AreviewonglobalwindenergypolicyR.Saidur *,M.R. Islam,N.A.Rahim, K.H.SolangiCentreofResearchUMPEDAC,Level4,EngineeringTower,FacultyofEngineering, UniversityofMalaya,50603KualaLumpur,MalaysiaContents1. Introduction . .. .. .. .. .. . .. .. .. .. .. .. .. . .. .. .. .. .. .. .. . .. .. .. .. .. .. . .. .. .. .. .. .. .. . .. .. .. .. .. .. .. . .. .. .. .. .. .. . .. 17451.1. Theenergypolicy . . .. .. .. .. .. .. .. . .. .. .. .. .. .. .. . .. .. .. .. .. .. . .. .. .. .. .. .. .. . .. .. .. .. .. .. .. . .. .. .. .. .. .. . .. 17451.2. Indispensabilityofwindenergy. .. .. . .. .. .. .. .. .. .. . .. .. .. .. .. .. . .. .. .. .. .. .. .. . .. .. .. .. .. .. .. . .. .. .. .. .. .. . .. 17452. Policiesofdifferentcountries.. .. .. .. .. .. . .. .. .. .. .. .. .. . .. .. .. .. .. .. . .. .. .. .. .. .. .. . .. .. .. .. .. .. .. . .. .. .. .. .. .. . .. 17472.1. Windenergypolicy inNorthAmerica . .. .. .. .. .. .. .. . .. .. .. .. .. .. . .. .. .. .. .. .. .. . .. .. .. .. .. .. .. . .. .. .. .. .. .. . .. 17472.1.1. UnitedStates .. .. .. .. .. .. . .. .. .. .. .. .. .. . .. .. .. .. .. .. . .. .. .. .. .. .. .. . .. .. .. .. .. .. .. . .. .. .. .. .. .. . .. 17472.1.2. Canada .. . .. .. .. .. .. .. .. . .. .. .. .. .. .. .. . .. .. .. .. .. .. . .. .. .. .. .. .. .. . .. .. .. .. .. .. .. . .. .. .. .. .. .. . .. 17482.2. Windenergypolicy inEuropeanCountries . .. .. .. .. .. . .. .. .. .. .. .. . .. .. .. .. .. .. .. . .. .. .. .. .. .. .. . .. .. .. .. .. .. . .. 17492.2.1. Denmark . .. .. .. .. .. .. .. . .. .. .. .. .. .. .. . .. .. .. .. .. .. . .. .. .. .. .. .. .. . .. .. .. .. .. .. .. . .. .. .. .. .. .. . .. 17492.2.2. Germany . .. .. .. .. .. .. .. . .. .. .. .. .. .. .. . .. .. .. .. .. .. . .. .. .. .. .. .. .. . .. .. .. .. .. .. .. . .. .. .. .. .. .. . .. 17502.2.3. Turkey.. . .. .. .. .. .. .. .. . .. .. .. .. .. .. .. . .. .. .. .. .. .. . .. .. .. .. .. .. .. . .. .. .. .. .. .. .. . .. .. .. .. .. .. . .. 17512.3. Windenergypolicy inAustralia. .. .. . .. .. .. .. .. .. .. . .. .. .. .. .. .. . .. .. .. .. .. .. .. . .. .. .. .. .. .. .. . .. .. .. .. .. .. . .. 17522.3.1. Policy . .. . .. .. .. .. .. .. .. . .. .. .. .. .. .. .. . .. .. .. .. .. .. . .. .. .. .. .. .. .. . .. .. .. .. .. .. .. . .. .. .. .. .. .. . .. 17522.3.2. Target . .. . .. .. .. .. .. .. .. . .. .. .. .. .. .. .. . .. .. .. .. .. .. . .. .. .. .. .. .. .. . .. .. .. .. .. .. .. . .. .. .. .. .. .. . .. 17522.3.3. Incentives. .. .. .. .. .. .. .. . .. .. .. .. .. .. .. . .. .. .. .. .. .. . .. .. .. .. .. .. .. . .. .. .. .. .. .. .. . .. .. .. .. .. .. . .. 17532.4. Windenergypolicy inAsianCountries .. .. .. .. .. .. .. . .. .. .. .. .. .. . .. .. .. .. .. .. .. . .. .. .. .. .. .. .. . .. .. .. .. .. .. . .. 17532.4.1. China. .. . .. .. .. .. .. .. .. . .. .. .. .. .. .. .. . .. .. .. .. .. .. . .. .. .. .. .. .. .. . .. .. .. .. .. .. .. . .. .. .. .. .. .. . .. 17532.4.2. Japan. .. . .. .. .. .. .. .. .. . .. .. .. .. .. .. .. . .. .. .. .. .. .. . .. .. .. .. .. .. .. . .. .. .. .. .. .. .. . .. .. .. .. .. .. . .. 17542.4.3. TheRepublicofKorea . .. .. . .. .. .. .. .. .. .. . .. .. .. .. .. .. . .. .. .. .. .. .. .. . .. .. .. .. .. .. .. . .. .. .. .. .. .. . .. 17552.5. Windenergypolicy inMiddleEasternCountries.. .. .. . .. .. .. .. .. .. . .. .. .. .. .. .. .. . .. .. .. .. .. .. .. . .. .. .. .. .. .. . .. 17552.5.1. Egypt . .. . .. .. .. .. .. .. .. . .. .. .. .. .. .. .. . .. .. .. .. .. .. . .. .. .. .. .. .. .. . .. .. .. .. .. .. .. . .. .. .. .. .. .. . .. 17552.5.2. Algeria.. . .. .. .. .. .. .. .. . .. .. .. .. .. .. .. . .. .. .. .. .. .. . .. .. .. .. .. .. .. . .. .. .. .. .. .. .. . .. .. .. .. .. .. . .. 17562.6. EnergypolicyinMalaysia.. .. .. .. .. . .. .. .. .. .. .. .. . .. .. .. .. .. .. . .. .. .. .. .. .. .. . .. .. .. .. .. .. .. . .. .. .. .. .. .. . .. 17562.6.1. Pricing-lawandquotasystem.. .. .. .. .. .. .. . .. .. .. .. .. .. . .. .. .. .. .. .. .. . .. .. .. .. .. .. .. . .. .. .. .. .. .. . .. 17572.6.2. Financial incentives . .. .. .. . .. .. .. .. .. .. .. . .. .. .. .. .. .. . .. .. .. .. .. .. .. . .. .. .. .. .. .. .. . .. .. .. .. .. .. . .. 1757RenewableandSustainable EnergyReviews14(2010)17441762ARTI CLE I NFOArticlehistory:Received19 January2010Accepted2March 2010Keywords:WindenergyPolicyFITIncentivesTargetimplementationABSTRACTWith the increasing negative effects of fossil fuel combustion on the environment in addition to limitedstock of fossil fuel have forced many countries to inquire into and change to environmentally friendlyalternatives that are renewable to sustain the increasing energy demand. Energy policy plays a vital roleto mitigate the impacts of global warming and crisis of energy availability. This paper explores the windenergy industry from the point of view of the wind energy policy. It is noticed that energy policy couldhelp increasing wind power generation as well as stimulating the energy industry. It may be stated thatwithout specic energy policy, a country would not be able to solve the acute problems like reducinggreenhouse gases (GHGs) emission, scarcity of energy, etc. This paper discussed the existing successfulenergy policies for fewselected countries. Based on literatures, it has been found that FIT, RPS, incentives,pricing law and Quota system are the most useful energy policies practiced by many countries aroundtheworld. Then, statusofwindenergypolicyforMalaysiawasinvestigatedandcomparedwithfewselectedcountriesaroundtheworld.2010Elsevier Ltd.Allrightsreserved.* Correspondingauthor.Tel.:+60379674462;fax:+60 379675317.E-mailaddress:saidur@um.edu.my(R.Saidur).ContentslistsavailableatScienceDirectRenewableandSustainableEnergyReviewsj our nal homepage: www. el sevi er . com/ l ocat e/ r ser1364-0321/$seefront matter 2010ElsevierLtd.All rightsreserved.doi:10.1016/j.rser.2010.03.0072.6.3. CurrentsubsidyforeachresourceinMalaysia . . .. .. .. .. .. .. . .. .. .. .. .. .. .. . .. .. .. .. .. .. .. . .. .. .. .. .. .. . . 17572.6.4. Pioneerstatusandinvestmenttaxallowance.. . .. .. .. .. .. .. . .. .. .. .. .. .. .. . .. .. .. .. .. .. .. . .. .. .. .. .. .. . . 17572.6.5. Involvementofresearchinstitutionsanduniversities . .. .. .. .. . .. .. .. .. .. .. .. . .. .. .. .. .. .. .. . .. .. .. .. .. .. . . 17582.6.6. Malaysiaenergy policy recommendations/suggestions .. .. .. .. . .. .. .. .. .. .. .. . .. .. .. .. .. .. .. . .. .. .. .. .. .. . . 17583. Conclusion. .. .. .. .. .. .. . .. .. .. .. .. .. .. . .. .. .. .. .. .. .. . .. .. .. .. .. .. . .. .. .. .. .. .. .. . .. .. .. .. .. .. .. . .. .. .. .. .. .. . . 1759Acknowledgements.. .. .. . .. .. .. .. .. .. .. . .. .. .. .. .. .. .. . .. .. .. .. .. .. . .. .. .. .. .. .. .. . .. .. .. .. .. .. .. . .. .. .. .. .. .. . . 1760References. .. .. .. .. .. .. . .. .. .. .. .. .. .. . .. .. .. .. .. .. .. . .. .. .. .. .. .. . .. .. .. .. .. .. .. . .. .. .. .. .. .. .. . .. .. .. .. .. .. . . 17601. Introduction1.1. TheenergypolicyEnergy policy is the manner and the countrys strategy in whichagivenentity(oftengovernmental)decidestoaddressissuesofenergydevelopmentalongwiththedevelopmentof theenergyindustry to sustain its growth including energy production,distributionandconsumption. The attributes of energypolicymay include legislation, international treaties, incentives toinvestment, thecountrystargetedenergygeneration, guidelinesfor energy conservation, strategies to stimulate the energyindustry, taxationandotherpublicpolicytechniquesaswell asthefocusonnew(usuallyrenewable)energysources. However,there are many countries that do not have specic policies on windenergy, whichmeansthatwindenergy, ifany, hasnotyetbeenexplored asanalternative [1,2].1.2. IndispensabilityofwindenergyWindenergy, theworldsfastestgrowingenergysource, isacleanandrenewablesourceof energythathasbeeninuseforcenturiesinEuropeandmorerecentlyintheUnitedStatesandother nations. Wind turbines, both large and small, produceelectricity forutilities andhome ownersandremote villages.Anewapproachtowindenergyoffersaclearpathtoamoresecure andprosperous future andmore livable worldfor thehumanbeingaswellasfortheentire livingcreature.Renewableenergy sources are easily accessible to mankind around the world.Itisnotonlyavailableinawiderangebutisalsoabundantinnature. Increased use of wind energy and other renewable energysources will spur economic growth, create job opportunity,enhancenational security, protect consumersfrompricespikesor supply shortages associated with global fuel markets anddramatically reduce the pollutant that is warming the planetwhich causes greenhouseeffect[24].Renewable energies are regarded as a key factor in mitigatingglobal climatechangeinthefuture. Amongvarious renewableenergy sources, wind energy in particular has achieved maturity inthe energy market, and has experienced the greatest growthworldwideover thepast fewyears, asillustratedinFig. 1[5].Accordingtotheassessmentof theIntergovernmental Panel onClimateChangeconcerningwindenergypotential, intermittentwind power on a large grid can contribute an estimated 1520% ofNomenclatureACT AustralianCapital TerritoryARRA AmericanRecovery andReinvestment ActASP Approved ServiceProjectsAuswind AustralianWind EnergyAssociationAWEA AmericanWind Energy AssociationBTU Britishthermal unitBWE German WindEnergy AssociationCO2CarbonDioxideDKK DanishKrone (Currencyof Denmark)DOE Department of EnergyDTE Ministry ofTransport andEnergyEEG RenewableEnergy SourcesActEU EuropeanUnionFIT Feed-In-TariffFY FiscalYearGHG GreenHouseGasHPP Hydro Power PlantIPP Independent Power ProducersITA Investment TaxAllowanceITC Investment TaxCreditJWEA JapaneseWindEnergy AssociationJWPA JapaneseWindPower AssociationkWh kiloWatt hourMENR Ministry ofEnergy and NaturalResourceMRET Mandatory RenewableEnergy TargetMW MegaWattNDRC National Development andReform CommissionNREA Newand RenewableEnergy AgencyOECD Organization for Economic Cooperation and Devel-opmentPS PioneerStatusPTC Production TaxCreditPTM Pusat TenagaMalaysiaPV PhotovoltaicR&D Researchand DevelopmentRE RenewableEnergyREPPA RenewableEnergy Power Purchase AgreementRES RenewableElectricity StandardRET RenewableEnergy TechnologyRM RinggitMalaysiaRPS RenewablePortfolio StandardSDPC State Developmentand Planning CommissionSETC State Economic andTradeCommissionSIRIM Standards and Industrial Research Institute ofMalaysiaSREP Small RenewableEnergy PowerTNB Tenaga NasionalBerhadTPP Thermal Power PlantUKM UniversitiKebangsaan MalaysiaUM University ofMalayaUNFCCC United Nations Framework Convention on ClimateChangeUPM UniversitiPutra MalaysiaUSM UniversitiSains MalaysiaUTM UniversitiTeknologi MalaysiaR.Saiduretal. / RenewableandSustainableEnergyReviews14(2010)17441762 1745annual electricityproductionwithout special arrangements forstorage,backup,or loadmanagement [6].Wind energy was the fastest growing energy technology in the90s, in terms of percentage of yearly growth of installed capacityper technology source. As Paul [7] noticed wind has advanced morequickly to commercialization than other technologies such as solarpower, fuel cells and wave power with relatively little R&Dexpenditure.Thegrowthofwindenergy, however, isnotevenlydistributedaroundtheworldasshowninTable1.Bytheendof1999, around70%of