Beijing International Renewable Energy Conference 2005

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Beijing International Renewable Energy Conference 20052005 Official Post Conference Report

Published byFaircount Ltd

Chinese Renewable Energy Industries AssociationChinese Wind Energy Association

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Authors / Chinese Renewable Energy Industries Association

Judy Siegel, UNDESA, Expert Group on Renewable Energy Policy

Martin Devine, Renewable Energy & EnergyEfficiency Partnership (REEEP)

Michael Allen, Renewable Energy & EnergyEfficiency Partnership (REEEP)

Michael Eckhart, President, American Councilon Renewable Energy (ACORE)

Lisa Zeng SommerHan Wenke

Zhu Junsheng Li Junfeng

Wang Zhongying Qin Haiyan

Mu Xiongbing

Translation / The ASK Group Ltd

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Marketing Executives / Margaret Cole

Guy HayesStephen Idrissi

Gary Tarian

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Picture Research / Kay Rowley

Photography / Cover image courtesy of Hydro Tasmania.

All other images as credited

Printed in India /

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Contents /

Wind power and agriculture make naturalpartners at the Buffalo Ridge wind farmin SW Minnesota. Warren Gretz / NREL /

Buffalo Ridge

06 Introduction

10 From Johannesburg via Bonn to Beijing- -

14 The Beijing declaration

18 A commentary on The Beijing declaration

20 Increasing the global renewable energy market share: Recent trends & perspectives

28 The role of policy

40 The Commercial Investment and Finance Forum

50 The standardization and certification of renewable energy products in china

58 Global energy development

63 New technology in renewable energy development – Japan’s experience-

65 Are China’s targets ambitious enough?

68 The answer is blowing in the wind

70 Establishing a southern coalition on renewable energy - WWF’s approach

74 The SWERA programme: an outlineSWERA

78 Policies, finance & frameworks: perspectives

86 The importance of co-operation

90 The EU’s global partnership commitment

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Introduction

Zhang Guobao, Deputy Director of the National Developmentand Reform Commission

In June 2004, I attended the International Renewable EnergyConference in Bonn, Germany. I was deeply impressed withthe meeting: firstly, the occasion was unprecedented, with154 countries participating and more than 3,000 participants;secondly, a political declaration was made that furtheremphasised the importance of renewable energy in increasingthe available energy supply, in environmental protection & thereduction of greenhouse gas emissions, and its potential tocreate jobs; thirdly, participating countries and internationalorganizations submitted 197 action programmes to theconference, demonstrating the importance that the internationalcommunity attaches to renewable energy issues.

The Chinese Government submitted two action programmesat Bonn, one for the formulation of renewable energy laws,the other for the preparation of a renewable energy developmentplan. These two programmes have by now made greatprogress. In February 2005, the National People’s Congressof China reviewed and passed the Renewable Energy Law,which defines the responsibilities and obligations of government,enterprises, and users in the development and use ofrenewable energy. It also provides a series of policies andmeasures, including systems for objective measurements, in-grid power generation, price management, cost amortization,and special funds and preferential taxes, amongst others.The Renewable Energy Law, now implemented, is playinga major role in promoting the development of renewableenergy in China.

Zhang Guobao

2004 6

154 3000

197

,2005 2

2020

19 200

In addition, The National Development and Reform Committeeof China has organized the drafting of a Mid-and Long-termDevelopment Plan for Renewable Energy which setsdevelopment objectives, strategic plans, construction priorities,and guaranteed targets for renewable energy resourcesin China by 2020. With the approval of the State Council,the plan will serve as the blueprint for renewable energydevelopment in China.

Energy is of central importance in the survival and developmentof the human race. Fossil based energy sources, such as coal,petroleum, and natural gas have supported nearly 200 yearsof economic and social development since the nineteenthcentury. However, the continuous and increasing consumptionof non-renewable sources of energy such as coal, petroleum,and natural gas has forced the issues of alternatives to thesefinite resources, and the environmental implications of theiruse, to the top of the international agenda. Faced with thedual problem of resource and environment, the internationalcommunity began to take measures to counter the threat. Inparticular, the UN Environment and Development Conferencein 1992, and the Heads of State Meeting on SustainableDevelopment in 2002, helped to bring sustainable developmentto the forefront of international thinking.

Today, increasing energy efficiency, developing and applyingrenewable energy sources, protecting the environment, andimplementing measures for sustainable development arecommon international objectives.

With growing globalization, increasingly close contact betweencountries all over the world, and mutual interdependence ineconomic and social development, no country can progressentirely independently, especially in issues such as climatechange. Therefore, addressing the issues of global energyresources and the environment becomes the commonresponsibility of all countries.

However, countries at different stages of development havedifferent capabilities and should assume different responsibilities:developed countries have strong industrial bases, withadvanced technologies, skills, and economic resources and,at the same time, consume more of the world’s traditionalenergy resources, so they should assume more responsibilityfor the development and use of cleaner energy andenvironmental protection.

Developing countries are characterised as having technological,skill base, funding, and administrative weaknesses, andby low efficiencies in energy provision, with little ability todevelop renewable energy, and technologies that are outdatedin terms of environmental protection. If left entirely to their owndevices, developing countries will inevitably follow the traditionalroute, causing environmental damage and wasting energy.To promote sustainable development globally and protectour shared earth, developed countries should provide supportto developing countries in the form of technology, skills, andfunding, helping them to build renewable energy industriesand improve their technological standards in the development

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Globally, renewable energy has entered animportant stage of rapid development, fullof hopes and challenges /

GDP20

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and increased use of renewable energy sources. In return,the developing countries will provide huge markets for thetechnologically and financially advanced developed countries.The path for global development of renewable energy dependsupon greater cooperation, learning from each other’s strengthsand weaknesses, coordinating policies, and working to mutualbenefit China is a rapidly advancing economy, with the world’slargest population and huge resources, but environmentalconsiderations pose enormous restrictions on development.

We urgently need to transform our energy sources fordevelopment and the Chinese Government has set out guidingprinciples to achieve this, at the root of which is a “human-oriented, scientific, coordinated approach to sustainabledevelopment” which will change the basis for economic growthto one that promotes circular economic development andaccelerates the building of a resource-conserving andenvironmentally friendly society.

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The Chinese Government will continue to follow its policy toprioritise development through the increasing use of energyefficiency and the conservation of energy resources. Chineseenergy consumption is targeted to decrease as a unit of GDPby 20% or so by the end of the 10th five year period.

China has always attached great importance to the applicationof renewable energy in its development and has made greatadvances. At present, renewable energy sources such ashydropower, solar energy for heating, and methane are inlarge scale use and at the same time other renewablesources such as photovoltaics and biomass are beingdeveloped. By the end of 2004, the installed hydropowercapacity in China had reached 108 million KW, accountingfor one quarter of the total national capacity; use of solarenergy for heating had reached 65 million M2; annual usageof methane had reached 5 billion M3, improving the livingconditions of 14 million farming families, and solarphotovoltaic power generation had reached 65,000 KW,solving the basic power supply problems of about 3 millionpeople in more than 700 towns in the remote areas.

The Chinese Government will further support the developmentand use of renewable energy and regards its development asan important element in increasing energy supply, regulating thesupply structure, protecting the environment, eliminating poverty,and promoting sustainable development. We will accelerate theuse of technologically mature renewable energy sources such ashydroelectricity, solar energy for heating, and methane. At the

Energy is of central importance in the survivaland development of the human race /

same time, we will actively develop and promote the potential ofbiomass liquidisation, wind, biomass, and solar power generationwith large scale construction projects, enabling renewablesto become competitive commercial energy sources to driveindustrial development.

The Mid and Long-term Development Plan for RenewableEnergy sets out that, by 2020, installed hydroelectricitycapacity will be 290 million KW; biomass 20 million KW;wind power 30 million KW; and solar energy 2 million KW.

Together, these renewable energy sources are targetedto produce over 30% of the total installed capacity. Weare encouraging the use of solar energy for heating in bothurban and rural areas. By 2020, the total collection area forsolar energy for heating will reach 300 million M3, replacingan annual consumption of about 40 million tons of standardcoal. The development and use of biomass will be animportant element in the development of modern agricultureand the building of a new rural society. Domestic use ofmethane, and poultry and livestock methane projects, willbe promoted and supported and the application of biomassparticle fuel will be accelerated. By 2020, the amount ofmethane used annually will be 24 billion m3 and of biomassparticle fuel, about 50 million tons. At the same time, we willactively develop biomass liquid fuels, using cultivated cropsas the main raw material, so that the quantities available canreplace 10 million tons of petroleum by 2020.

Compared with some other countries that are advanced inthe development and use of renewable energy technologies,China is relatively backward. We will integrate the advancedtechnologies available from these countries into our existingtechnology, continuously improve China’s own renewableenergy technology, and work towards building a completerenewable energy industry infrastructure as soon as possible.We are willing to continuously strengthen cooperation in thefield of renewable energy with countries all over the worldon an equal and mutually beneficial basis. Enterprisesthroughout the world are welcome to participate in therenewable energy industry in China through development,construction of facilities, and supply.

Globally, renewable energy has entered an important stageof rapid development, full of hopes and challenges. TheBeijing International Renewable Energy Conference wasimportant for increasing the common knowledge base,strengthening cooperation, and planning for future actionsand joint development. We believe that, with the joint effortsof many countries, renewable energy is sure to developfaster and better and will play a major role in promotingsustainable development globally.

This text is based on a speech delivered at the Ministers Forumof the Beijing International Renewable Energy Conference GreatHall of the People, Beijing, China,7 November 2005.


11

From Johannesburg via Bonn to BeijingA summary of developments

2002

(OPEC)

Renewable Energyand Energy Efficiency Partnership REEEP

2003

Johannesburg Renewable EnergyCoalition JREC 88

(WSSD)

2004 Federal Environment Ministry BMU

Federal Ministry for EconomicCooperation and Development BMZ

2004 6 1 4 154 3,000

Germany’s pioneering role in supporting renewable energies,and its high profile as conference host, gave new momentumto the global expansion of renewable energies.

The unanimously adopted Political Declaration demonstratedthe determination to achieve a “global transformation ofenergy systems” with a clear vision for renewables to becomesignificant and widely available sources of energy. At thesame time two key political messages were conveyed:• Renewable energies can play an important part in overcoming

global poverty. In order to achieve the Millennium Goals by2015, one billion people should be supplied with energy fromrenewable sources.

• Renewable energies, together with the improvement ofenergy efficiency, are indispensable for climate protection,and the facilitation of secure energy supplies which aremore independent from oil.

By focusing on renewable energies and with a skilful combinationof negotiated consensus and voluntary contributions by individualplayers, the Bonn conference was able to achieve a muchclearer majority on the central issues than Johannesburg. Atthe heart of the conference’s success is the International ActionProgram (IAP) containing binding agreed actions.

The IAP contains commitments to defined programmes fromgovernments, the United Nations, and other internationalorganizations, as well as from representatives of civilian groups,trade and industry and other stakeholders. The final version ofthe Action Program comprises a total of 197 specifics all overthe world. Around 40% of the proposals came from Europe,20% from Asia and Latin America and another 20% are trans-regional, including those of the World Bank.

•2015

•

(IAP)

197 40% 20%

20%

39% 9%

42% 29

/

The closing session of the World Summit on Sustainable Development in Johannesburg, September 2002. Nearly 40 states declared they wanted to go beyond the goalsset down in the Earth Summit's action plan. Photo courtesy of IISD/ENB-Leila Mead / 2002 9 40

A photovoltaic array in Tunisia.Photo courtesy of NREL /

At the 2002 World Summit on Sustainable Development inJohannesburg, the international community acknowledgedthe significance of renewable energies for sustainabledevelopment - especially for combatting poverty and forenvironmental and climate protection. The JohannesburgImplementation Plan calls for a rapid and substantial increasein the role of renewable energy sources in global energysupply. At the same time, the plan calls on participants toregularly review the global expansion of renewable energies.

However, the text did not go into much greater detail. InJohannesburg there was particular disagreement over thecall by the EU and other countries for specified global targetsfor the percentages of renewable energies in the total energymix. The proposal failed, largely because of opposition fromthe USA and OPEC countries.

There were some concrete initiatives launched at theJohannesburg summit, but these tended to be at thevoluntary level. Of particular note is the “Renewable Energyand Energy Efficiency Partnership (REEEP)”. This wasestablished by the United Kingdom, has been supportedby Germany since 2003, and has initiated and financednumerous projects in developing countries.

Against this background, a group of interested countriesformed the “Johannesburg Renewable Energy Coalition(JREC)”, which now has 88 countries belonging to it, andat the end of WSSD, Federal Chancellor Schröder invited theinternational community to attend an international conferenceon renewable energy in Germany. The meeting that subsequentlydeveloped was the International Conference for RenewableEnergies -Renewables 2004 – that took place in Bonn from1st to 4th June, 2004. It was jointly organized by the FederalEnvironment Ministry (BMU) and the Federal Ministry forEconomic Cooperation and Development (BMZ). Over 3,000participants from 154 countries took part, including manyministers, and high-ranking representatives from internationalorganizations, private industry, and NGOs.


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The contributions cover the entire spectrum of the conferencetopics: 39% of the actions deal with the political frameworkconditions for the expansion of renewable energies, 9% ofthe actions aim at strengthening private and public financingmechanisms, and 42% of the actions are aimed at capacitybuilding. In all, 29 countries set themselves expansion goalsfor renewable energies and incorporated these into IAP:Argentina, Australia, Belgium, Brazil, China, Cyprus, CzechRepublic, Denmark, Egypt, France, Germany, Iran, Italy, Japan,Jordan, Mexico, Morocco, New Zealand, Norway, Pakistan,Philippines, Senegal, Spain, Switzerland, South Africa, Tunisia,Uganda, United Kingdom, and the European Commission.

An evaluation of the Action Programme found the following:Implementation of the actions and commitments will createan additional capacity of at least 163 GW of electricity throughrenewable energies by 2015. This will trigger investmentstotalling at least US$326 billion.

By 2015 an estimated saving of 1.2 billion tonnes of CO2per year is anticipated. This would be equivalent to around5% of global CO2 emissions. The most significant effects inthis regard come from the contributions of China (approximately68% of the expected CO2 emissions), Mexico, Germany,USA, and Brazil.

(European Commission)

2015 163 GW

3,260

2015 CO2 12 CO2 5%

CO2 68%

3

(German Environment Ministry) 2005

Beijing International Renewable Energy ConferenceBIREC 2005 Trittin 2004 11

11 7 8

(NDRC) 2005

(Department of Economic andSocial Affairs)

78 1,300 Stavros Dimas

Jurgen TrittinStephane Dion (EUCouncil Presidency) Margaret Beckett

The Bonn conference was able to achievea much clearer majority on the centralissues than Johannesburg /

With the participation of 1,300 delegates from 78 countries,including high level officials such as the EU EnvironmentCommissioner Stavros Dimas, German Federal Minister for theEnvironment Jurgen Trittin, Canada’s Minister for the EnvironmentStephane Dion, and with the British Minister for Environment,Food and Rural Affairs, Margaret Beckett representing the EUCouncil Presidency, the conference focused on the expansion ofrenewables since the Bonn conference, and reviewed scientificand technical progress and policies. Participants discussed howto implement numerous voluntary commitments. Amongst themain subjects under discussion were the political frameworkneeded for greater cooperation in the expansion of financing,capacity building, and technology transfer.

In his written message, sent to the conference, Chinesepresident Hu Jintao stressed China’s commitment to developrenewable energy in order to sustain China’s economic growth.

In addition to the main conference programme, four parallelforums were held concurrently on: Investment and finance,with substantial participation by private finance companies;renewable energy industries and entrepreneurs; renewableenergy technology; and South-South cooperation. Therewere also four panels with leading representatives from tradeand industry, dealing with wind power, project development,solar thermal energy, and photovoltaics. Side events and anexhibition augmented the conference, which offered numerousopportunities for exchanges between governments andrepresentatives of the many different interest groups.

BIREC sent an important signal of support for sustainabledevelopment worldwide and for global climate protection. Itdiscussed, in practical terms, the special needs of developingand newly industrialized countries, and addressed the optionsavailable for reviewing the global expansion of renewable energies.

The conference also provided an opportunity to work towardsan understanding, especially among developing countries, onhow to achieve a switch to a more climate-friendly economyusing existing technologies – a topic highly relevant to theInternational Conference on Climate Change held in earlyDecember in Montreal, which aimed to initiate a process forthe further development of international measures to alleviatethe effects of climate change.

At the conclusion of the conference, the Beijing DeclarationOn Renewable Energy For Sustainable Development reaffirmedthe commitment to implement the resolutions of the JohannesburgEarth Summit (WSSD), and the United Nations 2005 MillenniumReview Summit and, as a matter of urgency, to substantiallyincrease the proportion of renewable energy output in thetotal global energy supply, as called for in the JohannesburgPlan of Implementation.

BIREC also sent a strong political signal to accelerate thedeployment of renewable energy, helping to ensure that the14th and 15th sessions of the UN Commission for SustainableDevelopment deliver tangible results.

12 (International

Conference on Climate Change)

(WSSD) 2005

(Commission for Sustainable Development) 1415

The actions and commitments contained in the IAP willfacilitate access to a modern and clean energy supply fromrenewable energies for an estimated 300 million people.To build on the momentum gained in Bonn and to launcha consistent implementation and review of the global expansionof renewable energies, and to take forward the progressmade in Bonn the German Environment Ministry proposed,after consultation with the United Nations, the organizationof the Beijing International Renewable Energy Conference2005 (BIREC 2005) to the Chinese Government, which gaveits consent on the occasion of Minister Trittin’s visit to Beijingin November 2004.

On November 7 and 8, at the Great Hall of the People, theseat of the Chinese parliament located on Tiananmen Square,China’s National Development and Reform Commission (NDRC)hosted and organised BIREC 2005. NDRC is a Chineseministry level commission in China with responsibility in alleconomic spheres, such as industry, transport, and energy.The European Commission, the United Nations Departmentof Economic and Social Affairs, and the German Governmentalso gave substantial support to the conference.

Engineers and technicians at the solar village outsideRiyadh are visited by the late King Fahd bin Abdul Aziz.Steve Wilcox / NREL / Fahd bin Abdul Aziz


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The Beijing declaration

1. We, ministers and government representatives from 78countries, having met at the Beijing International RenewableEnergy Conference 2005 (BIREC), reaffirm our commitmentto implement the outcomes of the Earth Summit, the WorldSummit on Sustainable Development (WSSD), and theUnited Nations 2005 Millenium Review Summit, and tosubstantially increase with a sense of urgency the globalshare of renewable energy in the total energy supply, ascalled for in the Johannesburg Plan of Implementation.

2. We welcome the ongoing and future activities andcommitments that have arisen from the WSSD, the BonnInternational Conference for Renewable Energies, the G-8Gleneagles Summit, and other international and regionalinitiatives that help promote renewable energy.

3. We emphasize the multiple benefits of increased energyefficiency and the use of renewable sources of energy forimproving access to energy services, thereby contributingto the eradication of poverty as called for in the UNMillenium Development Goals (MDGs), increasing jobopportunities, improving air quality and public health,reducing greenhouse gas emissions and combatingclimate change, enhancing energy security, and offeringa new paradigm for international co-operation.

4. We note with concern that more than 2 billion people indeveloping countries do not have access to modern energyservices and 2.4 billion people rely on traditional biomassfor their basic energy needs. This energy divide entrenchespoverty by limiting access to information, education, economicopportunity, and healthier livelihoods, particularly for womenand children, and erodes environmental sustainability at thelocal, national, and global levels.

5. We also note with concern that recent trends in the worldenergy market, especially the doubling of oil prices in less thantwo years, has increased the economic risk of relying primarilyon imported energy and a volatile world energy market. Bydeveloping local sources of energy such as hydro, wind, solar,geothermal and modern biomass including liquid biofuels,countries can create diversified energy portfolios that are lessvulnerable to wide price fluctuations. There is considerablescope, for example, for deploying bio-fuels in support of ruraldevelopment and the transport sector.

6. Despite the growing expansion in the development and useof renewable sources of energy in developed countries, thecombined share of renewable sources in the global primaryenergy supply remains small and limited. Most developingcountries have not benefited from such expansion. Theinternational community should strengthen its commitmentto the scaling up of renewable energy development and use,especially in developing countries.

7. We agree to take further actions at the national, regional,and international levels to accelerate the market uptake ofrenewable energy technologies and increase investment in

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research and development (R&D), especially by developedcountries, in order to enhance efficiency and reduce up-frontcosts. We also agree on the need for strengthened supportfor the commercialization and transfer of technologiesthrough North-South and South-South Cooperation.

8. We recognize that significantly increasing the use of renewableenergy faces a number of challenges. Government policieshave a significant impact on attracting private sector investmentand the pace of expansion of renewable energy as demonstratedin several developed and developing countries. Experiencehas shown that successful actions for scaling up the useof renewable energy, include: (1) creating supportive policy, legal, and institutional frameworks; (2) securing public sector commitment, including

for R&D and procurement policies; (3) leveling the playing field; (4) promoting private sector involvement and a stronger

alignment between policy timeframes and timelinesfor investment;

(5) supporting the establishment of national renewableenergy industries including small and mediumenterprises; and

(6) providing access to affordable finance, including micro-finance, and consumer credit mechanisms.

9. We also recognize the need for significant financial resources,both public and private, for investment in renewable energyand energy efficiency, including the use of innovative financingmechanisms, such as loan guarantees and the CleanDevelopment Mechanism (CDM), and market-basedinstruments that can leverage scarce public funds. We arecommitted to creating a positive investment climate to attractprivate capital for renewable energy. We emphasize thecatalytic role that financial incentives and higher shares ofODA can play and we urge International Financial Institutions(IFIs), including the World Bank, the Regional DevelopmentBanks, and the GEF, as well as individual governments tosignificantly expand their investments in renewable energytechnologies. We also urge IFIs and other actors to designimproved instruments and products to ensure effective blendingof public and private financing which should help buying downthe risks associated with renewable energy technologies.

10. We further emphasize the need for enhanced internationalco-operation for capacity building in developing countries for: (1) strengthening national policy frameworks and the

integration of renewable energy use into nationalsustainable development strategies for povertyreduction, health, education, and agriculture;

(2) enhancing national capacity for R&D and transferand diffusion of renewable energy technologies;

(3) establishing markets for renewable energy; (4) increasing access to finance; (5) enterprise development for sourcing, installing, operating,

and maintaining renewable energy systems; and (6) combining the increased use of renewable energy,

energy efficiency, and greater application of cleanerfossil fuel technologies.

