation and cost reductions in energy generated with renewable sources.

Progress in building new energy systems is already considerable. But issues like energy independence, eradicating energy poverty, combating climate change and improving the crisis-robustness of energy systems are asking to accelerate the deployment of renewables. Recent events that have had large impacts on societies around the world—e.g., the financial crisis, the nuclear accident in Fukushima, large oil spills, new findings in climate change science—have further highlighted this need.

However, there are also some trends that mask the opportunity of accelerating renewable energy growth. For instance, the promising—short-term—benefits from exploring new fossil sources like oil in arctic regions or shale gas are mobilizing powerful forces that tend to disregard the long-term disadvantages. Meanwhile, in debates the real costs of renewables are often misrepresented or misperceived, and the reality of integrating decentralized renewable sources in grids is often misperceived as a hurdle that cannot be taken.

One should acknowledge the real challenges of large-scale deployment of renewable technologies, which requires both institutional, technological and societal change. But the challenges of a business-as-usual strategy outweigh a renewable route by orders of magnitude: dealing with increased and volatile oil prices, insecurity of energy supply, climate change, air pollution, major accidents, et cetera.

So here is nowadays’ challenge for policy makers and decision makers: how to pass the threshold in the short term in order to prepare for the longer term? Achieving energy systems that will meet tomorrow’s energy demand in a sustainable, responsible way is possible, as some countries already prove. But further deployment requires a large effort on the part of policy makers and business leaders.

The International Energy Agency’s Implementing Agreement on Renewable Energy Technology Deployment (IEA-RETD) is a group of nine countries that advocate a significantly higher utilization of renewable energy technologies. RETD believes international cooperation and public-private partnerships are crucial means to establish a more rapid and efficient deployment, and that it is important to step up to the plate today.

This READy book has been commissioned for the purpose of inspiring and guiding action to begin now. To the readers—policy makers and other decision makers—the READy book presents a variety of policy options that have proven to accelerate the deployment of renewable energy technologies, based on experiences around the world at the local to national to regional levels. Lessons learned from successful cases reviewed in the book are distilled into six essential action points. Together these categories of policy actions compose the ACTION Star, a guide for taking action now while preparing for growth over the long term.

Decision and policy makers will find inspiration in the significant renewable energy developments to date, the many examples of successful policies in this book, and the ACTION star which provides policy recommendations for the way forward in six categories of actions that policy makers can begin to take now.

Hans Jørgen Koch

Chairman of the International Energy Agency’s Implementing, Agreement on Renewable Energy Technology Deployment (IEA-RETD), Denmark Deputy State Secretary of Energy

About IEA-RETD

Renewable energy will play a critical role in de-carbonizing the energy sector, reducing the costs associated with climate change impacts and adaptation, providing energy access to all, and securing long-term energy security at affordable costs. However, it is widely recognized that the establishment of a more sustainable, low-carbon energy system, based largely on renewable energy, will require a major transition in the energy sector and beyond in both scale and scope.

The International Conference for Renewable Energies in Bonn, Germany, in June 2004, was the first of a series of major international conferences to address questions such as how to substantially increase the share of renewables in global energy supply, and how to better make use of their potential and advantages. Participants—including government ministers, representatives of the United Nations and other international and nongovernmental organizations, civil society, and the private sector—aimed to chart the way toward accelerated deployment of renewable energy.

The IEA-RETD Implementing Agreement was one of the key outcomes of the Bonn conference. This knowledge exchange framework was established to focus on how to bridge the gap, generally called the Valley of Death, between research and development (R&D) and deployment of renewable energy technologies. In Bonn and at relevant follow-up conferences, countries at different stages of development all over the world concluded that benefiting from each other’s experiences and best practices will be crucial, and thus they came together to work within the RETD framework.

