Renewable energy systems (RESs) have an inherent quality of achieving independence Vis a Vis useful energy harnessing for self or localized use. At larger scale the renewable energy system allows the power generation and distribution without a significant harm to the environment. Propagation and proliferation of RESs and the Renewable Energy Technology (RET), collectively demand an effective policy making infrastructure to be in place to ensure their penetration locally and globally. Renewable Energy Policies have a great impact on how readily these systems are adopted by the investors and market, how efficient these systems are which is dependent on the research and development (R&D) of RESs, how effectively the country or region copes with the scourge of environmental harm with the use of RESs. Renewable Energy Policies also have an impact on how costly these technologies are and how these technologies fiscally benefit common man, investors and industries. Efficiency enhancement, stability and intelligent management of grids integrated with RES are also renewable policy dependent. This paper thoroughly and critically examines the importance of renewable energy policy. not just at domestic or national level but also at global level. It discusses in detail the core ingredients of renewable energy policy which were adopted in the past, which are being adopted now and which should be adopted in future. This paper also discusses policy, business and financial models; importance of tariff formulation, incentives and subsidies and a few factors which may pose a risk to the development and adoption of RESs. At the end a few suggestions have also been made which, if adopted, would help promote the RESs proliferation across the globe at a rapid pace and would ensure energy security, sustainable development and environmental conservation.
Energy policy, in general, is the stipulation of standard procedures and regulations by governmental or global bodies to look after the issues related to energy generation, distribution and end-user consumption. The salient features of energy policy include local or global legislations, treaties, investment-incentives, regulations regarding conservation of energy, monetary tax regulations and other significant factors impacting public well-being and development. In the current era, energy acts as the pivot to all economic activities of a region in general and a country in particular as it is required by the industry, agriculture, communication and transportation sectors among several others.
With the development and implementation of modern renewable energy systems at global scale, the dimensions of energy policy have evolved into renewable energy policy. The renewable energy policies are not only being developed and implemented at state level through governments, but also at global level through international agencies, syndicates and think tanks like IRENA or the International Renewable Energy Agency, REN-21 or the Renewable Energy Policy Network for the 21st Century, REEEP or the Renewable Energy and Energy Efficiency Partnership, ISA or the International Solar Alliance, EREC or the European Renewable Energy Council and the Energy and Climate Partnership of the Americas (ECPA) to name a few.
The renewable energy policies take into account deployment planning, legislation on commercial aspects of renewable energy systems along with their efficiency standards, fiscal policies, energy security and implementation of the above in accordance with international treaties, agreements and alliances. Another major issue being looked after in the global policy making is the effect of all these systems upon the climate, environment and ecology [1].
The major factors which are defined in the regional or global renewable energy policies include;Global policies to propagate renewable energy have played a key role in their expansion. Europe is regarded as the pioneer in defining renewable energy policy in early 2000s. Following the footsteps of Europe, now most countries around the world have formed such policies to cater for their plans to deploy and promote renewable energy systems. Major inter-governmental organizations are playing a key role for promoting the adoption of renewable energy worldwide. They have been providing policy advice and motivating member countries to develop and improve renewable energy policies apart from helping them with capacity building and technology transfer [4]. These organizations have also identified the fact that the renewable energy has the potential to take poor countries to a higher level of prosperity.
The global policy on renewable energy systems is also having a positive impact on evolution of next generation technologies. As the focus is now shifting from fossil fuels to renewables, several new technologies have been created as a result of more focused research and development in the renewables domain. These newly evolved technologies are not only proving to be cost-effective, but also offer an easier, effective and efficient way of their deployment regardless of where they are being deployed.
A close study of literature related to global renewable policy brings to light the fact that the momentum of fossil-fuel market and consumption still impedes the adoption of renewable energy systems owing to the geopolitical preferences of key global players. Some of the countries have even adhered to the policy of discouraging the proliferation of renewable energy systems not just within their own political boundaries, but also in their neighboring regions and trade-partners. Despite these impeding factors, effective policy-making vis a vis renewables is still on-going at national as well as global scale and is gradually gaining the pace to address all the issues related to the growth of renewables for sustainable development and complete reliance on green energy resources.
