Volume 1: Renewable Energy Policy

The Federation of Pakistan Chambers of Commerce & Industry (FPCCI)Since its inception in 1950, FPCCI has advocated and voiced the collective opinion, concern andaspiration of the private sector and offered advice and assistance to the Government in its efforts topromote exports, encourage foreign investment and stimulate economic activity in the country.FPCCI has its fingers on the pulse of the economy and serves as a bridge between the privatesector and the Government.FPCCI, along with the Karachi Chamber of Commerce, one of the largest chambers of Pakistan, isplaying an active role in addressing problems of trade, industry and environment and safeguardingthe interests of the private sector through constant dialogue with the Government.FPCCI performs a number of export & investment promotional activities and functions, which issummarized as follows:  Sponsoring general and specialized business & investment delegations to foreign countries.  Organizing Pakistan’s participation in international fairs & exhibitions.  Maintaining constant liaison with Pakistan Diplomatic and Commercial Missions abroad.  Exchanging information relating to trade, industry and economy with foreign Chambers and Institutions.  Encouraging and infusing competition among leading exporters of the country by offering Export Awards every year.  Mediating in the resolution of commercial disputes between Pakistan and foreign businessmen.Key Industrial AssociationsThe Pakistan Sugar Mills Association (PSMA) was established in 1964 with the objective tosupport the sugar industry of Pakistan to develop their competitiveness, capacity and sustainablegrowth. The tasks of PSMA include:  To support best practices in the sugarcane industry - a competitive market environment.  To promote a global expansion of trade volume.  To encourage the continuous advancement of sustainability throughout the sugarcane industry.  To play a leading role in negotiations to eliminate trade-distorting barriers against the sugar industry of Pakistan.  To promote bioelectricity as a reliable alternative to fossil fuels.  To support research and new technologies, particularly bio refineries from the sugar sector.  To collect, collate and analyze industry statistics and maintain a database for the industry.  To promote efficiency and the development of the industry through the establishment of appropriate institutional linkages.PSMA has played a vital role in the promotion of bagasse-based cogeneration in Pakistan. PSMAhas arranged meetings to help sugar mills adopt high-pressure cogeneration technologies. TheAnnual General Meeting of PSMA provides a platform to discuss and review different aspects ofdevelopment over the past years, appraise performance and develop a uniformed opinion on apolicy for the future growth. 49

The All Pakistan Textile Mills Association (APTMA):Established in 1957, APTMA is one ofthe premier industrial associations of Pakistan. APTMA is the largest association of the country, asit represents 396 textile mills out of which 315 are spinning, 44 weaving and 37 composite mills.The main tasks of APTMA are:  To encourage friendly feeling and unanimity amongst Textile Mill owners on all subjects connected with their common good.  To secure good relations between members of the Association.  To promote and protect Pakistan’s trade commerce and manufactures (the cotton trade in particular).  To consider questions connected with the trade commerce and manufactures of its members.  To collect and circulate statistics and information related to the trade, commerce and manufactures of its members.  To take all steps which may be necessary for promoting, supporting or opposing legislative and other measures affecting the trade, commerce or manufactures of its members.  To make representation to local, provincial and central authorities on any matter connected with the trade, commerce and manufactures of its members.  To arbitrate in the settlement of disputes arising out of transactions, piece goods, yarn and other manufactured goods between parties willing or agreeing to submit to arbitration in accordance with the Arbitration Rules of the Association.  To advance and promote commercial and technical education connected with the trade and commerce of its members.  To undertake special inquiries and initiate or support any action for securing the redress of legitimate grievances connected with the trade or commerce of its members.  To take any action which may be conducive to the extension of the trade and commerce of its members or incidental to the attainment of this object.  To regulate conditions of employment in the industry conducted or carried on by its members.The Renewable & Alternative Energy Association of Pakistan (REAP) was established in2009. It is the first ever registered entity of the country in the RE sector with a mission to minimizethe national dependence on conventional energy resources by promoting RE resources inPakistan. The aims and objectives of REAP are:  Minimize the national dependence on conventional resources,  Promote RE resources in Pakistan,  Create awareness amongst masses,  Develop skill programs through trainings,  Standardization & Quality assurance.The services provided by REAP include:  Policy advice to the GOP,  Support in development of technical specifications of RET to help investors purchase the right technologies,  Facilitate technology exchange program with foreign technology providers,  Facilitate networking of REAP members with international partners, and  Provide consultancy services in project development and implementation. 50

4.2 Existing RE Policy and RegulatoryFramework in PakistanThe RE policy and regulatory framework of Pakistan is in place for promoting RE-based powergeneration projects. Table 19 lists the key RE-related policies of Pakistan.Table 19: List of key RE-related policies of Pakistan Year Policy issued Issuing institution 1997 Pakistan Environmental Protection Act (PEPA) EPA 2000 EPA Review of Initial Environmental Examination (IEE) and EPA Environmental Impact Assessment (EIA) Regulations 2002 Policy for Power Generation Projects MOWP 2005 National Environmental Policy MOEn (now MOCC) 2006 Punjab Power Generation Policy (amended in 2009) PPDBDec 2006 Policy for Development of Renewable Energy for Power AEDB GenerationDec 2009 SBP Scheme for Financing Power Plants Using Renewable SBP EnergyOct 2011 Upfront Tariff for Wind Power Projects NEPRAMay 2012 National Sustainable Development Strategy MOCCSep 2012 National Climate Change Policy MOCCMar 2013 Framework for Power Cogeneration (Bagasse and Biomass) AEDBApr 2013 Adjustment of Upfront Tariff for Wind Power Generation NEPRAMay 2013 Upfront Tariff for New Bagasse-Based Cogeneration Projects NEPRAAug 2013 National Power Policy MOWPNov 2013 Framework for Implementation of Climate Change Policy MOCCJan 2014 Upfront Tariff for Solar Power Plants NEPRAMay 2015 Amendment of RE Policy 2006 for enabling AEDB to offer AEDB Federal Govt. Guarantee to project initiated at provincial levelAug 2014 Pakistan Vision 2025 MOPDRJan 2015 Adjustment of Upfront Tariff for Solar PV Power Plants NEPRAJun 2015 Adjustment of Upfront Tariff for Wind Power Generation NEPRAJul 2015 Adjustment of Upfront Tariff for New Bagasse-Based NEPRA Cogeneration ProjectsSep 2015 Distributed Generation and Net Metering Regulations NEPRAOct 2015 Quality Standards for Import of Solar PV Equipment into AEDB PakistanDec 2015 Adjustment of Upfront Tariff for Solar PV Power Plants NEPRAJun 2016 Revised SBP Financing Scheme for Renewable Energy SBPDec 2016 Upfront Tariff for Existing Bagasse-Based Cogeneration NEPRA ProjectsPakistan had published several strategies on the development of the energy sector in generalandRE in particular. These strategies set up the targets of RE development as well as the requiredpolicy framework and roadmap to achieve these targets. The upfront tariffs for different RE-basedpower generation plants (except biomass-based power generation, biogas and WTE projects) werealso introduced. The State Bank of Pakistan (SBP) has introduced a financing facility for newpower projects using RE sources. An incentive framework including exemption of corporateincome tax (CIT), exemption of import duties and tax (ID&T), exemption of sale tax on REmachinery, equipment and spares89, and reduction in licensing fees, was also established.89 S.R.O. 369(I)/2011 51

RE Targets and PlanningIn order to harness power from RE resources, GOP announced the Policy for Development of REfor Power Generation in December 2006 (2006 RE Policy). This is Pakistan’s first energy policyspecifically aimed at the promotion of RE power projects.It set a target to increase the deploymentof RE technologies (RET)90 so that RE sources provide a higher share in the national generationmix, i.e., a minimum of 9,700 MW by 2030 as per the Medium-Term Development Framework(MTDF).In order to achieve its target, the 2006 RE Policy adopted an evolutionary approach constituting astrategic policy implementation roadmap, which consisted of three phases:  Short Term (2006-2008): focused on commercially-proven technologies and resources such as small hydro, wind, solar, and biomass-based power generation by offering lenient policy measures and incentives.  Medium Term(2008-2012): envisaged that a more comprehensive ‘medium term’ policy framework would be prepared for the systematic implementation of RE technologies and scaling up of capacity deployment.  Long Term (2012-onwards): envisaged that RE would be fully mainstreamed and integrated within the nation’s energy planning process. During this phase, RE-based power producers are gradually exposed to full competition from alternative sources.Based on the actual RE-based power capacity installed in Pakistan during 2006-2012, it isobserved that the medium-term objectives of 2006 RE Policy could not be fully achieved.However, the two medium-term objectives, such as the creation of competition among IPPs,bringing down the costs/tariffs and bringing better efficiencies in power plants, were achievedduring the same period. There was little progress in the RE sector from 2006-2012 as far as theinclusion of RE in the power generation mix was concerned. Nevertheless, the competitiveenvironment for IPP’s and working on tariffs paved the way for growth in RE sector. Due to thisreason, in 2013, the ECC decided to extend and continue the implementation of the 2006 REPolicy until 2018. To further accelerate the uptake of RE, the ECC also approved the Frameworkfor Power Cogeneration Bagasse and Biomass as an addendum to the 2006 RE Policy. Thisframework shall be effective for all HP cogeneration projects utilizing bagasse and biomass asfuel. In May 2015, more amendments were made in the 2006 RE Policy in order to provide thenecessary support (e.g. issuance of LOS, Sovereign Guarantee, etc.)to provincially-initiated REprojects as well.91The Government of Punjab has issued LOIs for 1,830 MW, whereas Sindh hasissued LOIs for 1460 MW. In KP and Baluchistan, LOIs have been issued for 153.5 MW and 150MW RE projects, respectively.In 2012, the National Sustainable Development Strategy: Pakistan's Pathway to a Sustainable andResilient Future 2012 (2012 NSDS)was prepared by UNDP which was later on adapted by theMinistry of Climate Change (MOCC).92 The 2012 NSDS set a target to increase the share ofalternative and RE sources (small hydro, wind and solar) to at least 12% of the total energy mix bythe year 2022. It also specified several strategic measures to promote RE utilization, such as (i)90 For the purposes of this policy statement, RE includes the following technologies: small hydro of 50 MW or lesscapacity, solar PV and solar thermal energy for power generation, and wind power generation.91 http://www.aedb.org/index.php/ae-technologies/solar-power/solar-current-status92http://www.brecorder.com/pakistan/general-news/130405-pakistan-kicks-off-strategy-for-sustainable-development.html 52

Initiate and introduce financially attractive policy on RE to maximize its utilization and attractinternational and domestic investors in this sector; and (ii) Develop policies such as feed-in tariffsto encourage consumer level investments in RE.As of July 2016, the total share of RE resources (except large-scale hydro) was 2.33% of thegeneration mix. It means that only 19.4% of the 2012 NSDS target has been achieved in four yearsand about 80% is still to be achieved in the remaining 6 years.In August 2014, Pakistan Vision 2025, prepared by the Planning Commission of Pakistan, wasannounced by the Ministry of Planning, Development and Reform (MOPDR). Vision 2025 set atarget to eliminate the current electricity supply-demand gap by 2018, and catering to growingfuture demand by adding 25,000 MW, through conventional and RE sources, to the national powergrid by 2025. Vision 2025 also set the goal to complete two major hydro projects: Diamer-Bhashadam (4,500MW) and Dasu dam (4,320 MW), and to tap Pakistan’s huge potential for alternativeenergy. At present, only phase 1 of Dasu hydel project (2,160 MW) is near completion.The target of adding 25,000 MW of conventional and renewable power capacity by 2025 is veryambitious. This corresponds to an average annual growth rate of 6 to 7%, more than twice thehistorical growth between 2000 and 2012. In terms of RE target, AEDB plans to achieve 5% RE(solar, wind and biomass) share in the overall energy mix by the year 2030.93 The cost to achievethis target is staggering. As per information available on WAPDA website, following the approvalof the World Bank, WAPDA has approved Bid Evaluation Reports (BERs) for RCC Dam andunderground Power House on October 18, 2016 for Dasu dam. The expected year of completion ofthe Diamer Basha dam was 2019-2020 as per approved PC-1.94 However, reports state that thecompletion of the Diamer Basha dam will be delayed until 2037 and that work on Dasu damproject is moving at slow pace.95Although the industrial sector of Pakistan has been encouraged to opt for RE projects by offeringupfront tariffs and financial support in the revised RE policy, there was no RE target set forindustries.RE Price-based PoliciesFeed-in tariff / premium: Although the 2006 RE Policy mandates NEPRA to determine feed-intariffs (FIT) for grid-connected RE-based power plants, since 2006, the first upfront tariff policycould only be introduced by NEPRA in October 2011 for wind power projects. To set the FITs, thefollowing key factors are taken into account: (i) techno-economic performance of different REtechnologies; (ii) geographic location of the project; and (iii) availability of RE resources. TheFITs for renewable electricity have evolved over time and are a function of cost of technology, i.e.,any decrease in cost of technology (solar, wind, etc.) also results in a corresponding decrease in theFIT for that technology.Levelized upfront tariffs for wind power projects are presented in Table 20. Figure 6 shows theevolution of upfront tariff for wind power projects from 2011 to 2015. The upfront tariff wascalculated for two different financing structures of the project. For the “equity plus 100% foreign93 http://www.aedb.org/index.php/ae-technologies/biomass-waste-to-energy/53-about-aedb94PC-1 is the standard term used for project design document or project concept note which has to be submitted by theproject proponent for approval by Planning Commission of Pakistan95https://www.thenews.com.pk/archive/print/639042-bhasha-dam-delayed-till-2037 53

loan” financing structure, the levelized upfront tariff for wind power projects was reduced by27.7% from 14.6628 PKR/kWh in Oct 2011 to 10.6048 PKR/kWh in June2015. For the ‘equityplus 100% local loan’ financing source, it was reduced by 26.45 % from 17.2755 PKR/kWh to12.7064 PKR/kWh for the same period.Table 20: Levelized upfront tariffs for grid-connected wind power projects in Pakistan(2011-15)Financing structure 20-year Levelized Upfront tariff (PKR/kWh)Equity plus 100% foreign loan Oct 2011 Apr 2013 Jun 2015Equity plus 100% local loan 14.6628 13.5244 10.6048 17.2755 16.2926 12.7064 Upfront tariff (PKR/kWh) 20 18 16 Apr 2013 Jun 2015 14 12 10 8 6 4 2 0 Oct 2011 Equity plus 100% foreign loan Equity plus 100% local loan Figure 6: Evolution of upfront tariff for wind power projects (2011-15)For solar PV power projects, the upfront tariffs were calculated for Northern and Southern regionsand for different project capacities. Levelized upfront tariffs for solar PV power projects arepresent in Table 21. The evolution of levelized upfront tariffs from Jan 2014 to Dec 2015 areshown in Figure 7 for projects constructed in the Northern region, and in Figure 8 for projectsimplemented in the Southern region.The upfront tariff for solar PV power projects implemented in both Northern and Southern regionswas reduced by one third for the period from Jan 2014 to Dec 2015, depending on the projectcapacity. The gradual decrease of upfront tariff for solar PV power projects has slowed down thegrowth, as investors are losing interest to the point that approved projects are at risk of beingabandoned.Table 21: Levelized upfront tariffs for grid-connected solar PV power projects in Pakistan (2014-15)Location Capacity range 25-year Levelized Upfront tariffs (PKR/kWh)Northern regionSouthern region 1 MW < x ≤20 MW Jan 2014 Jan 2015 Dec 2015 20 MW< x ≤50 MW 50 MW< x ≤100 MW 17.8563 15.7793 12.1093 1 MW< x ≤20 MW 20 MW< x ≤50 MW 17.8563 15.6401 12.0183 50 MW< x ≤100 MW 17.8563 15.4967 11.9238 17.1216 15.1301 11.4366 17.1216 14.9966 11.3506 17.1216 14.8591 11.2614 54

