Daily Times

Some policy support is inevitable to harness the full range of benefits that renewable energy technologies (RETs) can provide to our country. But it is imperative that the policy framework and associated instruments to promote renewables arecarefully devised to avoid the pitfalls of a parochial approach and to ensure that these blend seamlessly into the other energy sector and economic policies of the country. These policies must not overlook the enabling technological and institutional aspects also that will be keys to their success.

The policy landscape for renewables is both rich and colorful, as different countries have tried different policy frameworks and a host of regulatory, fiscal, and financial instruments over the past 2 to 3 decades to promote RETs in their economies. As the RETs have gradually matured and become cost competitive with traditional options, policies to promote their uptake in different countries have also grown in complexity and sophistication.

Regulatory policies have included quotas, targets, and obligations that mandate a certain quantity and share of renewable energy production in the overall energy mix. The spectrum has varied from broader vision statements to legally-binding renewable-portfolio-standards or obligations, for instance European Union’s goal of meeting at least 32% of its final energy consumption by 2030 from renewables.

Regulatory policies have also included setting priceson the energy produced from renewables. Administratively-set prices have included feed-in-tariffs or premiums(FITs and FIPs) that offerdevelopers of RETs a fixed price or premium on a market price on the electricity produced from their facilities in addition to a guaranteed access to the grid and priority in generation dispatch.

Large-scale power projects have been increasingly supported by auctions and tenders, which are designed to fulfill multiplepolicy objectives and used to competitively set the prices of electricity produced from these plants.

In net metering or net billing arrangement, the owners of RETs are provided compensation, either in kind or in monetary terms, for the energy they inject to the grid.They can receive the credit either in the same billing period or in a different one for the surplus energy they contribute to the system.

Non-regulatory policies such as fiscal and financial instruments are used, often in parallel withregulatory and pricing policies, to improve access to capital and lower the investment and production costs of RETs. These have included a variety of instruments like tax incentives,rebates, grants, concessional loansand guarantees, and some measures to mitigate the risks.

All of the above policies and instruments have invariably been accompanied by a set of technical standards for equipment, systems, and networks to ensure the safety, security, reliability, and quality of supply from the RET facilities, as well asthe systems and networks to which they feed, and the general public.

One hopes that the new renewable energy policy, unlike the previous one, will seek RETs’ deployment in a wider scope to harness the potential synergies of a multi-sector approach

Policies have playeda significant role in the growth of RETsaround the world and havehelped advance technologies and reduce costs (cost of electricity production from solar PV systems has fallen by 80% and that from wind systems by 25% since 2010). The market, however, still remains tilted in favor of conventional technologies. Some policy support, therefore, will still be required to push their wider uptake in the energy sector.

Pakistan had introduced an RE policy in 2006 to encourage investment and deployment of RETs at various levels within the power sector. A new policy draft is under active consideration of the government which is expected to supersede the previous policy. This is a good move since policies often lose their usefulness over time and must be revised periodically to remove anylacunae and to reflect the new technological and market realities.

One hopes that the new renewable energy policy, unlike the previous one, will seek RETs’ deployment in a wider scope to harness the potential synergies of a multi-sector approach. At a minimum, it must address three complementary aspects: (1) it should not be just restricted to power sector but coversthe entire energy sectoras well asthe other sectors; (2) it must seek concurrentlythe development of enablingtechnical infrastructurethat will be crucial to optimize their value; and (3) it must also seek reforms of the existing institutional structure to ensure its successful implementation.

First, any policy to promote RETs should seek their deployment, not just in the power sector, but encourage their use in the other sectors also where they can provide energy services in a more cost-effective and sustainable manner. For instance, many options exist for serving the heating and cooling needs of the industries through use of appropriate RETs, instead of fossil fuels or electricity.

Similarly, RETs can serve the transport sector either through biofuel production or electricity generation. In fact, the growing popularity of electric vehicles (EVs) offers a good option to couple the power and transport sectors to substitute the petroleum products with electricity produced from renewable energy sources.

The new policy should also encourage deployment of storage technologies in the country as these can enhance RETs’ value while ameliorating their intermittency and variability.Besides being a source of new electric demand, battery packs in EVs can also support the power grid in more economical ways than the traditional solutions. Prices of battery packs for EVs have fallen from US$ 1,000 in 2010 to below US$ 200 per kWh last year. The costs for utility-scale storage batteries have also followed a similar trend. Storage technologies, therefore, should rank high in the new renewable policy.

Second, the new policy should encourage a thorough reassessment of the current technical infrastructure and associated protocols, standards, and procedures for their adequacy to serve the new demands, and seek their improvement or modernizing wherever necessary. In many cases, this can be achieved with small investment as India and Italy are doing to build fast-response capability in their existing generating facilities. But, in some cases new equipment, telecommunications, and protocols may be necessary to make it happen.

The third, and perhaps the deciding factor between the success and failure, of the new policy will be the institutional structure that will be available or put in place to implement it. Successful and value-added uptake of the mostly small-scale and dispersed RETs warrants a highly proactive and responsive institutional capability, especially at all managerial tiers of the transmission and distribution service providers. A sea change in mindsets, attitudes, and behaviors will be critical before expecting any significant success of the policy.

It is highly recommended, therefore, that our policy makers pay a special attention to this critical enabling factor.Through appropriate institutional reforms and education and training efforts, they should build this capacity in the organizations that will be entrusted to execute the renewable energy policy in the country. Using the words of a retired Harvard University professor Georges Doriot, a Grade A management with Grade B plan is preferable to a Grade B management with a Grade A plan.

The writer is a freelance consultant specializing in sustainable energy and power system planning and development