The WSSD’s Johannesburg Plan of Implementation (JPOI) in Paragraph 20(e) calls on
Governments and other stakeholders to, “With a sense of urgency, substantially increase the global share of renewable energy sources with the objective of increasing its contribution to total energy supply”. This paper reports initial results of a study of alternative provincial policies to increase the share of renewables in the province of Sichuan, P.R. China. The study uses data on energy resources, production, conversion and use in the province from published and publicly available material, and it uses energy system analysis models from the IAEA. For specificity in the context of developing countries, it analyses policy options as applied to the current energy system of Sichuan province. The study, however, is intended to provide general insights on the relative effectiveness and costs of generic policy options to increase the share of renewables. It is not a comprehensive analysis of policy options for Sichuan.
Based on the energy data, the IAEA energy models were used to generate a baseline least cost scenario of the Sichuan energy system through 2025. This describes the development of the energy system that would minimize total discounted energy system costs based on the technology and resource costs input to the model.
Alternative scenarios were developed by adding constraints to the models to represent five different policy options to increase the share of renewables relative to the base case. The Mandatory Market Share (MMS) scenario requires a certain percentage of primary energy supply to come from renewable sources of energy by specific dates. The Public Benefit Fund (PBF) scenario creates a fund that is used to partly finance renewable energy projects. There are two variations, the PBF 'wire charge' scenario in which the fund is financed by a levy on electricity transmission and the 'pollution tax' scenario in which it is financed by a levy on sulphur dioxide emissions from specific power plants. The Wind Concession Programme (WCP) scenario auctions wind rights to private developers such that the lowest bid per kilowatt hour wins a geographic concession. The Clean Development Mechanism (CDM) scenario allows the sale of certified emission reductions (CERs) generated by renewables on the international market. While the results are only illustrative with respect to the specific energy situation of Sichuan, they do suggest the following generic insights.
• All renewable energy policies tested in this analysis are policy options that can lead to an increase in investments in renewable energy technologies and an increase in the contribution of renewable energy to total energy supply.
• Policies aimed at increasing the share of renewables needs to take into account the renewable resources that are available. In the case of Sichuan province, the renewable energy resources potential, apart from large hydro, is limited and, therefore, energy policies to promote renewables may only have a limited impact.
• Similarly, if a policy increases the use of one renewable resource at the expense of another renewable resource (wind in place of hydropower in the case of Sichuan) it will have less of an impact on the overall objective of increasing the share of renewables in the total energy mix.
• While CDM projects have the advantage of bringing in outside investment, the price for certified emission reductions (CERs) may be too low for CDM project activity to help increase the domestic share of renewables.
• Renewable energy policies may lead to a loss of revenue or premature closure of existing power plants, and may also require regulatory responses as a result of additional investment requirements for the transmission and distribution infrastructure. However, strong growth in electricity demand is likely to limit these incidents.

By: UN Energy

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