Northern Region 20Upfront tariff (PKR/kWh) 18 16 14 12 10 8 6 4 2 0 Jan 2015 Dec 2015 Jan 2014 >50 MW ≤100 MW >1 MW ≤20 MW >20 MW ≤50 MWFigure 7: Evolution of upfront tariffs for solar PV power projects in Northern regionUpfront tariff (PKR/kWh) 18 Southern Region 16 14 Jan 2015 Dec 2015 12 >20 MW ≤50 MW >50 MW ≤100 MW 10 8 6 4 2 0 Jan 2014 >1 MW ≤20 MWFigure 8: Evolution of upfront tariffs for solar PV power projects in Southern regionUpfront tariff for new bagasse-based cogeneration projects is calculated and fixed for all projectcapacity ranges. In May 2013, NEPRA announced the first levelized upfront tariff for newbagasse-based cogeneration projects (using high-pressure boilers and turbines of 60 bar and above)at 10.4078 PKR/kWh. This slightly increased to 10.7291 PKR/kWh in July 2015.On 3April 2017,NEPRA held a meeting with stakeholders regarding the revision of the existing upfront tariff forbagasse-based cogeneration projects. During the meeting, NEPRA proposed a new 30-yearlevelized upfront tariff of 9.0956 PKR/kWh for new bagasse-based cogeneration projects using HPboilers and turbines of 100 bar or above. The next hearing on the proposed upfront tariff is yet tobe announced by NEPRA.NEPRAhas also decided to develop an upfront tariff for other biomass-based power projects. Forthis purpose, in April 2017, NEPRA has issued a notice of suo moto proceedings/hearing with 55

respect to the development of an upfront tariff for biomass power projects. According to thisnotice, NEPRA proposed three options for upfront tariffs:96 Option 1: 7.6420 PKR/kWh for 1-10 years and 6.0351 PKR/kWh for the next 11-30 years with a levelized tariff of 7.0835 PKR/kWh for a 30-year PPA. Option 2: 7.3310 PKR/kWh for 1-15yearsand 6.0351 PKR/kWh for the next 16-30 years with a levelized tariff of 7.0807 PKR/kWh for a 30-year PPA. Option 3: 7.0011 PKR/kWh for 30-year levelized tariff discounted at a weighted average cost of capital (WACC) of 11.24%.The eligible biomass fuels include agricultural residues (i.e., cotton stalk, wheat stalk, rice straw,rice husk, maize straw, maize husk, maize cob, etc.) and wood residues.In addition, there has been a notification on 7thApril 2017 regarding an amendment of the 2011NEPRA Upfront Tariff (Approval & Procedure) Regulations to include biogas, municipal solidwaste-to-energy and waste heat recovery projects.NEPRA announced the first upfront tariffs for small hydropower projects in April 2015. Theywere revised in October 2015. Table 22 presents the upfront tariffs currently applied for smallhydropower projects (1-25 MW)in Pakistan.Table 22: Upfront tariffs for grid-connected small hydropower projects in Pakistan 30-year Levelized Upfront Tariff (PKR/kWh)Financing source Apr 2015 Oct 2015 Low head High head Low head High head100% foreign loan 7.4499 6.8257 11.1016 10.2559100% local loan 9.7668 8.9360 13.0297 12.0606Source: NEPRA website (2017)Many grid-connected RE-based power projects have adopted these upfront tariffs. Details aregiven in Table 23.Table 23: Status of adoption of upfront tariffs for RE projects in Pakistan No. Upfront Tariff Number of Projects Combined Capacity (MW) 1 Wind 23 1,140.0 2 Solar 24 556.8 3 Bagasse/Biomass 24 826.0 4 Small Hydro 9 149.48Source: AEDB website (2017)It can be seen from Table 23that the upfront tariff adoption in terms of capacity (MW) is highest inthe wind sector, followed by bagasse/biomass and solar. From September 2016, several new windpower plants have been supplying electricity to the grid and the contribution of the wind sector intotal energy mix has increased from 0.77%97 in August 2016 to 1.4% in September 2016. As ofnow, the wind sector is supplying more electricity than the combined solar (0.61%) and biomass(0.41%) sector.98Although the country is moving in the right direction regarding the exploitation of96http://www.nepra.org.pk/Admission%20Notices/2017/April/biomas%20upfront.jpg97 NEPRA98 CEO/CPPA-G/7062, CPPA-G 56

its RE resources, there is still a need for raising awareness about the industry to adopt moresustainable energy practices.SPPA: As part of its security package, the 2006 RE Policy makes it mandatory for powerpurchasers to enter into a specific PPA with the RE power producers, based on a standard modelagreement.GOP shall also enter into an Implementation Agreement (IA), which will guarantee the paymentobligation of the public power purchaser for power sales extending over the term of the PPA. ThePPAs will be much simpler than those for thermal or large hydro IPPs, and shall be based on thepurchase of all power generated at a per-kWh rate, i.e., there will be no capacity charge, capacitytesting, no risk, and no penalty conditions implied.Under the 2006 RE Policy, solar and wind power projects were declared as “Must Run”. “Take orPay” mode was offered to the project developers to cover the intermittency/uncertainty risksassociated with the nature of these RE sources. Since 2013, the “Take or Pay” mode was alsooffered to the new bagasse/biomass-based cogeneration projects. However, NEPRA is of the viewthat bagasse availability is under the control of the project sponsor; hence, the risk should betransferred to the project sponsor/investor by opting for “Take and Pay” mode based on EconomicDispatch. This will discourage the investor to invest in biomass-based power plants, as these willbe less efficient when compared with other conventional power plants.Premium for use of local equipment: The Framework for Implementation of Climate ChangePolicy published in 2013 (FICCP 2013) encourages the promotion of local manufacturing ofpower generation equipment. However, there is currently no policy instrument that offers premiumfor the use of locally manufactured machinery/equipment.Reduced T&D costs: As per the upfront tariff regime for grid-connected RE-based IPPs,interconnection cost is to be borne by the power purchasers (NTDC/DISCOs), either in form ofcapital investment or in form of paying back the expense made by the IPP on behalf of the powerpurchaser. The latter option is being exercised to avoid delays in approval for such expenses.Net metering: The concept of net metering was first introduced in Pakistan in the 2006 RE Policy.It allowed setting up solar or wind power projects (up to 1 MW capacity) for captive generation aswell as selling the surplus (what is beyond the needs of the power generator) electricity to thenational grid (i.e., DISCOs). Under the net metering regime, the power generator can also importelectricity from the grid when it is not possible to cover its own demand.NEPRA, in consultation with AEDB, prepared and promulgated the Distributed Generation andNet Metering Regulations in September 2015. As per these regulations, any person who meets therequirements of a Distributed Generator can sell surplus power to a DISCO. At the end of eachBilling Cycle following the date of final interconnection of Distributed Generation Facility to theDistribution System of the DISCO, the latter shall net off the kWh supplied by DistributedGenerator against the kWh supplied to it. In case the kWh supplied by the Distributed Generatorexceed the kWh supplied by the DISCO, the net kWh shall be credited against DistributedGenerator's next billing cycle for future consumption, or shall be paid by the DISCO to theDistributed Generator quarterly at off-peak tariff of the respective consumer category of theDistributed Generator for that month. 57

Figure 9: Application process according to Net Metering RegulationsUnder the 2015 Distributed Generation and Net Metering Regulations, around 72licenses havebeen issued by NEPRA to solar PV rooftop projects with a cumulative capacity of 3,469.96 kW. Afull list of these projects can be found on the website of NEPRA.99 NEPRA is issuing the licensesfor 3 year terms which is very short compared with the payback periods and lifetime of solar PVsystems.Recently, GIZ has assisted AEDB in the development of business cases for the implementation ofNet Metering Regulations 2015. GIZ also evaluated solar PV systems for residential, commercialand industrial application to accelerate the uptake of Net Metering by consumers.100To raise the knowledge and awareness of people, AEDB has also published a reference guide onNet Metering for electricity consumers.101 However, one of the major challenges faced with regardto the implementation of the netmetering in Pakistan is that the solar PV systems cannot supply99 http://www.nepra.org.pk/Lic_netmetering.htm100 http://www.aedb.org/images/BusinessCaseNetMetering2016.pdf101 http://www.aedb.org/images/NetmeteringGuidlinesforConsumers.pdf 58

electricity to the grid during the load-shedding period as the profitability of net metering stronglydepends on the load-shedding situation. If no backup system is used, the grid disconnection duringthe load-shedding period decreases the profitability of the solar PV plants as available solar poweris lost. On the other hand, if a generator is used as backup, fuel is saved during load-shedding andthe profitability is thereby increased.The technical capability of DISCO’s also causes an issue for the implementation of NetMetering.That is the reason why only two DISCO’s (IESCO and LESCO) have adopted the NetMetering so far.Carbon/CDM credit transactions: The 2006 RE Policy encourages all qualified RE-based powerprojects to register with the CDM Executive Board. It also states that the Government shall strive,in collaboration with international development agencies, to facilitate project applications for suchcarbon credits in order to reduce the associated initial transaction costs for project sponsors.In 2012, MOCC announced the National Climate Change Policy (NCCP 2012). It focuses on theutilization of the potential of CDM by designing zero-emission buildings through RE technologyand development of biogas and manure digesters for methane generation and energy production. Italso highlights the need for institutional strengthening and awareness raising in order to ensureaccess to CDM.The Framework for Implementation of Climate Change Policy (FICCP) 2013 also encourages theutilization of CDM in various sectors of the economy. The Policy also envisages the creation of anenabling environment to secure an appropriate share from the “Green Climate Fund”.Pakistan has ratified the Kyoto Protocol and has established a Designated National Authority(CDM Cell of MOCC) for CDM related matters. Pakistan has been able to register 17 RE-basedprojects with a combined capacity of 719.22MW amounting to 16.684 million CERs. Five RE-based project of a combined capacity of 1,510 MW amounting to 23.423 million CERs are undervalidation. Up to date, Pakistan has a total nine of NAMAs under development in different sectors.Out of these, eight have been submitted to UNFCCC102.Although the government has taken steps to promote carbon markets in the country, projectdevelopers remain solely responsible for the registration process and there are no incentives(grants or technical support) available for CDM project developers.RE Quantity-based Policies and Procurement MechanismsCompetitive bidding/Auction: Under the 2006RE Policy framework, in the case of solicitedproposals, bidders shall be invited by AEDB/Provincial/AJK Agency from IPPs to participate in acompetitive bidding process. After the completion of the evaluation of the bids, a LOS shall beissued to the successful bidder to facilitate the project’s financial close. In December 2014,NEPRA announced its “Competitive Bidding Tariff (Approval Procedure) Regulations, 2014”.103These regulations are applicable for all types of power projects, including RE. It is required thatthe bid is site and technology specific. The levelized tariff approved by NEPRA for eachtechnology shall be taken as a benchmark tariff, and reverse bidding from it shall be done.102 http://www.nama-database.org/index.php/Special:RunQuery/QueryData103 http://www.nepra.org.pk/Legislation/D-16047-08-12-2014-NEPRA.PDF 59

On 27thJanuary 2017,NEPRA announced a benchmark levelised tariff for a 20-year PPA at 7.0840PKR/kWh (6.7467 US cents/kWh) for 100% foreign-financed wind power projects, and at 8.1209PKR/kWh (7.7342 US cents/kWh)for locally-financed projects. These benchmark levelized tariffs(in PKR/kWh) are 33% to 36% lower than the levelized upfront tariffs applicable for wind powerprojects since Jun 2015. These benchmark levelized tariffs shall be valid for one year. NEPRArequires that the power purchaser (respective government agencies) will no more take the riskassociated with the wind project, and the bidder is required to account for this risk in its biddingprice.On 3rdMarch 2017, NEPRA announced its “Decision in the Matter of Solar PV Power GenerationTariff”104 in which NEPRA decided to carry out competitive bidding for award of tariff to newsolar PV power projects in the country. According to this Decision, unlike the reverse auctions forwind projects, the competitive bidding for solar PV power projects will be carried out by relevantagencies without having a benchmark levelized tariff as the similar bidding has successfully beencarried out in the recent past in other countries. The relevant agencies will prepare the requireddocumentation for competitive bidding and the request for proposals will be submitted forapproval under the NEPRA's Competitive Bidding (Approval & Procedure) Regulations 2014.Theapproval of the final tariff shall be subject to consent given by NTDC or DISCO/NTDC forevacuation of the power.Financial Incentives for RE ProjectsSoft loans: In December 2009, SBP had announced a Scheme for Financing Power Plants usingRE with a capacity of up to 10 MW for the period from 2009 to June 2012.Eligible RE sourcesinclude wind, hydro, biogas, biofuels, bagasse cogeneration, solar and geothermal power.Financing under this Scheme was available for a maximum period of ten (10) years, including amaximum grace period of two (2) years. Financing facilities under the Scheme were providedthrough all commercial banks and development finance institutions (DFIs). SBP providedrefinance to each commercial bank/DFI on service charge basis, which was announced for eachfiscal year (from 1st July to 30th June).The Scheme aimed at promoting RE projects in the country.However, due to the high rate of refinance (9.9% for a loan tenor up to 5 years, and 9.5% for aloan tenor over 5 years and up to 10 years), the interest rates for end users were high (12.4% to12.5%).In September 2012, SBP decided to reduce the rates of refinance. Consequently, the interest ratesfor the borrowers were reduced to 11.1% for a loan tenor up to 5 years, and to 11.2% for a loantenor over 5 years and up to 10 years.In June 2014, SBP extended the financing scheme for two years, up to June 2016. In August 2015,SBP decided to further reduce the rates of refinance, so that the rates for end users were 6.0% forany loan tenor.In June 2016, keeping in view the low utilization of the scheme, the scope and financialmechanism were revised by SBP to make it more attractive to borrowers, banks and DFIs.The revised scheme offers financing facilities under two categories. Category I cover projectsbeyond 1 MW up to 50 MW while Category II includes projects from 4 kW to 1 MW for own use104 http://www.nepra.org.pk/Tariff/Benchmark%20Tariff/SPVPGT-2017%20%2003-03-2017%202915-17.PDF 60

and/or for supply to DISCO as per the rules set by NEPRA in 2015 (i.e., 2015 DistributedGeneration and Net Metering Regulations). Financing facilities under the scheme are providedthrough all commercial banks and DFIs.Financing under Category I of the scheme will be available for a maximum period of twelve (12)years including a maximum grace period of two (2) years. Financing for Category II projects underthe Scheme shall be available up to a maximum period of ten (10) years with no grace period.The Scheme offers refinance for upto 100% of the financing (debt), provided by banks/DFIs to theeligible projects. However, for Category I projects, the maximum refinance allowed under theScheme is at 6 billion PKR for a single RE project. Financing under the scheme shall be providedby the banks/DFIs on first come first served basis within the overall amount earmarked for thispurpose.Financing shall be available for projects achieving financial closure (Category I projects) or fornew systems installed (Category II projects) before 30 June 2019.The rate of service charge at which SBP provides refinance to the banks/DFIs is fixed at 2% p.a.for the entire duration of the loan. The principal amount of loans shall be repayable in quarterly orhalf yearly installments after the prescribed grace period. The rate of service charges by thebanks/DFIs will also be fixed at 4% p.a. Therefore, the rate for end users will be fixed at 6% p.a.Within two months after the announcement of the RE Refinance Facility in August 2016, SBP hasreceived 13 loan applications worth 60 billion PKR for generation of 450 MW from various SMEs,which shows that the scheme is attractive for investors/project developers. These applicationsinclude two bagasse fired HP cogeneration plants and other RE projects.Credit Enhancement Mechanism: SBP is working to establish a Credit Enhancement Mechanismfor sustainable energy financing projects of banks which will primarily be a risk sharing facilityfor RE and EE projects. Guarantee may help a great deal if the perceived risk mainly comes fromthe lack of knowledge about new technology.105Distributed Energy Fund: SBP also envisages to establish a Distributed Energy Fund (DEF) as ameans to facilitate financing of solar home solutions.106Investment grants: There are no government special funds available to provide an investmentgrant or subsidy to RE projects. However, various donors such as the World Bank, ADB, JICA andthe European Union are supporting development of RE-based power projects.Financial subsidy: Currently, no financial subsidies are offered to RE projects under any policyinstrument. Instead, fossil fuel based power generation is subsidized through various powerpolicies.Fiscal Incentives for RE Projects105 Promoting Green Finance – Refinance and Guarantees, Report for the Practitioners’ Dialogue on Climate Investments(PDCI) by GIZ106 Promoting Green Finance – Refinance and Guarantees, Report for the Practitioners’ Dialogue on Climate Investments(PDCI) by GIZ 61