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The Grand Auditorium, Great Hall of the People. /


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11. We recognize the need for making technical assistancefor renewable energy widely accessible to developingcountries, especially least developing countries. The UNsystem can and should play a key role in this regard. Itscapacity and resources should be strengthened and inter-agency co-operation should be enhanced in order to avoidfragmentation of effort. We also recognize the importanceof disseminating information and knowledge, lessonslearned, best practices, and scaling up experiences inthe development and application of renewable energy andenergy efficiency. Connecting multi-stakeholders throughnetworks as well as other international and regionalinitiatives should facilitate such exchanges and makeinformation more accessible to developing countries.

12. We note with appreciation the major focus on energyin the upcoming 2006/2007 cycle of the United NationsCommission on Sustainable Development (CSD).We also note that the current global situation, includinga growing awareness of energy poverty in developingcountries, the risk of climate change and the importantrole that renewable energy should play in sustainabledevelopment and energy security, the increasing numberof international initiatives and commitments, and volatilityof world energy markets, provides an unprecedentedopportunity for addressing the strategic challenge oftransforming our energy systems and closing the energydivide between poor and rich, and between developingand developed countries. We invite the Commission toconsider an effective arrangement to review and assessprogress towards substantially increasing the globalshare of renewable energy as foreseen in paragraph20(e) of Johannesburg's Plan of Implementation. Thiswould provide a long-term prospective and encourageprompt action. Such periodic review could offer opportunitiesfor enhanced national, regional, and international co-operation on renewable energy for sustainable developmentthrough, for example, exchange of lessons learned andbest practice and a more favourable environment fortechnology transfer and the rapid commercialization ofinnovative renewable energy technologies. The reviewcould also be useful in addressing the linkages betweenenergy and the commission's biannual thematic cluster,and voluntary reporting could be enhanced through inputsfrom relevant international organizations and networks.

13. We welcome the participation, and contributions made,at the conference by parliamentarians, local and regionalauthorities, international institutions, the private sector,international industry associations, NGOs, civil society,women's groups, youth, and academia, and emphasizethe importance of their continued role in increasing thedevelopment and use of renewable energy.

14. We express our deep appreciation and thanks to the peopleand Government of the People's Republic of China forsuccessfully organizing this conference and for theirgenerosity and hospitality. We kindly request the Chineseauthorities to consider reporting the outcomes anddeclaration of the Conference to the CSD at its 14th session.

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Allan Wilson MSPDeputy Minister for Enterprise and Lifelong Learning

The people of Scotland have benefited from renewableelectricity for over 120 years. Scotland is fortunate to possessrenewable resources in great abundance – wind, rain & snow,waves, tides, timber, and sunshine. Since the earliest daysof hydro, the value and practicality of harnessing thesetremendous forces has been demonstrated. While the initialdriver of hydro electricity was its very low cost, today it isenvironmental imperatives that demand new renewablecapacity. Climate change presents the greatest threat to futuregenerations. The devolved government for Scotland, theScottish Executive, has pledged to increase the generationof electricity from renewable sources as a vital part of thestrategy to combat the risk posed by climate change.

Scotland has had a hand in accelerating the industrialrevolution, and early atmospheric chemistry with thediscovery of “fixed air” or carbon dioxide as it came to beknown. So it is entirely appropriate that we should setourselves ambitious targets for generating electricity fromrenewables: that 18% of Scotland’s electricity should comefrom renewables by 2010, rising to 40% by 2020.

I believe that these targets are challenging, but achievable.The rewards are three-fold – helping to safeguard theenvironment by reducing harmful emissions; greater securityof supply through increased diversity and new capacity; andeconomic benefits through developing a new industry. Whilesome of the rewards may be for Scotland alone, if throughour actions we can accelerate the commercialisation of asuccessful marine energy industry, the benefits will be ableto be shared globally.

While hydro took off in the last century and now accountsfor around 10% of our electricity generation, other forms ofrenewable energy have been slower to take root. The Scottish

Executive’s resolve to build new renewable capacity hasradically changed this, however. We introduced legislationplacing a requirement on electricity suppliers to sourceincreasing amounts of their electricity from renewablesources in 2002, and have seen a dramatic upsurge indeveloper interest to build new renewable generation sincethen.

Our wind resource is rightly the envy of much of the rest ofEurope, thanks to our exposure to winds originating far ourin the Atlantic Ocean. New wind farms are operating andbringing clean electricity to our homes and businesses. Ourforestry can support new biomass generation, and we aredetermined that it should. To achieve this, we will introducefurther support measures for biomass in 2006. Our vast andrugged coastline is pounded with enormous amounts ofenergy and presents us with great potential for harnessingwave and tidal energy. That is why we co-funded theEuropean Marine Energy Centre on Orkney, and why weare considering increasing the reward given to the electricitygenerated by new wave and tidal generators, ensuring thatthis emerging technology is given every chance to thrive.Microgeneration is bringing renewables within the reach ofindividuals, and with our support many valuable jobs arebeing created in this exciting new industry.

By embracing sustainable development, we also bringopportunities for economic gain. I believe we are on thecusp of a renewable energy revolution. Scotland is ideallyplaced to harness renewable energy: thanks to our naturalresources and our commitment to protect the environmentfor future generations.

The Banqueting Hall, Great Hall of the People. /


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A commentary on The Beijing declaration

Ministers from the 78 countries attending BIREC reaffirmedtheir shared commitment to implement the outcomes of theWorld Summit on Sustainable Development (WSSD) and theUnited Nations 2005 World Summit, and to substantiallyincrease, “with a sense of urgency”, the use of renewable energyas a percentage of the total energy supply, as called for in theJohannesburg Plan of Implementation.

The declaration calls for urgent efforts to increase the use ofrenewables in the total global energy supply, in order to acceleratethe eradication of poverty, increase job opportunities, improve airquality and public health, reduce greenhouse gas emissions,combat climate change, and enhance energy security.

Pointing out that oil prices have doubled in less than two years,the declaration notes the increased economic risk of relyingprimarily on imported energy. By developing renewableenergy such as wind power, hydropower and solar energy,countries can create diversified energy portfolios that are lessvulnerable to wide price fluctuations.

The document says that the participating countries have agreedto accelerate the research and development of renewable energyand to strengthen support for the transfer of technologies throughNorth-South and South-South cooperation. The belief is thatdeveloping countries will enhance capacity building, including theestablishment of markets for renewable energy and increasingaccess to finance.

There is no set a target for investment in the renewable sector,though the need is pointed to for funds for research anddevelopment, support for commercialisation of new technologies,and the transfer of technologies from rich nations to poor.

There is growing concern that more than 2 billion people indeveloping countries do not have access to modern energyservices and that 2.4 billion people rely on traditional biomass fortheir basic energy needs. This energy disparity entrenchespoverty by limiting access to education, economic opportunity,and healthier livelihoods, particularly for women, and erodesenvironmental sustainability at the local, national, and global levels.

Despite the accelerating expansion in the development and useof renewable energy sources, the combined share of renewablesources in global primary energy supply remains small andlimited. Most developing countries have not benefited from suchexpansion which has been driven by a few, mostly developed,countries. This global imbalance will worsen unless the internationalcommunity strengthens its commitment to increase renewableenergy development and use, especially in developing countries.

Ministers agreed to take further actions at the national, regional,and international levels to accelerate the market uptake ofrenewable energy technologies and increase investment inresearch and development in order to enhance efficiencyand reduce up-front costs. Energy efficiency measures werehigh in the declaration’s priorities

The conference attendees agreed that successful policies forscaling up the use of renewable energy should include: thecreation of supportive policy and institutional frameworks;securing public sector commitment (including R&D andprocurement policies); levelling the playing field; promoting privatesector involvement; supporting the establishment of national

78 /

(WSSD) 2005

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/

International Financial Institutions IFI(World Bank) (GEF)

(EU Energy Facility)

(UN Foundation)

renewable energy industries (including small and mediumenterprises); and providing access to affordable finance andconsumer credit mechanisms.

The participants committed to creating a positive investmentclimate to attract private capital for renewable energy andemphasize the catalytic role played by financial incentives,and the declaration urges International Financial Institutions(IFIs), including the World Bank, the Regional DevelopmentBanks, and the GEF, as well as bilateral donors and the EUEnergy Facility, to significantly expand their investments inrenewable energy technologies.

The declaration emphasizes that enhanced international cooperationis needed in developing countries to build and strengthen theirnational policy frameworks, as well as to promote the integration ofrenewable energy use into national sustainable developmentstrategies for poverty reduction, health, education, and agriculture.

While some delegates to the Beijing Renewable EnergyConference may have doubted if the declaration could bemeaningful without a solid commitment to global targets andmore definite pledges on technology transfer, conferencefacilitator, declaration drafter, and Senior UN Foundation Fellow,Dr. Mohamed El-Ashry, made a point of including a clause in thedeclaration that invites the U.N. Commission on SustainableDevelopment (CSD) to consider effective arrangements to reviewand assess progress towards substantially increasing the globaluse of renewable energy sources.

Such review arrangements would help ensure that the targetsof Johannesburg’s Plan of Implementation are met, as well asthe many voluntary commitments made in Johannesburg, Bonn,and elsewhere.

A review and assessment procedure should provide an effectiveforum for generating recommendations regarding the furtherdevelopment and implementation of relevant activities and thefulfilment of commitments by all actors, and for identifying omissionsand obstacles, as well as ways to address them through policyreforms, capacity building, and international cooperation.

While much in the declaration will be familiar to seasonedobservers, those present at BIREC detected a definitedetermination to make progress, find funding to achievethat progress, and turn words into action.

Mohamed El-Ashry Commission on

Sustainable Development CSD

By developing renewable energy, countriescan create diversified energy portfolios /


2120

Increasing the global renewable energymarket share: Recent trends & perspectives

Judy Siegel

BackgroundGlobally, energy consumption is growing at a rapid rate. TheInternational Energy Agency (IEA) World Energy Outlook (WEO)predicts that in the next 25 years, energy consumption willincrease by 60 percent with the bulk of this growth to occurin developing countries. Under a business as usual scenario,fossil fuels will continue to dominate the energy mix, withenormous environmental, health, economic, and energysecurity consequences. The share of renewable energy, thoughgrowing in absolute terms, will remain largely unchanged at14 percent, of which the bulk today is traditional biomass andhydropower. Despite these growth rates, 1.4 billion people willbe without electricity in 2030 and a comparable number willcontinue to rely on traditional biomass for heating and cookingneeds. Clearly, this is an unsustainable path for the world tofollow, particularly given rising fossil fuels prices that areprojected to remain high into this decade and beyond.

On November 7-8, 2005, the National Development andReform Commission (NDRC) of the People’s Republic ofChina organized the Beijing International Renewable EnergyConference 2005 (BIREC 2005). This meeting broughttogether the international community around the shared goalof global renewable energy development, with a particularemphasis on developing countries. BIREC 2005 reviewedthe status of renewable energy and its contribution toeconomic development and poverty reduction; sharedsuccess stories and lessons learned from renewable energydeployment; and explored approaches and trends inrenewable energy policy, finance, and capacity building.

(IEA) World Energy Outlook WEO 25

60%

14%2030 14

2005 11 7-8 (NDRC) 2005

(BIREC 2005)

BIREC 2005

BIREC 2005 Federal Ministry for Environment, Natural Conservation and

Nuclear Safety BMUFederal Ministry for Economic Cooperation and

Development BMZ UnitedNations Department of Economic and Social AffairsUNDESA European Commission EC

(WSSD) (JPoI)

2004 6 (Renewables

2004)

(IAP)200

BIREC 2005 WSSD

2006 5 1-12 (CSD) 14

CSD 14

19

of renewable energy for development begun at the WorldSummit on Sustainable Development (WSSD) in the JohannesburgPlan of Implementation (JPoI). This plan calls for an increasein the global market share for renewable energy–with asense of urgency. This work was furthered at the landmarkBonn International Renewable Energies Conference in June2004 (Renewables 2004) that brought together participantsfrom across the world to focus on renewable energy scaleup, with an emphasis on the industrialized world. Outcomesof the Bonn Conference included a Political Declaration, aset of Policy Recommendations, and an International ActionProgram (IAP) that included 200 voluntary commitments onrenewable energy from a range of stakeholders.

(RD&D)

i

2005

(UNF) BMU

BIREC 2005

•BIREC 2005

/

BIREC2005 /

Renewable energy scale-up: the road from WSSD to CSD WSSD CSD

BIREC 2005 was supported by the Federal Ministry forEnvironment, Natural Conservation and Nuclear Safety (BMU),Germany; the Federal Ministry for Economic Cooperation andDevelopment (BMZ), Germany; the United Nations Departmentof Economic and Social Affairs (UNDESA); and the EuropeanCommission (EC). The Conference builds upon the groundwork

BIREC 2005 also reviewed progress on commitments madeat WSSD and in Bonn. The Beijing Conference also provideda unique and timely platform for building consensus onissues, actions, and accomplishments for increasing theglobal market for renewable energy. The conclusions of themeeting provided important inputs to the upcoming 14thsession of the Commission on Sustainable Development(CSD) to be held in New York City, May 1-12, 2006. CSD14 will have energy as one of its principal themes.

Why Renewable Energy?Renewable energy–including biomass, geothermal, hydropower,solar, wind, tidal, and wave– offers tremendous benefits formeeting global energy needs. Building on a foundation ofhydropower, biomass combustion, and geothermal powerpioneered during the industrial revolution in the late 1800s,new forms of renewable energy began to be developed andcommercialized, including solar, wind, and several forms ofadvanced bio energy. Today, these renewable energy technologiesare the fastest growing energy technologies (particularly windand solar) and are cost competitive in a variety of grid, off-grid, and remote applications worldwide. They utilize locallyavailable resources, offsetting the need for costly fuel imports; areenvironmentally beneficial, without the harmful emissions ofconventional energies; provide diversification to a country’senergy mix; and create local job and income opportunities.

A number of drivers are spurring market growth in renewableenergy. Most notably, investments in technology research,development, and demonstration (RD&D), primarily byindustrialized nations; supportive policy and regulatoryframeworks; energy security issues; environmental and climatechange concerns; and local and regional developmentopportunities that these technologies offer. Price spikes andsupply concerns over fossil based technologies are furtherincreasing interest in and demand for the technologies.

The countries most in need of the positiveattributes of R.E. technologies are not yetbeneficiaries /


2322

Nonetheless, despite their advantages, the bulk of renewableenergy development to date has occurred in industrializedcountries, with the limited exception of a few emergingeconomies like China. The countries most in need of the positiveattributes of these technologies are not yet beneficiaries. Thisis due in large part to a number of barriers that hinder renewableenergy advancement. Most notably, renewable energy continuesto be comparatively expensive for a range of developingcountries’ needs. Further, many of these countries have notyet put in place the policy and regulatory frameworks neededto induce investment in renewable energy, or eliminatedsubsidies for conventional fuels that make it difficult for thetechnologies to compete. Moreover, many developing countrieshave imperfect capital markets and insufficient access toaffordable financing for developers and consumers, as well asinadequate institutional capacity to support the technologies.

•

/

/

/

(feed-intariff)

(vehicle ethanol)

•

/

(SME)

•

/

and convened under the guidance of UNDESA, with technicalinputs and financial support provided by the United NationsFoundation (UNF) and BMU.

This report outlines a number of priorities for the internationalcommunity in accelerating the scale-up of renewable energy,particularly in the developing world. It also identifies thepotential role that BIREC 2005 can play in moving thesepriorities forward. Proposed actions include:

• Technology Research, Development, and Demonstration.BIREC 2005 provided an excellent avenue to focus attentionon the need for, and importance of, continued and acceleratedinvestment in all aspects of renewable energy research,development, and demonstration. RD&D is necessaryto drive down costs, increase performance and reliability,and improve efficiencies in all aspects of renewable energymanufacturing and production. RD&D is needed in thedevelopment of new and/or improved materials, processes,components, subsystems, and systems and these individualaspects need to be integrated in order to meet marketand end user needs. Further, RD&D is required not only forrenewable energy electricity end uses (grid and off grid) butalso for thermal, mechanical, and refined fuel applications(including charcoal and pellets used in improved cook).BIREC 2005 helped to raise visibility on the need for moreeffective leveraging of public and private sector RD&Dfunds; the importance of expanding product and serviceofferings to match the needs and income streams ofdeveloping country customers (particularly rural poor);the need for ongoing dissemination of information ontechnology performance, costs, and market potential;and joint opportunities for RD&D between and amongindustrialized and developing countries. It also involvesfurther research and development on "low tech" applicationsin the field (water pumping, water purification, etc.), andproductive use applications, in order to expand the benefitsof renewable energy, including to the rural poor.

• Improve Policy and Regulatory Frameworks. Securingpolitical commitment and putting in place effective policyand regulatory frameworks are crucial elements to improvethe investment climate for renewable energy. Governmentshave a role to play at all levels–national, state, and local–andthere is a range of policy options that have been appliedand from which lessons are being learned. These include:targets and timetables for renewable energy; policies toaccelerate grid connected renewable energy; technologyspecific policy measures; green power purchasing andpricing policies; policies at the local level (state, city, community,etc); rural electrification policies; cross sector policies thatpromote renewables (e.g., agriculture, water, etc); andremoval of market distorting policies that favour conventionalenergy sources such as oil, gas, and coal and make itdifficult for renewable energy technologies to compete.

Though it is premature to determine the impact ofrenewable energy policies, as many are still in the earlystages of development/implementation, several policies

-

(SME) (NGO)

•

A wedding picture in Xinjiang Autonomous Region of Western China. The groombought two 40 watt photovoltaic panels for the bride as a wedding present.Wallace,William / NREL /

40

Renewable energy electricity generation costs as percentage of 1980 levels:historical and projected (NREL 2005) / 1980

(NREL 2005)

Rapid increase of renewable energy in developing countrieswill require these barriers to be addressed, including thedevelopment of supportive policy and regulatory frameworks,securing public sector commitment, strengthening localcapacities and entrepreneurship, transferring technologies,and increasing access to affordable financing and consumercredit. It will require a transition from traditional biomass tomodern use of biomass, cleaner fuels, and improved stovesfor cooking; maximizing the use of large, small, and microhydro resources in an environmentally sustainable manner;more efficient use of biomass residues for power generationand transport, including growth of dedicated crops; andincreasing deployment and reducing costs of solar, wind,geothermal, wave, tidal, and other renewable energysources

1. The good news is that these issues have been

tackled successfully in several countries around the worldand models exist for replication elsewhere.

BIREC 2005 ReportThis report addresses issues and approaches for tacklingthe barriers and increasing market penetration of renewableenergy. It has been prepared by a group of experts in therenewable energy field representing developing and developedcountries across the globe. The report has been organized


24

creative leveraging of public and private sector resourceswill be needed to meet the financing requirements of therenewable energy industry. This will include support ofnational governments, international and local financial institutions,multilateral development banks, bilateral development agencies,other international agencies (UN, the Global EnvironmentFacility), global partnerships, foundations, and carbon financing.

• Capacity Strengthening. For renewable energy marketsto grow, capacity strengthening is needed in all aspects ofproject and program design, development, implementation,and operation. Capacity building is the process of creating,mobilizing, and converting skills and institutions to achievedesired socio-economic results. It requires a long-termcommitment, with activities focusing on individuals, institutions,and systems, and targeting public, private, and non-government organizations. In the renewable energy area,capacity building is needed at several levels, and thesemust be coordinated to maximize effectiveness.

At the technology level, capacity is needed to developacademic, professional, and vocational skills. Support isrequired on all aspects of technology research, development,demonstration, deployment, marketing, financing, operation,and maintenance. Further, continued emphasis on acceleratingrenewable energy R&D is essential to bring down costs,improve performance, and enhance competitiveness withconventional energy sources. At the institutional level,national and sub-national governments require capacitysupport in the formulation, implementation, and enforcementof effective policies and programs. Financial institutions,whether public, private, or micro-finance, require trainingon the costs and rewards of renewable energy, how toreview and assess projects, and the risks and risk mitigationinstruments associated with renewable energy. At thebusiness level, a range of business planning and supportservices are required to ensure development and deliveryof renewable energy services. These need to be aimed atutilities, SMEs, entrepreneurs, non government organizations(NGOs), communities, and community organizations. At theindividual level, capacity strengthening is needed to increaseconsumer awareness of the costs, benefits, and uses ofrenewable energy, and how to access, finance, and deploythe technologies. Though the needs for capacity supportcan often vary between the industrialized and developingnations, and a host of institutions will need to be involvedin the delivery of capacity services, the fact remains thatmore effective strengthening of individuals and institutionsworldwide is a prerequisite for the global scaling up ofrenewable energy.

• International Collaboration. Though each country has themain responsibility for developing its own domestic renewableenergy market, international collaboration can be beneficial.International collaboration can support national governmentsand industries to build market frameworks, strengthenindustrial capacity, and enhance technical know-howthrough information sharing on successful (and not sosuccessful) efforts, facilitation of industrial relationships,

Global Renewable Energy Applications /

have yielded significant results. Examples include feed-intariffs in Germany, Spain, and Denmark; subsidies for grid-connected solar PV in Japan and the United States; theproduction tax credit in the United States; vehicle ethanolpolicies in Brazil; and programs for biogas, biomass, andsmall hydro in developing countries such as China, India,and many others. Solar hot water promotion policies atmunicipal and national levels have been very effective insupporting the integration of solar hot water and heatinginto buildings. Electricity restructuring allowing retail powercompetition has clearly fostered voluntary green powerpurchasing, which along with utility green power pricingand/or renewables certificates systems, has stimulatedthe growth of green power markets in Europe, the UnitedStates, Australia, and Japan. Continued monitoring,evaluation, and reporting of the effectiveness of thesemeasures are important as policies have such a criticalrole to play in the advancement of the technologies.

• Financing Facilitation. Finance and investment are essentialingredients in the growth and development of renewableenergy for industrialized and developing countries alike.Though finance sector engagement in renewable energyis still nascent, it has been accelerating in many countriesand a number of signs indicate that this trend will continue.In OECD member countries, there is currently a large buoyantmarket for investment in large-scale renewable energy projects.In non-OECD countries the trends are also somewhat positive,although they stem from a much more modest base andoverall, the climate for investment in renewable energy isstill difficult. In many less developed countries (LDCs), theprivate sector often faces significant barriers in accessingthe credit markets, which due to limited liquidity and marketinstabilities, very seldom offer the sort of medium- andlong-term financing needed for infrastructure investments.

