Renewable Energy and Energy Efficiency: Eight FAQs

The BoKIR has added material on the involvement and mandate of the energy regulator with regards to rules affecting Renewable Energy (RE) and Energy Efficiency (EE). The renewable technologies include solar, wind, geothermal, biomass, and hydropower. The RE policies include Feed-in Tariffs, Net Metering, Renewable Portfolio Standards, Auctions, Power purchase agreements, direct investment support, and other incentives for RE development (resource mapping and encouraging NGO involvement). The policies are not mutually exclusive. Also, EE can be promoted via utility actions (incentivized by the regulator and actions by other agencies). The former include reduced line losses, improvements in load patterns and system reliability, decision-relevant customer billing information, energy audits, and smart grids. The latter include setting appliance standards, providing government financial support, creating tradable certificates, awarding tenders, and establishing government programs like improving EE in schools and hospitals. First, we start with the mandate of the energy regulator in promoting RE and the main challenges faced by the agency. Regulatory functions determine how specific policies affect incentives affecting investments in RE technologies.

New Frequently Asked Questions:

• What should be the involvement and mandate of the energy regulator in connection with promotion of Renewable Energy and what are the main challenges associated from a regulatory perspective?
• What should be the involvement and mandate of the energy regulator in connection with promotion of Energy Efficiency and what are the main challenges associated from a regulatory perspective?
• What is the best choice of regulatory instruments/tools for Renewable Energy promotion based on efficiency and effectiveness of reaching policy targets? (FiT versus Green Certificates versus Central Procurement and others)
• What is the best choice of regulatory instruments/tools for Energy Efficiency promotion based on efficiency and effectiveness of reaching policy targets? (Energy Efficiency Certificates versus Central Procurement and others)

Newly added July 2013: 

• If a government decides to consider feed-in tariffs (FITs) as a tool to promote distributed generation via renewable energy, what are the regulatory steps that should be taken to these implement rules?
• If the government decides to use Power Purchase Agreements as a tool to obtain renewable energy, what are the features of PPAs that must be monitored by regulators, and the steps that should be taken to promote transparency and cost effectiveness?
• How have countries linked policy-making related to energy efficiency to regulatory functions?
• What are the regulatory issues presented by renewable technologies (solar, wind, biomass, geothermal, and hydropower) and what are the basic characteristics of these options? 

Readers will see that the responses focus on what sector regulators can do, not what nations “should do.” The FAQs are not meant to be comprehensive tutorials on the issues but to serve as maps that can guide regulators and infrastructure managers to more detailed material.

The issues surrounding access to electricity and approaches to more sustainable and environmentally-friendly energy sources are complex. Stakeholders have a wide range of views on the cost-effectiveness of different technologies and the extent to which alternative energy should be promoted in the developing world. The purpose of the new FAQs will be to outline the key issues for those agencies implementing public policy towards renewable energy and energy efficiency. Additional cases and information on laws are available online at PPP in Infrastructure Resource Center for Contracts, Laws, and Regulation (PPPIRC) and Private Participation in Infrastructure Database.