Workshop on Policies to Accelerate

Renewable Energy Market Deployment

Highlights and findings of the Workshop – Emerging markets and specific policy measures

1. The numerous policy and project case studies presented and discussed during the Workshop were
used to formulate and/or to diffuse the following messages, conclusions and recommendations (see
also Annex 2).

2. The enlargement of renewable energy markets provides a source of energy security, reduces climate
change emissions and responds to energy needs that cannot be supplied by other means (at least
where grid extension or development would not be feasible).

3. There is a need for international co-operation with countries beyond the IEA borders, at least in the
form of converging visions and perspectives on the global natural resource availability and use,
capital and technology requirements as well as market segments that could be captured by renewable
energy. Common and co-ordinated actions will accelerate the pace of unit cost decreases, helping the
diffusion of renewable energy in the total world energy mix, and in particular in countries such as
India.

4. Policies carried out in IEA Member Countries already provide insights on the policy direction to
follow. Typically, IEA countries with active renewable market development have started out with
financial assistance to R&D and demonstration projects, thereafter encouraging larger market takeoff
through tax schemes, preferred tariffs, and soft interest rates. More recently, the financial incentives
have been complemented by legislation for mandatory purchase of electricity from renewable power.
As an early application in Germany, Spain and the US, for example, electricity feed laws have been
used to require mainstream suppliers to purchase renewable power at a predefined rate. In the UK,
the non-fossil fuel obligation mandated suppliers to buy renewable power from independent power
producers that have successfully bid for a particular amount of capacity required by the government.
Most recently, renewable portfolio standards have emerged as a third generation policy route,
adopted e.g. by Australia, Denmark, Italy, Netherlands, and 10 of the US states. Under this scheme,
utilities are required to purchase a certain percentage of the electricity from renewable sources, either
directly or through trading of renewable certificates if more efficient, providing strong incentives for
market-based portfolio optimisation. Although it is still too early to fully judge the efficiency of this
newer policy mechanism, it does seem to have obvious advantages in the form of flexibility
compatible with market deregulation as well as a relatively low levels of administration.

16
5. At only 2.5% (1998, including hydro) of the total commercial primary energy, renewable energy in
India still represents a niche market share. Nonetheless, this is a growing share and translates into
large absolute numbers, given the size of the Indian energy sector. As a result, India is emerging as a
world leader in the diffusion and development of several renewable energy technologies. This is the
case for wind power, biomass-based power (mainly co-generation in the sugarcane industry),
biomass gasifiers (with a successful export of Indian technology to Switzerland), solar photovoltaics,
or more specific applications such as biogas plants and solar cookers (see annex). India is also setting
up one of the four solar thermal plants in the world funded – partly – by the GEF (Mathania Project,
140MW dual-fuel solar-naphta thermal power plant).

6. Policy goals designed to accelerate market deployment of renewable energy to support this growth
are being formulated. Highlights of the Policy Statement on Renewable Energy being drafted by the
Ministry of Non-conventional Energy Sources were presented during the workshop. This is the first
attempt by India to develop a comprehensive renewable energy policy. The Policy statement will
encompass policy goals, as well as identify mechanisms to achieve them and investment
requirements. The objectives of the Policy Statement are to meet the minimum rural energy needs;
provide decentralised / off-grid energy supply for agriculture, industry, commercial and household
sectors in rural and urban areas; and, generate and supply grid quality power. The medium-term
goals, to 2012, envisage:

½ 10% of new power capacity addition projected to come from renewables

½ progressive electrification by renewables of the 18,000 villages that are considered non-
electrifiable by conventional means
½ coverage of 30 million households through improved woodstoves
½ setting up of a further three million family size biogas plants
½ deployment of five million solar lanterns and two million solar home lighting systems
½ deployment of solar water heating systems in one million homes

7. The Workshop concluded on the importance of such policy goals. It also emphasised on the need for
a market approach to renewable energy development, recognising the financial benefits of renewable
energy development, as well as moving away from a purely product-based approach to one that is led
by the delivery of specific services.

