Alex Doukas discusses outcomes of a financing clean energy access workshop in Africa, and how social entrepreneurs could be part of the clean power solution.
Green Tariff Design for Traditional Utilities
This paper describes what draws U.S. commercial and industrial customers to renewable energy, and explores how traditional utilities could build on their strengths to deliver affordable renewable energy to customers.
Strengthening India's Appliance Efficiency Standards and Labels through Greater Civil Society Involvement...
Residential use accounts for 14 percent of global energy consumption. Appliance standards alone could achieve 17 percent energy reductions in the residential sector. Although appliance efficiency standards and labeling programs (AES&L) aim to influence consumer behavior, consumers and civil...
Electricity production is central to climate change as it accounts for 20 percent of global carbon dioxide emissions. Too often, electricity decisions are made through closed processes with little scrutiny.
WRI’s Electricity Governance Initiative (EGI) is a civil society partnership promoting better governance in the electricity sector. Transparent, accountable, and a participatory decision-making processes will, in time, produce better decisions. When Thailand was privatizing its power utility, a report by in-country partners using the WGI toolkit highlighted the lack of a strong regulatory body to balance the interests of the public against those of a private power utility. The Thai courts halted the privatization, referencing our analysis that the privatization did not prevent abuses of power.
Electricity production accounts for 40% of global CO2 emissions. Too often, electricity decisions are made through closed processes with little scrutiny. WRI’s Electricity Governance Initiative is a civil society partnership working in India, Indonesia, Thailand, South Africa, and the Philippines – five countries with rapidly growing emissions from power generation – to improve public participation in the energy decisions that affect their lives.
The Electricity Governance Initiative has played an important role in the development of Thailand’s new Energy Industry Act, provisions of which include: promoting adequate energy services while maintaining fairness for both consumers and businesses; protecting consumer interests with regard to tariffs and service quality while increasing competition and preventing abuses of power; and promoting fairness and transparency in the provision of energy without unjust discrimination.
Large electricity consumers such as Apple or DuPont have limited options for directly purchasing green power. End-user consumers can’t easily contract with renewable power generators; they have to work through electric utilities who act as intermediaries. This gives utilities excessive market power as the only potential buyers in the green power market.
Based on a model proposed by WRI, Google set a new precedent in the green power market by committing to a long-term Power Purchase Agreement (PPA) with an Iowa wind farm. This is the largest, longest-term wind deal ever closed in the country between a renewable generator and an electricity end-user, and was only possible because of its creative deal structure.
WRI has been actively engaging Green Power Market Development (GPMDG) companies, including Google, for several years to overcome barriers in the power markets and regulations that make it difficult for non-utilities to sign PPAs. Long-term PPAs are essential for renewable power generators, because they are needed to secure financing—yet the traditional model used by utilities is not suitable for electricity consumers.
WRI provided analysis and connections to technical experts that helped Google better understand the benefits of entering into long-term purchase agreements with wind developers. These long-term agreements help the wind developer secure more attractive financing than traditional short term purchase agreements do, while providing important price stability to the end user (the price of wind does not fluctuate). These contracts can be complex to structure and raise many technical and financial questions. WRI’s research helped Google find a workable approach to these contracts that can now be replicated in the market place. This model could increase the amount of wind power the commercial and industrial sector purchase.
The model created by the groundbreaking Google deal will open the door for private electricity consumers to sign long-term PPAs, creating a whole new stream of credit-backing and access to financing for renewable power generators.
Decisions about how to generate, deliver and pay for electricity have a profound effect on people’s lives. WRI’s Electricity Governance Initiative (EGI) promotes transparent, inclusive and accountable decision-making in the electricity sector, with the goal of helping countries can develop more equitable and sustainable electricity policies. The partnership works in India, Indonesia, Thailand, South Africa, and the Philippines, five countries with rapidly growing emissions from power generation. Since 2005, we have worked with civil society organizations to complete national assessments of electricity governance and advocate for improvements. More than thirty organizations around the world are partners in the Initiative.
In 2010 EGI helped influence South Africa’s electricity plan for 2010-2030 which includes a 50 percent increase in the share of renewable energy and greater focus on energy efficiency.
This breakthrough resulted from the opening up South Africa’s national electricity planning process, in which EGI played a key role.
Civil society organizations were invited to participate in a new open and consultative process to develop the Integrated Resource Plan for 2010-2030. EGI partners in South Africa produced and shared relevant and timely analyses of the draft plan, held public workshops with government officials, parliamentarians, and civil society groups, and drew media attention to key components of the plan. The result was the government’s heightened focus on the clean energy options of renewables and efficiency. In addition, the South African Department of Energy committed to develop a research agenda to address issues that arose during the public process.
A social entrepreneur invests the little working capital she has to bring solar electricity to a community that –like 1.2 billion people worldwide– lacks access to electricity. The community used to use dirty, expensive and choking kerosene for light to cook by and for children to learn by. The entrepreneur knows she can recoup her costs, because people are willing to pay for reliable, high-quality, clean energy – and it will be even less than what they used to pay for kerosene. Sounds like a good news story, right?
Three months later, the government utility extends the electrical grid to this same community, despite official plans showing it would take at least another four years. While this could be good news for the community, one unintended consequence is that this undermines the entrepreneur’s investment, wiping out their working capital, and deterring investors from supporting decentralized clean energy projects in other communities that lack access to electricity.