Flying High On Winds Of Change: Role Of Wind Energy
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Flying High on Winds of Change: Role of Wind Energy Legislation in Developing Economies
Sweta Ramchandran, Research Analyst Economic Research & Analytics Division Energy & Power Systems October 07, 2009
Focus Points Global Wind Energy Market Effects and Impact of Economic Downturn: Emerging Economies Stimulus Measures: Emerging Economies Effects and Impact of Economic Downturn: Global Wind Energy Market in 2009 Market Dynamics Global Installed Wind Power Capacity
Wind Legislation in Developing Economies Need for Wind Energy Legislation Asia
India China Pakistan and Bangladesh East Europe Poland Czech Republic Roadmap Beyond 2009
Ranking of Countries Based on Emerging Opportunities Drivers Directing Global Wind Energy Market Growth Opportunities in Global Wind Energy Market
2
Global Economy: Effects and Impact of Economic Downturn in 2008-2009 on Emerging Economies Global financial and economic crisis results in recession Mexico
Poland
Russia
Slowdown of funds remittance from US
European banks withdrew investments from eastern Europe, diminished exports
Drop in oil prices due to slower growth in Europe and US
Brazil Withdrawal of Foreign Institutional Investors (FII) inflows, currency depreciation, slowdown in export of oil and other commodities
India Industrial production slowed down, fall in demand and exports
China Fall in exports, reduction in trade and investment
33
Global Economy: Emerging Economies and Stimulus Measures More than $2.0 trillion in 2009 via fiscal stimulus injected by Governments worldwide to spur aggregate demand Poland Fiscal measures- Additional fiscal spending, additional credit. June 2009- Unemployment dropping and overall industry climate indicators and trade improving Q1 2009 (yoy)- 1.7 % Q2 2009(yoy)-1.4% Mexico Lower interest rates are less effective in jump-starting economy. Dramatic fall in tourism. Q1 2009 (yoy)- (8.4%) Q2 2009 (yoy) – (9.7%) Brazil Increased lending by state banks, Central Bank support for corporate foreign debt and monetary easing to partly offset impact of global slow down Q1, 2009 (yoy) – (1.8%) Q2, 2009 (yoy)– (1.2%)
Russia Fiscal measures – cuts in interest rates and strengthening of financial sector and support to real economy. June 2009- Unemployment falling, investment and retail sales rising Q1, 2009 (yoy) – (9.7%) Q2, 2009 (yoy) – (10.9%) China Stimulus package-$586 bn Medical care and Education - $5.8 bn R&D and Innovative Projects - $23.4 bn New Medical Reform Plan - $123.00 bn Q1, 2009 - 7.1 % Q2,2009 - 7.9%
India Three stimulus packages with tax cuts, Cut in Reserve Bank of India repo rate and fall in Cash Reserve Ratio. June 2009 - Business and investment improving. Economic growth to gain momentum in second half of 2009 Q1, 2009 - 5.8% Q2, 2009 - 6.0%
4
Effects and Impact of Economic Downturn: Global Energy Market in 2009 • High capital intensive energy industry faces dip in future flow of investment due to weakened conditions in credit availability and commodities market • Beyond 2009, the road to global economic growth and recovery to be muted due to growing fiscal deficits even as world economies take to development of renewable energy including wind
North America • • U.S: $787.20 billion includes varied grants, loan guarantees, and grantsin-lieu-of-tax-credits encouraging renewable energy including wind energy
• Canada: $62.0 billion stimulus under Canada’s Economic Action Plan includes resources for enhance energy efficiency, Green Infrastructure Fund (GIF) and carbon capture and storage (CCS) technologies
Eastern Europe EU and Role of European Economic Recovery Plan
•
Asia Pacific China: To spend $585.5 billion stimulus by 2010. Specific to alternative energy, a *$440.0 billion has been planned to focus on boosting green energy via solar and wind
•
India: No direct stimulus allocated for energy sector across the three stimulus packages aiming at monetary easing
•
South Korea: $50.0 billion stimulus package supports expansion of the use of renewable energy and green technology
5
Global Wind Energy Market: Market Dynamics •
Energy security, climate change and oil and gas price volatility makes wind power one of the fastest growing forms of energy generation
Key •
Long run demand for electricity high making wind energy a vital source for generation
Features
•
Green energy production has been increasing post Kyoto Protocol
Wind
•
End of 2008 • Global total installed capacity: 120,798 MW
Energy
