The policy, manufacturing and financing for renewables continue to expand across the developing world and emerging economies. By 2018, according to the International Energy Agency (IEA), non-OECD countries are predicted to account for 58 per cent of total renewable generation, up from 54 per cent in 2012. Renewable energy generation in most developing countries still mostly depends on inexpensive and abundant hydropower, but other technologies are on the rise in countries with good resources and emerging support measures (IEA, 2013).
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Countries around the world increasingly take measures to research and deploy renewable energy sources to improve energy security, encourage economic growth and respond to environmental challenges particularly associated with climate change. The research by the International Energy Agency demonstrates that renewable energy technologies have been mainly adopted by countries with relatively high gross domestic product (GDP) per capita and also high energy security concern (Müller et al., 2011). Such front-runner countries have both the capacity and the impetus to engage with renewables especially during the initial development stages, when costs are high. The wealth of these countries also influences the choice of the technology for generating renewables, where countries with lower economic capacity focus on lower-cost, well understood and established renewable sources, such as hydro and biomass. With the increasing maturity of renewables, falling prices, enhanced education and improving competitiveness, the likelihood of technology diffusion across national boundaries increases. For many developing countries, the opportunities to deploy renewable energy sources exist particularly in cases where the resource conditions are good and the need for expansion in energy access is high (Müller et al., 2011).
The introduction and implementation of support policies to a large degree determine the extent to which renewables are developed in a country (Berg, 2013). The renewable energy market is also a policy-driven market. The adoption of support policies, however, does not follow the one-size-fit-all approach. The choices of policy instruments and sectors need to reflect the objectives of each country according to its priorities regarding environmental protection, economic development and socio-economic structure (Djiby, 2011). Also, while a particular policy approach may be considered as effective, public expenditures required to achieve this might be disproportionate and therefore politically unbearable. Determining the costs and risks of various policy tool kits involves multiple, complex assumptions and considerations of country market structure, resource endowments and national goals (UNDP, 2013).
Developed countries usually serve as front runners in establishing new policies. For example, in Europe, new policies are emerging to accelerate or manage the integration of renewables into existing power systems, including the development of energy storage and smart grid technologies. Developing countries are adopting support policies and experimenting with various policy tools. By the end of 2013, developing and emerging economies became the leaders in the increase of renewable energy support policies and accounted for 95 of the 138 countries with such policies (REN21, 2014). Renewable energy support policies usually include the use of regulatory and economic instruments such as standards, planning and codes; building institutional structures and capacity; as well as voluntary approaches, including information provision, advertisement, and education. The latter policy tools are only in their nascent stages in developing countries, with most emphasis on economic tools such as direct investments in infrastructure, fiscal and financial incentives and market-based initiatives, including allowances for greenhouse gas (GHG) emissions or green certificates. Specifically, feed-in tariff policies (policies based on prices) and renewable portfolio standards (RPS) (policies based on quantities) are the most commonly used policy support mechanisms. Regulatory policies, as well as economic instruments, have been found to have a strong effect on the production of renewable energy in the developing world. (Pfeiffer and Mulder, 2013)
Another challenge is the creation of an enabling policy environment and targets that can encourage the private sector to participate in financing the development of renewable energy projects (UNDP, 2013). Supporting renewable energy demonstration projects to spread information in remote areas, training microfinance leaders and decentralising the implementation of renewable energy projects may foster the spread of renewable energy projects. Such actions would also help build a better equipped sustainable renewable power industry, generate profits and create jobs, as well as increase efficiency in financing (Mohiuddin, 2006; MacLeod and Rosei, 2015). Most support for renewable energy policies and technologies in developing countries comes from local governments or from international donors, which undermines their sustainability, as the funds fluctuate with changing priorities and crises.
The second concern is whether many low-income developing countries are able to secure the diffusion of these technologies, as well as create conditions for the development of domestic renewable energy technologies (Ockwell and Mallett, 2012). Due to the relatively high upfront costs of most technologies, having access to finance is considered to be an important prerequisite for their adoption (Kandpal et al., 2003; Brunnschweiler, 2010; Huenteler et al., 2014). As such, higher level of economic development tends to influence the level of renewable energy development, because the former usually suggests more public and private financial resources, increasing environmental awareness and growing electricity demand (Pfeiffer and Mulder, 2013). Globally, there has been a discernible trend in lowering costs and improving efficiency of renewable technology installations, making it possible to build onshore wind and solar PV installations in certain areas around the world without subsidy support, particularly in Latin America. There has also been an increased use of mini-grids, which supported the dissemination of renewable energy-powered electrification in rural and suburban areas with poor electrification (Müller et al., 2011). With the help of information and communication technology for power management and end-user services, technical advances that allow the integration of renewable sources in mini-grid systems, stimulated a rapid expansion of the use of renewables-powered mini-grids in developing countries (REN21, 2014).
In general, it has been demonstrated that the diffusion of renewable energy technologies depends on the implementation of economic and regulatory instruments, per capita income and schooling levels and stability of the regime (Pohl and Mulder, 2013). A thorough understanding of domestic resources and knowledge of policy measures that have been successfully applied in other countries also influences the prospects of adoption of efficient and context-specific measures for the renewable sources. A combination of measures to build a coherent enabling framework is important to ensure cost-efficient transfer and diffusion of a specific technology. Especially in developing countries, there is a need for targeted technical assistance that incorporates social equity components, not jeopardising low-income consumers but still attractive to both private and international aid organisations (UNEP, 2011).
Although the adoption of renewable energy sources is increasing in many parts of the world, widespread adoption is constrained by a multitude of policy, regulatory, technological, social and financial barriers. Enormous subsidies for fossil fuels and nuclear power persist, and they continue to vastly outweigh financial incentives for renewables. Market failures coupled with unfavourable financial, institutional and regulatory environments demand governmental intervention to establish renewable energy sources. Building human and institutional capacity, setting up research and development infrastructure, creating an enabling environment for investment and providing information present a challenge for many countries. A lack of supporting policy framework also stands as a large barrier among the risks that can undermine renewable project feasibility, even in the conditions of plentiful resources and favourable technology development. This array of challenges to the adoption of renewables requires a systematic approach in research to deepen the understanding of the challenges that exist for the deployment and diffusion of renewables in different countries. The exact difficulties that countries face depend upon national circumstances, the dynamics of the global system and the flows of information and resources. Devising effective responses to a problem that is global and multi-generational in scale presents a challenge that is, especially for developing countries, greatly complicated by the simultaneous need to expand access to essential energy services and to advance multiple objectives, including economic and social development goal as well as environmental ones.
Abstract:The paper presents recent and future trends of the world energy market, as highlighted by medium- and long-term projections. Energy demand and energy consumptions projected by IEA (International Energy Agency) are examined, in comparison with projections provided by other international agencies and companies in the energy sector. In particular, energy resources, energy consumption and economic growth both in developing and developed countries are presented, with a particular attention to the role of energy efficiency, nuclear power, unconventional fossil resources and renewable energies. Sustainable development issues, according to the global climate agreement signed at COP21, are also presented. The outlook period extends up to 2040. The results confirm a worldwide interest in renewable and unconventional resources for the forthcoming decades, as well as efforts to increase the energy efficiency potential in all end-use sectors to reduce the overall environmental impact of energy production.Keywords: energy projections; energy efficiency; nuclear power; unconventional resources; renewables; low carbon production; sustainable development; COP21 2ff7e9595c
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