sectoral economic costs and benefits of ghg mitigation - IPCC

Renewable Energy
The Clean Development Mechanism could accelerate the dissemination of renewable energy
technologies. Since their dissemination advances the CDM’s climate change mitigation and
sustainable development goals, most renewable energy projects would probably be CDM
eligible. Furthermore, such projects tend to benefit rural areas in poor countries and would thus
promote the distribution of CDM benefits to areas and countries that might otherwise be left out.
Unless CO 2 values exceed $20 per ton, however, CDM funding alone is unlikely to generate
more than about $3 to $6 per typical SES each year or about of initial wholesale equipment costs
when discounted at 10% over twenty years. Still, if CDM transaction costs are kept low, this
funding could prove quite valuable in improving marginal project economics and making the
systems more widely affordable. For example, the additional CER income could increase the
profitability of an SHS-fee for service business sufficiently to make the difference in attracting
the capital needed to reach critical scale economies.
4 The Dessemination of (RE) Technologies: Some Concrete Interventions
Training of local technicians and entrepreneurs
If renewable energy technologies are to serve the needs of the African population to mitigate
climate change then rural communities will need resident technicians operating local businesses
who are able to supply, install and maintain these systems. A target could be to ensure at least
one such resident technician in every community. Curriculum and selection of participants is
important. Surveys show that people do not like to be in rural areas after their studies abroad, nor
do they go into the business of commercial technology dissemination. Currently, there is only a
handful of training institutions in Africa for rural, renewable energy technicians-entrepreneurs.
Research and development, testing, production and supply of products targeted to Africa
There is an urgent need to adapt decentralized, renewable energy technologies to rural consumer
markets to develop reliable supply lines, and to improve the quality of those components that can
be cost-effectively produced in Africa. Very few products are designed and tested especially for
African rural markets. The assumption is that each rural person has not enough money, but they
are already buying some of the most expensive energy in the world. In that case, the organization
of local people in cooperatives will be useful to apply with their incomes the decentralized
energy technologies. Programs to test existing systems to find out which are best suited to user
needs, and to adopt or design technology to the specific users needs will contribute to local
community development.
Since many renewable energy technologies are imported as complete packages from donor
countries and installed by non-resident technicians without the involvement of local
entrepreneurs, when systems fail, the local consumer is helpless. In addition to the need for
locally based technicians, there is a need for reliable supply lines.
Currently, energy technology equipment produced in developing countries is in general of lower
standard. However, with the investment in expertise and capital locally produced components
could come up to international standards. There is a whole range of renewable energy
technologies that could be manufactured locally. They would promote local entrepreneurship,
create employment and reduce foreign expenditure.
Financing and credit schemes
Buying a solar PV system, for example, is like buying many years of power. Most families
cannot afford any more than they could afford to pay the capital investment costs involved in
supply of grid electricity to their homes. Whereas for grid extension to consumers in remote
areas, the initial investment by utility companies may never be paid back, for solar PV, the payback
period could be as little as one year. Financial mechanisms are needed to enable
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