FeedFeed-in Tariff Methodologies and Financing: Options for Asia

Feed-in Tariff Workshop FeedAsian Development Bank 2020-21 June 2011 Manila, Philippines

Romeo Pacudan PhD Energy Specialist (Consultant) Asian Development Bank

Structure of Presentation
RE Promotion Policies FeedFeed-in Tariff Design Options Funding Options Final Remarks

test

1. RE Promotion Policies

from fiscal incentives to regulatory policies

Subsidy and grants Tax incentives Energy payments

Regulatory policies
Feed-in tariff Quota and Obligations RE Certificates Net Metering

Fiscal incentives

test

RE Policy Evolution in Developed Countries: Shift to regulatory policies supported by fiscal incentives
RD & D
D FI DK C NZ IR B NO NE CH US E ITA SW UK J GR A K AUS T P F L H

1. RE Promotion Policies

FI

CZ H AUS A CH B P J L C NE ITA SW B A DK FI D NO P CZ H CZ UK E K K C NE SW NE C NO E UK NZ

Investment Incentives

DK

US F

ITA

K D

GR

GR

Tax Measures Feed-in Tariffs Voluntary Programs Obligations Tradable Certificates

1970

US

T IR

E US DK P

UK CH

ITA L GR US A B IR F SW NO AUS C ITA

CH

CH

DK A AUS FI NZ

B NE ITA NE

K EU CZ L H D J GR NO F UK IR SW AUS H B SW NO UK A J DK FI K

ITA

1980

1990

2000 Source: IEA 2005

1. RE Promotion Policies
Tax Measures Investment Incentives Policy Instruments

RE Policy Evolution and Power Market Reforms In Europe, regulatory policies were introduced when power industries were liberalized

Feed-in Tariffs Obligations Tradable Certificates

Power Sector Reforms

Monopoly

Purchasing Agency

Wholesale Competition

Retail Competition

test

1. RE Promotion Policies

Power Industry Market Structure

Monopoly

Purchasing Agency

Wholesale Competition

Retail Competition

India Sri Lanka Malaysia Thailand China

Philippines Singapore R of Korea

EU countries US Canada Japan

power market reforms are slow in Asia various variants exist for purchasing agency model increasing role of the private sector in the generation segment

(DEVELOPED COUNTRIES) 1. RE Promotion Policies (DEVELOPED COUNTRIES)

OBLIGATIONS
SWEDEN ROMANIA POLAND

Combination of Regulatory Policies Consistent with Market Structures

TRADABLE CERTIFICATES
BELGIUM NETHERLANDS

ITALY JAPAN AUSTRALIA US UK

FINLAND FRANCE IRELAND SLOVENIA SPAIN DENMARK LATVIA LITHUANIA LUXEMBOURG SLOVAKIA CZECH

BULGARIA CYPRUS ESTONIA PORTUGAL

GERMANY GREECE HUNGARY

FEED-IN TARIFFS

Complex Market-Based Measures

(DEVELOPING COUNTRIES) 1. RE Promotion Policies (DEVELOPING COUNTRIES)

OBLIGATIONS
CHILE URUGUAY

Combination of Regulatory Policies Consistent with Market Structures

TRADABLE CERTIFICATES

PR CHINA PHILIPPINES

INDIA

ALGERIA ECUADOR MALAYSIA PAKISTAN

ARGENTINA INDONESIA MONGOLIA SRI LANKA

DOMINICAN SOUTH AFRICA KENYA UGANDA

NICARAGUA TURKEY THAILAND

FEED-IN TARIFFS

Simpler Market-Based Instruments

FeedFeed-in Tariff as Guaranteed Price over Fixed Period of Time

Guaranteed Purchase Obligation Clear Interconnection Rules Access to the Grid Stable and LongLong-term Purchase Agreement

Feed2. Feed-in Tariff Design Options

Feed2. Feed-in Tariff Design Options

Payment differentiation and supplementary design options

Solar PV Projects

Feed2. Feed-in Tariff Design Options

Wind Power Projects

Feed2. Feed-in Tariff Design Options

Tariff Regime and Electricity Market Compatibility

High Merchant RE-plants selling into Pool

Feed2. Feed-in Tariff Design Options

Degree of conformity with market rules for liberalized electricity market

Renewable Portfolio Standard with RE Certificate Power Pool Price + Premium RE-Generator Selling Electricity to Retail Consumers Feed-In Tariff Benchmarked Against Retail Price + Premium Time of Day Dependent Feed-In Tariff Season Dependent Feed-In Tariff Fixed Feed-In Tariff /Lowest Tariff Tender for MW / Negotiated Tariff

Low

Type of Tariff Setting Regime

Source: kfW 2005

Feed3. Feed-in Tariff Funding Options

Dual objectives: funding stability and minimize consumer impacts

Key Issue: consumer impacts

Ratepayer Funding
Equivalent Distribution Customer Differentiation System Benefit Charge

Taxpayer Funding
Key Issue: politically sensitive

Feed-in Tariff Funding

Key Issue: Sufficiency of funding

Supplementary Funding
Greenhouse gas revenue Utility tax credit

Inter-Utility Cost Sharing

Key Issue: disagreements from constituencies

FIT Funding in Asian Countries

Feed3. Feed-in Tariff Funding Options

Ratepayer Funding
Thailand FT charge Philippines FIT All Malaysia RE Fund

Ratepayer Funding
Japan Solar Charge China RE Premium

Feed-in Tariff Funding

Taxpayer Funding
Republic of Korea Government Budget

Ratepayer Funding
Sri Lanka India

4. Options for Asia

Combination of policy instruments

FIT supported with fiscal incentives FIT policy combined with other regulatory measures

FIT policy design consistency with

Electricity markets Regulatory frameworks

FIT Funding
Long-term funding stability Burden sharing and transparency Social and economic impacts considerations