No policy instrument offers accelerated depreciation of RE projects in Pakistan. The 2006 REPolicy offers the following fiscal incentives to RE-based power projects: Exemption from CIT, including turnover rate tax; Exemption from withholding ID&T; and Exemption from customs duty or sale tax on machinery, equipment and spares utilized for RE based power generation.Exempted/reduced licensing fees: Licensing fees are lower for RE projects than for thermal powerprojects. A comparison is given in Table 24 below.Table 24: Licensing fee comparison between RE and non-RE power projects in PakistanNo. Activity Fee, USD Fee, USD (Renewable) (Fossil Fuel/Large Hydro)1 Registration Fee 100 2002 Prequalification 500 1,500Documents (PQDs)Fee3 Request for Proposals 1,000 2,500(RFP) Fee4 Bid Evaluation Fee 20,0005 Project Processing  1,000 for ≤ 5 MW  100,000 (UnsolicitedFee at issuance of  5,000 for > 5 MW to 20 MW Projects)Letter of Support  10,000 for > 20 MW to 50 MW  80,000 (ICB Projects)(LOS) / Letter ofAward (LOA)  20,000 50 MW (i.e., wind, solar w/o AEDB)6 Legal fees Subject to a cap of:  100,000 USD for projects above 50 MW,  50,000 USD for projects in the range of 6-50 MW,  20,000 USD for projects in the range of 1-5 MW, and  no charge for projects of capacity below 1 MWMandatory Grid Access and Prioritized DispatchMandatory grid access: Electricity purchase by NTDC/CPPA from qualifying RE-basedgeneration projects has been made mandatory by the 2006 RE Policy. It states that it shall bemandatory for DISCOs to buy all the electricity offered to them by RE projects to stabilize themarket for RE projects. As per the upfront tariff policy promulgated by NEPRA, power evacuationis under the responsibility of DISCOs or NTDC. However, DISCOs face financial constraints forsetting up the power evacuation facility (substation at the owner’s facility) which results in delaysof projects. For instance, JDW I and III (see Table 13) provided the financial support to MEPCOand SEPCO for power evacuation to complete the HP cogeneration projects. MEPCO isreimbursing the advance but SEPCO is not. Both these projects have been supplying around 26MW to the afore-mentioned DISCOs. However, issues such as non-payment of reimbursableadvance are discouraging sugar mills to further supply the surplus electricity to the grid. Forinstance, Chiniot has requested NEPRA to modify its license so that it may utilize the excess orsurplus electricity within its allied unit (e.g. steel unit). 62

In another case, Al Moiz sugar mill had financial problems with PESCO for power evacuation.They are now supplying electricity to the sugar mill and Al Moiz steel107. In the past, Alnoor SugarMill has also faced similar issues from SEPCO and abandoned the supply of electricity to the grid.The 2015 Distributed Generation and Net Metering Regulations also makes it mandatory for theDISCOs to accept applications from its consumers willing to install RE based distributedgeneration facilities and purchase all the electricity offered.All RE based power plants commissioned so far are given grid access and supply power to thenational grid. However, DISCOs are reluctant to offer the net metering facility to its consumersdue to technical constraints. So far only two DISCOs (IESCO and LESCO) have offered thisfacility to some projects.Grid code to facilitate RE integration: Grid and Distribution Codes are in place in Pakistan since2005.The Grid Code is an essential requirement for the regulation of the electric network supplyand delivery system. The Grid Code sets out the operating procedures and principles betweenNTDC and all authorized Electricity Operators. The Grid Code approved by NEPRA is structuredso as to ensure that NTDC's transmission system can be developed, operated, and maintained in anefficient, safe, reliable and coordinated manner from technical and commercial aspects.The Distribution Code is also an essential part of the Regulatory Framework of the PakistanDistribution Electric Supply System. The purpose of this code is to ensure that the Disco'snetworks are planned, developed, operated, and maintained in an efficient, safe, reliable,coordinated, and economical manner from the technical stand point. The Distribution Code,approved by NEPRA defines the technical and operational aspects of the relationship betweenDISCO and all those entities connected to the DISCO Distribution System.The National Grid Code for wind power projects has been amended and the Grid Integration Plan2010 -2015 for wind power projects has been developed by AEDB to support NTDC. AEDB hasalso taken initiatives to amend the Grid Code for solar and distributed generation108.The Net Metering Rules 2015 refer to grid and distribution codes for technical specifications of theinterconnection facilities. As these systems are of very small scale, there should be specificguidelines and standards for these systems and best practice examples from across the worldshould be followed instead of “reinventing the wheel”.Other RE Policy MeasuresSupport to educational and R&D activities: Pakistan provides financial support to research anddevelopment (R&D) of RE technologies, mainly biogas plants, small wind turbine andmanufacturing of PV panels under the auspices of the Pakistan Council of Renewable EnergyTechnologies (PCRET). PCRET is involved in R&D and capacity building activities across thecountry. During the 2014-15 period, the electricity generated from various technologies installedby PCRET amounted to 438 MWh from solar PV and 52,560 MWh from small hydropower107http://www.almoiz.com/who-we-are.html108http://www.powerasia.com.pk/icaep2014/presentations/AEDB_Current_Status_Prospects.pdf 63

plants.109 However, there are no government funds/subsidies available for R&D activities in theacademic institutions/universities and in the private sector.Support to knowledge development and capacity building: PCRET and AEDB conduct varioustrainings, seminars and workshops for the promotion of RE technologies. PCRET is the primeinstitution in the country for coordinating R&D and promotional activities in different renewableenergy technologies. PCRET conducts RE training workshops for the general public, holds a seriesof seminars/ exhibitions, has contributed towards development of improved and user friendly solarcookers for mass scale dissemination, working on development of improved solar water purifiersfor mass scale deployment, carrying out advanced work in the field of biogas production and alsodevelopment of larger scale solar driers. Though various donor agencies are supporting thepromotion of RE in the country, no government funds are allocated for such activities to beundertaken in the private sector.Single window clearance systems for licensing and permitting: AEDB is the sole representingagency of the Federal Government to facilitate, promote and encourage development of RE inPakistan and with a mission to introduce Alternative and Renewable Energies (AREs) at anaccelerated rate. As per RE Policy 2006, Letter of Intent (LOI) and Letter of Support (LOS) willbe issued by AEDB and project developers have to approach NEPRA for generation license andtariff determination/acceptance of upfront tariff. In order to apply for generation license, a projectdeveloper has to get LOI from AEDB, conduct IEE/EIA study and get NOC from respective EPAand undertake grid interconnection study and get it approved by NTDC/DISCO. Due toinvolvement of different institution and lack of single window operation, the licensing andpermitting process is very tedious which has delayed many projects.For small-scale distributed generation, the 2015 Distributed Generation and Net MeteringRegulations has proposed single window operation as the Distributed Generator has to submitapplication to the DISCO only in order to install distributed generation facility and supplyelectricity to the national grid.109http://www.pcret.gov.pk/energybook2015rev.pdf 64

5. GENDER MAINSTREAMING IN RE POLICYIN PAKISTANWhy is gender mainstreaming needed in RE policy? Reliable and affordable energy is globallyrecognized as a crucial prerequisite for human and economic development. National energypolicies that underlie access and use of energy fundamentally affect living standards, livelihoodsand economic options of both households and communities, organizations and enterprises. Energyneeds and priorities of men and women are known to be different, based on their traditionallydifferent roles in society. However, women are grossly under-represented – or entirely absent – inthe energy sector. Gender mainstreaming is therefore imperative for the development of energypolicies that can serve different groups of people, and provide them with incentives for economicdevelopment options, including industries and other enterprises.Mainstreaming a gender perspective means assessing the implications for women and men of anyplanned action, including legislation, policies or programs. It is a strategy for making women's aswell as men's concerns and experiences an integral dimension of the design, implementation,monitoring and evaluation of policies and programs in all political, economic and societal spheresand at all levels so that women and men benefit equally and inequality is not perpetuated. Theultimate goal is to achieve gender equality.110 Accordingly, due to the under-representation ofwomen and women’s perspective in the energy sector, gender mainstreaming in the RE policy inPakistan requires special attention to be given to the needs and priorities, barriers and opportunitiesof women both as energy consumers and energy entrepreneurs, suppliers and managers.5.1Gender in the National PolicyGOP announced its 10-year development aims in the Pakistan Vision 2025, a plan that lays theground for reaching the UN SDGs (Sustainable Development Goals111) before the target date of2030. The Vision has seven priority areas, or Pillars, among them Pillar 1: People First -Developing social and human capital and empowering women (linking e.g., to SDG 1 on povertyeradication, SDG 3 on health and SDG 5 on gender equality) and Pillar 4: Security – energy, waterand food security (linking e.g., to SDG 7 on affordable and clean energy).The Vision rightly acknowledges the low ranking of Pakistan in the global Human DevelopmentIndex (UN Human Development Report 2015112 places Pakistan as 147 out of totally 185countries) and the bottom place in the Global Gender Gap Index113 (144/145 countries in 2015)measuring gender equality. Consequently, the Pakistan Vision realizes the unequal access betweenmen and women to opportunities, resources and benefits, and the importance of legislative andpolicy measures for enhancing women’s participation in different areas in society, includingdecision making and women’s economic empowerment through access to education andenterprise.110Definition by UN Economic and Social Council111http://www.un.org/sustainabledevelopment/sustainable-development-goals/112http://hdr.undp.org/en113http://reports.weforum.org/global-gender-gap-report-2015/The Global Gender Gap Index measures gender equality internally within each country, not between different countries.It shows the relative gender gap between men and women in one country across four key areas: health, education,economy and politics. Pakistan demonstrates a large difference between men and women in all these areas, which placesthe country among the least gender equal ones in the world (In the Index Pakistan is the least gender equal country afterYemen. N.B. Afghanistan is not included). 65

As expressed in the Vision, the GOP is committed to achieving the targets of the 5th SDG ongender, building upon the previous pursuit of the MDGs (Millennium Development Goals114) up to2015. Connecting both to the MDGs and the 1995 Beijing Platform for Action agenda forwomen’s development115, the 2002 National Policy on Development and Empowerment ofWomen (NPDEW) is a statement of intent of the GOP to ensure that gender perspective isreflected in all national policies and plans. Accordingly, the NPDEW strategy is to increasewomen’s empowerment through mainstreaming of gender issues into all national developmentsectors. NPDEW promotes women’s social, economic and political empowerment as a drivingforce for reducing social exclusion, accelerating poverty alleviation and ensuring more sustainabledevelopment results.5.2Gender in the RE PolicyThe National Sustainable Development Strategy (NSDS) (2012) which is “an attempt to definesustainable development and the pathway to green economy in Pakistan” identifies four keyoverall areas for development: (1) Sustainable and Inclusive Economic Growth; (2) Social andHuman Development; (3) Environmentally Sustainable Development; and (4) the Emerging Issueof Climate Change and Sustainable Development. Among the general strategic social goals arepoverty alleviation and promotion of social equity; extending social safety nets for the poorest andmost vulnerable, especially women; and to productively enable the increasing young populationand empowering women. Focus on the empowerment of women through education, awarenessraising and removing discrimination barriers to ensure productive interaction of women towardseconomic development are listed among the strategies of the sub-theme Population Dynamics andSustainability within the first key area for sustainable development.The Social and Human Development theme of the NSDS recognizes women’s empowerment andgender equality as fundamental conditions for sustainable development. Accordingly, one of theseven sub-areas for social and human development, Gender Equality and Women Development,has strategic goals of: (i) increasing the role of women and integrating gender balance into nationalsustainable development processes; (ii) enforcing protection and implementation of women’srights; (iii) providing equitable access to education, health, and work force; and (iv) introducingprogram for land allotments to empower women and improve their right to ensure family foodsecurity.The key area of Environmentally Sustainable Development mentions women’s empowerment asone of the effects of the strategy to introduce clean cooking stoves and solar lanterns as part of theAir Quality and Pollution theme.The implementation mechanism of the NSDS has ten core program areas, where Promotinginclusive and sustainable growth through engaging the poor, women and youth is one of the fourprograms within the Economic development theme. Two of the three social core programs mentionspecifically women: Social protection and safety nets for the poorest and most vulnerableparticularly women; and productively enabling the expanding “youth bulge” present in thecountry as well as empowering women. The core program on Environment also mentionstrengthening community-based interventions but without further specifying any involvement ofwomen or other groups within communities.114http://www.undp.org/content/undp/en/home/sdgoverview/mdg_goals.html115 Agenda for women’s empowerment agreed by different countries, among them Pakistan (in 1996),http://www.un.org/womenwatch/daw/beijing/platform/ 66

The National Climate Change Policy (2012) has totally ten policy objectives, one of them to focuson pro-poor gender sensitive adaptation while also promoting mitigation to the extent possible ina cost-effective manner. The participation of women and female gender experts is recognized ascrucial for policy development, initiatives and decision-making. The socio-economic policymeasures contain (I) mainstreaming gender perspectives into climate change efforts at national andregional levels; (II) reducing vulnerability of women to CC impacts; and (III) recognizingwomen’s contribution in the use and management of natural resources and other activitiesimpacted by CC. The more specific measures to be taken are to: (i) undertake a study on gender-differentiated impacts of CC with focus on capacity to cope with the adaptation and mitigationstrategies; (ii) develop a gender-sensitive criteria and indicators related to adaptation andvulnerability; (iii) develop and implement CC vulnerability-reduction measures that focusparticularly on women’s needs; (iv) integrate women and give them a role in the decision-makingprocess on CC mitigation and adaptation initiatives; and (v) develop CC adaptation measuresbased on local and indigenous knowledge particularly held by women.The Framework for Implementation of Climate Change Policy 2014–2030 (2013) recognizes thegender differences to CC impacts and adaptation, and expresses the GOP determination to supportgender integration into various efforts to address climate change. Yet there is no mention of genderor women’s participation in the eleven different sector strategies and in the listed implementationactions of each sector.The Pakistan National Environmental Policy (2005) has no mention of social or gender issues inthe nine sectoral guidelines (including RE), however it provides cross-sectoral guidelines onpoverty, population, gender, health, trade, local governance and disaster management. The specificguideline on gender and environment demands gender sensitivity and promotion of women’sempowerment in all environmental policies, projects and programs. Specific measures that GOPmay apply include: (i) compiling gender-disaggregated statistics of environmental goods andservices; (ii) ensuring participation of women in environmental projects and programs; (iii)mainstreaming gender in all relevant policies and plans; (iv) addressing environmental issues thatimpact women more adversely than men (such as indoor air pollution and access to water sources);and (v) including gender and environment in the environmental education and training curricula.The Policy for Development of Renewable Energy for Power Generation: Employing SmallHydro, Wind and Solar Technologies (2006) mentions as one of the strategy policy objectives toenhance income-generating opportunities, especially for currently marginalized segments of thepopulation. The RE development potential for poverty alleviation and for reducing the burden ofrural women in biomass collection and use are specified as social equity objectives. Theguidelines for small off-grid RE projects development take up community contribution but allocateno specific role to women.The other reviewed Pakistan RE policy documents (see the full list in Table 19) do not mentionany gender, poverty or social issues. 67

