Asia Pacific Renewable Energy Policy Handbook 2012

GDAE1001P / Published MAY 2012 Page 1 Asia Pacific Renewable Energy Policy Handbook 2012

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Asia Pacific Renewable Energy Policy Handbook 2012 Reference Code: GDAE1001P Publication Date: May 2012

Support Policy Measures Playing a Major Role in Renewable Energy Deployment in the Asia Pacific Region

The Asia Pacific region has seen a rapid increase in energy consumption which has been primarily driven by the increased consumption in the Indian and Chinese markets. This growing energy demand, increasing concerns over global warming and the need to diversify energy sources have driven the region towards an increase use of renewable energy.

Among the major Asian countries, Australia, Japan and New Zealand have signed the Kyoto Protocol, whilst India and China have pledged to reduce emissions at the Copenhagen summit. All the countries in the Asia Pacific region are expected to continue to invest in the renewable energy sector over the coming decades and are using the Renewable Portfolio Standards (RPS), Feed-in Tariffs (FITs), soft loans, tax incentives and other measures, in order to promote the renewable energy industry.

The government support measures have led to a significant increase in renewable energy growth in the region. Different countries are using various support measures to ensure the steady growth of the industry.

Most of the measures initiated by governments have received a positive response and have played a vital role in the development of the renewable energy industry in each respective country. The table below details the different policy measures used by the Asia Pacific nations to promote renewable energy.

China has led the development of renewable energy in the region, fast becoming one of the major players in the global renewable energy industry. Among recent Asian developments, China is developing its wind turbine and solar Photovoltaic (PV) manufacturing industries; this reflects the governments commitment to renewable energy through a series of new laws and financial support measures.

India and Australia have also implemented a number of support measures for the development of renewable energy. The future growth of renewables in these countries will depend on the pace of implementation of these measures. The new programs announced in India are expected to significantly increase the solar power industry.

The Japanese government has shown its commitment towards renewables through the implementation of solar FITs and is considering FITs for other renewable energy sources.

Thailand has announced a number of measures to boost its biomass industry. The country aims to increase its share of renewables to 90% by 2020 and to develop as a biofuel producing hub in the Asia Pacific region.

Renewable Power Policy Framework, Asia Pacific, Major Policy Instruments, 2010

Country Feed

in-Tariff

Renewable Portfolio Standard

Capital subsidies, grants or

rebates

Energy Production Payments/

investments or other tax

credits

Sales tax, energy tax, excise tax

or VAT reduction

Tradable renewable

energy certificates

Net Metering

Public investments

loans and financing

Public competitive

bidding

Australia

China

India

Japan

South Korea

New Zealand

Thailand

Source: GlobalData



China Led the Renewable Energy Industry in the Asia Pacific Region in 2011

China has emerged as one of the major players in the global renewable energy industry and is leading renewable energy growth in the Asia Pacific region. Driven by government policies and measures to support growth, China has become the largest wind power market in the world with a total installed capacity of 60,307 Megawatt (MW) in 2011, overtaking the US. The growth in the wind power market is due to of the addition of new installations over the last couple of years, adding 13.8 GW of wind capacity in 2009 and a further 18,789 MW wind capacity in 2010. China is also trying to establish itself as a major player in the solar power industry and the government has announced major support measures. The government has also initiated support measures for small hydro and biomass facilities. These moves are expected to promote renewable energy development in China and increase investments in the sector.

During 2011, the Chinese government announced the 12th five year plan which will promote the development of new energy industries. It also incorporates specific deployment targets for renewable energy, including the construction of six onshore and two coastal and offshore wind projects by 2015, totaling 120 Gigawatt (GW) of hydro power and 70 GW of wind power capacity. China also aims to develop 5 GW of solar energy projects. China is expected to continue its strong investments in the renewable energy industry and the government has established a target of generating 15% of the countrys electricity through renewables by 2020.

Australias Amendment to the Renewable Energy Target Ensure Growth of Large and Small Scale Renewable Energy Projects

In July 2010, the Australian government announced that it had decided to split the Renewable Energy Target (RET) scheme into two parts in order to ensure the long-term, sustainable growth of both the small-scale and large-scale renewable energy sectors. From January 2011, the existing RET scheme was separated into the Small scale Renewable Energy Scheme (SRES) and the Large scale Renewable Energy Target (LRET). Combined, the new LRET and SRES are expected to deliver more renewable energy than the existing 45,000 Gigawatt hours (GWh) target in 2020.

India to Witness Significant Investments in Solar Energy over the Next Decade

The Indian Government has planned significant investment in the solar power industry and launched the Jawaharlal Nehru National Solar Mission on January 11, 2010. The Mission aims to develop and deploy solar energy technologies in the country to achieve parity with the grid power tariff by 2022. The objective of the National Solar Mission is to establish India as a global leader in solar energy; the policy aims to achieve this

through rapidly diffusing the conditions of the mission throughout the country.

The mission aims to create an enabling policy framework for the deployment of 20,000 MW of solar power by 2022; and increase the capacity of grid-connected solar power generation to 1,000 MW by 2013 and 3,000 MW by 2017, through the mandatory use of the renewables by utility providers; this will be backed by a preferential tariff.

Japans Feed-in Tariff will Position it as the Next Large Growth Market

The world renewable energy market has seen a rapid development over the past few years, however, Japans renewable energy market has remained in a grounded state due to its market policies for renewables not being sufficiently examined or implemented. As a result, during 2011, the Japanese parliament approved a legislation that will create a national FIT scheme.

The new law is expected to boost the development of solar, wind and geothermal projects by mandating the utility providers to purchase power from renewable energy sources at a rate fixed by the government.

Hydro Power: a Major Source of Renewable Energy in Korea

The Korean government has heavily promoted the use of the green industry. The solar PV market is set to soar in the coming years as Korea has a generous FIT for the market. The growing importance of renewable energy in the Korean power market mix resulted in a total installed capacity of 7,866 MW at the end of the year 2011. However, among all the renewable sources, hydro power has contributed most significantly to the renewable power market in Korea, with a cumulative installed capacity of 6,435 MW in 2011, accounting for 82% of the entire market.

Thailand Aims to Become a Regional Biofuel Hub

Thailand plans to develop its biomass resources and become a regional biofuel hub. The country has laid down various support measures to develop renewable energy sources, especially biofuels. The country has also established incentives to promote the use of biofuels in the domestic market. In order to promote the use of E20 gasoline (20% Ethanol, 80% Gasoline), the government has set the retail price of E20 gasoline lower than that of E10 gasoline(10% ethanol and 90% gasoline). The retail price of E20 gasoline has been set at 2THB/l ($0.03) lower than E10 gasoline. . The government is expected to come up with other incentives for the biofuel industry in the country in order to achieve its target of developing Thailand as a regional biofuel hub and a major export center.



