North and South America Renewable Energy Policy Handbook Power

Transcription

1 North and South America Renewable Energy Policy Handbook 2017 Report Code: GDAE1110P

2 1 Table of Contents 1 Table of Contents List of Tables Executive Summary Introduction Renewable Energy Policy Globaldata Report Guidance Renewable Energy Policy, Argentina Overview Law on Promotion of Renewable Sources of Energy for Electricity Production: Law on Promotion of Renewable Sources of Energy for Electricity Production: 27, Incentives under Law no. 27, FODER and Decree 531/ RenovAr Program Renewable Energy Generation Program Financial Incentives and Policy Support for Solar Financial Incentives and Policy Support for Wind National Strategic Plan for Wind Energy Biodiesel Competitiveness Plan The Biofuel Law Biodiesel Content Requirement National Bioenergy Program Energy Efficiency Project Energy Efficiency Policies for Appliances National Program for Rational and Efficient Use of Energy Renewable Energy Policy, Brazil Overview Renewable Energy Auctions Alternative Energy Auction LFA-2010 and Reserve Energy Auction LER Brazil National Climate Change Plan Luz para Todos Electrification Program International Action Program, Brazil s Hydropower Program Incentives for Small Hydropower Facilities, Law Wind Turbine Component Tax Exemption (Executive Decree 656) Inova Energia Program Solar Auctions

3 5.11 National Biodiesel Program Net Metering for Distributed Generation Distributed Generation Regulation and Tax Incentives Energy Expansion Plan National Alcohol Program Federal and State Taxes on Ethanol Social Fuel Stamp Auction System Ethanol Blending Mandate Ethanol Export Tax Credit Special Regime of Reinstatement of Tax Amounts for Exporting Companies Reintegra Spending on Biofuels CT-Petro program CT-TRANSPORTE CT-INFRA CT-ENERG CT-AGRO CT-BIOTEC Green-Yellow Role of the National Development Bank of Brazil National Energy Efficiency Policy Regulated Investments in Energy Efficiency The Energy Efficiency Law Solar Water Heating Legislation Renewable Energy Policy, Canada Overview Provincial Incentives Renewable Energy Policy Framework, Prince Edward Island Renewable Energy Policy Framework, Manitoba Renewable Energy Policy Framework, Saskatchewan Renewable Energy Policy Framework, Northwest Territories Renewable Energy Policy Framework, Alberta Climate Leadership Plan (CLP) Climate Change Strategy Provincial Energy Strategy Financial Incentives and Policy Support for Wind Nine-Point Bioenergy Plan Renewable Energy Policy Framework, British Columbia

4 6.8.1 Hydro Net Metering Energy Plan: A Vision for Clean Energy Leadership Innovative Clean Energy Fund Standing Offer Program LiveSmart Efficiency Incentive Program Renewable Energy Policy Framework, Nova Scotia Renewable Electricity Plan, Energy Strategy Renewable Energy Standard Regulations, Net Metering Community Feed-in Tariffs Solar Gain Project Wind Atlas EnerGuide for New Houses Commercial and Industrial Custom Program Small Business Lighting Solutions Program EcoEnergy Retrofit Incentive for Buildings Renewable Energy Policy Framework, Quebec Energy Policy Energy Strategy Net Metering Wind Farm Construction on Public Land Wind Farm Construction on Private Land Rénoclimat and Novoclimat Program RénoVert Tax Credit Hydro Grants Climate Change Action Plan Tax Credit for Ethanol Production Renewable Energy Policy Framework, Ontario Financial Incentives and Policy Support for Renewable Energy Sources Financial Incentives and Policy Support for Solar Financial Incentives and Policy Support for Wind Financial Incentives and Policy Support for Geothermal Financial Incentives and Policy Support for Hydropower Financial Incentives and Policy Support for Bioenergy Funding to Promote Biofuels Industry EcoENERGY for Biofuels Initiative

