Feed-in Legislation
World Future Council
Nairobi 2006
Miguel Mendonca
miguel@worldfuturecouncil.org

WhatÕs the problem?
"Increasing"
Increasing
Energy demand
Energy costs
CO2 emissions and pollution
Sea levels
Health costs
Climate instability
Decreasing
Fossil fuel reserves
Biodiversity
Natural resources
Rural populations
Faith in governments
Time left for action

DŽjˆ Vu
We have always used natureÕs energy for our needs

ÔFreeÕ Energy!
Solar
Wind
Geothermal
Hydro
Wave
Tidal
Biomass
Biogas

Barriers to Market Entry for RES
Costs and pricing: distortion from subsidies for competing fuels; fluctuation of oil and gas prices; high initial capital costs; environmental externalities
Legal and regulatory: Lack of legal framework for independent power producers; planning restrictions; grid access; liability insurance requirements (net metering)
Market performance: lack of access to credit; Perceived technology performance uncertainty and risk; Lack of technical or commercial skills and information
Q: How can these be overcome?

German EEG (Erneuerbare-energien-gesetz) – Renewable Energy Sources Act
Gives RE priority access to the grid
Obliges grid operators to purchase electricity from RES
Sets the price for RE electricity for fixed periods
Sets no limit to amount of RE feeding into the grid
Differential tariffs for technologies and equalisation scheme

How the EEG Works
Costs
Connection to the grid: paid by the plant operator
Essential grid upgrades: paid by the grid system operator
Metering devices: paid by the plant operator
RE contribution: paid by consumer (only 3% of bill)

Advantages of the Feed-in Tariff (FIT) system
Overcomes barriers: guarantees grid access; premium price guarantees support for the technology; 20-year tariff periods allow full investor confidence.
Supports installations of different sizes and technologies: In addition to large RE projects for wind, solar etc, householders can now get a guaranteed payback on a solar roof in just a few years, rather than 20-30 years. The 100,000 solar roof programme helped meet costs with subsidies.
Promotes  innovation: Annual reduction of tariffs for new installations drives technological efficiency.
Drives economies of scale: investment and demand are rising, and manufacturing expansion is taking place globally in response, lowering costs further.
Promotes stability: Change of government does not affect system, as it does not cost taxpayers anything through taxes, and so cannot be cut from national budget.
Promotes public support: Through public participation in the scheme, no direct taxpayer costs, support for the nuclear phase-out, and awareness levels being very high in general.
All possible when implemented properly!

Top 5 countries in RE
German RE achievements in figures
170,000 jobs created
33 million tonnes of CO2 saved directly from EEG in 2004
83 million tonnes of CO2 saved overall in Germany 2005
10.2% share of final electricity consumption from RES achieved
Û16.4bn turnover in 2005 for German RE companies
Û8.7bn investment per year
Reduction of around Û5.40 worth of environmental damage per household per month
All this, at a cost of only around Û1 per household per month!

 Solar installations in Germany
Quotes on FITs
ÒRenewable Tariffs have proven the most successful mechanism for stimulating investment in renewable electricity generation worldwide. Renewable Tariffs have resulted in more installed generating capacity and more robust competition among manufacturers and have stimulated more renewable technology development than any other policy mechanism.Ó
- Paul Gipe, Renewable Energy Policy Mechanisms.
ÒTo date, feed-in or pricing systems have been responsible for most of the additions in renewable energy capacity and generation, while also driving down costs through technology advancement and economies of scale, and developing domestic industries and jobs. Pricing systems, where well-implemented, have provided increased predictability and consistency in markets, which in turn has encouraged banks and other financial institutions to provide the capital required for investment, and has attracted private investment for R&D.Ó
- Janet L. Sawin, National Policy Instruments: Policy Lessons for the Advancement & Diffusion of Renewable Energy Technologies Around the World.
ÒÉuntil now so called renewable energy feed-in tariffs (REFITs) have shown the best effectiveness concerning the creation of new RES installations.
- Mischa Bechberger and Danyel Reiche, Good Environmental Governance for Renewable Energies – The Example of Germany – Lessons for China?
ÒÉonly a model based on guaranteed feed-in tariffs enables a quick and broad implementation of renewable energy, better supports its technological development, as well as more efficiently promotes cost reduction.Ó
- Hermann Scheer, On the future of national support for renewable energy in Europe.

Comparison of support schemes
Countries, States and Provinces with FITs
Growing RE investment
Global RE expansion
The Future
Ongoing environmental damage from CO2 already released
Ongoing, unpredictable price rises for conventional energy
Threats to livelihoods and national productivity from energy shortfalls through high prices and poor grid investment
Technological advances will make RE cost-competitive with conventional fuels within a decade.
Huge global markets for exports
Increasing public support for RE as climate change accelerates
Global cooperation over clean energies
New emissions reduction protocol
Switch to renewables - inevitable

Thank you for your kind attention