• Global new installed capacity: 27,051MW • Investments in turbine installation increased to $47.00 billion (2008) from $37.00 billion (2007)
Statistics
Key Participants
•
•
Independent power owners
•
Independent project developers
•
Original equipment manufacturers
•
Component manufactures
•
Sub-suppliers
For an investor,
Need of
• Investment in wind power market based on geo-political risk, growing energy demand and national greening initiatives
the Hour
• Specifically, focus is to understand the greening legislative framework prevalent across: India, China, Bangladesh, Pakistan, Czech Republic, and Poland
6
Global Installed Wind Power Capacity in 2008 Germany: 23,903 MW
Denmark: 3,180 MW
United Kingdom: 3,241 MW France: 3,404 MW
`
Portugal: 2,862 MW
United States: 25,170 MW
China: 12,210 MW
Spain: 16,754 MW Italy: 3,736 MW
India: 9,645 MW
Key Observations • Beginning of 2009 saw United States, Germany, Spain, China, and India emerge as top nations in terms of total installed capacity • In 2010, Frost & Sullivan expects slower global growth in wind energy market due to tightened credit environment Source: Global Wind Energy Council 2008 and Frost and Sullivan
7
Wind Legislation in Developing Economies Asia •
India, China, Pakistan and Bangladesh
Eastern Europe •
Poland and Czech Republic
8
Need for Wind Energy Legislation Wind Energy Capacity, (Global), 2005- 2015
35 30
500,000
25
400,000
20 300,000 15 200,000
10
2015
2014
2013
2012
2011
2010
2009
2008
0 2007
0 2006
5
2005
100,000
Growth Rate (%)
Total Installed Capacity (MW)
600,000
Total Capacity (MW) Growth Rate (%)
Source: Frost & Sullivan
Year Key Observations • Frost and Sullivan predicts that wind power market is expected to grow from 2008 to 2015 at a compound annual growth rate • (CAGR) of 22.1 percent in terms of installed capacity, reaching 490,804 MW at the end of this period. • No uniform worldwide legislation exists to promote wind energy for electricity generation • Strong legislative and fiscal climates stimulate wind energy generation in US, EU, and China • At country level, wind energy generation seeks a legislative framework backed by fiscal incentives
9
Wind Legislation in India Indian legislative framework does not define the amount of electricity that could to be generated via renewable energy Legislative
• •
Highlights
•
•
Nodal
• •
Agencies
At the Central level: Ministry of New and Renewable Energy (MNRE) At the State Level: SERCs Indian Renewable Energy Development Agency Ltd (IREDA), Centre for Wind Energy Technology (C-WET), and Indian Wind Turbine Manufactures Association (IWTMA)
•
Varying Incentives and tariff norms across states for wind energy generation Unique renewable portfolio standards and feed-in-tariff systems in place Open FDI, income tax breaks, concessional import duty on specified wind turbine parts, loans through IREDA National Wind Power Program, Generation Based Incentive (GBI) Scheme, Small Wind Energy and Hybrid Systems‘ promote wind energy development National Action Plan on Climate Change and CERC in tariff regulations for electricity
•
Suzlon, Enercon, Vestas RRB India Ltd
• •
Incentives and Other Policy Measures
Section 3 (1) of the Electricity act of 2003 defines power development and encourages wind power generation State Electricity Regulatory Commissions (SERCs) set Renewable Portfolio Standards Indian Integrated Energy Policy of 2006
• •
Key Players
10
Wind Legislation in China The Chinese legal framework encourages wind energy generation via national level renewable energy law •
Legislative
• •
Highlights •
Nodal
• •
Agencies
Incentives and Other Policy Measures
Key Players
• • •
•
Chinese Renewable Energy (RE) Law passed in 2005 identifies non-fossil sources of energy including wind Grid operators to purchase resources from registered renewable energy producers National Development and Reform Commission (NDRC) had set a 2010 wind energy target of 5 GW, which the country achieved in 2007 National Mid and Long-Term Development Plan and Clean Production Promotion Law and Renewable Energy Law (2005) encourages renewable energy indirectly
NDRC organizes and implements the national, economic and social development strategies NDRC-backed National Energy Commission (NEC) has been coordinating national energy-related policy since 2008
Differentiated wind energy tariffs in NDRC’s new program issued in July 2009, RE law- backed varied incentives and tax status for wind especially for Chinese domestic producers A ‘10 GW Size Wind Base Programme’ (Wind Base) developed by the NEC identifies potential wind energy sites capable of generating more than 10 GW of installed capacity per site by 2020
