POLICY LANDSCAPE 118 - Renewables 2017 Global Status Report

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s of 2016, nearly all countries directly supported renewable energy technology development and deployment through some mix of policies .¹ (p See Table 3.) Decision makers continued to implement policies during the year to attract investment, drive deployment, foster innovation and encourage greater flexibility in energy infrastructure that supports enabling technologies such as energy storage .² (p See Enabling Technologies chapter.) A broad range of policies provided direct and indirect support, aimed at economy-wide economic development, environmental protection and national security . Technology advances, falling costs and rising penetration of renewables in many countries also have continued to require that policies evolve to stimulate renewables deployment and integration as effectively as possible . Many countries built on the momentum spurred by the landmark Paris Agreement of the United Nations Framework Convention on Climate Change (UNFCCC) by communicating their first Nationally Determined Contributions (NDCs)ⁱ . A total of 117 NDCs were submitted by year-end 2016, largely from countries that formalised the commitments made in their Intended Nationally Determined Contributions (INDCs) submitted prior to the Paris climate conference . Of the 117 NDCs, 55 included targets for increasing renewable energy, while 89 made reference to renewable energy more broadly .³

By late 2016 at the 22nd Conference of the Parties (COP22) in Marrakesh, Morocco, more than 100 countries had officially

joined the Paris Agreement, formalising their commitments to sustainable development, often through decarbonisation of the energy sector .⁴ At COP22, leaders of the 48 developing countries that constitute the Climate Vulnerable Forum (CVF), including COP22’s host nation of Morocco, committed jointly to work towards achieving 100% renewable energy in their respective nations .⁵ In addition, a new 20-country coalition launched the Biofuture Platform, dedicated to promoting the use of biofuels in transport and industry .⁶

Policies targeting broader environmental concerns or other resources and technologies in the energy sector also may impact renewable energy markets . For example, carbon pricing policies (either carbon taxes or emissions trading systems), if designed effectively, may incentivise renewable energy development and deployment across sectors by increasing the comparative costs of higher-emission technologies . On the counter side, fossil fuel subsidies continued to temper renewable energy growth globally in 2016 .⁷ (p See Global Overview chapter.)

Policy support specifically for renewable energy in 2016, as in past years, was focused mostly on power generation, whereas support for renewable technologies in the heating and cooling and transport sectors developed at a slower pace . (p See Figure 45.) Policy makers in many countries also continued to advance policies to integrate renewable generation into national energy systems .⁸

i NDCs are country-specific pathways for realising emissions reduction pledges; see Sidebar 4 in GSR 2016 .

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This chapter provides a snapshot of 2016 developments and emerging trends in renewable energy policy across all sectors (power, heating and cooling, and transport) at the regional, national and sub-national levels . The final section focuses on local policy developments . The chapter does not attempt to assess or analyse the effectiveness of specific policy mechanisms . Developments related to each type of policy mechanism are described independently, although often a targeted mix of complementary policies is applied jointly . Renewable energy policies may be implemented in conjunction with policies specifically designed to expand energy access through the deployment of distributed renewable energy technologies (p see Distributed Renewable Energy chapter) or with policies that promote energy efficiency (p see Energy Efficiency chapter and Figure 58) . Specific details on new policy adoptions and policy revisions are included in the policy reference tables and policy endnotes .

TARGETS

Targets for renewable energy continued to be a primary means by which governments expressed their commitment to renewable energy deployment during the year . Renewable energy targets range from official announcements made by governments or heads of state to fully codified plans accompanied by quantifiable metrics and compliance mechanisms, and can focus on individual technologies or sectors, or on economy-wide energy useⁱ .⁹ (R See Reference Tables R15-R19.)

As of year-end 2016, renewable energy targets were in place in 176 countries . The majority of targets continue to focus on renewable energy use in the power sector, with targets for a specific share of renewable power instituted in 150 countries, and economy-wide targets for primary energy and/or final energy shares in place in 89 countries . Targets for renewable heating and cooling and transport energy use have been introduced to a much lesser degree, in place in 47 and 41 countries, respectively, by year-end 2016 .

i The lines between target and regulatory policy mechanisms are often blurred, as in the case of Renewable Portfolio Standards (RPS), which establish mandatory shares, or mandated “targets”, of renewable generation that utilities must achieve by a specified date . RPS policies are covered here under regulatory policy mechanisms .