This paper will encompass all the key policies which are being introduced and implemented by inter-governmental organizations across the globe and will also highlight the policy preferences and structures being adopted by various countries across different regions regarding the development and promotion of renewable energy resources. It will also discuss which renewable policy is lopsided in the favour of which renewable technology by using the detailed data provided in the latest global renewable energy policy reports recently published in different research studies critically analyzing different governmental policy instruments.
There are several publications regarding the comparative analyses of renewable energy policies which have highlighted the pros and cons of these policies either by directly discussing their quality or effectiveness in short-term, as well as long-term scenarios or by comparing the magnitude of their quality as compared to policies of other countries or those defined by inter-governmental organizations on renewables. Having studied the reports, journals and technical papers on global renewable energy policies, one can easily conclude that the policy formulation and their implementation are still not perfectly defined and are constantly evolving with several modifications and improvements with every passing year. Some of the countries which have achieved the technical excellence in manufacturing and deployment of renewable energy systems through dedicated research and development are in a position to take effective policy measures Vis a Vis their implementation and effectiveness. Some policies are unique to a particular country or region while some are common across the globe. These policy matters are significantly affected by social preferences, political tendencies and geo-political scenarios.
Most of the studies begin with discussing the current issues in the domain of renewable energy with reference to policies of the past and those which have been currently implemented. Then a solution in the form of a new business or technical model is suggested and a restructured policy is proposed. In [5], S. Han et al., have discussed the current trend of renewable energy policy in South Korea. They have discussed the contemporary issues associated with instability in the supply of power from renewable energy sources along with the low efficiency issues offered by such systems. By observing the national policy trends, they have tried to propose an effective business model which could be used to address afore mentioned issues. They have also identified that the development and implementation of renewable energy systems is not the only solution in this regard, rather there is a need to develop a compact and interactive power system integrated with state-of-the-art information and communications technology (ICT) based solutions and platforms. Another observation made in [5] is that efficient energy use could be achieved by deploying advanced energy storage systems (ESSs) with an intelligent and agile demand-side management systems such as the EMS or the energy management system also termed in the modern technological nomenclature as the demand response (DR) system.
In one study about electrification of Ethiopian Power Sector using renewables, Md Alam Hossain et al., [6] suggest the use of diversified energy supply-mix to achieve energy security and sustainable energy system development with zero carbon emission and increased export options. It also suggests the use of market allocation (MARKAL) energy system model of energy to achieve all these mentioned objectives. For diversification of renewable energy sources, a mixed use of frontline renewable energy technologies like Hydro, PV and wind have been suggested. The effectiveness of Market allocation scheme has also been discussed by Ricardo Fagiani et al., [7] wherein such a policy of the European Commission implemented to introduce competitive allocation mechanism has been discussed. This policy ensures that the market players reveal their actual generation cost which would further help the policy makers with effective price formulation. It also discusses the pros and cons of commission’s recommendations regarding allocation of feed-in premiums (FiPs) through tender and quota obligation schemes. In [8], Song Yun-Wei has examined the renewable energy policy development in the USA. The policies regarding the green consumption and consumer protection have been discussed at stretch to verify their effectiveness. He concludes his study with the argument that renewables still suffer to compete with traditional energy due to the high cost of its implementation. He also states that the renewable technologies are still under development for their efficiency and reliability and that the public is still unaware of the benefits of deploying renewable energy harnessing techniques. Other obstacles that have been identified include the lack of research and development funds and the subsidies that still exist for the deployment of power generation systems using traditional non-renewable sources.
