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Renewable Energy Sources & Energy Efficiency Regulatory Frame for the Successful Sector Policy

Renewable Energy Sources & Energy Efficiency Regulatory Frame for the Successful Sector Policy. Serbian Wind Energy Association (SEWEA), Belgrade, 5 December 2011. Increase in Energy Efficiency and Renewable Generation = Changing Behavior

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Renewable Energy Sources & Energy Efficiency Regulatory Frame for the Successful Sector Policy

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  1. Renewable Energy Sources & Energy Efficiency Regulatory Frame for the Successful Sector Policy Serbian Wind Energy Association (SEWEA), Belgrade, 5 December 2011

  2. Increase in Energy Efficiency and Renewable Generation • = • Changing Behavior • Changing behavior of consumers -- so that they consume less heat and electricity by investing in energy-saving (e.g. appliances, home insulation, thermostats and timers) • Changing behavior of investors -- so that they decide to build renewable generation instead of thermal generation, and so they decide to invest in Serbia instead of in another country Serbian Wind Energy Association (SEWEA), Belgrade, 5 December 2011

  3. Market is the Easiest Mechanism to Change Behavior • Markets allocate resources very efficiently if price signals are accurate and well understood by market participants • Price signals must be stable, and believable, and projected far into the future to justify new investment by consumers and generators • Government should influence prices so that they reflect social objectives and reflect externalities currently not in electricity prices (energy security, CO2 emissions, renewable targets) • Electricity prices which are too low do not reflect externalities and send incorrect price signals to consumers and investors Serbian Wind Energy Association (SEWEA), Belgrade, 5 December 2011

  4. To Attract Renewable Investment, • More than Just Pricing Signals are Required • A generator facing a market with a guaranteed price for renewable energy can calculate the rate of return he will earn, against which the risk must be measured • Government can reduce risks for renewable generation (guaranteed long term power off-take after expiration of incentive tariff, changes of law protection, removal of transmission and balancing risks, payment in Euros rather than local currency, and importantly inflation risk), and by doing so reducing the electricity price necessary to attract investment • The 'package' consisting of power price plus risk-mitigating measures must be competitive with other countries, or investments will flow to other countries Serbian Wind Energy Association (SEWEA), Belgrade, 5 December 2011

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