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15 christoph henrich renewable energy investment in ecis zagreb 09.12.2013

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  • 1. Investment in Renewable Energy in the ECIS Christoph S. Henrich Sustainable Energy Consultant Environment and Energy Practice UNDP Bratislava Regional Centre Europe & CIS Region 09 December 2013 – Zagreb, Croatia 1
  • 2. Topics of the presentation  Renewable Energy Policy and Legislation  Renewable Energy Potential and Deployment  Barriers to Renewable Energy Investment  Good Countries for Investment in Renewable Energies  Conclusions 2
  • 3. Adopted RE legislation and policy in the countries covered Region Country Kazakhstan Kyrgyzstan Central Asia Tajikistan Turkmenistan Uzbekistan Albania Serbia Western Croatia Balkans Bosnia & Herzegovina and Turkey Montenegro Macedonia Turkey Belarus Moldova CIS Russian Federation Ukraine Armenia Caucasus Azerbaijan Georgia Estonia Latvia Lithuania Romania Bulgaria European Union Poland Czech Republic Slovakia Hungary Slovenia Feed-in Tariff Feed-in Premium Quota Obligation Tender and Auction Priority Grid Access Tax Rebates and Grants Low Interest Loans and Loan Guarantees Project Specific Feed-in tariff Policy implemented Policy not implemented 3
  • 4. 100 0 Ukraine Latvia Small Hydro Azerbaijan Estonia Armenia Czech Republic FBiH Slovakia RS Bulgaria Macedonia Turkey Serbia Slovenia Croatia Lithuania Montenegro 200 Hungary Belarus Feed-in tariffs for specific RE technology in € / MW-h 150 500 Wind 400 100 50 0 200 Solar 300 200 100 0 250 150 Biomass 100 50 0 4
  • 5. Technical RE potential in GW installed electricity capacity 60.00 Biomass 5,000.00 Solar 4,000.00 40.00 3,000.00 2,000.00 20.00 1,000.00 - 800.00 - Wind 40.00 600.00 30.00 400.00 20.00 200.00 10.00 - Source: Several National Sources and UNDP calculations - Small Hydro Power
  • 6. Some favorable RE legislations adopted  Among the highest feed in tariffs and promotion for 20 years Belarus  Complimentary Grid access  Several tax exempts for RE investment  Quota Regulation with Tradable RE Certificates in place Romania  Legally binding RE target  Grants ,Soft Loans, Loan Guarantees and Tax Rebates available  Regional highest feed-in tariffs for solar power in FBiH Bosnia & Herzegovina  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 Ukraine  Legally binding RE target  Several tax exempts for RE investment and existence of many funding possibilities 6
  • 7. Deployed Solar and Wind Energy Capacity in MW Poland, Turkey, Romania, Bulgaria and Czech Republic perform the best in Renewable Energy deployment 2500 2500 2000 2000 1500 1000 1500 Solar PV 2012 Wind Capacity 2012 Wind Capacity 2005 1000 Solar PV 2005 500 500 0 0 Czech Republic Bulgaria Slovakia Ukraine Slovenia Source: Several National Sources and UNDP calculations 7
  • 8. Deployed Biomass Capacity in MW  RE promotion scheme is necessary to make investment in RE attractive 1000 800 600 Biomass 2012 400 Biomass 2005 200 0 Poland Czech Hungary Slovakia Lithuania Romania Republic Source: Several National Sources and UNDP calculations  RE deployment is not tied to a specific selection of a promotion instrument  Favorable legislation has to be designed to satisfy investor requirements RE legilsation may be a necessary condition for RE deployment but does not automatically explain for differences in RES utilization 8
  • 9. Barriers to RE Investment  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” 9
  • 10. Barriers to RE Investment  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 10
  • 11. Good countries for investment in RE power generation  Among the highest (and for SHP the highest) feed-in tariffs in the region Ukraine  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  Favorable feed-in tariffs in the region Croatia  HEP ODS bears the grid connection costs  Showed significant deployment of wind power plants in the last years  EU member legally binding RE target  Favorable feed-in tariff lastly amended in 2013 Serbia  Priority grid access for RE power plants  Brief Investor Guides for RE technologies available  Via Directive 96/92/EC legally binding RE target  Favorable feed-in tariff legislation adopted Turkey  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 11
  • 12. Challenging countries for investment in RE power generation  No RE promotion scheme adopted Turkmenistan  Not listed in the “Ease of Doing Business” indicator  Vertical integrated state owned energy market  No RE target  No practical adoption of feed-in tariff legislation Kyrgyzstan  High “Country Risk” and “Ease of Doing Business” indicator  Vertical integrated state owned energy market  No legally binding RE target  Project specific feed-in tariff Tajikistan  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  Project specific feed-in tariff Uzbekistan  High “Country Risk” and “Dealing with Construction Permits” indicators  Despite priority access, vertical integrated state owned energy market  No RE target 12
  • 13. 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 13
  • 14. Thank you for your attention! Christoph S. Henrich Sustainable Energy Consultant Environment and Energy Practice Europe & CIS Region UNDP Bratislava Regional Centre Email: christoph.henrich@undp.org 15

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