1 Table of Contents 1 Table of Contents ............................................................................................................................ 3

1.1 List of Tables............................................................................................................................. 8 1.2 List of Figures.......................................................................................................................... 10

2 Introduction ................................................................................................................................... 11 2.1 Renewable Energy Policy Framework, Global, Overview .......................................................... 11 2.2 Renewable Energy Policy Framework, Global, Major Policy Measures ...................................... 11

2.2.1 Feed-in Tariff Program.................................................................................................... 11 2.2.2 Renewable Portfolio Standards ....................................................................................... 11 2.2.3 Tradable Renewable Energy Certificates Systems........................................................... 12 2.2.4 Capital Subsidies, Grants/Rebates .................................................................................. 12 2.2.5 Energy Production Payments/Investments or Other Tax Credits....................................... 12 2.2.6 Tax Reductions .............................................................................................................. 12 2.2.7 Net Metering................................................................................................................... 12 2.2.8 Public Investment Loans ................................................................................................. 12

2.3 GlobalData Report Guidance ................................................................................................... 13 3 Renewable Energy Regulatory Framework, Australia...................................................................... 14

3.1 Renewable Energy Regulatory Framework, Australia, Overview ............................................... 14 3.2 Renewable Energy Policy Framework, Australia, Federal Policies and Incentives...................... 16

3.2.1 Renewable Energy Target Scheme................................................................................. 16 3.2.2 Small-Scale Renewable Energy Scheme......................................................................... 18 3.2.3 Large-scale Renewable Energy Target............................................................................ 20 3.2.4 Renewable Energy and Energy Efficiency Partnership ..................................................... 22 3.2.5 Renewable Energy Demonstration Program (REDP)........................................................ 22 3.2.6 Clean Energy Initiative .................................................................................................... 22 3.2.7 Green Loans Program for Households............................................................................. 23 3.2.8 Renewable Power Percentage ........................................................................................ 23 3.2.9 Renewable Energy Future Fund...................................................................................... 23 3.2.10 Renewable Energy Equity Fund ...................................................................................... 25 3.2.11 Connecting Renewables Initiative.................................................................................... 25 3.2.12 Renewable Energy Venture Capital Fund ........................................................................ 25 3.2.13 Climate Change Grant Program ...................................................................................... 25 3.2.14 Community Energy Grants Program................................................................................ 25

3.3 Financial Incentives and Policy Support for Solar Power, Australia, Federal Incentives .............. 26 3.3.1 The Solar Cities Program................................................................................................ 27 3.3.2 Green Vouchers for Schools/National Solar Schools Program.......................................... 27 3.3.3 The Solar Homes and Communities Plan ........................................................................ 28 3.3.4 Australian Solar Institute ................................................................................................. 28

3.4 Financial Incentives and Policy Support for Wind, Australia, Federal Incentives......................... 29 3.4.1 Wind Energy Forecasting Capability ................................................................................ 29 3.4.2 National Code for Wind Farm Construction...................................................................... 30 3.4.3 Mechanisms Supporting Grid-Connected Wind Power ..................................................... 30

3.5 Financial Incentives and Policy Support for Geothermal, Australia, Federal Incentives............... 30 3.5.1 Geothermal Industry Development Framework ................................................................ 30 3.5.2 Geothermal Drilling Program........................................................................................... 30

3.6 Financial Incentives and Policy Support for Bioenergy, Australia, Federal Incentives ................. 31 3.6.1 Ethanol Production Grants Program ................................................................................ 32 3.6.2 Biofuels Capital Grants Program ..................................................................................... 32 3.6.3 Methane to Markets Partnership...................................................................................... 32 3.6.4 Energy Grants Credit Scheme Alternative Fuels............................................................ 32 3.6.5 Fuel Tax Reforms ........................................................................................................... 32 3.6.6 Second Generation Biofuels Research and Development Program................................... 33

3.7 Financial Incentives and Policy Support for Energy Efficiency, Australia, Federal Incentives ...... 34 3.7.1 Energy Efficiency Information Grants............................................................................... 34 3.7.2 Energy Savings Initiative................................................................................................. 34 3.7.3 Low Carbon Communities............................................................................................... 34 3.7.4 Green Precincts Fund..................................................................................................... 35 3.7.5 Renewable Energy Bonus Scheme ................................................................................. 35 3.7.6 Tax Breaks for Green Buildings....................................................................................... 35

3.8 Renewable Energy Policy Framework, Australia, State Level Policies and Incentives ................ 36



3.8.1 South Australia ............................................................................................................... 36 3.8.2 New South Wales ........................................................................................................... 36 3.8.3 Victoria........................................................................................................................... 37 3.8.4 Tasmania ....................................................................................................................... 38 3.8.5 Queensland.................................................................................................................... 38 3.8.6 Australian Capital Territory.............................................................................................. 38 3.8.7 Western Australia ........................................................................................................... 39

4 Renewable Energy Regulatory Framework, China .......................................................................... 41 4.1 Renewable Energy Regulatory Framework, China, Overview.................................................... 41 4.2 Renewable Energy Policy Framework, China, Major Policies and Incentives ............................. 43

4.2.1 Renewable Energy Law .................................................................................................. 45 4.2.2 Medium and Long Term Development Plan for Renewable Energy................................... 48 4.2.3 Renewable Portfolio Standards ....................................................................................... 48 4.2.4 International Science and Technology Cooperation Program for New and Renewable

Energy ........................................................................................................................... 48 4.2.5 Shandong Province Village Renewable Energy Regulations............................................. 49 4.2.6 New Carbon Intensity Target........................................................................................... 49 4.2.7 The 12th Five-Year Plan .................................................................................................. 49

4.3 Financial Incentives and Policy Support for Solar Power, China ................................................ 49 4.3.1 Golden Sun Program ...................................................................................................... 50 4.3.2 The BIPV Subsidy Program............................................................................................. 51 4.3.3 Feed-In Tariff for Solar Projects....................................................................................... 51 4.3.4 Solar PV Bidding Program .............................................................................................. 52 4.3.5 Subsidies for Solar PV in Rural Areas.............................................................................. 52 4.3.6 R&D support for Solar PV ............................................................................................... 52 4.3.7 Shandong Province Energy Fund.................................................................................... 53 4.3.8 Shandong Provinces Sunshine Plan................................................................................ 53

4.4 Financial Incentives and Policy Support for Wind, China........................................................... 53 4.4.1 Feed-in Tariffs for Wind Power ........................................................................................ 54 4.4.2 Domestic Content Requirement....................................................................................... 55 4.4.3 Wind Power Concession Program ................................................................................... 55 4.4.4 Low Interest Rate Loans ................................................................................................. 55 4.4.5 VAT and Import Tariff Rebate on Key Wind Turbine Components..................................... 55 4.4.6 Market Entry Standards for Wind Equipment Manufacturers............................................. 55 4.4.7 Interim Measure on the Management of Offshore Wind Farms ......................................... 55 4.4.8 Offshore Wind Development Plan.................................................................................... 56 4.4.9 Hainan Province Plan for the Construction of Wind Farms................................................ 56 4.4.10 Provincial Incentives for Wind ......................................................................................... 56

4.5 Financial Incentives and Policy Support for Hydro, China.......................................................... 57 4.5.1 Brightness Program ........................................................................................................ 57 4.5.2 Financial Incentives for Small Hydropower....................................................................... 57 4.5.3 Rural Electrification Policies for Small Hydropower .......................................................... 58

4.6 Financial Incentives and Policy Support for Bioenergy, China ................................................... 58 4.6.1 Feed-in Tariffs for Biomass ............................................................................................. 58 4.6.2 Support for Biomass Power Generation........................................................................... 58 4.6.3 Support for Biogas Projects............................................................................................. 58 4.6.4 National Rural Biogas Construction Plan 2003-2010 ........................................................ 59 4.6.5 Financial Incentives for Ethanol....................................................................................... 59 4.6.6 Banning of Grain based Ethanol...................................................................................... 59

4.7 Financial Incentives and Policy Support for Energy Efficiency, China ........................................ 59 4.7.1 Green Lighting................................................................................................................ 59 4.7.2 Subsidy for Bulk Purchase of CFL................................................................................... 59 4.7.3 National Building Energy Standard .................................................................................. 60 4.7.4 Efficiency Upgrade for Appliance Production and Public Lighting...................................... 60 4.7.5 Energy Conservation in Buildings.................................................................................... 60

