Modelling the impacts of CDM incentives for the Thai electricity sector

The CDM Executive Board recently took a positive decision on programmatic CDM, also known as a CDM Programme of Activities. This prompts the author to present a new tool that has been developed recently for the Thai electricity market. The Renewable Energy Development (RED) Model, initially developed in the framework of the DANIDA funded project: Promotion of Renewable Energy in Thailand (PRET), at the Ministry of Energy of Thailand, was designed for the modelling of different incentive schemes and their effects on the Thai power system for the promotion of renewable energy technologies (RETs). Within this article, an extension of the existing RED model, including the CDM as additional incentive measure, is presented (RED-CDM). Along with the project-based approach, also a sectoral and programmatic approach is included as well. Several scenarios developed with the RED-CDM model show the influence of different incentive mechanisms on the Thai power market and their potentials for reaching the policy targets stated in the Energy Strategy of Thailand for Competitiveness. The main results show that reaching the policy targets is possible, while the price can be extremely high if the targets are to be achieved on schedule. Another important result is that a sectoral CDM approach could help financing about 20% of the incentives needed for a shift towards a more sustainable power grid, if the certified emission reductions (CERs) are sold at a price of 15 Euro/ton.     

Distributed energy resources market diffusion model

Distributed energy resources (DER) technologies, such as gas-fired reciprocating engines and microturbines, can be economically beneficial in meeting commercial-sector energy loads. Even with a lower electric-only efficiency than traditional central stations, combined heat and power (CHP) applications can increase overall system energy efficiency. From a policy perspective, it is useful to have good estimates of penetration rates of DER under different economic and regulatory scenarios. We model the diffusion of DER in the US commercial building sector under various technical research and technology outreach scenarios. Technology market diffusion is assumed to depend on the system's economic attractiveness and the developer's knowledge about the technology. To account for regional differences in energy markets and climates, as well as the economic potential for different building types, optimal DER systems are found for several building types and regions. Technology diffusion is predicted via a baseline and a program scenario, in which more research improves DER performance. The results depict a large and diverse market where the West region and office building may play a key role in DER adoption. With the market in an early stage, technology research and outreach programs may shift building energy consumption to a more efficient alternative.     

Wind farm investment risks under uncertain CDM benefit in China

China has set an ambitious target to increase its wind power capacity by 35 GW from 2007 to 2020. The country’s hunger for clean power provides great opportunities for wind energy investors. However, risks from China’s uncertain electricity market regulation and an uncertain energy policy framework, mainly due to uncertain Clean Development Mechanism (CDM) benefits, prevent foreign investors from investing in China’s wind energy. The objectives of this paper are to: (1) quantify wind energy investment risk premiums in an uncertain international energy policy context and (2) evaluate the impact of uncertain CDM benefits on the net present values of wind power projects. With four scenarios, this study simulates possible prices of certified emissions reductions (CERs) from wind power projects. Project net present values (NPVs) have been calculated. The project risk premiums are drawn from different and uncertain CER prices. Our key findings show that uncertain CDM benefits will significantly affect the project NPVs. This paper concludes that the Chinese government needs revising its tariff incentives, most likely by introducing fixed feed-in tariffs (FITs), and re-examining its CDM-granting policy and its wind project tax rates, to facilitate wind power development and enable China to achieve its wind energy target.     

Business model innovation in electricity supply markets: The role of complex value in the United Kingdom

This research investigates the new opportunities that business model innovations are creating in electricity supply markets at the sub-national scale. These local supply business models can offer significant benefits to the electricity system, but also generate economic, social, and environmental values that are not well accounted for in current policy or regulation. This paper uses the UK electricity supply market to investigate new business models which rely on more complex value propositions than the incumbent utility model. Nine archetypal local supply business models are identified and their value propositions, value capture methods, and barriers to market entry are analysed. This analysis defines 'complex value' as a key concept in understanding business model innovation in the energy sector. The process of complex value identification poses a challenge to energy researchers, commercial firms and policymakers in liberalised markets; to investigate the opportunities for system efficiency and diverse outcomes that new supplier business models can offer to the electricity system.     

