Appropriately Applied Incentives

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Let us assume that we have now fully defined the resources and/or technologies eligible under a policy. The policy framework as a whole must then be fine-tuned to maximize the long-term harnessing of the spectrum of the country's indigenous renewable resources. The following questions and answers attempt to cover the challenges we may meet on this front.

Is there flexibility to allow new technologies to be included and to evolve in future?

Policies intended to support renewables must permit technologies to be introduced, to migrate as they evolve and to ultimately depart, leaving support focused where needed.

Renewable energy sources are largely known today. The technologies to harness them are relatively new compared to thermal energy production — which is two centuries old. These renewable technologies are still evolving rapidly and occasionally make major leaps.

As currently non-commercial technologies become more viable, they will need to migrate from R&D or demonstration support to the commercial technology bracket. In the latter bracket the focus is on industry development using some type of policy to make up the price gap. As the price gap finally narrows, these technologies may be capable of migrating into the broad energy market which has carbon constraints. In some cases, renewables are also cost effective in a non-carbon constrained market as is, but these cases tend to niches.

Therefore, policy needs to allow new technologies to join the list of new renewables being developed, and thereafter to migrate between support schemes as their costs decline and volume increases. The Spanish case study in this book illustrates how failure to build in this policy feature initially blocked solar thermal electricity's migration from demonstration to industry development, holding back a country-appropriate technology.

Are the identified technologies actually being developed by the policies?

Once we have identified the technologies or groups that are being targeted we need to ensure that these technologies are indeed being developed.

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Figure 3.2: Growth rates over the decade 1990—2000 show how PVand wind energy surged while almost all other renewables languished

Source: IEA (2002)

Figure 3.2: Growth rates over the decade 1990—2000 show how PVand wind energy surged while almost all other renewables languished

Deep GHG emissions cuts require a portfolio of zero- or low-emission sources to replace the current carbon-intensive energy supply. How long that process takes depends in part upon on the time required to install and commission industries.

A time-critical element is therefore the industry growth rate. For example, wind power has grown at more than 25 per cent per annum over a decade and solar PV has had similarly spectacular growth. But are the other renewable industries performing as well?

Here are the four main reasons technologies can be left behind:

1 First, drivers may not be optimized. The drivers may need to be quite different for different technologies, varying substantially for wind, small hydro, bio-fuels and solar PV.

2 There may be variations in financial efficiency. The technologies will require different levels of support due to their different levels of maturity. If this need is ignored, the market may come to be dominated by the cheapest technology alone.

3 Parallel industry development may not occur. Different technologies will have a varying capacity to deliver, based on different industry sizes and pricing. A one-size-suits-all policy may render many technologies dormant until prices become suitable, and this wastes valuable development time.

4 There may be inadequate or unclear policy signals. Clearly identifying the technologies indicates to decision-makers of other ministerial or departmental portfolios (for example, treasury, agriculture, environment or planning) which other areas of policy must also be modified. For example, grid connection policies for wind or household metering for PV may need revision.

The key point is that if deep GHG reductions or long-term industry developments are important and that therefore the aim is to deliver a suite of industries, the policy framework must ensure that the country-appropriate technologies it identifies are not left to languish or stall.

Is the line drawn around the eligible technologies in a way that allows adequate promotion for the country-appropriate technologies?

Countries that promote the most globally successful renewable technologies may also fail to incubate technologies that will harness abundant national renewable resources that are currently untapped.

Why are Polynesians excellent sailors, Russians good horsemen and Arabians' architecture so rich in passive solar techniques? Wind power has become a huge success, but almost entirely through perseverance and technological development in countries like Denmark, Germany and the UK. The fact that modern wind technology emerged from these countries is no accident. They are windy places.

Vast areas of the planet are bathed in strong sunlight. While solar thermal technologies may have fallen behind in cooler northern countries, they should not be ignored by nations assessing their own indigenous resources. The take-home message is that the appropriate mix of technologies to be implemented or developed will always vary from country to country. And if a technology has not reached adequate maturity, there exists an opportunity for a future national industry and even internationally valuable intellectual property.

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Renewable Energy 101

Renewable Energy 101

Renewable energy is energy that is generated from sunlight, rain, tides, geothermal heat and wind. These sources are naturally and constantly replenished, which is why they are deemed as renewable. The usage of renewable energy sources is very important when considering the sustainability of the existing energy usage of the world. While there is currently an abundance of non-renewable energy sources, such as nuclear fuels, these energy sources are depleting. In addition to being a non-renewable supply, the non-renewable energy sources release emissions into the air, which has an adverse effect on the environment.

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