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SUSTAINABLE ENERGY REGULATION AND POLICYMAKING TRAINING MANUALpage 9.140SUSTAINABLE ENERGY REGULATION AND POLICYMAKING FOR AFRICASupport Mechanisms Applicable inthe Short Term (4)“Light-handed” Regulation• Deliberate removal of, or making less stringent, provisions for a playeror group of players• Explicitly exempting or significantly reducing the statutoryrequirements of investors in sustainable energy• For example, waiving the need for licensing small to medium scalerenewable energy investments below a certain capacity thresholdModule 9SUSTAINABLE ENERGY REGULATION AND POLICYMAKING FOR AFRICASupport Mechanisms Applicable inthe Short Term (5)Setting Targets for Renewable Electricity Generation• Set explicit targets for the share of electricity generated from provenrenewable energy technologies such as hydro, wind, solar PV,bagasse-based cogeneration and geothermal• The Government of Kenya has set a target of 25 per cent of electricitygeneration to come from geothermal energy by the year 2020• IPPs actively encouraged to exploit renewables to meet targetsModule 9
MODULE 9: RENEWABLE ENERGY: REGULATORY AND POLICY OPTIONSpage 9.141SUSTAINABLE ENERGY REGULATION AND POLICYMAKING FOR AFRICASupport Mechanisms Applicable inthe Short Term (6)Encouraging local private participation inrenewable energy development• Local private investors can own and operate small to medium scaleentities in the power sector• Either on their own or with foreign partners• Appropriate policy and financial incentives such as:– Enactment of lower entry requirements– Tax holidays– Lighter regulation of Initial Public Offers (IPOs)Module 9SUSTAINABLE ENERGY REGULATION AND POLICYMAKING FOR AFRICASupport Mechanisms Applicable inthe Short Term (7)Providing Subsidies to Rural Investments• Rural electrification provides local benefits but has high capital cost• Demand/usage of electricity in rural areas is low• For a reasonable return on investment, the capital cost of ruralelectrification needs to be covered in part or fully by subsidies• Usually grants financed by donors through rural electrification funds• Used to finance rural electrification concessions (e.g. Uganda)Module 9
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