6. REVIEW OF INTERNATIONAL POLICY BEST PRACTICES AND EXPERIENCE IN RE DEVELOPMENTThis chapter reviews the international best practices, lessons learned and experience in RE policydevelopment and deployment in five Asian countries in similar circumstances: China, India, thePhilippines, Thailand and Vietnam.6.1International RE Policy Best Practices and Experience6.1.1ChinaAccording to the China Electricity Council and National Bureau of Statistics, the total installedpower capacity in China increased by 10.4% from 1,365 GW in December 2014 to 1,507 GW inDecember 2015. As shown in Figure 10, as of December 2015, the total installed power capacityof fossil fuel-based power plants (coal, natural gas and oil) accounted for 65.03%, followed byhydropower with 21.23%, non-hydro RE sources (wind, solar and biomass) with 12.0%, andnuclear power with 1.73%. Wind, 8.63% Solar, 2.72% Biomass, 0.66%Nuclear, 1.73%Hydro, 21.23% Fossil fuels, 65.03% Figure 10: Power generating capacity mix in China (Dec 2015)RE Potential, Utilization Targets and PlanningChina has an abundant potential of all types of RE resources, especially hydropower, wind, solar,biomass, and geothermal. The Government of China (GOC) is well aware of these resources andhas been introducing measures to tap them.The total power potential of RE in China is estimated at 5,886 GW, of which 2,750 GW116 (46.7%)is from wind power, 2,700 GW117 (45.9%) from solar, 400 GW118 (6.8%) from hydropower(including large-scale hydropower plants), 30 GW (0.5%) from biomass (including MSW), and 6GW (0.1%) from geothermal.116 CNREC (2012): wind power potential was estimated at 2,750 GW, of which 190 GW are from offshore wind farms.117 IRENA (2014): total exploitable potential for solar power generation in China was estimated at around 2,200 GW forutility-based and 500 GW for rooftop-based solar PV systems.118 CNREC (2012): total technical potential for hydropower generation is 542 GW. However, the economically feasiblepotential was estimated at 402 GW only. 68

In 2007, the National Development and Reform Commission (NDRC) promulgated the Mediumand Long-Term Development Plan for Renewable Energy in China up to 2020. According to thisplan, the share of RE in the total primary energy consumption is targeted at 15% by 2020. Thetotal installed power capacity of various types of RE sources was expected to reach 450 GW by2020, of which 300 GW from hydropower (including 75 GW from small-scale hydropower), 100GW from wind, 20 GW from solar PV, and 30 GW from biomass-based power. In addition, 30million m2 of solar water heating systems will be installed. For biofuels, 10 million tonnes ofbioethanol, and 2 million tonnes of biodiesel are planned to be produced by 2020.Based on the actual RE-based power capacities installed in China in 2014119, the 2020 targets arealmost achieved or surpassed. For example, installed capacity of wind power already reached96.9% of its 2020 target while hydropower and solar PV power have surpassed their targets for2020.In March 2016, the China National Energy Administration (CNEA) has released the 13thElectricityDevelopment Five-Year Plan for 2016-2020 period. The new 2020 installed power capacity targetfor various RE sources is 680 GW (around 51% higher than the previous target). The hydropowerinstalled capacity target is 340 GW (excluded pumped-storage hydropower plants), followed bywind power with 210 GW (including 205 GW onshore and 5 GW offshore wind power), solar PVpower with 110 GW (50 GW from central solar power plants and 60 GW from distributed PVpower systems), biomass-based power with 15 GW, and solar thermal-based power with 5 GW.A comparison of the potential, target and the actual installed capacity of RE sources in China isshown in Table 25.Table 25: Potential, target and actual installed capacity of RE sources in ChinaNo. Type of RE Potential 2020 target Actual installed (GW) (GW) capacity by Dec1. Wind power 2,750 210 2015 (GW) 115 1302. Solar power 2,700 340 41 15 3203. Hydropower (including large-scale) 400 10 - -4. Biomass (including MSW) 30 680 5015. Geothermal 6Total 5,886Source: 13th Electricity Development Five-Year Plan (2016-2020)Table 26 shows that, by the end of 2015, 501 GW of RE-based power capacity had been installedwhich accounts for 73.7% of the 2020 target, and 8.5% of the total RE-based power capacitypotential. Hydropower plants (excluded pumped-storage) have a combined installed capacity of320 GW (63.9% of total RE-based installed power capacity), followed by wind power with 130GW (25.9%), solar power with 41 GW (8.2%), and biomass-based power with 10 GW (2.0%).RE Price-based PoliciesFeed-in tariff: Since the 2005 China’s Renewable Energy Law (REL), RE-based power plantshave been guaranteed grid connection. The REL has been amended in 2009. According to this law,119 Based on the data from China Electricity Council, the total installed capacity of RE sources was around 427 GW inDecember 2014 69

the purchase price of electricity generated from RE sources is determined by NDRC. Feed-intariffs (FIT) have been adopted in China since 2005. To set the FITs, the following factors aretaken into account: (i) techno-economic performance of different RE technologies, (ii) geographiclocation of the project, and (iii) availability of RE resources.Table 26 presents the FITs currentlyapplied in China.Table 26: Current FITs for grid-connected RE-based power projects in China Type of RE sources FITs (VAT-included)Hydropower RMB/kWh USD/kWh120Onshore windOffshore wind (Near shore) 0.2 - 0.3 0.030 - 0.045Offshore wind (Intertidal)Solar PV (Central solar power plants) 0.40 - 0.57 0.06 - 0.0855Solar PV (Distributed solar PV)Biomass (Agricultural and forest biomass)121 0.85 0.128Biomass (Waste)Source: NDRC website (May 2017) 0.75 0.113 0.65 - 0.85 0.0975 - 0.1275 0.42 0.063 0.75 0.113 0.65 0.098The FITs for renewable electricity evolved over time and have been continuously reducedaccording to the cost of project development and implementation, and technology advancement.For solar PV projects, in 2013, NDRC has set the FIT between 0.9and 1.0 RMB/kWh for centralsolar PV power plants implemented in three regions of the country with different solar powerresources and construction costs. The distributed solar PV power projects were offered a FIT of0.42 RMB/kWh. However, FITs for central solar PV power plants were reduced to 0.80 - 0.98RMB/kWh since Jan 1, 2016, and further reduced to 0.65 - 0.85 RMB/kWh starting fromJan 1,2017. FITs for distributed solar PV power projects remain unchanged.For onshore wind power projects, the FITs were reduced from a range of 0.51 - 0.61 RMB/kWhsince 2009 to 0.40 - 0.57 RMB/kWh starting from Jan 1, 2017.Reduced T&D costs: The grid connection costs shall be covered by the grid utilities. However,they will be awarded a subsidy from the Government to pay for such costs122. Depending on thedistance of power transmission, the subsidy will be 0.01 RMB/kWh for within 50 km, 0.02RMB/kWh for 50-100 km, and 0.03 RMB/kWh beyond 100 km.RE Quantity-based Policies and Procurement MechanismsRenewable energy quota obligation:The NDRC introduced a mandatory market share (MMS) in2007, linked to the country’s mid-term (2007-2010) and long-term (until 2020) RE developmentplans. According to the plans, the share of power generation from non-hydro RE sources shouldreach 1% of the total by 2010, and 3% by 2020 in regions served by centralized power grids.Furthermore, power producers with a capacity larger than 5 GW must increase their powercapacity of non-hydro RE sources to 3% by 2010 and 8% by 2020.120 1 RMB = 0.15 USD as of September 2016121 Since 2010122MOF (2012) 70

However, many aspects of this policy have yet to be put into practice. As of 2010, none of the sixlargest power producers in China had met the 3% RE target, partly due to the lack of monitoringand compliance requirements. To address these problems, NDRC began to develop animprovement plan in 2011. A draft of the amended plan was released in May 2012 for publicconsultation. However, the state-owned power utilities have so far resisted the new requirements,which were under debate until 2015.According to a R100’s analysis123, China will soon implement its amended RE quota system tohelp accelerate the country’s transition to a low carbon economy. Under the planned quota system,each of China’s provinces will be responsible for ensuring that a certain percentage of theirelectricity consumption will come from non-hydro RE sources, primarily wind, solar and biomass.The quotas differ according to a province’s RE resources (currently set between 2-10%). Provincesthat are unable to meet their quotas may have to suspend or reduce their fossil fuel powergeneration projects. Once put into play, the RE quota system is expected to speed up theimplementation of RE projects, especially in China’s eastern provinces where electricityconsumption rates rank highest in the nation. The quota system is also likely to encourage thecountry’s two largest electric utility companies (State Grid Corporation of China and ChinaSouthern Power Grid Corporation) to improve the rate of connectivity of wind and solar to theirpower grids.Renewable Energy Certificate (REC) Market: In February 2017, China announced a nationalpilot Green Certificate Scheme with the aim of reducing government subsidies to the RE sector.This pilot scheme covers onshore wind and solar projects only. A green electricity certificate willbe issued for each MWh of electricity produced from RE sources. Initiated on a voluntary basis,the scheme is expected to become mandatory in 2018.When the scheme becomes mandatory, RE users (such as private and state-owned businesses) thatfail to meet certain renewable power requirements (yet to be announced) will be required topurchase certificates to cover the shortfall. Prices of the green electricity certificates will bedetermined by the market, subject to a cap at the level of subsidies currently received by RE-basedpower producers.124Competitive bidding/auction:125In addition to the FIT policy, China adopted the auction scheme tohelp reduce market barriers and encourage large-scale deployment of RE-based power generation.It has played a significant rolein promoting the development of large-scale RE projects and indetermining appropriate FITs for RE-based power projects. FITs for RE-based power projectswere established based on the results of this auction scheme. The eligible technologies for auctionscheme are onshore wind (minimum 50 MW), offshore wind, solar PV and concentrated solarpower (CSP).NDRC is in charge of onshore wind auctions while CNEA is responsible for the solar and offshorewind auctions. NDRC and CNEA publish the auctions with detailed instructions. The evaluationcommittee is made up of members from the NDRC, CNEA, state-owned grid companies,provincial development and reform commissions, provincial power companies, bidding agenciesand technical experts.123 R100 (2015). R100 is a global campaign working with the world’s most influential businesses on their journeys tobecome 100% powered by renewables.124 http://www.latham.london/2017/02/china-will-issue-green-certificates-for-renewable-energy/125 IRENA (2013b), IRENA and CEM (2015) 71

The auctions were organized for pre-identified projects or sites. The evaluation procedure typicallyincluded pre-qualification, detailed evaluation, ranking of candidates and negotiation. The RE-based power projects were selected based on their offered price, following the “lowest price win”criterion, or weighted score from price and local content.The auctions were effective in revealing costs and establishing benchmarks for setting appropriateand economically efficient FITs for RE-based power projects in China.  For onshore wind projects, five (5) auctions were held annually from 2003 to 2007 for a total contracted capacity of 7.3 GW. The average contract price varied between 0.382 to 0.551 RMB/kWh. In 2009, the GOC issued the FITs, ranging from 0.51 to 0.61 RMB/kWh for onshore wind power projects in four regions with variable wind resource potentials.  The development of solar PV followed a similar path, evolving from auctions to FITs. In 2009, the winning bid for a 10-MW solar PV projectoffered a price of 1.0928 RMB/kWh. The 2010 auction awarded 13 solar PV projects for a total capacity of 280 MW with contract prices between 0.73 and 0.91 RMB/kWh. Based on these auction results, the GOC issued a FIT for grid-connected solar PV projects at 1.0 RMB/kWh in 2011. Later in 2013, FITs ranging from 0.9 to 1.0 RMB/kWh were set for three regions according to their different solar resource potential.  The only auction for offshore wind projects was organized in 2011. Four projects with a total capacity of 1,000 MW were awarded with contract prices between 0.6881 to 0.7779 RMB/kWh. Based on these results, a FIT of 0.75 RMB/kWh was set for near-shore, and 0.85 RMB/kWh for intertidal offshore wind power projects.Financial Incentives for RE ProjectsSoft loans: Access to low-cost finance from state-owned banks has supported extraordinary levelsof expansion of RE deployment in China. There are signs that the other financial institutions arestarting to increase their involvement in the sector. For example, in 2012, the lowest interest rateavailable for a loan of more than one year from a Chinese state-owned bank was 5.9%. In 2013,China Longyuan Power Group raised 279 million USD from a loan from three banks at an interestrate of 3.75%126.Financial subsidies:The China Renewable Energy Development Fund (CREDF) wasestablishedin 2006 toprovide financial support to RE projects. The CREDF was built fromsurchargeslevied on electricity consumption, excluding residential and agricultural customers. Thissurcharge was raised several times since 2006, starting at 0.002 RMB/kWh, increasing to 0.004RMB/kWh in 2009, to 0.008 RMB/kWh in 2012, and toa current 0.015 RMB/kWh. The financialsupport includes subsidies for RE power tariffs (in form of FITs), capital incentives for small-scalepower PV projects, grants for R&D of RE technology, etc.The CREDF strongly contributed to the successful development of RE in China. However,according to CNREC estimates, the fund raised from electricity surcharges is not sufficient to payfor RE subsidies. The National Center for Climate Change Strategy and International Cooperation126 IISD (2014) 72

estimated that about 30 to 40 billion RMB may be owned by the GOC to RE developers in unpaidsubsidies.127In 2009, the Ministry of Finance initiated two national solar PV subsidy programmes to supportand expand the local solar industry.  An up-front subsidy for building-integrated PV (BIPV) systems and a subsidy of 50% of the bidding price for the supply of critical components are provided. Financial support has decreased substantially since the programme’s inception, reflecting the declining cost of solar PV power. By 2012, the subsidy has fallen to 9 RMB/W for BIPV (compared to 20 RMB/W in 2009) and 7.5 RMB/W for rooftop systems (from 15 RMB/W in 2009);  The Golden Sun Demonstration Programme provides direct subsidies for grid-connected and off-grid PV systems: 50% of the total cost for grid-connected systems and 70% for off-grid systems in rural areas. In 2012, grid-connected systems received 5.5 RMB/W, while off-grid systems received 7.0 RMB/W.Fiscal Incentives for RE ProjectsVAT exemption and reduction:Several forms of VAT exemption and reduction have been grantedto RE-based projects in China.  50% VAT refund on the sales of self-produced solar PV power, enforced from October 2013 to December 2015;  Currently, there is a 50% VAT refund on the sales of wind power. There is also a 50 to 100% VAT refund on sales of self-produced energy produced from the prescribed recycled materials, wastes and agricultural residues (the rates vary depending on the nature of recycled materials or residues utilized). There is a 100% VAT refund on the sale of biodiesel oil generated by the utilization of abandoned-animal fat and vegetable oil.128CIT exemption and reduction: A reduced corporate income tax (CIT) rate of 15% (instead of 25%as standard CIT rate) is presently granted to qualified advanced and new technology enterprises.Applicable fields include solar, wind, biomass, and geothermal energy. In addition, the projectsrelated to biomass energy, synergistic development and utilization of methane will enjoy a three-year CIT exemption, followed by a 50% reduction for another three years.Mandatory Grid Access and Prioritized DispatchPrioritized dispatch: The 2005 China’s Renewable Energy Law, followed by the trial “Regulationon Energy Conservation Power Generation Dispatching” issued by NDRC in 2007, required thatRE-based power generation has priority over other generation sources to be dispatched. However,grid operators in China have not implemented priority dispatch, citing concerns about grid securityand reliability of electricity supply from variable RE sources.In March 2015, the Chinese government issued a major policy announcement (known asDocument 625) on RE, aimed at reducing the perennially high level of curtailment of electricitygenerated from wind, solar, hydro and other RE sources. The key statement of this document is a127Bloomberg article (2015-08-20): China’s wind and solar developers hit by subsidies short of plan128 KPMG (2015) 73

mandatory “guarantee” that grid companies have to purchase electricity outputs from REgenerators, at least up to an allocated number of hours. Document 625 states that NDRC and theCNEA will be responsible for planning annual allocations of operational hours for each type ofrenewable generation in regions of the country that have been experiencing curtailment. Thedocument stresses that purchase of the energy from these allocations will be guaranteed.Document 625 also introduced a compensation mechanism for renewable electricity curtailment. Ifcurtailment is due to non-renewable generators “infringing on absorption space and transmissioncapacity”, then the non-renewable generators are responsible for paying compensation.Alternatively, if the curtailment is due to grid line failure or unplanned maintenance, then the gridcompany must take responsibility for compensation. However, given the difficulties thatpolicymakers have apparently encountered thus far in ensuring priority for RE generation,enforcement of these new payments may still be a big challenge.Grid connection standards: China has issued the T&D grid codes, and the technical standards forgrid connection of RE-based power plants. These include (i) Technical specifications forconnecting wind farm to power grid (GB/T 19963-2011), (ii) Technical requirements forconnecting photovoltaic power station to power grid (GB/T 19964-2012).Other RE Policy MeasuresSupport to educational and R&D activities: China provides financial support to research anddevelopment (R&D) of RE technologies, mainly wind turbines and advanced silicon technologiesfor solar PV. Among various publicly-funded Science and Technology (S&T) programs, the“863”129 and “973”130 programs provide most of the financial support for RE technology researchand development. In addition, the Ministry of Finance established a special fund to support theR&D of wind power equipment. The “863” Program has invested 3 billion USD in R&D duringthe 2001-2005 period. Another 585 million USD (4 billion RMB) was approved in 2008 for both“863” and “973” programmes. Between 1998 and 2008, the “973” programme has funded 382R&D projects with a total investment of 1.3 billion USD131.Support to knowledge development and capacity building:The GOC has been providing a strongsupport to knowledge development and capacity building activities in RE sector conducted bylocal and/or international organizations.During the 1999-2005 period, the GOC has implemented a project, namely “Capacity building forthe rapid commercialization of renewable energy in China”. The project was co-funded by theGOC (11.5 million USD), UNDP-GEF (8.8 million USD), the Australian AusAid Program (3million USD) and the Government of the Netherlands (2.53 million USD).The project supportedthe establishment of the Chinese Renewable Energy Industries Association (CREIA), one of thefirst completely business-led and self-financed associations in China. CREIA provides its memberswith the latest information on technology and market developments and acts as an organizer ofindustry training programs.129 The “863” Program, a “National High-Tech Development Plan” established in March 1986, focuses on boostinginnovation in the strategic high-tech sectors in order to help China gain a foothold in the world market.130 The “973” Program, a “National Basic Research Program” established in 1997, focuses on fundamental research, andthus complementing the “863” Program.131 Richard J. C. (2014) 74