American Superconductor, Suzlon, GE, Goldwind Science and Technology, Sinovel Wind Co., Ltd., Xinjiang Goldwind Science & Technology Co and Dongfang Electric Corp
11
Wind Legislation in Pakistan Pakistan’s weak energy policy for harnessing renewable energy for electricity generation makes wind energy incentive driven •
Legislative Highlights
Nodal
•
•
• •
Agencies
•
• •
Incentives and Other Policy Measures
•
•
'Policy for Power Generation Projects Year- 2002' Alternative Energy Development Board’s (AEDB) aim is to generate 9,700 MW through renewable energy technologies by 2030 Medium-term Development Frame Work (MTDF), from 2005 to 2010, a five year plan that also covers the importance of renewable energy) AEDB National Electric Power Regulatory Authority (NEPRA) Pakistan Council of Renewable Energy Technologies (PCRET)
Policy Framework and Package of Incentives for Private Sector Power Generation Projects in Pakistan (1994) 'Policy for Power Generation Projects Year- 2002‘ suggests a two-part tariff structure consisting of fixed capacity and variable energy component indirectly encouraging wind energy participants 'Policy for Development of Renewable Energy for Power Generation' (issued in 2006) and concept 'Wind Risk Coverage Incentives for renewable energy based power projects include assured grid connection, a guaranteed market offering, mandatory purchase of electricity. Production incentives include a production bonus payment to the IPP, earning carbon credits by registering for CERs
Key •
Zorlu Enerji Group
Players
12
Wind Legislation in Bangladesh No separate legislation defines the need for wind energy for electricity generation in Bangladesh •
Legislative Highlights
•
•
Nodal
• •
Agencies
•
Incentives and Other Policy Measures
•
•
National Energy Policy (NEP) (1996) ‘ensures’ optimum development of all the indigenous energy sources including wind Private Power Generation Policy (1996) Renewable Energy Policy formulated in 2008
Bangladesh Power Development Board (BPDB) Dhaka Electricity Supply Authority (DESA) and Rural Electrification Board (REB) A body called ‘Renewable Energy Development’
Renewable energy project investors both in public and private sectors shall be exempted from corporate income tax for a period of 15 years Others include exemptions from corporate tax for 15 years, low-interest loans and a cap of 3.0 % on import duty and value-added tax.
Key •
Players
High potential for existing wind power players
13
Wind Legislation in Developing EU Countries: Poland and Czech Republic At the EU level, complete flexibility is given to each Member State in deciding their preferred 'mix' of renewable energy including that of wind •
Role of EU
• •
•
RES Directive on Electricity Production from Renewable Energy Sources By March 2010, each Member State to prepare and present a National Action Plan (NAP) to EU Commission By 2020, 20% of electricity generation from renewable energy (of which wind energy to contribute 12%) EU directive requires Poland and Czech Republic to achieve 15% and 13% respectively of its final energy consumption from renewable energy by 2020 Poland
Legislative
Highlights
Polish Energy Law Polish Building Law
Ministry of Economy
RES driven by green certificates rather than the Renewable Energy Feed-In Tariff (REFIT) system Subsidies and preferential credits for RES projects provided by the National Fund for Environment Protection and Water Management Role of Natura 2000 Poland’s Energy Policy up to 2030
Enercon, GE Energy, Vestas, Gamesa
Nodal Agencies
Incentives and Other Policy Measures
Key Players
Czech Republic
Act No 180/2005 of the Czech Republic legislation implements the promotion of electricity produced from renewable energy source Energy Regulatory Office’ (ERU) Ministry of Industry and Trade Choice of selecting between a feed-in-tariff or a green bonus A guarantee of revenue per unit of electricity produced over a 15-year period as of the date a plant is put into operation exists 100.0% property tax reduction on certain renewable technologies ‘State program for energy saving and use of renewable energy sources’ Onshore wind energy investors are entitled for 15 years of support under feed in tariff mechanism
14
Growth Opportunities in the Wind Energy Sector: Roadmap Beyond 2009 Lower demand for energy, fluctuating energy prices, weak exchange rates, and less credit availability will make the economic recovery of the global wind energy sector sluggish in 2010