5 Renewable Energy Regulatory Framework, India............................................................................ 61 5.1 Renewable Energy Regulatory Framework, India, Overview ..................................................... 61 5.2 Renewable Energy Regulatory Framework, India, Major Policies .............................................. 63

5.2.1 Electricity Act 2003 ......................................................................................................... 63 5.2.2 Integrated Energy Policy ................................................................................................. 63 5.2.3 Renewable Portfolio Standards ....................................................................................... 63 5.2.4 Tariff Policy 2006............................................................................................................ 65 5.2.5 Ladakh Renewable Energy Initiative................................................................................ 65 5.2.6 Remote Village Electrification Program............................................................................ 66



5.2.7 Central Financial Assistance for Renewable Projects ....................................................... 66 5.2.8 Renewable Energy Certificates ....................................................................................... 70 5.2.9 Foreign Investment Policy............................................................................................... 72

5.3 Financial Incentives and Policy Support for Solar, India ............................................................ 73 5.3.1 National Solar Mission .................................................................................................... 73 5.3.2 Generation Based Incentives .......................................................................................... 76 5.3.3 Central Financial Assistance for Solar Power Projects ..................................................... 77 5.3.4 India Semiconductor Policy ............................................................................................. 77 5.3.5 Demonstration and Promotion of Solar PV Devices/Systems in Urban Areas and Industry 78 5.3.6 Development of Solar Cities Scheme .............................................................................. 79 5.3.7 Energy Efficient Solar/Green Buildings Scheme............................................................... 81

5.4 Financial Incentives and Policy Support for Wind, India ............................................................ 81 5.4.1 Central Government Incentives for Wind Power ............................................................... 82 5.4.2 Generation Based Incentive for Grid Connected Wind Power Projects.............................. 83 5.4.3 Financing Guidelines for Wind Energy Projects................................................................ 84 5.4.4 State Government Policies.............................................................................................. 85

5.5 Financial Incentives and Policy Support for Bioenergy, India..................................................... 85 5.5.1 Biomass Power and Bagasse Co-generation Program ..................................................... 85 5.5.2 Central Financial Assistance (CFA) for Biomass Power Projects ...................................... 86 5.5.3 Capital Subsidy for Biomass Gasifiers and Biomass Co-generation Projects..................... 87 5.5.4 Ethanol Production ......................................................................................................... 87 5.5.5 National Biomass Cookstove Initiative ............................................................................. 87 5.5.6 National Biofuel Policy .................................................................................................... 87 5.5.7 Ethanol Blending Program .............................................................................................. 88 5.5.8 National Biodiesel Mission .............................................................................................. 88

5.6 Financial Incentives and Policy Support for Hydropower, India.................................................. 88 5.6.1 Small Hydropower Program (SHPP)................................................................................ 88 5.6.2 Central Financial Assistance for Hydro Power Projects .................................................... 89 5.6.3 Financial Support to Private Sector, Joint Sector and Co-operative Society ...................... 89 5.6.4 Financial Support to State Government, Central Government and Public Sector Units ...... 90 5.6.5 Financial Support for Renovation and Modernization of Small Hydro Projects ................... 90

5.7 Financial Incentives and Policy Support for Energy Efficiency, India.......................................... 90 5.7.1 National Building Code.................................................................................................... 91 5.7.2 Energy Conservation Building Codes .............................................................................. 91 5.7.3 Environmental Impact Assessment.................................................................................. 91 5.7.4 Green Building Rating Systems....................................................................................... 91 5.7.5 Incentives Offered by State/Central Government ............................................................. 91

6 Renewable Energy Regulatory Framework, Japan.......................................................................... 92 6.1 Renewable Energy Regulatory Framework, Japan, Overview ................................................... 92 6.2 Renewable Energy Regulatory Framework, Japan, Major Policies ............................................ 93

6.2.1 Establishment of NEDO .................................................................................................. 93 6.2.2 New Renewable Energy Target....................................................................................... 93 6.2.3 New 2010 Renewable Energy Targets............................................................................. 94 6.2.4 Special Measures law for Promoting the Use of New Energy............................................ 94 6.2.5 Renewables Portfolio Standard (RPS) System................................................................. 94 6.2.6 National Energy Strategy 2006........................................................................................ 95 6.2.7 Comprehensive Review of Japanese Energy Policy......................................................... 95 6.2.8 Japan Renewable Energy Policy Platform ....................................................................... 96 6.2.9 Feed-in Tariffs for Renewable Energy.............................................................................. 97 6.2.10 Support for Deployment of New and Renewable Energy .................................................. 97 6.2.11 Subsidy for R&D for New and Renewable Energy............................................................ 97

6.3 Financial Incentives and Policy Support for Solar Power, Japan................................................ 99 6.3.1 Solar Power in Government Office Buildings.................................................................. 100 6.3.2 Subsidy for Residential PV Systems.............................................................................. 100 6.3.3 New Purchase System for Solar Power-Generated Electricity ........................................ 100 6.3.4 Fiscal and Tax Incentives for Solar PV Generation......................................................... 101 6.3.5 Local Government Initiatives ......................................................................................... 101

6.4 Financial Incentives and Policy Support for Wind, Japan......................................................... 101 6.4.1 Subsidy Project for Grid Interconnection of Wind Power Generation............................... 102 6.4.2 Research and Development of Next-Generation Wind Power Generation Technology .... 102

6.5 Financial Incentives and Policy Support for Geothermal, Japan............................................... 102 6.5.1 Project on Geothermal Power Generation Development................................................. 102

6.6 Financial Incentives and Policy Support for Hydro, Japan ....................................................... 103 6.6.1 Project for Developing Small and Medium-sized Hydroelectric Power Plants................... 103



6.7 Financial Incentives and Policy Support for Bioenergy, Japan................................................. 103 6.7.1 Biofuel Targets ............................................................................................................. 103 6.7.2 Government Incentives for Biofuels ............................................................................... 103 6.7.3 Bio-diesel Policy ........................................................................................................... 104 6.7.4 Methane to Markets Partnership.................................................................................... 104 6.7.5 Ethanol (E3) Production Demonstration......................................................................... 104

6.8 Financial Incentives and Policy Support for Energy Efficiency, Japan...................................... 104 6.8.1 Subsidies for Energy Efficient Hot Water and Air Conditioning Systems.......................... 104 6.8.2 Financial or Tax Incentives for Energy Efficient Buildings ............................................... 105 6.8.3 Energy Conservation and Recycling Assistance Act....................................................... 105 6.8.4 Energy Efficiency Standards ......................................................................................... 105

7 Renewable Energy Regulatory Framework, South Korea .............................................................. 106 7.1 Renewable Energy Regulatory Framework, South Korea, Overview........................................ 106 7.2 Renewable Energy Regulatory Framework, South Korea, Major Policies................................. 108

7.2.1 Green Growth Policy..................................................................................................... 108 7.2.2 Subsidy program (Renewable energy demonstration and deployment) ........................... 108 7.2.3 Research Funding for the Development of Renewable Energy Sources.......................... 108 7.2.4 Renewable Energy and Energy Efficiency Partnership ................................................... 108 7.2.5 The Promotional Law of New and Renewable Energy Development, Use and Dissemination

.................................................................................................................................... 108 7.2.6 Second Basic Plan for New Renewable Energy Technology Development, Use and

Deployment .................................................................................................................. 109 7.2.7 Certification for New and Renewable Energy Facilities ................................................... 109 7.2.8 Tax Audit Exemption..................................................................................................... 109 7.2.9 National Energy Plan 2008-2030................................................................................... 109 7.2.10 One Million Green Homes Program............................................................................... 109 7.2.11 Feed-in Tariff Program.................................................................................................. 110 7.2.12 Renewable Portfolio Standards ..................................................................................... 112 7.2.13 Renewable Portfolio Agreement .................................................................................... 112 7.2.14 Mandatory Use for Public Buildings ............................................................................... 112 7.2.15 Methane to Markets Partnership.................................................................................... 112