2014 2015 2016

Power H&C Transport Power H&C Transport Power H&C Transport 130

120 110 100 90 80 70 60 50 40 30 20 10 0

Countries with Power Policies Number of countries

Countries withTransport Policies

Countries with Heating and Cooling (H&C) Policies

117 118

126

64 66 68

21 21

Power Policies Feed-in tariff/premium payment

Tendering Net metering Renewable portfolio standard (RPS)

Heating and Cooling Policies Solar heat obligation Technology-neutral heat obligation

Transport Policies Biodiesel obligation/

mandate Ethanol obligation/

mandate

Non-blend mandate

Figure 45. Number of Renewable Energy Regulatory Incentives and Mandates, by Type, 2014-2016

Note: Figure does not show all policy types in use. In many cases countries have enacted additional fiscal incentives or public finance mechanisms to support renewable energy. Heating and cooling policies do not include renewable heat FITs (i.e., in the United Kingdom). Countries are considered to have policies when at least one national or level policy is in place. A country is counted a single time if it has one or more national and/or state/provincial-level policies. Some transport policies include both biodiesel and ethanol; in this case, the policy is counted once in each category (biodiesel and ethanol).

Tendering policies are presented in a given year if a jurisdiction has held at least one tender during that year. For more information see Table 3.

Source: REN21 Policy Database

Several joint commitments were made at the regional and international levels . In addition to the 100% renewable electricity commitments made by the 48 CVF member states (see above), the EU proposed a new 2030 Framework under which it aims for renewables to account for at least 27% of total energy consumption and at least a 27% improvement in energy efficiency (relative to a business-as-usual scenario) to help reduce greenhouse gas emissions by 40% in 2030 (compared to 1990 levels) .¹⁰ Leaders of Canada, Mexico and the United States reached a deal to source 50% of the region's electricity from non-carbon sources by 2025ⁱ .¹¹

At the national level, countries in Asia were particularly active in launching new targets or revising existing ones . China’s newest Five-Year Plan sets an overall goal of increasing renewable energy capacity to 680 GW by 2020, accounting for 27% of total power generation .¹² China’s Five-Year Plan on Ocean Energy also established a target for achieving a total cumulative capacity of 50 MW of ocean energy from tidal, wave and temperature-gradient technologies by 2020 .¹³ Additional renewable energy shares or installed capacity targets were enacted in India, Malaysia, the Republic of Korea, Singapore, Taiwan, Thailand and Vietnam .¹⁴

Elsewhere, targets were adopted or revised in Africa (Cabo Verde, Morocco , Nigeria and South Africa), Europe (France, Finland and

Norway), Latin America and the Caribbean (Argentina, Aruba, Cuba, Jamaica and Mexico) and the Middle East (Azerbaijan and Saudi Arabia) .¹⁵ Notably, Aruba joined a growing list of countries committed to achieving a 100% share of renewable energy in the electricity sector .¹⁶

A small number of new renewable transport targets also were established in 2016 . In Finland, a target was set for 30% biofuel blending and 40% renewable transport fuels use by 2030, and in Norway a goal was set for 20% biofuels use in transport fuels by 2020 .¹⁷ (R See Reference Table R24.)

New or revised targets also were established at the sub-national level in Australia (Victoria) and in Canada, where all 10 provinces have set renewable energy targets; Alberta announced a 30% renewable electricity target by 2030 .¹⁸ The US state of Massachusetts also established targets for installed power capacity .¹⁹ (R See Reference Table R17.)

Although targets are an important tool, they do not guarantee success . For example, a number of countries in the EU (France, Luxembourg, the Netherlands and the United Kingdom) were identified as likely to miss their 2020 targets .²⁰ Similarly, targets can become outdated quickly if deployment exceeds the original goals, such as in Europe where solar PV already has exceeded both its 2014 and 2020 targets .²¹

Countries with policies at start-2016

Countries with no policy or no data Countries without policies at start-2016 and that added a policy/policies in 2016 State/provincial (not national) policies Countries that held renewable energy-only tenders in 2016 Countries with policies at start-2016 and that added a policy/policies in 2016

Figure 46. Countries with Renewable Energy Power Policies, by Type, 2016

Note: Figure shows countries with Renewable Portfolio Standards, feed-in tariffs/premium payments and net metering policies. Countries are considered to have policies when at least one national-level policy is in place; these countries may have state/provincial-level policies in place as well. Diagonal lines indicate that countries have no policies in place at the national level but have at least one policy at the state/provincial level.

i The 50% by 2025 goal includes renewable energy, nuclear energy, and carbon capture and storage technologies .

Source: REN21 Policy Database

05 POWER GENERATION

As in past years, policy makers introduced new support mechanisms and revised existing policies in an effort to respond to changing political, societal and market conditions, with the power sector continuing to receive the majority of attention . (p See Figure 46.) Feed-in policies – feed-in tariffs (FITs) and feed-in premiums (FIPs) – remained the most prominent form of regulatory policy support for renewable power promotion in 2016 . (R See Reference Table R20.) However, throughout the year countries around the world (most notably in Europe and Asia) continued to shift away from these policies; this was particularly the case when supporting large-scale project deployment, where these mechanisms often have been replaced with auction-based procurement .

