Solar Energy Perspectives - IEA

Chapter 10: Policies
In Morocco, several development banks are taking part in the financing of the first 125-MW
CSP plant in Ouarzazate with conditional loans, thereby reducing costs of capital. They are
the French AFD, the German KfW, the European Investment Bank (EIB), the African
Development Bank, and the World Bank Group, notably with its Clean Technology Fund.
Solar electricity is expected to satisfy 14% of the electricity demand of the Kingdom by 2020,
or about 5% of its final energy demand.
Various suggestions have been made to establish global financing mechanisms to help
developing economies deploy solar energy and adopt solar energy technologies, using global
feed-in tariff funds. For example, the Global Energy Transfer Feed-in Tariffs for Developing
Countries (GET-FIT Program) mechanism put forward by the DB Climate Change Advisors of
the Deutsche Bank Group. GET-FIT would provide premium payments, passed through the
national governments and utilities to independent power producers (IPPs). The utility would
pay at least the market rate to the IPP, and there would be minimal additional burden on the
electricity ratepayer. An international sponsor would provide an ultimate guarantee for the
GET FIT payments. The climate change “money” pledged in Copenhagen by industrialised
countries could take this path. For decentralised, off-grid installation, the scheme could
involve a renewable energy service company, owned either by the local community or by
third-party developers, in lieu of utilities.
Electricity trade can also be an important dimension of a global strategy to deploy solar
energy. Umbrella export agreements, primarily from North Africa and Middle East to
Europe, but also for example from Mexico to the United States or Australia to Indonesia,
could help developers reach long-term power purchase agreements with prospective
customers in those markets. This would help emerging projects achieve profitability and
reach financial closure.
Support schemes
Most incentives to support the deployment of solar energy technologies to date have taken
the form of feed-in tariffs (FITs) or feed-in premiums (FIPs). Both are long-term contracts
offered to renewable energy producers based on electricity generation. FITs guarantee special
rates for renewable electricity provided to the grid, while FIPs supplement the normal market
prices.
FITs and FIPs have a demonstrated ability to jumpstart the deployment of solar electricity,
whether photovoltaic or thermal, which other incentive schemes still need to prove on
a similar scale. They can take the form of renewable energy portfolio standards (RPS),
i.e. obligations imposed upon utilities to include a given share of renewable energy sources
in their generating mix. RPS can lead utilities to propose long-term power purchase
agreements (PPAs) to solar project developers. They can also lead to the creation of markets
for renewable energy certificates (RECs). Tenders for competitive bids are increasingly being
used, in particular in developing economies. And finally tax credits are also widely used,
either in isolation or in conjunction with other support schemes.
Performances of support systems vary considerably from country to country. For the more
mature technologies and markets, such as wind power, IEA analysis reveals three realities:
very efficacious policies that are also cost-effective; policies that are efficacious but at a very
high cost; and policies that fail to be efficacious even though incentive levels could be
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