8 Renewable Energy Policy Framework, Thailand ........................................................................... 113 8.1 Renewable Energy Policy Framework, Thailand, Overview..................................................... 113 8.2 Renewable Energy Policy Framework, Thailand, Major Policies .............................................. 113

8.2.1 National Renewable Energies Development Plan 2008-2022 ......................................... 114 8.2.2 Tax Incentives through Board of Investment .................................................................. 124 8.2.3 Technical Assistance for Renewable Energy Projects .................................................... 124 8.2.4 Investment Grants ........................................................................................................ 125 8.2.5 Soft Loans - Revolving Fund ......................................................................................... 125 8.2.6 Energy Service Company Fund..................................................................................... 125 8.2.7 Adder Feed-in Premiums .............................................................................................. 125 8.2.8 Energy Conservation Program ...................................................................................... 126 8.2.9 Small Power Producer and Very Small Power Producers Program ................................. 127 8.2.10 Strategic Plan for Renewable Energy Development ....................................................... 128 8.2.11 Tax Incentive for Energy Conservation .......................................................................... 128

9 Renewable Energy Policy Framework, New Zealand .................................................................... 129 9.1 Renewable Energy Policy Framework, New Zealand, Overview.............................................. 129 9.2 Renewable Energy Policy Framework, New Zealand, Major Policies ....................................... 129

9.2.1 New Zealand Energy Efficiency and Conservation Strategy (NZEECS) .......................... 129 9.2.2 The Energy Efficiency and Conservation Strategy, 2007 ................................................ 130 9.2.3 Electricity Industry Act 2010 .......................................................................................... 133 9.2.4 New Zealand, Emissions Trading Scheme..................................................................... 133 9.2.5 New Zealand, Climate Change and Sustainability Agenda ............................................. 133 9.2.6 Warm Up New Zealand Heat Smart............................................................................... 133 9.2.7 Solar and Heat Pump Water Heating............................................................................. 134 9.2.8 Efficient Lighting Strategy.............................................................................................. 134 9.2.9 Energy Saving Scheme: Solar Heaters Support............................................................. 134 9.2.10 Renewable Energy and Energy Efficiency Partnership ................................................... 134 9.2.11 Proposed National Policy Statement for Renewable Electricity Generation ..................... 134

9.3 Financial Incentives and Policy Support for Solar Power, New Zealand................................... 135 9.3.1 Grants for Public Buildings............................................................................................ 135

9.4 Financial Incentives and Policy Support for Wind, New Zealand.............................................. 135 9.4.1 Resource Management Act 1991 .................................................................................. 137 9.4.2 Project to Reduce Emissions......................................................................................... 137



9.5 Financial Incentives and Policy Support for Bioenergy, New Zealand ...................................... 137 9.5.1 Biodiesel Grant Scheme ............................................................................................... 137 9.5.2 Wood Energy, Grants ................................................................................................... 137 9.5.3 New Zealand Bioenergy Initiative .................................................................................. 138 9.5.4 Low Carbon Energy Technologies Fund ........................................................................ 138 9.5.5 Ethanol Manufacturing Regulations ............................................................................... 138

10 Renewable Energy Policy Framework, Vietnam............................................................................ 139 10.1 Renewable Energy Policy Framework, Vietnam, Overview...................................................... 139 10.2 Renewable Energy Policy Framework, Vietnam, Major Policies............................................... 139

10.2.1 Electricity Law .............................................................................................................. 139 10.2.2 The Environmental Law ................................................................................................ 139 10.2.3 Decision 37 .................................................................................................................. 139

11 Renewable Energy Policy Framework, Taiwan ............................................................................. 141 11.1 Renewable Energy Policy Framework, Taiwan, Major Policies ................................................ 141

11.1.1 Renewable Energy Development Act ............................................................................ 141 11.1.2 Feed-in Tariffs .............................................................................................................. 142 11.1.3 Renewable Energy Incentives ....................................................................................... 143 11.1.4 Green Energy Sunrise Program .................................................................................... 143 11.1.5 National Science and Technology Program - Energy...................................................... 144

12 Appendix..................................................................................................................................... 145 12.1 Abbreviations ........................................................................................................................ 145 12.2 Bibliography .......................................................................................................................... 147 12.3 GlobalDatas Methodology..................................................................................................... 149 12.4 Coverage .............................................................................................................................. 149 12.5 Secondary Research ............................................................................................................. 149 12.6 Primary Research.................................................................................................................. 150 12.7 Contact Us ............................................................................................................................ 150 12.8 Disclaimer ............................................................................................................................. 150



1.1 List of Tables Table 1: Renewable Energy Target, Australia, Annual Renewable Power Target, GWh, 2010-2030.... 17 Table 2: Small-scale Renewable Energy Scheme, Australia, Maximum Level of Support by City, 201119 Table 3: Small-scale Renewable Energy Scheme, Australia, Solar Credits, 2009-2013....................... 19 Table 4: New Large-scale Renewable Energy Target (LRET), Annual Targets, Australia, (GWh), 2011-

2030................................................................................................................................... 21 Table 5: Renewable Energy Future Fund, Australia, Funding for Advanced Solar Energy Technologies,

2010................................................................................................................................... 24 Table 6: Renewable Energy Demonstration Program, Australia, Funding for Solar Projects, 2010 ...... 24 Table 7: Solar Homes and Communities Plan, Australia, Summary Of Rebates And Grants ............... 28 Table 8: Renewable Power Policy Framework, Asia Pacific, Major Policy Instruments Supporting the

Industry, 2010..................................................................................................................... 31 Table 9: Biofuels Excise Rates, Australia, 2010................................................................................. 33 Table 10: Effective Tax Rates For Biofuels, Australia, 2010................................................................. 33 Table 11: Solar Power Market, Australia, Summary of State-level Feed-in Tariff Programs, 2011 ......... 36 Table 12: Residential Feed-in Tariffs, Western Australia, 2011 ............................................................ 39 Table 13: Renewable Energy Buyback Rates, Western Australia, 2011 ............................................... 39 Table 14: Major Renewable Energy Law Implementation Timelines, China, 2010................................. 43 Table 15: Renewable Energy Law, China, Major Regulations, 2005-2006............................................ 45 Table 16: Renewable Energy Targets, China, 2006-2020.................................................................... 46 Table 17: Jiangsu Solar PV Preferential Tariffs, China, 2009-2011 ...................................................... 51 Table 18: Wind Power Market, China, List of Major Policies................................................................. 53 Table 19: Wind Power Market, China, Provincial Incentives................................................................. 56 Table 20: Financial Incentives for Small Hydropower, China................................................................ 57 Table 21: Rural Electrification Policies for Small Hydropower, China.................................................... 58 Table 22: Renewable Power Market, India, RPS Specified by SERCs, 2010-2013 ............................... 64 Table 23: Renewable Energy Market, India, CFA for Off-grid Renewable Energy Programs, 2011........ 66 Table 24: Renewable Power Market, India, CFA for Grid Interactive Renewable Energy Programs, 2010

.......................................................................................................................................... 67 Table 25: Renewable Power Market, India, IREDA Loan Disbursals, 2005-2012.................................. 68 Table 26: Renewable Power Market, India, Loans Sanctioned by IREDA, 2006-2011........................... 68 Table 27: Renewable Power Market, India, Loan Disbursements by IREDA, 2006-2011....................... 69 Table 28: Renewable Power Market, India, Capacity Sanctioned by IREDA, 2006-2011....................... 69 Table 29: Renewable Power Market, India, REC Trading, Volume and Price, IEX, March to December

