Investment in sustainable energy is expanding rapidly internationally with over $150 billion invested in renewable energy in 2009 alone. This is in response to a number of global challenges, but also increasing opportunities. In the developing world, renewable energy can play a key role in addressing challenges of climate change and energy security, and provide access to affordable, reliable, and clean energy to alleviate poverty as well as stimulate and drive economic development.
Although Southern Africa is endowed with abundant renewable energy resources, large-scale deployment of renewable energy faces significant challenges and barriers, which include cost competitiveness, financing, technical and engineering issues, and project development challenges. There is therefore increasing pressure for governments to introduce policies, legislation and regulatory support mechanisms to accelerate the development of the renewable energy sector.
Internationally, renewable energy feed-in tariffs (REFIT) have a strong track record in promoting the deployment of renewables, leading to a reduction costs and encouraging the establishment of a local renewable energy industry through the provision of a secure investment climate. A REFIT scheme is multi-facetted, including political, legislative, technical, social, financial, economic, cultural and planning dimensions, which all need to be addressed in order to make the feed-in tariff effective. In jurisdictions where FITs have been implemented, their success has been dependent on various key issues that include:
- the design of the FIT
- the conditions of the grid infrastructure
- the policy and regulatory framework
- grid access conditions
- financial strength
- institutional capacity and administrative procedures.
In developing countries, renewable energy and feed-in tariffs can also play a significant role in supporting macro-economic development objectives by increasing energy security and energy access, contributing to job creation and overall sustainable development.
Over the past three years, Camco has been working with a number of Governments in sub-Saharan Africa on the development of renewable energy feed-in tariffs, including South Africa, Uganda and Botswana. Our work has included the development of network avoided cost and levelised cost tariff models and a renewable energy scenario tool. These tools have enabled policy makers to assess the potential cost impacts of various kinds of renewable energy and establish a viable programme that will be attractive to investors while restricting negative economic impacts such as electricity price increases. In addition, Camco has assisted regulators and Governments in the development of institutional guidelines and regulatory frameworks to support the implementation of the feed-in tariff.
At present, Camco is investigating how international climate change funds can be utilised to support the expansion of feed-in tariffs in sub-Saharan Africa, in particular for higher cost technologies such as solar PV and CSP. Camco is also looking at the role of feed-in tariffs for off-grid rural energy programmes.