The year 2016 marked the second in a row in which no new countries adopted feed-in policies at the national level . Although support for large-scale projects is shifting to tendering in an increasing number of countries, feed-in policies remain in force in many of these countries for the deployment of small-scale installations . Policy makers continue to adjust FIT rates as the technologies become more cost-competitive in ever more areas . In 2016, the European Commission (EC) approved revisions to several feed-in mechanisms proposed by its member countries . These changes often included the adoption of market premiums for large-scale projects .²² In a separate move, the EC also announced plans (not yet adopted in 2016) to remove priority dispatch rights for new renewable energy projects, a notable feature of feed-in policies, with the objective of further restricting priority dispatch so that only installations smaller than 250 kW will qualify by 2026 .²³ At the national level, in the Czech Republic, the FIT that previously had been halted was reapproved for new projects and for projects built between 2006 and 2012 .²⁴ The EC approved France’s revised renewable energy support scheme, with only installations of less than 500 kW remaining eligible for the FIT; larger projects are to receive premium payments .²⁵ Germany’s Renewable Energy Law (EEG) was reformed to transition from government-set FIT rates (a central component of the EEG originally adopted in 1990)

to an auction-based scheme for projects larger than 100 kW .²⁶ Greece’s FIT was amended to allow for small-scale projects and installations on non-interconnected islands to receive support;

in separate legislation, Greece transitioned large-scale project support to a FIP that is to be provided over 20 years (25 years for CSP) .²⁷ Slovenia also amended its FIT, making it applicable only to projects below 500 kW .²⁸

Elsewhere in Europe, Denmark reintroduced a FIT for small-scale wind power projects, after a previous programme reached its cap and was closed, and the United Kingdom reduced its FIT for all technologies by 65% .²⁹ Ukraine reduced rates for commercial solar installations greater than 10 MW .³⁰

In Asia, several countries reduced rates, including China (which reduced rates by 13-19% for its solar FIT but kept the distributed generation FIT unchanged), Japan (which reduced its solar FIT by 11% for 2016 and aims for cuts of 20% or more in three years), Pakistan (which cut tariffs for solar power by 36%) and the Philippines (which proposed new, lower rates for the third round of its FIT) .³¹ Moving away from the general trend, Indonesia increased its solar FIT by more than 70% and set a fixed FIT rate for geothermal power .³²

Modifications were made to feed-in policies in Africa as well . Ghana announced plans to update its solar PV FIT to last for 20 years (up from 10 years); Kenya announced its intention to transition away from FITs to tendering; and Egypt announced a new phase of its FIT programme, including requirements for 30%

of financing for solar PV projects and 40% of financing for wind power projects to come from Egyptian sources .³³

Sub-national jurisdictions in India (Tamil Nadu), Canada (Ontario) and Australia (Victoria and Queensland) also made changes to existing feed-in policies in 2016 .³⁴ Ontario offered 241 MW of contracts to solar PV, hydropower, wind and bio-power projects under the fourth round of its FIT and opened its fifth round of applications, and Queensland increased the size of solar power systems eligible for its FIT from 5 kW to 30 kW .³⁵ In contrast, Tamil Nadu cut its solar PV FIT rates by 27% .³⁶ (R See Reference Table R20.)

Tenders (competitive bidding or auctions) for renewable energy are the most rapidly expanding form of support for renewable

energy project deployment and are becoming the preferred policy tool for supporting deployment of large-scale projects . (R See Reference Table R22.) At least 33 countries issued new tenders in 2016; most renewable energy tenders were for solar PV, and to a lesser extent for wind and geothermal power . Renewable technologies also were competitive in some technology-neutral tenders .

Asia was home to some of the largest tenders by capacity in 2016 . For example, China tendered 5 .5 GW of renewable energy capacity in 2016, up from 1 GW offered in 2015 .³⁷ India held a tender for the deployment of 1 GW of new solar PV capacity alone .³⁸ Japan announced a schedule for its solar PV tender system, which will be introduced in 2017; Indonesia held a tender for 680 MW of new geothermal capacity spread across six regions; and Turkey held a tender for a single 1 GW solar PV plant .³⁹ Sub-national tenders were launched during the year in Australia (New South Wales) and India (Tamil Nadu) .⁴⁰