As the industry matures it will be increasingly important toexpand the scope and breadth of financing sources andinstruments, both locally and internationally, to include projectequity, project debt, risk management, small and mediumentrepreneur (SME) finance, and end-user finance. More

- -

• BIREC 2005

BIREC 2005

BIREC 2005

BIREC 2005

A newly-built school, complete withsolar panels, celebrates its opening /

A number of drivers are spurring marketgrowth in renewable energy /


2726

and connection of local players to a wealth of internationalexpertise. By linking national efforts to the broader internationalcommunity, a country can reap the benefits of technologicalimprovements and cost reductions at home, while contributingto the collective scaling up of renewable energy worldwide.Though different renewable energy technologies are in varyingstages of development, all can benefit from internationalcollaboration. Many developing countries have hydropowerand geothermal resources that can be exploited, andwould gain from the experiences of countries that havesuccessfully deployed these technologies. For the “newer”renewable energy technologies (e.g., wind power, solartechnologies, and newer forms of bio energy), internationalcollaboration is useful to exchange experiences, learn fromeach other, and discuss best practices, in order to avoidtime-consuming and costly mistakes, and provide a “short-cut” to success. The potential benefits of internationalcooperation could include reduced technology developmentand production costs, improved technological performanceand reliability, improved market growth worldwide leading toeconomies of scale and further cost reductions, enhancedknowledge of effective market strategies and mechanismsto enhance technology competitiveness, expanded equipmentstandardization, and harmonization across countries, reducedtrade and investment barriers, expanded opportunities forcooperative technology development and joint venturemanufacturing and marketing opportunities, increasedSouth-South and North-South trade opportunities, reduceddependency on imported energy sources, improvedemployment and income opportunities, and increasedenergy access to those in need.

International cooperation in renewable energy is occurringtoday via a number of mechanisms including workshops,fora, technical assistance and training, pilot projects, andother information exchange media. Yet to date, these effortshave not yielded significant growth at the global level. Thus,opportunities exist to increase international collaboration andenhance the global penetration of renewable energy productsand services, as well as the establishment of truly internationalmarkets. Continued collaboration is needed in the areasof technical assistance, joint research and development,technology transfer, reduction of trade barriers, investmentand partnership, and opportunities for North-South, South-South, and South-North exchange.

• Mechanisms for Reviewing Progress on Increased Useof Renewable Energy. BIREC 2005 provided a forum forverifying the importance of continued and expanded effortson renewable energy information collection and sharing.During the meeting, discussions examined the data gapsand barriers, with particular emphasis on the areas of policy,finance, and capacity development.

BIREC 2005 also explored mechanisms for improvinginformation reporting and review. In this regard, participantsinvited the Commission on Sustainable Development to

Opportunities for renewable energies arelimitless /

1 J. Saghir, The Global Investment Climate: Financing the Growth of RenewableEnergy in Developing Countries, Renewable Energy World, July-August 2005.

1 (The GlobalInvestment Climate: Financing the Growth of Renewable Energy in DevelopingCountries) J. Saghir 2005 7-8 (Renewable Energy World)

Solar water heater tanks in Kunming, Yunnan Province, China. Jean Ku / NREL /

consider an effective arrangement for reviewing and assessingprogress towards substantially increasing the global shareof renewable energy as foreseen in the Johannesburg Planof Implementation. It was agreed that this would provide along term prospective and encourage prompt action. Suchperiodic review could offer opportunities for enhanced national,regional, and international cooperation on renewable energyfor sustainable development that could lead to morefavourable environments for technology transfer andaccelerated commercialization of innovative renewableenergy technologies. The review would also be useful inaddressing the link between energy and the Commission’sbiannual thematic cluster. Finally, it was noted that voluntaryreporting could be enhanced through inputs from relevantinternational organizations, partnerships, and networks.

In summary, opportunities for renewable energies are limitlessand countries around the world have committed to worktogether on increasing their global market share. BIREC 2005provided a unique and timely forum to exchange experienceson renewable energy development, share views on policiesand approaches, explore financing mechanisms, promoteinternational cooperation, and determine how to measuresuccess. The conference also provided a platform to buildconsensus and secure commitments on moving forwardtowards a cleaner energy future, from which all can benefit. Thisreport served as a background report for BIREC 2005, providedinput to the dialogue and discussion, and contributed to theprimary outcome of the meeting – the Beijing Declaration.


The role of policy

Martin Devine

Over the last decade the policy discussion around sustainableenergy and, in particular, renewable energy has taken on aheightened significance.

A growing awareness and appreciation of the complex issuesassociated with the way the world consumes energy, fromthe need to provide energy for development to the need tocut global emissions of greenhouse gas, against a backgroundof sustained high oil prices, has brought into sharp focus theneed to, in the words of the Johannesburg Plan of Implementation“With a sense of urgency, substantially increase the globalshare of renewable energy sources with the objective ofincreasing its contribution to total energy supply.”

In response there has been a widespread expansion of policiesto promote renewables. At least 48 countries worldwide nowhave some type of renewable energy promotion policy, including14 developing countries. By 2005 at least 32 countries and5 states/provinces had adopted feed-in policies, half of whichhave been enacted since 2002. At least 32 states or provinceshave enacted renewables portfolio standards, half of thesesince 2003. Policy targets for renewable energy exist in at least45 countries worldwide, including 10 developing countries, all25 European Union (EU) countries, and many states/provincesin the United States and Canada.

As a result, investment in renewable energy in 2004 was around$30 billion, excluding large hydropower, which accounts for anadditional $20-25 billion. However, this is against a backgroundof $150 billion investment in the conventional power sector.Renewables currently supply around 160GW of power worldwide,about 4% of the total and growing (but this does not includelarge hydro which accounts for a further 16%). The fastestgrowing sector is solar, which grew 60% per year from 2000to 2004, and wind grew at 28% per year over the same period.

48 14 2005

32 5 /2002 32 /

2003 45 10

25 /

2004 300 200-250

1500 160GW 4%

16%2000 2004

60% 28%450

1600 200 100

2030 16

2002 (WSSD)

Johannesburg Renewable Energy CoalitionJRECJREC 88

(REEEP)

29

In the EU, Australia, Japan, US and Canada, over 4.5 millionpeople chose to purchase renewable energy voluntarily, showingthat consumer awareness of the benefits of renewable energyis increasing.

The role of renewables in development is also increasing –small hydro power, biomass, and solar PV play an importantrole in providing energy services to tens of millions of peoplein rural areas, serving homes, schools, agriculture, and smallindustry. 16 million people use biogas to cook and light theirhomes and 2 million use solar lighting systems. The productionof biofuels results in nearly 1 million jobs worldwide.

The IEA estimates that around $16 trillion worth of investmentwill be necessary by 2030 to meet the world’s growing energydemands. Clearly, there will be a need to greatly increase theflow of investment into renewable energy if renewables are toplay a significant role in the future.

The need for this paradigm shift in renewables policy wasvoiced at the World Summit on Sustainable Development(WSSD) in Johannesburg in 2002, where there was a strongcall for increased international collaboration to pursue thecommon goal of energy sustainability.

WSSD

REEEP

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WSSD

WSSD

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f Ph

oto

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Ice Harbor Dam: Large hydropower produces 10% of the U.S.A.’s energy. US Army Corps of Engineers / NREL / Ice Harbor 10%


30

This political momentum resulted in the formation of a numberof new types of organisation, designed to bring a greater levelof coherence to the various actors associated with sustainableenergy across all sectors. At the political level, the JohannesburgRenewable Energy Coalition (JREC) was formed to push forclearer and stronger frameworks for the promotion of renewableenergy. JREC has been successful in galvanising supportwith 88 member governments and has established a patientcapital fund to support investment in renewables. Also toemerge from Johannesburg were a variety of organisations,across a range of sectors, operating under the new modelof Type II partnerships. The Renewable Energy and EnergyEfficiency Partnership (REEEP) is one of these.

The vision at WSSD was to create a new means of workingbetween all parts of the private and public sectors and ofinvolving civil society in the discussion, to make the dealsthat are needed to deliver sustainable development. It wasrecognized that there exists a need to create change in astrategic way at a systemic level to reduce political, policyand economic risk in order to facilitate investment. Byengaging the expertise and resources of a very open anddiverse range of actors, all of whom have significant assetsto bring to the table, partnerships such as REEEP set out tocoordinate ongoing work and scale up its impact, enable ademand-driven approach to development, strengthen publicsector policy and governance capacity at all levels, andsupport and enable progress in international negotiations.

This goes a long way beyond the traditional ‘PPP’ model ofthe public private partnership, which has for some time beenused by governments to collaborate with the private sectoron specific programmes and projects. Such partnershipsoften involve only a limited number of actors (e.g. within aspecific region) and operate in relative isolation from similaractivities occurring elsewhere. What the WSSD partnershipsbring is a way to join together actors working on similar issuesfrom across the globe to share experience and learning, andto provide a common platform and forum for opinion, helpingto bring together diverse interests under a common agenda,providing a voice that is more than the sum of its parts. In thisway the WSSD partnerships seek to move from incremental,project by project change towards more fundamental andsystemic reform. This approach of bringing together lotsof smaller players and facilitating a stronger community isespecially suited to sustainable energy, as it is a sector thatincludes many small scale actors who lack the political cloutof the traditional energy sector and other well establishedindustries. Gaining a meaningful influence on policy to allow thepotential of renewables to flourish will, in large part, depend onthe level of coherence in the sustainable energy community.

WSSD partnerships have a number of challenges to overcome,if they are to bring people together in this way to affect systemicchange. In developing REEEP, a range of issues were encounteredthat are likely to be common wherever partnerships seek toinfluence policy. After the initial burst of high-level endorsementat and immediately after WSSD, REEEP has had to workhard to ensure that interactions between the partnership’son the ground activities and high-level politics are maintained.

WSSD REEEP

WSSD REEEP

REEEP

REEEP

REEEP (BP & Climate Change Capital)

REEEP

[ REEEP ]

2004 (Renewables2004) REEEP

154

21 Renewable Energy Network forthe 21st Century REN21

REN21

2004

A failure by governments to invest political capital (rather thanjust money) in the partnerships is a risk when it to comes tothe long term future of any partnership. One way to overcomethis is to ensure that the value of the partnership is clear to thepublic and private sectors. Clearly defined objectives help inthis, as do rigorous monitoring and evaluation mechanismsto assess the partnerships, progress, and impact backed up byskilled and committed staff working to facilitate the partnership.In selecting areas to work on REEEP’s programme, processesseek to build strong linkages into national and local level policymaking processes and ensure that projects do not deliver inisolation, but help deliver systemic change. This means thatREEEP, as with many partnerships, must take a strategicapproach and identify where it can make the most impact –not just where all partners can happily agree an outcome.

In engaging the private sector, the benefits of partnershipneed to be even more concrete. In REEEP, apart from directinvolvement in specific projects, the most active private sectorpartners (BP & Climate Change Capital) already hold areputation for their progressive thinking and appetite forexploration of new possibilities. REEEP’s key challenge overthe short to medium term is to build stronger engagementwith the private sector and ensure its active participationin the quest for systemic change. This seems more relevantto sustainable energy and renewables than to many othersectors, as energy is so central to our lives that the factorsdetermining how we get and use energy are embeddeddeep in the way we run and govern society: in energy, morethan in almost any other sector, change is needed at a systemiclevel if we are to make a significant difference to the sustainabilityof our energy systems. (Two case studies of REEEP projectsare given below.)

The work of partnerships such as REEEP, and many otherorganisations working to improve the policy and regulatoryenvironment for renewables, was given a political boost in2004 with the German government’s hosting of the BonnRenewables 2004 conference. Bonn reaffirmed the call foran urgent expansion of renewable energy that emerged fromJohannesburg and its importance in reaching the MillenniumDevelopment Goals that were agreed there. Indeed ministersfrom 154 countries stated in the Bonn political declaration that“They share the vision that renewable energies, combined withincreased energy efficiency, will become a most important andwidely available source of energy and will offer new opportunitiesfor cooperation among all countries.”

In addition to underlining the importance of renewable energy tothe key issues of climate change, energy security and development,in particular the Millennium Development Goals, where there is aclear need for access to more reliable and affordable energyservices which can increasingly be met through renewables,the political declaration to emerge from Bonn highlighted theimportance of collaboration multi-sectoral engagement tocreate the necessary environment for renewable energy toflourish and the vital need for capacity building – in termsof knowledge of renewables, policy making, financing andassessment of renewable investments – across all sectorsand in both the developed and developing worlds.

One kilometre off the coast at Blyth, Northumberland,UK, these turbines are subject to waves which can reachheights of 6.5 metres, wind speeds of up to 100 miles anhour and a tidal range of 4.5 metres in a water depth of5.8 metres. Copyright AMEC Wind / Northumberland

Blyth 6.5

100 5.8 4.5


The response to this need for greater collaboration was theformation of the Renewable Energy Network for the 21stCentury (REN21). REN21 is a policy network that operatesat a political level, bringing together high level actors from allsectors to provide political impetus that supports the on theground work of its members and the renewables communityat large. The Renewables 2004 Global Status Report releasedat Beijing is a prime example of the output of the network andsheds light on the current state of play of renewables policyand deployment. REN21 is also collaborating with REEEP todevelop an Information Gateway on Renewables and EnergyEfficiency that will provide a state of the art gateway toinformation on all aspects of renewable energy globally.

That fact that Bonn was hosted jointly by the Germandepartments for environment and for development co-operationwas in itself a significant step, as it acknowledged the role ofrenewables and energy efficiency in development and demonstrateda new level of awareness on the part of developed countries.This was further exemplified later in the year with the DutchEnergy for Development (E4D) conference, again hosted bythe environment and the development ministry, which calledfor a level playing field for different energy technologies toallow greater investment, and highlighted the importanceof policy and regulatory reform to achieve this.

As two of the key partnerships that straddle these two formerlydistinct policy areas, REEEP and the Global Village EnergyPartnership (GVEP) have agreed a memorandum of understandingthat promotes co-operation between the organisations. Thinking

REN21 REEEP (Information Gateway on

Renewables and Energy Efficiency)

(E4D)

REEEP Global Village EnergyPartnership GVEP

2005

Margaret Beckett

BIREC

Methane-fuelled gas cooking in China. Simon Tsuo / NREL /


34

on priorities and opportunities to add value to each otherswork is shared, and projects seeking funding can now beredirected to the more appropriate organisation, reducingthe amount of duplication in fundraising efforts that projectdevelopers have to undertake.

All the messages emerging from Bonn were reaffirmed atthe Beijing International Renewable Energy Conference2005. There was a strong call from the business communityfor clearer policy signals from government to promote betterinvestment conditions and this was recognised by the UK’sSecretary of State for Environment Margaret Beckett who said,"It is important that the time frames of policies to promotesustainable energy fit with the time lines for investment bythe private sector.”

Stavros Dimas

2006 2007 Commission on Sustainable Development

CSD

CSD WSSDE4D G8

REEE PMEDREPPMEDREP

(Mediterranean Renewable Energy Partnership)

In addition, BIREC has taken renewable policy one step further.That the Chinese government not only hosted such a majorrenewables event with very high level attendance, but alsoannounced a major expansion of their own renewable energypolicy was a significant step in demonstrating that, in the wordsof Stavros Dimas, Environment Commissioner at the EuropeanCommission "The fact that the conference is taking place here inBeijing confirms that taking up renewable energy is no longer thesole purview of developed countries and that emerging countriesalso wish to play a leading role in this area." He later remarkedthat "renewable energy has been viewed as something only richcountries can afford, but now we see it is something developingcountries cannot afford to be without".

The timing of this shift is fortuitous. In spring of 2006 and 2007,the UN Commission on Sustainable Development (CSD) willmeet in New York to consider progress towards the MillenniumDevelopment Goals, with a specific focus on energy, industrialdevelopment and climate change – three topics close to theheart of renewable energy. The Beijing conference has askedthe Chinese to report its outcomes to the CSD and theseoutcomes echo the calls for reform and support that havecome from WSSD, Bonn and E4D. Under the UK presidency,the G8 have this year focused on climate change and theGleneagles Plan of Action calls on partnerships such as REEEPand MEDREP (Mediterranean Renewable Energy Partnership)to take forward the Johannesburg Plan of Action. Agreementin Montreal, at the United Nations Framework Convention onClimate Change’s first meeting of parties, to continue dialogueabout future climate change mitigation, will add further impetusto the call for an urgent and substantial increase in the use ofrenewables, but the renewable energy community, as diverseas it is, must continue to galvanise itself to take advantage ofthe opportunities that will be presented over the coming years.

The fact that Bonn was hosted jointly by theGerman departments for environment andfor development co-operation was in itselfsignificant /

This infrared radiometer will lookdown from 100 feet above the SaudiArabian desert to measure theinfrared radiation emitted. Steve Wilcox /

NREL /100


36

Case study 1: Policy & Regulation

National policy road map for wind in ChinaThe potential for grid-connected wind power in China is enormous,with current estimates at 250 GW and an off-shore potential of750 GW. China has recently established goals for near termdevelopment of 4 GW by 2010, and longer term goals of 20 GWby 2020 in order to accelerate the pace of development for wind.

With the recent passage of the Chinese Renewable Energy Law,the goals and intent are now in place to create the policy andregulatory structures which are in support of renewable energy.REEEP, together with the Centre for Renewable Energy Development(CRED) will establish a logical framework of objectives and goalsfor cooperation between the Government, industry, and financialstakeholders to support the achievement of national objectives.

The project will prepare a National Implementation Roadmap forWind Energy Development which will become part of the Multi-Year Technology and Industry Development Plan. The detailedplanning framework will also establish specific targets that canbe associated with the 11th Five Year Plan which is currentlyunder development.

The Chinese government introduced a new energy law in February2006, and it also recently raised its renewable energy targets at theBeijing renewable energy conference in November 2005. Insteadof 10%, renewable energy is to account for 15 % of nationalconsumption by 2020, according to the Chinese government.

REEEP’s job, together with the Chinese Centre for RenewableDevelopment (CRED), will be to determine how to get to that15% from a current base of 764MW. According to CRED, China’sinland resource development potential is estimated at 250 GWand its offshore resource development potential at 750 GW. Themajor gateposts on the roadmap will be a total wind capacity of5 GW by 2010 and 30 GW by 2020.

“All of the present project will be decided by the market, nomatter whether the developer is domestic or foreign. The pricewill be structured according to a feed-in tariff in line with theconditions in the Chinese Renewable Energy Law. But if more thanone developer is interested in the same wind site development, thegovernment will use a bidding procedure to make the decisionfor the developer,” says Zhongying.

In order to create the roadmap or planning framework whichmonitors goals, needs, actions and achievements, a steeringcommittee has been formed. Made up of the key players fromgovernment agencies and advisors, it will be critical in shapingfour main themes: the vision and framework for wind development,the key development needs and strategies for the technology,industry, and market sectors for wind, a logical framework forkey stakeholder actions required to reach the long term targets,and a set of metrics and appropriate intermediate targets.

Stakeholders include utilities, turbine manufacturers, governmentagencies, investors, component makers, and project developers.Another aspect of its role will be to act as a central point for co-ordinating the stakeholders, as well as ensuring the committee isacting and thinking in accordance with the demands made by theindustrial five-year planning period, the renewable energy law, andthe government agency.

Case study 2: Finance

Seed funding for renewable energy and energy efficiency finance

in BrazilTo meet environmental and energy goals, Brazil needs to establishmore small-scale renewable and energy efficiency projects, anobjective supported by the REEEP and its partners, the BlueMoon Fund, and Econotech. REEEP is providing seed funds tosupport the establishment of a dedicated private equity investmentfund to provide financing for clean energy in Brazil. The fund,known as “MMZ” is a spin off of Econotech, a vehicle createdby Brazilian financiers that has established its credentials financingsmall hydro generation projects in southern Brazil. The LaGuardiaFoundation, which promotes financial innovation in the delivery ofsustainable energy, is working with MMZ to create a $45 millionprivate equity and guarantee facility for clean energy in Brazil.

The project will identify potential sources of capital, promote theinvolvement of national and local investors and financial institutions, andsupport the adaptation of orthodox financial mechanisms and businessstructures. The project will reduce issues of risk and contribute towardsits mitigation through training, guarantees and bundling.

REEEP will build on lessons already learned from a feasibility studycarried out in Brazil in 2004/2005. The project team recognisesthat the main activities necessary to establish a renewable andenergy efficiency fund in Brazil are the preparation of a projectpipeline, the involvement of financial advisory services, thepreparation of documents with the Brazilian authorities, the raisingof funds, and the overall coordination of a project. These activitieswill be cost shared with local fund managers with the relevantexperience. Debt in local currency is available at attractive ratesof interest for investors in renewable energy thanks to provisionsmade by the National Development Bank – the BNDES.

The expected output is a first-of its-kind $45m equity and guaranteefacility to finance small hydropower, energy efficiency and biomassprojects. Based on average construction costs of small hydropowerplants in Brazil, at least 20MW of new, installed capacity ofrenewable energy generation could be built within the first 3 yearsof the fund. The fund will provide leverage for about $180m in debtfrom the BNDES, although total leverage could be even higher.

1

250 GW750 GW

2010 4 GW 2020 20 GW

REEEP Centre for RenewableEnergy Development, CRED

2006 1 2005 11

2020 15% 10%

REEEP (CRED) 764MW 15% CRED

250 750GW 2010

5 GW 2020 30 GW

2

REEEP (Blue Moon Fund) Econotech REEEP

MMZ Econotech

LaGuardiaMMZ 4500

REEEP 2004/2005

(BNDES)

4500

3 20MW BNDES 1.8

BNDES Energy Service Company ESCO

MMZ MMZ

100MW

Wind turbines at the RenewableEnergy Experiment andDemonstration Centre inHohhot, Inner Mongolia, China.Jean Ku / NREL /

(Renewable EnergyExperiment and DemonstratioonCentre)

Bagasse, a by-product of sugar generation, could provide a significant source of energy if technologies are improved: shown in the picture is the Usina SantaElisa mill in Sertaozinho, Brazil. Ralph Overend / NREL / Sertaozinho Usina Santa Elisa


38

The fund will also provide a significant new opportunity for theparticipation of local investors. Negotiations are underway withthe BNDES to replace their current requirement for real assetguarantees with financial guarantee structures allowing the EnergyService Company (ESCO) industry more flexibility to achieve alevel of financial viability commensurate with its economic andtechnical potential.

MMZ goes so far as to set up special purpose companies to takeequity stakes in a number of energy projects that it then bundlestogether under a single investment fund. MMZ expects its newfund’s investments to produce about 100MW of small scale hydrocapacity over the next three years. The fund’s activities focus onpulling together the owners of different hydro projects to createthe critical mass that will enable negotiation of better terms bothwith utilities that will buy the power and providers of equity anddebt finance. “The truth is that there was never a shortage ofgood projects, just a shortage of good projects big enough tointerest mainstream banks”, says Luiz Prado, LaGuardia Foundation’sDirector in Brazil. “MMZ’s team overcame this problem by contactingall the companies in one region with a concession to producesmall-scale hydropower. Confidentiality agreements were thensigned with interested parties and the team began the processof bundling and structuring the projects so that it was able to wina Power Purchase Agreement (PPA) from the main local utility.”The bundling enabled Econotech to access long-term debt withacceptable rates of interest from the National Development Bank(BNDES) and Brazilian pension funds that had knowledge of thepower sector.