The project also included RE resource assessment, demonstration projects, introduction ofinternational best practices, capacity building (through training, workshops, and study tours),standards development, and promotion of RE technologies (such as industrial-scale biogas, solarwater heaters, wind power, bagasse cogeneration). A series of training programs and workshops onbusiness development and financing for RE have been conducted. These activities have sought toenhance the business skills of managers and entrepreneurs and to raise awareness andunderstanding of REby the financial community.In addition to direct support of governmentprograms and strategic planning in the market sectors of biogas, solar water heaters, grid-connected wind, and village power, the project has also provided cross-sector policy support to theChinese Government in the formulation of its Promotion Law for RE Development andUtilization.In July 2015, the R100 launched a capacity building program managed by the Climate Group inpartnership with the CREIA.132 Through a series of expert-led workshops, field trips and peer-to-peer learning, the R100 Capacity Building Program aims to raise the technical awareness andunderstanding of companies on how RE investments can provide energy security, help manageenergy costs and improve reputation.Support to local RE equipment manufacture:For the purpose of promoting local manufacture ofRE equipment, China provides local companies with import tax exemption for the importedtechnologies and materials used for production of RE equipment. In addition, the Chinesegovernment and the state-owned banks also provide strong financial support to the RE equipmentmanufacturing industry. For example, the Chinese government has contributed around 80% of thetotal of 41.8 billion USD invested in the solar manufacturing industry in 2010. The ChinaDevelopment Bank offers low-interest loans, while the Export-Import Bank of China (China EximBank) provides export credits at preferential rates for the local solar PV manufacturers.6.1.2 IndiaBased on the annual reports of the Ministry of Power (MOP) and the Ministry of New andRenewable Energy (MNRE) of India, the total installed power capacity in India had reached 307.3GW in October 2016, up from 281.5 GW in December 2015. As shown in Figure 11, fossil fuels(coal, natural gas and oil) made up the largest share (69.1%), followed by large-scale hydropower(>25 MW) with 14.0%, RE-based power (small hydro, wind, solar and biomass) with 15.0%, andnuclear power with 1.9%.132 https://www.theclimategroup.org/news/leading-chinese-companies-encouraged-set-100-renewable-energy-goals-re100 75

Wind, 9.1% Solar, 2.8% Biomass, 1.6%Nuclear, 1.9% Small hydro, 1.4% Large hydro, 14.0% Fossil fuels, 69.1% Figure 11: Power generating capacity mix in India (Oct 2016)RE Potential, Utilization Targets and PlanningThe National Institute of Solar Energy estimated the commercially exploitable solar energypotential in India at about 749 GW. Other estimates showed potential power generation for thevarious RE technology such as wind (103 GW), small hydropower (20 GW) and various types ofbiomass (25 GW). This brings the total RE commercially exploitable potential capacity to 897GW.In 2008, GOI published the National Action Plan on Climate Change comprising of eight missions,in which some of the purposes focus on deploying appropriate technologies for both adaptationand mitigation of GHG emissions. The National Solar Mission aims to increase the share of solarenergy in the total energy mix. The National Mission on Sustainable Habitat aims to improve themanagement of solid waste and conversion to power.In 2014, GOI has enacted several policies designed to accelerate the installation of RE-basedpower projects of various technologies and sizes. The center piece of this approach is anaggressive target of 175 GW of grid-connected RE-based power capacity installed by 2022.The solar PV capacity target of 100 GW set under the Jawaharlal Nehru National Solar Mission(JNNSM) for the 2015-2022 period principally comprise of 40 GW grid-connected rooftop and 60GW through large and medium scale ground-mounted solar power projects. The target, whichlooked very ambitious, now seems realistic with the launch of a net metering and a FIT for grid-connected rooftop solar power generation projects in twenty States of India.A comparison of the potential, target and the actual installed capacity of grid-connected REsources in India is shown in Table 27.Table 27: Potential, target and actual installed capacity of RE sources in IndiaNo. Type of RE Commercially 2022 target Actual installed exploitable (GW) capacity by Nov 1. Wind power 2. Solar power potential (GW) 60 2016 (GW) 103 100 28.419 749 8.875 76

3. Hydropower (only Small) 20 5 4.325 5.0464. Biomass (including MSW) 25 10 46.665Total 897 175Source: Compiled from the Annual Reports 2015-2016 of MOP and MNREIt can be seen from Table 27 that, by November 2016, the total installed grid-connected RE-basedpower capacity in India was about 46.7 GW. It represents 26.7% of the 2022 target or 5.2% of thetotal RE power capacity potential. Biomass power includes gasification, bagasse cogeneration andwaste-to-power while small hydropower includes power plants of 25 MW or lower. Wind power ismost abundant in India and now at a mature stage, comprising of 60.9% of the total installedcapacity of RE power plants. This is followed by solar (19.0%), biomass (10.8%) and smallhydropower (9.3%).The GOI has taken up the following new projects/scheme in its effort to meet the RE target:  The Viability Gap Funding (VGF) scheme (under the JNNSM)for setting up over 2,000 MW of grid-connected solar PV power projects. Projects are to be set up by solar power developers on a Build-Own-Operate (BOO) basis, and are selected through a process of open and transparent competitive reverse bidding in which bidders offer are duction vis-a-vis the tariff pre-defined by the VGF scheme. These projects would be selected through a process of e-bidding followed by e-reverse auctioning.  Creation of Intra State Transmission System in the States of Andhra Pradesh, Gujarat, Himachal Pradesh, Karnataka, Madhya Pradesh, Maharashtra and Rajasthan with the funding from GOI and from the National Clean Energy Fund (NCEF) in order to facilitate integration of large scale renewable generation capacity addition.  Scaling up of budget from 90 million USD during the 12th Five Year Plan to 750 million USD for the Grid-Connected Rooftop and Small Solar Power Plants Program over a period of five years up to 2019-20 under National Solar Mission (NSM).  Setting up of 25 solar parks to be developed in the next 5 years in various States to accommodate over 20,000 MW of solar power projects.133In February 2015, GOI launched the “Report on India’s Renewable Electricity Roadmap 2030:Toward Accelerated Renewable Electricity Deployment”. The RE Roadmap summarized theprocess and the results of a comprehensive stakeholder consultation exercise. It presented theopportunities and barriers to RE, based on inputs given by stakeholders. It also provided asummary of the rationale as well as benefits and costs of RE within the context of the Indian powersystem. The report suggested a framework for an integrated policy strategy for rapid REimplementation, particularly solar PV and wind power, which will complement both the existingand planned conventional power projects. The framework includes: A new comprehensive National RE Policy that will establish targets, identify financial support for achieving those target, undertake integrated energy resources planning, restructure and improve the Renewable Purchase Obligation (RPO) and implement mandatory net metering (NEM)/feed-in tariff (FIT); Support mechanisms to ensure speedy RE implementation by introducing a “One-Stop Shop”;133 MNRE Annual Report 2015-2016 (Section 1.13-1.15) 77

 Grid reforms to ensure smooth integration of RE through upgrade of grid technology and grid operation protocols, establish Grid Codes, implement 5-minute Scheduling and Dispatch and expand balancing areas by promoting flexible demand and supply resources.In June 2016, the Ministry of New and Renewable Energy (MNRE) issued the “Thrust Areas withAction Plan for Research Development & Demonstration (RD&D)” For Technology Developmentin New and Renewable Energy in order to promote technology development and demonstration forwidespread deployment of new and RE for various applications in a cost-effective manner acrossthe country. RD&D efforts are directed towards process/technology development anddemonstration with emphasis on cost reduction and improving efficiency.RE Price-based PoliciesFeed-in tariff: The FITs for RE-based power generation projects in India evolved over time andhave been continously reduced. Table 28 presents the FITs currently applied in India.Table 28: Current FITs for grid-connected RE-based power projects in India Type of RE sources FITs (VAT-included)Small Hydro (< 25 MW) INR/kWh USD/kWh134Wind powerSolar PV power 3.95 - 5.47 0.0592 - 0.0820Biomass power (direct combustion)Biomass power (gasifier) 3.67 - 5.87 0.0550 - 0.0880Bagasse cogenerationBiogas cogeneration 5.10 - 5.70 0.0764 - 0.0854Source: CERC Annual report (2014-15) 7.27 - 8.71 0.1089 - 0.1305 6.46 - 7.39 0.0968 - 0.1107 5.41 - 6.76 0.0811 - 0.1013 7.60 0.1139The regulatory oversight in setting the FITs for RE-based power projects is provided by theCentral Electricity Regulatory Commission (CERC) and the State Electricity RegulatoryCommissions (SERCs). However, at present, only grid-connected RE based systems come underthe regulatory purview.For grid-connected mini/small hydro, the FIT is usually dependent on the location of the project(i.e., the State) and the size, which varies from 100 kW up to 25 MW. The FIT for mini/smallhydropower projects for the fiscal year 2015-16 was set at 3.95 to 5.47 INR/kWh.In January 2010, the Prime Minister of India officially announced JNNSM. The first phase of thisprogram targeted 1,000 MW of grid-connected solar power plants, by paying a tariff fixed by theCentral Electricity Regulatory Commission (CERC) of India. The FIT for the year 2011-12,depending on the location of the solar power plant, was fixed at 10.0 to 17.9 INR/kWh for ground-mounted solar PV projects, 11.0 to 15.31 INR/kWh for solar thermal power projects, and 12.54 to18.52 INR/kWh for rooftop solar PV systems.135 The tariff was reviewed periodically by CERC.For the fiscal year (FY)136 2015-16, the FIT was set at 6.35 INR/kWh for all new solar PV projectsand 10.80 INR/kWh for solar thermal power projects, upon adjusting for accelerated depreciationbenefit.134 1 USD = 66.73 INR as of October 2016135 http://fs-unep-centre.org/sites/default/files/media/abps.pdf136In India, fiscal year starts on 1 Aprilof previous calendar year and concludes on 31March 78

For wind, the FIT is dependent on the wind zone. The FIT for wind power projects for the fiscalyear 2015-2016 was set at 3.67 to 5.87 INR/kWh, upon adjusting for accelerated depreciationbenefit.For biomass-based power and cogeneration projects, the FITs are determined for differenttechnologies and locations. For biomass-based power projects (other than rice straw and plantedJuli flora based projects), the FIT varies from 7.27 to 8.29 INR/kWh for projects using water-cooled condenser and travelling grate boiler, and from 7.54 to 8.58 INR/kWh for projects usingair-cooled condenser and travelling grate boiler. For biomass-based power projects burning ricestraw or planted Juliflora as fuel, the FIT varies from 7.39 to 8.41 INR/kWh for projects usingwater-cooled condenser and travelling grate boiler, and from 7.67 to 8.71 INR/kWh for projectsusing air-cooled condenser and travelling grate boiler. Biomass gasifier power projects enjoy a FITvarying from 6.46 to 7.39 INR/kWh.The FIT for bagasse-based cogeneration projects for the fiscal year 2015-16 was set at 5.41 to 6.76INR/kWh. For biogas-based cogeneration projects, the FIT was fixed at 7.60 INR/kWh. TheseFITs are adjustable upon accelerated depreciation benefit.As of December 31, 2015, MNRE reports that India has achieved a total of 38.8 GW of gridconnected RE installed capacity137. Compared to Table 23, the capacity already increased by morethan 6 GW, to 45.9 GW in October 2016. The latest data shows that solar almost doubled to 8.5GW while the wind increased by more than 3 GW. Small hydro and biomass-based installed powercapacity is also steadily increasing. It is safe to conclude that the FIT implementation has beensuccessful in India.SPPA: Based on the National Tariff Policy of 2006, RE developers can sign a long-term PPA atfixed tariffs, which delivers a stable revenue stream. Solar power producers can also sign a long-term PPA with utilities at fixed tariffs, albeit these are determined through auction.Net metering: As of July 2016, SERCs of twenty States have announced a regulatory frameworkon net metering to encourage rooftop solar plants. Eligible rooftop solar PV systems shall have aninstalled capacity between 1 kWp and 1,000 kWp. Net metering scheme is crucial for India inmeeting the 40 GW rooftop grid connected solar target. Unfortunately, solar PV adoption throughnet metering has not picked up, even in the States where it has been implemented. Out of a totalsolar PV capacity of 8 GW installed by December 2015, only 4% (320 MW) was from rooftopsolar systems.Both the distribution companies (DISCOs) and end-consumers are reluctant to adopt net metering.The main reason for this disappointing adoption of the net metering scheme in India is low tariffsof grid electricity. As the actual average electricity tariffs in most States of India are low comparedto the average production cost of electricity by rooftop solar PV systems, most of net meteringconsumers will have to sell electricity generated from their solar PV systems at aloss.138Consumers paying higher electricity tariffs are the most likely to implement the netmetering as they strongly benefit from the scheme. However, this will cause a potential loss ofrevenue for the DISCOs due to a reduction of high-paying commercial and industrial consumers.This is the main argument that is regularly used by DISCOs, which are against the adoption of net137MNRE Annual Report 2015-20161381.70-6.56 INR/kWh for residential consumers (depending on the State), and 7.5 INR/kWh for industrial consumers 79

metering. Another concern of the DISCOs is the additional burden of modernizing the grid andinspecting, certifying and billing solar PV rooftop systems.In a new policy move, the MNRE has announced financial incentives for DISCOs to supportrooftop solar installations.139The notification proposes a financial support of up to 3.75 millionINR/MW (56,200 USD/MW) for up to 1,350 MW of additional rooftop solar capacity.RE Quantity-based Policies and Procurement MechanismsRE quota obligation:The 2005 National Tariff Policy (NTP) regulates The Renewable GenerationObligation (RGO) and Renewable Purchase Obligation (RPO). The latter was amended by GOI in2011 and 2016.  RGO is applied for thermal power generators. The 2011 NTP required that new coal/lignite based thermal plants after specified date shall also establish/procure/purchase renewable capacity as prescribed by GOI. In order to comply with the RGO, the 2011 NTP allowed bundling of RE with power from thermal plants, whose PPAs have expired or plants which have completed their useful life subject to development through competitive bidding. To further encourage RE, the 2016 NTP states that coal-fired power plants installed after a specified date have to implement a RE-based power plant for at least 10% of their coal generating capacity.  There is a compulsory procurement of 100% power produced from all WTE plants by DISCOs.140 By November 2016, the DISCOs had purchased about 114 MW of WTE capacity.  As per the 2011 NTP, the target for solar power RPO shall be 3% by 2022. In order to achieve this target, DISCOs have to buy around 34 GW of solar power capacity. This target has been increased to 8% (equivalent to 69 GW) by 2019 in accordance to the new 2016 NTP. Solar RPO does not apply to power sourced from hydropower plants.The SERCs also provided preferential tariffs and RPO for Biomass Power Projects and BagasseCogeneration Projects.141 RPO percentages are fixed by the SERCs as per Electricity Act of 2003considering the resource availability and impact on retail tariff. By January 2013, 27 states hadissued RPO regulations and 25 states had come out with regulations for Renewable EnergyCertificates (RECs).142It was reported that the enforcement of RGOs and RPOs has been weak and that bringing all thestates on board will be challenging. In order to enforce the RPOs and RGOs, the MNRE isplanning to introduce penalties for non-compliance as part of new energy policy.143Renewable Energy Certificate (REC) market: In order to achieve the RE targets and the RPOs,the National Action Plan for Climate Change (NAPCC) of 2008 planned to establish a RECmarket. In January 2010, CERC has issued the “Regulations on the Terms and Conditions forrecognition and issuance of REC for RE Generation” which shall apply throughout India except inthe States of Jammu and Kashmir. CERC has nominated the National Load Dispatch Center139MNRE (2016b)140 MNRE Annual Report 2015-2016 (Section 1.16)141http://mnre.gov.in/schemes/grid-connected/biomass-powercogen/142 Krithika and Mahajan (2014) Background paper – Governance of RE in India Issues and challenges143 http://www.pv-tech.org/news/india_ramps_up_renewable_purchase_obligations_target 80

