Policies for Clean Energy Development in South Asia

Priyantha D C Wijayatunga, PhD

Senior Energy Specialist Asian Development Bank 7th Asia Clean Energy Forum 8 June 2012

Outline
Introduction Current Status Way forward Final Remarks

Energy a key contributor

An essential input to maintain and improve living standards

Poor and vulnerable To develop socioeconomic Infrastructure

Over 50% of the population rely on traditional biomass for cooking in South Asia No electricity access to about 700million

Household electrification varying from 50-100% Barrier to industrialization Poverty trap

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Economic Growth

South Asia Region had a growth of 5.75%

9.00 8.00 Average Growth Rate (%) 7.00 6.00 5.00 4.00 3.00 2.00

1.00
0.00

Nepal

Bangladesh

Sri Lanka

Maldives

India

Bhutan

Energy and Economy

Economic growth strongly coupled with energy sector growth Energy demand will continue to increase with 90% of the increase coming from developing world Even with environmental sustainability kept in mind, incremental power supply

South Asia needs to fall in line with this reality

Continue with Coal and Gas domination About 50% from renewable energy

Justification for RE .

Energy Security
SA a net importer of fossil fuels

Price volatility of fossil fuels

Significant portion of import bill Increasing trend of price Burden on the national budget

Less adverse local environmental impacts High portion of local value addition Increased opportunities for local investors Closer to rural communities

Increased opportunities for rural electrification Ability for rural communities to participate Less technical losses

Viability ..

Hidden subsidies for fossil fuels

Fossil fuel subsidies took $409 billion in 2010 Renewable energy took only $66 billion in 2010

Environmental and social costs not internalized To create a level playing field for RE Policy and regulatory interventions RE subsidies will increase to Subsidies $ 250 billion by 2035 Other incentives About 50% in developing countries

Current Policies

Renewable Energy Polices and Targets Bhutan Renewable Energy Policy 2011 Long term objectives enhance energy security and broaden the energy portfolio; conserve the environment and reduce GHG emissions; enhance socio-economic development Deals with a range of measures such as institutional arrangements, allocation of resources, water charges, royalty, ownership, investment arrangements etc 20MW by 2020 (Solar, Wind, Biomass and other)

Current Policies .

Bangladesh Renewable energy policy 2008 Harness RE in across the country and promote appropriate RE technologies Encourage public and private sector investment Develop sustainable RE supplies to substitute indigenous nonrenewable energy supplies Scale up contributions of renewable energy to electricity production; Capacity building in RE use Create enabling environment and legal support to encourage the use of renewable energy. Promote development of local technology in the field of renewable energy 5% of the total power demand by 2015 and 10% by 2020.

Current Policies .

India Electricity Act 2003 Created enabling environment for RE development

encouraging optimal use of RE resources promotion of RE through appropriate tariff regulations in line with the National Electricity Policy (2005) and Tariff Policy (2006)

National Action Plan on Climate Change (2008) RE to be 5% of generation in 2010 and increased by 1% each year States may go for even a higher percentage National Solar Mission (2010)
1-2GW of grid-connected solar projects by 2013, 4-10GW by 20132017 and 20GW by 2020

Current Policies .

CERC Regulations
Regulations for Preferential Tariff for RE (2009) Renewable Energy Certificate Mechanism (2010)

SERC Regulations
Preferential RE Tariff Orders by SERCs (2002 onwards)

Current Policies .

Nepal Long history of developing RE

community involvement, delivery through private sector and use of micro financing

RE development continues to be a high priority

least cost solution to remote, sparsely populated areas unviable for grid extension,

GoN's goal for the next 20 years

increase the share of renewable energy from less than 1% to 10% of the total energy supply and to increase the access to electricity from alternative energy sources from 10% to 30%

Current Policies .
GoN to mobilise investments amounting to $ 1 billion by 2020
support for hydro power, solar PV and biogas technologies

Three Year Plan (2010-2013)

15 MW of mini/micro hydro power 225,000 solar home systems 90,000 domestic, 50 community and 75 institutional biogas plants 1 MW of wind power 4,500 improved water mills

Enabling measures include

establishment of national, district, and community rural energy funds Tax and duty concessions Exemption of mini, micro and pico hydro projects from royalties and licensing requirements Standard PPAs (flat tariff) for micro-hydropower up to 25MW

Current Policies .

Maldives Energy Action Plan (2009-2013) to become Carbon neutral by 2020 Promote energy conservation and energy efficiency to reduce costs Increase national energy security by diversifying energy sources Promote renewable energy technologies

Current Policies .

National Energy Policy

Become carbon neutral in energy sector by 2020 Invest in advanced energy technologies to enable carbon neutrality and improve energy efficiency 50% of the electricity is supplied from renewable sources by 2015 50% reduction in energy sector GHG emissions by 2015 (compared to 2000 levels) Reach a saving of 7.5% on the final energy consumption over 10 years until 2020

Current Policies .

Sri Lanka Since 1997 to 2006 ad hoc policy To promote small hydro (less than 10MW) Encourage private sector Energy policy (2006/07) covering NCRE Economically viable, environmentally friendly, NCRE to be promoted Incentives for other non-economic NCRE A separate facilitation centre for NCRE (SEA) Support for research and development on adopting new technologies

Current Policies .

10% of generation by 2015 and 20% by 2020 Feed-in-tariff from 1998

For avoided cost based tariffs up to 2006 Cost based tariffs since 2007

Net-metering Off-grid plants exempted from licensing

Outcome

Exponential development of RE in India

Wind, small hydropower, Solar 12% of generation capacity (170GW) by 2011

Substantial progress in Sri Lanka

Small hydropower, wind, biomass About 10% of generation capacity and 6.8% of energy

Significant progress in expanding off-grid supplies in Nepal and Bangladesh

Mini-micro hydropower, solar and biogas in Nepal Solar PV in Bangladesh

Increased emphasis in RE in Bhutan and Maldives through ongoing programs

Outcome .

ADB has been facilitating

Investment support in RE projects Power evacuation infrastructure
Facilitate development of RE projects by private sector

Credit lines Pilot projects

More action needed .

Tax credits/incentives Appropriate Feed-in-tariffs (FIT) To cover costs and a reasonable ROR Adjusted as needed Utilities compensated Government subsidies
Extend fossil fuel subsidies to RE

Green tariffs FIT passed on to the consumer

Will not have serious impact to the final tariff
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More action needed .

Wheeling allowed Green consumers Renewable energy certificates Establishing (where needed) and enabling the regulators Advise on and enforce RPS and FIT Ensure transparency and cost recovery Consumers looked after

Final Remarks
Extend fossil fuel subsidies to RE Can finance additional cost of FITs with minimum tariff impacts From economic regulation to Regulation for sustainable development Technology transfer can catalyze increased penetration South-South cooperation with adapted technologies will further boost these efforts Leapfrog in technology and environmental sustainability

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Thank you

e-mail: pwijayatunga@adb.org

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