theworld-widewindenergycapacitywasinstalled in Europe, a further 19% in North America and 9% in AsiaandthePacic [8].There has been a signicant increase in electrical energydemandduetotheeconomical andtechnologicaldevelopmentsover the world [9]. The global economy grew3.3% per year over thepast 30 years and in this period electrical energy demand increased3.6%[10]. Theelectricalenergyproductionoftheworldin2004was 17,450 TWh[11] andit is estimatedthat the worldwillconsume 31,657 TWhin2030[12]. AccordingtoInternationalEnergyOutlook2009, Worldenergyconsumptionwill increasefrom472quadrillionBtuin2006to552quadrillionBtuin2015and 678 quadrillion Btu in 2030a total increase of 44% over theprojection period 20062030 as shown in Figs. 2 and 3. Fossil fuelin the world is limited but most of the electrical energy has beenderived from fossil fuel and in the future world will face the fuelcrisis[13].So to tackle the future crisis it is needed to study the electricalenergyproductionwithrenewableenergysuchas wind, solar,biomass, hydro, etc. [9]. Among all the renewable energy sources,the greatest increase will be in wind energy production as shownin Fig. 4. This rate reached 20% in Denmark, 6% in Germany for theyear2003[15,16].Global warming and the associated changes in the worldclimatepatternhavebeenacceptedworldwideasthegravestthreat to humanity in the 21st century. Consequentially the UnitedNations FrameworkConventiononClimateChangeconference(UNFCCC) has to establish a legally binding internationalagreement, wherebyall theparticipatingnationscommitthem-selves to tackling the issue of global warming and greenhouse gasemissionsandtheytargetedanaveragereductionof 5.2%from1990 levels by the year 2012. Large-scale and global environmentalhazardstohumanhealthincludeclimatechange, stratosphericTable1Operationalwindpower capacityworld-wide[8].Region Installedcapacity(MW)Endof 1995 Endof1997 Endof 1999 Endof2000 Endof2001Europe 2518 4766 9307 12972 16362NorthAmerica 1676 1611 2619 2695 4440South& CentralAmerica 11 38 87 103 103Asia&Pacic 626 1149 1403 1795 2162MiddleEast& Africa 13 24 39 141 203Totalworld-wide 4844 7588 13455 17706 23270Fig.3. Residentialelectricity consumptionpercapita [14].Fig. 1.Worldwide developmentofwindpower [5].Fig.2. Worldenergy demandgrowth[13].Fig. 4.Globalannualwindinstallations(MW) 19802005[17].R.Saiduretal. / RenewableandSustainableEnergyReviews14(2010)17441762 1746ozone depletion, loss of biodiversity, changes in hydrologicalsystems andthesupplies of freshwater, landdegradationandstressesonfood-producingsystems. Airpollutionlevelsofmostpopulated cities in the world are high andcontinue to climb. Indoorair pollution from burning solid fuels causes a lot of death in Asiaanditisabout65%of theworldtotal. TheprojectedGHGsgasemissionsandreasonbehindthehealthhazardousisshowninFigs.57 [18,19].As a result of concerns about climate change, increasetheenergy consumption rate, international agreements to reduce theGHGs emission and thinking about the availability of wind energygovernments worldwide are beginning to establish national goalsfortheprovisionofelectricityfromrenewableenergy andhencetry toset-up thevariouswind energy policyinvariouscountries[22,23]. In this paper the existing various wind energy policies arediscussed briey. There are many literatures that discussed mainlyabout the energy policies of a country or one or two energy policiesof a country. However, in this paper authors discussed andcompared energy policies for eleven countries around the world. Itisexpectedthatitwillbeveryuseful forpolicymakers, energyproducing industries, research organizations, Government formany partsof theworld.2. Policies of different countriesAvarietyof policies like pricing laws, quota requirements,production incentives, tax credits, trading systems, etc. have beendevelopedandimplementedtopromotetheuseof renewableenergy (RE) [24]. The main objective of this strategies arereducing reliance on fossil fuels, reducing the environmentalimpacts of the energy sector andencouraging newindustrialdevelopment[25]. Yetthefeed-intariff(FIT)andtherenewableportfolio standard (RPS) are the most popular. Though thereexistingalotofdebatessurroundtheireffectiveness, withsomeexpectation that a choice has to be made between them [2628].For this the countries can decide which RE policy can be applicablein their own particular circumstances and objectives. According toEkins[29], Nooptimalmodelhasemerged, andprobablynonewill do so in the contexts that is shaped by different histories andcultures.2.1. WindenergypolicyinNorthAmerica2.1.1. UnitedStates2.1.1.1. Renewableportfoliostandard. RPS-typemechanismshavebeen adopted in Britain, Italy and Belgium as well as in 27 U.S.A.states, A renewable portfolio standard is a regulation that requiresthe increased production of energy fromrenewable energysources, suchaswind, solar, biomass, andgeothermal. Anothercommon name for the same concept is renewable electricitystandard(RES) [30].The energy policy of the United States is determined by federaltax incentives, state renewable portfolio standards and local publicentitiesintheUnitedStates[31]whichaddressissuesofenergyproduction, distribution and consumption such as building codesand gas mileage standards. Several mandates have been proposedover the years, such as gasoline will never exceed $1.00/gallon andthe United States will never again import as much oil as it did in1977 [32], but no comprehensive long-termenergy policy has beenproposed, although there has been concern over this failure [33].ThreeEnergyPolicyActshavebeenpassed, in1992, 2005, and2007. The Energy Independence and Security Act of 2007 has asignicant impact onU.S.Energy Policy[34].2.1.1.2. Incentives. In March 2009, Vice President Joe Bidenannouncedplanstoinvest $3.2billioninenergyefciencyandenergyconservationprojects intheUnitedStates. The EnergyEfciency and ConservationBlock Grants program, fundedbyPresident Obamas American Recovery and Reinvestment Act, willprovide grants for projects that reduce total energy use and fossilfuel emissions,and improveenergy efciency nationwide[35].DOEandtheU.S. EnvironmentalProtectionAgency[36]havereleased an updated version of the National Action Plan for EnergyEfciency Vision for 2025: A Framework for Change, which laysout a proposed energy efciency action plan for state policymakers. If implemented by all states, the plan could lower energydemand across the country by 50%, achieve more than $500 billionFig. 6.Globalenvironmentalchangeanditseffect onhumanhealth [20].Fig.7. Airpollutionfrom WorldWar IIproduction[21].Fig. 5.World energyrelatedgreenhousegas emissions(CO2eq.)[14].R.Saiduretal. / RenewableandSustainableEnergyReviews14(2010)17441762 1747in net savings over the next 20 years, and reduce annualgreenhousegas emissions equivalent tothosefrom90millionvehicles. The report, which was released under the National ActionPlan for Energy Efciency initiative, was produced by more than 60energy, environmental, andstatepolicyleadersfromacrossthecountry [36].The American Wind Energy Association (AWEA) reported in itsthird quarter (Q3) market report that the U.S. wind energy industryinstalled 1649 megawatts (MW) of newpower generating capacityin the third quarter [37]. Wind energy generating capacity in theUS increased fromabout 2500 MWin 1999 to about 21,000 MWinmid 2008 and about 28,000 MWin early 2009 [38]. This expansionofgeneratingcapacity wasaccomplishedbyinnovationsinwindturbinedesign, learningbythewindandutilityindustriesandeconomics of scale. At the same time, the costs of installed utility-scalewindprojects(inconstant $/kW) declineduntil theearly2000s andthengenerallyincreased[39]. IncreasingtheWindEnergys Contribution to U.S. Electricity Supply, a report released inMay 2008 by the U.S. Department of Energy, concludes that the U.S.possessessufcient andaffordablewindresourcestoobtainatleast 20%of its electricityfromwind. Achievingthe20%windvisionwilldramatically cut greenhousegasemissions[37].OnFebruary17, 2009, PresidentObamasignedintolawTheAmericanRecoveryand ReinvestmentAct [40]of2009.ARRA repeals the subsidized energy nancing limitation on theinvestment tax credit (ITC) in order to allowbusinesses andindividualstoqualifyforthefullamountoftheITCevenifsuchproperty is nanced with industrial development bonds or throughany other subsidized energy nancing. Previously, the ITC had to bereducedifthepropertyqualifyingfortheITCwasalsonancedwith industrialdevelopment bonds or through any other federal,stateor local subsidizednancing program.ARRA extends the production tax credit (PTC) for wind energyfor three years, throughDecember 31, 2012. Inorder tohelpmonetize the ITC, ARRAallows taxpayers who are eligible for an ITC(includingITCsclaimedinlieuofPTCs)toreceiveanequivalentnancial grant from the Treasury Department, in lieu of claimingthecredit, ifthe propertyiseither:Placed inservice in2009or 2010,orPlacedinservicebeforethecredittermination date(January1,2013 for wind projects), provided the construction of suchproperty began in2009or 2010.ARRAamends the Energy Policy Act of 2005 to create a newloanguarantee program(LGP) at the Department of Energy funded at $6billion. Theprogramappliestobothcommercial andinnova-tive technologies;generationprojects, transmissionandmanu-facturing facilities are eligible. To qualify for a loan, projects mustcommence construction nolaterthanSeptember 30,2011.2.1.1.3. Reduction of GHGs. American Wind Energy Associationseeks climatelegislationthat includesanaggressivenear-termgoal, such as a 1520% carbon dioxide reduction by 2020, in orderto promote a near-termshift to renewable energy and get the quickstartongreenhouse gasemissionsreductions[40].2.1.1.4. Target. AWEA seeks a national RES that calls for 25% of thenationselectricitytocomefromrenewableenergyby2025. Anaggressivenear-termtarget, suchasthe10%by2012objectivecalledforintheObama-BidenNewEnergyforAmericaplan, isessentialtoensurerapid renewableenergy deployment [41].2.1.1.5. Research and development. According to Gramlich [41]federal funding for wind energy research and development (R&D)and other programs is inadequate, especially when compared withfunding levels for other fuels and energy sources. The U.S.Department of Energywindprogramcurrentlyreceives about$50 million annually, which is well below its all-time high of $63million appropriated inFiscalYear1980.The renewable electricity standard, also known as a renewableportfolio standard, uses market mechanisms to ensure that agrowing percentage of electricityis producedfromrenewablesources, like wind power. The RES provides a predictable,competitive market, within which renewable generators competewith each other to lower prices. RES policies currently exist in 28U.S.states, butnotatthe nationallevel.The so-called feed-in-tariffs that have provided a stableprotablemarket forwindgeneratorsinDenmarkandSwedenhistorically,andGermanyandSpaincurrently, nolongerexistintheUnited States[42].2.1.2. CanadaCanadais the5thlargest producer of energyintheworld,producingabout 6%of global energysupplies[43]. Theenergysector is animportant part of Canadas economy interms ofinvestment, trade, incomegenerationandemployment [44]. Itproduces of total energy (all sources) (397.5 megatons of oilequivalent (16,640 PJ)). On an energy basis, uranium accounts for33%ofproduction, naturalgas30%, petroleum23%, coal6%, andrenewable(hydro, windandbiomass)8%[45]. Itisalsothe8thlargest consumer (269 megatons of oil equivalent (11,300 PJ)) [46].2.1.2.1. Feed-in-Tariff. A Feed-in Tariff is an incentive program thatstimulates the renewable energy sector through governmentlegislation. It requires electricity utilities to buy renewable energyatabovemarketrates(setbythegovernment)fromanyonewhowishes to produce renewable electricity. This has been shown to beoneof themost effectivewaystojump-start renewableenergyproductionandadoptionbyrewardingsmall andmediumscaleproducersaswell as industrial scaleproducersof greenpower.Ontariointroducedafeed-intariff in2006, andrevisedit in2009[47].2.1.2.2. Growth & target. The installed capacity of wind generationin Canada had an average annual growth rate of 51% between 2000and 2006. In 2006, 776 MW of new capacity was installed, and it isexpectedthat, in2007, wind-installedcapacitywill growbyaminimumof 500 MW. Fig. 8 shows the increase in wind generationinstalled capacity in Canada [48]. In 2006, Canada became one of13 countries around the word that have 1 GW or more of installedwind-power capacity. The total installed wind capacity in Canadaasof May2007was1492 MW, outof which, 415 MWisintheprovince of Ontario. Because of the proposed changes in Ontariospowermixandtheanticipatedincreaseofwindshare, OPAandOntariosIndependent EnergySystemOperator (IESO) commis-sioned studies about Ontarios future wind power and itsintegrationinthe system[4951].Canadas wind energy market experienced its second best yearever in 2007. A total of 386 MW of new wind energy capacity wasFig. 8.Canadianinstalledcapacity(MW)20002006 [17].R.Saiduretal. / RenewableandSustainableEnergyReviews14(2010)17441762 1748installed in 2007, increasing Canadas total by 26%. Canada nowhas1846 MW of installed wind energy capacity. Canadas federal andprovincial governments have both developed policy frameworks tosupport the deployment of wind energy in Canada. If all of Canadasprovincial governments/utilities meet their stated targets forwind/renewable energy development, it is anticipated that Canadawill havea minimumof 12,000 MWof installedwindenergycapacity by 2016.2.1.2.3. Incentives. TheFederalGovernmentseco-energyRenew-able Power Programprovides a production incentive of 1 cent/kWhfor the rst 10 years of production at a wind energy facility. Ontariohas implementedaStandardOffer Contract (i.e. feed-intariff)programforprojectsof10 MWorlessandsimilarprogramsareunder consideration inother provinces[52].Theonlyexceptionis Alberta, whereaderegulatedmarketmeans that winddevelopers must buildplants onamerchantbasis. It also appears likely that wind energy projects will be able tocreategreenhousegasemissionoffsetswithinbothFederal andAlbertan greenhouse gas emission regulatory frameworks that aretobeput inplacein2008, providinganopportunityfor windenergy projects toobtainsome value for their environmentalattributes inadomestic carbonmarket.Theindustrydoesfaceanumberofchallengesthatmustbeaddressed to maximize the economic and environmental benetsof its massivewindenergypotential. Onthepolicyfront, thefederal eco-energyRenewablePower Programislikelytohavefully allocated its funds in 2009 and it is not yet clear what formfuture federal support will take. Permitting and approval processescan still be made more efcient and streamlined. The availability oftransmission capacity isalsoanemerging issue.Whilepublicoppositiontowindenergyprojectsisstill anissue withrespect toa minorityof projects inCanada, suchopposition is gaining a higher prole in light of the rapidexpansionof theindustry. Finally, increasedturbinecostsandissues related to turbine availability are having an impact on themarketplace.Small-scalediesel generators (50100 kW) areonly2535%efcient.Sincecostsforfuelintheremoteoff-gridcommunities,withdiesel generationandfreight costs, arethreetimes moreexpensive than fuel prices elsewhere in Canada, due to transporta-tion costs, renewable energy technologies (RETs) may make moreeconomicsenseinremoteoff-gridcommunities[53]. Presently,small-scaledieselgeneratorsprovidepowertoover300off-gridcommunities in Canada with a combined population of over200,000people[54].Generallyspeaking,therearethreeareasinwhichcommunitiescanfocusinordertoimprovetheirenergysystems: energy efciency; energy conservation; and the switch-ing ofenergy sources to renewable[55].Accordingly, the future for Canadas wind industry looks brightwithstableandsustainablegrowthforeseenforthenextseveralyears.2.2. WindenergypolicyinEuropeanCountries2.2.1. DenmarkIn1973, practically all of the electricity inDenmark weregenerated in large, centralized thermal power stations [56].RenewableelectricityhasplayedanimportantroleinDenmarksince the rst oil shock in 1973 [57]. Wind energy has grown to ascalethatwillundoubtedlyalternaturalandculturallandscapes[58]. Denmark has been leading the development of modern windpower during the rst part of its commercial history. Wind energyhas gone through an incommensurable evolution, fromsmall scalesymboloficonicvaluetoalarge-scaleindustriesandoppositionagainst newinstallations [59].2.2.1.1. Policy and R&D. Denmark has a long tradition of exploitingwindpower. Researchanddevelopment of newkindsof windturbinesfromthelate1970s, combinedwithfavorablegovern-ment grants towards windpower production, have createdaDanishsuccess story. In2001, about 18%of Danishelectricityconsumptionwassuppliedbywindpowerasopposedto2%in1990. Concurrently, Danishwindturbineshavebecomeamajorexport commodity with currency earnings of approximately DKK12billion in2001[60].Inthewakeoftheoilcrisisof1973, theDanishgovernmentpublished their newenergy policy where Renewable energy,especially wind energy would play a role. This role has increased infollowingenergypolicies, especiallysupportedbyabottom-upmovementofentrepreneursandcooperatives. Energypolicyhasincluded residency restrictions and own consumption minima, anda mandatory grid connection for de-central generation since 1979to encourage this local movement [61]. Agreements with utilitiesfor implementation targets and a kWh subsidy have led to a stronghome market for the rising Danish wind industry and animplementationof windenergymakingDenmarkthe countrywiththehighestwindpenetrationinelectricitysupply: 23%in2006.Thedevelopmentofwindenergyhasbeenaccompaniedbyacontinuous development of energy policy and planning practice, asthe technology grewinsize, extent andsignicance. In1990s,inspite of imposing the planning restriction, windturbines continuedto growin capacity and size, making the majority of exclusive zoneobsolete. A major contributor to the diminishing numbers of newturbines, however, was of economic nature: the former xed feed-in-tariffwasabolishedaftertheyear2000, makingwindenergyinvestments increasingly dependent onmarketprices[57].2.2.1.2. Incentive. Wind energy in Denmark generally enjoys a highpublic acceptance [62]. The mainreasonbehindthis was theownership. Publicregulationgrantedaproportionof thewindcapacity to be erected by publicly owned utilities and moreimportantly, legislationstimulatedtheformationof local windcooperativeswithlimitedownershipof sharesinwindturbineprojects within residents municipalities [63].In the Electricity Reform Agreement of March 1999, it becamepossible for private individuals to submit applications for offshorefarms next to the demonstration parks, with the possibility for co-ownership for consumers and other private investors. TheElectricityReformAgreement openedtheelectricitymarket forcompetition. TheAgreement includedprioritizationof environ-mentallyfriendlygeneration, aconsumer quotafor RenewableEnergy Resource (RER) and the announcement of a CO2 emissionstrading system, to be implemented in 2003. A target was set for a21% deduction of CO2 emissions in 20082012 compared to 1990level.2.2.1.3. Target. Danish energy policy for offshore wind powerstarted in 1996, when the Danish government named their targetof 4000 MW in 2030 in Energy 21. Because of the visual impact of(large) wind turbines and already a high deployment onshore, thisoffshore target has beenformulatedinorder toachieve theirobjectiveofa50%CO2reductionin2030comparedtothe1990level. In 1997, the study Offshore wind turbine Action Planshowedoffshorewindas aninterestingrenewableoptionthatcould reach competitiveness and designated ve suitable areas foroffshore wind. The Danish government decided to order the powerproducingcompanies tobuild5demonstrationparks intheseareas, totaling 750 MWto further investigate the technical,economical andenvironmental aspects.Intherecent EnergyStrategy2025of 22March2004, theMinistryofTransportandEnergystatedthatthefutureofwindR.Saiduretal. / RenewableandSustainableEnergyReviews14(2010)17441762 1749energy in Denmark would mainly lie offshore, for which asignicant growth is foreseen. The Policy Agreement of 29 March2004 announced a call for bids for two offshore wind farms, eachconsistingof 200 MW [64].By the end of 2001, capacity had grown to over 2800 MW andwindcontributednearly12%ofgrosselectricityconsumptionasshown in Fig. 8 [65]. In 2005, Denmark had installed wind capacityof 3129 MW, whichproduced23,810 TJ of energy. Windpowerprovided18.2%ofthetotalgrosselectricityproduction. In2006,theinstalled capacityincreasedto3136 MWasstatedinTable2[66].2.2.2. GermanyRenewable energy policy in Germany began in 1974, after therst oil crisis [68]. Germany is a leader in Europe on shifting fromconventional to renewable sources of energy [69]. Renewableenergy technologies have deployed rapidly in Germany since 1990largely as a result of energy policies adoptedby the Germangovernment andtheEuropean Union[70].2.2.2.1. Policies. The major government instruments that led to therapiddiffusionof windpowercapacityattheendof the1980sconsistedof:the100/250 MWprogram, thefeed-inlawandtaxbreaks, as well as the provision of low-interest loans [71]. Togetherwiththe100/250 MWprogramandsubsidiesfromvariousstateprograms, the Feed-In Law gave considerable nancial incentivesto investors, although less so for solar power due to the latters highcost[72].The Electricity Feed-in law was the progenitor of German windpowerdevelopmentin1991. In1997, theFederalBuildingCodeincluded wind turbines as privileged building projects; April 2000sawtheadoptionof theRenewableEnergySourcesAct (EEG);March2001sawthe feed-intariff model complyingwiththeEuropean State Aid and Competition Law, while in August 2004 theEEGwasamended[73].Germany has been extremely successful at rapidly transitioningtowardrenewableenergysystemsthroughfeed-intariffs. Usingfeed-in tariffs, Germany currently generates 12.5% of its electricityfromrenewable sources [74].2.2.2.2. Target. Germany has pushed strongly for the developmentof renewable energies and their integration into the existingnetwork. This is particularly the case for windenergy, whereGermany had 20.7 GWonshore wind capacities in 2006; in additionabout 7 GWare expectedtobeconstructedoffshore until 2015andalong-termgoalof30 