The IEA-RETD is currently comprised of nine countries: Canada, Denmark, France, Germany, Ireland, Japan, the Netherlands, Norway, and the United Kingdom. The IEA-RETD is a policy-focused, technology cross-cutting platform that brings together the experience and best practices of countries, along with the expertise of renowned consulting firms and academic institutions. IEA-RETD believes that a stable and predictable policy framework is required to create the conditions in which renewable energy can be deployed swiftly and economically at the scale required to address major energy related challenges.

The IEA-RETD is one of a number of Implementing Agreements on renewable energy under the framework of the International Energy Agency (IEA).

IEA-RETD Objectives and Target Groups

Already, the renewable energy industries have made enormous progress and taken substantial steps along the learning curve, and many renewable energy technologies are experiencing high rates of market growth. Nevertheless, policy and decision makers require a step change to stimulate wider deployment of renewable energy technologies and to avoid further lock-in effects of investments in conventional energy technologies.

IEA-RETD aims to demonstrate the need for action and to motivate relevant players to take advantage of the current window of opportunity. The IEA-RETD framework intends to empower energy policy makers and energy market actors through the provision of information and tools, and to provide possible pathways toward accelerated deployment and commercialization of renewable energy. Some general IEA-RETD objectives include the following:

• Make transparent and demonstrate the impact of renewable energy action and inaction

• Facilitate and show best practice measures

• Provide solutions for leveling the playing field between renewable energy and other energy resources and technologies

• Make transparent the market frameworks for renewable energy, including infrastructure and cross-border trade

• Demonstrate the benefits of involving private and public stakeholders in the accelerated deployment of renewable energy technologies

• Enhance stakeholder dialog

• Implement effective communication

• Organize outreach activities

Disclaimer

This book draws heavily on studies commissioned by the IEA-RETD as well as reports produced by other international and national organizations. Its content does not necessarily reflect the views and opinions of the IEA Secretariat or of its individual member countries.

READy: Renewable Energy Action on Deployment

Executive Summary

The ACTION star

The ACTION star is a graphic representation of six key policy actions that the RETD recommends for successful acceleration of renewable energy deployment. It is a simple tool for policy makers to develop and analyze their portfolio of policies for renewable energy deployment.

ACTION is the acronym for six required categories of policy actions:

A: Build alliances and reach agreements among policy makers and with relevant stakeholders including industry members, consumers, investors, and others.

C: Communicate and gather knowledge about renewable energy resources, technologies, and issues to create awareness on all levels, address concerns of stakeholders, and build up the needed work force.

T: Clarify the goals and set ambitious targets on all levels of government, and enact policies to achieve goals.

I: Integrate renewables into policy making related to social, economic, and technical structures and systems, and take advantage of synergies with energy efficiency.

O: Optimize by building on own policies or other proven policy mechanisms and adapting them to specific circumstances.

N: Neutralize disadvantages in the marketplace, such as misconceptions of costs and the lack of a level playing field.

Six Policy Actions for Accelerated Deployment

The READy book presents a kaleidoscope of policy options that have proven to accelerate the deployment of renewable energy technologies, based on experiences around the world at the local to national levels. Lessons learned from successful cases reviewed in the book are distilled into six essential action points. Together these categories of policy actions compose the ACTION Star, a guide for taking action now while preparing for growth over the long term.

Policy makers play a key role in accelerating renewable energy deployment.

There is growing consensus that a transformation of the energy system must begin immediately. This is because investment decisions made today could lock countries onto a particular path for the next several decades, and because any delay will increase the economic costs associated with energy production and use as well as the costs of the required transition. Thus, this publication focuses on actions that are needed now.

Working in close cooperation, policy makers and the business community can bring about necessary and timely changes in the energy system. This collaboration enables a smooth transition to an economy that is based primarily on renewable energy sources. Policy makers play a key role in accelerating deployment of renewable energy technologies by influencing near- and long-term planning and investment decisions through government policy.

In some countries, policy makers have already created and applied policies that have successfully attracted substantial financing to renewable energy, encouraging significant technological advancement alongside massive and rapid deployment. Their experiences provide both inspiration and evidence that the transition to a clean energy system is achievable. Yet, while some countries are moving rapidly in the needed direction, others are still struggling with inertia or have not even begun down this path. A much faster and more global deployment of renewables is required to advance economic development and create domestic jobs, improve energy security, provide energy access to all, reduce local health and environmental impacts and, most important, to reduce greenhouse gas (GHG) emissions dramatically in order to ensure a stable climate.