2011................................................................................................................................... 71 Table 30: Renewable Power Market, India, REC Trading, Volume and Price, PXIL, March to December

2011................................................................................................................................... 72 Table 31: Solar Power Market, India, NSM, Phase Wise Targets, 2010-2022....................................... 74 Table 32: Solar Power Market, India, NSM Mission Targets, Funding Requirements, INR billion........... 75 Table 33: Solar Power Market, India, Selected by NVVN, Phase I, Batch I and Batch II........................ 76 Table 34: Solar Power Market, India, CFA for Off-Grid Projects ........................................................... 77 Table 35: Solar Power Market, India, CFA for Off-Grid Projects ........................................................... 77 Table 36: Solar Power Market, India, Applications Received Under the Semiconductor Policy.............. 78 Table 37: Solar Power Market, India, Solar Cities Program, State List of 48 Cities with In-Principle

Approval, 2011 ................................................................................................................... 80 Table 38: Custom Duty for Wind Equipment and Components, India, 2010 .......................................... 82 Table 39: Wind Power Market, India, Guidelines for Projects Financed through IREDA ........................ 84 Table 40: CFA for Biomass Power Project and Bagasse Cogeneration Projects by

Private/Joint/Coop./Public Sector Sugar Mills, India ............................................................. 86 Table 41: CFA for Bagasse Cogeneration Project in Existing Cooperative Sector Sugar Mills Employing

Boiler Modifications, India ................................................................................................... 86 Table 42: Capital Subsidy for Biomass Gasifiers and Biomass Co-generation Projects, India................ 87 Table 43: Renewable Energy Market, India, Financial Support for Biofuel ............................................ 87 Table 44: Small Hydropower Market, India, States Project Statuses, 2010-2011 ................................. 88 Table 45: CFA for Hydro Power Project, India..................................................................................... 89 Table 46: Financial Support for Hydropower, India, Support for Private Sector, Joint Sector and Co-

operative Society ................................................................................................................ 89 Table 47: Financial Support for Hydropower, India, Support to Private Sector, Joint Sector and Co-

operative Society ................................................................................................................ 90 Table 48: Financial Support for Hydropower, India, Support to Government/State /Public Sector for

Renovation and Modernization............................................................................................ 90 Table 49: Utilization Targets For New Energy, Japan, TWh, 2003-2014............................................... 95 Table 50: JREPP Vision, Japan, Share of Renewables in Electricity Generation, 2050......................... 97



Table 51: New Energy Facility Introduction Project, Japan, Eligible Systems and Requirements For Local Government........................................................................................................................ 98

Table 52: Solar PV Feed-in Tariff, South Korea, KRW/kWh, 2010-2011............................................. 110 Table 53: Feed-in Tariff for Wind, South Korea, KRW/kWh, 2009-2011.............................................. 111 Table 54: Feed-in Tariff for Mini-hydro, South Korea, KRW/kWh, 2010 .............................................. 111 Table 55: Renewable Portfolio Standards, South Korea, Targets (%), 2012-2020............................... 112 Table 56: Renewable Energy Development Plan, Thailand, Interim Targets by Phase, 2008-2022...... 114 Table 57: Renewable Energy Development Plan, Thailand, Contribution of Renewable Energy and

Natural Gas Vehicles to Total Consumption, ktoe, 2011-2022 ............................................ 116 Table 58: Renewable Energy Development Plan, Thailand, Contribution of Renewable Energy and

Natural Gas Vehicles (NGV) to Total Consumption, ktoe, 2011-2022.................................. 116 Table 59: Renewable Energy Development Plan, Thailand, Target for Renewable Energy by Source

Type, ktoe, 2011-2022 ...................................................................................................... 117 Table 60: Renewable Energy Development Plan, Thailand, Target for Renewable Heat by Source Type,

ktoe, 2011-2022................................................................................................................ 118 Table 61: Renewable Energy Development Plan, Thailand, Target for Renewable Power by Source

Type, MW, 2011-2022....................................................................................................... 119 Table 62: Renewable Energy Development Plan, Thailand, Target for Biofuels, ml/day, 2011-2022.... 120 Table 63: Renewable Energy Development Plan, Thailand, Contribution by Alternative Sources to the

Total Target, %, 2022 ....................................................................................................... 121 Table 64: Renewable Energy Development Plan, Thailand, Promotion Measures by Phase, 2008-2022

........................................................................................................................................ 123 Table 65: Adder Feed-in Premiums, Thailand, Premium for Renewable Energy Technologies, THB/kWh,

2011................................................................................................................................. 126 Table 66: Energy Wise Business, New Zealand, Summary of Actions................................................ 131 Table 67: Energy Wise Business, New Zealand, Renewable Energy Program..................................... 131 Table 68: Energy Wise Transport, New Zealand, Developing and Adopting Renewable Fuels ............ 132 Table 69: Energy Efficient and Renewable Electricity System, New Zealand, Promoting the Uptake of

Renewable Electricity........................................................................................................ 132 Table 70: Wind Power Market, Power Generation and Share in Total Power Generation Mix, New

Zealand , GWh, 2007-2011 ............................................................................................... 136 Table 71: Bioenergy Initiative, New Zealand, Government Funding Available , 2007-2011.................. 138 Table 72: Feed-in Tariff, Taiwan, TWD/kW, 2011 .............................................................................. 142 Table 73: Feed-in Tariff for Solar PV, Taiwan, TWD/kW, 2012........................................................... 143 Table 74: National Science and Technology Program - Energy, Taiwan, Budget Allocation, TWDm,

20092013 ....................................................................................................................... 144 Table 75: Abbreviations.................................................................................................................... 145 Table 76: Bibliography List ............................................................................................................... 147



1.2 List of Figures Figure 1: Renewable Power Market, Australia, Impact Analysis of Renewable Energy Policies, 2000-

2012................................................................................................................................... 15 Figure 2: Renewable Power Market, Australia, Impact on Applicable Renewable Power Sources......... 16 Figure 3: Renewable Energy Target, Australia, Annual Renewable Power Target, GWh, 2010-2030.... 17 Figure 4: Small-scale Renewable Energy Scheme, Process Diagram, Australia, 2011......................... 18 Figure 5: Large-scale Renewable Energy Target, Process Diagram, Australia, 2011 ........................... 20 Figure 6: New Large-scale Renewable Energy Target (LRET), Annual Targets, Australia, (GWh), 2011-

2030................................................................................................................................... 21 Figure 7: Solar PV Power Market, Australia, Annual Capacity Additions, MW, 2001-2011.................... 26 Figure 8: Wind Power Market, Australia, Cumulative Capacity, MW, 2001-2011 .................................. 29 Figure 9: Renewable Power Market, China, Impact Analysis of Major Policies, 2004-2012................... 42 Figure 10: Renewable Power Market, China, Policy Impact on Applicable Renewable Power Sources... 42 Figure 11: Solar PV Power Policy, China, Annual Capacity Addition, MW, 2001-2011 ........................... 50 Figure 12: Wind Power Market, China, Annual Capacity Addition, MW, 2001-2011................................ 54 Figure 13: Renewable Power Policy, India, Impact Analysis of Policies, 2003-2012............................... 62 Figure 14: Renewable Power Policy, India, Policy Impact on Applicable Renewable Power Sources...... 62 Figure 15: Renewable Power Market, India, REC Trading, Volume and Price, IEX, March to December