Understanding the CDM's contribution to technology transfer

Developing countries are increasingly contributing to global greenhouse gas emissions and, consequently, climate change as a result of their rapid economic growth. In order to reduce their impact, the private sector needs to be engaged in the transfer of low-carbon technology to those countries. The Clean Development Mechanism (CDM) is currently the only market mechanism aimed at triggering changes in the pattern of emissions-intensive activities in developing countries and is likely to play a role in future negotiations. In this paper, we analyse how the CDM contributes to technology transfer. We first develop a framework from the literature that delineates the main factors which characterise technology transfer. Second, we apply this framework to the CDM by assessing existing empirical studies and drawing on additional expert interviews. We find that the CDM does contribute to technology transfer by lowering several technology-transfer barriers and by raising the transfer quality. On the basis of this analysis, we give preliminary policy recommendations.     

Can CDM bring technology transfer to China?—An empirical study of technology transfer in China’s CDM projects

China has undertaken the greatest number of projects and reported the largest emission reductions on the global clean development mechanism (CDM) market. As technology transfer (TT) was designed to play a key role for Annex II countries in achieving greenhouse gas emission reductions, this study examines various factors that have affected CDM and TT in China. The proportion of total income derived from the certified emissions reductions (CER) plays a key role in the project owners’ decision to adopt foreign technology. Incompatibility of CDM procedures with Chinese domestic procedures, technology diffusion (TD) effects, Chinese government policy and the role of carbon traders and CDM project consultants all contribute to the different degrees and forms of TT. International carbon traders and CDM consultants could play a larger role in TT in China's CDM projects as investors and brokers in the future.     

Modeling business risk: The effect of regulatory revision on renewable energy investment - The Iberian case

Regulatory risk is commonly accepted as one of the most important risks in the energy business, particularly renewable energy. With the recent changes (in June 2014) in the Spanish regulatory framework, investors' returns might be significantly affected. Further, as the Spanish and the Portuguese electricity systems are integrated, a change in the regulatory framework of Spain might also affect renewable energy policies and investment strategies in Portugal. This study is a projection of business risk under the assumption that the Portuguese government may adopt similar regulatory changes. Monte Carlo method is used to simulate the data under different scenarios. Applying Net Present Value and Real Options approaches, a 50 MW wind power project is evaluated. This study has considered the delay option to study five regulatory scenarios. A higher value for the delay option suggests that a high financial loss is expected if new wind power projects of similar capacity are implemented under the new regulatory framework.     

中外碳交易市场发展现状分析

《京都议定书》的生效,标志着国际社会开始以法律手段来限制温室气体排放,其中采取的重要机制之一就是碳排放权交易。清洁发展机制(CDM)、联合实施机制(JI)、国际排放权交易体系(IET)三种灵活机制作为碳金融工具,在关键国家和地区实施并迅速发展。CDM和JI是基于项目的市场,IET是基于配额的市场。目前国际碳交易市场以配额为主体,以项目交易为补充。西方发达国家已建成了全球性的碳交易市场,其中欧盟排放交易体系(EU ETS)是目前全球最大的排放交易体系。近年全球碳交易量及交易额迅速增长,预计2020年有望分别达到440×108t和5799亿美元,国际金融机构也积极参与碳交易市场。我国碳交易市场仍处于起步阶段,目前还只有CDM一种交易机制,国家已批准在7省市成立碳排放权交易试点。截至2013年6月底,我国签发的CDM项目数占到世界总量的61.76%。针对目前国内存在的问题,建议国家应设法扩大碳金融的影响力,建立统一的排放权交易平台,加强金融业对CDM项目的支持,完善碳金融法律框架,加大知识产权保护力度,同时要大力发展中介市场。     