However, bundling is not just about gaining negotiating capacitywith larger and more powerful players. MMZ has also found thatthe project developers gain flexibility by working with counterparts.“Developers have varying expectations,” explains Prado. “Somemay be very confident in the value of their project and want to stayin until completion. Others may seek more cash up front. Infinancial jargon, they want different ‘exits’. If you can ally theirinterests by pooling projects in a single purpose company, youdo not have to worry about the different details of each of theprojects that, together, are supplying the hydropower.”

To make investors more comfortable, MMZ has hired independentengineering services to provide a full review of each individualproject with the objective of increasing generating capacity andreducing investment costs. “We have now drawn up contractswith the owners of eight small hydro power plants in one areaof Brazil, totalling about 99 MW,” says Prado.

Prado sees the bundling of projects as essential to making smallscale renewable energy developments viable investment opportunities.“By bundling a number of similar small projects, transaction costsbecome more palatable and there are better conditions fornegotiating with investors, banks, utilities, technology suppliers andengineers,” he explains. “Bundling is crucial to the success of cleanenergy development, because it brings together projects andenables them to compete with big high-carbon energy projects.To do this you need an organisation, preferably a dedicated fundmanager such as MMZ, prepared to deal with the plethora oftechnical, legal, and financial issues that characterise cleanenergy development.”

Data in this article is taken from REN21’s Renewables 2005 Global StatusReport, produced by The Worldwatch Institute, which provides an in depthassessment of the current status of renewable energy. Case studies aretaken from www.reeep.org

LaGuardia Luiz Prado

MMZ

(PPA) Econotech (BNDES)

MMZ Prado

MMZ Prado

99 MW

Prado

MMZ

REN21 2005 (Worldwatch Institute)

www.reeep.org

This young girl in Cardeiros, Brazil can fill her jug from the schoolwater tank thanks to a photovoltaic-powered pumping system.Roger Taylor / NREL / Cardeiros


40 41

The Commercial Investment and Finance Forum

2005 11 7 BIREC 2005

BIREC2005

2006 1

/

15000

Airtricity Eddie O'Connor- (Renewable Energy - Building the Future)

2025

30%5%

1 Virginia Sonntag O'Brien Nick

Gardiner Basel Agency for Sustainable Energy BASE

(Fortis Bank)

(ADEME) Dominique Campana

(RES) 2005 7 2010

21% 5.75% 50%

750,000 (CDM)

Tetouan Lafarge CO2

20%

(Asian Development Bank) KlausGerhaeusser

(sovereign guarantee)

(KfW) Peter Pischker

A key part of BIREC 2005 was the Renewable Energy Investmentand Finance Forum that took place on Monday, November 7, 2005in the Great Hall of the People.

The Finance Forum provided leading investors and globalfinancial institutions with a platform to discuss how and wherenew patterns of investment are taking hold in the renewableenergy sector. It explored the financial instruments and dealstructures that are working today, as well as the regulatoryframeworks needed to underlie future development trends.An emphasis was placed on the rapidly expanding renewableenergy markets in developing countries, and how they canhelp deliver sustainable world economic development.Whereas the theme of finance speeches several years agowas about barriers and the need to bring down costs, thecentral theme of the speeches in the BIREC 2005 FinanceForum was about the financing that is being done. The mainpoints of the opening addresses are summarized below.

Wu Guihui Vice Director General Of Energy Bureau ofNDRC: With the background of the new China RenewableEnergy Law coming into force in January 2006, Wu Guihuiprovided a comprehensive review of China’s currentrenewable energy installations focusing particularly on hydro,wind, solar and biomass. Existing capacity in each of thesefields is impressive, but generally represents only a smallportion of the potential that has been identified for each ofthese resources. The development of all such resources willin future be regulated by the new law which sees three basicstrategies to promote resources, namely:

Those which are already commercially viable and need minorsupport to encourage extensive development – hydro, solarthermal and biogas; those resource rich applications, such aswind and biomass, that need increased technical support andthe establishment of an expanded local capacity in manufacturingand development: and those such as solar PV which havehuge potential but limited application until costs are reduced.

Michael Eckhart and Michael Allen

The development targets in all areas are substantial, with athreefold increase in hydro, and a thirtyfold increase in windforeseen. Under the broader biomass / biogas category afourfold expansion of biomass power generation is anticipated,with a fiftyfold increase in the available supply of compressedbiomass fuels. To reach the targets as outlined, a total investmentof some ¥1500 billion will be required.

Eddie O’Connor, CEO, Airtricity: In a paper titled“Renewable Energy – Building the Future”, the backgroundcontext of the world supplies of oil and gas were presentedin some detail, highlighting the author’s contention that by2025 not only will resources be limited, but reserves will alsobe geographically restricted. The potential for wind powergeneration was outlined in some detail. The opportunityto integrate wind generation with more traditional forms ofgeneration provides a number of benefits. The risk adjustedcosts of various generation sources has demonstrated theimmediate viability for wind and the positive impacts that itsinclusion has in the overall generation mix. In Scotland, forexample, where wind now contributes some 30% of generation,its installation has seen a 5% reduction in bulk electricitycosts. Concerns about the intermittency of wind can alsobe offset by interconnection to a dispersed grid system - thepotential exists to provide an enormous, steady, and reliablesupply of wind generation across Europe. Such a systemcould be established, for example, if a distribution systemwere established for electricity that imitated that providedfor oil and gas. The potential for wind generation in China isconsiderable given the very significant energy potential bothonshore and offshore, but the success of this market willdepend on the establishment of market features that ensure anattractive investment environment with, amongst other things,long term RE targets, appropriate and dependable legislation,and an open and unsubsidized market for wholesale electricity.

Methane madefrom biomass isan important fuelin China. William Wallace /

NREL /

Copyright REpower


4342

Session 1: The panel on investing in the development of therenewable energy sectorThe first session of the Finance Forum was chaired by VirginiaSonntag O’Brien, Managing Director of the Basel Agency forSustainable Energy (BASE) in Basel, Switzerland, and NickGardiner, Vice President and Head of the Energy Finance Groupof Fortis Bank in London. A panel of speakers presented theinterests and activities of their organizations in a session thatsought to summarize current activities and future trends in REfinance, both nationally and globally.

Dominique Campana of ADEME, outlined a number ofdomestic approaches that have been implemented in Franceto help accelerate the development of renewables and thewider uptake of energy efficiency measures. Sustainableenergy policy in France is based mainly on energy efficiencyand Renewable Energy Sources (RES) promotion, within theEuropean Union framework, to apply the Kyoto protocol andthe new national law on energy policy by July 2005. In 2010RES will have to provide 21 % of electricity consumption,5.75 % of fuel consumption in the transport sector andincrease their contribution to heat production by 50%.To achieve those targets, integrated partnerships betweenpublic and private professional and financial operators areimplemented, such as innovative financing instruments between

13 15

2 Michael Eckhart

AmericanCouncil on Renewable Energy ACORE

The financial community needs stabilityof policy more than anything else /

for public sector lending. To further enhance their programmesthe bank is working to establish co-financing facilities and tooffer guarantees that will provide not only partial credit coverage,but also address issues of political risk.

Peter Pischke of KfW outlined their interest in offering earlystage financing, an area where there is often considerabledifficulty in sourcing funding. Support can take the form of agrant to demonstrate project feasibility, through to the provisionof much needed longer term financing for the exploitationand operational phase of projects. It was stressed that theestablishment of recognized portfolio standards would beprovide a real benefit to future investments. Similarly, thebenefits of predictable feed-in tariffs were reiterated. To buildthe credibility of RE in the wider finance community, there isa need to focus on the success of projects, not linger on theoccasional negative experiences of the past. For rural energysupplies there was a plea that these should not be technologydriven solutions, but that the most appropriate approach andtechnology should be openly and critically assessed.

Zhuang Laiyou of the China Development Bank provideda background on current wind developments in China andplans that the bank has to support a significant growth in thelocal industry. The need for domestic manufacturing of windturbines and related equipment is seen as a crucial element,but there is a concern that China is still focused on R&D withinthis sector. The bank has introduced a number of supportmechanisms for the wind industry and these were outlined insome detail. Of particular importance was the recognition thatlonger term funding (13 to 15 years) is an important elementand that this will help underwrite accelerated implementationunder the new RE law that is now in effect.

Nick Gardiner

4.5 MW

(World Bank) Jamal Saghir

21

100

Saghir

ADEME and private banks, supporting the development ofbiomass, or an advanced feed-in tariff system for wind power.At the international level, funding schemes within public andprivate cooperation between France and other countries aresuccessful. For example, Renewable Energy Services Companiesproviding electricity in Mali, Morocco, and South Africa results inup to 750, 000 non-connected beneficiaries. Clean DevelopmentMechanism (CDM) offers increased profitability to projects,like a private wind power project by Lafarge in Tetouan,Morocco, decreasing the CO2 emissions of the cementplant by 20%. From those examples a widening of theFrance-China cooperation could be proposed, in the fieldof institutional framework, capacity building, electrificationfrom renewables and CDM implementation.

Klaus Gerhaeusser of the Asian Development Bankdescribed the bank’s renewed programmes to support cleanenergy developments through multi-tranche financing whichoffers more favourable terms and can provide facilities in localcurrency, an issue that is seen as key by many. The newerfacilities through the bank will engage the private sector andeliminate the requirement for sovereign guarantees, as needed

The cement plant in Tetouan, Morocco is poweredby wind generated electricity. ARR Lafarge Medialibrary /

Tetouan

Villagers working on the Hybrid Wind & DieselPilot Project on Xiao Qing Dao Island in the YellowSea, which provides electricity for 120 households.Jerry Bianchi / NREL / Xiao Qing Dao

120


44

Li Fusheng of the Export Import Bank of China describedin detail the support that can be provided by export creditagencies under the internationally accepted protocols forsuch institutions. He noted that world energy demand isgrowing rapidly with world economic development, but thatdevelopment has also been frustrated by the energy andenvironmental crisis. Thus it is critical to explore energyrenewability for human beings. Renewable energy is a newarea in world energy exploration, due to its special characteristicsfor sustainable development strategy and bioenvironmentalimprovement. Export credits agencies, as one of the keydevelopment financiers, will play an important role in developingrenewables. In recent years, many ECAs have begun toapproach consensus on financing renewable energies andactively take part in the financing system. As an officiallysupported ECA in China, China ExIm Bank has been financingrenewables in domestic and overseas projects through itsexport credits, aid related loans, overseas investment financing,and transfer loans from other foreign governments. The bankwill collaborate with international financial institutions and therenewables sector to expand global renewable energy andcontribute to sustainable global growth.

Michael Eckhart

GE (Ecomagination) BP

CalPERS (Green Wave) Nth

Power DFJ Technology Partners IPO 2005

Q-Cells SunPower SunTech 2005

Winslow Management (Green Fund) 200

New Energy Capital US Renewables Group United Hudson

Bank 2004 40 2005 120

1

Acciona Energia Alberto de Miguel10

Christina Weirlen

1991-2004 57.30 188.20

245.50

(Roaring 40s Renewable Energy Ltd) MarkKelleher CLP

(100 MW)

consolidation within the manufacturing sector, which limitsources, but which perhaps provides more robust financialresources to address the rapidly growing demand for equipment.

Jamal Saghir of the World Bank provided a fitting finalpaper in which the estimates of the total investment needsfor proposed RE developments on a global basis weregraphically outlined. He said: “Profound and radical changesare taking place all across the world that are altering ourenergy landscape - changes that will continue to do sothroughout the rest of the 21st century. Rapidly developingcountries such as Brazil, China, India, and others are havinga dramatic impact on the global market for energy as theyseek to fuel their economies. The impact of higher oil prices ishaving a crippling effect on some of the poorest oil-importingcountries.” While the World Bank, KfW, GEF, EIB, the EU,EBRD and ADB are all increasing their commitments to thismarket, the source of the full $10 billion seen as neededeach year has yet to be identified. Clearly the private sectorhas a key role to play, but it will take a significant team effortfrom all sides to provide adequate sources of finance frompre-investment through to construction and operation if weare to have any hope of meeting the ambitious targets that theindustry has set itself. Mr. Saghir said: “Among internationalfinancial institutions and bilateral donors, the World BankGroup is without a doubt one of the developing world’s largestfinanciers for renewable energies - and just as importantly -energy efficiency. “ He closed by saying: “All of us have arole to play, and how we can effectively play to our strengths,and, more importantly, in global partnership with one another,will determine whether or not we succeed.”

Session 2: Commercial investment and financing of renewableprojectsThe second Finance Forum Session was Co-chaired byMichael Eckhart, President of the American Council onRenewable Energy (ACORE) in Washington, DC, and QinHaiyan, General Manager, China General Certification, and alsoa leader in the Chinese Wind Energy Association in Beijing. Inthis second session speakers representing leading renewableenergy investors and lenders shared their experiences.

Nick Gardiner of Fortis Bank outlined the portfolio ofinvestments that the bank has in RE developments andthen provided a very thorough overview of project risks,their assessment, and steps that are taken to address thesefor their investment in wind projects. The importance of highquality and reliable resource data was stressed as was theneed for a clear and consistent regulatory environment. Thereis considerable enthusiasm within the current wind energymarket as an increasing number of bankable projects arebeing presented for financing. In return, the interest of thefinance market in wind is growing, major sponsors are emerging,and larger projects being undertaken. If there are concerns,these are around the fact that technology is evolving andturbine unit sizes are moving towards 4.5 MW, a size forwhich there is no experience to date. There is also some

Renewable energy financing is increasingrapidly, as are corporate commitments /

A 100 kW photovoltaic system being installedat a wind farm site south of Coimbatore, India.Applied Power Corporation / NREL / 100 Kw

Co imbatore

IPO 2005

1015 20

BIREC 2005


Michael Eckhart of ACORE presented an overview ofrenewable energy financing in the US. He noted that renewableenergy financing is increasing rapidly, and corporate commitmentsare up, such as GE’s Ecomagination initiative, and BP’s newAlternative Energy commitments. Institutional investors arealso increasing commitments, such as CalPERS pensionfund’s new Green Wave initiative. Venture capital is increasing,with traditional firms like Nth Power, DFJ, and TechnologyPartners being joined by newcomers into the Clean-Techarena. IPO activity is up sharply, with the top three technologydeals in 2005 all being solar PV companies: Q-Cells, SunPower,and SunTech. Public stock markets are responding well, asevidenced by Winslow Management’s Green Fund beingranked number two out of over 200 funds in 2005. Equitycapital for RE projects is increasing, with new funds like NewEnergy Capital and US Renewables Group. Lending to thesector is increasing, with new participations by United HudsonBank and others. Merger and Acquisition activity is increasing,up to $4 billion in 2004, anticipated to be $12 billion in 2005.Finally, there is the beginning of a market for RenewableEnergy Certificates being formed in the US.

Harvesting corn and stoverfor ethanol production.Warren Gretz / NREL /


48

Mark Kelleher of Roaring 40s Renewable Energy Ltdprovided an overview of how a newly established joint venturewith CLP has assessed the regional wind market, built on thepartners’ experiences with wind farms in New Zealand andAustralia, and sees the future opportunities within China. Thecompany’s first investment in China, through the 100 MWDatang project in Jilin province, is the base from which asignificant portfolio of investments will be built in China. In linewith a number of earlier speakers, the importance of an efficientindustry development, a clear signal on tariffs, and a realisticregulatory environment were all stressed as key elementsto allow the market’s rapid growth.

SummaryThe tone of the Finance Forum was positive, with cautiousbut optimistic outlooks for the future. This fits very well withthe similar tone in the main governmental event, whereleaders spoke about recent successes and the need to domore in renewable energy. The speakers reported increasinglevels of activity from all sources of financing includinggovernment export-import agencies, research agencies,development banks, commercial banks, investment banks,investors, and venture capitalists. The public markets areturning positive, with IPOs and stock prices increasing.Overall, it appears that 2005 was the most successful yearyet for renewable energy financing. There are concernsabout whether renewable energy will become a big,mainstream form of energy, and whether costs will continueto come down. The speakers expressed confidence thatthings are heading in the right direction, and all expressedcommitments to remain focussed on this sector for futurefinancial business.

The one thing requested of public policymakers in the Forumis to recognize that the financial community needs stability ofpolicy more than anything else. Temporary sweeteners mightbe good for demonstrations and prototype experiments, butthis can be quite disruptive for mainstream financing whichseeks stable and predictable environments. The basis for thiscan be easily seen when considering that investors andbanks can be making 10, 15, and 20-year commitments,and it is not unreasonable therefore to expect public policyto make similar long-term commitments.

The BIREC 2005 Finance Forum was a tremendoussuccess, in terms of so quickly updating the audience aboutthe state of finance, and the key issues of today.

Overall, it appears that 2005 was the mostsuccessful year yet for renewable energyfinancing / 2005

Wei Diansheng of China State Forestry Administrationmade a strong plea that the potential of forestry based biomassbe recognized and supported as a key element of future RE inChina. He also suggested that with some 100 million hectaresof bare land within China, there was a considerable opportunityto utilize these for the growing of Jatropha and its integrationas a biofuel into the transport industry.

Alberto de Miguel of Acciona Energia spoke about theexciting yet challenging field of microfinance in Latin America,which has expanded tremendously in the past 10 years.Microfinance is expanding, from original business in very smallloans to groups of poor women, to making a broader array offinancial services available to rural and urban populations. Thisincludes renewable energy, such as solar PV and othersystems.

Christina Weirlen of the Global Environment Facility spokeabout GEF, noting that it is the financial mechanism of theUNFCCC, financing the incremental costs of taking careof the global environment. GEF is a partnership with andbetween international development agencies. Key partnersinclude the World Bank, UNDP and UNEP. More recently ADB,IADB, EBRD, and AfDB have joined. These agencies propose,co-finance, and execute the GEF. During the period 1991-2004,GEF advanced $5,730 million in grants for the globalenvironment, leveraging an additional $18,820 million infinancing, totalling $24,550 million of impact. Today, GEFis moving away from direct support for hardware acquisition,and is moving towards supporting the creation of an enablingenvironment, such as information and awareness, policyframeworks, and capacity building. In addition, non-grantinstruments are a field of experimentation, and will be furtherexplored in the future.

Stacks of hay to be made into low grade paper, China. Simon Tsuo / NREL /


40 41

The Commercial Investment and Finance Forum

2005 11 7 BIREC 2005

BIREC2005

2006 1

/

15000

Airtricity Eddie O'Connor- (Renewable Energy - Building the Future)

2025

30%5%

1 Virginia Sonntag O'Brien Nick

Gardiner Basel Agency for Sustainable Energy BASE

(Fortis Bank)

(ADEME) Dominique Campana

(RES) 2005 7 2010

21% 5.75% 50%

750,000 (CDM)

Tetouan Lafarge CO2

20%

(Asian Development Bank) KlausGerhaeusser

(sovereign guarantee)

(KfW) Peter Pischker

A key part of BIREC 2005 was the Renewable Energy Investmentand Finance Forum that took place on Monday, November 7, 2005in the Great Hall of the People.

The Finance Forum provided leading investors and globalfinancial institutions with a platform to discuss how and wherenew patterns of investment are taking hold in the renewableenergy sector. It explored the financial instruments and dealstructures that are working today, as well as the regulatoryframeworks needed to underlie future development trends.An emphasis was placed on the rapidly expanding renewableenergy markets in developing countries, and how they canhelp deliver sustainable world economic development.Whereas the theme of finance speeches several years agowas about barriers and the need to bring down costs, thecentral theme of the speeches in the BIREC 2005 FinanceForum was about the financing that is being done. The mainpoints of the opening addresses are summarized below.

Wu Guihui Vice Director General Of Energy Bureau ofNDRC: With the background of the new China RenewableEnergy Law coming into force in January 2006, Wu Guihuiprovided a comprehensive review of China’s currentrenewable energy installations focusing particularly on hydro,wind, solar and biomass. Existing capacity in each of thesefields is impressive, but generally represents only a smallportion of the potential that has been identified for each ofthese resources. The development of all such resources willin future be regulated by the new law which sees three basicstrategies to promote resources, namely:

Those which are already commercially viable and need minorsupport to encourage extensive development – hydro, solarthermal and biogas; those resource rich applications, such aswind and biomass, that need increased technical support andthe establishment of an expanded local capacity in manufacturingand development: and those such as solar PV which havehuge potential but limited application until costs are reduced.

Michael Eckhart and Michael Allen

The development targets in all areas are substantial, with athreefold increase in hydro, and a thirtyfold increase in windforeseen. Under the broader biomass / biogas category afourfold expansion of biomass power generation is anticipated,with a fiftyfold increase in the available supply of compressedbiomass fuels. To reach the targets as outlined, a total investmentof some ¥1500 billion will be required.

Eddie O’Connor, CEO, Airtricity: In a paper titled“Renewable Energy – Building the Future”, the backgroundcontext of the world supplies of oil and gas were presentedin some detail, highlighting the author’s contention that by2025 not only will resources be limited, but reserves will alsobe geographically restricted. The potential for wind powergeneration was outlined in some detail. The opportunityto integrate wind generation with more traditional forms ofgeneration provides a number of benefits. The risk adjustedcosts of various generation sources has demonstrated theimmediate viability for wind and the positive impacts that itsinclusion has in the overall generation mix. In Scotland, forexample, where wind now contributes some 30% of generation,its installation has seen a 5% reduction in bulk electricitycosts. Concerns about the intermittency of wind can alsobe offset by interconnection to a dispersed grid system - thepotential exists to provide an enormous, steady, and reliablesupply of wind generation across Europe. Such a systemcould be established, for example, if a distribution systemwere established for electricity that imitated that providedfor oil and gas. The potential for wind generation in China isconsiderable given the very significant energy potential bothonshore and offshore, but the success of this market willdepend on the establishment of market features that ensure anattractive investment environment with, amongst other things,long term RE targets, appropriate and dependable legislation,and an open and unsubsidized market for wholesale electricity.

Methane madefrom biomass isan important fuelin China. William Wallace /

NREL /

Copyright REpower


4342

Session 1: The panel on investing in the development of therenewable energy sectorThe first session of the Finance Forum was chaired by VirginiaSonntag O’Brien, Managing Director of the Basel Agency forSustainable Energy (BASE) in Basel, Switzerland, and NickGardiner, Vice President and Head of the Energy Finance Groupof Fortis Bank in London. A panel of speakers presented theinterests and activities of their organizations in a session thatsought to summarize current activities and future trends in REfinance, both nationally and globally.