Getting on track to this sustainable energy future calls for stepped-up policy action starting now. It calls for a focus on advancing renewable energy deployment in combination with major energy-efficiency improvements. Recent international developments, such as the global and regional financial crises, the so-called Arab Spring, Japan’s 2011 Fukushima nuclear accident, and the development of unconventional fossil fuels, have affected circumstances and perceptions surrounding renewable energy. But they have not changed the urgency for change.

Experiences to date point to six key ingredients that policy makers can mix together in their own recipes, adapted to local circumstances, to substantially accelerate deployment of renewable energy—even in the current difficult economic climate—to effectively and efficiently realize the many benefits of a sustainable energy economy.

Ready to Get on Track

This Renewable Energy Action on Deployment publication (READy) publication is intended primarily for use by policy makers. READy is a publication of the International Energy Agency’s Implementing Agreement on Renewable Energy Technology Deployment (IEA-RETD), which aims to increase awareness and accelerate deployment of renewable energy technologies. IEA-RETD advocates for expanded international cooperation and public–private partnerships to further the acceleration of renewable deployment.

The current trends in renewables, however impressive, are not on track to keep temperature increases below the internationally agreed 2°C threshold.

READy describes current trends and future outlooks for renewable energy, as well as the barriers that continue to impede broader and more rapid growth. It reviews a number of important energy scenarios to examine potential pathways to a more sustainable energy future.

These are the prelude to the core of the book: the policies that have been proven to work. READy addresses a number of questions to provide guidance for getting on track: Which support policies have been most effective to date and why? Which will be required to drive the transition from a world dominated by fossil fuels to a world in which clean and sustainable renewable energy provides the majority of the world’s energy needs? Are any policy options economic crisis-robust? Given the current challenges facing renewable energy—from the global economic slowdown to the rise of shale gas—which specific policy instruments can help to increase significantly the deployment of renewables in the short, medium and long terms?

READy is intended as a resource for policy makers to benefit from lessons learned and a source of inspiration that invites swift action. The inspiration derives from sectoral and cross-sectoral reviews and analyses of policy initiatives and mechanisms, based on experiences to date at the local and national levels. Trends, outlooks, and policies outlined in this report are evidence and fact based, sourced from a variety of sources including numerous other studies commissioned by IEA-RETD.

The Change Needs to Start Now

Historical patterns of economic development imply that global energy demand will continue to increase over the next few decades. The demand for energy services is increasing sharply in emerging economies like China, India, Brazil, and South Africa. An estimated 1.5 billion people still lack access to modern energy services. Further, the world’s population could approach 7.6 billion by 2020, meaning the demands of an additional hundreds of millions of people will need to be met within the next decade alone.

Without a major transition in the world’s energy system, it will be impossible to satisfy all energy needs within the given economic and ecological boundaries.

At the same time, the continued and growing reliance on fossil fuels to meet global energy needs raises significant challenges and costs at the local to global levels. Extraction and burning of fossil fuels enacts high costs on human health and local air and water quality. Concerns related to peak oil, political instability in key oil-producing regions, and volatile fuel prices pose challenges to countries that are heavily reliant on fossil fuels. And, perhaps most critically, GHGs that are emitted through the combustion of fossil fuels threaten the stability of the global climate.

Without a major transition in the world’s energy system—to one based on renewable energy in combination with energy efficiency improvements—it will be impossible to satisfy the needs of current and future populations within the given economic and ecological boundaries. Technologies that harvest biomass, geothermal, hydro, ocean, solar, and wind resources to provide energy services ranging from lighting to mobility to heat have the technical potential to meet global energy demands many times over. Meanwhile, improving energy efficiency is of an equal importance.