•
•
• • •
CEE Europe's offshore installed wind power capacity to grow from 1.9 GW (2009) to 40.0 GW (2020) Poland and Czech Republic to look at enhancing wind power generation as: • Poland to achieve minimum share of electricity from RES from 3.6% (in 2006) to 7.5% (in 2010), and 14.0 % (in 2020). Wind energy generation accounts for 463MW (Beginning of 2009) • Czech Republic’s share of RES in electricity to grow from around 4.0 % (at the end of 2008) to 13.0 % (by 2020). Wind energy generation accounts for 150MW (Beginning of 2009)
Pakistan 700.0 MW of wind power by 2010, 3,000.0 MW by 2020, and 9,700.0 MW by 2030 Overhaul of existing energy policy to solve load shedding problem Indirectly, greater exploitation of nations’ wind corridor via incentives can be expected
China Less than 1.0% of electricity supply comes from wind energy in 2009 Installed wind capacity target to reach 30.0 GW by 2020 making renewable energy supply 40.0% of the energy market by 2050 From being a world leader in the manufacturing of micro and small wind turbines in 2009, China to enter large wind turbine production market to build its currently underdeveloped transmission system
• • •
Bangladesh Expected to address issues concerning lack of regulation defining the tariff norms as being a new entrant into the renewable energy market
•
• •
India From 9,645.0 MW (beginning of 2009) of installed wind capacity, India to achieve a total wind power capacity of 10,500.0 MW (ongoing) by 2012 Government to continue with fiscal incentives to encourage wind energy participants
15
Ranking of Countries Based on Emerging Opportunities Global Total Installed Wind Power Capacity, 2009* Regions Asia Pacific Europe North America Rest of the World
2009 (in MW)
Ranking
37,496 73,398 34,118 1,681
2 1 3 4
Note: * The figures are estimates
Source: by Frost & Sullivan
Ranking of Specific Economies based on Qualitative Indicators** Economies Business National Legislative under Study Prerogatives for Wind Climate Energy Development India China Pakistan
Bangladesh Poland
Note: 1.** Ranking based on economic growth expected between 20102012, political and legislative environment supporting future wind energy development 2. Green indicates positive environment Orange indicates mixed environment Red indicates scope for major overhaul
Czech Republic
16
Drivers Directing Global Wind Energy Market
•
Positive fiscal climate such as incentives for feed in tariffs, subsidies for wind power generation, programs (such as Foreign direct investment, income tax breaks, easy available credit)
•
Drivers directing global wind energy market:
Assessing existing national electricity policies and electricity supply mixes in potential wind energy nations of Asia and East Europe
Increasing population levels in some Asian economies to change trends in energy demand- and supply mix
Growth in wind energy driven by increased global uncertainties regarding steady supplies of conventional and indigenous power resources like oil and natural gas
Globally, increased awareness concerning environmental, ecological, and geopolitical risks surrounding generating electricity to lead to drive wind energy market
17
Growth Opportunities in Global Wind Energy Market •
Domestic manufacturing of turbines including design, installation, operation and associated wind energy services to emerge (Globally)
•
Integration of the wind energy with electricity grids to cause increased demand for specialized manpower resources for operating grid systems (in East Europe and Asia)
•
Demand for micro wind turbines and technological databases to emerge (in East Europe and Asia)
•
Turbine and tower market to witness private sector collaboration and additional capital investments (in Asia)
•
Innovation and development expected in turbine design, gearboxes, generators, and larger capacity machines (in Asia aiming at rural electrification)
•
Demand for energy-efficient renewable energy technologies such as growth in technology option called compressed air energy storage (CAES) aiding large scale storage of wind energy (in Asia)
•
Service offerings such as repairs, replacement, and other operations and maintenance related aspects concerning wind power component (in India and China)
•
Reviewing investment in newer entrants such as Pakistan and Bangladesh that are low in energy supply when compared to actual electricity demand
18
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21