GWoffshoreisconsideredfor2030[75]. Atpresent, thetechnicalitiesoftheintegrationoftheoffshorewindenergy are being studiedbyindustryandgovernment; there is alsoadebateabouttheeconomiccostsofintegratinglarge-scalewindpower into the German electricity grid [76].Germanys federal goal is to achieve 30% of its electrical powergeneration from renewable sources by the year 2020 with a long-termgoalof 50%by2050 [77,78].Germanysclimateprotectionprogram, onOctober18, 2000declared with the targets of reduction of CO2 emissions until 2005by 25% (base year1990), reduction of all 6 GHG emissions of theKyoto protocol within the EU burden sharing by 21% andpromotionofCHPtoreduceCO2emissions(10 mio.tuntil 2005and23 mio.t until 2010 [79].2.2.2.3. Incentives and R&D. To test the availability of wind energywithinGermanythehourlywindfeed-induringtheperiodfrom2006 till summer 2008 is obtained fromthe four German TSOs. Thetotal output of windparks was about 30 TWhin2006, about 40 TWhin 2007, and about 22 TWh in the rst half of 2008. Compared to thetotaldemandforelectricityinGermanyofabout500 TWhwindenergy still plays only a minor role. During the observation periodthe installed capacity increased from18.5 GWto 23.4 GWputting iton a level playing eld with nuclear and coal [80].AccordingtotheLeadScenario2008[81]toreachthetarget(30%) for 2020 is possible, and the continued steady expansion willamount to a renewable share of more than 50% in Germanys totalgrosselectricitygeneration in2030asshown inFigs.9and10.CloselyaftertheUSA, Germanyistheworldssecondlargestuser of wind power with an installed capacity of 23,903 MWby theend of 2008 [82] ahead of Spain which had an installed capacity of16,740 MW [83] 20,301 wind turbines are located in the Germanfederal area and the country has plans to build more wind turbines[84].Recent data highlights Germanys success in meeting itsambitious goals for renewable energy production. Renewableenergies achieved a share of 14.2% of gross electricity consumptionin2007one-fthmore thanthe previous year. Windenergysupplied the largest share of the electricity generated fromrenewablesources [85].Table2Installedwindcapacityshareinthe electricity supplyinDenmarkbyyear [66].Year 2001 2002 2003 2004 2005 2006 2007Installedwindcapacity(MW) 2489 2892 3117 3125 3129 3136 3125Windpower sharein theelectricity supply(%) 12.1 13.8 15.8 18.5 18.5 16.8 19.7Fig.10.Trendsinnewcapacityinstalledannuallyforelectricitygenerationfromrenewableenergiesforthe period20002020and2030 [81].Fig.9. Developmentof installedDanishwindcapacityfrom1980 to2002 [67].R.Saiduretal. / RenewableandSustainableEnergyReviews14(2010)17441762 1750Withmorethanathirdof theworldsinstalledcapacity, noother country has more wind turbines than Germany. According toguresfromtheGermanWindEnergyAssociation[82], 18,685plantswitha capacity of20,622 megawatts wereinoperationattheend of2006 [70].Itisconsideringthreekeydimensionsascriteriaforsuccessbehind the Germanys renewable energy policy: First, it addressesthe familiar question of effectiveness of policy in its inuence onthedeploymentofrenewableenergy technologiesandongreen-housegasemissions, Second, theeffect of renewablepolicyontechnological advance, third, is the effectiveness of policy inpromotingGermanrenewabletechnologyexportsandeconomiccompetitiveness [86].Additionally, theEnvironment Ministry hasproposed that theGermanRenewableEnergyLawistoberevisedsothatoffshoreprojects wouldreceiveapayment (s0.091per kWh) for theirelectricity output over 12 years instead of the current 9 years. Atthepresenttimethepaymentisrestrictedtothoseinstallationswhichstartedoperatingbefore2006butanamendmentwouldextend this date. Further amendments would reduce payments tosomeonshore wind turbines [73].2.2.3. TurkeyAlthough Turkey has a wide range of energy resources, it is anenergyimportingcountryandMorethanabout 60%of energyconsumptioninthecountryismetbyimportsandtheshareofimports continues togroweachyear [87]. Turkeyhas alargepotential for renewable energies and their technology is develop-ment enoughtousethis resources effectively[88]. InTurkey,electricity is produced by thermal power plants (TPPs), consumingcoal, lignite, NG, fuel oil and geothermal energy, and hydro powerplants (HPPs) [89]. Figs. 11 and 12 show the installed capacity ofpower anddistributionof installedpower capacity inTurkeyrespectively.2.2.3.1. Policies. Turkey introduced its rst lawon the Use ofRenewable Energy Resources for the Generation of ElectricalEnergy inMay 2005, introducing tariff support for electricityproduced by renewable sources. This tariff was increased slightlytos55.5 ct/kWhbya revisionof thelawinMay2007. Thesupport wasset out tolast for sevenyears. Whilethelevel ofsupport is low in comparison with other European countries, windpower producers are also free to sell to the national power pool orengagedirectlywitheligiblecustomersinbilateral agreementswhere prices aremuchhigher thantheguaranteed price[90].Anumber of additional policy measures have helped to increaserenewable production in Turkey in recent years. These include theobligationofthenationaltransmissioncompanytoprovidegridconnection to all renewable power projects, and improvedtransmission links with the EU, which stabilize the power system.Furthermore, most restrictions on foreign investment in theTurkish powersector havebeenlifted[91].2.2.3.2. Incentives. Energy development in Turkey has beendominatedbypublicinvestmentandmanagementsinceinde-pendence in 1923, although several waves of liberalization havebeenlaunchedsince1983, leadingtoagradual openingoftheTurkishenergymarketandimprovingthesituation.Turkeyhasmade early and extensive use of nancing models such as build-own-operate (BOO) and build-own-transfer (BOT). As yet,however, nodecisivebreakthroughhasbeenachieved[92]. Inthelasttwoyears, several encouragingstepshavebeentakentowardsgreater liberalization. Thenotionof privatizationhasbeenintroducedintotheTurkishconstitutionforthersttime.Legislation was adopted in February 2001 to allowcompetition inthe electricity market and adapt Turkeys legislation for EuropeanUnion (EU) membership. A new Gas Market Law was adopted inMay2001andinsistsonthereductionof CO2by8%asKyototargets [93].Turkeys renewable energy policies are being improved.Currently, there are a fewGovernment-backed incentives topromote renewable energy investments. The MENR is preparing adraft legislationwhichwouldallowcertainrenewable energyprojects (mainly geothermal and wind, but also solar, wave, wasteand landll gas only) to be built and operated by the private sector,and provide incentives for such system. This legislation would alsoset the buy-back rates for renewable electricity. MENR hasannounced a target for wind energy, namely 2%of the totalinstalled capacity by 2005. There is some municipal support in theareaof geothermal heat aswell. Privatesector involvement inrenewableenergypromotionexistspredominantlyinthewindenergy and small-scalesolarprojects [94].All, the Ministry of Energy and Natural Resources [91], the StatePlanningOrganization(DPT) andtheElectric Power ResourcesSurveyandDevelopment Administration(EIEI) areinvolvedinrenewableenergypromotionpolicies. Low-interest loansupto45% ofthecapitalcostareapplicabletoappropriateinvestments[95].Until recently, Free Market Lawof Electricity, the price ofenergywasdecidedasaresultof negotiationsbetweenenergyproduction company and the state which is buyer. This was a kindof incentive. Now, the price of the renewable energy will have toobey the market conditions. The subventions given to therenewableenergysourcesarecompulsorytillthesectorcomeacompetitive point withother energysectors [96]. Inaddition,Turkish electricity demand is expected to increase by 78%annually, andpower shortages arealreadywidespread. Inthiscontext, policy makers increasingly recognize the potential role ofwind poweraspart ofthecountrys future energy mix[97].2.2.3.3. Target. The Ministry of Energy and Natural Resources [91]is planning for a very large increase in electric generating capacityoverthenexttwentyyears, asshowninTable3. TheMENRhadFig. 11. Trends in electricity generation from renewable energies 20002030 [81].Fig.12.Distribution ofinstalledpower capacityofTurkey[9].R.Saiduretal. / RenewableandSustainableEnergyReviews14(2010)17441762 1751intendedthatmostof thenewpowerplantswouldbebuiltbyforeigndevelopers onaBuild, OperateandTransfer basis[98].GHGs emissions are projectedto continue decreasing until 2020in the EU-27, the 20% reduction target compared to 1990, endorsedby European leaders in 2007, will remain out of reach without theimplementation of additional measures, such as the EU energy andclimate change package proposed by the European Commission inJanuary 2008 and Turkey also took it as their commitment [100].2.3. WindenergypolicyinAustraliaAustralia is the 14th largest world economy, with energy, withsignicant air trafc between states and is perhaps unique in alsohavingawiderangeof climaticzones, longdistancesbetweenurbancenters, andlandusepatterns that arestill undergoingsignicant change[101].2.3.1. PolicyEnergypolicyof Australiaissubject toregulationandscalinuenceof thethreelevels of Government [102] inAustralia;however, State and Federal energy policy deals with primaryindustries, such as coal [103]. Despite Australia is one of the mostcoal-dependentcountriesintheworld[104], thereisincreasingpressure fromboth the political arena, e.g. Agenda 21 [105] and theAustralianGreenhouse Challenge [106] as well as consumer opinion[107]toincreasetheusageofrenewableenergyandreducethegreenhouse gas (GHG) emissions [108]. At May 2009, feed-in lawshad been passed in Queensland, South Australia and the AustralianCapital Territory (ACT), Limited provisions have also been passed inVictoria. The Tasmanian, New South Wales and Western AustraliaGovernments are consideringascheme while theNorthernTerritoryis not currently considering feed-in tariffs [109].2.3.2. TargetAustralia is at the cross-roads in terms of howto meet its futureenergy requirements in an increasingly carbon-constrainedmultilateral policy environment [110]. At current levels ofgeneration, ashortfall inavailableelectricityisexpectedwithinthedecade[111]. Federalpolicyisbeginningtochangewiththepublication of the Garnaut report and Carbon Pollution ReductionScheme White Paper, announcement of anEmissions TradingSchemetocommencein2010andannouncementof anationalmandatoryrenewableenergytarget of 20%shareof electricitysupply in Australia by 2020 [112]. The national MandatoryRenewable Energy Target [112] contains three main objec-tives:[111].