The portfolio of renewable energy sources for achieving the three E policy goals

Renewable energy is considered by many policy-makers to contribute to achieving at least three major policy goals: the energy goal, the environmental goal, and the economic goal (3E goals). As an innovation-oriented island country with scarce natural resources, Taiwan announced the Sustainable Energy Policy Principles in 2008 that stated that Taiwan’s renewable energy policy should accomplish the 3E goals. Several studies point out that specific renewable energy policy goals lead to specific renewable energy sources and technologies because each type of renewable energy has different features. In order to achieve the renewable energy policy goals, this research aims to examine how different policy goals lead to corresponding renewable energy sources. The relative importance of each goal is evaluated by using analytic hierarchy process (AHP). The weight of each policy goal is adjusted separately to construct policy scenarios by the sensitivity analysis. According to the results, non-pumped storage hydropower, wind energy, and solar energy are three sources that could meet the three policy goals at the same time.     

Extracting the resource rent from the CDM projects: Can the Chinese Government do better?

The revenue generated from a CDM project in China will be shared by the government and the project owner, and is also subject to the corporate income tax. This paper studies the impacts of the revenue sharing policy and income tax on the CDM market. The economic model presented in this paper shows that higher-cost CDM projects will be more affected by the CDM policies than lower-cost projects. In addition, the majority of CERs will be generated from lower-cost projects. This kind of distribution of CERs across different types of CDM projects, which is in line with the current picture of the CDM market in China, is not consistent with the goal of sustainable development. A simulation shows that a type-by-type tax/fee scheme would be more effective in assisting sustainable development than the current CDM policies. The study also suggests the government use negative tax/fee with the type-by-type scheme to subsidize the CDM projects that generate large sustainability benefits but would otherwise not be developed due to high costs. If all of the revenue from the CDM is recycled, it is estimated that CERs generation will increase by 98.28 MtC, mainly from the CDM projects that have substantial sustainability benefits for the host country.     

Business models and financing options for a rapid scale-up of rooftop solar power systems in Thailand

Diverse solar PV business models and financing options exist in the international landscape, helping expand and accelerate the adoption of rooftop solar PV systems. The conditions for their emergence are context specific, depending on the policies, regulations, incentives, and market conditions of each country. After a review of the international landscape, this paper compiles and analyzes business models and financing options for rooftop solar PV investment in Thailand that have emerged during the period between 2013 and 2015. Despite policy discontinuity for the support of rooftop solar systems, diverse business models and financing options are driving market expansion and expanding solar access to more Thai consumers. Drawing on our policy and regulatory analyses and in-depth interviews with business representatives, we identify four types of business models and one financing option. The business models include Roof Rental, Solar PPA, Solar Leasing, and Community Solar, and the financing option is the solar loan. We analyze the drivers for their emergence, barriers to their success, and the risks from the business owners' and consumers' viewpoints. Our policy recommendation is focused on crafting a net-metering regulation with evidence-based studies on the potential costs and benefits to different stakeholders.     

Enabling optimal energy options under the Clean Development Mechanism

This paper addresses the cost effectiveness of renewable energy technologies in achieving low abatement costs and promoting sustainable developments under the Clean Development Mechanism (CDM). According to the results of our optimal energy option's analysis, at project scale, compared with a diesel-only energy option, photovoltaic (PV)–diesel (PVDB), wind–diesel (WDB) and PV—wind–diesel (PVWDB) hybrids are very cost-effective energy options. Moreover, energy options with high levels of renewable energy, including 100% renewables, have the lowest net present cost and they are already cost effective without CDM. On the other hand, while the removal of about 87% carbon dioxide emissions could be achieved at negative cost, initial investment could increase by a factor of 40, which is one of the primary barriers hindering wider renewable energy applications in developing countries, among others. Thus, in order to increase developing countries’ participation in the carbon market, CDM policy should shift from a purely market-oriented approach to investigating how to facilitate renewable energy projects through barrier removal. Thus, we recommend that further research should focus on how to efficiently remove renewable energy implementation barriers as a means to improve developing countries’ participation in meaningful emission reduction while at the same time meeting the needs of sustainable economic development.     