(NLDC) as the Implementing Agency for the Central Registry, which prepares procedures and aweb-based platform for the REC market. The latter was formally launched in November 2010.The REC mechanism provides an alternative route (besides FIT) to a generator to sell hiselectricity from RE sources to utilities at a regulated price (average power purchase cost ofutilities) or to third parties and receive) RECs, which can be traded on the power exchange market.The buyers of RECs are obligated entities such as utilities, open access consumers and captivesthat are not based on RE.On every MWh of electricity generated from RE sources, the generator is entitled to get one RECafter getting registered with the Central Registry. Such registration requires prior accreditationwith the State nodal agency for verifying the source of generation, capacity and grid metering.There are two categories of RECs: solar and non-solar. This is because the cost of solar-basedpower generation is high compared to all other RE sources. RECs can be issued within threemonths after generation and is valid for one year thereafter.Trading of RECs is being undertaken on the Power Exchanges (approved by CERC) on the lastWednesday of every month. The bidding window is open on the Power Exchanges designated fordealing in the RECs from 13:00 hours to 15:00 hours on the day of trading.RECs are exchanged within the band of a floor price and forbearance (ceiling) price as notified byCERC from time to time. The first REC trading session was held in March 2011. The floor andforbearance price for REC transactions, with took effect since 1st March 2015, are respectively3,500 INR/MWh and 5,800 INR/MWh for solar RECs, and 1,500 INR/MWh and 3,300 INR/MWhfor non-solar RECs. The growth of REC transactions on Power Exchanges is shown in Table 29.Table 29: Growth of REC transactions on Power Exchanges of IndiaFiscal year Number of buyers Number of sellers Number of RECs transacted (million) 2011-12 397 168 1.015 2012-13 802 487 2.590 2013-14 1,083 703 2.749 2014-15 821 906 3.062 2015-16144 632 966 4.955Source: CERC (2016)Competitive bidding/auction:India adopted the competitive bidding with the main goal to procuresolar power capacity at low prices in the scale-up phase of solar development. Auctions wereorganized since 2010 at the national level for large-scale and rooftop solar power projects, and atthe state level for decentralized solar power projects. Bidding was carried out in a closed envelop,pay-as-bid fashion, with fully disclosed ceiling prices.145The winning bidder was granted a 25-yearPPA with no escalation clauses. In addition, the auction rules explicitly established a strongdomestic content requirement on crystalline silicon PV modules to support the manufacturing ofthis technology in India.The auction mechanism has been successful. Around 2.7 GW of solar power capacity have beenawarded in 15 auctions organized during the 2011-13 period. The discounts to the pre-defined144 Numbers of buyers and sellers are up to November 2015145 Bidders bid a discount to the ceiling price 81

ceiling prices varied in a range of 30 to 50% for solar PV projects, and 20 to 30% for concentratedsolar power projects.In March 2016, the MNRE has issued the “Draft Guidelines for Tariff Based Competitive BiddingProcess for Grid Connected Solar PV Power Projects” for stakeholder comments.146The DraftGuidelines were then amended and published in June 2016.147The objectives of these guidelinesare:  to facilitate the scale up of solar capacity addition and achieve economies of scale,  to promote competitive procurement of electricity from RE Sources (solar) by distribution licensees,  to facilitate transparency and fairness in procurement processes,  to facilitate fulfillment of the Renewable Purchase Obligation (RPO) requirement of the obligated entities,  to facilitate reduction of information asymmetries for various bidders,  to protect consumer interests by facilitating competitive conditions in procurement of electricity,  to enhance standardization and reduce ambiguity and hence time for materialization of projects,  to provide flexibility to sellers on internal operations while ensuring certainty on availability of power and tariffs for buyers,  to bring uniformity in tendering by various agencies including state utilities which will facilitate investment,  to ensure bankability.Financial Incentives for RE ProjectsSoft loans: Several financing schemes have been established to finance RE projects in India. Mostof these schemes are funded by the international development and financial organizations (JICA,WB, AFD, UNIDO, etc.), and implemented by the GOI through the local banks and/or governmentorganizations such as the Small Industries Development Bank of India (SIDBI), the IndianRenewable Energy Development Agency Ltd. (IREDA), etc. Public sector banks such as StateBank of India (SBI), Bank of Baroda and Industrial Development Bank of India (IDBI) as well asprivate sector banks such as YES Bank and Axis Bank have also funded RE projects. These localbanks have so far funded mostly large scale grid-connected projects set up by IPPs. Some of thekey financing schemes providing soft loans to RE projects are presented below.  National Clean Energy Fund (NCEF):148 The Fund was created in 2011 from cess (levy) on coal produced/imported (“polluter pays” principle” to provide both grants and soft loans to projects proposing innovative methods to adopt clean energy technology and R&D. These projects include the upgrading/creation of power transmission systems, JNNSM’s installation of solar PV systems (solar lights, solar water pumps, rooftop and ground-mounted solar PV plants), pilot projects to assess wind power potential, etc.146http://mnre.gov.in/file-manager/grid-solar/draft-sbg-solarpv.pdf147 http://www.indiaenvironmentportal.org.in/files/file/Amended-Draft-SBG-for-Solar-PV-power-projects.pdf148 http://www.finmin.nic.in/the_ministry/dept_expenditure/plan_finance2/Latest_NCEF_Brief.pdf 82

The projects eligible for funding from NCEF shall meet the following criteria: they should be(i) sponsored by a ministry/department of the GOI,(ii) submitted by an individual or aconsortium of organizations (participating organization) from the government/public andprivate sectors, and (iii) including a minimum of 40% of total project cost contributed by theparticipating organization. An Inter-Ministerial Group (IMG) chaired by the Secretary of theMinistry of Finance evaluates and approves the projects on a case-by-case basis.A coal cess of 50 INR/tonne was collected from June 2010. It was increased to 100 INR/tonnefrom July 2014, to 200 INR/tonne from March 2015, and to 400 INR/tonne (+/- 6 USD/tonne)during FY 2016-2017.During 2010-2016, a total coal cess of 281.9 billion INR was collected,of which 136.2 billion INR was transferred to the NCEF. For FY 2016-17, about 84.5 billionINR are expected for the NCEF.As of March 2016, NCEF allocated 90.2 billion INR to fund55 projects recommended by IMG. IREDA-JICA Financing Scheme (2011-2017): Since 2011, IREDA received two lines of credit of 30 billion JPY each from the Japan International Cooperation Agency (JICA). This concessional credit, coupled with technical expertise, has supported the growth of India’s RE by almost 70% to around 40 GW in the last five years. The first line of credit was awarded for the years 2011-14 and the second line of credit (2014-17) is now under implementation. IREDA’s Solar Rooftop Financing Scheme: The loan scheme, launched in 2015, is applicable to grid interactive, rooftop solar PV plants for industries, institutions and commercial establishments. Financing can be accessed for single or aggregated investments. The applicant’s minimum capacity needs to be 1 MW. In case of aggregation, the smallest sub- project has to be at least 20 kW. The maximum repayment time is 9 years with an interest rate of 9.9% to 10.75%.Support to biomass projects: in addition to FIT policy, the GOI provides Central FinancialAssistance (CFA)as capital subsidy to promote grid-connected biomass combustion-based powerprojects and bagasse-based cogeneration projects in sugar mills for export of surplus power to thegrid. The amount of CFA is calculated based on the installed capacity for biomass power projects,and on surplus capacity exported to the grid for bagasse cogeneration projects. There are threecategories of eligible projects under this CFA scheme: Category 1: Biomass combustion-based power projects and bagasse cogeneration projects implemented by private, joint venture (JV), cooperative or public-sector sugar mills; Category 2: Bagasse cogeneration projects in cooperative or public-sector sugar mills implemented through BOOT/BOLT model by IPPs, State Government Undertakings or State Government JV Companies or Special Purpose Vehicles; Category 3: Bagasse cogeneration projects in existing cooperative sector sugar mills undertaking boiler modification.The CFAs are provided depending on the category and type of projects as shown in Tables 30 and31.149Table 30: CFA for grid-connected biomass power and bagasse cogeneration projects of Category 1Project Type Special Category States Other States (NE Region, Sikkim,149 http://mnre.gov.in/file-manager/grid-biomass/scheme-Biomass.pdf 83

J&K, HP & Uttarakhand)Biomass power projects 2.5 million INR per MW of 2.0 million INR per MW of installed installed capacity(Maximum capacity(Maximum support of 15 support of 15 million INR per million INR per project) project)Bagasse co-generation by 1.8 million INR per MW of surplus 1.5 million INR per MW of surplusprivate/JV sugar mills* capacity (Maximum support of 15 capacity (Maximum support of 15 million INR per project) million INR per project)Bagasse co-generation 4.0 million INR (> 40 bar) 4.0 million INR (> 40 bar)projects by cooperative/ 5.0 million INR (> 60 bar) 5.0 million INR (> 60 bar)public sector sugar mills* 6.0 million INR(> 80 bar) 6.0 million INR (> 80 bar)40 bar & above Per MW of surplus capacity Per MW of surplus capacity60 bar & above (Maximum support of 60 million (Maximum support of 60 million INR80 bar & above INR per project) per project)Source: MNRE (2017)(*) For new sugar mills, which are yet to start production and existing sugar mills utilising backpressureroute/seasonal/incidental cogeneration, which exports surplus power to the grid, subsidies shall be one-halfof the level mentioned above.Table 31: CFA for grid-connected bagasse cogeneration projects of Categories 2 and 3 Minimum Projects of Category 2 Projects of Category 3 configuration Not applicable 2.0 million INR per MW of surplus40 bar and above capacity 2.5 million INR per MW of surplus60 bar and above 4.0 million INR per MW of surplus capacity80 bar and above capacity 3.0 million INR per MW of surplus 5.0 million INR per MW of surplus capacitySource: MNRE (2017) capacity (Maximum support of 60 million INR per project)Together with the FIT policy, the CFA scheme is an important policy instrument to support thesuccessful implementation of grid-connected biomass power projects and bagasse cogenerationprojects in India. As of March 2016, more than 530 projects with a combined capacity of above4,830 MW have been implemented.Financial incentives for biomass gasifier-based energy projects: These incentives have beenprovided under the Biomass Gasifier Program initiated by the MNRE in December 2009. Thefocus of this Program is to meet captive electrical and thermal needs of rice mills and otherindustries, which in turn help replacing conventional fuels such as coal, diesel, furnace oil, etc. TheProgram also includes setting up small biomass gasifier-based power plants up to 2 MW capacityconnected at the tail end of the grid. Various stakeholders are involved in the implementation ofthe Program, such as IPPs, ESCOs, industries, NGOs, etc.The CFA for development and implementation of biomass gasifier projects in the industrial sectoris shown in Table 32.Table 32: CFA for industrial biomass gasifier projects CFA Type of project 2,500 INR per kWBiomass gasifier systems retrofitted with dual fuel mode engines 84

Projects involving installation of 100% producer gas engines with 1 million INR per 100 kWan existing gasifierThermal applications in rice mills and other industries 200,000 INR per 300 kWthCaptive power projects through dual fuel engines in rice mills and 250,000 INR per 100 kWother industriesCaptive power projects through 100% producer gas engines in rice 1 million INR per 100 kWmills and other industriesSource: MNRE (2017)The Program has been successfully implemented. As of March 2016, more than 300 rice mills andother industries have used biomass gasifier systems with a total equivalent capacity of more than165 MW for meeting their captive power and thermal needs.CFA for captive biogas-based energy projects:The MNRE is promoting biogas production andutilization for captive power and thermal supply. Table 33 presents the CFA for off-grid biogas-based energy projects.Table 33: CFA for captive biogas-based energy projects CFA limited to the Administrative/Service following ceiling or 40 % of Charges to SNAs/ SNDs /BDTCs and IAs150 Power Biogas plant the cost of the systemgenerating capacity whichever is the lowest capacity Power Thermal Power Thermal generation applications generation applications (INR/kW) (INR/kWth)3 to 20 kW 25 to 85 m3 40,000 20,000 10 % of CFA 10 % of CFA>20 up to Any combination of 35,000 17,500 100,000 INR 50,000 INR100 kW above plants or approved alternate capacity/design>100 up to Any combination of 30,000 15,000 150,000 INR 75,000 INR250 kW above plants or approved alternate capacity/designSource: MNRE (2017)CFA plays a key role in successful promotion of captive biogas-based energy projects in India,especially in the livestock sector and agro-industries. As of March 2016, a total of about 400biogas-based power plants with power generation capacity of around 5.5 MW have beenimplemented under this CFA scheme.Fiscal Incentives for RE ProjectsBesides the CFA, fiscal incentives such as accelerated depreciation, concessional import duty,excise duty, tax holiday for several years, etc., are available for RE projects.151Accelerated depreciation: In 1992, the accelerated depreciation was introduced with adepreciation rate of 100%. Among all RE technologies, wind power experienced unparalleledgrowth from less than 1 GW in 1997 to 27 GW in 2016. The accelerated depreciation was reduced150SNAs/SNDs refer to State Nodal Agencies/Departments such as Agriculture Department, District Rural DevelopmentAgencies (DRDAa) and Khadi and Village Industry Commission (KVIC) centers. BDTCs refer to the BiogasDevelopment and Training Centers, and IAs refer to Implementing Agencies151 DTU (2009) 85

to 80% in 1992 and the scheme was further reduced to 15% in 2012 for wind power, which greatlyaffected the sector. After significant harm to the wind sector, the accelerated depreciation wasrestored in July 2014. This decision of the GOI has helped in creating a robust manufacturing basefor wind turbines in the country 152 However, a maximum limit of 40% from the previous 80% willbe implemented by April 1, 2017.153VAT exemption and reduction: Some of the state governments have provided incentives in theform of a VAT at a reduced rate (5%) whereas other states levy a VAT of 15%.CIT exemption and reduction: Wind, biomass, small hydropower and solar power plants can avail10 years of tax holiday, if power generation begins before 31 March 2017. However, the plantshave to pay a minimum alternative tax at the rate of approximately 20.4% to 21.4% (based on theincome), which can be offset over the next 10 years.154ID&T exemption and reduction: There are concessional customs and excise duty exemption formachinery and components for initial setting up of projects.Mandatory Grid Access and Prioritized DispatchPrioritized dispatch:For large scale RE integration, GOI established Renewable EnergyManagement Centers (REMC) which are equipped with advanced forecasting tools, smartdispatching solutions, and real-time monitoring of RE generation, closely coordinating with StateLoad Dispatch Centre (SLDCs)/ Regional Load Dispatch Centre (RLDCs). GOI is planning toestablish one REMC in each region, which will be connected through respective state REMCs. TheCentral REMC will be at the top, which will be maintained and run by the National Load DispatchCentres (NLDCs).In view of the expected increase in RE penetration, there is a need to equip the power systemoperators with state-of-the-art tools along with real time data of RE generation. There will be ahierarchical connection between the SLDC, RLDC and NLDC.155The 2030 Roadmap emphasizedthe importance of RE grid integration and efficient grid operation. An upgrade of the gridtechnology is recommended to maximize the use of RE power plants. Hence, while RE powerplants are given dispatch priority, the REMC will determine the right balance between RE andconventional power plants to maintain grid integrity.Grid code to facilitate RE integration: The Central Electricity Authority (Technical Standards forConnectivity to the Grid) Amendment Regulations, 2013 specifies connectivity standards and thetechnical requirements from wind generators to be synchronized with the grid. Meanwhile, theIndian Electricity Grid Code 2010 provides some guidelines in the operation of solar and windwithin the grid.156Other RE Policy Measures152 MNRE Annual Report 2015-2016153 IISD (2016)154KPMG (2015)155MNRE Annual Report 2015-2016 Section 1.27156 IDAM (2015) 86