5 NextGen Biofuels Fund Accelerated Capital Cost Allowance Industrial Electricity Incentive Program SaveONenergy Conservation Programs Program of Energy Research and Development Clean Energy Innovation Program Renewable Energy Policy, Chile Overview National Strategy for the Energy Sector Non-Conventional Renewable Energy Law (NCRE Law) Energy Program Energy Access Fund Support for Non-Conventional Renewable Energy Development Program Invest Chile Project Carbon Tax Program for Rural and Social Energy (PERYS) Short Law I and II Law 19, Net Metering Other Renewable Incentives Hydroelectricity Development of Transmission System Chile s Nationally Determined Contribution to the Paris Agreement Developing Interregional Electricity Interconnections Energy Efficiency Energy Efficiency Guarantee Fund (Fondo de Garantía de Eficiencia Energética FOGAEE) Energy Efficiency in Public Buildings Program Renewable Energy Policy, Colombia Overview Rural Electrification Fund Fund for the Electrification of Non-interconnected zones Efficient Lighting Program of Rational and Efficient Use of Energy and Other Forms of Non-conventional Energy Policy guideline for the promotion of sustainable biofuels production in Colombia (Conpes 3510) Law 939 to promote the production and promotion of biofuel Law 1665 (2013) and Law 1715 (2014) Financial Incentives and Policy Support for Renewable Energy, Colombia

6 8.2.1 Funds Supporting Investment in Energy Projects Renewable Energy Law, Renewable Energy Policy, Mexico Overview Electricity Industry Law Mexico Renewable Energy Program Energy Transition Law (Ley de Transición Energética, LTE) General Law of Climate Change (Ley General de Cambio Climático) Special Program for the Use of Renewable Energy Resolution on Net-Metering National Energy Strategy National Commission for the Efficient Use of Energy Large-Scale Renewable Energy Development Project Accelerated Depreciation for Environmental Investment Wheeling Service Agreement for Electricity from Renewable Energy Sources Methodology to Establish Service Charges for the Transmission of Renewable Electricity Grid Interconnection Contract for Renewable Energy Renewable Energy Outlook Vision for 2030 on the Use of Renewable Energy in Mexico Renewable Energy Promotion-PromovER Integrated Energy Services Project, Light in the House Program (Luz en Casa Oaxaca) Light for Mexico Program Financial Incentives and Policy Support for Wind Resolution on Interconnection of large hydro plants Geothermal Energy Act Law for the Promotion and Development of Bioenergy Sustainable Rural Development Project for the Promotion of Alternative Energy Sources in Agribusiness Value Added Agribusiness Risk Sharing Schemes Program for Financing of Electric Energy Saving Guidelines establishing and issuing Clean Energy Certificates Law for the Sustainable Use of Energy (Ley para el Aprovechamiento Sustentable de la Energía, LASE) Law for Sustainable Use of Energy and the National Program for the Sustainable Use of Energy (PRONASE) Compact Fluorescent Lamp Market Solar Water Heaters Program Green Mortgage Program

7 9.33 Nationally Determined Contribution (NDC) to the Paris Agreement (COP21) Renewable Energy Policy, Peru Overview Legislative Decree The Electric Social Compensation Fund (FOSE) Accelerated depreciation benefits Biofuel Production and Commercialization Law Energy Efficiency Development Energy Efficiency Targets Renewable Energy Policy, US Overview Federal Initiatives Energy Independence and Security Act, Energy Improvement and Extension Act, Production Tax Credits Investment Tax Credits Manufacturing Tax Credit Rural Energy for America Program: Grants Tribal Energy Program Grant Clean Renewable Energy Bonds Qualified Energy Conservation Bonds US Department of Energy Loan Guarantee Program Modified Accelerated Cost Recovery System Green Purchasing Goal Residential Renewable Energy Tax Credit Federal Initiatives for Solar Solar America Initiative SunShot Initiative Federal Initiatives for Wind Federal Initiatives for Biopower and Biofuels Energy Policy Act Alternative Fuels Biorefinery Assistance Program Clean Air Act Amendments of State-Level Incentives Overview Renewable Portfolio Standards Renewable Energy Certificates