Sweta Ramchandran, Research Analyst Economic Research & Analytics Division Energy & Power Systems October 07, 2009
Focus Points Global Wind Energy Market Effects and Impact of Economic Downturn: Emerging Economies Stimulus Measures: Emerging Economies Effects and Impact of Economic Downturn: Global Wind Energy Market in 2009 Market Dynamics Global Installed Wind Power Capacity
Wind Legislation in Developing Economies Need for Wind Energy Legislation Asia
India China Pakistan and Bangladesh East Europe Poland Czech Republic Roadmap Beyond 2009
Ranking of Countries Based on Emerging Opportunities Drivers Directing Global Wind Energy Market Growth Opportunities in Global Wind Energy Market
2
Global Economy: Effects and Impact of Economic Downturn in 2008-2009 on Emerging Economies Global financial and economic crisis results in recession Mexico
Poland
Russia
Slowdown of funds remittance from US
European banks withdrew investments from eastern Europe, diminished exports
Drop in oil prices due to slower growth in Europe and US
Brazil Withdrawal of Foreign Institutional Investors (FII) inflows, currency depreciation, slowdown in export of oil and other commodities
India Industrial production slowed down, fall in demand and exports
China Fall in exports, reduction in trade and investment
33
Global Economy: Emerging Economies and Stimulus Measures More than $2.0 trillion in 2009 via fiscal stimulus injected by Governments worldwide to spur aggregate demand Poland Fiscal measures- Additional fiscal spending, additional credit. June 2009- Unemployment dropping and overall industry climate indicators and trade improving Q1 2009 (yoy)- 1.7 % Q2 2009(yoy)-1.4% Mexico Lower interest rates are less effective in jump-starting economy. Dramatic fall in tourism. Q1 2009 (yoy)- (8.4%) Q2 2009 (yoy) – (9.7%) Brazil Increased lending by state banks, Central Bank support for corporate foreign debt and monetary easing to partly offset impact of global slow down Q1, 2009 (yoy) – (1.8%) Q2, 2009 (yoy)– (1.2%)
Russia Fiscal measures – cuts in interest rates and strengthening of financial sector and support to real economy. June 2009- Unemployment falling, investment and retail sales rising Q1, 2009 (yoy) – (9.7%) Q2, 2009 (yoy) – (10.9%) China Stimulus package-$586 bn Medical care and Education - $5.8 bn R&D and Innovative Projects - $23.4 bn New Medical Reform Plan - $123.00 bn Q1, 2009 - 7.1 % Q2,2009 - 7.9%
India Three stimulus packages with tax cuts, Cut in Reserve Bank of India repo rate and fall in Cash Reserve Ratio. June 2009 - Business and investment improving. Economic growth to gain momentum in second half of 2009 Q1, 2009 - 5.8% Q2, 2009 - 6.0%
4
Effects and Impact of Economic Downturn: Global Energy Market in 2009 • High capital intensive energy industry faces dip in future flow of investment due to weakened conditions in credit availability and commodities market • Beyond 2009, the road to global economic growth and recovery to be muted due to growing fiscal deficits even as world economies take to development of renewable energy including wind
North America • • U.S: $787.20 billion includes varied grants, loan guarantees, and grantsin-lieu-of-tax-credits encouraging renewable energy including wind energy
• Canada: $62.0 billion stimulus under Canada’s Economic Action Plan includes resources for enhance energy efficiency, Green Infrastructure Fund (GIF) and carbon capture and storage (CCS) technologies
Eastern Europe EU and Role of European Economic Recovery Plan
•
Asia Pacific China: To spend $585.5 billion stimulus by 2010. Specific to alternative energy, a *$440.0 billion has been planned to focus on boosting green energy via solar and wind
•
India: No direct stimulus allocated for energy sector across the three stimulus packages aiming at monetary easing
•
South Korea: $50.0 billion stimulus package supports expansion of the use of renewable energy and green technology
5
Global Wind Energy Market: Market Dynamics •
Energy security, climate change and oil and gas price volatility makes wind power one of the fastest growing forms of energy generation
Key •
Long run demand for electricity high making wind energy a vital source for generation
Features
•
Green energy production has been increasing post Kyoto Protocol
Wind
•
End of 2008 • Global total installed capacity: 120,798 MW
Energy
• Global new installed capacity: 27,051MW • Investments in turbine installation increased to $47.00 billion (2008) from $37.00 billion (2007)
Statistics
Key Participants
•
•
Independent power owners
•
Independent project developers