(i)encourage the additional generation of electricity fromrenewablesources;(ii)reduceemissionsof greenhousegases; and(iii)ensure that renewable energy sources are ecologicallysustainableAustraliahas oneof thehighest per-capitagreenhousegasemissionslevelsintheindustrializedworld[113].Inpart,thisisdue to its large domestic reserves of coal, which have keptelectricity prices lowand attracted energy-intensive industry.Currently, coal-redpowerprovidesmorethan75%ofdomesticelectricitygeneration[114]. However, inrecent yearsconcernsoverclimatechangehavepromptedAustralianpolicymakerstoTable4Summaryof windenergypolicyin differentcountries.Country Principlesupport(FIT/RPS)Investmentsupport(e.g.subsidies)SalesorenergytaxexemptionPublicloans/nancingLegislation(e.g.CO2emissionTargetimplementationR&DsupportStrength (highlight)USA[3042] RPS Yes Yes Yes Yes(25%,2025) Yes(25%ofsupply,2025)Yes Investment&productiontax creditCanada[4355] FIT Yes Yes RegulatoryFrameworkin2008Yes,(12GW, 2016) Yes Productionincentive of1cent/kWh forthe rst10yearsDenmark[5667] FIT(1993) Yes Yes Yes(50%,2030) Yes(200GW, 2030) Yes Tenderschemes foroff-shorewindGermany[6886] FIT(1991) Yes Yes Yes(20%,2020) Yes(30GW, 2010) Yes Electricity feed-intariffTurkey[87100] FIT(2005) Yes Licenseupto 10GW PreparingtojointheEuropeanUnionAustralia[101119] FIT Yes Yes Yes(60%,2050) Yes(10GW, 2020) Yes NationalClean EnergyTargetChina[120140] Yes Yes Yes Yes(totalcapacity30GW, 2020) Locally madecomponentsJapan[141150] RPS (2003) Yes Yes(6%,2012) Yes(3000MW,2010) Yes MarketincentivesandsubsidyKorea[151156] FIT(2002) Yes(2250MW,2012) Yes Feed-in-tariffsystemEgypt[157161] FIT Yes Yes Yes(7.2GW, 2020) Guaranteeofa long-termpower purchaseagreementAlgeria[162171] FIT Yes Yes Yes(40%,2020) Yes(1012%,2010) CSPGlobalMarketInitiativeTable3Electricpower capacitydevelopmentinTurkey[91,99].Fueltype 2000 2010 2020Installedcapacity(MWe) Generation(GWh) Installedcapacity(MWe) Generation(GWh) Installedcapacity(MWe) Generation(GWh)Coal 7465 38186 16106 104040 26906 174235Naturalgas 6756 46217 18923 125549 34256 225648Fueloil 2124 9531 3246 18213 8025 49842Renewable 10112 30988 25102 86120 30040 104110Nuclear 2000 14000 10000 70000Total 26457 124922 65377 347922 109227 623835R.Saiduretal. / RenewableandSustainableEnergyReviews14(2010)17441762 1752seekmechanisms toincreasetheproportionof emissions-freerenewable energy.Asa result, in2001 Australia becametherstnationtointroduceanational renewableenergymarket usingtradablecerticates [115].The Labor Party had also announced its commitment to a long-term emissions reduction target of 60% (compared with year 2000levels) by2050as part of their campaign. These policies willgradually begin to level the playing eld between wind and otherrenewable energy and coal power, which holds a 77 per cent shareofAustralias electricity generation.2007 also sawthe amalgamation of the Australian Wind EnergyAssociation(Auswind) andtheAustralianBusiness Council forSustainableEnergytoformtheCleanEnergyCouncilasinglepowerfulindustryvoiceforthecleanenergysectorinAustralia,whichisfocusingonensuringthatthedetailsoftheREsupportschemedeliver investment certaintytowindandcleanenergydevelopers.2.3.3. IncentivesThe total operatingwindcapacityat the endof 2007was824 MW. While there were only three new project commitmentsduring 2007 amounting to $440 million Euros of investment the2008 outlook is rosier as a result of the growing political and publicsupport.Signicantwindcapacityismovingthroughtheprojectplanning stage with over 400 MW of projects receiving planningapprovalduring 2007[116,117].The policy that created this market, called the mandatoryrenewableenergytarget[112], requiresthatelectricityretailerssourceanadditional 9500gigawatt-hours (GWh) of electricityfrom renewable sources by the year 2010. The Australiangovernment isnowexpectedtoreplacetheMRETwithanewnational renewable energy target of 45,000 GWh by 2020[118,119].2.4. WindenergypolicyinAsianCountries2.4.1. ChinaChina has had double-digit rates of economic growthfor muchofthepasttwodecades. Thisgrowthhashadhugeimplicationsforenergyconsumptionandenvironmentalimpact[120].Oneoftheenvironmental problemsassociatedwithenergyconsumptioniscarbonemissions. Though, Chinas carbonemissions are lowona percapitabasis, Chinaisalreadyrankedtheworldssecondlargestproducer of carbon emission, behind only America [121,122]. It isreported that 75 percent of Chinas pollution is due to the burning ofCoal as a source of primaryenergy andthis accounts for thedominant share of Chinas total consumption. Though this share hasdeclined recently, it is still too high relative to other countries [123].China is endowed with large wind resources in the north, fromXinjiangAutonomousRegionthroughGansuProvincetoIMAR,and in the southeast, along the coastline [124]. The total availablewind energy in China has been estimated at 3.2 TW; however, theMinistry of Electric Power estimates the exploitable electricpotential (at a10 mheight) tobe253 GW[125,126]. Thusfar,about 200 MW has been developed through large- and small-scaleprojects [124]. The Ministry of Electric Powers assessment of windresource shows that the best wind resources in IMAR cover an areaof 83,000 km2with an average power density at 10 mof 286 W/m2andwith 6950usablehours6[127].Thelackof domestictechnologyandtheavailabilityof softloans are not the only reasons why utility-scale wind developmentin China has been so difcult. One of the main reasons is that thereis no clear, xed policy for wind power sales. Each powerpurchaseagreement[128]mustbenegotiatedindividually. Thepower purchase price varies fromprovince to province, asexpectedfordifferentavoidedcosts, butinChina, thepricealsocan vary by a factor of two in the same province. Fiscal incentives topromote renewable energy are limited and vary from province toprovince. The process of securing project approvals fromtheregional and national government, PPA fromthe utility and projectnancingappearstobedifcult, time-consumingandconfusing.Utilities want a complete nancing package in place beforeagreeing to a rm power purchase price; or the SDPC may revokesomeapprovalsfor projectsinwhichcostshaverisenbecausecompletenancingpackageswerenotinplacebeforeapprovalsweregranted [129].TheInner MongoliaAutonomousRegion(IMAR) hasbeenacritical supplier of electric energy to the PRC for decades, primarilydue to its coal production which is the second largest supplier ofcoal in China [130]. Grid-connected wind power is well developedinInnerMongolia, especiallyafter2005. Bytheendof2007, itswind power generation capacity exceeded 1000 MW. The govern-ment aims toincreasethetotal windpower capacityinInnerMongoliatoreach4000 MWby2010. Windpower developedsteadilyfrom2000to2005inInner Mongolia, withanannualincrease of 16% in installed turbines and 24% in installed capacity[131]. Recently, the off-grid technology has matured. The popularturbinetypesare200 W, 300 W,and500 Wturbines, whichhadaggregatelyoccupiedabout65%shareofthemarketin2008asshown inFig.13[132].TheChinesegovernmentacknowledgestheimportanceofREfor its energy security and has voiced ambitious targets as shownin Fig. 14 [133]. However, China will be one of the worst impactedregions in the world if climate changes as predicted [134136]. Forexample, global warmingcouldmakeChinas agricultural outputreduced by 510% by 2030 [136], thus adding stress to a countrythathas20%oftheworldspopulationandonly7%ofthearableland. Inaddition, threemainindustrial centersof Chinaareonlowlandareas:theGulfofBohai regionwiththeBeijing-Tianjinaxis, the Yangtze River delta radiating inland from Shanghai, andthe Pearl River delta encompassing Hong Kong and Guangzhou. AFig. 14. Developmentandprojectionsfortheinstalledcapacitiesof selectedREbetween2000and2020inMW [137].Fig. 13.Total installedcapacityofwindturbinesinChina[132].R.Saiduretal. / RenewableandSustainableEnergyReviews14(2010)17441762 1753sea level rise of a meter would inundate 92,000 km2of land in thesethreeregions[134,136].2.4.1.1. Policy. Generally, Chinas policy on renewable energydevelopment falls into three categories. Similar to the wayrenewablepoliciesareset intheUnitedStates, Chinascentralgovernment establishes the rst two levels of policy. Localgovernments, including provincial, municipal, and county govern-ments, establishthethirdlevel of policywithoverall directionfrom the central government [138]. The government of China has,since 1996, implementeda fewprograms regarding the windenergy to stimulate the wind energy industry and the wind turbinemanufacturing industry,asexplained below.2.4.1.2. Ride the Wind Program. This programwas initiated in 1996by the former State Development and Planning Commission(SDPC) to import technology fromforeign companies and establishahigh-quality Chinesewindturbinegeneratorsector.Underthisprogram, wind farm projects approved by SDPC during the NinthFive-Year Plan (19962000) required that wind turbine generatorequipment purchased for those projects containlocally madecomponents, whichaccount for at least 40%of thetotal. Thisinitiativeledtotheformationof joint venturesintheChinesemarket and effectively introduced wind turbine generatormanufacturing technology intoChina[139].2.4.1.3. National Debt Wind Power Program. The National DebtWind Power Programwas implemented by the former StateEconomic and Trade Commission to encourage the development ofdomestic wind power equipment manufacturing and to usenationaldebtwithfavorableinterestsubsidyconditionstobuildwindfarmswithlocallymanufacturedwindpowercomponentsfor newgeneration projects. By 2000, this programhad establishedfour pilot projects with a total installed capacity of 73 MW. Thusfar,this programhas been completed[139].2.4.1.4. Adjustment of value-added tax. InSeptember 2001, theChinese government reduced the value-added tax for wind powerfrom17% to8.5% [139].2.4.1.5. WindPower ConcessionProject. Inorder topromotethecommercialization of wind power, the National Development andReformCommission(NDRC)adoptedtheconcessionapproachin2003witha20-yearoperational period, whichhavebeenusedrelativelysuccessfullyfor theexplorationanddevelopment inChinas petroleumandnatural gas sectors. Throughthe WindPower Concession Project, the Chinese government hopes to createfurther incentives for international and domestic investors todevelop large-scale wind farms and to encourage a reduction in theprice of wind power within Chinas reformed electricity industry.The basic approach is to select potential projects of relatively largescale(100 MW), andtochoosetheinvestorthroughcompetitivebidding. The government guarantees that the on grid power pricewill be set through process bidding, and ensures that all electricitygenerated by the wind farms will be purchased. Under this policy,market risk is reduced signicantly, which in turn reduces the riskpremiumoftheinternalrateofreturnforwindpowerprojects.From2003, NDRChas continuouslyorganizedrounds of windconcession projects, giving more emphasis on the domesticmanufacturing. Bytheendof 2006, four roundshadraised15wind concession projects with a total capacity of 2550 MW. All theprojectshavestartedconstruction, only25%ofwhichhavebeencompleted[139].2.4.1.6. RenewableEnergyLaw. InFebruary 2005,Chinas Renew-able Energy Law was formulated and came into force on January 1,2006. Thelawrequires thatpower gridoperators purchaseafullamount of wind power generated by registered producers. The lawalsooffersnancialincentives, suchasanational fundtofosterrenewableenergydevelopmentanddiscountedlendingandtaxpreferencesfor renewableenergy projects [139].Since theintroduction ofthesepolicies,thepowergenerationthroughwindenergyhasincreasedrapidlyasshownbyFig. 15.Chinas wind energy policy can therefore be considered as asuccessful exampletoothercountriesthatwishtoutilizewindenergy asdescribeinFig. 