8 Public Benefits Funds for Renewable Energy Interconnection Standards Net Metering Property Assessed Clean Energy Renewable Energy Policy Framework, Iowa Financial Incentives and Policy Support for Renewable Energy Sources, Iowa Financial Incentives and Policy Support for Solar, Iowa Financial Incentives and Policy Support for Wind, Iowa Renewable Energy Policy Framework, Minnesota Financial Incentives and Policy Support for Renewable Energy Sources, Minnesota Financial Incentives and Policy Support for Wind, Minnesota Financial Incentives and Policy Support for Solar, Minnesota Financial Incentives and Policy Support for Hydropower, Minnesota Financial Incentives and Policy Support for Bioenergy, Minnesota Renewable Energy Policy Framework, Washington Financial Incentives and Policy Support for Renewable Energy Sources, Washington Renewable Energy Manufacturing Program Financial Incentives and Policy Support for Solar, Washington Renewable Energy Policy Framework, Colorado Financial Incentives and Policy Support for Renewable Energy Sources, Colorado Sales and Use Tax Exemption for Renewable Energy Equipment Renewable Energy Policy Framework, Texas Financial Incentives and Policy Support for Renewable Energy Sources, Texas Financial Incentives and Policy Support for Solar, Texas Financial Incentives and Policy Support for Wind, Texas Financial Incentives and Policy Support for Bioenergy, Texas Renewable Energy Policy Framework, California Financial Incentives and Policy Support for Renewable Energy Sources, California Financial Incentives and Policy Support for Solar, California Financial Incentives and Policy Support for Wind, California Financial Incentives and Policy Support for Hydropower, California Financial Incentives and Policy Support for Geothermal, California Financial Incentives and Policy Support for Bioenergy, California Renewable Energy Policy Framework, Nevada Financial Incentives and Policy Support for Renewable Energy Sources, Nevada Renewable Energy Policy Framework, New Jersey Financial Incentives and Policy Support for Renewable Energy Sources, New Jersey

9 Financial Incentives and Policy Support for Solar, New Jersey Renewable Energy Policy Framework, Oklahoma Net Metering and Interconnection Guidelines Zero-Emission Facilities Production Tax Credit Wind Development Updates Property Tax Exemption for Wind Generators Renewable Energy Policy Framework, Illinois Future Energy Jobs Bill Renewable Portfolio Standard Net Metering and Interconnection Solar and Wind Energy Rebate Program Large Distributed Solar and Wind Grant Program Biogas and Biomass to Energy Grant Program Illinois Solar Renewable Energy Credits (SREC) Renewable Energy Policy, Venezuela Overview Development Plan for the National Electric System Electric Service Law Electricity Law Law of Rational and Efficient Use of Energy Renewable Energy Development National renewable energy registry Sowing Light Program(Sembrando Luz) Energy Efficiency Appendix Abbreviations Bibliography Methodology Coverage Secondary Research Primary Research Modeling and Forecasting Contact Us Disclaimer

10 1.1 List of Tables Table 1: Renewable Energy Policy, North and South America Table 2: Renewable Energy Auctions, Brazil, Table 3: Biodiesel and Mineral Diesel, Brazil, Federal Taxes Table 4: Key Regulatory Authorities, Canada Table 5: Renewable Energy Targets, Canada Table 6: Feed-in Tariffs, Ontario, Table 7: Feed-in Tariffs, Ontario, Table 8: Additional Price Incentives on Feed-in Tariff, Ontario, Table 9: Additional Price Incentives on Feed-in Tariff, Ontario, Table 10: ecoenergy for Biofuels Incentives (CAD/liter and $/liter), Table 11: Renewable Energy Market, US, Production Tax Credit ($/kwh), Table 12: Renewable Energy Market, US, Investment Tax Credit, Table 13: Renewable Energy Market, US, Green Purchasing Goal (%), Table 14: Renewable, US, Renewable Portfolio Standards, State Targets, Table 15: Renewable, Minnesota, Solar Incentives ($/kwh), Table 16: Renewable Energy Market, Washington, Member-Owned Renewable Energy Program Rate ($/kwh), Table 17: Renewable Energy Market, Colorado, Capital Cost Threshold Rates, Table 18: Renewable Energy Market, Texas, Rebates for Energy Efficiency Products ($/unit), Table 19: Renewable Energy, Feed-in Tariffs, Marin County California, Table 20: Renewable Energy, Feed-in Tariffs, Los Angeles California, Table 21: Renewable Energy, Feed-in Tariff Multiplier, Los Angeles - California, Table 22: Renewable Energy, Electric Energy Reduction Standard (TWh), California, Table 23: Renewable Energy, Annual Electric Demand Reduction Standard (MW), California, Table 24: Renewable Energy, ReMAT Tariffs ($/MWh), California, Table 25: Renewable Energy Market, California, Go Solar Campaign Program Components, Table 26: Renewable Energy Market, California, California Solar Initiative Program Budget ($m), Table 27: Renewable Energy Market, California, California Solar Initiative Rebate Levels by Incentive Step and Rebate Type, Table 28: Renewable Energy Market, California, California Solar Initiative, Details by Incentive Type, Table 29: Solar Alternative Compliance Payment ($/MWh), New Jersey, Table 30: Renewable Energy Market, Oklahoma, Production Tax Credit ($/kwh), Table 31: Renewable Energy Market, Illinois, Requirements and Carve-outs for Various Technologies for Investor-owned Utilities (%), Table 32: Renewable Energy Market, Illinois, Requirements and Carve-outs for Various Technologies for Alternate Renewable Electricity Suppliers (%), Table 33: Abbreviations

