Regulatory and policy options to encourage development of ...

MODULE 9: RENEWABLE ENERGY: REGULATORY AND POLICY OPTIONSpage 9.35LEARNING RESOURCESKey points coveredThese are the key points covered in this module: The advantages and benefits of supporting renewable energy through regulatoryand policy measures. The main issues to address when designing a policy instrument to supportrenewable energy. The existing policy instruments to support renewable energy, including feedintariffs, quota mechanisms amongst others. The advantages and disadvantages for each of these policy instruments.Provision of information enabling the reader to consider, in a given country,which (or combination) of system(s) would suit their national situation best. Experiences from Europe, Africa and other developing countries.Answers to review questionsQuestion: Name at least five regulatory/support mechanisms that canencourage renewable energy development in the African powersector in the short term.Answer:- Establishing “standard” power purchase agreements (PPAs)- Ensuring long-term electricity generation licences and PPAs- Developing a favourable tariff setting and adjustment formula- “Light-handed” regulation- Setting explicit targets for the share of renewables in the electricity generation mix- Enacting explicit regulations that encourage local private participation in renewableenergy development- Providing subsidies to renewable energy-based power systemsQuestion: What are the main differences between a feed-in tariff systemand a quota system?Answer: A feed-in tariff system provides certainty on the price for green electricity,as this price is fixed over a certain period. A feed-in tariff system does not providecertainty on the level of green electricity that will be supplied. The fixedpremium is the incentive for investors.