The single largest barrier in the non-adoption of renewable energy systems globally is policymaking as identified by Nathan Murthy et al., [9]. They propose that effective policy recommendations are needed to accelerate the penetration of renewables at national as well as global scale. Their study also states that a sustained policy support for demand dispatch in combination with integrated intermittent generation through renewables is important to achieve the goal of meaningful inclusion of renewables to the grid. It also been suggested that a National Action Plan be proposed to delineate a comprehensive climate strategy, incentives be introduced to promote renewables against the traditional fossil fuel-based generation systems, subsidies to fossil fuel-based producers be removed in favor of renewables and an effective Feed-in Tariff (FiT) policy be introduced. A study about the renewables policy in different States of the US has been presented by Olawale Ogunrinde et al., [10] . According to their report, several policies to incentivize the proliferation of RESs have been implemented in several states. One of these policies is the renewable portfolio standards (RPS) which ensures that renewable energy sources contribute to a certain percentage of the total electricity sales. It has been observed that the returns on RPS are location specific and RPS mandate implementation is still not fully functionalized due to lack in development of renewables integration technologies.
China’s renewable policies and regulations have been discussed in [11] which suggests that China has a strong policy structure to achieve the sustainable development and to overcome the menace of climate change. According to this report China has implemented instruments from laws, policies and financial incentives. Chinese policymakers have clearly identified that renewable energy is without a doubt unavoidable for sustainable economic growth and development. They have been weaving their policies around the idea that it is imperative to have reduced production cost and technological reliability of renewable energy systems. To further the effectiveness of China’s policies regarding renewables, authors suggest that legal and institutional frameworks along with a supportive policy must be brought forth. Security and sustainability of public sector, promoting the involvement of private sector, R&D across all sectors, establishment of small and medium enterprises related to renewable energy systems and access to affordable finance have been identified as areas which must be taken into account for improvement in existing policies. Reforms are also needed create a positive investment climate so that the attention of private sector with its capital towards renewable energy could be attracted which will further expand international cooperation in this domain. Further policy suggestions in [12] include development of advanced and efficient renewable energy systems which could be achieved with the definition of specific energy development objectives, mandatory and effective legislation, administrative intervention and establishment of a complete research and design institution.
Shyam B. et al., in [13] discuss policies, opportunities and challenges related to renewable energy systems in India. India is one of the global leaders in the deployment of renewable energy systems and has implemented an effective policy mechanism to promote the deployment and utilization of renewables across the country. It is known to Indian policy makers that utilization of renewable energy is crucial to nation’s energy security and economic stability. In India, the renewable energy sector is supported by the government with significant amount of financial, educational and institutional aids. Owing to India’s effective and reliable renewable policies, strategies and frameworks, the country has witnessed prolific deployments of renewable energy harvesting systems widely dispersed across the country. The publication also discusses the potential challenges faced by the power sector in integrating the renewable energy systems with the existing grids and significance of smart-grid in this regard. It also highlights the work being done in the domain of smart-grid to overcome all the challenges related to renewable systems integration and energy management. Another important take-away from this discussion is the healthy environment created by the government to ensure the involvement of private sector, particularly in the domain of wind power. R&D in the domains of micro-grids, storage systems and smart-grid is being emphasized. Authors in [14] introduce the generation expansion planning (GEP) method and policy and evaluate its effectiveness. The objective of GEP is to identify the most feasible combination of different conventional or fossil-fuel based energy sources in combination with RESs to overcome the power demand in a predictable manner. It involves a clearly defined algorithm for its implementation which monitors all the demand and available supply parameters for optimized decision making strictly including parameters from renewable energy sources. Results from this publication conclude that committed higher percentage of renewable energy portfolio (REP) results in a comparatively higher investment and somewhat lower cost of operation. It also concludes that the policy makers make use of GEP to identify the most efficient and economically feasible policy while also determining the most suitable renewable portfolio standard (RPS) or emission penalties.