11 2 Executive Summary All the nine countries covered in the Americas have renewable energy targets, implying that these governments are actively supporting the growth of renewable energy in their respective countries. The US and Canada do not have federal targets, but each state/province has a target to achieve in terms of what percent of power purchased by utilities comes from renewable sources. All other countries covered have similar generation targets at a national level. A noticeable observation in this region is the popularity of the net-metering arrangement which is uncommon in Europe, Middle East, and APAC regions. Six of the nine countries covered, have a net-metering scheme for one or more renewable technologies. In North America, all the three major markets US, Canada, and Mexico have net-metering in place, Mexico being the most recent country to adopt the scheme. Mexico has a federal level net-metering regulation while Canada and the US have it at a province/state level with six provinces in Canada and several states in the US having adopted the scheme with several variations and for different technologies. Brazil and South America have similar net-metering policies where small to medium self-generating entities can feed the excess electricity into the grid and as compensation receive billing credit which can be used within a fixed timeframe to pay for the electricity consumed by the entity from the grid. Meanwhile, Colombia is still putting the net-metering policy and regulation and system eligibility criteria into place. Feed-in Tariff (FiT) is another major vehicle used by governments of American countries to promote renewable energy. Argentina, Brazil, Canada, US and Peru have FiTs in place for various renewable energy technologies. In the US and Canada, state/province governments have the power to set FiTs and procure electricity with a risk free agreement with the entity producing renewable electricity. Table 1: Renewable Energy Policy, North and South America Country RPS FiT Net-metering RE Targets Tax exemption Grants Argentina - Yes - Yes Yes Yes Brazil - Yes Yes Yes Yes Yes Canada Yes Yes Yes Yes Yes Yes Chile - - Yes Yes Yes Yes Colombia - - Yes Yes Yes - Mexico - - Yes Yes Yes Yes Peru - Yes - Yes - - United States Yes Yes Yes Yes Yes Yes Venezuela Yes Yes - Source: GlobalData The US, Canada, and Brazil have the most number of policies and incentive for the growth renewable energy. They are also unsurprisingly, the top markets in terms of cumulative installed capacity. While US and Canada 11

12 have large capacities of various renewable energy technologies, Brazil s power capacity is dominated by hydropower and bio-power. The Ministerio de Minas e Energia (Ministry of Mines and Energy, MME) plans to diversify the power mix in order to reduce the risk of electricity shortages. The diversification and energy security strategies for the forecast period will increase the share of renewable sources in the power mix. RPS is a very effective policy designed to easily mandate utilities to purchase a certain portion of their total energy acquisition from renewable energy plants. The RPS targets are designed keeping in mind the current and expected renewable energy capacity, the national renewable energy targets, grid infrastructure, and many more factors. Utilities get certificates for procuring electricity from renewable sources and these certificates need to be retired at the end of the year in order to comply to the scheme. Excess certificates acquired by a utility can be traded to a different utility that fails to acquire enough certificates. In the Americas, only the US, Canada, and Brazil have a functioning RPS system. Most states in the US and Canada have an RPS system for their utilities, while in Brazil there is a certificate system that encompasses all utilities in the country. Tax exemptions and grants are also among the effective incentives used in this region to promote renewable energy. Excluding Peru, all other countries covered in the report have one or more forms of tax incentives for renewable energy generators and/or equipment manufacturers. Financial grants are not as common in the region as they are more difficult for a government to provide. However, Argentina, Brazil, Canada, Chile, Mexico and the US have different types of grants for different types of industry participants. 12