14.2.4.2. JapanIn fact, wind power in Japan accounts for less than 0.3% [141] ofthetotal generationcapacity. Ontheother hand, inEuropeitaccounts for a larger percentage of the total generation capacity at13%in Germany and 24%in Denmark [142], representing a growingbusiness.In1999,thediffusionrateofwindpowerreachedonly0.04%, and other new sources of energy 0.22% [143] in Japan. Evenif windpower reaches by 2010, inamounts upto 3000 MW[143,144] whichisthetarget of theJapanesegovernment, thepercentagewillstill remainassmallas1.1% [145].2.4.2.1. Incentives. JapaninitiatedaSunshineProject in1973after the rst oil crisis as a project to develop and commercializenewenergytechnologies, includingrenewable. TheNewEnergyand Industrial Technology Development Organization (NEDO) wasestablished by the Japanese government in 1980, and theSunshineProjectwasupdatedtotheNewSunshineProgramin 1993. The governments policy that led to the present diffusionofphotovoltaic powergeneration hasincluded offeringsubsidiesfor residential photovoltaicsystems (1994), subsidies for windpower systems (1998) and other measures typical of thetechnology push or initialinvestmentapproach[146].2.4.2.2. Target & policy. In pursuit of its Kyoto Protocol objectives,Japan has a target to reduce the level of its greenhouse gasemissionsby6%(comparedto1990levels)intheperiod20082012. To help achieve this goal, the Japanese governmentintroduced a Renewable Portfolio Standard law in April 2003 withthe aim of stimulating renewable energy to provide 1.35% of totalelectricity supply in 2010 [147]. The ofcial government target forwind power in Japan by 2010 is 3000 MW. However, the law has anumber of weaknesses, including a very lowtarget, the inclusion ofelectricitygeneratedbywasteincinerationasrenewable andinsufcientmarketincentives. ApartfromtheRPS, theJapanesewind industry also benets fromthe governments initial subsidiesFig. 15.Political milestonesforwindpowerdevelopment inChina [140].R.Saiduretal. / RenewableandSustainableEnergyReviews14(2010)17441762 1754such as the Field Test and New Energy Business Support Programs[148].One of the governments energy policy goals prior to PMHatoyamas announcement was to extend nuclear energy capacitytodeliver40%ofthenationselectricityneedsby2030[149].Inaddition to R&D support, the Japanese government also Endeavorsto promote renewable energy diffusion through legislative means[150].2.4.2.3. Research and development. The government has, in the lastcouple of years, investigated the feasibility of offshore projects, andanR&Dproject isexpectedtostart in2008. ThemainpresenthurdlestothedevelopmentofoffshorewindfarmsinJapanaresocialissues, especiallypublicacceptanceandcompensationforthesheryindustry. TherearealsoplanstostartR&Dfordeepoffshore wind technology in order to capture the huge potential ofwind energy indeepoffshore areasaround Japan [66].2.4.3. TheRepublicofKorea2.4.3.1. Policy, target and incentive. SouthKorea is the worldsfourth-largest oil importing country, with 97% of its energyconsumption provided for by fossil fuel imports. In order todiversify its energy supply, the Korean government in 2003establisheditsSecondBasicPlanforNew&RenewableEnergyTechnologyDevelopment andDissemination, settinga goal ofincreasing the countrys share of renewable energy in total energysupply from1.05% in 1999 to 5% in 2010. In addition, the plan has ashort-term target of meeting 2% of the total energy demand withnew& renewableenergy sources by 2003[151].The priority areas for achieving these objectives are windenergy and solar photovoltaics (PV), and a target for wind energywas set at 2250 MW by 2012. A report by the International EnergyAgency concluded that the country could generate as much as 30%of its electricityfromrenewableenergysources. However, theproportion of renewable power stood at only 2.3% in 2007 [152].Since the feed-in-tariff systemfor RE-generated electricity tookeffectinMay 2002,private investors havebeen thedriving forcebehind installation of commercial wind power generators. In ordertosecureprivateinvestment, anapplicationperiodforthebasepricewasestablished asa guarantee[153].There are currently 12 wind farms in Korea, made up of morethan 120 commercial turbines. The total installed capacityincreased by 18 MWin 2007, and the total nowstands at191 MW [154].2.4.3.2. Creation of a domestic industry. The Korean government ispromoting research and development in renewable energytechnologies to create a newhigh technology sector of theeconomy.South Korea government in collaboration with Jeju special self-governing province is implementing a wind power project on JejuIsland as a benchmark for NRE development in South Korea. At theendof2001, 40unitswereinoperationwithatotalcapacityof6.6 MW[155].Atpresent,fourdomesticmanufacturersaredevelopingMW-class windpower generators withcapacities of 23 MW. Thefabrications of 2 MW-class wind turbines have been completed in2007, andtheprototypeswillbetestedforthetypecerticationduring 2008[66].The government of the Republic of Korea is setting up a US$72.2million renewable energy fund to increase renewable energyinfrastructure. According to the Ministry of Knowledge Economy,the fund will be used to attract private sector investments in solar,wind and hydroelectric power projects, including technologydevelopment andplant construction [156].2.5. WindenergypolicyinMiddleEasternCountries2.5.1. EgyptEgypt is oil and gas producing country and its electrical powersupply is well developed, with over 98% of households connectedtothenational grid. Therapidgrowthrateof domesticpowerconsumption of 7% annually and dwindling oil reserves are startingto putpressureonthe Government. Securityof energy supplyaswellasenvironmentalconcernsledtheEgyptiangovernmenttotake upthe use of renewable energies inits national energyplanning asearlyasthe1980s [157].The proposed polices to foster increasing wind powercontribution to the Egyptian electricity mix consist of two phases:DuringPhase1, tenderswillbeissuedrequestingtheprivatesectortosupplypowerfromwindenergy.Theguaranteeofalong-termpower purchase agreement will reduce the investorsnancial risk. Thedocuments relatingtothetender for theCompetitiveBidsarepresentlyunderpreparationincoopera-tionwith theWorld Bank.Phase2willseetheimplementationofafeed-in-tarifftakinginto considerationthe prices achieved in phase 1. NREA (Newand Renewable Energy Agency) has taken the decision tofurther support the wind energy business by providing resourceassessment, necessary data for feasibility studies and technicalsupportforpotential projectdevelopers. Besidesthealreadyearmarked areas, work is underway to earmark other promisingareas; these areas will be also available for future wind projectscarried outby theprivatesector.2.5.1.1. The feed-in-tariff. The Electricity Act aims to introducemechanismsthat will makeproducingrenewableenergymoreprotable and reduce the reliance on carbon credits. When the lawisfullyimplemented, NREAwillnotownandoperateanymorerenewable power plants. The act will use power purchaseagreements, where the transmission company agrees to purchaseelectricity fromthe operator for a set number of years, to guaranteeinvestments in renewable. The second mechanism is the feed intariffan incentive tariff for any developer who would like to builda renewable energy plant. The grid is being committed to purchasefrom this source on a take or pay contract all of this capacity withthis incentive tariff orfeedintariff.2.5.1.2. Target of renewable energy. In order to increase the usage ofrenewable energy the Newand Renewable Energy Authority(NREA) inEgypt has set specic targets for renewableenergyutilization. According to these targets, by the year 2005 the share ofelectrical energy from renewable sources should increase to 5% ofthe total amount of electrical energy used in Egypt [158]. Aroundthe year 2005, when the last phase of the wind farmin Zaafarana iscompleted, thetotal installedcapacityof this farmwill reach600 MW. As a long-termplanning about 1000 MWwill be installedinthe coastofSuezGulf byyear 2012[159].In April 2007, the Supreme Council of Energy in Egyptannounced an ambitious plan to generate 400 MW of power fromwind and will increase the capacity to 600 MW by mid-2010 and20%ofthecountryselectricityfromrenewablesourcesby2020,includinga12%contributionfromwindenergy, whichisabout7200 MW[160].2.5.1.3. Subsidies&incentive. InEgypt, subsidiescontinuetobeoneof themajoritemsof government expenditures. Thelatestguresindicatethatgovernmentsubsidiesexceed23%of2005/2006 total budget spending (exceed LE50 billion) and around 74%of suchsubsidies are allocatedto energy products (excludingelectricity).R.Saiduretal. / RenewableandSustainableEnergyReviews14(2010)17441762 1755Due to the rapid increase in oil prices over the last two years, thesubsidy bill of energy products has quadrupled. Such an increasehas presented a critical challenge for the Egyptian scal authority.Startingthescal year2005/2006, scal authorityhasrecordedsuchsubsidies, explicitly, inordertoreveal thetrueburdenofsubsidizingpetroleum productsandnatural gas.Egypt is committed to phasing out subsidies on oil and gas, andprivatizingelectricityproductionanddistributiontoencourageinvestment in the wind power sector. It has also reduced tariffs onimported renewable energy equipment such as wind turbines, andestablishedafundtohelpoffsetthemarginalcostsofdeployingthesetechnologies [160,161].2.5.2. AlgeriaThe global demand for energy and more specically clean energyis growing rapidly. Algeria has denitely decided to pursue anactiverolewithintheglobal mobilizationforenvironmental protectionand the promotion of sustainable development. Promoting renew-able energies is now one of the major pillars of the Algerian policy[162]. The Algeriangovernment has beenpromoting the use of windenergy by means of a series of laws and ofcial program [163].Thegovernment has initiated programs that aimat increasing the use ofrenewable energy technologies inAlgeria, therefore providinggreenpowertoisolatedvillagesandcombatingglobal climatechange,especially greenhouse gas emissions [164].InJuly2002,Sonatrach, Sonelgaz(two publiccompanies) andanAlgerianprivate company (SIM) formeda new, renewableenergy joint venture company, called New Energy Algeria (NEAL).NEAL will look at development of solar, wind, biomass, andphotovoltaic (PV) energy production. In January 2003, Algeria andthe International Energy Agency agreed on technological coopera-tionindevelopingrenewableenergy[162,165].2.5.2.1. Estimation of the wind resources. A preliminary study of theseasonalandannualevolutionmeanvelocityofthewind, madepossible to make a rst identication of the windy areas of Algeria.This representation of speed in the formof chart has twoobjectives:rstistoidentifythewideareaswithgoodpromisesof exploitationof the windpower. Secondis tohighlight therelativevariation ofthe resourcesthroughAlgeria [165].2.5.2.2. Feed-in-tariff. Algeria has a feed-intariff scheme since2004. The FIT has been established by the executive decree of No.04-92 of 25 March 2004 concerning the diversication ofelectricitygeneration. TariffpaymentundertheAlgerianfeed-intariff scheme is expressed as a percentage of