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1
Investment in Renewable Energy in the ECIS
Christoph S. HenrichSustainable Energy Consultant
Environment and Energy PracticeUNDP Bratislava Regional Centre
Europe & CIS Region
09 December 2013 – Zagreb, Croatia
2
Renewable Energy Policy and Legislation
Renewable Energy Potential and Deployment
Barriers to Renewable Energy Investment
Good Countries for Investment in Renewable Energies
Conclusions
Topics of the presentation
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Adopted RE legislation and policy in the countries covered
Project Specific Feed-
in tariff
Policy implemented
Policy not implemented
Region Country Feed-in Tariff Feed-in Premium Quota Obligation Tender and Auction Priority Grid Access Tax Rebates and GrantsLow Interest Loans and
Loan Guarantees
KazakhstanKyrgyzstanTajikistan
TurkmenistanUzbekistan
AlbaniaSerbiaCroatia
Bosnia & HerzegovinaMontenegroMacedonia
TurkeyBelarus
MoldovaRussian Federation
UkraineArmenia
AzerbaijanGeorgiaEstoniaLatvia
LithuaniaRomaniaBulgariaPoland
Czech RepublicSlovakiaHungarySlovenia
Central Asia
Western Balkans
and Turkey
CIS
Caucasus
European Union
Ukraine
Croati
a
Czech Rep
ublic
Belaru
sSe
rbia
Bulgaria
Latvia
Hungary
Macedonia
Slova
kia
Slove
nia
Monteneg
ro
Lithuan
ia RSFB
iHTu
rkey
Estonia
Albania
Armen
ia
Azerbaij
an0
100
200
4
Wind
Small Hydro Biomass
Solar
Feed-in tariffs for specific RE technology in € / MW-h
Belaru
s
Hungary
Latvia
Ukraine
Monteneg
ro
Lithuan
ia
Croati
a
Slove
niaSe
rbia
Turke
y
Macedonia
Bulgaria RS
Slova
kia FBiH
Czech Rep
ublic
Armen
ia
Estonia
Azerbaij
an0
50
100
150
FBiH
Ukraine
Latvia RS
Croati
a
Lithuan
ia
Bulgaria
Macedonia
Monteneg
ro
Belaru
s
Turke
y
Slove
niaSe
rbia
Czech Rep
ublic
Hungary
Belaru
s
Slova
kia
Estonia
0
100
200
300
400
500
Slove
nia
Croati
a
Macedonia
Turke
y
Monteneg
ro
Czech Rep
ublicLat
via
Belaru
s
Bulgaria
Slova
kiaSe
rbia
Ukraine
Hungary
Lithuan
ia RSFB
iH
Armen
ia
Estonia
0
50
100
150
200
250
-
20.00
40.00
60.00
-
1,000.00
2,000.00
3,000.00
4,000.00
5,000.00
-
200.00
400.00
600.00
800.00
-
10.00
20.00
30.00
40.00
Biomass Solar
Small Hydro PowerWind
Technical RE potential in GW installed electricity capacity
Source: Several National Sources and UNDP calculations
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Some favorable RE legislations adopted Among the highest feed in tariffs and promotion for 20 years
Complimentary Grid access
Several tax exempts for RE investment
Quota Regulation with Tradable RE Certificates in place
Legally binding RE target
Grants ,Soft Loans, Loan Guarantees and Tax Rebates available
Regional highest feed-in tariffs for solar power in FBiH
Republic Srpska has an optional feed-in premium implemented
Republic Srpska offers priority access to the grid, FBiH offers priority access to the grid for installations smaller than 150 KW
Very high feed-in tariffs
Legally binding RE target
Several tax exempts for RE investment and existence of many funding possibilities
Belarus
Romania
Bosnia & Herzegovina
Ukraine
7
Deployed Solar and Wind Energy Capacity in MW
Poland, Turkey, Romania, Bulgaria and Czech Republic perform the best in Renewable Energy deployment
0
500
1000
1500
2000
2500
Czech Republic
Bulgaria Slovakia Ukraine Slovenia
Solar PV 2012
Solar PV 2005
0
500
1000
1500
2000
2500
Wind Capacity 2012
Wind Capacity 2005
Source: Several National Sources and UNDP calculations
8
Deployed Biomass Capacity in MW
RE legilsation may be a necessary condition for RE deployment but does not automatically explain for differences in RES utilization
0
200
400
600
800
1000
Poland Czech Republic
Hungary Slovakia Lithuania Romania
Biomass 2012
Biomass 2005
RE promotion scheme is necessary to make investment in RE attractive
RE deployment is not tied to a specific selection of a promotion instrument
Favorable legislation has to be designed to satisfy investor requirementsSource: Several National Sources and UNDP calculations
Market Distortions and Access to the Market
Subsidies for fossil fuels and monopolistic energy markets
Grid Access and Inadequate Infrastructure
Prioritized vs. Non-discriminatory grid access
Concessions, Permits and Licenses
Complicated, bureaucratic and intransparent license and permit processes can increase transaction costs, delay returns and discourage investment.
