PHOTO CREDIT: ISTOCK.COM USAID CLEAN POWER ASIA Regulatory Incentives to Promote RE Investment International Forum on Unlocking Investment Opportunities in Renewable Energy for the ASEAN Region July 22, 2019 SimaThani Hotel, Nakhon Ratchasima, Thailand 7/17/2019 1
Content • USAID Clean Power Asia Overview • Policies and regulatory incentives for RE – Existing incentives in ASEAN – Barriers for RE adoption – Supporting regulations • Supporting activities – Solar pilot auction in Lao PDR – DPV economic and technical impacts and policies in Southeast Asian countries – Energy storage system application in Vietnam • Looking forward to the future – Emerging trends 7/17/2019 2
USAID Clean Power Asia – Overview Aims to increase deployment in ‘grid - connected’ renewable energy in SE Asia 5 years: June 2016 – June 2021 Regional clean energy program Focus on Lower Mekong countries (Lao PDR, Thailand, Vietnam and Cambodia) + SE Asian countries Provide market signal (the Philippines, etc.) Establish market Goals: Scale up market 15 laws / policies / regulations $750 M USD investment mobilization 500 MW of installed RE 3.5 M tCO2e reduction Implemented by Abt Associates and partners Funded by USAID (United States Agency for International Development) 7/17/2019 3
USAID Clean Power Asia – Overview • Improved data and tools • Consideration of RE in power sector planning Focused on individual country (LM and • Incentivizing RE and removing policy and regulatory barriers Southeast Asia) • Mobilizing investment through improved bankability and facilitating financing • Promote RE Data Explorer and other planning tools • ASEAN Interconnection Masterplan Study 3 rd update (AIMS III) Regional Activities • Scaling up data, planning approaches and tools, policies and regulations and investment mobilization regionally 7/17/2019 4
USAID Clean Power Asia – Overview • Improved data and tools • Consideration of RE in power sector planning Focused on individual country (LM and • Incentivizing RE and removing policy and regulatory barriers Southeast Asia) • Mobilizing investment through improved bankability and facilitating financing • Promote RE Data Explorer and other planning tools • ASEAN Interconnection Masterplan Study 3 rd update (AIMS III) Regional Activities • Scaling up data, planning approaches and tools, policies and regulations and investment mobilization regionally 7/17/2019 5
Policy and regulatory incentives for RE 7/17/2019 6
Policies supporting RE • Administratively set the price to promote development Feed-in Tariff (FIT) • Provide incentives to increase return on investment • Typically use in the early stages for RE promotion • Competitive bidding or tenders for energy Competitive • Scaling up capability Procurement • Transparency and typically lower cost • Net metering/billing Net Metering • Self consumption • Buy all sell all Renewable Portfolio • Increase RE in portfolio of generators/distributors Standards (RPS) • Create market for RECs (Renewable Energy Credits) and Tradeable RECs • Tax incentives (tax/import duty exemptions) Other Incentives • Soft loan • Capital subsidy Source: Smithsonianmag.com 7/17/2019 7
Existing RE targets and incentives in ASEAN Source: USAID Clean Power Asia (2017). DESIGNING RENEWABLE ENERGY INCENTIVES AND AUCTIONS: LESSONS FOR ASEAN 7/17/2019 8
Barriers for RE investment Lack of Technical Financial risks understanding and limitation Funding and • Lack of financing options awareness of RE • Off-taker risks resources • RE resource availability • Country risks • Technical know-how • Equipment/Supply availability • Impact understanding • Grid access • Capacity Lack of / unclear Permitting and / inconsistent Policy Approval supporting Uncertainties Processes regulations 7/17/2019 9
Supporting regulation to promote RE investment • Grid code Grid Technical • Equipment standards Distribution code • Installation standards • Connection Standards • Grid connection check • Technology specific Grid impact study • Standard process • Power • Offtaker • Approval time Permitting Tariff regime Website/Online • • Offtake • Contract terms platform Supporting • Inspections Regulations 7/17/2019 10
Summary of regulation gap analysis in LM countries Cambodia Lao PDR Thailand Vietnam Supporting Least acceptable contract term – 20 years Need supporting Need supporting Inconsistency among utilities regulations Limited time for PPA regime – until June 2019 regulations for solar regulations for VRE Tariff for rooftop is still being related to power (waiting for new/revised Decision) development development decided (ERC) Offtaker risk purchasing Need distribution Need update for Need detail regulation of performance standards code national grid code (since Inconsistent grid connection Grid connection and technical connection requirements (such as Out-of-date 2014 and focused requirements between EGAT, MEA, regulations real-time communication for capacity >1MW) in transmission code mostly for hydro) PEA grid code (since 2009) Need distribution code Need technical and Need installation standards Technical Need installation installation standards Need revision to building and fire Need revision to building and fire code to standards Current LEPTS* focused code to accommodate solar rooftop accommodate solar rooftop standards on hydro Unclear permitting process Much paperwork needed Permitting Need permitting Need permitting Need convenient platform and clear guidelines Difficult to track application status process for solar process for solar Involves many government authorities and varies process Lack of support to answer questions across the different provinces Source: Review of Supporting Regulations (USAID Clean Power Asia, 2017), Why are grid code important (ERAV) *LEPTS – Lao Electrical Power Technical Standards 7/17/2019 11
Supporting activities of USAID Clean Power Asia 7/17/2019 12 7/17/2019 12
Supporting activity – Solar pilot auction in Lao PDR Auction Design Policy Assess Auction Auction Requirements Support Process Documents Auction Implementation Capacity Bid Requirements Bid Evaluation Auction Package Building Site Selection Assessment Bidding documents Regulation Technical Connection Term of Reference Term of Reference Technical Standards Requirements for for Pre-Feasibility for Final-Feasibility Support for solar solar Study for solar Study for solar LEPTS (Lao Electrical Power Lao Grid Code (2014) Technical Standards) Legend Coordination New Existing 7/17/2019 13
Supporting activity – DPV economic and technical impacts and policies in Southeast Asian countries Previous activities Current activities Philippines Vietnam Thailand Philippines Study of DPV impact on International review Study three DPV impact Activities: Support Department Circular (DC) on NM policy utility revenue and rate analyses Activities Customer Economics 1. T echnical input to DC (May-July 2019) 2. Experts for public consultation events Report - DPV impact on utility Report – DPV economic and Report – Chapter 1 on international (Aug 2019) revenue and rate (Nov 27, 2017) technical impacts for the Philippines review (Jan 17, 2019) (Mar 15, 2019) Output 3. Post-public consultation support (Aug-Sep 2019) Policy Brief (Aug 17, 2017) Report – Chapter 4.2 on customer economics (Mar 13, 2019) Output NREL, ERI (Chula) USAID V-LEEP, NREL NREL, LBN Partners T echnical input to DC (similar to policy brief) – July 2019 Revised net-metering policy to Proposed net billing policy (DEDE) Policy Revised net-metering policy (DOE, replace Decision 11 (EREA) ERC) Impact DPV impact studies Customer economics Utility revenue and rate T echnical impact International review 7/17/2019 14
Supporting activity – Energy Storage System in Vietnam (1/2) USAID Clean USAID V-LEEP Power Asia Subcontract Chapter 1 - Overview of Energy Storage System Chapter 2 - Role of Energy T echnical Economic Storage in Vietnam Analysis Analysis Input Chapter 3 - Developing the Energy Storage Market in Chapter 4 – Assessment of the value of Vietnam battery energy storage projects in Vietnam ESS Study EREA/MOIT 7/17/2019 15
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