Visible and effective leadership and commitment by high level policy and decision makers is important for significant policies regarding the renewables [15]. Policies to stimulate the growth of industries that manufacture, supply and trade RESs with solutions must be introduced. Strong and stable financial services and institutions for private and public investments must be implemented which have high transparency and accountability [15]. Many publications discuss the significance of penalties, FIT, FIP and RPS in policy making and their repercussions Vis a Vis renewable energy systems efficient deployment and acceptance in the current era [16]. Narayanan et al., in [17] discuss and propose the significance and inclusion of micro renewable energy systems (MRES) in the future policies to maximize the utilization of renewables. According to [18], strict quota rules are needed for renewable energy development as well as punitive measures are needed for those who do not achieve the production and dispatch targets. Effective communication is needed between the state-grid and renewable energy generators. A detailed literature about latest renewable policies in the US and EU [19] compares and discusses the effective renewable policies which have been formulated and implemented in these regions. The discussion again highlights the significance of smart-grid based energy management, monitoring and storage systems to achieve the goal of efficiency in modern micro and large-scale renewable energy systems. The discussion in [19] describes the significance of renewable energy certificates (RECs) and FiTs which are being widely used in modern renewable policies, particularly in the policies formulated by the key global players in renewable energy systems and their implementations. According to this discussion the RECs ensure maximum possible inclusion of RESs by allocating compulsory or committed generation capacities. It also introduces and states the significance of RPS and solar renewable energy certificates (SRECs). The discussion concludes with remarks that the EU and the US have introduced micro-generation and smart-grid initiatives in their policies. Further, incentives for private sector have been proposed to ensure their participation in the research, manufacturing and deployment domains of RETs. In [20], renewable policies of different countries have been discussed and their salient features have been described and compared. The common targets of these policies include increase in renewable energy, increase in renewable efficiency, energy security and sustainability, competition in renewable energy generation and sustained environmental protection.
In [21], the significance of RPS, Production Tax credits, FiTs and net-metering in renewable policies have been discussed in the USA and its states. The discussion in [22] stresses upon the restructuring of financial models in renewable policies to maximize the investment potential of the interested parties in the market. This would help create a healthy environment favoring the growth and investment in RETs. Enerallt, a market based inter-region energy system model, has been proposed in [23] in an attempt to model a common energy market based on RETs, implementation of which would require a policy shift by the participating countries. Authors of [24] discuss traditional renewable policies at a stretch and identify and propose areas where new policy formulation or improvement is required. These proposed areas for policy formulation and improvement include RPS, Net-metering policy, renewable energy certificate (REC), electricity feed-in law, public benefit funds, investment support, fiscal and financial measures, tenders and quotas, emissions trading policies and renewable energy targets.
Nearly all of the previous works discussed here state many common improvement factors in the renewable policies being formulated and implemented around the globe. These also discuss the existing challenges along with areas having significant room for improvement as far as policy formulation or policy restructuring is concerned. Many new business, financial and technological models have also been proposed which could be used globally to implement an effective and sound policy related to renewables.
Renewable Energy policies vary globally but share the common objective of achieving the deployment and promotion of renewable energy technologies at the least cost and minimum damage to the local and global environment. Elements commonly shared by all these policies include a specific target, an annual target, a set of feasible and eligible renewable technologies (RETs), policies and considerations regarding the import of equipment related to RETs and an effective compliance and enforcement structure. This section discusses modern renewable policies which are evolving with every passing day for feasible and effective adoption and implementation of RETs for self-sustained, secure and environmentally friendly power generation systems.
Smart grid technologies make use of ICT for gathering information related to generation transmission and distribution performances and also for actuating processes that make the overall system resilient with enhanced power quality, sustainability and economy with regard to the power systems.
The evolving smart grid technology brings along with it a novel concept related to demand-side response and management system, known as the Electric Spring, to achieve high standards of power quality and overall distribution system stability with the introduction of intelligent and interactive smart loads to the existing power supply infrastructure [25]. Modern renewables policy making approach must focus on this concept as the smart loads cater for nondeterministic or fluctuating power generation by dynamically varying the load demand, specifically for non-critical loads. Smart loads are in essence power reactive power controllers based on modern power electronics, integrated with non-critical end-use devices or loads. Secondly, such a system is also proposed to be capable of self-regulating the voltage values at the distribution-side where intermittent generation sources are connected. Introduction of such systems as per policy would help mitigate the issue of voltage fluctuation particularly in areas where intermittent RESs are connected to the grid. Smart loads are expected to be capable of dynamically injecting reactive power to the distribution-side network to achieve localized support for voltage adjustment [25].