Dominique Campana of ADEME, outlined a number ofdomestic approaches that have been implemented in Franceto help accelerate the development of renewables and thewider uptake of energy efficiency measures. Sustainableenergy policy in France is based mainly on energy efficiencyand Renewable Energy Sources (RES) promotion, within theEuropean Union framework, to apply the Kyoto protocol andthe new national law on energy policy by July 2005. In 2010RES will have to provide 21 % of electricity consumption,5.75 % of fuel consumption in the transport sector andincrease their contribution to heat production by 50%.To achieve those targets, integrated partnerships betweenpublic and private professional and financial operators areimplemented, such as innovative financing instruments between

13 15

2 Michael Eckhart

AmericanCouncil on Renewable Energy ACORE

The financial community needs stabilityof policy more than anything else /

for public sector lending. To further enhance their programmesthe bank is working to establish co-financing facilities and tooffer guarantees that will provide not only partial credit coverage,but also address issues of political risk.

Peter Pischke of KfW outlined their interest in offering earlystage financing, an area where there is often considerabledifficulty in sourcing funding. Support can take the form of agrant to demonstrate project feasibility, through to the provisionof much needed longer term financing for the exploitationand operational phase of projects. It was stressed that theestablishment of recognized portfolio standards would beprovide a real benefit to future investments. Similarly, thebenefits of predictable feed-in tariffs were reiterated. To buildthe credibility of RE in the wider finance community, there isa need to focus on the success of projects, not linger on theoccasional negative experiences of the past. For rural energysupplies there was a plea that these should not be technologydriven solutions, but that the most appropriate approach andtechnology should be openly and critically assessed.

Zhuang Laiyou of the China Development Bank provideda background on current wind developments in China andplans that the bank has to support a significant growth in thelocal industry. The need for domestic manufacturing of windturbines and related equipment is seen as a crucial element,but there is a concern that China is still focused on R&D withinthis sector. The bank has introduced a number of supportmechanisms for the wind industry and these were outlined insome detail. Of particular importance was the recognition thatlonger term funding (13 to 15 years) is an important elementand that this will help underwrite accelerated implementationunder the new RE law that is now in effect.

Nick Gardiner

4.5 MW

(World Bank) Jamal Saghir

21

100

Saghir

ADEME and private banks, supporting the development ofbiomass, or an advanced feed-in tariff system for wind power.At the international level, funding schemes within public andprivate cooperation between France and other countries aresuccessful. For example, Renewable Energy Services Companiesproviding electricity in Mali, Morocco, and South Africa results inup to 750, 000 non-connected beneficiaries. Clean DevelopmentMechanism (CDM) offers increased profitability to projects,like a private wind power project by Lafarge in Tetouan,Morocco, decreasing the CO2 emissions of the cementplant by 20%. From those examples a widening of theFrance-China cooperation could be proposed, in the fieldof institutional framework, capacity building, electrificationfrom renewables and CDM implementation.

Klaus Gerhaeusser of the Asian Development Bankdescribed the bank’s renewed programmes to support cleanenergy developments through multi-tranche financing whichoffers more favourable terms and can provide facilities in localcurrency, an issue that is seen as key by many. The newerfacilities through the bank will engage the private sector andeliminate the requirement for sovereign guarantees, as needed

The cement plant in Tetouan, Morocco is poweredby wind generated electricity. ARR Lafarge Medialibrary /

Tetouan

Villagers working on the Hybrid Wind & DieselPilot Project on Xiao Qing Dao Island in the YellowSea, which provides electricity for 120 households.Jerry Bianchi / NREL / Xiao Qing Dao

120


44

Li Fusheng of the Export Import Bank of China describedin detail the support that can be provided by export creditagencies under the internationally accepted protocols forsuch institutions. He noted that world energy demand isgrowing rapidly with world economic development, but thatdevelopment has also been frustrated by the energy andenvironmental crisis. Thus it is critical to explore energyrenewability for human beings. Renewable energy is a newarea in world energy exploration, due to its special characteristicsfor sustainable development strategy and bioenvironmentalimprovement. Export credits agencies, as one of the keydevelopment financiers, will play an important role in developingrenewables. In recent years, many ECAs have begun toapproach consensus on financing renewable energies andactively take part in the financing system. As an officiallysupported ECA in China, China ExIm Bank has been financingrenewables in domestic and overseas projects through itsexport credits, aid related loans, overseas investment financing,and transfer loans from other foreign governments. The bankwill collaborate with international financial institutions and therenewables sector to expand global renewable energy andcontribute to sustainable global growth.

Michael Eckhart

GE (Ecomagination) BP

CalPERS (Green Wave) Nth

Power DFJ Technology Partners IPO 2005

Q-Cells SunPower SunTech 2005

Winslow Management (Green Fund) 200

New Energy Capital US Renewables Group United Hudson

Bank 2004 40 2005 120

1

Acciona Energia Alberto de Miguel10

Christina Weirlen

1991-2004 57.30 188.20

245.50

(Roaring 40s Renewable Energy Ltd) MarkKelleher CLP

(100 MW)

consolidation within the manufacturing sector, which limitsources, but which perhaps provides more robust financialresources to address the rapidly growing demand for equipment.

Jamal Saghir of the World Bank provided a fitting finalpaper in which the estimates of the total investment needsfor proposed RE developments on a global basis weregraphically outlined. He said: “Profound and radical changesare taking place all across the world that are altering ourenergy landscape - changes that will continue to do sothroughout the rest of the 21st century. Rapidly developingcountries such as Brazil, China, India, and others are havinga dramatic impact on the global market for energy as theyseek to fuel their economies. The impact of higher oil prices ishaving a crippling effect on some of the poorest oil-importingcountries.” While the World Bank, KfW, GEF, EIB, the EU,EBRD and ADB are all increasing their commitments to thismarket, the source of the full $10 billion seen as neededeach year has yet to be identified. Clearly the private sectorhas a key role to play, but it will take a significant team effortfrom all sides to provide adequate sources of finance frompre-investment through to construction and operation if weare to have any hope of meeting the ambitious targets that theindustry has set itself. Mr. Saghir said: “Among internationalfinancial institutions and bilateral donors, the World BankGroup is without a doubt one of the developing world’s largestfinanciers for renewable energies - and just as importantly -energy efficiency. “ He closed by saying: “All of us have arole to play, and how we can effectively play to our strengths,and, more importantly, in global partnership with one another,will determine whether or not we succeed.”

Session 2: Commercial investment and financing of renewableprojectsThe second Finance Forum Session was Co-chaired byMichael Eckhart, President of the American Council onRenewable Energy (ACORE) in Washington, DC, and QinHaiyan, General Manager, China General Certification, and alsoa leader in the Chinese Wind Energy Association in Beijing. Inthis second session speakers representing leading renewableenergy investors and lenders shared their experiences.

Nick Gardiner of Fortis Bank outlined the portfolio ofinvestments that the bank has in RE developments andthen provided a very thorough overview of project risks,their assessment, and steps that are taken to address thesefor their investment in wind projects. The importance of highquality and reliable resource data was stressed as was theneed for a clear and consistent regulatory environment. Thereis considerable enthusiasm within the current wind energymarket as an increasing number of bankable projects arebeing presented for financing. In return, the interest of thefinance market in wind is growing, major sponsors are emerging,and larger projects being undertaken. If there are concerns,these are around the fact that technology is evolving andturbine unit sizes are moving towards 4.5 MW, a size forwhich there is no experience to date. There is also some

Renewable energy financing is increasingrapidly, as are corporate commitments /

A 100 kW photovoltaic system being installedat a wind farm site south of Coimbatore, India.Applied Power Corporation / NREL / 100 Kw

Co imbatore

IPO 2005

1015 20

BIREC 2005


Michael Eckhart of ACORE presented an overview ofrenewable energy financing in the US. He noted that renewableenergy financing is increasing rapidly, and corporate commitmentsare up, such as GE’s Ecomagination initiative, and BP’s newAlternative Energy commitments. Institutional investors arealso increasing commitments, such as CalPERS pensionfund’s new Green Wave initiative. Venture capital is increasing,with traditional firms like Nth Power, DFJ, and TechnologyPartners being joined by newcomers into the Clean-Techarena. IPO activity is up sharply, with the top three technologydeals in 2005 all being solar PV companies: Q-Cells, SunPower,and SunTech. Public stock markets are responding well, asevidenced by Winslow Management’s Green Fund beingranked number two out of over 200 funds in 2005. Equitycapital for RE projects is increasing, with new funds like NewEnergy Capital and US Renewables Group. Lending to thesector is increasing, with new participations by United HudsonBank and others. Merger and Acquisition activity is increasing,up to $4 billion in 2004, anticipated to be $12 billion in 2005.Finally, there is the beginning of a market for RenewableEnergy Certificates being formed in the US.

Harvesting corn and stoverfor ethanol production.Warren Gretz / NREL /


48

Mark Kelleher of Roaring 40s Renewable Energy Ltdprovided an overview of how a newly established joint venturewith CLP has assessed the regional wind market, built on thepartners’ experiences with wind farms in New Zealand andAustralia, and sees the future opportunities within China. Thecompany’s first investment in China, through the 100 MWDatang project in Jilin province, is the base from which asignificant portfolio of investments will be built in China. In linewith a number of earlier speakers, the importance of an efficientindustry development, a clear signal on tariffs, and a realisticregulatory environment were all stressed as key elementsto allow the market’s rapid growth.

SummaryThe tone of the Finance Forum was positive, with cautiousbut optimistic outlooks for the future. This fits very well withthe similar tone in the main governmental event, whereleaders spoke about recent successes and the need to domore in renewable energy. The speakers reported increasinglevels of activity from all sources of financing includinggovernment export-import agencies, research agencies,development banks, commercial banks, investment banks,investors, and venture capitalists. The public markets areturning positive, with IPOs and stock prices increasing.Overall, it appears that 2005 was the most successful yearyet for renewable energy financing. There are concernsabout whether renewable energy will become a big,mainstream form of energy, and whether costs will continueto come down. The speakers expressed confidence thatthings are heading in the right direction, and all expressedcommitments to remain focussed on this sector for futurefinancial business.

The one thing requested of public policymakers in the Forumis to recognize that the financial community needs stability ofpolicy more than anything else. Temporary sweeteners mightbe good for demonstrations and prototype experiments, butthis can be quite disruptive for mainstream financing whichseeks stable and predictable environments. The basis for thiscan be easily seen when considering that investors andbanks can be making 10, 15, and 20-year commitments,and it is not unreasonable therefore to expect public policyto make similar long-term commitments.

The BIREC 2005 Finance Forum was a tremendoussuccess, in terms of so quickly updating the audience aboutthe state of finance, and the key issues of today.

Overall, it appears that 2005 was the mostsuccessful year yet for renewable energyfinancing / 2005

Wei Diansheng of China State Forestry Administrationmade a strong plea that the potential of forestry based biomassbe recognized and supported as a key element of future RE inChina. He also suggested that with some 100 million hectaresof bare land within China, there was a considerable opportunityto utilize these for the growing of Jatropha and its integrationas a biofuel into the transport industry.

Alberto de Miguel of Acciona Energia spoke about theexciting yet challenging field of microfinance in Latin America,which has expanded tremendously in the past 10 years.Microfinance is expanding, from original business in very smallloans to groups of poor women, to making a broader array offinancial services available to rural and urban populations. Thisincludes renewable energy, such as solar PV and othersystems.

Christina Weirlen of the Global Environment Facility spokeabout GEF, noting that it is the financial mechanism of theUNFCCC, financing the incremental costs of taking careof the global environment. GEF is a partnership with andbetween international development agencies. Key partnersinclude the World Bank, UNDP and UNEP. More recently ADB,IADB, EBRD, and AfDB have joined. These agencies propose,co-finance, and execute the GEF. During the period 1991-2004,GEF advanced $5,730 million in grants for the globalenvironment, leveraging an additional $18,820 million infinancing, totalling $24,550 million of impact. Today, GEFis moving away from direct support for hardware acquisition,and is moving towards supporting the creation of an enablingenvironment, such as information and awareness, policyframeworks, and capacity building. In addition, non-grantinstruments are a field of experimentation, and will be furtherexplored in the future.

Stacks of hay to be made into low grade paper, China. Simon Tsuo / NREL /


51

The standardization and certificationof renewable energy products in china

2005 283

3 1TC20 ISO/TC180

(SC6)TC50 IEC/TC88

TC90IEC/TC82

Framework for the Standardization and Certificationof Chinese Renewable Energy ProductsThe standardization and certification of Chinese renewableenergy products is administrated by two Committeessubordinated to the General Administration of QualitySupervision, Inspection and Quarantine of P.R. for China,namely, the National Standardization Administration Committeeand the Certification and Accreditation Administration of P.R.for China. Other relevant supporting bodies include theTechnical Committee for Standardization and the NationalAccreditation Centre for Conformity Assessment, as well asvarious laboratories and other certification bodies (see Figure1). The administrative system is structured such that itcombines unified management with clear divisions ofresponsibility. The following paragraphs will presentstandardization, certification, and accreditation respectively.

Figure 1: The Structure of China’s Standardization and Certification Administration / 1

Rural communities in Chinaoften rely on solar waterheaters. Simon Tsuo / NREL /

China is a country with both a large population and a rapidlygrowing economy.

Its energy industry at the beginning of the twenty-first centuryis confronted, as is the case in many other countries, withtwo major conflicting pressures: economic growth and theneed for environmental protection.

Changing traditional methods of energy production andconsumption and pursuing the development and utilizationof clean renewable energy have a significant role to play inthe establishment of a sustainable energy system that canboth promote national economic development and improvethe quality of the environment.

China began to develop and apply renewable energy technologyin the 1970s and gradually started a process of industrializeddevelopment in recent years. However, there still remainsa large shortfall of good quality renewable energy productsin China, which severely restricts the further developmentof industry. Therefore, the lack of standardization andcertification - a cornerstone for improving product quality – is without doubt a problem in need of urgent solution.

This article will give a brief introduction to the administrativeand implementation systems for standardization, certificationand accreditation in China, as well as the relevant standardsand certification systems for renewable energy technologies suchas wind and PV power generation and solar water heating.

21

20 70

??

1


5352

Authorized by the State Council and supervised by theGeneral Administration of Quality Supervision, Inspection,and Quarantine, CNCA presides over standardizationthroughout the country.

The Technical Committee of National Professional Standardizationis mainly in charge of nationwide standardization in varioustechnical fields, as well as the technological jurisdiction ofstandardization within its own field. It was established, and isadministered by, the National Standardization AdministrationCommittee.

By the end of 2005 there were, in total, 283 national professionalstandardization techniques commissions, involving a variety ofareas such as industry, agriculture, service, security, sanitation,and environmental protection & management, amongst others.Three of these, as Figure 1 shows, are related to renewableenergy: the New Energy and renewable Energy Subcommittee(SC6) under the Technical Committee of National EnergyFoundation and Administration Standardization (TC20,connected withISO/TC180); the Technical Committee ofNational Wind Mechanism Standardization (TC50, connectedwith IEC/TC88); and the Technical Committee of NationalPhotovoltaic Solar Energy System Standardization (TC90,connected with IEC/TC82).

So far, many national standards have been formulated, ofwhich twelve are related to solar thermal applications, nineteento photovoltaics, twenty one to wind, two to geothermal, andsix to methane.

12 1921 2

6

2001 7 29

WTO

2

1

2

(CNAB)(CNAL)

(CNAT)

3

Historically, China’s certification and accreditation systemwas established and managed by various departments andindustries within relevant fields, which to some degree bringsabout the diversity of policies and rules, intersectional management,multiple standards, and inadequate supervision and surveillance.Confronted with these problems the State Council determined,on July 29th 2001, to set up CNCA to supervise, administrate,and coordinate certification and accreditation work at thenation level. The establishment of CNCA indicates that Chinawill establish a new management structure, in accordancewith the requirements of market economics, to conduct thework of certification following the National Treatment Principleunder WTO guidelines, thus finally establishing a certificationand accreditation system with unified standards and regulations,internal and external consistency, and high efficiency.

Figure 2 shows the current administration and implementationsystem for Chinese certification and accreditation.

(1) CNCA implements the ‘licensing’ system for certificationbodies, which means that a certification body can onlyconduct certification work within defined parameters, andafter it has been approved by CNCA, having gained thecorporation’s qualification.

(2) China implements a unified accreditation system, thatis, CNCA designates accreditation bodies to evaluate thecapability of certification bodies, inspection bodies, andlaboratories, and to grant Accreditation Certificates to thosequalified. To date, the three accreditation bodies designatedby CNCA are CNAB, CNAB and CNAT.

(3) Certification bodies conduct certification work in accordancewith the Implementation Rules of Products Certification approvedby CNCA. Certification bodies will grant Accreditation Certificatesto qualified manufacturers and permit them to use a certificationmark on their products.

(4) Testing laboratories contracted with certification bodiesare entrusted to conduct sample testing, make evaluationsand then make a final report on products in accordance withthe relevant standards and the rules of implementation forproduct certification.

(5) Manufacturers entrust certification bodies to conductcertification tests on their products and make commitmentsto provide products to the required standards.

(6) Certificates and Marks of Certification, granted by certificationbodies that are independent of both supply and demandparties, are authoritative guarantees of product quality. Consumerscan identify the product quality according to the Certificatesand Marks of Certification, enhancing their confidence insuch products.

4

5

6

3

Figure 2: The Administration andImplementation System for ChineseCertification and Accreditation / 2

CNCA_The Certification and AccreditationAdministration of P.R. China /

CNCA:

CNAB_China National AccreditationBoard for Certifiers /

CNAB:CNAL_China National Accreditation

Board for Laboratories /CNAL:

A sustainable energy system can promoteeconomic development and improve thequality of the environment /

(TC50) 1999

19992005 2136

3 12

(IEC)GB 18451.1-2001

IEC61400-1


5554

Wind Turbines Generator System Part 1: Technical Condition,Wind Turbines Generator System; Part 2: Testing Methods;and Technical Specifications for the Integration of WindFarms into the Power System.

The product and testing standards relevant to wind turbinegenerating systems are now basically complete. Some ofthem are identical to those adopted by the InternationalElectro-technical Commission (IEC), in particular some of thecentral standards. For example, GB 18451.1-2001 SafetyRequirements for Wind Turbine Generators, which is thefoundation of the design and certification for wind turbinegenerating systems is identical to IEC61400-1. For historicalreasons, the technology for wind power generation hasmainly been developed in Europe, which results in therelevant standards being based on the European environmentand wind conditions. However, China’s wind conditions arevery different from those in Europe. For instance, typhoonsare frequent in the southeast coastal areas of China, but theyare not a consideration for the above-mentioned Europeanstandards. Damage caused to wind turbine generators bytyphoons often occurs in China, India and Japan, and regionssuch as these need the international standards to be urgentlyre-evaluated, and improved in applicability, to take account oftheir specific situations and, in China’s case, to allow theestablishment of its own standards system for wind energy.

PV ProductsThe standards system for PV products includes four mainparts: PV cells, PV modules, PV systems and PV components.The 18th Institute of the Ministry of Information Industry is incharge of the establishment of the standard system for PVproducts in China (TC90).

The basic standards have been put in place and the nationalstandards for PV cells and PV modules have been integratedwith international practices, with the adopted standards identicalto IEC. However, the primary standard for PV systems iscurrently GB/T 19064-2003 Solar Home System Specificationsand Test Procedure which is compiled by TC20 (The TechnicalCommittee for National Energy Foundation and AdministrationStandardization) and based on the Solar Home System andWind/Solar Hybrid System Technical Specification developed byNDRC/GEF/WB Renewable Energy Development ProgrammeOffice. This standard is mainly aimed at small householdsystems, with particular emphasis on the examination ofcomponent quality, but neglects examination of the rationalityand reliability of the whole system. As PV products areincreasingly popular in China, TC90 is now making effortsto formulate corresponding national standards, taking thefollowing as references in order to meet the demands of safetyand integration of PV systems into power systems:

IEC 62124-2004 Photovoltaic (PV) stand alone systems -Design verification; IEC 61727-2004 Photovoltaic(PV) systemscharacteristics of the utility interface; IEC 61730-1 Photovoltaic(PV) module safety qualification - Part 1: Requirements forconstruction; and IEC 61730-2 Photovoltaic (PV) module safetyqualification - Part 2: Requirements for testing

14

• -

•

•

•

Figure 3 shows the specific certification process: Whenmanufacturers submit their application for certification toa certification body, the certification body will conduct afirst audit. After the corporation passes the first audit, thecertification body will send a notice of acceptance and anannouncement of the submission of product samples. Atthe same time, they will also notify the testing bodies, whowill then conduct sample testing and give the final reportin accordance with the implementation rules for productcertification and other relevant criteria and standards.After reviewing the report, if a product is deemed to havequalified, the certification body will inform the corporationand establish a team to make an inspection of the factory.After the inspection team submits its final report on thefactory, the certification body will review the report andgrant certificates to those corporations it considers qualified.

The Standardization of Chinese Renewable EnergyProductsWind Turbine Generating SystemsThe standardization of technology in the field of windmechanisms is presided over by the Technical Committeeof National Wind Mechanism Standardization (TC50). Since1999, TC50 has shifted its focus from off-grid generatingsystems to grid-tied generating systems. By 2005, Chinahad put in place twenty one national standards and thirtysix professional standards for wind turbine generatingsystems. Three national standards for wind turbinesgenerating systems being compiled recently included

(TC90)

IECGB/T 19064-2003

//

-

TC90

IEC 62124-2004 IEC 61727-2004 IEC 61730-1 -

- 1 IEC 61730-2 - - 2

1982

Figure 3: Certification Process / 3

A photovoltaic powered loudspeaker installed by Solar Electric Light in a Chinesevillage house. Simon Tsuo / NREL / (Solar Electric Light)


5756

Solar Water HeatersChina has made tremendous progress in the applicationof solar water heating and has now, after twenty years ofresearch and development, reached a level as advanced asany in the world. Parallel with the formation and developmentof the solar water heating industry, related standardizationwork has also been proceeding. The formulation of thesenational standards in China started in1982, with the draftingof Testing Method for Rating the Thermal Performance ofFlat Plate Solar Collector. Subsequently, following theindustry’s development, the Technical Committee of NationalEnergy Foundation and Administration Standardizationformulated fourteen national standards including Specificationfor Flat Plate Solar Collectors and Solar Energy-ThermalApplications-Terminology, etc. On the whole, China’stechnical standards system for solar water heating is nowquite sound, and the next stage will focus on the formulationof relevant standards for architectural integration so as tofurther accelerate its development.

The Certification of Renewable Energy ProductsIn order to regulate the renewable energy market, improveproduct quality, and promote the development of renewableenergy, the National Institute of Metrology, supported byNDRC and MOST and authorized by CNCA, has establisheda certification body especially for Chinese renewable energyproducts. This is the China General Certification Centre (CGC).CGC is the only domestic certification body accredited toconduct certification on renewable energy products suchas wind turbine generating systems, solar water heatersand PV products.

