1. Overview of RE Policies in the Mekong Region Policy and Incentive Mechanism for Renewable Energy Development in EEP Mekong Countries 20 November 2012 Melia Hotel, Hanoi, Vietnam Anthony Jude Director, Energy Division, Southeast Asia Department Asian Development Bank

2. Structure of Presentation Diversity of Mekong Countries Policy Drivers Policy Targets Policy Measures Current RE Deployment RE Barriers Best Practice Policy Guideline Final Remarks test

3. For countries with lower energy access rate: RE plays an important role in providing services in off-grid areas Hydropower investments were mostly carried out by state owned utilities. Mekong Countries Diversity in economic development levels, energy resources, and markets Cambodia Myanmar Thailand Lao PDR Income Conventional Energy Resources HH Electrification (2011) LowLarge hydro 26% Low Oil and Gas Coal Large hydro 25% Upper Middle Oil and Gas Coal Large hydro 99% Lower Middle Coal Large hydro 57% Vietnam Lower Middle Oil and Gas Coal Large hydro 95% Installed Capacity (2011) 0.5 GW 3.36 GW 31.45 GW 2.10 GW 25.0 GW RE share in power generation (2011) 3.7% hydro 0.4% other RE 53.9 % hydro 8% hydro 5% other RE 100% hydro 43% hydro Excluding large hydro, share of RE is relatively small Share of HH with access to electricity

4. Renewable Energy Policy Drivers Policy objectives Cambodia “Energy Policy” Myanmar “Proposed Concepts RE Forum’ Thailand “Alternative Energy Dev’t Plan” Lao PDR “RE Development Strategy” Energy Security Economic Development Provide adequate energy supply - Reduce reliance on imported fuels Alternative markets for agri; rural employment; SME development Fossil fuel substitution, enhance energy security Development of domestic RE industry Ensure adequate supply Bring socio-economic benefits Vietnam “RE Development Strategy” Replace and conserve fossil energy; enhance energy security Development of RE projects for economic development Climate and Environment Promote environmental and sustainable development Reduce pollution; environmental sustainability Green utilization in communities; R&D of efficient, technologies Ensure environmental and social sustainability Clean energy supply, enhance sustainable dev’t, reduce GHGs

5. RE Policy Targets Cambodia Rural electricity supply by 2015 15% Lao PDR Total energy consumption by 2025 30% Myanmar Total powergeneration installed capacity by 2020 15-20% Thailand Total energy consumption by 2021 25% Vietnam Electricity production by 2020 4.5%

6. RE Policy Measures Cambodia Myanmar Thailand Lao PDR Fiscal Incentives Regulatory Instruments Information and Education -- - --- BOI incentives, low interest loan, capital support Feed-in Adder (solar, wind, biomass, MSW, biogas, etc) Information on energy potential Tax incentives-- Vietnam Tax incentives, low interest loan, exempt land and environmental fees Feed-in tariff (wind), avoided costs for other RE Wind potential information RD&D Demonstration projects Research and Support, prototype demonstration - S&T Development Fund Public Financing and voluntary Utility investments Investments by Ministries involved Utility investments, cooperation with stakeholders Utility investments One could expect that more RE investments were carried out in countries with combination of policy instruments In countries with less policy instruments, RE investments were mostly carried out by state-owned utilities or donor agencies

7. RE Policies and Electricity Supply Industry Policy design must be consistent with the structure of the market Policy Instruments Tax Measures Investment Incentives Feed-in TariffsObligations Tradable Certificates Power Sector Reforms Monopoly Purchasing Agency Wholesale Competition Retail Competition All Mekong countries are under various variants of purchasing agency model Cambodia: EdC, IPPs, rural entreprises Lao PDR: EdL, IPPs Myanmar: MOEP Thailand: EGAT, IPPs, MEA and PEA Vietnam: EVN and IPPs