Support to educational and R&D activities: MNRE has been supporting Research, Design andDevelopment (RD&D) in New and RE since 1982. However, in October 2010, MNRE announcedthe Policy Guidelines157 for identification, formulation, appraisal, approval of proposals forRD&D, demonstration and manufacture of New and RE technologies. A fundhas been set up toprovide financial assistance to these RD&D activities. A RD&D Project Appraisal Committee(RDPAC) has been established under the chairmanship of the MNRE Secretary for the purpose ofgiving guidance to the overall direction of RD&D effort in New and RE. This Committee alsoelicits RD&D proposals, appraises them, and recommends financial support wherever required.During the 11th Five-Year Plan period (2007-2012), a total budget of 5.25 billion INR was spent tosupport 169 RD&D projects in solar thermal, solar PV, biogas, bio-fuel, hydrogen and fuel cells.In the current 12th Five-Year Plan period (2012-2017),MNRE budgeted an amount of 5.132 billionINR (77 million USD) for R&D of New and RE technology, of which 4.359 billion INR (65.46million USD) was spent in 2013-2016.158The GOI, through MNRE, also provides support in capacity building in educational and R&Dinstitutions. In October 2013, MNRE announced the Human Resources Development (HRD)Program in New and Renewable Energy for the 12th Five-Year Plan period (2012-2017). Underthis Program, the National RE Fellowship Scheme was introduced to encouragestudents/researchers to choose RE as their career by providing 400 new fellowships/scholarships inthe field of RE every year in addition to the 50 existing fellowships awarded since FY 2009-10.The present fellowship rates are presented in Table 34.Table 34: Present fellowship rates for students and researchers in India Category Fellowship rate (INR/month) DurationJunior Research Fellows (JRF) 25,000Senior Research Fellows (SRF) 28,000 2 yearsPost-Doctoral Fellows (PDF) and 3 yearsResearch Associates (RA) 36,000 (1st year) 3 years 38,000 (2nd year)M. Tech/M. Eng students 40,000 (3rd year) 20-24 months (as per the norm of the educational institutions)M. Sc. students 12,400 22 monthsSource: MNRE (2017) 4,000While JRF/SRF/PDF/RA fellowships are open for all universities, technical institutions, nationallaboratories having facilities for research in identified key areas of the Ministry’s R&D program,the M. Tech and M. Sc. fellowships are granted to empanelled educational institutions having M.Tech/M. Sc. courses in energy/RE. A maximum of 20 such institutions with 15 seats per institutionare selected based on open advertisement. For the rest of the fellowships (minimum of 100), theselection is made through open advertisement and evaluation of the received applications by acommittee of experts. TERI University in Delhi has been assigned to coordinate the National REFellowship Scheme on behalf of MNRE. TERI University therefore is doing the fund managementand recordkeeping of the fellowship scheme and charges for its services to the Ministry.MNRE is also implementing the National Solar Science Fellow Program under which fellowshipsof 100,000 INR/month (net of tax)are provided to 10 persons for a period of 3 years. In addition,157 http://www.mnre.gov.in/file-manager/rd-scheme/om-rnd18102010.pdf158 PIB.GOI (2016) 87

they are eligible for a research grant up to 1.5 million INR/year and a contingent grant of 0.5million INR/year to undertake research work in cutting edge areas of solar energy.Support to knowledge development and capacity building:MNRE is providing financial and othersupport for RE knowledge development and capacity building through its Human ResourcesDevelopment Program and Information and Public Awareness Program.The overall objective of the Human Resources Development Program is to institutionalize REeducation and training in the country to cater the requirement of qualified and trained manpowerfor RE sector. The Program is providing financial assistance for the conduct of: short-term training programs forprofessionals working in MNRE and its attached and autonomous bodies at specialized institutions in India and abroad; short-term training programs for professionals working with State Nodal Agencies/Goverments/Utilities on different aspects of RE technology, its development and project management; short-term training programs on general aspects of RE (social, economic, environmental, trade, legal, administration, management, etc.) for manpower working in R&D institutions, NGOs, community-based organizations, banking and financial institutions, etc.; training of personnel to develop technicians for design, installation, operation, maintenance and repair of RE systems at grass root level; and for the development of training modules.The financial assistance for conduct of training programs would be upto 100%. However, thesupport levels shown in Table 35 would be followed.Table 35: Financial assistance to training activity in India Activity Indicative financial assistanceNational level training programs 2 million INR/programInternational level training programs 3 million INR/programState level training programs 1 million INR/program (50 trainees/week)Short-term training programs for technicians 0.15 million INR/program (30 technicians/week)Development of training modules Maximum 0.5 million INR/moduleSource: MNRE (2017)MNRE is also implementing the Information and Public Awareness Program to disseminateinformation on New and RE systems through a variety of media like electronic& printeddocumentsand exhibition as well as outdoor advertising media, thereby popularizing and creatingawareness about such systems. It also occasionally brings to the fore benefits, technologicaldevelopments and promotional activities taking place in the RE arena. This Program aiming atinculcating the importance of RE amongst masses has been gaining momentum in recent times.The Programme is implemented mainly through State Nodal Agencies, Directorate of Advertising& Visual Publicity (DAVP), Doordarshan, All India Radio (AIR), and Department of Posts, etc.The Program also provides support to universities, academic institutions, NGOs, governmentdepartments, etc. for organizing workshops, seminars, conferences on New and RE technologies.During the 12th Five-Year Plan (2012-2017), a total budget of 1.2 billion INR (around 18 millionUSD)was allocated for the Information and Public Awareness Program. 88

Support to local equipment manufacturers: SIDBI and KfW is implementing the InnovationFinance Programme (IFP) with a budget of 53 million EUR. IFP provides financial assistance toinnovative projects and SMEs that manufacture and supply innovative clean technologies(products, processes and services), including RE & EE technologies. The minimum assistance isgenerally not less than 10 lakh INR (around 13,000 EUR). The operational duration of theProgramme is 2013-2016. As of September 2015, a total of 2,646 million INR (36 million EUR)has been committed to 28 innovative clean technology SMEs.The Biomass Gasifier Program also provides financial support to local gasifier manufacturers andsuppliers for establishing service centers in areas where clusters of at least 10 gasifier systemshave been set up in one district or region. A one-time funding of 0.5 million INR is granted to eachcenter.Support to local service providers/ESCOs:The GOI is providing financial support to local serviceproviders and ESCOs who develop and implement industrial RE projects through BOOT/BOLTmodels. For example, the CFA is granted to ESCOsfor preparing Detailed Project Report (DPR)for grid-connected and captive biomass-based power and/or thermal projects. A financial grant of50,000 INR per project is provided to projects with an equivalent capacity between 100 kW and500 kW. For projects with an equivalent capacity of 500 kW and above, the financial grant is100,000 INR per project.Several local banks and financial institutions, in particular SIDBI and IREDA, are providingfinancial support in form of grant and soft loans to ESCOs in development of RE projects and inthe provision of energy services.6.1.3 PhilippinesThe total installed generating capacity grew by 4.6% from 17,944 MW in December 2014 to18,766 MW in December 2015. As shown in Figure 12, fossil fuels (coal, natural gas and oil)made up the largest share (66.3%), followed by large-scale hydropower (>10 MW) with 18.5%,geothermal with 10.2%, wind power with 2.3%, biomass with 1.2%, solar power with 0.9%, andsmall hydro with 0.7%. 89

Wind, 2.28% Solar, 0.88% Biomass, 1.18%Geothermal, 10.22%Small hydro, 0.72%Large hydro, 18.46% Fossil fuels, 66.26% Figure 12: Power generating capacity mix in the Philippines (Dec 2015)RE Potential, Utilization Targets and PlanningFollowing the World Resource Institute, the Philippines could be considered as one of the leadersin RE because of its abundant resources such as solar, wind, ocean, small hydro and geothermal.The Philippines Department of Energy (DOE) considers the Philippines as the second largestgenerator of geothermal energy next to the United States of America. With the country’s untappedRE potential, the Philippines envisions to be the leader in geothermal, wind and solar equipmentmanufacturing in Southeast Asia, as stated in the Philippine Development Plan 2011-2016.From the study conducted by the National Renewable Energy Laboratory (NREL), the Philippineshas 11,055 km2 of windy land with good-to-excellent resource potential for wind energy. Thepotential installed capacity from wind energy was estimated at 76.6 GW. Potential for solar poweris 5 kWh/m2/day. According to the Philippines DOE, the total potential for hydropower isestimated at around 13.1 GW, of which 85.7% (11.223 GW) are considered large-scale, 14.1%(1.850 GW) are classified as small and mini-hydro with a capacity more than 100 kW to 10 MW,0.2% (0.027 GW) are micro-hydro with a capacity up to 100 kW. Biomass resources, particularlyagricultural and forestry residues, represent an opportunity for many areas of the country toproduce sustainable bio-energy both for commercial use and for urban and rural communities. Thepotential capacity from biomass resource is estimated at 0.5 GW.The National Renewable Energy Program (NREP) was launched in 2011 to steer the country inachieving the goals laid down under the Renewable Energy Act of 2008. The NREP sets targetsfor each RE source including solar, wind, geothermal, hydro and ocean technologies within thetimeframe 2011 to 2030. The program also includes a roadmap that will guide efforts towardsactualizing the market penetration targets of each RE source as well as the FIT for sustainableenergy generation.From the Renewable Energy Management Bureau, the expected total RE installed capacity by2030 is 12.431 GW, of which 44.5% would come from hydropower (including large scale), 27.5%from geothermal, 21.1% from wind power, and 6.9% from other RE sources (biomass, solar andocean energy). 90

Table 36 shows the potential, target and actual installed capacity from RE sources in thePhilippines.Table 36: Potential, target and actual installed capacity of RE sources in the PhilippinesNo. Type of RE Potential (GW) 2030 target Actual installed (GW) capacity by Dec 1. Wind power 76.6 2. Solar power 5 kWh/m2/day 2.627 2015 (GW) 3. Hydropower (including large scale) 0.373 0.427 4. Biomass 13.1 5.530 0.165 5. Geothermal 0.408 3.600 6. Ocean Energy 0.5 3.423 0.221 4.0 0.070 1.918 Total 12.431 -Source: DOE 170.0 6.331 264.2159As of December 2015, the actual installed RE-based power capacity (including large-scalehydropower) in the Philippines was around 6.331 GW, representing 33.7% of the 2030 target.Among RE sources, the share of hydropower capacity (including large-scale hydropower)remained the highest at 56.9% of the total installed generating capacity of RE sources, followed bygeothermal (30.3%), wind (6.7%), biomass (3.5%), and solar (2.6%).RE Price-based PoliciesFeed-in tariff: The main policy that ensures a continuous, adequate, reliable, and economic supplyof energy to keep pace with the country's growth and economic development is the RA 7638 or the“Department of Energy Act of 1992”. The Philippine Energy Plan supports the Act. The guidingpolicy for the promotion of the development, utilization, and commercialization of RE resourcesand other purpose is part of the Biofuels Act of 2006 (RA. 9367) and the Renewable Energy Act of2008 (RA. 9513). Under RA. 9513, a policy mechanism to enhance the competitiveness of REutilization introduces the FIT for RE projects, offering guaranteed payments (fixed rate per kWh)and a Renewable Portfolio Standard (RPS) fixing a mandatory utilization of RE electricity in on-grid systems.Four FITs are in place for run-of-river hydro, biomass, wind and solar power projects. The FITrates approved by the Energy Regulatory Commission (ERC) are shown in Table 37.Table 37: Current FIT rates for RE-based electricity in the PhilippinesRE sources Approved rates (PHP/kWh) USD/kWh160 0.1223Run-of-river hydro 5.90 0.1375 0.1534Biomass 6.63 0.1802Wind 7.40Solar 8.69Source: Energy Regulatory Commission (ERC)In order to ensure sufficient fund to pay all RE producers, the FIT Tariff Allowance (FIT-All)Fund was established. FIT-All is a uniform charge (in PHP/kWh) billed to consumers who aresupplied with electricity through the distribution or transmission network. The FIT-All shall be159Total RE potential do not include solar power160 1 USD = 48.23 PHP as of 6 October 2016 91

established and set by the ERC on an annual basis upon petition by the National Grid Corporationof the Philippines (NGCP), which is tasked with the settlement of the FITs of the eligible REplants. The FIT-All charge shall be collected by the NGCP from the consumers who are directlyconnected to the transmission network or by the distribution utilities (DUs) from the consumerswho are connected to their respective systems161. The FIT-All rate for 2015 is 0.04057PHP/kWh162.With the FIT incentives and continued support of the Department of Energy (DOE) and othergovernment agencies, the installed capacity of other RE sources (wind, solar and biomass) grewremarkably. The share of the installed power capacity of these RE sources in the countrygenerating capacity mix increased from 2.4% in Dec 2014 to 4.3% in Dec 2015.Net metering: Net metering is the first non-fiscal incentive mechanism employed under RA. 9513.Home owners and commercial establishments can generate power through installation of solar PVpanels (up to 100 kW) and deliver their excess power to the local distribution grid, which will beused to offset their consumption. Consequently, end-users are able to generate savings on theirelectricity bills and protect themselves against rising electricity prices. However, the net meteringin the Philippines is not a real one, as the tariff for electricity fed to the grid is aligned to theaverage generation cost of electricity by the utilities, which is lower than the price of electricitypurchased by the end-users. Despite that, the net metering scheme is quite successful as theelectricity tariffs in the Philippinesare on the high side.RE Quantity-based Policies and Procurement MechanismsRenewable Portfolio Standards: One of the policy tools established in RA.9513 is to promote thedevelopment of RE is the Renewable Energy Standard (RPS). It states that “All stakeholders in theelectric power industry shall contribute to the growth of the RE industry of the country”. TheNational Renewable Energy Board (NREB) has set the minimum percentage of generation fromeligible RE sources and determine to which sector the RPS shall be imposed within one (1) yearfrom the effectivity. The NREB has discussed, negotiated and drafted the RPS. It is in its finalstages of definition and approval. It is expected that the minimum incremental percentage ofelectricity sources from RE shall be no less than 1% per year over the next 10 years.The Philippine energy sector continuously supports the restructuring and deregulation of theelectric power industry as mandated by the RA. 9136 (2001)163 which led to the liberalization ofthe power markets, including the privatization of government owned power plants, the sale ofTransco to the private sector, the implementation of the electricity spot market in Luzon and thetrials of the system in Visayas, the implementation of performance-based rate mechanism fordistribution utilities. This let to almost 97% barangay electrification for Luzon, Visayas andMindanao, private sector participation in missionary electrification and energy supply security andreliability. In addition, the RA. 9136 (2001) has enabled the implementation of retail open accessallowing end-users to choose their power suppliers from whoever provides the most cost-effectiveservice. Power suppliers can able transact business directly with end-users.Competitive Bidding/Auction: The Wholesale Electricity Spot Market (WESM) was set up as oneof the reforms of the EPIRA to strengthen competition at the generation level modeled from theelectricity markets of New Zealand and Australia. The DOE established the Philippine Electricity161 ERC (2010): Resolution no. 16 on adopting the feed-in tariff rules162 ERC (2014): Order no. 2014-109 RC on approval of FIT-All rate for calendar years 2014 and 2015163 Also known as the “Electric Power Industry Reform Act of 2001” (EPIRA) 92