Wind Turbine Generating SystemsUnder the leadership and support of CNCA, NDRCand MOST, CGC has made the following progress in theprogramme for Quality Certification System in ChineseWind Turbine Generating Systems:

• Quality Testing and Certification System of Wind TurbineGenerating Systems: Rules and Procedures has been compiledand is now moving towards approval and application.

• The draft of The Handbook of Design and Evaluation onWind Turbine Generating Systems has been finished, andthe performance comparison of evaluation software is nowbeing made and the work of trial certification conducted.

• Manufacturers of components (including gearboxes, vanesand generators) have had corresponding testing capabilityand they can now conduct certification by means ofwitnessed tests. The Wind Energy Technology Centre ofCGC has finished the draft of The Test Manual andconducted the witnessed test on gearboxes andgenerators. They are currently preparing testing equipmentfor the whole machine, as well as conducting training atexpert level.

• Preparations are under way to construct ‘national-level’wind farms to meet the needs of certification and R&D.

•

// (REDP)

REDP

(UNDP) (GEF)

2005 71

• The draft of The Implementation Rules for Certification ofWTGS (Wind Turbine Generator Systems) and Componentshas been finished and trial certification for WTGS as wellas generators, gearboxes and vanes, etc. is now beingconducted.

PV ProductsSupported by NDRC/GEF/ REDP, CGC is engaged in aFeasibility Study on the Establishment of a PV ProductsCertification System in China. REDP will initiate the Programmefor the Establishment of the PV Products Certification Systemin the near future and will make quality surveillance throughcertification in the process of carrying out the PV subsidyprogramme. CGC has finished the initial survey, collated theinformation, and drafted the certification implementation rules.CGC will soon carry out trial certification work.

Solar Water HeatingWith the support of NDRC, UNDP and GEF and under thecoordination of relevant organizations, CGC has compiledThe Implementation Rules for Certification of SWH Productsand established the Technical Committee of Certification forSWH. Since July 1, 2005 when certification for solar waterheating was formally put into practice, numerous domesticmanufacturers of solar water heaters have applied forcertification of their products. At present, the trial certificationprocess has almost been completed, with the result thatmost of the leading manufacturers in China have beenapproved for certification.

China’s wind conditions are very differentfrom those in Europe /

Solar water heater systems on rooftops in Kunming, Yunnan Province, China. Jean Ku / NREL /

A tower maintenance mechanicclimbs a wind turbine to installmeteorological instruments.Jerry Bianchi / NREL /


5958

Global energy developmentAn overview of the main conference session

Globally, the change in the mix of renewable energies isexpected to be significant, as the use of wind, solar, geothermalenergy, and biofuels for transportation continue to increaserapidly , and the use of biomass for cooking and heatingremains stable, or declines.

Recent growth rates for renewable energy have outpaced allother fuels, although they still represent a very small percentageof total world energy consumption. Other more traditionalrenewable power generation technologies, including biomass,geothermal and small hydro, are more mature, and growingmore slowly at rates similar to those of fossil fuels.

Renewable energy costs have declined at rapid rates acrossthe board over the past two decades, and are all projectedto continue to decrease. The factors behind these costreductions include improvements in technological performance,and increasing scales of production and use. Coupled withincreasing prices for conventional energy sources and othermarket and policy drivers, these cost reductions have allowedrenewable energy technologies, such as wind power, bioenergy,solar hot water and photovoltaic systems, geothermal energy,and hydropower to achieve significant market penetrationaround the world.

The primary markets for renewable technology are powergeneration, much of it localised, for applications such as hotwater and space heating, and transportation fuels. Worldelectricity demand is expected to double between 2005 and2030, and to triple in developing countries by 2030. Renewableenergy accounted for 4% of total global electricity capacity,or 160 GW, in 2004 and is projected to increase rapidly over

2005 2030 2030 2004

4% 160GW 2004

160 GW 44%2/3

(PV)

20 70 70

80 20 90

90 21 /

the next several decades. Developing countries accountedfor 44% of the 160 GW in 2004, with two thirds of thiscapacity coming from small hydropower and wind energy.

There are opportunities for increasing use of all the majorsources of renewable energy electricity generation in thefuture. Onshore and offshore wind energy is expected tomake the largest contribution of the available technologies,expanding both in developed, and in developing countriesthat have made major commitments to wind power generation.

Photovoltaic (PV) markets are currently booming in Germany,Japan and some US states, with an expectation that thegrowth will continue in these markets and others. Biomasselectricity and heat production is slowly expanding in Europe,while small scale power and heat production from agriculturalwaste should see ongoing growth in developing countrieswith large agricultural industries. The concentrating solarpower market is also seeing a resurgence of investment,with numerous new projects under development.

Small scale hydro equipment continues to offer rural communitiesopportunities to enjoy reliable localised power supplies. Inthe developed world, the emphasis is on modernization andplant life extension, whereas in many developing countries,the priority is on attracting investment for new projects.

High-efficiency solar panels help power the headquartersof the Berlin Bank. Courtesy of BP Solarex / NREL /

A geothermally heated greenhouse in New Mexico. Robb Williamson / NREL /


6160

Utility scale wind power has tremendous potential for meetingsome of the rapidly increasing global demand, as costs havebecome competitive with conventional power generation,the industry has matured, and the technology has beenmade reliable.

The evolution of renewable energy policies has shown adiscernible pattern over the past three decades. Starting withRD&D in the early 1970s, government investments were foundmainly in support for market deployment. In the late 1970s,government investment started to emphasise market investmentincentives, voluntary programmes, and tax measures. By themid 1980s, most developed countries had RD&D policies.Towards the end of the 1990s, new market based policieswere being introduced, and by the late 1990s and early2000s, a clear acceleration in renewable energy policy makingwas taking place at national, state/provincial and municipallevels. Some policies set targets for future shares or amountsof renewable energy, others promote power generation, solarhot water, biofuels, or purchase of green power.

Analysts may argue about the details and relative effectivenessof different renewable energy policies, but nonetheless manypolicies have clearly produced significant results.

2005 43 25

2010 21%12% 43 18

5-30% 2010 3.6% 78% 1997

5-10%

2010-2012

The removal of market distortions can be the most effectivepolicy instrument to promote investment in economicallyviable renewable energy technologies. These are not promotionalpolicies for renewables, rather they are designed to removemarket barriers.

By mid-2005, at least 43 countries had set a national targetfor renewable energy supply, amongst them the 25 EUcountries. The EU has Europe-wide targets as well: 21% ofelectricity and 12% of total energy from renewable sourcesby 2010. In addition to these 43 countries, 18 US states,plus and the District of Columbia, and three Canadian provinceshave targets based on renewables portfolio standards. Mostnational targets are for shares of electricity production, typicallyin the 5-30% range. EU country targets by 2010 range from3.6% in Hungary to 78% in Austria, with most of these targetsproviding a 5-10% increase in the share from renewablescompared to 1997. Other targets around the world arefor shares of total primary energy supply, specific installedcapacity, or total amounts of energy from renewables,with most aiming for 2010-2012 as fulfilment dates.

Among the 43 countries with national targets, 10 are developingcountries – Brazil, China, the Dominican Republic, Egypt,India, Malaysia, Mali, the Philippines, South Africa, andThailand, with a few other developing countries expectedto announce targets in the near future.

At the Renewables 2004 Conference, capacity buildingfor market development was recognized as a key challenge.In fact, of the 200 actions and commitments set out in theInternational Action Program (IAP), 25% targeted the developmentof human and institutional capacity. This was a higher percentagethan for any other issue, and underscores the importance ofcapacity building for many countries. Since Bonn, a numberof capacity development initiatives have been put in place.Examples include:

Industrialized countries, newly industrialized economies intransition, and developed countries have continued to buildcapacity on policy, finance and technical issues. Policymakers, private firms, utilities, industry groups, and NGOshave sponsored and participated in a range of domestic,regional, and international forums aimed at strengthening thecapacity of decision makers and implementers of renewableenergy projects.

Research organizations continue to advance renewableenergy R&D and to develop and enhance models and toolsfor evaluation.

Benefiting from capacity building activities, several countrieshave recently put in place policy commitments, targets,and timetables for renewable energy advancement andare following through with implementation.

Capacity building efforts have helped to expand the rangeof corporate and financial players now investing in renewableenergy.

43 10

2004 (IAP)

200 25%

Recent growth rates for renewable energyhave outpaced all other fuels /

An aerial view of the Horns Rev Wind Millfarm, Denmark. © Elsam A/S / HornsRev


62

BIREC has outlined a number of priorities for theinternational community in accelerating the scaling upof renewable energy, particularly in developing countries.Proposed actions include:

Technology R&D. The continuation and accelerationof investment in technology research, development anddemonstration, in order to drive down costs for technologies’enhanced product and system performance, reliability, andefficiency; and to expand the base of cost competitive end-use applications.

Improvement of policy and regulatory frameworks.Securing political commitment and putting in place effectivepolicy and regulatory frameworks are crucial elements inimproving the investment climate for renewable energy.Governments have a role to play at all levels, and there isa range of policy options that have been applied, and fromwhich lessons are being learned.

Financing facilities. As the industry matures, it will beincreasingly important to expand the scope and breadthof financing sources and instruments, both locally andinternationally. More creative leveraging of public and privatesector resources will be needed to meet the financingrequirements of the renewable energy industry.

Capacity strengthening. For renewable energy marketsto grow, capacity strengthening is needed in all aspectsof project and programme design, development,implementation, and operation. Areas where capacitystrengthening is most needed include technology R&D,marketing, financing, operation, and maintenance; policyformation, implementation, and regulation; business planningand development; and consumer outreach and awareness.

International collaboration. Though each country has thelead responsibility for developing its own domestic renewableenergy market, and fulfilling commitments made at WSSDtowards increasing the global market share for thesetechnologies, a role exists for enhanced internationalcollaboration.

Networks such as REEEP and the Global Village EnergyPartnership (GVEP) have made capacity strengthening part oftheir core strategic plans, and support such efforts worldwide.

The overall picture is one of renewed determination toachieve real progress in the immediate future, with a generalacknowledgment amongst governments that policy initiativeshave to be capable of creating an environment in which thereare real incentives for private investment, together with bymeaningful levels of public support, at both the institutionaland consumer levels.

(GVEP)

U.S. biodiesel is made primarily from soybean oil and recycled restaurant cookingoil. Bob Allan / NREL /

New technology in renewable energydevelopment – Japan’s experience

Speaking at BIREC’s plenary session on policy, IchiroTakahara Director-General of the Energy Conservationand Renewable Energy Department of Japan’s Ministryof Economy, Trade and Industry, said that long-termcommitment to technological innovation is of centralimportance in keeping up to date with renewable energydevelopments.

His country has certainly benefited from its promotion ofthe sector, and is now the world’s top photovoltaic powerproducing country, accounting for 48% of the globalelectrical output derived from photovoltaics. at the same timeproducing about 50% of the world’s solar cells and batteries.This could not have been accomplished without active andcontinual investment in research and development, whichnow has reached 170 billion yen, or US$1.5 billion.

Japan started promoting energy conservation and renewableenergy in the 1970s when the oil crisis threatened thecountry’s economic development. Since then, the countryhas made strenuous efforts in energy conservation, andhas actively worked for international cooperation.

(Ministry of Economy, Trade and Industry) (Energy Conservation and Renewable

Energy Department) Ichiro Takahara

48% 50%

1700 15

20 70

New Energy& Industrial Technology Development Organisation NEDO

100 8700

Wind turbines north of Rumoi Cityon the west coast of Hokkaido, Japan.Bill Bauer / NREL / Rumoi


64

The development of innovative technology has led to drasticcost reductions and helped overcome many of the problemsfacing the renewables industry. In PV alone, Japan hasinvested more than 10 billion yen (US$87 million) throughits New Energy & Industrial Technology DevelopmentOrganisation ( NEDO), a government agency.

Japan believes that the fruits of technological innovations inrenewable energy must be shared among the contributingcountries, and has established information and technologyexchanges with partner countries such as its joint developmentof three PV projects in China. However, simply sharing isnot enough and Japan proposes that the sharing of suchtechnology information must be actively promoted in amultilateral forum where as many countries as possible canparticipate. In the IEA’s “Renewable Energy Working Party,”there is a framework for joint research and development,in which non-IEA countries can participate.

In the sharing of technological information, Japan suggeststhat the participating countries actively make use of sucha multilateral framework and the proposal for a frameworkwas referred to in the Action Plan of the Gleneagles Summitearlier this year. Japan plans to continue active participationin the framework, and to develop further cooperations withthe participating countries.

In order for each country to establish a renewable energymarket, it is necessary to introduce a clear renewable energypolicy which will set targets and regulations based on eachcountry’s circumstances. For this reason, it is essential todevelop the human resources to not only shoulder theresponsibility for constructing systems and developingpolicies in their own countries, but also to provide expertiseand enthusiasm for the development of an independentrenewable energy market.

To promote such human resources in developing countries,Japan initiated an ongoing plan in 2005 to train 100renewable energy personnel from Asia each year.

Japan believes that a further challenge facing the widerpromotion of renewable energy in developing countries lies inencouraging private sector investment in renewable energybusinesses. Those renewable energy projects that make thebest use of the Global Environment Facility, or GEF, are goodexamples. But the greater challenge remains the involvementof more private funds and the encouragement of investmentin developing countries in order to further promote wider useof renewable energy. The APEC Energy Ministers’ Meeting, inwhich Japan participates, has also emphasized this aspect.

The hope is that a significant contribution to the resolution of theseissues can continue to be made by Japan through internationalforums like BIREC, as well as the country’s assistance tospecific renewable energy projects in many countries bymeans of ODA and official export credits and through JBIC asa public financial institution. Certainly current policy is thecontinued support of such projects for the foreseeable future.

A 200 watt concentratorphotovoltaic moduledeveloped by Daido Steelin Japan. Daido Steel / NREL /

Daido Steel 200

(IEA) (Renewable Energy Working Party)

2005 100

(GEF)

(APEC)

(ODA)(JBIC)

A solar home systemin Gansu Province,People's Republic ofChina. William Wallace / NREL

/

Are China’s targets ambitious enough?

2002 (CDM)

2020 7% 15%

(NDRC) 2020 30%

2.9 3000 200

2020 3 4000

2020 240

25% 1.08

25%

6500 50

65,000

China ratified the Kyoto Protocol in 2002 and is currently activelyengaged in applying the Protocol’s Clean DevelopmentMechanism (CDM). Chinese officials announced an ambitiousplan at BIREC for the world's second biggest emitter ofgreenhouse gases to boost the proportion of renewable energyin its primary energy production from the current 7% to 15%by 2020. The expectation is that this will alleviate increasingpressure both on resources and the environment.

Xu Dingming, director of the Energy Bureau of the NationalDevelopment and Reform Commission (NDRC) said in aninterview that by 2020, China expects at least 30% of itselectricity to come from power plants fuelled by renewableenergy sources. By that date, the combined generatingcapacity of hydropower plants in the country should reach290 million kilowatts, that of wind power plants 30 millionkilowatts, and that of solar power plants, 2 million kilowatts.

Already the world's largest market for solar water heaters,China plans to increase the total heat collecting area for thisapplication to 300 million square metres by 2020, with anannual fossil fuel saving equivalent to 40 million tonnes ofstandard coal. China will also aggressively push ahead with theuse of methane in its rural areas and by 2020, the country'sannual methane consumption will reach 24 billion cubic metres.

However, environmentalists suggest that Beijing's new targetis still not ambitious enough to offset the climatic damagethat will be caused by its spectacular economic growth,which will continue to be predominantly fuelled by coal.


6766

0.23 0.25

2004

2005 2

2020

On average, China's renewable energy consumption isgrowing by over 25% a year. Official statistics show China'shydroelectric power generating capacity has reached 108million kilowatts, 25% of its total generating capacity.

The total heat collecting area of solar water heaters in Chinais currently 65 million square metres, its annual methaneconsumption has reached 5 billion cubic metres, and thecombined generating capacity of photovoltaic systems inthe country is 65,000 kilowatts.

Xu said the renewable energy industry is still in its infancyand should be given preferential treatment in terms of taxes,government funds, and financial markets, so that it can surviveand develop in competition with the existing power industry.

Measures regarding electricity tariffs have already beenformulated and will be announced by the end of the year.Electricity produced by wind power will cost 0.23 yuan perkWh more than electricity produced by coal-burning plants,while electricity generated by biological materials will cost0.25 yuan per kWh more.

The Chinese government submitted two programmes foraction at the Bonn International Renewable Energy Conferencein 2004. One was the formulation of a Renewable Energy Law,the other the preparation of a renewable energy developmentplan. In February 2005, the National People’s Congress ofChina reviewed and passed the Renewable Energy Law, whichdefines the responsibilities and obligations of government,businesses, and users in the development and use ofrenewable energy. It also provides a series of policies andmeasures, including the total quantity objective, powergeneration in-grid, price management, cost amortization,special funds, and tax preference systems.

DOE/NREL and the State Power Corporation of China (SPCC)developed Xiao Qing Dao Village Power Wind/Diesel HybridPilot Project, which was commissioned in February 2001.Jerry Bianchi / NREL / DOE/NREL State Power Corporation ofChina (SPCC) Xiao Qing Dao /

2001 2

In the meantime, China is considering policy instrumentsand regulations to facilitate renewable energy developmentand to enforce the Renewable Energy Law. Article one ofthe law emphasises the benefit of renewable energies forthe improvement and diversification of energy supply, supplysecurity, environmental protection, and sustainable development.It guarantees the connection and purchase of electricitygenerated from renewable energies, as well as the feed-in ofbiogas to the gas grid (on condition that it is of the appropriatequality) and biofuel admixture. It also sets out to facilitate theuse of renewable energies for both heating and cooling.

Additionally, allowance is made for the introduction of feed-inregulations and tenders, with higher than average pricestransferred to the cost of sales. Independent companies nowhave a fundamental right to develop and operate renewableenergy projects, and. the state will set up a fund for renewableenergies which will be used to support increased R&D,studies on available renewable energy resources, projectsin remote areas, and the development of local industry.

In addition, NDRC has organized the drafting of a Mid-andLong-term Development Plan for Renewable Energy settingout China’s objectives, strategies, construction priorities, withfirm targets for renewable energy resources by 2020. Withthe approval of the State Council, the plan will serve as thefoundation for renewable energy development policy in Chinafor the next two decades.

With supplies from conventional sources failing to keep upwith the demands of China's fast-expanding manufacturingsector, and frequent blackouts in many cities, China hasgood reason to look for new sources of power.The hugepotential for the exploitation of renewable technologies in Chinaopens up many possibilities for international collaboration, withnew technologies produced in China being used to supply itsvast market with energy produced in power plants usingrenewable energy sources.

China is working with many other countries as well asinternational agencies in the development of renewableenergy. The Italian Ministry for Environment and Territorylaunched a programme of cooperation with China in 2000,aimed at the development of pilot projects and feasibilitystudies for natural resources protection and conservation,energy efficiency, renewable sources promotion, low emissiontransport systems and technologies, sustainable agriculture,and environmental training courses. Germany’s renewablesagencies also have a long standing and growing programmeof activities in many regions.

Xu confirmed that China will give further support to thedevelopment and use of renewable energy and considersrenewable energy development of prime importance inincreasing the energy supply, protecting the environment,eliminating poverty, and promoting sustainable development.

(Ministry forEnvironment and Territory) 2000

Children in rural China benefit greatly from methane derived from biomass.Simon Tsuo / NREL /


The answer is blowing in the wind

China's capacity for wind-generated electricity is expected toreach 30 GW by 2020, making wind generation the country’ssecond largest electricity source, after thermal power.

According to Li Junfeng, secretary general of the ChinaRenewable Energy Industries Association (CREIA), China'swind generated electrical output will reach 80 billion kilowatt-hours in 2020, sufficient to satisfy the demand from 80 millionpeople, or about 5% of the projected population. These windpower plants would also help China reduce carbon dioxideemissions by 48 million tonnes annually, and developmenton such a scale is expected to generate revenues of at least300 billion yuan (US$37 billion) over the next 15 years.

By the end of 2004, China had 43 wind power plantsincorporating 1,291 wind power generators, with a combinedgenerating capacity of 764 MW, the tenth largest worldwide,and Asia’s third largest. The 2005 target was for wind farmswith a total capacity of 1,000 MW, compared with the 764 MWcapacity that had been installed in 2004.

Li said the pending implementation of China’s RenewableEnergy Law in early 2006 will give the wind power industry abig boost. China has abundant wind power potential in over20% of its landmass, largely in the Xinjiang Uygur AutonomousRegion and the Inner Mongolian Autonomous Region. Large-scale windmills will soon be completed in the provinces ofGansu, Jiangsu, Hebei, and Jilin, with a combined supply ofalmost 1 GW. Numerous further projects are planned, to belocated in northeastern, northern, and northwestern regions.

2020 30 GW

(CREIA) 2020 800 8000

5%4800

15 3000 370

2004 43 1,291 764 MW

2005 1,000MW 2004 764 MW

2006 20%

1 GW

70% 2020 30 GW 2006

5 GW 2004 1 GW

82.2%

With 70% of its energy currently derived from coal, Chinahas set a target of 30 GWs of electricity generated fromwind sources by 2020, an increase from an estimated 5 GWby the end of 2006, and up from 1 GW in 2004. However,China faces technological barriers in the development ofwind power and the government is encouraging foreigntechnology transfers by guaranteeing market share tooverseas firms. The fact remains, however, that developmentcosts are currently still too high, as the country dependson imports for most of the equipment needed. Wind powergenerating units produced by foreign companies dominatethe Chinese market, and their sales account for 82.2%of sales, with the remainder held by Chinese companies.

In order to promote the development of China's windpower industry, the government has outlined a newelectricity pricing system, which will be a major incentiveto firms wanting to produce power from these cleanersources. The government is also considering setting aquota for the country's big power producers, such asHuaneng, which would oblige them to produce electricityfrom renewable sources.

Installing poles for instrument cables:wind turbines power the station on XiaoQing Dao Island, China. Jerry Bianchi / NREL /

Xiao Qing Dao

Photo courtesy of ARR Lafarge Medialibrary

69


71

Establishing a southern coalition onrenewable energy - WWF’s approach

The World Wildlife Fund, sponsors of the South-SouthCooperation Forum at BIREC, put forward a new proposalfor discussion with delegates for the establishment of aSouthern Coalition on Renewable Energy (SCREN).

SCREN’s aim is to provide a structure for viable South-Southcooperation, based on the principles of equity and sustainability,that will encompass renewable energy trade, investment,technology transfer, and capacity building among developingcountries in Asia-Pacific, Africa, and Latin America.

Such a mechanism is necessary, as renewable energydevelopment requires robust South-South cooperation tomaximize synergies between emerging economies that havemuch in common in terms of history, economic realities, andchallenges to sustainable growth.