the average electricityprice whichis set annually by the power market operator. The tariffispaidbothforownconsumptionandforsalestothegrid.Onlyplantswithamaximumcapacityof50 MWareeligiblefortariffpayment. Even though the tariff level can vary every year (due tothe connection to the electricity price), tariff payment isguaranteedfor thefulllifetime of aproject[166].2.5.2.3. Incentives. Withinitspolicyofclimateandenvironmentprotection, the Algerian Ministry for Energy and Mines fullysupports the objective of the CSP Global Market Initiative (GMI) tofacilitate and expedite the building of 5000 MWe of CSP worldwideover thenext tenyears. TheGovernment of Algeriasees idealopportunities of combining Algerias richest fossil energy source the natural gas with Algerias most abundant renewable energysourcethesunbyintegratingconcentratingsolarpowerintonatural gas combined cycles. Incentive premiums for CSP projectsaregrantedwithintheframeworkof AlgeriasDecree04-92ofMarch25th, 2004relatingtothecostsof diversicationof theelectricity production. The incentive premiums of this decree shallattract private investors to implement integrated solar combinedcycle plants in Algeria. According to the current power expansionplanning of the Ministry for Energy and Mines, the capacity targetsfor CSP power implementation in Algeria are 500 MWof newISCCSplants until 2010. With these CSP targets and the new Decree 04-92, Algeria has established the GMI commitment on national solarthermal power market implementation. But beyond this Algeria islookingforaclosepartnershipwiththeEuropeanUnionsothatAlgerianplants mayhelpdeliver thegreenenergyneededforEuropetomeetitstargets.Tobringtheseplanstorealityandtoenhancetheparticipationoftheprivatesectorbothlocal andinternational anew companyhas beencreated [161,167].2.5.2.4. Subsidies. Energy subsidies government interventionsthat affect energyprices or costs arelarge, widespreadanddiverse. Theyvarygreatlyinsizeandtypeamongfuels, end-usesectors andcountries. Theyalsouctuatemarkedlyover time.Non-OECD countries account for the bulk of these subsidies, withmostofthemgoingtoconsumptionbyloweringpricespaidbyconsumers. InOECDcountries, mostsubsidiesgotoproduction,usually in the form of direct payments to producers or support forresearchanddevelopment [168].2.5.2.5. Target. Meanwhile both the Algerian government and theprivatesectorareawareof Europescommitmenttorenewableenergy sources, in particular the European Unions aimto have 17%ofrenewableenergyin2010senergymix.Internally,Algeriahasalso taken on its own commitment [167]. The share of renewableenergy sources in Algeria primary energy supply is relatively lowcomparedwithEuropeancountries, thoughthetrendsofdevel-opmentarepositive. OneofthemainstrategicprioritiesofNewEnergy Algeria which is Algerias renewable energy agency(government, SONELGAZandSona-trach), isstrivingtoachievea share of renewable energy sources in primary energy supply of1012% by2010 [169,170].2.5.2.6. GHGsemissionreduction. The electricity production sectoremitsthelargestportionof AlgeriasGHG(24.9%) howeverthismighthavechangedinlastfew years duetoasignicantshift tonaturalgasasamainfuel. Thesecondlargestemissionsourceistransportation(11.3%) andthirdisindustry(includingconstruc-tions) emitting9.7%. Algeriacontributes0.7%of total global gasemissions. Despitebeingalargeoil andgasproducingcountry,Algeria is one of only two Arab States which has advanced a numberfor Annex I countries emission reductions (Morocco being the onlyotherArab country to have done so).This target correspondsto areduction of at least 40% by 2020 compared to the 1990 levels. Inaddition, Algeria has recognized the importance of NAMAs incontributing to the achievement of the global goal by delivering asubstantial deviation from baseline in developing countries [171].The windenergy policies of different countries are shownbrieyinTable 4.2.6. EnergypolicyinMalaysiaMalaysiasenergypolicyencompassesthesupply, utilizationandenvironmentalobjectives[172]. Thepotentialuseofrenew-able energy in Malaysia is important: only 4% of the hydropower istappedand48%oftheavailablebiomasswasteisusedtodayforenergy production [173]. The development of renewable energy inMalaysia is still in the early stage [174]. Throughout the years, thegovernment of Malaysia has formulated numerous energy-relatedpolicies toensurethelong-termreliabilityandsecurityof theenergy supply for sustainable social-economic development in thecountry. These various energy policies included the NationalEnergy Policy (1979), the National Depletion Policy (1980) and theFuel Diversication Policy (1981, 1999) [175]. One of the main andR.Saiduretal. / RenewableandSustainableEnergyReviews14(2010)17441762 1756directconsequencesofthesestrategiesisthedrasticdropinthecontribution of oil to the energy mix froma high of 90%dependencein1980downtolessthan10%in2003asshowninTable5. In2003, theremainingcontributionstotheenergymixwere from gas and coal at 71.0% and 11.9%, respectively, with thebalance from hydroelectric generation[176,177].UndertheEighthMalaysianPlan(20012005), theFiveFuelDiversication Strategy was implemented with RE regarded as thefth fuel in the countrys energy supply mix. The other four types ofenergy are oil, gas, coal and hydroelectric. The RE target was set at5% of the countrys electricity generation by the year 2005 [178].With this target in mind, a reduction of 70 million tonnes of CO2will be achieved over a span of a 20 year period. Under this policy, aspecial committee on Renewable Energy (SCORE) under theMinistryof Energy, WaterandCommunications[179]launchedthe SREP. Under this program, the installation of RE resource-basedsmall power plants is encouraged [180]. Some of the implementa-tions regardingrenewable energy areshownnext.2.6.1. Pricing-lawandquotasystemThecurrentMalaysianpolicyneitherhasthepricing-lawnorthe quota system. The price of the Renewable Energy is determinedthrough agreement between utility (e.g. Tenaga Nasional Berhad inPeninsulaMalaysia) anddevelopers intheformof RenewableEnergy Power Purchase Agreement (REPPA). The price of theelectricity is not xed and price has a range set by Tenaga NasionalBerhad(TNB)distributionbetween14and17 sen/kWhwhichisderived based on its studies and experiences of Independent PowerProducers(IPPs)whosesizesaremuchbiggerthanRE(e.g.IPPseveral hundredMW, SREPbelow10 MW), thus economic ofscale works to reduce the cost and price. According to the interviewwithMalaysiaEnergyCenterstaffs, eventhemaximumpriceof17 sen/kWh does not provide high enough rate of return to attractinvestors or project developers given the size of the project underSmall Renewable Energy Power (SREP). Also, this price range doesnotvaryaccording to thesize,location, andtechnology.Payment mechanismfor IPPs andSmall RenewableEnergyPowerdevelopers are different. The two main differences are as follows:The payment mechanism for IPPs is called take or pay. Thepayment consists of two elements. One is capacity payment paidaccordingtothesizeof theprojects andtheother is energypayment which is paid according to the amount of electricity theIPPsfedintothegrid.Thecapacitypaymentisaxedpaymentdeterminedsolely by the capacity, andenergy payment is avariable payment subject to the amount of energy. On the otherhand, the mechanismfor SREPdevelopers is take andpaymechanism. The payment isbasedonly on energy payment (i.e.electricitypriceperkWhtimesamountofenergyconnectedtothegrid). Thus, theIPPsarepaidthexedamountof capacitypayment even though they do not provide any electricity into thegrid, whileSREPdevelopers arenot paidunless theyprovideelectricity.Thepriceofelectricityisreviewedeveryfour yearsincaseofIPPs, while the price is xed at the price agreed on REPPA which issigned before project starts. The maximumlength of the contract is21yearsinbothcases.Thepenaltyfordevelopersincaseofnotmeeting the contracted amount of energy fed into the grid for SREPdevelopers is 10% of tariff reduction. In both regards, mechanismofthe payment for IPPs is more benecial to developers or producersrather thanthat of SREP. Also, theSREPset thecapof 10 MWmaximum for developers to sell the electricity to the grid. The sizeof this 10 MWis the indicator that determines whether thedevelopers are categorizedas IPPs or SREP developers. Above10 MW, the developers are regarded as IPPs not SREP developers.The two main benets for SREP developers unlike IPPs are (i) SREPdeveloperscanenjoysomenancialincentives,and(ii)Environ-mental Impact Assessment is not necessary whose cost may turnsome projects notviable[180182].2.6.2. FinancialincentivesCurrentenergypolicyframeworkwhichisnowinactioninMalaysiaisdescribed inTable 6.2.6.3. CurrentsubsidyforeachresourceinMalaysiaThe current subsidies which are available in energy sector areshown inTable 7.2.6.4. PioneerstatusandinvestmenttaxallowanceProject proponents wishing to establish new renewable energygeneration capacities have the option to request for Pioneer Status(PS) and Investment Tax Allowance (ITA). A company receiving PShas to pay only tax on 30% of its statutory or taxable income for veyears. Companies located in the states of Sabah, Sarawak and theEastern Corridor states of Peninsular Malaysia have to pay tax ononly 15%of their statutoryincomefor veyearsA company also has the option of asking for ITA. The ITA is morebenecial if the project involves heavy up-front capital costs andprots are not expected in the initial years of the project. Under theITA, a company is given an allowance of 60% of qualifying capitalTable 6Currentstatus ofdifferentnancialincentivesinMalaysia[180].Systems Current status CommentsTaxexemption-income Pioneer StatusofIncometax exemptionof 100%for10years(orInvestmentTaxAllowance)Upgradedfrom 70%to100%and5yearsto10yearsin2004Taxexemption-investment-based 100%ofcapital expenditureincurredwithin aperiodof5years(orPioneerStatus)Upgradedfrom 60%to100%in2004Taxexemption-production-based Notexist Production incentiveswithalump-sum notproportion isbetterthaninvestmentincentivesImport duty exemption Import duty andsalestax exemptionon machineryandequipmentwhich arenotproducedlocally.Formachinery andequipmentwhichareproducedlocally,salestax exemptionswill begiven.NoneRebates Notexist RebatesforRE shouldbeimplementedwith technologystandard, net-meteringsystem,andgrid-connection standardsLoan Notexist RenewableEnergyBusinessFacilityis goingto besetunderBioGenproject.Table 5Energymix inMalaysia [176,177].Source 1980(%) 1990 (%) 2000(%) 2003(%)Oil 87.9 71.4 53.1 6.0Natural gas 7.5 15.7 37.1 71.0Hydro 4.1 5.3 4.4 10Coal 0.5 7.6 5.4 11.9Biomass 1.1R.Saiduretal. / RenewableandSustainableEnergyReviews14(2010)17441762 1757expenditure, whichcanbeutilizedtooffset against 70%of thetaxable income. Any unutilized allowance can be carried forwardto subsequent years until the whole amount has been used up. Thecompanypaystheprevailingcorporatetaxrateonthebalance(30%) of its statutory income. For the states of Sabah and Sarawak,and Eastern Corridor states in Peninsular Malaysia, the allowanceis higher at 80%, which can be utilized to offset 85% of the statutoryincome. The allowance given under the ITA is over and above thenormal