•
Original equipment manufacturers
•
Component manufactures
•
Sub-suppliers
For an investor,
Need of
• Investment in wind power market based on geo-political risk, growing energy demand and national greening initiatives
the Hour
• Specifically, focus is to understand the greening legislative framework prevalent across: India, China, Bangladesh, Pakistan, Czech Republic, and Poland
6
Global Installed Wind Power Capacity in 2008 Germany: 23,903 MW
Denmark: 3,180 MW
United Kingdom: 3,241 MW France: 3,404 MW
`
Portugal: 2,862 MW
United States: 25,170 MW
China: 12,210 MW
Spain: 16,754 MW Italy: 3,736 MW
India: 9,645 MW
Key Observations • Beginning of 2009 saw United States, Germany, Spain, China, and India emerge as top nations in terms of total installed capacity • In 2010, Frost & Sullivan expects slower global growth in wind energy market due to tightened credit environment Source: Global Wind Energy Council 2008 and Frost and Sullivan
7
Wind Legislation in Developing Economies Asia •
India, China, Pakistan and Bangladesh
Eastern Europe •
Poland and Czech Republic
8
Need for Wind Energy Legislation Wind Energy Capacity, (Global), 2005- 2015
35 30
500,000
25
400,000
20 300,000 15 200,000
10
2015
2014
2013
2012
2011
2010
2009
2008
0 2007
0 2006
5
2005
100,000
Growth Rate (%)
Total Installed Capacity (MW)
600,000
Total Capacity (MW) Growth Rate (%)
Source: Frost & Sullivan
Year Key Observations • Frost and Sullivan predicts that wind power market is expected to grow from 2008 to 2015 at a compound annual growth rate • (CAGR) of 22.1 percent in terms of installed capacity, reaching 490,804 MW at the end of this period. • No uniform worldwide legislation exists to promote wind energy for electricity generation • Strong legislative and fiscal climates stimulate wind energy generation in US, EU, and China • At country level, wind energy generation seeks a legislative framework backed by fiscal incentives
9
Wind Legislation in India Indian legislative framework does not define the amount of electricity that could to be generated via renewable energy Legislative
• •
Highlights
•
•
Nodal
• •
Agencies
At the Central level: Ministry of New and Renewable Energy (MNRE) At the State Level: SERCs Indian Renewable Energy Development Agency Ltd (IREDA), Centre for Wind Energy Technology (C-WET), and Indian Wind Turbine Manufactures Association (IWTMA)
•
Varying Incentives and tariff norms across states for wind energy generation Unique renewable portfolio standards and feed-in-tariff systems in place Open FDI, income tax breaks, concessional import duty on specified wind turbine parts, loans through IREDA National Wind Power Program, Generation Based Incentive (GBI) Scheme, Small Wind Energy and Hybrid Systems‘ promote wind energy development National Action Plan on Climate Change and CERC in tariff regulations for electricity
•
Suzlon, Enercon, Vestas RRB India Ltd
• •
Incentives and Other Policy Measures
Section 3 (1) of the Electricity act of 2003 defines power development and encourages wind power generation State Electricity Regulatory Commissions (SERCs) set Renewable Portfolio Standards Indian Integrated Energy Policy of 2006
• •
Key Players
10
Wind Legislation in China The Chinese legal framework encourages wind energy generation via national level renewable energy law •
Legislative
• •
Highlights •
Nodal
• •
Agencies
Incentives and Other Policy Measures
Key Players
• • •
•
Chinese Renewable Energy (RE) Law passed in 2005 identifies non-fossil sources of energy including wind Grid operators to purchase resources from registered renewable energy producers National Development and Reform Commission (NDRC) had set a 2010 wind energy target of 5 GW, which the country achieved in 2007 National Mid and Long-Term Development Plan and Clean Production Promotion Law and Renewable Energy Law (2005) encourages renewable energy indirectly
NDRC organizes and implements the national, economic and social development strategies NDRC-backed National Energy Commission (NEC) has been coordinating national energy-related policy since 2008
Differentiated wind energy tariffs in NDRC’s new program issued in July 2009, RE law- backed varied incentives and tax status for wind especially for Chinese domestic producers A ‘10 GW Size Wind Base Programme’ (Wind Base) developed by the NEC identifies potential wind energy sites capable of generating more than 10 GW of installed capacity per site by 2020
American Superconductor, Suzlon, GE, Goldwind Science and Technology, Sinovel Wind Co., Ltd., Xinjiang Goldwind Science & Technology Co and Dongfang Electric Corp