Barriers and opportunities of using the clean development mechanism to advance renewable energy development in China

Studying the barriers and opportunities of using clean development mechanism (CDM) to advance renewable energy deployment in China has a practical significance to achieve its ambitious renewable energy plan which affects the global efforts to curb carbon emission. This paper analyses the role of CDM in promoting renewable energy development in China by reviewing the CDM activities, especially renewable energy CDM activities in China. There are three barriers to utilizing CDM for renewable energy deployment, namely the dilemma of additionality, lower proportional certified emission reduction credit revenues on the investment, and the lack of incentive for technology transfer. Whereas the opportunities of using CDM in promoting renewable energy development include the international carbon market redirection to renewable energy, Chinese renewable energy boom driven by a series of effective energy policies, and additional finance from CDM supporting Chinese renewable energy development. Based on the study on the barriers and opportunities, the article considers that CDM is an indispensable incentive and a viable choice to promote renewable energy deployment in China.     

Strategic use of storage: The impact of carbon policy,resource availability,and technology efficiency on a renewable-thermal power system

Concerns about climate change have spurred governments to reduce carbon emissions by supporting adoption of renewable energy (RE) technologies. Due to the intermittent and location-specific nature of RE technologies, energy storage has become important because it could be used to smooth out temporal disparities in residual demand. Thus, carbon policy has made storage-enabled RE generation more critical to the power sector, and this enhanced position could be exploited by firms to exert market power. Using an equilibrium model, we examine the implications of policy interventions and technological change on the marginal value of energy storage in a power market with RE and thermal generation. In particular, we specify the market conditions under which RE producers with storage strategically shift deployment of their resource to the off-peak period and outline its implications for the marginal value of RE storage. Moreover, we find that even price-taking RE producers may actually increase off-peak RE production as storage efficiency increases. Consequently, the RE producer's profit decreases with storage efficiency, which conflicts with the social objective of improving storage efficiency. These private and social incentives can be better aligned via a carbon tax, however. Hence, our results may inform the regulatory process governing market design of a power sector with increasing capacities of RE generation and storage.     

Exporting the “Norwegian Model”: The effect of administrative design on oil sector performance

Norway has administered its petroleum resources using three distinct government bodies: a national oil company engaged in commercial hydrocarbon operations; a government ministry to direct policy; and a regulatory body to provide oversight and technical expertise. Norway's relative success in managing its hydrocarbons has prompted development institutions to consider whether this “Norwegian Model” of separated government functions should be recommended to other oil-producing countries. By studying ten countries that have used widely different approaches in administering their hydrocarbon sectors, we conclude that separation of functions is not a prerequisite to successful oil sector development. Countries where separation of functions has worked are characterized by the combination of high institutional capacity and robust political competition. Unchallenged leaders often appear able to adequately discharge commercial and policy/regulatory functions using the same entity, although this approach may not be robust against political changes. Where institutional capacity is lacking, better outcomes may result from consolidating commercial, policy, and regulatory functions until such capacity has further developed. Countries with vibrant political competition but limited institutional capacity pose the most significant challenge for oil sector reform: Unitary control over the sector is impossible but separation of functions is often difficult to implement.     

2010年国际碳市场状况与趋势分析

当世界经济趋于稳定并且开始恢复时,全球碳市场却处于停滞状态,停止了5年的快速增长趋势而现在出现横盘整理态势。碳市场的徘徊反映了国际气候政策现状。一些发达国家的排放贸易政策受阻,CDM市场经历了暂停签发减排量及2013年起限制使用等事件。市值最大的欧盟碳市场继续出现增值税欺诈、循环买卖CER和黑客侵入等问题,影响了市场的可靠性和安全性。2010年末坎昆会议取得成果为暗淡的一年带来了生机,发展中国家采取各种政策继续努力应对气候变化。     

Development of new generation cooperatives in agriculture for renewable energy research,development, and demonstration projects