depreciationallowancespermittedinthepreparationofnancialstatements.Apart fromthat, under theincentives for ApprovedServiceProjects (ASPs), project proposers undertaking investment in ASPssuchastransportation, communicationandutilityprojectscanenjoy tax exemption under Section 127 and 1A under Schedule 7BoftheIncome Tax Act1967 [180,183,184].2.6.5. InvolvementofresearchinstitutionsanduniversitiesTheresearchinstitutesthatareinvolvedinrenewableenergyincludeSIRIMBerhad, thegovernment researchagency. Mean-while, academic studies fromthe universities have helped inexploring new energy sources and their possibilities of utilization.In fact, energy conservation, energy efciency and renewableenergy are the topics of interest for most public universities,especiallythefour research-orienteduniversities: UniversityofMalaya (UM) on energy conservation in industries and alternativefuels, Universiti Putra Malaysia (UPM) on solar energy andbiomass, Universiti Sains Malaysia(USM) onsolar energy, PVsandrural energyplanning, andUniversiti KebangsaanMalaysia(UKM)onsolarenergy anduidized bedcombustion [183].2.6.6. Malaysiaenergypolicyrecommendations/suggestionsMalaysiacurrentlydoes not haveaspecicpolicyfor windenergydespitethepossibilityofutilizingthisrenewableenergy.Therefore, considering the success stories of certaincountrieswhicharenowusingwindenergyintensively, andconsideringMalaysias condition and existing strategies for renewable energy,thefollowing aresuggested.2.6.6.1. Pricing lawandquota system. Pricinglawis the initialregulatoryframework, andquotasystemmaybedesirableafterthe RE market has been well developed and RE technology becomecompatible with conventional energy technologies. Quota systemmay be the appropriate system in that situation, as it will lead tocompetition, whichinturnencouragetechnologydevelopment,andreducecosts.Pricing-law which xes the price should be implemented. Thefollowing should be taken into consideration on deciding the price.The price per kWh should be different according to the scale ofthe project (i.e. price for 5 MW should be different from that of10 MW).PriceforeachREtechnologyshouldbedifferent(i.e. priceforbiomass should be different fromthat of wind like manyEuropean nations).Pricing may need to reect inationary effect and also escalationof fuel price or pricing law should be reviewed on a regular basislike IPPs for every four years to reect these effects andtechnology development.ThepriceshouldnotbecalculatedbasedonIPPsexamples, asmost of the RE are smaller than those, and economy of scale doesnot work.Theprice shouldreect thecompeting use.Thediscussionfor whoisgoingtopaytheadditional feesisnecessary. In most of the cases in European countries, theadditionalfeesarepaidbyconsumersthroughhighertariff, orgovernment.Government cangivethesamesubsidytoREasconventionalenergy, or remove current subsidy for conventional and switch toRE.Consumers or industry pay additional fee as a carbon, orelectricity tax.Pricing lawshould be set along with grid connection standards soas not for utility to interfere the grid connection throughexpensive chargingforgridconnection.Pricing lawshould guaranteethe longenough time contracts.The size constraint of maximum10 MWfor SREP projects shouldberemovedtoencourageabiggerprojectwhereeconomicofscale works. It means that any size of the RE projects as long astheyutilizeREsourcesshouldbegivennancialincentivesforSREPprojects. However, thesenancialincentivesshouldvaryaccording to technology,and sizeof theprojects[180].The quota system is not recommended to implement now due to thefollowing reasons:Administrativecostistoomuch.Tend tocreatestop-and-go, boom-and-burstmarket.Still lackinginexperienceinother countries.2.6.6.2. Financial incentives. Thenancial incentivesormechan-ismsshouldbeappliedaccordingtothetypeoftechnologyandpurposeoftheincentives. Forexample, topromotetechnologiessuchasPV, solarthermal, heat pumpsandwindturbinesonasmall-scale, distributed basis, nancial incentives should be set tobenet end customers. On the other hand, to promote large wind,Table7Currentsubsidyforoil,naturalgas andREinMalaysia [180].Subsidy Example Oil Naturalgas REDirectFinancial Transfer Grantsto producersorconsumers,low-interest loansRetailpriceforpetrolanddieselissubsidizedFuelpriceforpowergenerationisRM6.40/nmBTU(6.80inSabah,4.41inSarawak)comparedtonormalpriceofRM 18.00/nmBTUNonePreferentialtaxtreatment Rebates, exemptiononroyalties,tax credit,accelerateddepreciationTaxexemptionof58.62senperlitterNone IncomeTaxAllowance(ITA)orinvestmenttaxexemption(PioneerStatus)Traderestrictions Quotas,trade embargoes,technical restrictionsNone Contractualxedtradequotaof250mscfdtoSingaporeNoneEnergyrelated servicesprovidedbygovernmentatlessthanfull costDirect investmentinenergyinfrastructure,publicR&DRM8millionis setasideforenergyrelated activitiesRegulationson energysector Demandguarantees,pricecontrols,marketaccessrestrictionsNone None pricecontrolof1417sen/kWhProductionlimit None 600thousandbarrelperday2000mmscfd perdayofwhich1300forpower generationNoneR.Saiduretal. / RenewableandSustainableEnergyReviews14(2010)17441762 1758biomass, or geothermal technologies, theincentives shouldbeaimedat encouraginginvestment byalarge entity or company.Current PS and ITA are not the appropriate nancial incentivesfordevelopmentofREinMalaysia. Pioneerstatusofincometaxexemptioncanbeusedfortaxevasion, anddoesnotguaranteeproductionof RE whichdoes not always encourage domesticmanufacturing as rms may purchase RE technologies fromabroad. Investment tax exemption without technology standardscan be also used for tax evasion, be benecial to rich, and does notguarantee production ofRE.Insteadof investmenttaxexemption, rebatewhichrefundsacertainamountofcapitalexpenditureisrecommendedforsmall-scale, residential-use, or off-gridtechnologies, suchas wind, biomassandgeothermal energy systems. Also, it is benecial for technologieswhoseinitial expenditureisstill expensivesuchaswindturbineinstallation. Investment incentives should come along with technol-ogy standards toavoidsubordinate technologies frombeing utilized.For large scale or commercial/industry-use biomass, wind, andhydro, performance-based incentives especially rebates foramountofelectricityfedintogridratherthantaxexemptionisdesirable. Performance-based incentives are strongly recom-mendedtogiveincentivesfor developerstoprovideelectricitystablyinorder toavoidpenaltyduetoshortageof minimumuptake. This canbealsosuggestedas asolutionfor removingpenaltiesitemfromREPPAtoencouragedeveloperstodotheirmaximumefforts to meet the contracted amount of energy fed intothegrid. ThemainreasonwhypenaltiesshouldberemovedinREPPAis that SREP projects are very small compared to IPPs. In caseSREP developer could not provide contracted amount of electricitydue tomaintenance reasons,for example, the developers arenotpaid at all for that period unlike IPPs, which are at least guaranteedxed amount of payment and also the payment may be penalizedas it couldnot meet the monthly requirement. These doublenegative impacts makes thesmallRE projects easilyunviable.As for loan, as seen in Thailand on petrol or other countries onenergy, a small extra charge on electricity per kWh can be collectedfor RE fund for loan on RE projects. This fund can be also used forotherRE-relatedactivities, suchasR&D, education, informationdissemination, or nancial use as rebates. The appropriatecommoditiesmaybenatural gasorpetroleumorallfossil fuelstolevy this tax [180].2.6.6.3. Subsidies. Inorder tolevel theplayingeldfor RE, thesubsidies for conventional energy should be gradually removed ortransferred to RE otherwise the same subsides should be given toRE for the time being. Removal of subsidies does not always worsentheeconomy butrather boost itdueto efcientuse ofenergy.Thereformsofsubsidescanbedoneoveracertainperiodoftime to reduce the political barrier and sometimes withcompensating measures. For example, if the subsidies areremoved, offset mechanism should be introduced by giving othernancial incentives to increase the use of RE such as tax exemptionfortheutilitiesthatsufferfromincreaseofproductioncost, andalso social security for consumers which will suffer from increaseofconsumer price.Timingmattersforsubsidyreformbecausesuddenshockcandeteriorate domestic economics. Thus energy price reform shouldbe announced in advance so that utilities can shift fromconventional energy sources to RE source besides giving incentivesforRE [180].2.6.6.3.1. Rational for Subsidy in Malaysia. The role of the subsidiesisverycontroversial. Followingisthesuggestedjusticationofsubsidies inMalaysia.Increaseofenergy priceduetotheremovalofenergysubsideshinderthe foreigndirect investments.Poor cannot afford the increased price and benets and welfaregained can be higher than long-term costs in providing subsides.Despite the detrimental effect of subsides, it is politically difcultto remove them partly because its short term costs that energyremovalwould entail.2.6.6.4. Localcomponentsinwindturbines. Windenergyindustryincludes not just the power generation industry but also the windturbine manufacturing industry. There are only a fewwind turbinemanufacturers that can provide wind turbine if wind powergeneration isto beproduced.According to Chinas windenergy policy, the former StateDevelopment and Planning Commission (SDPC), in 1996, launchedaprogramcalledRidetheWindProgram. Underthisprogram,wind farm projects approved by SDPC during the Ninth Five-YearPlan (19962000) required that wind turbine generator equipmentpurchasedforthoseprojectscontainlocallymadecomponents,whichaccount for at least 40%of the total [139]. Aprogramlike thisis very useful when a country is in its initial phase of exploring anindustry.Hence, Malaysiacanadopt thestrategyof encouraginglocalcomponents in wind turbines since the country is in its early phaseof utilizing wind energy. In more practical terms, government candenelocallymanufacturedwindturbineasthoseconsistingatleast40%componentsbylocalsuppliers.Infact, similarstrategywas also used during the 1980s to stimulate the Malaysia nationalcar project, in which every national car produced must have certainpercentageof local componentsto gainthe nationalcarstatus.2.6.6.5. Increaseinenergyresearchanddevelopment(R&D). Windenergy has been a topic of interest for many local academics andengineers. Thisisprobablybecausewindenergyisstill newinMalaysiaanditspotentialhasnotyetbeenfullydiscovered.ThecurrentsituationinMalaysiaisthatmostof theresearchesaredone by academics in public universities like UM, USM, UPM, UKM,whichareresearchedoriented, andnot tomentionotherslikeUniversity Technology Malaysia[185].R&Disessential toimprovethetechnologyofutilizingwindenergy, andthus it canalsohelptoincreasethewindpowergeneration in Malaysia. If a policy is to be made, it should includeencouragement to wind energy R&D. Apractical and usuallyeffective way is to provide greater budget for research workregarding wind energy. This suggestion is supported by the Japansstarting R&D in 2008 for deep offshore wind technology in order tocapture the huge potential of wind energy in deep offshore areasaroundJapan. ResearchesdoneonwindenergyinMalaysiacanalso focus ontheoffshore areas.Ideally, R&D