Moreover, the dominance of oil and coal exporting countries,and major energy companies based in the North, requires acoherent and viable strategy for cooperation among developingcountries to enable them to chart their own energy future,independent of narrow corporate interest.

The mechanism will also enable southern countries to be in astronger negotiating position to deal with established northernblocks, such as the European Union and North American countries.

WWF envisages that establishing SCREN will result in a win-winsituation – a more equitable trade, investment, and technologytransfer regime for renewable energy among developing countries,making it a big business with wider societal participation.

Southern Coalition on Renewable Energy SCREN

•

Benefits of the coalition include the following:

• Transfer of technologies that have proved successful indeveloping countries’ market situations, such as householdbiogas, small hydro power, and solar water heaters inChina, wind power development in India, and bio-fuelsin Brazil, which can be adopted by other countries orregions with similar economic or cultural situations.

• Increased trade volumes among developing countries,which will help to create employment and wider businesssector involvement.

• Investment flows steered toward renewable energies, withmore engagement of financial institutions and governmentcommitment and support.

The proposal is for SCREN to become a component ofREN21, composed of governments, the private sector,and civil society, that will:

• Boost information exchange on renewable energy,including the establishment of institutions and legislationto support renewable energy development, the applicationof relevant policy tools to help attract public and privateinvestment, support for renewable energy R&D, andpublic/private enterprise development.

• Facilitate business partnerships in renewable energyamong companies, governments, and local communitiesin developing countries.

• Help analyse challenges and opportunities for developingcountries, determine priority areas, and assist internationalorganizations and multilateral and bilateral financialinstitutions in finding effective approaches for assistingin the development of renewable energy.

• Increase the negotiating capacity of developing countrieswith developed countries over climate change, renewableenergy trade, investment, and technology transfer.

The organization, as a non-governmental, not-for-profitnetwork will work on the promotion of clean powerdevelopment based on the use of renewable energyresources. Emphasis will also be on wider marketdissemination of appropriate renewable energy technologiesin rural areas that can help improve the lives of poor anddisadvantaged social groups and communities.

An important component of the work would be the use ofrenewable energies in combination with income generationand an increase in local employment opportunities. Attentionshould also be focused on the impact of access to cleanerenergy services on gender and social equity, as indicatedin the UN Millennium Development Goals.

•

•

REN21

•

•

•

•

One year after the installation of photovoltaic home systems in the village ofCacimbas in the state of Ceara, Brazil, TV antennas have sprouted from theroofs of many homes. Roger Taylor / NREL / Caera Cacimbas

Renewable energies have an important role to play in overcoming poverty in manyparts of the world. Above: A poor city street in Inner Mongolia. Roger Taylor / NREL /


7372

• Establish a southern coordination network and respectiveregional focal points/secretariat, i.e., in Asia, Africa, andLatin America, in order to coordinate innovative renewableenergy activities and initiatives.

• Establish the network within an existing organizationexperienced in renewable energy development with goodcontacts with governments, industries, and relevant NGOs.

• Renewable energy activities coordinated by the focalpoints in their respective regions on information exchangeand Website management; dialogue to be facilitated withgovernments, industries, and the NGO community.

• Annual workshops held to promote greater government,industry, and NGO dialogue/cooperation on renewableenergy; each region will be responsible for organizingsimilar activities.

• Founding agencies will promote and support network activities.

Institutional establishment is viewed as the first step and keyto the success of the network’s development. It is estimatedthat it could be fully established within a two-year period(2006-2007) with extensive networking and coordinationundertaken globally and regionally and it is proposed thatthe international coordinator would be based in China, withregional focal points (secretariats) in Asia-Pacific, Latin America,and Africa. Each focal point will be responsible for coordinatingrelevant activities in its own region with those in membercountries.

SCERN’s principal areas of focus are

• Capacity-building – the Coalition shall facilitate the flow ofassistance, primarily S-S but also possibly N-S, in trainingand skill development in all areas of renewable energydevelopment (such as policy, financing, resourceassessment, and R&D). The Coalition shall also facilitateaccess to capacity-building opportunities from internationalorganizations such as the IEA, the UN System, and theEU, among others.

• Technology Transfer – the Coalition shall establish schemesand mechanisms that will develop and strengthen effectivetransfer of renewable energy technology from developingcountries with matured renewable energy technologies tothose that lack them but have substantial RE resources.Priority shall be given to least developed countries inorder to spur rural development and poverty alleviation.Innovative financing options for efficient and effectivetechnology diffusion shall also be explored, developed,and shared by the Coalition and its members. The thornyissue of patents shall also be high on the agenda, as it isone of the stumbling blocks of effective renewable energytechnology diffusion.

•/

•

•

•

•

(2006-2007)

• - -

•

• Trade and Investment – the Coalition shall createa mechanism by which trade on renewable energyequipment (and other related technologies based onequity among developing countries) shall be facilitated.The objective is to promote favorable terms in mutualassistance pacts among developing countries, with theCoalition acting as intermediary. The collaboration ofdeveloping countries will enhance the growth in theprivate sector renewable energy business, and will openup new markets well beyond borders. A Guideline onSouth-South Renewable Energy Trade and Investmentshall be established by the Coalition to ensure an equitabletrade and investment regime among southern countries.

• Energy Financing Reform, Needs Assessment, andAccessing – the Coalition shall work on institutionalreforms in the energy financial markets. It will do soby forging consensus among its members on measuresthat will influence micro finance institutions (MFIs), regionaldevelopment banks (RDBs), and export credit agencies(ECAs) to shift their lending policies, giving preferentialtreatment to renewable energy. The creation of a vastmarket for renewable energy in developing countries,anchored by a strong cooperation regime, will be themain argument for this shift. Likewise, the Coalition shallbe the main vehicle assisting MFIs, RDBs, ECAs andinternational development organizations (IDOs) in identifyingand prioritizing financial assistance for renewable energydevelopment, taking into consideration regional balance,poverty alleviation, gender equity, and rural development,as well as helping developing countries achieve a low-carbon development path. Likewise, the Coalition,together with MFIs, RDBs, ECAs and IDOs shall exploreand develop innovative financing mechanisms for a moreeffective, clean-energy technology diffusion regime.

The intention is that the main negotiating block of thedeveloping countries for renewable energy should alsobe their main channel for articulating and advancing theirinterests in negotiations with established northern blocks.It is important that developing countries speak with onevoice and negotiate from a position of strength, in orderto redress the current unequal trade relationship overrenewable energy between north and south.

This is a proposal from WWF and does not necessarily reflect the view ofBIREC organizers.

•

•

(MFI)(RDB) (ECA)

(IDO)

WWF BIREC

A village house supplied with lighting from aphotovoltaic panel in the Sundarbans regionof West Bengal, India. Jim Welch - Remote Power / NREL /

Sundarbans

WWF envisages that establishing SCREN willresult in a win-win situation / WWF

SCREN


75

The SWERA programme: an outline

“Utilities need to be persuaded that the use of solar and windpower is a practical option for augmenting grids supplied byhydropower, and can make significant contributions to satisfyingpeak demand,”

Interviewed at BIREC, Tom Hamlin, manager of the UNEP/GEPproject, Solar and Wind Energy Resource Assessment (SWERA),added that UNEP & GEF are working with utilities in developingcountries to ensure that such applications are more widely accepted.

Many utilities reject solar and wind generation because it isnot “firm power” and is thought to be too expensive. However,with a large and growing number of failures in hydropowersupplies, solar and wind power are being re-evaluated. InKenya, the drought in 1999-2000 caused the four Tana Riverdams to run below generating capacity, and in Ghana in1983 and 1998, severe drought resulted in water levelsfalling below the minimum. Recently, in Ethiopia, droughtresulted in power rationing, while some hydro installationsaveraged outputs of less than 20% of their rated capacities.

One major factor in favour of wind power is that, in manyregions, the strongest and most consistent winds arrive inthe dry season and, generally, they also coincide with thelongest periods for solar generation. For example, in north-

(SWERA) Tom Hamlin

1999-2000 TanaRiver 1983

1998

20%

SanFrancisco River

east Brazil, the San Francisco River hydropower plant runs atlow capacity in the dry season, when winds and directnormal irradiation are highest, while in Central America, dryseason winds are high and steady when many rivers usedfor generation have diminished flows.

The potential for wind energy is enormous. SWERA estimatesthat seventeen of the countries included in the assessmenthave an aggregate wind generating potential of three terrawatts.

SWERA is a UNEP project with co-financing from the GlobalEnvironment Facility (GEF). From August 2002 to December2005, it promoted solar and wind energy by combattingresistance to their use that had been based on misconceptions,and by supporting more informed decision making, and science& technology based policies. The ultimate hope is that suchinitiatives will increase investors’ interest in renewable energy.

SWERA helped to assess the overall potential for renewableenergy, creating a reliable source of information, and tools forenergy planners and project developers, including regional andnational maps of solar and wind energy resources. It is alsodeveloping a geographical information system (GIS) interface.

Thirteen countries in Latin America, the Caribbean, Africa,and Asia participated in the SWERA programme. Somecountries, including Ethiopia, Bangladesh, El Salvador, Kenya,and Nepal had almost no useful resource information, whileothers like Nicaragua, Ghana, Honduras, and Guatemalawere initially unconvinced of the potential . Still others likeBrazil, China, and Cuba had good capacity but soughtinternational cooperation to support policy initiatives.

The table below gives the basic results of the SWERAassessment in eleven countries

(GEF) 2002 8 2005 12

(GIS)

Country *Area>300w/m2 Windy % of land area Potential @5Mw/km2* >300w/m2 @5Mw/km2

10% East China 10% 650138 Unknown 3250690Oaxaca Mexico Oaxaca 9859 0.105 49295Honduras 4591 0.041 22955Guatemala 3446 0.056 17230El Salvador 2724 0.245 13620Nicaragua 8176 0.771 40880Ghana 11974 0.018 59870Sri Lanka 12284 0.421 61420Bangladesh 218 0.016 1090Cuba 4792 0.023 23960Brazil 791697 0.242 3958485

1499899 0.194 7499495 Mw~7.5 TW

* The land area with a potential modelled wind energy density of more than 300 w/m2 (the energy in the wind adjusted for density).These are broad estimates by country and particular sites would have to undergo detailed assessments. *

300 w/m2

With a large and growing number offailures in hydropower supplies, solarand wind power are being re-evaluated /

Remote power systems in Ghana wereprovided by UNDP-GEF (United NationsDevelopment Program - Global EnvironmentalFacility) in cooperation with the Ministry ofMines and Energy and NREL. Roger Taylor / NREL /UNDP-GEF -

(Ministry of mines andEnergy) NREL


7776

SWERA in ChinaIn China, the programme helped reduce uncertaintiesassociated with investment and development decisions forsolar and wind projects. It has also made key stakeholdersand decision-makers aware of the relevance of the resourceinformation to the development and deployment of varioussolar and wind technologies.

In addition, SWERA has increased the capacity for makingsolar and wind energy plans on the local, provincial, national,and regional levels.

This progress has resulted from training provided by SWERAin 2002, working with multiple international projects, andsupporting those projects by sharing resources and expertiseof consultants.

SWERA in GhanaThe programme was implemented by the MeteorologicalService Agency of Ghana, the Department of MechanicalEngineering of KNUST, and the Department of GeodeticEngineering of KNUST. Its aim was to develop adequate,reliable solar and wind energy resources data and information,and evaluation tools for energy planning and policy. So far,the National Renewable Energy Laboratory (NREL) of theU.S. has produced the following:

• 40 km resolution satellite data on direct, diffuse, global,and latitude tilt.

• Solar radiation maps (direct, global and latitude tilt).

• A national wind map (drawn from EC wind data and 40kmresolution satellite wind data).

• A Geospatial toolkit.

• The German Aerospace Agency provided high resolution(10km) solar data (direct and global).

The study concludes that the resource, in terms of globalradiation, is high throughout the country. This abundantnatural resource is a ideal for the development of off-gridrural electrification. There are an extensive electricity distributionnetworks and a road network in the “rich” wind resource areason the coast, preconditions that should facilitate investment inthe wind resource there.

SWERA in Bangladesh The programme has helped to produce a number of maps,including a high-resolution (10-km) solar map in cooperationwith DLR, a 5-km wind map (draft) for offshore areas incooperation with Risø, a medium (40-km) solar map incooperation with NREL, and a wind atlas for the coastallocations developed using WasP. In addition, comparisonbetween Lisa is this WasP or WasP? and KAMM analysesfor Kuakata and Charfassion have been completed, andRETScreen and HOMER analysis has been carried out forKutubdia and St. Martin’s Island.

2002

(Meteorological Service Agency of Ghana) KNUST KNUST

National Renewable Energy Laboratory NREL

SWERA in NepalProducts already available include TMY solar data forselected stations, monthly latitude tilt radiation for Nepal,monthly global horizontal radiation, monthly direct normalradiation, and geospatial toolkit. DLP has provided directnormal irradiance & global horizontal irradiance highresolution data (10km).

SWERA in Sri LankaProducts already available include monthly direct normalradiation, monthly global horizontal radiation, monthly latitudetilt radiation, TMY data for selected stations, direct normalirradiance (DNI) high-resolution data, and global horizontalirradiance (GHIi) high-resolution data. Also available are hourlytime series of GHI and DNI for selected sites, medium- andhigh-resolution solar atlas, wind atlas, the Sri Lankan finalwind power density (w/m_) at 50 m above ground level,and a geospatial toolkit.

SWERA will be producing a global report in late 2006,aggregating the results of its assessment programmeand looking at potential impacts.

• 40

•

• 40

•

• (German Aerospace Agency) 10

In many regions, the strongest and mostconsistent winds arrive in the dry season /

(DLR) 10 (Risø)

5 40

WasP WasP Lisa Kuakata Charfassion

KAMM Kutubdia St. Martin's IslandRETScreen HOMER

(TMY)

DLP 10

(TMY) (DNI) (GHIi)

50 (w/m2)

2006

A 1 kilowatt wind turbine at theGrameen shrimp farm in Bangladesh.April Allderdice / NREL / Grameen

1


7978

Policies, finance & frameworksGovernment representatives at BIREC give their view on themajor issues

Zhang GuobaoDeputy Director, National Development and Reform Commission, ChinaOn policy: The Chinese Government will follow guidelinesthat prioritise energy development, energy saving and energyefficiency. During the tenth five-year plan, energy consumptionper unit of GDP in China will be reduced by 20%.

The Chinese Government will support further developmentand use of renewable energy, with renewable energydevelopment as an important means of increasing energysupply, regulating the energy structure, protecting theenvironment, eliminating poverty, and promoting sustainabledevelopment. China will accelerate the development oftechnologically mature renewable energy resources such ashydroelectricity, solar energy heaters, and energy extractedfrom wastes, to develop and use resources as soon aspossible. At the same time, China actively promotes thedevelopment of potential and technologically mature renewableenergy technology such as wind power, biomass and solarenergy power generation, and biomass liquefaction, as well asdriving industrial development through large-scale construction,enabling renewables to become competitive commercialenergy sources.

On international cooperation: If economic globalization continuesto develop, no country can progress independently, especiallyin light of the global climate changes caused by the emissionof greenhouse gases affecting every country. Therefore,addressing global energy resources and the environment isthe common responsibility of all countries. However, countrieshave different abilities and responsibilities since they are atvarying development stages. With advanced industrializedprogress, the developed countries have strong technology,skills, and economic strength. As most global energy resourcesare consumed by developed countries, they should assumemore responsibility for the development and use of cleanerenergy and environmental protection.

Restricted by technology, skills, funds, and management,developing countries are saddled with low energy efficiency,weak development ability, low use of renewable energy,and backward environmental protection technology. If theydepend solely on themselves, these countries will inevitablydevelop along the traditional route, which will cause energywaste and environmental damage. To promote globalsustainable development and protect the earth, developedcountries should provide support to developing countries.Aspects of support include technology, skills, and funds,especially to help developing countries build renewableenergy industry systems. It is also necessary to continuallyimprove the technology level for development and use ofrenewable energy, through technology transfer and service.In return, developing countries will provide a huge market forthe technologically advanced wealthy developed countries.

GDP 20%

Jonathan Margolis

9% 1998 2003

2005 (2005 EnergyPolicy Act) 1995 2004 5400 MW2002 (Global Village Energy Partnership)

1290 (Energy Star)

2400 2000

(Partnership for Healthy Fuels and Vehicles)

Therefore, developed and developing countries assumecommon but differentiated responsibilities in promotingthe development of world renewable energy. Strengtheningcooperation, learning from others’ strengths to offset weakness,coordinated actions, and mutual benefit is the route fordeveloping renewable energy globally.

Jonathan MargolisSpecial Representative for Sustainable Development,U.S. State DepartmentOn policy & progress: It is important to be very clear aboutwhat the U.S. is trying to accomplish. Currently, 9% of theUnited States’ electricity demand is met by renewable energy,using the full range of technologies. Wind energy is the fastestgrowing, with installed capacity tripling between 1998 and2003. The 2005 Energy Policy Act renews a “production taxcredit” for wind that has already contributed over 5400 MWof installed capacity from 1995-2004. Since 2002, throughU.S. government support for the Global Village EnergyPartnership and other programmes, 12.9 million people havebenefited from increased access to electricity. Through theEnergy Star programme, which promotes energy efficiency,Americans saved enough energy last year to power 24 millionhomes, eliminating greenhouse gas emissions equivalent tothose from 20 million cars. The Partnership for Healthy Fuelsand Vehicles has made substantial progress in eliminatinglead from gasoline. For CSD to be successful it mustgalvanize public opinion with these kinds of concreteand measurable results.

An ethanol fuelled bus in Peoria, Illinois.Courtesy of Greater Peoria Mass Transit District /

A carpenter uses wind powergenerated electricity for his saw.Jerry Bianchi / NREL /


81

On finance and resources: In 2004, the total U.S. federal on-budget support for renewables was over $2 billion, includinga research and development budget of well over $300 million.The 2005 Energy Policy Act expands R&D programmes. Atthe front line of this R&D effort is the National RenewableEnergy Laboratory (NREL), one of the world’s premier researchfacilities on renewable energy and energy efficiency. Technicalassistance and analytical tools also are important. TheUnited States government supports industrial innovationthrough NREL’s National Wind Technology Center, wherecutting-edge techniques test commercial wind turbinedesigns. The U. S. also conducts resource assessments thatfacilitate the diffusion of renewables. These efforts includewind resource mapping, both in the United States and abroad,that help investors identify cost-effective renewable options.American state and local governments also play a key role,contributing hundreds of millions of additional dollars torenewable efforts. Furthermore, 18 states plus the Districtof Columbia have adopted Renewable Portfolio Standardsof similar instruments. According to the recently releasedREN21 Renewables 2005 Global Status Report, currentstate Renewable Portfolio Standards laws could contributean additional 52 GW of renewables by 2020, thereby morethan doubling the existing U.S. renewables capacity.

2004 20

3 2005 National

Renewable Energy Laboratory NREL

(National Wind Technology Center)

18

REN21 2005 2020

52 GW

On how to measure success: One metric that the UnitedStates will use is to measure the number of people aroundthe world hooked up to electricity services. A second area isenergy efficiency. A third area is improved and healthier fuels.The mechanisms that deliver results are handled by specialistsand project implementers in organizations around the world.

On lessons learned: In the United States, the fifty states arereally fifty laboratories exploring options to increase the useof renewable energy. On the basis of this experience, wehave learned an important lesson: no one-size-solution fitsall states. This lesson applies globally as well – each countryfaces a unique energy challenge with unique solutions. Somecountries have vast solar resources, others wind, othersgeothermal, and still others hydroelectric. We cannot picka single technology, or a single policy, to promote growthin renewables – there is no magic bullet.

Heidemarie Wieczorek-ZeulFederal Minister for Economic Cooperation and Development, GermanyOn international cooperation & policy: The German governmenthas made support for renewable energies a priority forinternational cooperation. The pledge at the 2002 JohannesburgWorld Summit to provide developing countries with 1 billioneuros for renewable energies and energy efficiency over thefollowing five years was fulfilled in 2005 – in other words, inthree years instead of five. In Germany, the political partiesare currently engaged in negotiations to set the agenda forthe new government. The new government will remain astrong advocate for renewable energies, both in Germanyand across the world, and I will make it a priority withinthat government to implement and move ahead with thedecisions made in Bonn.

On poverty reduction: Without a sustainable, efficient, andsecure supply of energy, we cannot fight poverty. The currentsituation on the crude oil markets is jeopardizing our effortsto reach the Millennium Development Goals (MDG). Thecountries of sub-Saharan Africa will suffered average incomedeclines of 2.7% in 2005 as a result of the increased oilprice. What does this mean for the international community?First, the developing countries must reduce their dependencyon oil and rely on renewable energy to a greater extent.Second, we must discourage speculation on the oil market.Developing countries need access to better data on prospectivedemand, supply, and investment. And third, the questionarises as to how the extra income of oil-producing countries– which is estimated at US$200 billion – can be invested insuch a way that the financial system will not be destabilizedand the MDG’s will be fostered. It would be a gesture ofsolidarity and of good economic sense if the oil-producingcountries could devote part of these funds to developmentcooperation, for instance through a contribution to IDA.

On legal frameworks: The Ministry of Energy is taking actionto support the development of new legal, regulatory, andfinancial instruments that are compatible with the currentelectricity law, in an effort to prevent controversy. The Ministry

Heidemarie Wieczorek-Zeul

2002

10 2005

If globalization continues, no country canprogress independently /

(MDG) 2005 2.7%

2000

2005 4

This wind turbine on a farm in Clarion, Iowa savesthe Clarion-Goldfield Community School about$9,000 a year and provides part of the school'sscience curriculum. Robert Olson / NREL / Clarion Clarion-Goldfield 9,000


8382

is now supporting the Congress in passing a new law for thepromotion of renewables, tabled in Congress in April 2005,and promoting the development of regulatory instrumentsfor self-supply. The government supports the new law andprovides technical advice to Congress. The law includes aspecific fund to provide incentives for renewable electricity,R&D, and other renewables applications. The governmenthas also conferred new powers on the regulatory body.

On the rationale for using renewables: International tensionsand competition over access to the world’s oil resourceshave become worse rather than better, and that is anotherreason why we need more renewable energies. In the past,wars were fought over access to oil. Yet wars can neverand will never be fought over access to the sun.

On climate change: 2005’s horrific storms have shown usthat the risks to the world climate are a reality and not a thingof the future. Every year, some 200 million people are hit bynatural disasters, and in 2004 alone, 250,000 people acrossthe world lost their lives as a result of them. Many of theseevents are related to climate change and these naturaldisasters hit people in the developing countries particularlyhard. Often they destroy in a matter of minutes what tookyears of hard work to build up. The human suffering, butalso damage to the economy, is immense.