Any of several business structures may be used to operate a farm enterprise. Models have been developed showing advantages and disadvantages of sole proprietorships, partnerships, and corporations when applied as farm enterprises. In recent years, the farm cooperative business structure has taken on a different complexion, especially when faced with new crops and uses, mixed, multiple, and international markets, and cross-cutting market sectors. These new generation cooperatives have played a particularly strong role in developing renewable energy and agricultural enterprises, especially in the face of proposed new crop rotations, inclusion of perennial crops in these rotations, and different management scenarios based on agro-forestry principles. In this paper, we define conditions under which the farm cooperative is an appropriate business enterprise structure, and review and update the status of four of these new generation cooperative business structures in Minnesota, New York, and Iowa. We assess the status of development of these cooperatives and the market conditions needed for the agriculture, energy, and environmental sectors that comprise these cooperatives.     

清洁发展机制(CDM)及项目实施介绍

CDM是一个新的国际合作机制,如何了解和充分有效的利用好这一机制,使之服务于本国的经济发展是许多国家普遍面临的问题。我国已经建立CDM的管理机构,颁布了"清洁发展机制项目运行管理暂行办法"。在全方位多层次开展能力建设的同时,积极推进CDM项目的实施,到2004年年底已经批准了两个CDM项目。中国被视为最具潜力的CDM市场。要将这一潜在的市场变为现实还有大量的工作要做,如进一步完善CDM项目的管理办法、审批程序和相关的政策,建立我国自己的项目咨询机构以减少交易成本,提高企业参与的积极性等。CDM已经被越来越多的人所了解和认识,相信我国一定能够很好地利用这一机制,在为人类应对气候变化的挑战做出贡献的同时,最大限度地服务于我国国民经济与环境的可持续协调发展。     

Coproduct market analysis and water footprint of simulated commercial algal biorefineries

Algal biorefinery-based integrated industrial sector is getting increased attention in United States as a sustainable way of producing biofuel, high value products and feed ingredients. However, coproduct market analysis and water footprint (WFP) of algal biorefineries need to be studied before large scale deployment and adoption of this strategy. This article highlights the coproduct market and WFP analysis of two simulated algal biorefineries. The market analysis of primary product (biodiesel) and coproducts (algal meal (AM), omega-3 fatty acids (O3FA), glycerin) from these biorefineries showed that there is clear market for AM and O3FA up to certain level, there after diversification for other coproducts is desirable. Challenges include, vigorously finding new market and sectors to integrate the products and coproducts. Hence, comprehensive assessment of coproduct market and coproduct diversification among the biorefinery to meet the local needs and to avoid market glut by excessive production of single coproduct is needed. Our analysis also showed the clear advantages for multiproduct paradigm to attain high operational profit and to sustain initial industry developmental phase with clear return on investment. Our WFP analysis showed that algal biodiesel production requires 23–62 L MJ⁻¹ of energy produced and our calculations showed that the energy return on water invested (EROWI) for algal biodiesel at different scenarios ranged between 0.042 and 0.016 MJ. Coproducts market analysis and WFP of algal biorefineries with different production scenarios illustrated the new policy and regulatory needs for the sustainable development of an algal biofuel sector to meet liquid fuel needs.     

Comparative study of commercial building energy-efficiency retrofit policies in four pilot cities in China

The energy efficiency of existing commercial buildings is more challenging to regulate and improve than the energy efficiency of new constructions. In 2011 and 2012, the Chinese Government selected four cities- Shanghai, Tianjin, Shenzhen, and Chongqing- to implement pilot commercial building energy efficiency retrofit program. Based on site surveys and expert interviews in these pilot cities, this research conducted a comparative analysis on incentive policies of local city level. The analysis results show that policy designs of existing commercial buildings should be further improved. The aspects that influence the implementation effect in the future, such as subsidy level, installments, and business model promotion, should be specified in the policy clauses. Referring to the technical solution and cost-benefit in Chongqing, we found that lighting system is the most common retrofit objects while envelope system is the least common one. And the subsidy incentive is greatest for educational buildings, followed by office buildings. In the end, we further discussed the problems and obstacles in commercial building retrofit market, and provided a series of recommendations.