1. Feed-in Tariff Methodologies and Financing: Options for GMS Countries 5 th Meeting of the GMS Subregional Energy Forum (SEF-5) 9-11 November 2011 Ho Chi Minh City, Vietnam Dr. Romeo Pacudan Senior Energy Specialist/Team Leader ADB TA 7679 Lahmeyer International GmbH

2. Structure of Presentation RE Promotion Policies Feed-in Tariff Design Options Funding Options Final Remarks test

3. Subsidy and grants Tax incentives Energy payments Fiscal incentives Feed-in tariff Quota and Obligations RE Certificates Net Metering Regulatory policies 1. RE Promotion Policies from fiscal incentives to regulatory policies

4. 1970198019902000 RD & D Investment Incentives Tax Measures Feed-in Tariffs Voluntary Programs Obligations Tradable Certificates Source: IEA 2005 1. RE Promotion Policies RE Policy Evolution in Developed Countries: Shift to regulatory policies supported by fiscal incentives

5. test Policy Instruments Tax Measures Investment Incentives Feed-in Tariffs Obligations Tradable Certificates Power Sector Reforms Monopoly Purchasing Agency Wholesale Competition Retail Competition 1. RE Promotion Policies RE Policy Evolution and Power Market Reforms In Europe, regulatory policies were introduced when power industries were liberalized

6. MonopolyPurchasing Agency India Sri Lanka Malaysia Myanmar Thailand China Cambodia Lao PDR Vietnam Wholesale Competition Philippines Singapore R of Korea Retail Competition EU countries US Canada Japan 1. RE Promotion Policies Power Industry Market Structure power market reforms are slow in Asia various variants exist for purchasing agency model increasing role of the private sector in the generation segment

7. FEED-IN TARIFFS TRADABLE CERTIFICATES ITALY JAPAN AUSTRALIA USUK FINLANDFRANCE IRELAND SLOVENIA SPAINCZECH DENMARK SWEDEN ROMANIA POLAND OBLIGATIONS BELGIUM NETHERLANDS BULGARIAGERMANYLATVIA CYPRUSGREECE LITHUANIA ESTONIAHUNGARYLUXEMBOURG PORTUGALSLOVAKIA 1. RE Promotion Policies (DEVELOPED COUNTRIES) Combination of Regulatory Policies Consistent with Market Structures Complex Market-Based Measures

8. FEED-IN TARIFFS TRADABLE CERTIFICATES INDIA OBLIGATIONS ALGERIA ARGENTINA DOMINICAN SOUTH AFRICA ECUADOR INDONESIA KENYAUGANDA MALAYSIA MONGOLIA NICARAGUATURKEY PAKISTAN SRI LANKA THAILAND 1. RE Promotion Policies (DEVELOPING COUNTRIES) Combination of Regulatory Policies Consistent with Market Structures CHILE URUGUAY PR CHINA PHILIPPINES Simpler Market-Based Instruments

9. 2. Feed-in Tariff Design Options Feed-in Tariff as Guaranteed Price over Fixed Period of Time Guaranteed Access to the Grid Stable and Long-term Purchase Agreement Purchase Obligation Clear Interconnection Rules

10. 2. Feed-in Tariff Design Options Payment differentiation and supplementary design options

11. 2. Feed-in Tariff Design Options Solar PV Projects India Single, Fixed Tariff Tariff for 2010- 2011 25 yearsMalaysia* By project size Bonus payments Tariff degr (8% per year) 21 yearsPR China Single, Fixed Tariff R of Korea By project size Tariff deg (4% per year since 2009) 20 yearsPhilippines* Single, Fixed Tariff Tariff degr (6% after 1 year) 20 yearsThailand* Single, Fixed Tariff Bonus payments 10 yearsMongolia Single, Fixed Grid, Off-grid Chinese Taipei By location, By project size 20 years

12. 2. Feed-in Tariff Design Options Evolution of Solar PV wholesale price US$/Wp

13. 2. Feed-in Tariff Design Options Solar PV FITs

14. 2. Feed-in Tariff Design Options Wind Power Projects India By location, zones Capital cost indexation (2010-2011) 13 yearsMalaysiaPR China By location, zones R of KoreaSingle, fixed Tariff deg (2% per year since 2009) 15 yearsPhilippines*Single, fixed Tariff deg (0.5% after 2 years) 20 yearsThailand* By project size Bonus payment 10 yearsMongolia Single, Fixed Grid, Off--grid Chinese Taipei Onshore, off- shore; by project size 20 years

15. 2. Feed-in Tariff Design Options Evolution of Wind Power Investment Costs

16. 2. Feed-in Tariff Design Options Wind Power FITs

17. 2. Feed-in Tariff Design Options Biomass Power Projects IndiaBy state Capital Cost indexation 2010-2011 13 yearsMalaysia* By project size Bonus payments Tariff degr (0.5% per year) 16 yearsPR China Single, Fixed Tariff R of Korea Single, Fixed tariff 5 yearsPhilippines* Single, Fixed Tariff Tariff degr (0.5% after 2 years) 20 yearsThailand* By project size Bonus payments 7 yearsMongolia Single, Fixed Grid, off-grid Chinese TaipeiSingle, Fixed20 years

18. 2. Feed-in Tariff Design Options Biomass Power FITs

19. 2. Feed-in Tariff Design Options Hydropower Power Projects India By state, by project size Capital Cost indexation 2010-2011 35 yrs <5MW) 13 yrs 5-25MW Malaysia* By project size 21 yearsPR ChinaR of Korea Single, Fixed tariff 5 yearsPhilippines* Single, Fixed Tariff Tariff degr (0.5% after 2 years) 20 yearsThailand* By project size Bonus payments 7 yearsMongolia Single, Fixed Grid, off-grid Chinese TaipeiSingle, Fixed20 years

20. 2. Feed-in Tariff Design Options Hydropower Power FITs

21. Fixed Feed-In Tariff /Lowest Tariff Tender for MW / Negotiated Tariff Season Dependent Feed-In Tariff Time of Day Dependent Feed-In Tariff Feed-In Tariff Benchmarked Against Retail Price + Premium RE-Generator Selling Electricity to Retail Consumers Power Pool Price + Premium Renewable Portfolio Standard with RE Certificate Merchant RE-plants selling into Poo l Type of Tariff Setting Regime Degree of conformity with market rules for liberalized electricity market High Low 2. Feed-in Tariff Design Options Tariff Regime and Electricity Market Compatibility Source: kfW 2005

22. Ratepayer Funding Equivalent Distribution Customer Differentiation System Benefit Charge Taxpayer Funding Supplementary Funding Greenhouse gas revenue Utility tax credit Inter-Utility Cost Sharing Feed-in Tariff Funding 3. Feed-in Tariff Funding Options Dual objectives: funding stability and minimize consumer impacts Key Issue: consumer impacts Key Issue: politically sensitive Key Issue: Sufficiency of funding Key Issue: disagreements from constituencies

23. Ratepayer Funding Thailand* – adder charge Philippines – FIT All Malaysia – RE Fund Ratepayer Funding Japan – Solar Charge China – RE Premium Chinese Taipei India and Sri Lanka Taxpayer Funding Republic of Korea – Government Budget Supplementary Funding Mongolia Feed-in Tariff Funding 3. Feed-in Tariff Funding Options FIT Funding in Asian Countries

24. 4. Options for GMS countries Combination of policy instruments FIT supported with fiscal incentives FIT policy combined with other regulatory measures FIT policy design consistency with Electricity markets Regulatory and institutional frameworks FIT Funding Long-term funding stability Burden sharing and transparency Social and economic impacts considerations