8. Reflecting this trend, the debates in the workshop were purposely structured around three different
renewable energy markets segments. The differentiation among them was useful for highlighting
different market dynamics (with regards to the demand for example). This differentiation is
important. It helps reflect the many degrees of maturity of each of the market segments. It facilitates
the identification of each expective needs in terms of technology development to reduce cost and
improve the reliability of delivered renewable energy. It improves the appraisal of investments and
the design of specific mechanisms that can be used to stimulate the market expansion. These three
market segments are:

½ Grid power
½ Decentralised power (distributed generation)
½ Rural energy needs (often off-grid, and often with limited solvable consumption)
9. Accordingly, policy measures will differ for each of the market segments. Renewable power
connected to the grid needs to benefit from a policy environment linked to the liberalisation of the
power sector industry, particularly when it comes to tariff determination. The Workshop served as a
platform to call for the inclusion of provisions on renewable energy market deployment in the draft
Electricity Bill led by the Indian Ministry of Power, a bill expected to provide an integrating legal
framework for power development in India. So far, the policy implications of renewable energy are
 not clearly identified in the Electricity Bill. Indian regulators operating at both central and state levels
are yet to take full account of renewable power requirements in their tariff orders or in the norms.

10. For rural energy, India expects to need a certain amount of public financial support, an acceptable
measure provided it for a given period of time and well targeted towards very-low income
households. This may be called subsidies if one looks at the consumption side of the issue, but
amounts to learning investments from the supply side as the financial support will facilitate unit cost-
reduction. Similarly, for marginally higher income groups, the workshop highlighted the enormous
potential existing in India for the diffusion of certain renewable energy technologies (such as solar
photovoltaics for home or outdoor lighting), provided both that the government eliminates market
distortions and that innovative financing mechanisms are implemented. Similar remarks were made
on the potential of renewable energy diffusion in the small-scale industry (for power and heat), but
the requirement for this market segment is more information and again, innovative financing.

Lessons from other developing countries

11. Five representatives of developing countries participated in the Workshop as invited speakers (see
annex 3), thanks to the financial support from the CTI. Each of them was useful in highlighting the
following policy aspects.

Brazil
12. A representative from the electricity regulatory agency presented the Brazilian policy requirement
for companies participating in the emerging Brazilian liberalised power market to invest a share of
their returns in renewable energy development and energy conservation. This can be done either
through R&D investments or through direct renewable energy supply or energy savings. This
highlighted the importance of Energy Service Companies (ESCOs) in accelerating the
implementation of energy saving measures.

Malaysia
13. The Malaysian delegate from PTM (Malaysia Energy Centre) highlighted the importance of adequate
resource assessments for renewable energy potentials, as these are often very local. The public
authorities have an important role to play in facilitating the match between market identification and
supply potentials based on local resources.

Thailand
14. In addition to the insights from the contribution of the Malaysian delegate, the Thai representative
from the National Energy Policy Office emphasised on the need to work out mechanisms that would
enable final market pricing of renewable energy to fully reflect the benefits from their positive
environmental externalities.

Bangladesh
15. Bangladesh has been successfully applying the micro-credit methodology developed by the now
world-wide known Grameen Bank to solar power development in rural areas successfully, a concept
that is now being also experiencing with in India and elsewhere.

China
16. The Chinese representative brought the recent experience of China in boosting renewable energy
market development (as demonstrated at the IEA workshop organised in Guilin in 2000). The fact
that China has been able to mobilise any long-term multilateral sources of financing national for
renewable energy programme activities (GEF) has not gone unnoticed in India.
 Annex 1

Renewable Energy Programs in India

Cumulative Achievements (as of 30 June 2000)

Source / Technologies Units Cumulative World

Achievements Rank

Power Generation
Wind power MW 1175 5
Small hydro power (<25MW) MW 1157 10
Biomass-based power MW 235
Biomass gasifiers MW 35 1
Solar photovoltaics MW 58 3
Energy recovery from urban & industrial wastes MWe 15 na
Thermal Applications
Biogas Plants No. 3,043,853 2
Improved cookstoves No. 32,267,000 2
Solar water heating systems m2 collector area 500,000
Solar cookers No. 490,000 1
Water pumping
Wind pumps No. 651 na
Solar PV pumps No. 3443 na
na: non available
Source: Ministry of Non-Conventional Energy Sources
 Annex 2