2011................................................................................................................................... 70 Figure 16: Renewable Power Market, India, REC Trading, Volume and Price, PXIL, March to December

2011................................................................................................................................... 71 Figure 17: Solar PV Power Policy, India, Annual Capacity Addition, MW, 2001-2011............................. 73 Figure 18: Solar Power Market, India, Projects Selected by NVVN, Phase I, Batch I and Batch II........... 75 Figure 19: Wind Power Policy, India, Annual Capacity Addition, MW, 2001-2011 .................................. 82 Figure 20: Renewable Power Market, Japan, Impact Analysis of Policies, 2000-2012............................ 92 Figure 21: Renewable Power Market, Japan, Policy Impact on Applicable Renewable Power Sources .. 93 Figure 22: Utilization Targets For New Energy, Japan, TWh, 2003-2014............................................... 94 Figure 23: JREPP Vision, Japan, Share of Renewables in Electricity Generation, 2050......................... 96 Figure 24: Solar PV Power Market, Japan, Annual Capacity Addition, MW, 2001-2011 ....................... 100 Figure 25: Wind Power Market, Japan, Annual Capacity Addition, MW, 2001-2011 ............................. 102 Figure 26: Renewable Power Market, South Korea, Impact Analysis of Various Policies, 1992-2012 ... 107 Figure 27:Renewable Power Market, South Korea, Policy Impact on Applicable Renewable Power

Sources............................................................................................................................ 107 Figure 28: Renewable Energy Development Plan, Thailand, Contribution of Alternative Energy Sources to

Total Consumption, ktoe, 2011-2022 ................................................................................. 115 Figure 29: Renewable Energy Development Plan, Thailand, Contribution of Renewable Energy and

Natural Gas Vehicles (NGV) to Total Consumption, ktoe, 2011-2022.................................. 116 Figure 30: Renewable Energy Development Plan, Thailand, Target for Renewable Energy by Source

Type, ktoe, 2011-2022 ...................................................................................................... 117 Figure 31: Renewable Energy Development Plan, Thailand, Target for Renewable Heat by Source Type,

ktoe, 2011-2022................................................................................................................ 118 Figure 32: Renewable Energy Development Plan, Thailand, Target for Renewable Power by Source

Type, MW, 2011-2022....................................................................................................... 119 Figure 33: Renewable Energy Development Plan, Thailand, Target for Biofuels, ml / day, 2011-2022.. 120 Figure 34: Renewable Energy Development Plan, Thailand, Contribution by Alternative Sources to the

Total Target, %, 2022 ....................................................................................................... 121 Figure 35: Wind Power Market, Power Generation and Share in Total Power Generation Mix, New

Zealand, GWh, 2007-2011 ................................................................................................ 136 Figure 36: National Science and Technology Program - Energy, Taiwan, Budget Allocation, TWDm,

20092013 ....................................................................................................................... 144



2 Introduction

2.1 Renewable Energy Policy Framework, Global, Overview In the late nineties huge investments were made in the renewable energy sector by countries such as the US, Germany, Spain, India, and the UK in order to enhance renewable power generating capacity. Renewable energy provides an answer to two major issues the world is facing today: global warming and diminishing fossil fuel reserves.

Renewable energy is a clean energy generally emitting no, or very small amounts of, Carbon Dioxide (CO2). The inexhaustible nature of these resources ensures a never ending supply. These factors have forced the major countries of the world to shift their focus towards renewable energy sources. Today, renewables make up the fastest-growing energy industry in the world and have the potential to meet half of the worlds energy needs by 2050.

Renewable energy has the potential to renew the global economy and it is policy-makers who are responsible for bringing about this change. One major challenge in the deployment of renewable energy is the fact that it is expensive in comparison to conventional fuels. In order to make renewable energy competitive, it is necessary for governments to provide support in the form of favorable policies and incentives.

In this context, governments are establishing regulatory frameworks, policies and incentives to develop the renewable sector. Most countries are supporting renewable sources in order to aid recovery from the economic downturn. Renewable Portfolio Standards (RPS) or quota obligations and FITs are the two most prominent support mechanisms implemented by countries around the world that are driving the renewable energy market development. Most of the countries promoting renewable energy offer either one or both of these policy measures. The major difference between the two policy processes is that RPS is quantity-oriented while FIT is a price-oriented policy promoting renewable energy.

Other incentives, such as capital subsidies, grants, rebates, tax credits, tax exemptions, loans at reduced interest rates (financing), net metering, Renewable Energy Certificates (RECs) and public competitive bidding are also offered by major countries to promote renewable sources.

2.2 Renewable Energy Policy Framework, Global, Major Policy Measures 2.2.1 Feed-in Tariff Program FITs offer qualifying renewable energy generators a fixed-price contract over a specified term with particular operating conditions. Tariffs are often distinguished on the basis of the type of technology, resource quality, or size, and may decrease on a set schedule over time. FITs reduce the risk involved in the renewable energy market by offering a fixed tariff to renewable energy generating facilities over a fixed time period.

FITs have been the primary tool for financing renewable energy projects in both North and South America. The tariffs have been quite successful in increasing the use of renewables in countries such as the US and Canada. In addition, a number of countries such as Germany, France, and Italy have been offering FITs to promote renewable energy over the past few years. The support level offered by these tariffs differs from country to country.

2.2.2 Renewable Portfolio Standards RPS is a policy which mandates the providers of electricity to source a percentage of their electricity from renewable energy sources (such as solar, wind and geothermal) and supply it to the end users. The RPS mechanism uses a target or standard for renewables that is governed and determined by policy regulations. The renewable power producers obtain certificates for every unit of power they generate which they can sell, along with the electricity produced, to transmission companies. These companies then transfer the certificates to the regulatory body to indicate fulfillment of their regulatory obligations. In the US, respective state governments have taken an active role in developing the infrastructure for promoting renewable energy with the implementation of this program. In certain cases, RPS has the provision for various penalties for non-compliance.



2.2.3 Tradable Renewable Energy Certificates Systems Many countries have tradable REC systems. These certificates are provided for generating renewable electricity and can be traded in the market.

2.2.4 Capital Subsidies, Grants/Rebates Capital subsidies, grants or rebates are the most common incentives provided for renewable energy worldwide. These subsidies, grants or rebates are provided in various amounts in different countries for the installation of renewable energy systems in offices, commercial places and residences with the aim of promoting renewable energy.

2.2.5 Energy Production Payments/Investments or Other Tax Credits Energy production payments/investments or other tax credits are also important instruments in the deployment of renewables. Many countries offer different tax credits in order to increase the profitability of the renewable energy business.

2.2.6 Tax Reductions Tax reductions also make renewable energy attractive. Each country offers different types of tax reductions to make renewable energy more profitable. The reductions are offered in the form of a sales tax, energy tax, excise tax or VAT reductions, varying from country to country.

2.2.7 Net Metering Net metering laws were introduced as an essential pre-condition law for grid-connected renewable energy. The law allows electric meters to run backwards when an on-site renewable facility is generating more power than it is consuming. Most of these laws were written to allow the facility owner to receive credit for power generated and consumed for up to one year. This law benefits producers whose system can generate power at different times of day to when power is actually needed. It also benefits customers with systems that produce excessive power during certain months of the year and insufficient power during other months. This allows customers to use their equipment on the basis of their average and annual consumption rather than their average daily consumption. Net metering is very effective in developing small renewable energy facilities.

2.2.8 Public Investment Loans Public investment loans are offered at low interest rates and in some cases even zero interest loans are provided. These loans are aimed at attracting players to the renewable energy industry. These policy measures have been adopted by different countries on different scales; this means that the policy framework for each country is unique.



