Selecting effective financial instruments to support action on climate change
This low emission development strategies (LEDS) Finance Resource Guide presents a curated selection of resources on a range of topics around finance for LEDS and Nationally Determined Contributions (NDCs). It is designed to help LEDS practitioners find high-quality resources that meet their specific needs, avoiding time-consuming searches on the internet. It will be useful to individuals working on, or interested in, LEDS and NDC finance in both developed and developing countries.
- 1. Understanding the situation
- 1.1 Understanding current flows
- 1.2 Assessing financing needs
- 1.3 Assessing capacity
- 1.4 Identifying and overcoming barriers
- 2. Planning and coordinating
- 2.1 Institutions and governance
- 2.2 National finance strategies
- 2.3 Investment plans
- 2.4 National climate funds
- 2.5 Green investment banks
- 4. Using public finance
- 4.1 Managing national finance
- 4.2 International climate finance
- 4.3 Climate finance readiness
- 4.4 The Green Climate Fund
- 4.5 Direct access
- 5. Designing financial instruments
- 5.1 General resources
- 5.2 Sources of private finance
- 5.3 Risk mitigation
- 5.4 Guarantees
- 5.5 Feed-in tariffs and auctions
- 5.6 Taxes and tax incentives
- 5.7 Carbon pricing
5.5 Feed-in tariffs and auctions
This section provides some introductory and more comprehensive resources on feed-in tariffs and auctions—two of the most widely adopted renewable energy support policies—as well as some case studies. Feed-in tariffs are designed to increase deployment of renewable energy technologies by offering long-term purchase agreements for electricity generation at a specified price per kilowatt-hour, thereby providing market certainty for developers. (Adapted from Feed-in tariffs: Good practices and design considerations, Clean Energy Solutions Centre/NREL, 2016.)
Renewable energy auctions are also known as demand auctions or procurement auctions, whereby a government issues a call for tenders to supply a certain capacity or generation of renewables based electricity. They can achieve deployment of renewable electricity in a well planned, cost efficient, and transparent manner while also achieving a number of other objectives. (Adapted from Renewable energy auctions: A guide to design, IRENA/CEM, 2015.)
This guidebook assists policymakers in understanding different approaches to renewable energy auctions. It includes some specific country experiences, representing different contexts and circumstances, and offers lessons learned and best practices on how governments can design and implement auctions to meet their objectives. Chapter 2 of the guidebook contextualizes auctions within the larger realm of renewable energy support schemes, and gives an overview of their key strengths and weaknesses. Chapters 3–6 cover four key design elements of auctions—demand, qualification requirements, winner selection, and sellers’ liabilities.
Feed-in tariffs as a policy instrument for promoting renewable energies and green economies in developing countries
This report is intended as a resource for policymakers in developing countries to make informed policy decisions about the ‘whether,’ ‘when,’ and ‘how’ of feed-in tariffs and to support nationally appropriate policy measures to scale up renewable energy. It also aims to improve understanding of the potential benefits and challenges for developing countries in designing feed-in tariffs, as well as the factors influencing their success. The report also analyzes the funding and capacity implications. Rather than identifying a set of rigid best practices, it attempts to outline the range of possible designs that developing country policymakers may wish to pursue, and to identify the different drivers that may guide their decisions. Chapter 2 provides a general overview of feed-in tariff policies and design elements, and compares them with other instruments; chapter 3 provides guidance on drafting feed-in tariff laws; chapter 4 explores how to fund feed-in tariff policy; and chapter 5 examines the human, technological, regulatory, and institutional capacity needed to implement such policies.
This policy brief introduces the topic of feed-in tariffs, covering key design elements and good practices, and lessons from country experience. The references section lists further resources on policy design for feed-in tariffs, and experience. The information in this brief provides a good starting point for countries to think about the key questions relating to feed-in tariff design in their country context.
The South African Renewable Energy Independent Power Producers Procurement Programme (REIPPPP)—Lessons Learned
This presentation summarizes the rationale, design elements, results, and lessons learned from South Africa’s successful Renewable Energy Independent Power Producers Procurement Programme.
At least 67 countries had used auctions for renewable energy contracts by mid-2016, up from less than 10 in 2005. This report provides key updates on this crucial mechanism for price discovery and market development, by analysing the results of renewable energy auctions around the world. It provides an overview of the most recent auctions, analyses trends in auction prices and designs, and provides an in-depth overview of the interesting experiences and results. This analysis is meant to provide policy makers with a thorough understanding of the dynamics of auctions to support their design in particular, and to make informed decisions regarding the choice of policy instruments in general.
This paper considers the design and performance of auction mechanisms used to deploy renewable energy in three emerging economies: Brazil, China, and India. The analysis focuses on the countries’ experience in various dimensions, including price reductions, bidding dynamics, coordination with transmission planning, risk allocation strategies, and the issue of domestic content.
Launched in May 2013, the GET FiT Uganda Program is designed to leverage private investment into renewable energy generation projects in the country. GET FiT is supported by several donors and the World Bank. The program targets the key barriers confronting investors looking at potential investments in small renewable energy projects (1–20 megawatts) in Uganda and aims to fast track up to 20 projects. Its main feature is a frontloaded results based premium payment designed to top up Uganda’s own renewable energy feed-in tariff. This report describes the main aspects of the program, early results achieved and future results expected, and how it is governed, monitored and funded.
This World Bank report includes detailed case studies on feed-in tariffs and auctions (e.g. the studies on Brazil, Indonesia, Tanzania, South Africa, and Vietnam). For further information on this report see 5.1.