IEA

Synthesis and Recommendations

Workshop on
Policies to Accelerate Renewable Energy Market Development,

New Delhi, 20 February 2001

Overall Policy Elements for Long-

Term RE Portfolio Optimisation
l National target for share of renewable energy, based
on optimal use of regional resource potentials;
l Legislation: (a) for utilisation of eligible renewable
IPPs; (b) designed to be compatible with power sector
reform and overall development objectives; and (c)
coupled with adequate monitoring and accounting
authority; and
l Market mechanisms for (a) fair cost-sharing; and (b)
for enabling entrepreneurship among developers,
financiers, and other service providers
l e.g.: Renewable Portfolio Standards with Tradable
Renewable Certificates
 Specific Demand Segment Challenges
l Minimum rural energy needs:
u Learning investments, DA
u (Micro-)financing schemes

l Decentralised energy systems:

u RE hybrids
u Local resource chain, e.g. biomass

l Grid power:
u Balanced long-term tariff comparisons
u Reliable quality of service

Technology-Specific Opportunities
Bioenergy

Solar PV
Power
Solar

Wind

Minimum rural energy needs X X X

Decentralised energy systems XX X XX X

Grid power X XX XX
 Global Market Integration:
Strategic IEA Action Agenda Items

l OECD RE policy experiences for guiding long-

term market frameworks
l Identification of optimal RE portfolio elements,
incl. for medium- and long-term emerging
technologies
l Readily extendable international collaboration
on aggregation of lead markets with common
strategic RE take-off opportunities
l Advice and co-ordination for a new level of
joint international RE technology procurement

NMC/IEA RE Perspectives

l RE market global
l Strategic public-private alliances
l Open network for international
collaboration available, e.g. for increased
N-S(-S) co-operation, and for joint cost
reduction
l National resource assessment and target
l Efficient power sector reform
l Balanced long-term cost-recovery
regulatory mechanisms
 Challenges for Global RE Market
Integration Financing
l Level playing field for a portfolio with major
demand-driven clean energy investments;
l Global market efforts rather than fragmented
national systems;
l Leveraging distributed risk sharing between e.g.
multilaterals, public banks, export credit agencies,
and the private sector;
l Pulling the market down the experience curve
through aggregation in new procurement alliances
for particularly promising market segments; and
l Expansion of national OECD country programs into
providing incentives with global access and focus
 Annex 3

Workshop on
Policies to Accelerate Renewable Energy Market Deployment
18 – 20 February, 2001 : Banquet Hall, Ashoka Hotel, New Delhi
Detailed Programme
18th February

1700 – 1800 hrs Inaugural Session

1700 – 1710 hrs Welcome Address

- Mr. Roberto Vigotti
Chairman
International Energy Agency Renewable Energy Working Party

1710 hrs Introductory Remarks

- Mr Jørgen Bjelskou, Head Climate Change, Danish Energy Agency,
and Climate Technology Initiative Chairman Representative

1720 hrs Presidential Address

- Shri M Kannappan, Hon’ble Minister of State for Non-Conventional
Energy, GOI

1740 hrs Inaugural Address

- Shri Suresh Prabhu
Hon’ble Minister of Power, GOI

1755 hrs Vote of Thanks

- Mr V Raghuraman, Sr-Adviser, Energy
Confederation of Indian Industry

1800 hrs Reception

19th February

0930 – 1130 hrs Plenary Session – I

POLICY APPROACHES & INITIATIVES

Session Chairman : Mr P M Nair, Secretary, MNES

Session Co-chairman : Michael Geyer, Executive Committee
Secretary, IEA SolarPACES

Lead Presentations:

- A strategy to realise renewables’ contribution to energy diversity

Mr. Roberto Vigotti, Chairman
International Energy Agency Renewable Energy Working Party
 - Renewable Energy in India- Policy Approaches
Mr Ajit Gupta Adviser-Power, Ministry of Non-Conventional Energy

Invited Presentations:

- Climate Change Mitigation, Prof P R Shukla, IIM Ahmedabad

- Capacity Building, Dr P Venkata Ramana Asst. Rresident
Representative, UNDP, New Delhi
- New Regulatory Frameworks, Sanjeev Ahluwalia
- Private Sector Perspectives, V Raghuraman, Senior adviser, CII

1145 – 1200 hrs Tea / Coffee Break

1200 – 1315 hrs Plenary Session – I (Continued)

POLICY APPROACHES & INITIATIVES

Session Chairman: Mr. Roberto Vigotti, Chairman, IEA Renewable

Energy Working Party
Session Co-chairman : Mr Ajit Gupta, Adviser-Power, MNES

Country Presentations:

- Brazil (Marcelo Khaled Poppe, Special Advisor of the Board of

Directors, ANEEL)
- China (Dr Wang Zhongying, National Project Coordinator,
UNDP/GEF project Management Offce, China)
- Malaysia (Mr Ahmad zarin Ismail, Head of Emerging Technologies
R&D Management Services Unit, Malaysia Energy Centre)
- Thailand (Dr. Pongpisit Viseshakul, Director of Energy
Conservation and Renewable Energy Division, NEPO)

1315 – 1400 hrs LUNCH

1400 – 1500 hrs TECHNICAL SESSION – I

MINIMUM RURAL ENERGY NEEDS
Session Chairman: Dr C L Gupta, Head , Solar Agni
Session Co-Chairman: Mr Ahmad Zarin Ismail, Head of Emerging
Technologies R&D Management Services Unit, Malaysia Energy Centre

Case Study Presentations:

- Dipal Barua, Gramin Shakti
- Swami Shashankananda, Secretary, Ramakrishna Mission
Ashrama
- Mr Harish Hande, Managing Director, SELCO
- Shri N K Maini, Chief General Manager, SIDBI
1500 – 1600 hrs TECHNICAL SESSION – II
DECENTRALISED ENERGY SYSTEMS
Session Chairman: Erik Lysen, Executive Committee Chairman, IEA
Photovoltaic Power Supply Systems
Session Co-Chairman: Mr A K Barua, Project Director, IACS

Case Study Presentations:

- Thermal technology and Integrated Solar Combined Cycle for

Mathania, Mr Nagi Chehab, INABENSA, Spain
- Mr. P K Bhatnagar, Sr. Adviser, DESI Power
- Dr C Palanippan, Planters Energy Network
- Mr S K Ray Chaudhuri, Managing Director, Pulse Power
Technologies Pvt. Ltd.

1600 – 1630 hrs Tea / Coffee Break

1630 – 1730 hrs TECHNICAL SESSION – III

GRID POWER

Session Chairman : Dr. V Bhaktavatsalam, Managing Director, IREDA

Session Co-Chairman : Mr Jørgen Bjelskou, Head Climate Change,
Danish Energy Agency, and Climate Technology Initiative Chairman
Representative

Case Study Presentations:

- Marcelo Khaled Poppe, Special Advisor of the Board of Directors,

ANEEL, Brazil
- Dr G C Datta Roy, Chief Executive Power, DSCL
- Mr V Saibaba, Asian Wind Turbines Ltd
- Mr. Michael Geyer, Executive Committee Secretary, IEA
SolarPACES: Concentrated Solar Grid Power Experience – The
Success Story of California

1800 – 1930 hrs Round Table on Renewable Energy Market Development

1800 Introduction –Roberto Vigotti, Chairman, IEA Renewable

Energy Working Party
1815 Lead Discussion 1: Erik Lysen, Executive Committee
Chairman, IEA Photovoltaic Power Supply Systems
1830 Lead Discussion 2: Michael Geyer, Executive Committee
Secretary, IEA SolarPACES
1845 Lead Discussion 3: Jaap 't Hooft, Executive Committee
Chairman, IEA Wind Turbine Systems
1900 Discussion
20th February
BREAK-OUT SESSIONS (in parallel)