In order to streamline the integration of renewable technologies to the grid, the use of smart grid technology has increased manifolds. Utilities are increasingly making use of them to ensure optimum performance and uninterruptible delivery. The current urbanization trends demand for increased use of renewable technologies which are now contributing towards the efficient demand and supply management. This increased utilization of renewable energy sources has also introduced risks related to voltage and power fluctuations, harmonics, frequency mismatch and inefficiencies in generation, transmission and distribution. With the introduction of policies and solutions using smart grid technologies, small distributed energy sources can be integrated to an urban power supply network allowing real-time management and optimization of such integrated systems with the existing infrastructure. Such solutions are bound to play an essential role in sustainable development of smart cities along with other ventures aiming at establishment of self-sustaining and self-sufficient energy generation and distribution systems. Figure 1 shows a scalable model for smart grid-based setup with renewable energy sources integrated with the primary grid [26].
Another direction, again based on ICT in general and smart grid in particular is the policy-based introduction of smart city concept amongst the masses and relevant industries. A Smart city comprises of several components which are core to its concept as a future efficient and cost-cutting technology utilizing the best features of smart grid technology. These components include effective governance, mobility of assets and contributing resources, economy and efficient energy harnessing and subsequent power distribution practices. These components could play a key role in achieving a sustainable urban life, integrating power generation, distribution and end-use infrastructure along with various contributing stakeholders. Smart cities are considered to be a logically extended concept of smart grid technology and its practical implementation is of utmost importance to the modernization process of the traditional power systems. Policy formulation related to the introduction of smart grid systems in general and smart city concept in particular must be focused on grid integration of renewable energy resources, agile, stable, efficient and capacious energy storage systems, smart lighting systems and electric vehicles for a green global environment, energy security and sustainability [27].
Policy making is also bound to be focused on the research, development and introduction of new power electronic devices capable of either taking remote commands using communications infrastructure or making intelligent decisions in real-time to manage the power systems for its smooth performance. These devices are being used to integrate distributed generation (DG) or renewable power generation systems at the main supply with energy storage systems (ESSs) working in parallel, particularly in the case of solar and wind-based power generation setups. In conjunction with network infrastructure and smart meters, these devices can be used for power grid automation and control. These devices can also play an important role for grid infrastructure security, effective demand response and power quality [28].
Integration of ICT technologies to RETs has been adopted as a core part of new renewable policies around the globe, particularly by the countries of the developed world. The introduction of these policies is still in somewhat early stages yet their introduction has started providing substantial dividends to those countries in the form of secure, stable sustainable, efficient and effectively manageable power infrastructure with an ever-increasing chunk of renewable energy systems contributing to the overall power infrastructure. Introduction of these policies has also started to help achieve green environment with minimal harm to natural and ecological processes. Further research and development as a part of policy will accelerate the adoption rate of this technology with increased sustainable development and better global environment.
In order to overcome high initial investment costs, environmental constraints impeding the deployment of RET based systems, commercialization difficulties, issues related to deployment, operations and maintenance and the barriers including unstable power supply and low system efficiencies, an integrated system of diverse energy sources, as discussed in the previous sub-section, is needed along with a new business model [5]. These issues cannot be overcome without government support and require a clearly defined business and financial models designed initially formulated and implemented by the government with sufficient incentives and guarantees to lure in investors and stakeholders. Several governments are working in the direction of discovering an optimum business model for their indigenous as well as regional renewables market to accelerate the promotion and adoption of RET based systems. One such model is the ICT model, being introduced in the developed world to create energy efficient power infrastructure fully integrated with multiple RET based power sources. The efficiency offered by such systems itself is an attraction for the investors and other new entrants to the renewables market.
Another renewables expansion model is the generation expansion planning (GEP) model. The purpose of GEP is to identify the most economically viable and optimal combination of traditional and renewable energy sources to accommodate for predicted power demand [14].