2.3 GlobalData Report Guidance The report starts with an executive summary capturing the current and future outlook of renewable

policy frameworks and renewable energy production in the Asia Pacific region.

Chapter two provides an overview on the renewable energy policy framework. It also provides an overview on FITs and various other types of financial incentives for renewable sources.

Chapter three discusses the major renewable policy frameworks in Australia for solar, wind, geothermal and bioenergy sources. It also details the major financial incentives by state that drive renewable energy production.

Chapter four discusses the major renewable policy frameworks in China for solar, wind, geothermal, hydro and bioenergy sources.

Chapter five discusses the major renewable policy frameworks in India for solar, wind, geothermal, hydro and bioenergy sources.

Chapter six details the major renewable policy frameworks in Japan for solar, wind, hydro and bioenergy sources.

Chapter seven details the major renewable policy frameworks in South Korea for solar, wind, hydro and bioenergy sources.

Chapter eight discusses the major renewable policy frameworks in Thailand for solar, wind, geothermal, hydro and bioenergy sources.

Chapter nine discusses the major renewable policy frameworks in Vietnam for solar, wind, geothermal and bioenergy sources.

Chapter ten discusses the major renewable policy frameworks Taiwan for solar, wind, geothermal, hydro and bioenergy sources.



3 Renewable Energy Regulatory Framework, Australia

3.1 Renewable Energy Regulatory Framework, Australia, Overview Australia has vast unused renewable energy potential. To tap into this potential, renewable energy has become an integral part of the Australian government's energy policy with the government making conscious efforts to promote renewable energy sources.

In Australia, the Office of the Renewable Energy Regulator (ORER) is the major regulator for the industry administering the Renewable Energy (Electricity) Act 2000, Renewable Energy (Electricity) Charge Act 2000, Renewable Energy (Electricity) (Small-scale Technology Shortfall Charge) Act 2010 and the Renewable Energy (Electricity) Regulations 2001.

The aim is to increase renewable electricity generation by generating an additional 45,000 Gigawatt hours (GWh) per year by 2020. In order to achieve such an ambitious renewable energy target, the Australian government has implemented a number of programs, including the promotion of renewable energy through the Mandatory Renewable Energy Target (MRET) which aimed to enhance the contribution of renewable energy sources in the total electricity produced. In 2010, MRET was superseded by the Renewable Energy Target (RET). The RET scheme aims to achieve the 20% renewable energy target in Australia's electricity supply and increase the renewable electricity generation to 41,000 GWh from sources such as solar, wind and geothermal.

The Renewable Energy Target (RET) applies nationally, with large number of electricity retailers and wholesale power buyers in all states and territories; these retailers and buyers are required to dispense a proportionate amount of energy derived from renewable sources in order to meet Australia's renewable energy targets.

The RET is implemented through the following legislations:

Renewable Energy (Electricity) Act 2000

Renewable Energy (Electricity) (Charge) Act 2000

Renewable Energy (Electricity) Regulations 2001

Renewable Energy (Electricity) (Small-scale Technology Shortfall Charge) Act 2010

The increasing investments in the Research and Development (R&D) of the renewable energy market has led to technical improvements with reductions in generation costs which has facilitated a boom in the sector. The cumulative installed capacity of renewable power in the country has surged from 801 Megawatt (MW) in 2001 to 4,659 MW in 2011.



The figure below summarizes the impact of various policies implemented in the country during the period 2000-2012. The implementation of the MRET initiated the development of renewable power in Australia.

Figure 1: Renewable Power Market, Australia, Impact Analysis of Renewable Energy Policies, 2000-2012

Years 2003

2004

2005

2006

2007 2008

2009

2011

20122010

Feed-in Tariffs for Solar PVIncentive range from $0.21 (AUD 0.20) to $0.62 (AUD0.60) (depending on location and size of installation) for solar power installations.

Renewable Energy Target SchemeFormulated to deliver 20% of electricity from renewable sources by 2020.RPP for 2011 is 5.62%.

The size of the circle denotes the impact of the policy.

2001

2000 2002

Renewable Energy (Electricity) ActUnfolded a regulatory structure supporting renewable sourcesby Introducing RET.

Fuel Tax ReformExcise rate for ethanol is $0.12 (AUD0.12) per literExcise rate for biodiesel is $0.19 (AUD0.19) per liter.

Small-scale Renewable Energy SchemeFinancial incentive of up to $0.41/STC (AUD40/STC) for small-scale renewable energy installations.Large-scale Renewable Energy TargetInculcates legislated annual targets from 2011 to 2030.

Mandatory Renewable Energy TargetInitiated the growth of the renewable energy sector in Australia and was superseded by Renewable Energy Target Scheme in 2010.

Note: Renewable Purchase Percentage (RPP) Small-scale Technology Certificates (STC)

Source: GlobalData

FIT and RPS programs along with other subsidies and support schemes have majorly impacted the solar PV and wind industry in Australia. However, the impact of support programs on biopower and small hydro is minimal. The figure below represents the relative impact of the various policies in Australia for renewable energy technologies including wind, solar PV, small hydro and biopower.



Figure 2: Renewable Power Market, Australia, Impact on Applicable Renewable Power Sources

R&D Funding

Capital Subsidies, Grants/Rebates

Tradable Renewable Energy Certificates System

Renewable Portfolio Standards (RPS)

Feed-in Tariff (FIT) Program

BiopowerSmall HydroSolar PVWindPolicy/Incentive/Scheme

Policy Impact on Applicable Renewable Power Sources

High Medium Low

Source: GlobalData

3.2 Renewable Energy Policy Framework, Australia, Federal Policies and Incentives

The Ministerial Council on Energy released a document entitled Reform of Energy Markets' on December 11, 2003. The purpose of the document was to initiate the creation of national electricity and natural gas market rather than a state-based provision for both. As a result, two federal level institutions, the Australian Energy Market Commission (AEMC) and the Australian Energy Regulator (AER), were created. The National Electricity Market (NEM) constitutes Australian Capital Territory, New South Wales, Queensland, South Australia, Victoria and Tasmania. Western Australia and the Northern Territory are not included in the NEM due to their geographic distance from the rest of the market.

AEMC was established under the Australian Energy Market Commission Establishment Act 2004 and is responsible for rule and policy making for the NEM in Australia. The AER is accountable for the regulation of electricity transmission networks in the NEM. It is also accountable for implementation of the National Electricity Law and National Electricity Rules.

The following are some of the major policies promoting renewable power generation in Australia.

3.2.1 Renewable Energy Target Scheme In August 2009, the Government of Australia introduced the RET Scheme which is formulated to deliver on the governments assurance that 20% of electricity will be derived from renewable sources by 2020. The RET scheme had a legislated target of an additional 45,000 GWh in 2020.

The RET scheme supersedes the previous MRET which was introduced in 2001. The MRET scheme obligated large wholesale buyers of electricity to support renewable energy electricity generation. The liable parties were directly accountable for enhancing the amount of electricity produced from renewable energy sources and were required to submit RECs in proportion to their acquisitions of electricity.

RECs are an electronic form of currency created on the REC registry by eligible parties. A REC is generally equivalent to 1 MWh of renewable electricity generated above the power station baseline

1 MWh of renewable electricity deemed to be generated by small generation units

1 MWh of electricity deemed to be displaced by the installation of solar water heaters



The RECs are authenticated by ORER and registered RECs can be offered between eligible parties (renewable energy power stations, small generation units) and liable parties (typically wholesale buyers of electricity) at a price mutually agreed by both parties or at the market clearing price.

Outline of Annual Targets

The target set up under the RET scheme will increase to 45,000 GWh in 2020 and will then remain the same until 2030.

