2012年-世界发展银行全球_The_Role_of_Policy_Driven_Incentives___A_Cross-Country_Analysis_27页_1mb

Summary of "The Role of Policy Driven Incentives to Attract PPPs in Renewable-Based Energy in Developing Countries"

Core Content

This working paper explores the role of policy-driven incentives in attracting public-private partnerships (PPPs) for renewable energy investments in developing countries. Using a panel data analysis of 105 developing countries over a 16-year period (1993–2008), the study identifies the key determinants of private investment in renewable-based electricity generation.

Main Findings

• Policy is a key driver: Supportive policies are central to attracting private investment in renewable energy. These policies not only encourage entry into the market but also influence the level of investment.

• Feed-in tariffs (FITs): FITs are increasingly seen as the preferred policy instrument for promoting private investment in renewable energy. They provide a guaranteed price for renewable energy, reducing financial risk and ensuring a stable revenue stream for investors.

• Market size matters more than income level: Private investors tend to focus on the size of the renewable energy market rather than the income level of the country when deciding to enter the market. However, when assessing the level of investment, they also consider the "affordability" of the market.

• Governance factors: Broader governance factors, such as control of corruption and political competition, are important for private investors in making the initial decision to enter the market. Once in, they seem to be more adaptable to the governance environment.

• Risk mitigation: Private investors require technical and regulatory certainty regarding the availability of renewable-ready transmission infrastructure. Additionally, they need assurance that the policy framework will remain stable over time.

• Impact of financial crises: Financial crises, such as the East Asian and Russian crises in 1997–1998 and the Latin American crisis in 2001, had a negative impact on PPP investments in renewable energy.

• Geographic and energy-specific trends:

  • Hydropower: Dominates renewable energy investment in developing countries, with Brazil accounting for over 35% of hydropower PPP investments in Latin America.
  • Wind and geothermal: Wind and geothermal are growing rapidly, especially in East Asia and Latin America.
  • Solar and biomass: Solar and biomass investments have seen mixed trends, with solar facing challenges due to policy changes like retroactive cuts in feed-in tariffs.
  • Regional concentration: Investment in renewable energy is highly concentrated in certain regions, with Latin America and East Asia leading in hydropower and geothermal, and South Asia and the Middle East in solar and wind.

Key Policy Insights

• Incentive design: The effectiveness of support mechanisms like FITs depends on their design. High tariffs can lead to inefficiencies by encouraging investment in high-cost projects, while stepped tariff reductions (as in Germany) can lead to more sustainable and steady growth.

• Risk allocation: The allocation of risk between the public and private sectors is crucial. A strong government commitment ensures continuity and reduces the risk premium required by private investors.

• Need for flexibility: As the cost of renewable technologies decreases, there is a need to revisit the level and structure of incentive schemes to ensure they remain effective and aligned with market realities.

• Quota systems: Some developing countries have implemented quota systems, such as Poland's renewable power purchase obligation, which require energy suppliers to meet a minimum renewable share. These systems are less flexible than FITs and may not be as effective in promoting cost reductions.

Methodology and Data

• Analytical approach: The paper uses a probit model to analyze the entry of PPPs into the renewable energy market and Heckman’s sample selection model to assess the amount of investment.

• Data sources:

  • Micro-level data: From the World Bank's Private Participation in Infrastructure (PPI) database.
  • Macro-level data: From the World Development Indicators (WDI), World Governance Indicators, Polity IV, and the International Energy Agency (IEA) databases.

• Variables controlled: The analysis includes governance variables, financial crises, climate change variables, macroeconomic indicators, and regional variables.

Conclusion

The study underscores the importance of well-designed policy incentives in attracting private investment in renewable energy in developing countries. While FITs have been effective, their design and sustainability must be continuously evaluated. Governance factors play a role in the initial entry decision, but once investors are in, they can adapt to the environment. The paper also highlights the need for technical and regulatory certainty and the significance of market size and affordability in determining the level of investment. It concludes with a call for further research to explore the evolving dynamics of renewable energy investment and policy effectiveness.