0930 – 1100 hrs Panel Discussions on Technologies, Policy Intervention &

Financing

(A) MINIMUM RURAL ENERGY NEEDS

Session Chairman : Shri K C Khandelwal
Adviser, MNES

Session Co-Chairman : Johan Wide, Administrator, IEA

Renewable Energy Unit

• Dr Veena Joshi , Head Energy Division, SDC, New delhi

• Swami Shashankananda, Secretary, Ramakrishna Mission
Ashrama
• Dipal Barua, Gramin Shakti, Bangladesh
• Dr Saroj Mishra, Asst. Programme Officer, Winrock International
India

(B) DECENTRALISED ENERGY SYSTEMS

Session Chairman : Dr E V R Sastry, Adviser, MNES
Session Co-Chairman : Dr Wang Zhongying, National Project
Coordinator, UNDP/GEF project Management Office, China

• Prof. H S Mukunda, Indian Institute of Science

• Mr K Subramanya, Vice President, Tata BP Solar
• Mr S P Gon Chouduhry, Director, West Bengal Energy
Development Agency
• Mr D Mazumdar, Director, IREDA

(C) GRID POWER

Session Chairman: Mr A K Mangotra, Joint Secretary, MNES
Session Co-Chairman : Jaap ’t Hooft Chairman, IEA R&D Wind

• Rakesh Bakshi, Managing Director, VESTAS RRB

• Mr M S Balasubramniam, General Manager, Carborandum
Universal
• Dr G C Datta Roy, Chief Executive Power, DSCL
• Mr Nagi Chehab, INABENSA, Spain

1100 – 1130 hrs Tea / Coffee Break

1130 – 1300 hrs BREAK-OUT SESSIONS (Continued)

Panel Discussions on Technologies, Policy Interventions &

Financing

(A) MINIMUM RURAL ENERGY NEEDS

Session Chairman : Dr. Pierre Audinet, Administrator, IEA
Session Co-Chairman : Mr V Raghuraman, Sr-Adviser, Energy
 • Mr Ahmad Zarin Ismail, Head of Emerging Technologies R&D
Management Services Unit, Malaysia Energy Centre, Malaysia
• Prof H P Garg, Indian Institute of Technology, Delhi
• Shri N K Maini, Chief General Manager, SIDBI
(B) DECENTRALISED ENERGY SYSTEMS
Session Chairman : Dr. Hari Sharan, DESI Power
Session Co-Chairman :Dr. Pongpisit Viseshakul, Director of
Energy Conservation and Renewable Energy Division, NEPO

• Dr V V N Kishore, TERI
• Dr. B C Jain, Ankur Industries
• Mr N Udayakumar, Udhaya Semiconductors
• Chandrakanti Solar Lantern Programme-: Mr Dehabratha
Kantha, Collector, Karimngar
• Mr G Ananth Padmanabhan, IDFC
(C) GRID POWER
Session Chairman : Mr. R V Shahi, Chairman & Managing
Director, BSES
Session Co-Chairman : Marcelo Khaled Poppe, General
Executivo, ANEEL, Brazil

• Dr Y P Abbi, Bharat Heavy Electricals Ltd.

• Mr. P D Nair, Sulzer Flovel
• Dr Wang Zhongying, National Project Coordinator, UNDP/GEF
project Management Office, China
• Mr Tulsi Tanti, Suzlon Energy systems Ltd.

1300 – 1400 hrs LUNCH

1400 – 1530 hrs Round Table Discussion

Session Chairman : Mr P M Nair, Secretary, MNES

• Roberto Vigotti, Chairman, IEA Renewable Energy Working

Party
• Marcelo Khaled Poppe, General Executivo, ANEEL, Brazil
• Mr. V Raghuraman, Sr Adviser Energy, CII
• Dr. V Bhaktavatsalam, Managing Director, IREDA
• Mr. R V Shahi, Chairman & Managing Director, BSES
• Mr Jørgen Bjelskou, Head Climate Change, Danish Energy
Agency, and Climate Technology Initiative Chairman
Representative
• Dr. Hari Sharan, Chairman, DESI Power

1530 – 1600 hrs Tea / Coffee Break

1600 – 1700 hrs Synthesis, Recommendations & Closing

• CII Representative
• MNES Representative
• CTI Representative
• IEA Representative