Figure 3: Renewable Energy Target, Australia, Annual Renewable Power Target, GWh, 2010-2030

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

45,000

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020-2030

GW

h

Source: GlobalData, Department of Climate Change and Energy Efficiency

Table 1: Renewable Energy Target, Australia, Annual Renewable Power Target, GWh, 2010-2030

Year Annual Target (GWh)

2010 12,500

2011 14,400

2012 16,300

2013 18,200

2014 20,100

2015 22,000

2016 26,600

2017 31,200

2018 35,800

2019 40,400

2020-2030 45,000

Source: GlobalData, Department of Climate Change and Energy Efficiency



In June 2010, the government passed a law to divide RET into two parts: the Large-scale Renewable Energy Target (LRET) and the Small-scale Renewable Energy Scheme (SRES). These schemes came into effect on January 1, 2011, and created a financial incentive for investments in renewable energy sources through the creation and trade of certificates. It is expected that both the LRET and SRES will help Australia surpass its target of generating 45,000 GWh renewable power by 2020.

3.2.2 Small-Scale Renewable Energy Scheme The small-scale renewable energy scheme creates financial incentives for owners to install eligible small scale installations such as solar water heaters, solar panel systems, heat pumps, small-scale hydro systems or small-scale wind systems. In order to promote small scale installations, the government has created demand for Small-scale Technology Certificates (STC). These certificates are created for small-scale installations based on the amount of electricity they generate.

The number of certificates a system generates depends on the amount of electricity generated by the small-scale solar panel, hydro or wind system, for a period of up to 15 years or by solar water heater or heat pumps over a period of up to 10 years.

The SRES obligates the liable entities to purchase a certain amount of STCs every year. The number of certificates to be purchased is determined based on the Small-scale Technology Percentage (STP), which is set annually by the regulators. STP is calculated on the estimated:

Value, in MWh, for STCs that will be created

Amount of electricity that will be acquired by liable entities for the year

Amount of all partial exemptions expected to be claimed for the year

The fluctuation in price of STCs depends on the demand and supply in the market. The transactions can occur at or below a price of $41.2/STC (AUD40/STC). The government guarantees a price of $41.2/STC (AUD40/STC) if the seller uses the STC clearing house. However, the certificates may take some time to clear, which will delay the payment to the seller.

The below figure represents the process flow diagram for creation and redemption of STCs:

Figure 4: Small-scale Renewable Energy Scheme, Process Diagram, Australia, 2011

Regulator (ORER)

Any GST Registered Entity

REC Registry(STC Clearing House)

REC Registry(STC Market)

Any Registered Owner of STCs

Eligible PartiesEligible water heatersEligible small-scale solar panels, wind and hydro systems

Liable EntitiesWholesale electricity retailersSome generators

Emissions-Intensive Trade-Exposed Entities

STC registration and validation

Setting of STP

(Annual rate of liability)

Purchase

Purchase

PurchaseSurrender

Sale

Sale

Supply PEC

Quarterly Surrender

Creation

Supply Demand

Note: Good and Services Tax (GST)

Source: GlobalData, ORER



The table below summarizes the approximate maximum level of support that can be provided under the SRES for a 1.5 kilowatt (kW) solar panel system installed before June 30, 2012. The support provided is based on a $41.2/STC (AUD40/STC) for sellers using the STC clearing house, with different solar credits support depending on the date of installation.

Table 2: Small-scale Renewable Energy Scheme, Australia, Maximum Level of Support by City, 2011

City 5x Solar Credits

Multiplier (systems installed up to 30

June 2011)

4x Solar Credits Multiplier under transitional arrangements for pre 5 May

2011 contracts (systems installed from 1 July 2011 to 30 June 2012)

3x Solar Credits Multiplier (systems

installed from 1 July 2011 to 30 June 2012)

Adelaide $6,200 (155 STCs) $4,960 (124 STCs) $3,720 (93 STCs)

Brisbane $6,200 (155 STCs) $4,960 (124 STCs) $3,720 (93 STCs)

Canberra $6,200 (155 STCs) $4,960 (124 STCs) $3,720 (93 STCs)

Darwin $6,880 (172 STCs) $5,520 (138 STCs) $4,120 (103 STCs)

Hobart $5,320 (133 STCs) $4,240 (106 STCs) $3,160 (79 STCs)

Melbourne $5,320 (133 STCs) $4,240 (106 STCs) $3,160 (79 STCs)

Perth $6,200 (155 STCs) $4,960 (124 STCs) $3,720 (93 STCs)

Sydney $6,200 (155 STCs) $4,960 (124 STCs) $3,720 (93 STCs)

Source: GlobalData, Australia Department of Climate Change and Energy Efficiency

3.2.2.1 Solar Credits

Additional support in the form of solar credits is provided to small renewable power units. The type of units eligible include solar PV rooftop installations, and small wind and small hydro systems. Solar credits apply to the first 1.5 kW of capacity installed for systems connected with the grid and up to the first 20 kW of capacity for off-grid systems.

Solar credits multiply the number of STCs. The multiplier to determine the amount of solar credits to be received is based on the date of the solar PV system was installed, as shown in the table below:

Table 3: Small-scale Renewable Energy Scheme, Australia, Solar Credits, 2009-2013 Date Installed Multiplier

9 June 2009 30 June 2011 5

1 July 2011 30 June 2012 3

1 July 2012- - 30 June 2013 2

From 1 July 2013 onwards 1

Source: GlobalData, Australia Department of Climate Change and Energy Efficiency



3.2.3 Large-scale Renewable Energy Target The LRET schemes are aimed at large-scale renewable energy projects such as wind farms and commercial solar and geothermal projects; these are expected to achieve the 2020 target of 41,000 GWh.

The LRET has legislated annual targets and will operate the same as the current RET, but as a separate scheme to the SRES. From 2011 to 2030, the yearly targets for the LRET are 4,000 gigawatt-hours (GWh) less than the previous RET targets, reaching 41,000 GWh by 2020.

The figure below represents the process for creation and redemption of large-scale renewable energy certificates.

Figure 5: Large-scale Renewable Energy Target, Process Diagram, Australia, 2011

Regulator (ORER)

LGC Market(REC Registry)

Any Registered Owner of LGCs

Eligible PartiesAccredited renewable power stations

Liable EntitiesWholesale electricity retailersSome generators

Emissions-Intensive Trade-Exposed Entities

Accreditation and LGC validation

Setting of RPP

(Annual rate of liability)

Purchase

PurchaseSurrender Supply PEC

Surrender

Creation/sale

Supply Demand

Note: Renewable Purchase Percentage (RPP), Large-scale Generation Certificates (LGCs), Partial Exemption Certificates (PEC)

Source: GlobalData, ORER



The new LRET annual targets are summarized in the figure and table below.

Figure 6: New Large-scale Renewable Energy Target (LRET), Annual Targets, Australia, (GWh), 2011-2030

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

45,000

2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 -2030

GW

h

Source: Global Data, ORER, Australia Department of Climate Change and Energy Efficiency

Table 4: New Large-scale Renewable Energy Target (LRET), Annual Targets, Australia, (GWh), 2011-2030

Year Revised targets (GWh)

2011 10,400

2012 16,388

2013 18,283

2014 16,100

2015 18,000

2016 20,581

2017 25,181

2018 29,781

2019 34,381

2020 2030 41,000

Source: : Global Data, ORER, Australia Department of Climate Change and Energy Efficiency

Existing banked RECs will be available for use in the LRET but not for the new SRES. Due to the introduction of a large number of RECs in the last six months of 2010, the targets surge temporarily in

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