Renewable Energy Targets and Policy Strategies in Mekong Countries Policy and Incentive Mechanism for Renewable Energy Development in EEP Mekong Countries 20 November 2012 Melia Hotel Hanoi, Hanoi Vietnam Dr. Romeo Pacudan Team Leader ADB TA 7679: Promoting RE, clean fuels and EE in the GMS Lahmeyer International GmbH

Structure of Presentation Formulating Policy Framework for RE Development RE Targets Technology specific targets RE technologies Policy interventions Support Mechanisms Final Remarks test

Preparatory Studies Resource assessments Site, project identification Technical, economic, financial studies Institutional and market studies Others (stakeholders) Goal Setting RE targets Objectives Impact studies Financial implications Barriers Analysis Techno- Economic Non-economic barriers Support Mechanisms Incentives Risk insurance Soft loans and guarantees Technical assistance and capacity building Technology transfer Sources of financing 1. Formulating Policy Framework for RE Development RE planning and policy setting process

2. RE Targets Source: REN21, countries with targets in 2012 More than half are from developing countries Mostly renewable electricity targets Others – (1) % share of final or primary energy supply; (2) installed capacity; (3) heat supply; (4) biofuels targets Recently, many countries have increased their targets

2. RE and Biofuels Policy Targets in the Mekong Cambodia Rural electricity supply by 2015 Lao PDR Total energy consumption by 2025 Myanmar Total powergeneration installed capacity by 2020 Thailand Total energy consumption by 2021 Vietnam Electricity production by 2020 ASEAN Electricity installed capacity by 2015 (including hydropower and biofuels) Lao PDR Each for biodiesel and bioethanol % Myanmar Combined biofuels by %8% Thailand Oil substitution by % Biofuels Targets RE Targets and achievements

3. Technology Specific Targets Thailand (2021) Alternative Energy Development Plan Biofuels Targets and achievements RE Targets and achievements

3. Technology Specific Targets Lao PDR (2025) Renewable Energy Development Strategy Biofuels Targets and achievements RE Targets and achievements

3. Technology Specific Targets Vietnam (2030) Power Development Plan 7 RE Targets and achievements

3. Technology Specific Targets Flexibility and Raising the Bar Thailands REDP: Past Source: Dr Sinsukprasert 2012 Source: Dr Sinsukprasert 2010 Vietnams Wind Power Planning Thailands AEDP: Present Source: Dr Nguyen Anh Tuan 2012

4. RE Technologies Technology maturity, costs and rationale for policy interventions externalities Cost Reductions from learning Policy Interventions

4. RE Technologies Solar PV technological learning curve

5. Policy Interventions Technology maturity and incentive mechanisms Source: UNEP-SEFI 2008 R&D FundingPublic Funding Fiscal Policies Regulatory Frameworks

5. Policy Interventions Technology maturity, financing and incentive mechanisms Source: UNEP-SEFI 2008 R&D FundingPublic Funding Fiscal Policies Regulatory Frameworks

6. Support Mechanisms Financial incentives R&D Funding Public Funding Fiscal Policies Regulatory Frameworks Public investments Loans, grants Competitive bidding Capital subsidy, rebate Tax incentives Energy payments Feed-in Tariff RPS, Quota and Obligations Net Metering Tradable Renewable Energy Certificate

RD & D Investment Incentives Tax Measures Feed-in Tariffs Voluntary Programs Obligations Tradable Certificates Source: IEA Support Mechanisms RE Policy Evolution in Developed Countries: Shift to regulatory policies supported by fiscal incentives

5. Policy Interventions RE economic and non-economic barriers Source: IEA 2011

6. Support Mechanisms Mekong countries Investments by Ministries involved Utility Investments Utility Investments Utility Investments Utility Investments Demonstration Projects Demonstration Projects Demonstration Projects S & T Fund Demonstration Research, Prototype Demonstration Tax Incentives BOI incentives, low interest loan, capital support Tax incentives, soft loan, exempt land & environ fees Feed-in Adder solar, wind, biomass, MSW, biogas Feed-in tariff (wind), avoided costs for other RE Information on energy potential Wind potential information

6. Support Mechanisms Thailand Source: Thailand PV Status Report 2012

6. Support Mechanisms Vietnam Land and environmental fees exemptions Tax incentives, duty exemptions Wind information Wind Feed-in-Tariff Source: adapted from Dr Nguyen Anh Tuan 2012

Indonesia FIT Geothermal 2003 Thailand Adder (solar, wind, SMHP, bioenergy, biofuels) 2006 Indonesia FIT small RE 2009 Malaysia FIT (biogas, biomass, SHP, PV) 2011 Vietnam FIT wind 2011 Philippines FIT (wind, solar, ROR hydro, biomass, ocean thermal) 2012 Thailand FIT 2012? 6. Support Mechanisms Increasing use of FIT in the ASEAN

6. Support Mechanisms Thailands feed-in adder and solar PV investments Source: Thailand PV Status Report 2012

6. Support Mechanisms Vietnams wind policies and wind power development Wind Power Projects under Development Over 4,000 MW Source: adapted from Dr Nguyen Anh Tuan 2012

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 Key Issue: consumer impacts Key Issue: politically sensitive Key Issue: Sufficiency of funding Key Issue: disagreements from constituencies 6. Support Mechanisms Feed-in tariff funding Ex: Republic of Korea Thailand, Malaysia, Indonesia, Japan, Philippines, PR China, India, etc Ex: Mongolia

7. Final Remarks Setting of targets Ambitious but achievable technology-specific targets founded on realistic technical, economic and market studies Responsive to market developments Supported by a policy or a regulatory decision Integrated in a RE Plan or Power Development Plan Mechanisms to achieve the targets Technology-specific support Mix of instruments addressing various types of barriers Feed-in tariff (FIT) (and its variants) appears to be gaining acceptance in the ASEAN in general – but its effectiveness needs to be further demonstrated Predictable and transparent