13 3 Introduction 3.1 Renewable Energy Policy Renewable energy represents a possible solution to two major global issues: global warming and diminishing fossil fuel reserves. It is sustainable and clean, generally emitting no or very little CO 2, and these factors have led major countries to shift their focus towards the development of renewable energy sources. Renewable energy has the potential to boost the global economy. However, the most important challenge in the deployment of renewable energy is that it is more expensive than conventional fuels. In order to make renewable energy competitive, it is necessary for governments to provide support in the form of favorable policies and incentives. Various governments are establishing regulatory frameworks, policies and incentives to develop the renewable energy sector, as they increasingly recognize its importance. Renewable Portfolio Standards (RPS), or quota obligations, and Feed-in Tariffs (FiT) are the two most prominent support mechanisms used to drive the development of the renewable energy market, and most of the countries that recognize this offer one or both of these policy measures. Other incentives, such as capital subsidies, grants, rebates, tax credits, tax exemptions, loans at reduced interest rates, net metering, Renewable Energy Certificates (REC), and public competitive bidding, are also offered variously by major countries to promote renewable energy capacity building. 3.2 Globaldata Report Guidance The report begins with an introduction to renewable energy policy and its importance in making renewable energy sources competitive with conventional energy sources The report then discusses the major renewable energy policies in each of the key countries in North America and South America. 13

14 4 Renewable Energy Policy, Argentina 4.1 Overview Argentina has been facing severe power shortages in recent years, prompting the government to refocus on increasing installed capacity. The growth of the power market has been slow, with installed capacity increasing at a compound annual growth rate of 2% between 2000 and In 2015, conventional energy sources such as thermal and nuclear accounted for 63% of installed capacity, while large hydropower accounted for 33%. The installed capacity from renewable energy sources, including small hydropower, was just 3%. The current installed capacity is unable to satisfy demand, which is increasing at a high rate. There are three sectors that the government has earmarked for expansion: hydropower, nuclear power, and renewable sources. Within hydropower, small-scale projects are expected to become prominent. However, several large projects are also planned, and this is expected to result in increased demand for hydropower equipment. The government s focus on nuclear power generation is also expected to create demand for nuclear equipment, as well as demand for facilities for nuclear waste disposal. There is substantial untapped renewable potential, which presents another opportunity for growth. The Ministry of Energy is exclusively responsible for developing and implementing policies relating to power, oil, and fuel to promote competition and efficient resource allocation. The National Regulatory Entity for Electricity (Ente Nacional Regulador de la Electricidad, ENRE) was created in 1993 by Law and was allocated the authority to set environmental rules and regulations and design procedures for implementation in generation, transmission, and distribution verticals. According to clause No.1 of Resolution SE No. 475/87, all companies in the power market should conduct environmental impact assessments in the pre-feasibility stages of planned projects and monitor the projects continuously thereafter. The resolution lists the standard formulation of procedures for the environmental management of specific activities such as the laying of transmission lines. The Wholesale Electricity Administrator Company (Compañía Administradora del Mercado Mayorista Eléctrico, CAMMESA) was established to operate the wholesale power market. In 2006, the Department of Energy issued Resolution No. 1281/06, or the Energy Plus resolution, an initiative to encourage companies to increase power generation in order to meet demand. Companies that consume large amounts of energy, compared with base demand at 2005 levels, are liable to pay a price equivalent to the cost of generation plus a profit to the generator, as approved by the Department of Energy. The low utilization of renewable energy sources such as wind, solar photovoltaic (PV), geothermal, and biomass is due to a lack of government incentives that support renewable investment and limited financial support in terms of financing and project funding options. However, with energy demand increasing, Argentina is now more willing to encourage the development of its untapped renewable energy sources, and a large number of projects are receiving financing from the government, which is also encouraging private participation through foreign 14