Tenders and FITs increasingly are implemented alongside one another . In Europe, this is being driven by EC State Aid guidelines, which have led to policy changes in member countries attempting to meet the requirement to shift towards tendering for certain projects . In 2016, for example, Poland’s Renewable Energy Law replaced the existing green certificate scheme with a mix of tenders for large projects and feed-in payments for small-scale projects (up to 10 kW); Slovenia revised its feed-in support scheme to include a two-round tender process for projects over 500 kW; and Greece introduced a package of incentives that includes FIPs, tenders and virtual net meteringⁱ .⁴¹ These reforms led to both Greece and Poland holding their first solar PV tenders in 2016, aiming to contract 40 MW and 100 MW of small-scale projects, respectively .⁴²

National solar PV tenders also were held in France and Germany, while the Netherlands held solar power tenders and two rounds of offshore wind power tenders .⁴³ In December 2016, Spain announced its intention to hold 3 GW of technology-neutral tenders in 2017 .⁴⁴ A new development in 2016 saw Denmark and Germany enter a unique partnership to launch mutual cross-border solar PV tenders . The pilot programme, the first of its kind, opened auctions to installations in either country, with the objective of expanding cross-border co-operation to include additional countries as well as onshore wind power .⁴⁵

In Africa, Nigeria, in a similar fashion to the multi-pronged approach established in Europe, adopted a tender system for projects larger than 30 MW while formally approving its FIT rates first announced in 2015 .⁴⁶ Both Malawi and Zambia held their first renewable energy tenders in 2016: Malawi held tenders for four solar PV plants with a cumulative capacity of 70 MW, and Zambia held solar tenders for a total of 100 MW and set a record-low bid price for Africa at USD 0 .06 per kWh under a 25-year PPA .⁴⁷ In the Middle East and North Africa (MENA) region, Morocco called for tenders totalling 1 GW of large-scale renewable energy projects .⁴⁸ Elsewhere in the MENA region, the Palestinian Energy Authority launched its first tenders in 2016, aiming to boost installed solar PV capacity by as much as 100 MW; Saudi Arabia launched a 100 MW solar PV tender; and Iraq announced

a tender for a 50 MW solar PV project .⁴⁹ Israel ended its two-year hiatus on new solar power deployment by launching plans to issue more than 1 GW of new solar tenders, as well as tenders for a 500 MW solar PV project in the Negev desert and a 40 MW PV project in Ashalim .⁵⁰ Jordan announced its third round of tendering for solar power and its second round for wind power, including a new 200 MW solar PV tender .⁵¹ Sub-national tenders were held in the UAE (Abu Dhabi and Dubai) .⁵²

In the western hemisphere, Argentina held the first tenders under its RENOVAR programme, which aims to develop 1 GW of renewable energy and includes a green trust fund to help secure investment .⁵³ Chile held its largest power auction to date to supply 12,430 GWh of electricity annually for 20 years, or about one-third of the country’s energy needs; wind power received 40%

of the available capacity in this auction, and the world’s lowest price for solar PV generation (USD 29 .10 per MWh) also was bid .⁵⁴ In Central America, El Salvador launched tenders calling for 100 MW of solar power and 50 MW of wind power capacity .⁵⁵ Additional auctions were held in Guatemala, Honduras, Panama and Peru . Mexico selected 23 bidders to develop USD 4 billion worth of clean power projects, primarily from solar PV and wind power .⁵⁶ Tenders also were held at the sub-national level in the Canadian province of Alberta .⁵⁷

By contrast, South Africa’s successful tender programme, a model for many others around the world, was threatened by the country’s switch in focus from renewables to nuclear power and by the national utility’s refusal to sign PPAs with solar and wind power energy projects .⁵⁸ A similarly negative trend was witnessed in Brazil, where reduced demand for electricity and economic challenges caused by the country’s contracting national economy led officials to abandon plans to add new solar and wind power capacity through auctions in 2016 . After multiple delays, the country’s only scheduled solar and wind power auction for the year was cancelled in December, making 2016 the first year since 2009 in which Brazil did not hold a tender for wind power .⁵⁹ Due to the country’s economic slump, Brazil also took steps to ease the financial burden for now-struggling developers who had won contracts under previous tendering rounds, reducing penalty fees and considering extending project durations to 30 years .⁶⁰ Net metering / net billing has been used to support the deployment of small-scale, distributed renewable energy systems by enabling generators to receive credits or payments for electricity generated but not consumed on site . In many cases, net metering policies have been adopted alongside other policy mechanisms – such as FITs or auctions – that support larger-scale projects . The pace of adoption of new net metering policies slowed in 2016, with Suriname and Slovenia adding new policies .⁶¹ As in past years, net metering continued to see opposition through challenges to the rates paid to power producers and through the adoption of

In document Renewables 2017 Global Status Report (Page 119-135)