The International Energy Agency’s World Energy Outlook 2011 estimates that for every dollar invested in carbon-intensive energy technologies up to 2020, society will need to pay USD 4.30 to compensate for increased emissions. In other words, if the world postpones action, the 2°C goal will become more expensive to achieve or the costs associated with climate change will increase, or both.

Current Trends are the Basis for Further Acceleration

Driven greatly by government policies, renewable energy technologies have seen a rapid expansion in deployment and significant reductions in cost in recent years. While this is a good start, the pace must accelerate for the transition to occur in the next few decades, in time to remain below the internationally agreed 2° C threshold in order to avoid catastrophic climate change.

Growth in renewable energy deployment has accelerated in recent years, despite the global economic recession, with notable market growth for many technologies even during 2011. Average annual capacity growth rates for solar photovoltaics (PV) approached 50% from 2005 to 2010 and those for wind energy exceeded 25% during the same period. Rates of growth for renewables in some countries have far surpassed global averages.

The 2011 financial crisis has slowed the growth in some sectors, but has not stopped it. In fact, the world market for wind energy set a new record in 2011, with more than 41 GW of capacity added, while vigorous growth continued in PV markets with the addition of nearly 28 GW. According to data from Bloomberg New Energy Finance (BNEF), global investment in wind power in 2011 was down an estimated 17% from 2010; however, solar PV cost reductions were more than compensated by strong market growth, leading to a 37% increase in PV investments in 2011.

Increasing levels of investment in R&D, manufacturing facilities, and deployment have resulted in steady cost decreases in all renewable energy technologies. Most notable are solar PV technologies, which saw average module costs fall by a factor of almost 50 between 1976 and 2010. Between the summer of 2008 and mid-2011, the price of PV modules declined by an estimated 60% per megawatt, making solar power competitive with the retail price of electricity in many sunny countries. Bio-ethanol and wind energy have also witnessed considerable cost reductions over these time periods, with wind turbine prices falling an estimated 18% between 2009 and 2011.

Renewable energy industry associations foresee continued and rapid market growth in the near future. For instance, the European Photovoltaic Industries Association projected in 2011, under its conservative scenario, that cumulative PV installations would increase by at least 20% annually until 2015, with total capacity more than tripling between year-end 2010 and 2015. Note that actual growth of cumulative capacity in 2011 was approaching 70%. The Global Wind Energy Council predicted that global wind power capacity would more than double during this same period; during the course of 2011, total capacity increased by an estimated 21%. Even so, as baseline capacities increase, relative growth rates will tend to decline, but that the natural trend will be offset when renewable technologies become cheaper than fossil technologies.

Government policies have played a crucial role in driving these developments. Between 2004 and early 2011, the number of countries with renewable energy support policies in place doubled to at least 96 countries; more than half of these were emerging or developing economies. Policies include a wide portfolio of measures, ranging from target setting to rebates, to feed-in tariffs (FITs) and quotas.

In addition, local government support schemes are playing an ever-increasing role in advancing renewable energy. Several hundred cities and local governments have adopted their own targets and policies.

Alongside these developments, a growing number of organizations and frameworks have evolved around renewable energy. In addition to traditional players such as environmental organizations and industry groups, stakeholders in the financial community and the business world have established associations that focus on renewable energy, often in combination with energy efficiency. For policy makers, these organizations are an important gateway to a large knowledge database and to new partnerships.

Recent developments have changed the scene, sometimes, but not always, in a direction that is favorable to renewable energy.

New Priorities in Energy Investment

Global investment in renewable energy increased about sevenfold between 2004 and 2010. In 2011, total global new investment in renewable energy even increased further, reaching USD 257 billion. Growth continued, despite the 2009 and 2011 financial crises, although the picture differs widely according to region and technology. In order to get the energy transition on track, however, a larger shift in investment priorities will be required.

During 2010, in the power sector private renewable energy investments in new generating capacity exceeded those in new fossil fuels power plants (including replacement of old plants) for the first time. However, although the increase in public and private investment in renewable energy over the last decade