Market development for renewable energy

Looking at the markets where renewable energy carriers might compete facilitates an understanding of the demand for renewable energy. The potential markets for renewable energy and the role played by the public sector to develop these markets depend on specific conditions in each country and region. Providing efficient energy-using technologies and renewable energy is a public good in many developing countries, with a wide range of benefits for sustainable development. Thus, governments must find an effective balance between liberalization and directing markets towards wider social goals. It is within developing countries that much work is necessary to develop markets for renewable energy. This implies a change in focus, away from the historically dominating resource and technology assessments. A market perspective brings into question what underlies a market, such as social conditions, demand for products and services, and consumer knowledge (UNDP, 2005).

The use of renewable energy is either direct or indirect. Direct use is the immediate use of renewable energy flows to satisfy energy service needs. Examples include passive solar heating, day lighting and solar crop drying. There are often no energy markets involved here. However, policies related to other areas could advance the direct use of renewable energy — for example, building codes or other instruments in the buildings area to promote passive solar heating and day lighting. Energy services cannot be measured on a dollar per kilowatt-hour basis; thus, many comparisons of costs of local and integrated renewables with the costs of, for example, electricity generation by conventional power plants are incorrect and misleading.

Indirect use of renewable energy refers to the generation of an energy carrier that is then applied in end-use equipment to provide the desired energy service. Such energy carriers include electricity, biogas, mechanical (shaft) power and liquid biofuels. For some of these energy carriers there exist established markets. In other cases the use is local, such as small hydro or wind energy providing shaft power, or stand-alone electricity use that serves niche markets, such as solar photovoltaics for illumination and communication uses.

In industrialized countries and many developing countries, most renewable energy use takes place through markets for heat, electricity and fuels. Such markets increasingly exist in all developing countries, with some having nationwide systems for electricity, and well-developed fuel markets, while others rely more heavily on local markets and direct uses of renewable energy. The development of these energy markets thus relies on the use of a battery of incentives and regulations. In developing countries it is useful to consider the direct end-uses and look at the opportunities for renewable energy to expand (see Box 2.4). Many of these applications encourage increased decision-making and participation from a variety of stakeholders, including the end-users

Getting Started With Solar

Getting Started With Solar

Do we really want the one thing that gives us its resources unconditionally to suffer even more than it is suffering now? Nature, is a part of our being from the earliest human days. We respect Nature and it gives us its bounty, but in the recent past greedy money hungry corporations have made us all so destructive, so wasteful.

Get My Free Ebook

Post a comment