4.5.1.2 Policy implementation experiences—successes and failures
Experiences of early policy implementation in the 1990s to reduce GHG emissions exist all over the world. This section lists and evaluates some examples. The fast penetration of wind power in Denmark was due to a regulated, favourable feed-in tariff. However, a new energy act in 1999 changed the policy to one based on the trading of green certificates. This created considerable uncertainty for investors and led to a significant reduction in annual investments in wind power plants during recent years (Johansson and Turkenburg, 2004).
In Germany, a comprehensive renewable energy promotion approach launched at the beginning of the 1990s led to it becoming the world leader in terms of installed wind capacity, and second in terms of installed PV capacity. The basic elements of the German approach are a combination of policy instruments, favourable feed-in tariffs and security of support to reduce investment risks (Johansson and Turkenburg, 2004).
When Spain passed a feed-in law in 1994, relatively few wind turbines were in operation. By the end of 2002, the country ranked second in the world, but had less success with solar PV in spite of having high solar radiation levels and setting PV tariffs similar to those in Germany. Little PV capacity was installed initially because regulations to enable legal grid connection were not established until 2001 when national technical standards for safe grid connection were implemented. PV producers who sold electricity into the grid, including individual households, had to register as businesses in order not to pay income tax on their sales (Sawin, 2003a). Significant growth in Spanish PV manufacturing in recent years is more attributable to the neighbouring German market (Ristau, 2003).
In 1990, the UK government launched the first of several rounds of competitive bidding for renewable energy contracts, known as the Non-Fossil Fuel Obligation (NFFO). The successive tendering procedures resulted in regular decreases in the prices for awarded contract value for wind and other renewable electricity projects. The average price for project proposals, irrespective of the technology involved, decreased from 0.067 €/kWh in 1994 to 0.042 €/kWh by 1998, being only 0.015 €/kWh above the wholesale electricity pool reference purchase price for the corresponding period (Menanteau et al., 2001). Due to only relatively small volumes of renewable electricity being realized through the tender process, the government changed to a support mechanism by placing an obligation on electricity suppliers to sell a minimum percentage of power from new renewable energy sources. The annual growth rate of electricity generation by eligible renewable energy plants has significantly increased since the introduction of the obligation in April 2002 (OFGEM, 2005).
Swedish renewable energy policy during the 1970s and 1980s focused on strong efforts in technology research and demonstration. Subsequently market development took off during the 1990s when taxes and subsidies created favourable economic conditions for new investments and fuel switching. The use of biomass increased substantially during the 1990s (for example forest residues for district heating increased from 13 PJ in 1990 to 65 PJ in 2001). Increased carbon taxes created strong incentives for fuel switching from cheaper electric and oil-fired boiler for district heating to biomass cogeneration. The increase of biomass utilization led to development of the technology for biomass extraction from forests, production of short-rotation coppice Salix and implementation of more efficient district heating conversion technologies (Johansson, 2004).
Japan launched a ‘Solar Roofs’ programme in 1994 to promote PV through low-interest loans, a comprehensive education and awareness programme and rebates for grid-connected residential systems. In 1997, the rebates were opened to owners and developers of housing complexes and Japan become the world’s largest installer of PV modules (Haas, 2002). Government promotion included publicity on television and in newspapers (IEA, 2003f). Total capacity increased at an average of more than 42% annually between 1994 and 2002 with more than 420 MW installed leading to a 75% cost reduction per Watt (Maycock, 2003; IEA, 2003f). The rebates declined gradually from 50% of installed cost in 1994 to 12% in 2002 when the programme ended. Japan is now the world’s leading manufacturer, having surpassed the US in the late 1990s.
China’s State Development and Planning Commission launched a renewable energy Township Electrification Program in 2001 to provide electricity to remote rural areas by means of stand-alone renewable energy power systems. During 2002–2004, almost 700 townships received village-scale solar PV stations of approximately 30–150 kW (about 20 MW total), of which few were hybrid systems with wind power (about 800 kW total of wind). Overall, the government provided 240 million US$ to subsidize the capital costs of equipment and around one million rural dwellers were provided with electricity from PV, wind-PV hybrid, and small hydropower systems (Martinot, 2005). Given the difficulties of other rural electrification projects using PV (ERC, 2004), it is too early to assess the effectiveness of this programme.
The California expansion plan to aid the installation of a million roofs of solar power in the residential sector in the next ten years was signed into law in August 2006 (Environment California, 2006). The law increased the cap on net metering from 0.5% of a utility’s load to 2.5%. A solar rebate programme will be created and it will be mandatory that solar panels become a standard option for new homebuyers.