Capital Scarcity
Some countries show low rankings in World Bank indicators “Getting Credit” and “Risk Premium on Lending”
Barriers to RE Investment
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Political Instability and Country Risk
Regional average of “Country Risk” indicator by OECD is 5.5
Governance and Transparency
Transparency in governmental institutions, as license granting or tariff setting, is indispensable to attract private investor’s engagement
Cost of Information and limited experience with RE
High information costs due to cost and time intensive pre-feasibility and feasibility studies of a plant’s wind speed or water flow, represent a major barrier for RE investment
Barriers to RE Investment
10
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Good countries for investment in RE power generation
Favorable feed-in tariff lastly amended in 2013
Priority grid access for RE power plants
Brief Investor Guides for RE technologies available
Via Directive 96/92/EC legally binding RE target
Among the highest (and for SHP the highest) feed-in tariffs in the region
Significant improvement in construction permit processes (increase of 145 ranks)
Large investment in the recent years strengthened national RE market
Via Directive 96/92/EC legally binding RE target
Ukraine
Serbia
Croatia
Favorable feed-in tariffs in the region
HEP ODS bears the grid connection costs
Showed significant deployment of wind power plants in the last years
EU member legally binding RE target
Turkey
Favorable feed-in tariff legislation adopted
Priority grid access for RE power plants
Small scale power plants are exempt of power generation license
With specific targets Turkish Government shows commitment to RE expansion
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Challenging countries for investment in RE power generation No RE promotion scheme adopted
Not listed in the “Ease of Doing Business” indicator
Vertical integrated state owned energy market
No RE target
Turkmenistan
Project specific feed-in tariff
High “Risk premium on lending” and high “Dealing with Construction Permits” indicators
Despite complementary grid access, vertical integrated state owned energy market
No RE target
Tajikistan
Kyrgyzstan
No practical adoption of feed-in tariff legislation
High “Country Risk” and “Ease of Doing Business” indicator
Vertical integrated state owned energy market
No legally binding RE target
Uzbekistan
Project specific feed-in tariff
High “Country Risk” and “Dealing with Construction Permits” indicators
Despite priority access, vertical integrated state owned energy market
No RE target
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Conclusions Except of Turkey and Ukraine, only EU countries showed significant growth in RE deployment
- Adopted but not applied RE promotion- Subsidizing of traditional energy sources and electricity prices- Ongoing market liberalization- Complicated and cost intensive licensing - Unfamiliarity with RE investment
Positive Outlook
- Tremendous technical RE potential in the region
- Some countries already started tackling market barriers
- Growing demand for energy security in the region
- Increasing competitiveness of RES
- Some of the promotion schemes were recently adopted
- Decreasing cost of information
Thank you for your attention!
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Christoph S. HenrichSustainable Energy Consultant
Environment and Energy PracticeEurope & CIS Region
UNDP Bratislava Regional CentreEmail: [email protected]