8. InceptionTake-OffConsolidation Thailand Wind: 7.28 MW Solar: 256.13 MW Hydro: 95.7 MW Biomass: 1796 MW MWS: 27.48 MW Vietnam Small hydro: 600 MW Biomass: 150 MW Wind: 37.5 MW MSW: 2.4 MW Solar: 2 MW Cambodia Small,micro hydro: 13.37 MW Biomass: 0.087 MW Solar: 3 MW Inception Phase When first examples of a technology is deployed Take-Off Phase When the market grows rapidly, leading to widespread deployment Current RE Deployment Market diffusion - for one country, some RE technologies may have reached the take-off phase while other technologies may still be at the inception phase Myanmar Mini-hydro: 33 MW Wood gasifier: 0.36 MW Wind: 0.0054 MW Solar: 0.006 MW Lao PDR Small hydro: 11.3 MW Biomass: 3.5 MW Solar: 0.1 MW Market Consolidation Phase Where deployment grows towards maximum practicable level Source: IEA, 2011

9. RE Barriers Economic Cost of the technology is higher than the competing alternative Regulatory and Policy Uncertainty Relate to bad policy design, or discontinuity and/or insufficient transparency of policies and legislation Institutional and Administrative Lack of strong, dedicated institutions, lack of clear responsibilities, and low or non ‐ transparent permitting Market Inconsistent pricing structures, asymmetrical information, market power, subsidies for fossil fuels, internalization failures Financial Absence of adequate funding opportunities and financing products for renewable energy Infrastructure Centre on the flexibility of the energy system, e.g. the power grid, to integrate/absorb renewable energy Awareness and skilled personnel Insufficient knowledge on the availability and performance of renewables and insufficient numbers of skilled workers Public acceptance and environmental Experience with planning regulations and public acceptance of renewable energy Source: IEA, 2011

10. RE Barriers based on literature survey Cambodia Myanmar Thailand Lao PDR Techno Economic Regulatory & Policy XX X- X- X X Vietnam XX Institutional & Admin. Market XX X- X- XX -- Financial Infrastructure XX -X -- XX X- Awareness & skilled personnel Acceptance & Environmen- tal XX X- XX X- X-

11. RE Barriers and Technology Market Diffusion InceptionTake-OffConsolidation Inception Phase When first examples of a technology is deployed Significant Barriers Economic Technical Regulatory Administrative Medium Barriers Financing Socio-cultural Take-Off Phase When the market grows rapidly, leading to widespread deployment Significant Barriers Economic Market Financing Socio-cultural Regulatory Administrative Medium Barriers Grid integration infrastructure Market Consolidation Phase Where deployment grows towards maximum practicable level Significant Barriers Grid integration Market integration Medium Barriers Socio-cultural Source: IEA, 2011

12. Best Practice Policy Guidelines Solutions are country specific which take into account national context InceptionTake-OffConsolidation Inception Phase Immature market Technologies are not well established Local supply chain is not in place Financing institutions perceive investments as risky Policy Measures Develop a clear road map (including targets) Provide a suitable mixture of support Establish streamlined regulatory framework Stimulate R&D Take-Off Phase Deployment of a specific technology is increasing in the national market Supply chain is in place even not fully developed Financing institutions have increased knowledge of technology Policy Measures Ensure predictable support environment (with ambitious target) Ensure adaptability to market and technology developments Provide appropriate incentives Focus on removing non-economic barriers and implementation details Source: IEA, 2011

13. The Mekong Region is composed of countries at various levels of economic development, with different energy resource endowments, at various stages of energy market development Countries with lower electrification rates have RE policies aimed at increasing energy access while those with higher electrification ratio, the focus is on grid- connected development. Though most countries have RE policy targets, only Thailand and Vietnam have introduced more complex intervention and implementation measures to promote RE development For each country, some RE technologies may have reached the ‘take-off phase’ of RE deployment while other technologies are still at the ‘inception phase’. A combination of intervention measures is necessary to address both economic and non-economic barriers. The choice of measures is country and technology specific, and depends on the current level of market diffusion of a given RE technology as well as the national context Final Remarks

14. Thank you ajude@adb.org www.adb.org