Micro Renewable Energy Systems (MRES) deployment model is another dimension which could be opted by policy makers not only to encourage the use of RETs but also to meet the ever-increasing demand of power in a distributed manner. MRES involves RET based power generation units of less than 5 kWh capacity. These systems are either community owned or individually maintained to fulfill the daily requirement of scattered or distributed communities. The main aim of using MRES is to reduce reliance on traditional non-renewable systems which further helps reduce the harmful impact of fossil-fuel based systems with regard to the greenhouse gases (GHGs) [17]. With effective policies in support of MRES model in place, micro renewable energy devices will become popular enough to be readily bought by the people allowing energy independence.
The problems currently being faced by such micro renewable energy systems is the lack of their commercial presence and inefficiency of such systems. These problems can be significantly overcome once the MRES model comes into action as this would also bring along improvements in such systems with broader commercial presence. Governments and their policy making bodies must direct funding towards R&D of such systems with subsidies, incentives and guarantees to ensure affordability and deeper penetration of such systems to the mainstream renewables market. Table 1 shows the advantages that come along the implementation of MRES model [17].
As far as investment and financial models are concerned, they face a few constraints in the form of lack of innovation in the RET systems deployment methodologies and investment climate. The innovation model itself involves economic risks, political climate dependence, natural risks, social acceptance, governance issues and natural factors determining its effectiveness. Innovative models and projects depend upon initial costs, time required for market maturity and time required to bring the innovation to the market. Innovation is strictly involved in the maturity and stability of the investment and financial models. Next to the innovation model, there are two further finance models which require policy-makers attention. These include (i) program-targeted financing model and (ii) market-based financing model. These two models differ on the basis of their objectives and financing structures and sources.
In the case of program-targeted financing model of RES development, government gets directly involved in funding implementing non-debt-based funding structure. This model may also include the involvement of government-owned enterprises in partnership with private investors. The funding in this scenario is more targeted towards domestic socio-economic progress and self-sufficiency in RET based power generation. In the market-based financing model, general market mechanics work as the core driving factors like demand and supply trends, profit earning and sharing mechanisms and risk reduction practices. Unlike the program-targeted financing model, this model focuses on export of energy on region-wide scale. The program-targeted model may prove beneficial for the developing or cash-starved nations while the market-based financing model is likely to work better with developed nations. Both these models can prove beneficial for the development of alternative energy sources and should be the focus of renewable energy policy makers. These models would help enhance the energy potential of industries, create suitable environment for increased investments in the renewables domain and would help create more competitive market base. Having these models implemented would most likely ensure self-sufficiency, energy security and socio-economic well-being.
| Advantage | Impact |
|---|---|
| Self-sufficiency in Power generation | Savings on utility bills and additional source of income |
| Community/individual ownership and participation in RET based systems deployment | Higher approval of RET based systems adoption and job creation |
| Localized power generation | Energy security and reduced cost of logistics |
| A new technological domain with improvised generation methods | An impetus to technological advancement and newer sources of income |
| Independence from energy market fluctuations and volatility | Reduced bills with higher system stability |
The key mechanisms that contribute to the effective renewable energy law are as follows;
The world has been witnessing a steep rise in energy demand to achieve the goals of development not just at industrial scale but also at the level of masses. People around the globe have started realizing the importance of renewable energy technologies and energy conservation as these contribute not just towards environmental protection but also towards the creation of new avenues and dimensions of economics. Of all the RE sources and technologies available, the most sought-after technologies and sources have been solar, wind and hydropower. With evolving policies Vis a Vis RE sources, the world has experienced sharp increase in the use of almost all forms of RE sources as it has been realized that the use of RETs is necessary to achieve self-reliance, energy security and environmental protection. Renewable energy policies of many countries have contributed to growth in the market volume of RE systems and also to the increase global trend of adoption for such systems. In the pursuit of efficient RE system, policies of many countries have helped evolve new technologies which complement the use of RE to a great extent. These new technologies or approaches include hydrogen fuel-cell based storage systems, ICT and nano-technology based power management and control systems. Even though many countries have effective policies in place regarding RES, there still remains enough room for improvement of such policies to make them more effective.
