 There are many barriers to implementation of grid-connected renewable energy systems. This module identifies policies and regulatory activities that have been used successfully to develop markets, reduce investment cost and pay for the incremental cost of renewable energy incentives. For more click here
Barriers to grid-connected renewable energy systemsMany studies have detailed the barriers that prevent market development and growth for grid-connected renewable energy power plants. These barriers are the result of a variety of legal and regulatory practices, economic and financial factors, and market and business risks that discourage entrepreneurs from entering the market and prevent the successful development of projects. For more click here 
 | The three principle types of mandated market policies are: - Price Mandates, where renewable energy generators are paid fixed prices for the electricity they provide to the grid, and
- Quantity Mandates, where all electricity providers must obtain a specific market share quantity of renewable energy generation.
- Competitive bidding, where set quantities of renewable energy generation are purchased on the basis of open competitive solicitations.
These policies usually also include the legal framework allowing independent power producers of renewable energy and assuring grid connection. The effectiveness of any set of government policies depends on how well they are designed and whether or not they are enforced. The use of a particular policy type does not guarantee success. In addition, the policies need to be appropriate to the types of technologies, projects and applications they are trying to promote. See a Comparison of Market Mandates. Furthermore, each country has unique circumstances and must design and enact its own set of policies based on needs, competing interests and available resources. See Requirements for a Successful Policy. All these mandated market policies need to address who will pay for the incremental financial costs between renewable energy and conventional energy sources. In general, there are four principle approaches: 1) the most common approach is that incremental costs are passed on to consumers and shared among the entire population or customer base by an additional per kilowatt-hour (kWh) charge; 2) incremental costs are covered by public funds such as system benefit charges in the US; 3) incremental costs are covered by a carbon tax on fossil fuel consumption, for example, in the UK; and 4) incremental costs are covered through a Green Fund from government budget and donor support, for example, in Mexico. For more click here
| | Financial incentive policies are designed to help overcome market barriers by providing financial and fiscal incentives for investments in renewable energy that reduce the costs of such investments. For grid-connected renewable energy technologies, the most important of these policies can be characterized as falling in four broad categories: policies that: Reduce up front capital costs (via grants) Provide loans, loan guarantees and other financial assistance Reduce capital or operating costs (via tax credits) Enhance revenue streams through carbon credits
For more click here | | | | Public InvestmentPublic investment can take the form of investment funds or guarantee facilities. Public fund can also be used in public-private partnerships to support infrastructure development or business formation. Public funds can also be used to technical research, standards development, and public awareness. In some European countries and in several U.S. states, public funds for renewable energy development are raised through a levy (a per-kWh fee) on electric power consumption or fossil-fuel-based power generation. This is called a system benefit charge in the US. Public employee pension funds are also a source of long-term investing in renewable energy. For more click here | | | | Market Facilitation ActivitiesMarket facilitation activities are public investments to implement the rules, regulations and procedures that help to facilitate or accelerate renewable energy project development. The most important of these activities are Small Power Producers Programs which include the development and implementation Standardized Power Purchase Agreements, Tariff Setting Procedures, and Interconnection regulations. Other market facilitation activities include Infrastructure supports, Public awareness, information and training and Government procurement mandates. For more click here |
| | | | Electric market deregulationUnbundling and deregulation change the way the utilities operate in the market and evaluate renewable energy. Electric sector reform is driven by the belief that subjecting the sector to competition and other market forces will eliminate waste and inefficiencies in the traditional regulated monopoly model and generate cost savings for consumers. On the one hand, competitive wholesale power market appears to be an essential pre-requisite for renewable energy development. On the other hand, the privatization of the power sector is inherently biased against capital intensive investment in renewable energy. Another outcome of unbundling the traditional utility into its generation, transmission and distribution components has been the loss of the “social compact” where by the regulated monopoly utility carried out research, development and demonstration of new technologies, many of which were renewable energy technologies, on behalf of (and at the expense of) all its consumers. The unbundled generating company (and its IPP competitors) no longer has this social responsibility and has no incentive to support such work in the new competitive environment. Therefore, new public investment mechanisms and market facilitation activities are needed to support the development and implementation of renewable energy systems (and energy efficiency) as part of electric sector reform. For more click here | | | | |
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