11
Wind Legislation in Pakistan Pakistan’s weak energy policy for harnessing renewable energy for electricity generation makes wind energy incentive driven •
Legislative Highlights
Nodal
•
•
• •
Agencies
•
• •
Incentives and Other Policy Measures
•
•
'Policy for Power Generation Projects Year- 2002' Alternative Energy Development Board’s (AEDB) aim is to generate 9,700 MW through renewable energy technologies by 2030 Medium-term Development Frame Work (MTDF), from 2005 to 2010, a five year plan that also covers the importance of renewable energy) AEDB National Electric Power Regulatory Authority (NEPRA) Pakistan Council of Renewable Energy Technologies (PCRET)
Policy Framework and Package of Incentives for Private Sector Power Generation Projects in Pakistan (1994) 'Policy for Power Generation Projects Year- 2002‘ suggests a two-part tariff structure consisting of fixed capacity and variable energy component indirectly encouraging wind energy participants 'Policy for Development of Renewable Energy for Power Generation' (issued in 2006) and concept 'Wind Risk Coverage Incentives for renewable energy based power projects include assured grid connection, a guaranteed market offering, mandatory purchase of electricity. Production incentives include a production bonus payment to the IPP, earning carbon credits by registering for CERs
Key •
Zorlu Enerji Group
Players
12
Wind Legislation in Bangladesh No separate legislation defines the need for wind energy for electricity generation in Bangladesh •
Legislative Highlights
•
•
Nodal
• •
Agencies
•
Incentives and Other Policy Measures
•
•
National Energy Policy (NEP) (1996) ‘ensures’ optimum development of all the indigenous energy sources including wind Private Power Generation Policy (1996) Renewable Energy Policy formulated in 2008
Bangladesh Power Development Board (BPDB) Dhaka Electricity Supply Authority (DESA) and Rural Electrification Board (REB) A body called ‘Renewable Energy Development’
Renewable energy project investors both in public and private sectors shall be exempted from corporate income tax for a period of 15 years Others include exemptions from corporate tax for 15 years, low-interest loans and a cap of 3.0 % on import duty and value-added tax.
Key •
Players
High potential for existing wind power players
13
Wind Legislation in Developing EU Countries: Poland and Czech Republic At the EU level, complete flexibility is given to each Member State in deciding their preferred 'mix' of renewable energy including that of wind •
Role of EU
• •
•
RES Directive on Electricity Production from Renewable Energy Sources By March 2010, each Member State to prepare and present a National Action Plan (NAP) to EU Commission By 2020, 20% of electricity generation from renewable energy (of which wind energy to contribute 12%) EU directive requires Poland and Czech Republic to achieve 15% and 13% respectively of its final energy consumption from renewable energy by 2020 Poland
Legislative
Highlights
Polish Energy Law Polish Building Law
Ministry of Economy
RES driven by green certificates rather than the Renewable Energy Feed-In Tariff (REFIT) system Subsidies and preferential credits for RES projects provided by the National Fund for Environment Protection and Water Management Role of Natura 2000 Poland’s Energy Policy up to 2030
Enercon, GE Energy, Vestas, Gamesa
Nodal Agencies
Incentives and Other Policy Measures
Key Players
Czech Republic
Act No 180/2005 of the Czech Republic legislation implements the promotion of electricity produced from renewable energy source Energy Regulatory Office’ (ERU) Ministry of Industry and Trade Choice of selecting between a feed-in-tariff or a green bonus A guarantee of revenue per unit of electricity produced over a 15-year period as of the date a plant is put into operation exists 100.0% property tax reduction on certain renewable technologies ‘State program for energy saving and use of renewable energy sources’ Onshore wind energy investors are entitled for 15 years of support under feed in tariff mechanism
14
Growth Opportunities in the Wind Energy Sector: Roadmap Beyond 2009 Lower demand for energy, fluctuating energy prices, weak exchange rates, and less credit availability will make the economic recovery of the global wind energy sector sluggish in 2010
•
•
• • •