Dr. Michael HofmannFederal Ministry for Economic Cooperation and Development, GermanyOn international cooperation: South-South Cooperation is avery important aspect of Germany’s development cooperationand GTZ is co-host of the parallel South-South Forum.GNESD (The Global Network on Energy for SustainableDevelopment) can be regarded as a model of South-Southcooperation and knowledge exchange, and Germany isproud to be able to support this effort together with otherbilateral partners and with UNEP.

On technology and financing: Sometimes we hear thatthe most critical issues in renewable energy promotion arefinancing and technology transfer. I want to challenge thisview. Missing financial resources and technology are not theproblems that developing countries are facing. Today, thenecessary technology is available in many renewable energysectors, even if there is still a lot of room for improvementand for cost reductions. Financial resources are availablein the markets, both commercial and concessional, andfinancial mechanisms have been developed over the lastcouple of years.

On capacity building: The experience with actual diffusionof technology and with the development of energy servicemarkets clearly shows that capacity development is oneof the most important “missing links.” Especially in Africa,capacity is missing at all levels, from local to national, bothin the public and private sectors, and in the electric and thenon-electric energy sectors. This is even truer for the ruralconsumers.

2005

2 2004 250,000

Michael Hofmann

(GTZ) The Global

Network on Energy for Sustainable Development GNESD

Wars can never and will never be foughtover access to the sun /

On energy efficiency: It is essential to integrate renewableenergy and energy efficiency, as both factors are intrinsicallylinked. Enhancing energy efficiency will quite often be themost cost-effective way of mitigating environmental effects.The rational use of energy has to be improved at all stagesof energy generation, transmission, and distribution, as wellas in all areas of energy use. To achieve this, we have toprovide a level playing field, without any subsidies to fossilfuels, and charge tariffs which cover costs, according to the“consumer pays” principle. We have to provide clearlytargeted subsidies to the poorer consumers for improvedaccess to energy, but we should not subsidise consumption.

On strategy: We have to use more environmentally-friendlytechnologies, such as renewable energies. We have touse less polluting, carbon-intensive energy sources. Thisincludes fuel substitution. To get there, the situation hasto be analyzed case by case and the most promising andaffordable strategies for each country have to be chosen.A policy framework has to be established which supports theimplementation of these strategies. It is the wrong wayto start by selecting technologies. First, the problems haveto be analyzed from a demand-side perspective, and thenone has to seek appropriate solutions.

Carlos Garza(Energy Planning and

Technological Development)

1992 (IPP)

(CDM)

Shahid Hamid (Alternative Energy

Development Board)

Photovoltaic modules are being tested in a European pilot project to directlyconnect to a tram system, Karlsruhe, Germany. Courtesy of BP Solarex / NREL /


8584

Carlos GarzaUndersecretary for Energy Planning and Technological Development, MexicoOn policy: The current policy framework establishes Statecontrol of electricity transmission and distribution. Since1992, the private sector has had limited participation inpower generation in only two schemes: self-supply andindependent power production (IPP). The current electricitylaw presents barriers for renewables development and someof the benefits of renewables are not clearly enough defined.However, the current income tax law already offers accelerateddepreciation to all investment in renewable energy equipment.A consensus is developing among a number of sectors,including government and congress, that the existing projectsand the tax incentives are beneficial, but inadequate, andparticipation of renewable energy sources in the primarysupply needs to grow steadily, both in absolute andrelative terms.

The Energy Ministry is gathering multilateral and bilateralsupport to develop methodologies and policy instruments,and supports the development of Clean DevelopmentMechanism (CDM) projects. In the long run, the governmentis promoting renewable energy as part of a sustainabledevelopment strategy. The strategy for the promotion ofrenewables includes financial incentives, policy changes,project promotion, and creation of an institutional frameworkwith local governments, geared towards the facilitation andsupply of local initiatives.

Air Marshal (r’t’d) Shahid HamidChairman Alternative Energy Development Board Government of PakistanOn policy : Pakistan is a new and big emerging market forrenewable energy technologies. It has drafted a NationalRenewable Energy Policy, which offers attractive financialincentives as well as a security package to foreign investors.The country is an active partner in the internationalcommunity for the promotion of renewable energy.

On barriers: To remove barriers in the use of renewableenergy, there is a need to enhance international cooperationon renewable energy for sustainable development, cooperationamong public and private and governmental and nongovernmentalagencies, and a more favourable environment for technologytransfer, and the rapid commercialization of renewableenergy technologies. Also, we will need to encourageexchanges through international and regional partnershipsto share lessons learned, best practices, and scaling-upexperiences in the development and application of renewableenergy.

Viji Jegarasasingam(Ministry of Power and Energy)

240 1040 22% 4%

Viji JegarasasingamAdditional Secretary, Ministry of Power and Energy, Sri LankaOn poverty reduction: South Asia lags behind other regionsdue to poverty, with per capita income varying from US$240to US$1040 per year, and about 22% of the world’s poor arein South Asia, in 4% of the world’s landmass. The region hasgaps in policy initiatives and regulatory frameworks for renewableenergy and faces institutional, investment, and technicalbarriers. To use energy as a tool for poverty alleviation, thegovernment should reduce short-term energy intensity tosupport higher economic growth, and shift economic strategiestowards less energy-intensive activities. In the meantime,governments should also encourage technological advancesto support harnessing renewable energy sources, anddeploy these sources to rural masses for economic activities.

Ahmed Abdullah Minister of Environment, Energy and Water, MaldivesOn policy: Only recently, the government has focussed onintroducing and promoting renewable technologies in theMaldives. At present, the country uses renewable energy invery limited applications, and there are many barriers to beovercome at this stage. Renewable technologies involve veryhigh capital costs, and it is therefore necessary to seekfunding sources and schemes to allow citizens access torenewable energy applications. Work to formulate the FirstNational Energy Policy is in progress: it aims to promoterenewable energy by providing reasonable incentives foradoption of the available technologies.

On barriers: The barriers to renewables development include:inadequate information on the availability of renewable energyresources; inadequate information on the options availablefor renewable technology; lack of policies for the utilizationof renewable energy; inadequate capabilies amongst the keyplayers in government in the development, design, implementation,and management of renewable technology applications; lackof significant field testing of renewable energy technologies;lack of financing available for renewable energy applications,as well as for renewable energy-based livelihood projects.

On ongoing activities: Several islands have been surveyedand studies were conducted to establish the feasibility ofsolar-diesel and wind-diesel hybrid systems. One island hasbeen selected to implement a solar-diesel hybrid pilot systemfor power generation. The solar-diesel hybrid pilot system is inthe process of implementation and installation for commission.

Ahmed Abdullah

Photovoltaics are being used to pumpwater in many wells throughout rural India.Harin Ullal - Central Electronics, Ltd. / NREL /

This small 10 kW wind turbine hasperformed well in the harsh seasideenvironment of the Costa de Cocosresort in Mexico. Charles Newcomber / NREL /

Costa de Cocos 10 Kw


8786

The importance of co-operation

BIREC participants reiterated the importance of internationalpartnerships for renewable energy development, particularlybecause renewable energy is, in many respects, still anascent field.

As the technologies are relatively new to the market, andsince policies, approaches, mechanisms, and marketstructures are still in the early stages, it is critical to shareexperiences, learn from each other, discuss best practices,and avoid time-consuming and costly mistakes.

Since industrialized countries have consistently lead the fieldin most renewable energy technologies and applications,it is important for them to work with their counterparts indeveloping countries to advance the technologies in theirmarkets.

International cooperation in renewable energy is takingplace today through a number of mechanisms, includingworkshops, technical assistance and training, pilot projects,and other information exchange. Yet these efforts havenot yielded significant growth at the global level. Thus,opportunities exist to increase international collaborationand enhance the worldwide penetration of renewableenergy products, services, and markets.

BIREC reaffirmed the six areas that need internationalcooperation, as cited in the Political Declaration ofRenewables 2004. The conference stressed the need forstronger international cooperation in policy development,capacity building, technology transfer, joint R&D, financing,and trade barrier reduction. Continued attention to thethemes drawn from Bonn, through implementation of theInternational Action Programme and others, will enhancethe success of international cooperation in promotingrenewables.

Participants agreed that REN21 represents a strongfoundation for collaborative policy development. Its goalis to allow the rapid expansion of renewable energies indeveloping and industrial countries by bolstering policydevelopment and decision-making on international,national, and sub-national levels.

Since Bonn, a number of developing countries havelaunched major policy initiatives that will inform decision-making. These include development of the China RenewableEnergy Law and its small hydro resources assessmentprogramme; improved planning for integration of renewableenergy into rural electrification in the Philippines; the IndianMinistry of Non-Conventional Energy Sources wind resourceassessment programme. Sharing this information with otherdeveloped and industrialized countries will help to reinforcethe global reference base.

2004

21

(Ministry of Non-Conventional Energy Sources)

(GHG)

The conference stressed that it will be important to focuson technologies that have broad and deep applications, noton the niche market, and on those that can help addressenergy access issues. It will also be necessary to addressspecific gaps with targeted solutions.

In policy development, the potential areas for support fromindustrialized countries include international agreements andmarket mechanisms, open trade policies, integrated policynetworks and policy exchange, and technical support.

In terms of capacity building, the industrialized countriesshould support developing countries in technologicalinnovation, management expertise, collaborative education,state-of-the-art research institutes, and tools for technologyassessment. In the technology sector, the developedcountries should offer help in national policies for technologytransfer, private sector technology transfer, and internationaltechnology transfer funding streams.

In joint R&D, the developed countries could offer R&D fundsfor collaboration, integrated E&D and technology deployment,and international collaborations.

In finance, the industrialized countries should offer carboninvestment, carbon funds, multilateral credit lines, exportcredit, fiscal incentives, and restrict tied aid.

A 1-kilowatt photovoltaic/batterysystem at Camp Leakey, Borneo,Indonesia, for the Solar in theJungle project. Susan Thornton / NREL /

Borneo Campbeakey 1 /


8988

To overcome trade barriers, the potential areas for supportfrom the industrialized countries include international lawreform, subsidy review, tariff reform, and internationalstandards.

All these economies will require tremendous energy inputsto fuel their growth. China is second in energy consumptionafter the U.S, with India fast catching up. The same trendhas been observed in the emerging economies of smallerAsian countries like Thailand, Malaysia, Indonesia, Philippines,and Vietnam, as well as the fast-growing Latin Americancountries. The demand created has forced the price of fossilfuels to record highs in recent months, threatening the growthof these emerging economies, with a predictably more extremeeffect on those dependent on imported fossil fuels.

This galloping growth in energy demand will, potentially,result in an exponential growth in the emission of greenhousegasses (GHG) coming from power generation, transportation,and industrial operations. This will be the inevitable outcomeif conventional approaches to energy solutions are allowed todominate and strategic interventions to influence governmentenergy policies are not made.

(MDG)

Regional and bilateral trade ties exist and continue tobe forged among these countries, with China fortifyingits position as a regional (soon to be global) economicpowerhouse, even extending its economic reach as faras Brazil and Argentina.

Regrettably, cooperation in the field of energy, specificallyrenewable energy, remains weak if non-existent. This isindeed unfortunate, as such cooperation could be the keyto sustained economic growth and energy security. At thesame time, it could prevent dangerous climate changesthat are likely if U.S. inaction combines with the inertia ofthe developing countries in addressing the rapid growthin GHG emissions.

This scenario could be prevented if key developing countriesare persuaded to steer away from a carbon-intensive pathto a cleaner energy future, by making renewable energyand energy efficiency major pillars in their energy strategies.

Apart from preventing dangerous climate change, renewableenergy can play a major role in providing electricity to themore than two billion people who currently lack it, and inmeeting the Millennium Development Goals (MDG). Thisrequires a robust South-South cooperation mechanism tomaximize synergies among the emerging economies thathave so much in common in terms of history, economicrealities, and future challenges to their sustainability.

Moreover, the dominance of oil and coal exporting countriesand major energy companies from the North calls for acoherent and viable strategy for cooperation amongdeveloping countries. This will enable them to chart their ownenergy future, independent of the narrow corporate interestsof the northern energy companies. The mechanism wouldalso provide southern countries with a stronger negotiatingposition to deal with established northern blocks, such asthe European Union and North American countries.

China and India, along with other major emerging economies,such as Brazil and South Africa, are the natural centres ofgravity for this South-South cooperation, being the lynchpinsof the ongoing economic revolution. Already, China is thesecond biggest producer of solar PV systems after Japan,and a world leader in small hydropower technologies, smallwind turbines, and solar thermal and biogas applications.India has a burgeoning wind power industry and has madetremendous technological headway in this cutting-edgeindustry. Brazil leads in bio-fuel development and utilization,a technology with vast potential in largely agrarian economies.However, China and India, for example, also pose a hugethreat to the global climate due to their heavy reliance oncoal for power generation.

A healthy environment for collaboration on renewable energyamong these largest emerging markets, in partnership withother developing countries, will lead to better approaches tolow carbon development and the attainment of the MDGs.

Regrettably, cooperation in the field ofrenewable energy remains weak /

A photovoltaic panel used forpumping water,Thailand. Photo

courtesy of United Solar Ovonic / Family members wash clothes as workersinstall a photovoltaic-powered securitylight in South Africa. Bob McConnell / NREL /


91

The EU’s global partnership commitment

In his keynote speech at BIREC, the European Commissionerin charge of environmental policies, Spiros Dimas, reaffirmedthe European Union’s commitment to working with partnersto promote global environmental issues, such as renewableenergy.

Dimas said the EU’s experience in establishing multi-country,multi-faceted, target-based programmes can provide someindication as to how renewables can be promoted at theglobal level. Renewable energy sources have real potentialfor local economic development and for communities belowthe poverty line.

The Johannesburg Renewable Energy Coalition, (JREC) isa broad platform where governments are working togetherto strengthen renewables, he said. To encourage theexchange of expertise, the Commission has reinforced itsalliance with the International Energy Agency. The plan is todevelop the JREC Renewable Energy Policy and MeasuresDatabase into the largest online data repository of nationalrenewable energy policies and related information. The aimis to cover all 88 JREC countries, as well as other majorcountries, in time for the UN’s Sustainable DevelopmentCommission session in 2006 that will focus on energy.

Spiros Dimas

Dimas

JohannesburgRenewable Energy Coalition JREC

JREC

2006 88 JREC

JREC

JREC

(European Investment Bank) 2007 1

Dimas

2007

Dimas 2010 0.56% 2015

0.7%

Dimas 2002

2

The JREC Capital Initiative follows up on a commitment byJREC member countries to identify and bridge financinggaps for renewable energy business developers and SMEs,particularly in developing countries. From the preliminaryinterest shown by governments, private investors, and theEuropean Investment Bank, it seems that an initial budget ofaround 100 million euros is feasible by mid-2007, but muchmore work has to be done for this to happen. Dimasexpressed confidence in this new mechanism, which willencourage the creation of joint north-south ventures andaccelerate the much needed transfer and developmentof renewable energy technologies in developing countries.

In addition to these dedicated partnerships, there is theEuropean Union’s research and development frameworkprogramme. The next programme, starting in 2007, willemphasize international cooperation even more, especiallyin the area of renewables and energy efficiency. It willcontinue to make funding available for scientists to participatein European research projects. This will further boost thetransfer of renewable technologies and know-how todeveloping countries and help achieve global sustainabledevelopment patterns.

Dimas also highlighted the European Union’s commitmentto an increase in aid to 0.56% of national income by 2010,reaching 0.7% by 2015.

A researcher examines samples of solar reflective materials atthe outdoor test site at NREL in Golden, Colorado. Warren Gretz / NREL /

Golden NREL

A geothermal well on the north-westflank of the Aguade de Pau Volcanoon the island of Sao Miguel, Azores,Portugal. Dick Moore - USGS / NREL/

Sao Miguel Aguade dePau


93

In 2002, the World Summit for Sustainable Developmentin Johannesburg took a fundamental step by acknowledgingfor the first time that renewable energy is a key factor inaddressing climate change, poverty, and more generally,economic development, said Dimas, also acknowledgingthat taking action on climate change is urgent. The scientificevidence is very clear – greenhouse gas emissions will peakwithin two decades, and must then decline if global warmingis to be limited to 2 degrees C. In economic terms, governmentsneed to reconcile the challenge of climate change with theeconomic growth, to which all countries are entitled, and theresulting rise in energy demand.

While further measures to promote energy efficiency arecertainly necessary and promising, a comprehensive andefficient energy policy must encompass energy supply. In thiscontext, renewables are key, offering a great opportunity forproducing clean energy. By definition, they do not alter theeconomic balance of the world.

This offers opportunities for developing and developedcountries alike. Developing countries can have at their disposalappropriate and sufficient energy without the uncertaintiesand vulnerabilities related to oil-price fluctuations.

20 90

Dimas

2004

9 (EU-China Partnership on Climate Change)

The UK’s first semi-offshore wind farmat Blyth, Northumberland, UK canprovide enough electricity for over4,000 households. Copyright AMEC Wind /

Northumberland Blyth

4,000

The world's largest residential photovoltaic projectin Amersfoort, Netherlands, produces over 180 kWp.Courtesy of BP Solarex / Amessfoort

180 Kwp


9594

Renewables strengthen countries’ reliance on their ownenergy supply and promote local economies, as developingcountries can exploit resources already available to them.This increases the sense of ownership and creates morejob opportunities.

Renewables are also an important source of technologicalinnovation. As a major decentralized energy source,renewables offer important potential savings in transmissionand distribution costs. This makes it possible to leapfrogthe expensive grid-based energy systems that have beenused in Europe and the United States since the early 1990s.Renewable energy sources offer many solutions for providingmillions with access to affordable energy.

Dimas said the fact that the conference was being heldin Beijing is very positive and encouraging. It confirms thataccelerating the uptake of renewable energy is no longeronly the business of developed countries, and that emergingeconomies also wish to play a leading role in creatingconditions for renewables to thrive. Further evidence ofthis is China’s renewable energy law of 2004 that introduceda support scheme based on advanced feed-in tariffs.

The EU-China Partnership on Climate Change (agreed onat the September EU-China Summit) and related EU-Chinaagreements in the energy sector, provide an excellent basisfor future cooperation to combat climate change and forsustainable production and use of energy.

The clean development mechanism (CDM) under the KyotoProtocol provides incentives for cooperation and technologytransfer between industrialized and developing countries.Under suitable framework conditions, CDM offers greatopportunities for investment in renewable energy in Chinaand other parts of the world.

The Commission stands to gain from working together in thisarea and helping developing countries benefit from their vastrenewable energy sources.

The European Union has a comprehensive and target-basedapproach to renewable energy. Since the late 1990s, the Unionhas been working towards a general indicative target of 12% asthe share of renewable energy in primary energy consumptionby 2010. Since 2003, the European Union has worked activelyto reach two operational targets: 21% for electricity and 5.75%for biofuels. The target year here is also 2010.

Six percent of the energy and 12% of the electricity theEU consumes today already comes from renewable sources.The renewable energy sector is one of the fastest-growingin the EU. Annual turnover has reached 15 billion euros andmore than 200,000 jobs have been created and Europe hasmore than 4.5 million green-power consumers.

There is, however, another side to the coin: As the Commissionstated in its Communication on Renewables in May 2004,

(CDM)

20 90 2010

12% 2003 2010

21% 5.75%

6% 12%

150 200,000450

2004 5 (Communication on Renewables)

2005 (Biomass Action Plan)

2010

12% of the electricity the EU consumestoday already comes from renewablesources / 12%

2007

2020 25%

Dimas

Dimas

2005 6 2020

20%

a lot needs to be done in terms of Member States’ support,public awareness, and research in innovative technologies.The promotion of renewables is, in fact, not the same in allMember States.

Taking this all into consideration, the Commission wants toexplore new areas for renewable energy policy. By the end of2005, the EU was expected to adopt an ambitious BiomassAction Plan. It will list a range of actions on biomass, includingrenewable heating applications, to ensure that the generaland operational targets are met by 2010.

The Commission has also reviewed the national supportschemes designed and implemented by the European Union’sMember States to accelerate the uptake of renewable electricity.The review highlights, for example, the effectiveness of theGerman and Spanish systems of feed-in tariffs. Nevertheless,cumbersome permission procedures prove to be the mainobstacle to bringing more renewables on stream. MemberStates are being asked to focus in particular on removingsuch disincentives.

The Commission is also undertaking a scenario analysis toenable the European Union to set a new general target forrenewable energy before 2007. The European Parliamentrecently called for an integrated approach to energy policiesthat will give renewables a 25% share by 2020.

Considering climate change, issues of security of supply,and energy price volatility, the European Union should indeedseriously consider adopting this ambitious target. Nevertheless,the jury is still out and the Commission will report its findingsearly next year.

(forum of African Energy Ministers)

(European UnionEnergy Facility) 2.2 2006

(Intelligent Energy - Europe) (Partnership and Dialogue Facility)

One of the largest thin-film systems in Europefeatures 870 Millennia modules and produces29.58 kWp for a school in Aachen, Germany.Courtesy of BP Solarex /

870 Millenia 29.58 kWp


96

Dimas admitted that, in addition to boosting renewables,unless there is also an effort to increase energy efficiency,any increases in renewables use will be negated by growingenergy demand. In this context, Dimas cited one particularinitiative because of its relevance to the goals of BIREC.

The Commission issued a Green Paper on energy efficiencyin June 2005, identifying possibilities for cost-effective energysavings equivalent to 20% of the European Union’s currentenergy use by 2020. An action plan on how to achieve thesesavings will be presented shortly and will identify guidelinesthat the European Union should follow to become an energy-efficient economy. Measures will cover various aspects ofpeople’s lives, including transport, housing, and industry.

The EU’s internal efforts to promote renewable energy gohand in hand with its willingness to enhance and strengtheninternational cooperation in this area and the European Unionis well equipped to continue playing a key role through themany initiatives it is involved in. The deployment of renewableenergy technologies are highly relevant in the EU’s dialoguewith developing countries.

The European Union Energy Initiative, focuses on policydialogue in conjunction with specific partnerships, and actionsaddressing access to energy and poverty alleviation, withrenewable energy as a major focal point. Many governmentsin developing countries have acknowledged the EuropeanUnion Energy Initiative as a major partner, including therecently established forum of African Energy Ministers.

The Energy Initiative establishes the European Union EnergyFacility, with a budget of 220 million euros, that will becomeoperational in 2006 and act as a catalyst for concreteinvestments in energy services for those living below thepoverty line. These funds will be in addition to the resourcesmade available to developing countries through the EuropeanUnion’s “Intelligent Energy – Europe” funding programme,through the “Partnership and Dialogue Facility,” and throughseveral other actions by the Commission and EuropeanUnion Member States.

So it seems that the will to address the issues is there,together with some of the means. The work to achievethe goals is, however, just beginning.

This petrol station in Perivale, United Kingdom has grid-connected photovoltaic modules generating electricity to power the pumps and canopy lights. Courtesy of BP Solarex /Perivale


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