Market Corporation (PEM) at the end of 2003 to assume responsibility for WESM. The mainemphasis for WESM is to trade all electricity flows through a power exchange that is binding forall participants. The computer-based system was implemented with the assistance of the ADB. Thefirst major test run of the system, which also served to prepare the 53 participating companies forWESM, was conducted in Luzon between April and December 2005. The test run in Visayasbegan in March 2006.A resolution directing all distribution utilities (DU) to conduct a competitive selection process(CSP) in the procurement of their supply to the captive market was initiated by the ERC.According to this resolution, the power supply agreement (PSA) shall be awarded to the winninggeneration company following a successful transparent CSP or by direct negotiation with the DUafter at least two failed CSPs. A CSP is successful if the DU receives at least two qualified bidsfrom entities with which the DU is not prohibited from entering into a contract for power supply.This resolution can be applicable to off grid RE projects such as solar and wind.Financial Incentives for RE ProjectsSoft loans: Provision of financial packages for the development, utilization and commercializationof RE projects are recommended and endorsed by the DOE, provided that it is in accordance withand to the extent allowed by the enabling provisions of financial institutions respective charters orapplicable laws.Government financial institutions that provide these financial packages are the Development Bankof the Philippines (DBP), Land Bank of the Philippines (LBP), Phil-Exim Bank. The followingexample of a financing option is for solar rooftops:164  Loan term of 3 to 7 years or longer, depending on the project requirement with loan payments that can be tailor-fit to the project’s cash flow;  Grace period of 6 months to 1 year with a deferred payment on the principal can be offered during construction;  The interest rate depends on the prevailing market rates and can be on a variable or fixed basis.Private Banks like the Bank of the Philippine Islands (BPI)165 also offer sustainable energyfinancing options such as:  Capital Expenditure financing for fixed asset acquisition: new plant or building construction, expansion or modernization of operations, acquisition of machinery and equipment.  Working Capital Financing for short-term needs of manufacturers or traders of EE and RE products, e.g. purchase of raw materials.  Leasing to finance the use of an asset or equipment over a specified period. It is an alternative mode of financing an asset compared to outright purchase or borrowing. Any type of asset can be leased as long as it is durable, identifiable, insurable and has a good secondary market and reliable after sales support.Fiscal Incentives for RE Projects164 https://www.doe.gov.ph/6-how-finance-solar-rooftops165 https://www.bpiexpressonline.com/p/1/203/business-loans-sustainable-energy-finance 93

Accelerated depreciation: RA.9513 (2008) regulates that if, and only if, an RE project fails toreceive an income tax holiday (ITH) before full operation, it may apply for accelerateddepreciation in its tax books and be taxed based on such, provided that, if it applies for accelerateddepreciation, the project or its expansion shall no longer be eligible for an ITH. The accelerateddepreciation rate shall not exceed twice the rate which would have been used in accordance withthe rules and rehulations prescribed by the DOF and the provision of the National InternalRevenue Code (NIRC) of 1997, as amended by RA.9337 (2005).VAT exemption and reduction: According to RA.9513 (2008), the sales of power generated fromRE sources shall be subject to zero percent (0%) VAT. All RE project developers shall be entitledto zero-rate VAT on its purchases of local supply of goods, properties and services needed for thedevelopment, construction and installation of its plant facilities. This provision shall also apply tothe whole process of exploring and developing RE sources up to its conversion into power,including but not limited to the services performed by subcontractors and/or contractors.CIT exemption and reduction: As regulated in RA.9513 (2008), all RE project developers shall beexempt from CIT for the first seven (7) years of its commercial operation. After that, RE projectdevelopers shall pay a CIT of 10% on its net taxable income as defined in the NIRC (1997), asamended by RA.9337 (2005), provided, that the developers shall pass on the savings to the end-users in the form of lower power rates.ID&T exemption and reduction: Based on RA.9513 (2008), the RE-based power projects areexempted from ID&T on imported goods for the first ten (10) years upon the issuance of acertification of an RE project developer. The imported goods (machinery and equipment, materialsand parts, etc.) shall be eligible for ID&T exemption if they are directly and actually needed andused exclusively in the RE facilities for energy conversion and delivery of energy to the point ofuse and covered by shipping documents. The endorsement of the DOE on the ID&T exemptionshall be obtained before the importation of the goods are made.Other tax incentives: RA.9513 (2008) also regulates the following tax incentives for RE projects:  1.5% special realty tax rate on civil works, equipment, machinery, and other improvements of a registered RE project, which are exclusively used for RE facility;  7-year net operating loss carry-over;  Cash incentive of RE developers for missionary electrification;  Tax exemption on the sale of carbon credits;  A tax credit equivalent to 100% of the value of VAT and ID&T that would be paid on the imported goods shall be given to an RE project developer who purchases similar goods from the local manufacturers.Mandatory Grid Access and Prioritized DispatchPrioritized dispatch: According to the 2010 ERC’s resolution adopting the FIT rules, all eligibleRE plants shall enjoy priority connection to the transmission or distribution system if they complywith the pertinent standards and ERC rules governing such connection. Eligible RE plants shall begiven priority to inject into the network they are connected and shall be paid the correspondingFITs based on their actual metered deliveries. For this reason, NGCP and DUs, in the case of 94

embedded eligible RE plants, shall proportionately allocate among all their customers andconsumers connected to them the RE covered by the FIT system flowing into their systems.Grid code: An ERC resolution amending the Philippine Grid Code (PGC) was promulgated toestablish the required minimum connection and operational requirements applicable to non-conventional or Variable Renewable Energy (VRE) Generators. This was done to integrate thePhilippine Grid Code and provide direction for existing and new VRE developers andmanufacturers, fabricators and suppliers of RE equipment by setting the technical standards forwind and solar energy projects.Other RE Policy MeasuresSupport to knowledge development and capacity building:The GOP, through its 2011-2030National Renewable Energy Program (NREP), has been providing support to knowledgedevelopment and capacity building in the RE sector. NREP provides budget for hiring consultantsto conduct the detailed resource assessement for RE resources such as biomass/biogas, wind, solarand hydro. The Information, Education and Communication Program (IECP) established underDOE is conducting various public awareness, promotional and information dissemination activitiesto enhance the appreciation of RE stakeholders (both government and private sectors) on the use ofRE technologies. A National RE Database is planned to be established under DOE. The databasewill contain RE resource data accessible to the target clients such as potential private investors andpolicy makers. It will also include information on local and international best pratices andapproaches in RE development and utilization.One-Stop Shop for Licensing and Permitting: DOE envisioned a Renewable Energy One-StopShop to serve as the contact point within the department for the processing of applications for REService/Operating Contracts. The One-Stop Shop would integrate the RE services from concernedgovernment agencies, integrate web-based RE systems infrastructure and database and automateRE applications. In lieu of the RE One-Stop-Shop at the current time, an Energy Virtual One-Shared System (EVOSS) is being developed for handling and processing service contracts issuedby DOE. Starting with the RE Sector, the EVOSS is a web-based platform aiming to facilitate andstreamline the process of RE applications.The evaluation process of the Renewable Energy Service Contracts (RESC) shall not exceed 45working days.6.1.4 ThailandAccording to the Ministry of Energy (MOE), the total installed generating capacity of Thailandwas 40,398 MW in December 2015, including 3,386 MW of imported power capacity. It wasincreased by 7.4% from 37,612 MW in December 2014. Fossil fuels (mainly, natural gas) had ahighest share, i.e. 71.1% of the total installed generating capacity in the country. 95

Solar, 3.25% Biomass, 7.86% Wind, 0.56% Small hydro, 0.43%Large hydro, 8.43%Imported, 8.38% Fossil fuels, 71.09% Figure 13: Power generating capacity mix in Thailand (Dec 2015)RE Potential, Utilization Targets and PlanningThailand has a good potential for utilization of RE, especially from biomass residues from itsagricultural sector and from solar energy. The Department of Alternative Energy Development andEfficiency (DEDE), under the MOE, has conducted potential assessment on various RE resources.The total potential installed capacity of RE sources (excluding large-scale hydropower) wasestimated at 71.042 GW. The Alternative Energy Development Plan 2015-2036 (AEDB 2015),published by MOE in September 2015, has set a target of 16.778 GW of installed capacity fromdifferent RE sources, which represents 23.6% of the total RE potential.Table 38shows the potential, target and actual installed capacity of RE sources in Thailand.Table 38: Potential, target and actual installed capacity of RE sources in Thailand No. Type of RE Potential 2036 target Actual installed (GW) (GW) capacity by Dec 1. Wind power 2. Solar power 14.141 3.002 2015 (GW) 3. Small hydropower 42.357 6.000 0.226 4. Biomass (including wastes and energy crops) 0.410 0.376 1.314 14.134 7.400 0.172 Total 71.042 16.778 3.176Source: MOE 4.888As shown in Table 38, as of December 2015, the actual installed RE-based power capacity(excluding large-scale hydropower) was around 4.888 GW representing 29.1% of the 2036 target.Among RE sources, the share of biomass-based power capacity (including biogas and MSW) wasthe highest at 65.0% of the total installed generating capacity of RE sources, followed by solarpower (26.9%), wind (4.6%), and small hydro (3.5%).In addition to the target of RE utilization for electricity generation, AEDP 2015 had also set thetargets of RE utilization for thermal energy generation and biofuel production. The overall targetfor the share of all alternative energy (AE) sources in Thailand final energy consumption will be30% by 2036, equivalent to 39.3 Mtoe. Electricity generated from RE sources (including large- 96

scale hydropower plants) will contribute around 5.5 Mtoe, accounting for 4.2% of the final energyconsumption in Thailand by 2036.In 2036, about 25.1 Mtoe of final energy consumption is expected to come from AE sources.Similar to the RE-based electricity generation, biomass will play a crucial role, contributing 22.1Mtoe of thermal energy to the 2036 final energy consumption in Thailand. The remaining portionswill come from biogas, solar thermal, municipal solid waste (MSW), and other sources.AE-based biofuels are mainly aimed at the transportation sector that still relies significantly onpetroleum products. Currently, biodiesel and ethanol-blended fuels are widely used in Thailand(so-called E10, E20, and E85). AEDB 2015 states that, by 2036, biofuels produced from AEsources will contribute about 8.7 Mtoe to the final energy consumption of Thailand. Biodiesel willcontribute about 4.4 Mtoe, followed by compressed bio-methane gas (CBG) with 2.0 Mtoe,bioethanol with 2.1 Mtoe, and other alternative fuels with 0.2 Mtoe.RE Price-based PoliciesFeed-in tariff and SPPA: Thailand introduced the Adder Scheme in 2007 to promote thedevelopment of RE project for power generation with an attractive fixed amount (“adder”) to bepaid on top of the wholesale electricity tariff. This scheme offered very attractive and stable sellingprice for project developers as it was always linked to the variation of wholesale electricity tariff.The adder scheme was phased out in 2014-2015 and replaced by a fixed FIT scheme that has nolink with the wholesale electricity tariff. In addition to the base FIT, a bonus called “FIT premium”is applicable when a project meets some special conditions (i.e., project developed in the foursouthern provinces of Thailand, or project using bio-energy as input energy source for powergeneration). Table 39 summarizes the current FITs applied for grid-connected RE-based powerprojects in Thailand.Table 39: Current FITs for grid-connected RE-based power projects in Thailand Base FIT FIT Premium (THB/kWh) RE source THB/kWh USD/kWh166 Bio-energy For 4 Southern projects (first provinces167Hydropower (up to 200 kW) 4.90 0.1380Wind power 6.06 0.1707 8 years) (ProjectSolar PV (ground-mounted) 5.66 0.1594Solar PV (rooftop) lifetime) Installed capacity ≤ 10 kWp - 0.50 Installed capacity > 10 - 250 kWp Installed capacity > 250 - 1,000 kWp - 0.50MSW (integrated waste management) Installed capacity ≤ 1 MW - 0.50 Installed capacity > 1-3 MW Installed capacity > 3 MW 6.85 0.1930 - 0.50MSW (landfill) 6.40 0.1803 - 0.50 6.01 0.1693 - 0.50 6.34 0.1786 0.70 0.50 5.82 0.1639 0.70 0.50 5.08 0.1431 0.70 0.50 5.60 0.1577 0.50 -166 Average exchange rate: 1 USD = 35.5 THB in November 2016167 The four Southern provinces include Yala, Pattani, Narathiwat and 4 sub-districts in Songkla (Jana, Tepha, Sabayoiand Natawee) only. 97

Biomass 5.34 0.1504 0.50 0.50 Installed capacity ≤ 1 MW 0.1358 0.40 0.50 0.1194 0.30 0.50Installed capacity > 1-3 MW 4.82 0.1059 0.50 0.50 0.1504 0.50 0.50Installed capacity > 3 MW 4.24Biogas (waste water/solid waste) 3.76Biogas (energy plants) 5.34Source: Energy Regulatory Commission (2016)For solar PV power projects (both ground-mounted and rooftop installations), the FITs will begranted for a 25-year term. The MSW-based (landfill) power projects will enjoy a fixed contractterm of 10 years while the remaining types of RE-based power projects will be offered a fixedcontract term of 20 years. A new scheme for FIT is being developed. It is called “FIT Hybrid”168.It aims to promote the use of multiple RE resources or use of RE with energy storage system(ESS). The main objective is to make RE power plants more dependable despite variations inweather condition.The development of alternative energy in the power sector relies on investments by the privatesector through two schemes: Small Power Producer (SPP) with a sale capacity of over 10 MW and up to 90 MW; Very Small Power Producer (VSPP) with a sale capacity of up to 10 MW.For the development of AE project by VSPP, the form of power purchase agreement (PPA) ispredefined by distribution utilities, i.e. the Provincial Electricity Authority (PEA) and MetropolitanElectricity Authority (MEA). No terms and conditions of the PPA can be amended. For the AEproject development by SPP, the form of PPA is predefined by the transmission utility, i.e., theElectricity Generation Authority of Thailand (EGAT).Net metering: The net metering scheme is under discussion. The government has launched thepilot solar rooftop project. This pilot project aims at promoting the use of solar rooftop system forgenerating electricity for self-consumption. The excess electricity, which should be minimized, canbe fed to the grid on a voluntary basis.RE Quantity-based Policies and Procurement MechanismsRE quota obligation: Although there are AE targets, there is no RE quota obligation or RenewablePortfolio Standard (RPS) for Thailand power sector. Power utilities are not forced to source certainpercentage of their power generation from AE.The Energy Regulatory Commission (ERC) is responsible for issuing the quota (i.e., maximumcapacity that can be installed) for particular types of AE projects from time to time. At themoment, AE project development is allowed only in the four southern provinces, apart from solarPV. The current quota for AE project development in the power sector is summarized in Table 40.Table 40: Current quota for AE projects in the power sectorRE Type of project Quota (MW)type  Solar farm under the Adder Scheme 2,800 (already oversubscribed)Solar168 This scheme is not yet officially announced. It is under the public consultation (as of October 2016) 98