CEE Europe's offshore installed wind power capacity to grow from 1.9 GW (2009) to 40.0 GW (2020) Poland and Czech Republic to look at enhancing wind power generation as: • Poland to achieve minimum share of electricity from RES from 3.6% (in 2006) to 7.5% (in 2010), and 14.0 % (in 2020). Wind energy generation accounts for 463MW (Beginning of 2009) • Czech Republic’s share of RES in electricity to grow from around 4.0 % (at the end of 2008) to 13.0 % (by 2020). Wind energy generation accounts for 150MW (Beginning of 2009)
Pakistan 700.0 MW of wind power by 2010, 3,000.0 MW by 2020, and 9,700.0 MW by 2030 Overhaul of existing energy policy to solve load shedding problem Indirectly, greater exploitation of nations’ wind corridor via incentives can be expected
China Less than 1.0% of electricity supply comes from wind energy in 2009 Installed wind capacity target to reach 30.0 GW by 2020 making renewable energy supply 40.0% of the energy market by 2050 From being a world leader in the manufacturing of micro and small wind turbines in 2009, China to enter large wind turbine production market to build its currently underdeveloped transmission system
• • •
Bangladesh Expected to address issues concerning lack of regulation defining the tariff norms as being a new entrant into the renewable energy market
•
• •
India From 9,645.0 MW (beginning of 2009) of installed wind capacity, India to achieve a total wind power capacity of 10,500.0 MW (ongoing) by 2012 Government to continue with fiscal incentives to encourage wind energy participants
15
Ranking of Countries Based on Emerging Opportunities Global Total Installed Wind Power Capacity, 2009* Regions Asia Pacific Europe North America Rest of the World
2009 (in MW)
Ranking
37,496 73,398 34,118 1,681
2 1 3 4
Note: * The figures are estimates
Source: by Frost & Sullivan
Ranking of Specific Economies based on Qualitative Indicators** Economies Business National Legislative under Study Prerogatives for Wind Climate Energy Development India China Pakistan
Bangladesh Poland
Note: 1.** Ranking based on economic growth expected between 20102012, political and legislative environment supporting future wind energy development 2. Green indicates positive environment Orange indicates mixed environment Red indicates scope for major overhaul
Czech Republic
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Drivers Directing Global Wind Energy Market
•
Positive fiscal climate such as incentives for feed in tariffs, subsidies for wind power generation, programs (such as Foreign direct investment, income tax breaks, easy available credit)
•
Drivers directing global wind energy market:
Assessing existing national electricity policies and electricity supply mixes in potential wind energy nations of Asia and East Europe
Increasing population levels in some Asian economies to change trends in energy demand- and supply mix
Growth in wind energy driven by increased global uncertainties regarding steady supplies of conventional and indigenous power resources like oil and natural gas
Globally, increased awareness concerning environmental, ecological, and geopolitical risks surrounding generating electricity to lead to drive wind energy market
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Growth Opportunities in Global Wind Energy Market •
Domestic manufacturing of turbines including design, installation, operation and associated wind energy services to emerge (Globally)
•
Integration of the wind energy with electricity grids to cause increased demand for specialized manpower resources for operating grid systems (in East Europe and Asia)
•
Demand for micro wind turbines and technological databases to emerge (in East Europe and Asia)
•
Turbine and tower market to witness private sector collaboration and additional capital investments (in Asia)
•
Innovation and development expected in turbine design, gearboxes, generators, and larger capacity machines (in Asia aiming at rural electrification)
•
Demand for energy-efficient renewable energy technologies such as growth in technology option called compressed air energy storage (CAES) aiding large scale storage of wind energy (in Asia)
•
Service offerings such as repairs, replacement, and other operations and maintenance related aspects concerning wind power component (in India and China)
•
Reviewing investment in newer entrants such as Pakistan and Bangladesh that are low in energy supply when compared to actual electricity demand
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Sandeep Maheshwari Vice President, E&S Economic Research and Analytics (ERA) Division +001 (210) 326-0456 [email protected]
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