15 direct investment in the energy sector. It has set a target for 8% of its power consumption to be accounted for by renewable energy sources by 2016, in order to support the development of the renewable power industry. In 2014, the share of renewable energy in total generation was only 3.5%. Solar PV is a nascent market in Argentina and is not yet developed except for very specific small-scale applications and programs like the Renewable Energy Project in Rural Markets (Proyecto de Energía Renovable en el Mercado Eléctrico Rural, PERMER), which supports the promotion of renewable energy in the country. Argentina has ideal conditions for solar energy exploitation, with large areas near population centers having low cloud levels. The PERMER program aims to support rural populations by supplying renewable energy sources to schools and many households. 4.2 Law on Promotion of Renewable Sources of Energy for Electricity Production: In 2006, Law superseded the earlier Law and set the legal framework for the promotion of renewable energy sources in the country. It also set the target of 8% of the country s power consumption to come from renewable energy sources by The law extended the revised and expanded FiTs to all renewable energy sources. The following FiTs were provided under the law: Wind power: ARS0.015 ($0.0048) per kilowatt hour (kwh) Solar power: ARS0.9 ($0.288) per kwh Small hydropower with up to 30 MW of capacity: ARS0.015 ($0.0048) per kwh Other renewable sources, such as geothermal, tidal power, biomass, and biogas: ARS0.015 ($0.0048) per kwh The tariffs were provided for a period of 15 years. The law also offered an additional adjustable premium of $4 per Megawatt hour (MWh) to wind power generators, funded through the Renewable Energy Trust Fund. This law was superseded in 2016 by Law no. 27, Law on Promotion of Renewable Sources of Energy for Electricity Production: 27,191 Law no. 27,191 sets mandatory renewable energy targets for all consumers up to The law has set a target of 8% renewable energy by December 31, 2017 and 20% renewable energy by December 31, Purchase Agreements (PPAs) will be tendered by the Ministry of Energy and Mining with the costs being passed on to the final consumers. Large consumers, defined as those with average consumption exceeding 300 kw, have been given the option of opting out of the tendered PPAs and getting their supply directly from a distributor or from the wholesale market at a price ceiling of $113 per MWh or through self-consumption projects (Navia and Sewell, 2016). 15

16 4.3.1 Incentives under Law no. 27,191 Some benefits have been carried over from the earlier Law, no Accelerated depreciation for income tax purposes of the assets or infrastructure works involved in projects including capital goods, civil, electromechanical, and assembly works, and related services has been continued. Similarly, the following have been continued: income tax loss credit carryovers for 10 years; tax exemptions on minimum presumed income in connection with the assets involved in the project; tax exemption on dividends or profits distribution, as long as they are reinvested in infrastructure projects in Argentina; and benefits for utilization of local components (minimum of 30%). Under the new law, beneficiaries have also been exempted from import duties, over new capital goods, special equipment, or parts or components of such goods and certain supplies until December 31, Consumers who adhere to the targets will also be allowed exemption from certain taxes, fees, or royalties, of national, provincial, or municipal levels, or of the Autonomous City of Buenos Aires. In addition, beneficiaries have been allowed to transfer into the prices of the PPAs any future tax increases (Sammartino, 2016) FODER and Decree 531/16 The decree, completed in March 30, 2016, created a trust fund for renewable energy, the Fund for the Development of Renewable Energies (Fondo para el Desarrollo de las Energías Renovables), with a commitment of ARS12,000m ($819m) for The amount of money to be moved into this fund every year will depend on two factors: renewable energy targets that are met; and will never be less than 50% of the amount saved by switching over to renewables from fossil fuels in the previous year. The decree has proposed various methods of power purchase for those consumers that opt out of tendered PPAs: by private contract, by self-generation or cogeneration, or by partaking in a joint procurement mechanism from CAMMESA or from an entity designated by the ministry. The decree has also outlined specific points related to the bidding process for renewable energy. There is a possibility for having quotas for technology within the bids. Price can also be denominated in terms of US dollars instead of Argentine pesos. Benefits related to encouraging the utilization of local content in renewable power projects, wherever available, have also been outlined in this decree (Lopez, 2016). Apart from the benefits/incentives mentioned in the previous section, certain (FITs) are also being offered for the various renewable energy sources. They are: $0.11/kWh for solar power 16

17 $0.005/kWh for wind, geothermal, biomass, biogas, and hydropower projects (Norton Rose Fulbright, 2016) RenovAr Program This program has been launched to specifically develop Argentina s renewable energy sector. The first auction was launched in August 2016 to add 1 GW of renewable electricity to the national grid with a breakdown of 600 MW of wind power, 300 MW of solar power, 65 MW from biomass, 20 MW from small hydropower dams, and 15 MW from biogas. The projects must materialize within two years and the total investment estimated to accumulate from the first round is $1.5 $2 billion. There were 75 companies participating in the first round in 123 projects totaling 6 GW, making the tender six times oversubscribed. The awarded PPAs will be for 20 years and will be denominated in Argentine pesos, with guarantees for cases that may hinder free currency conversion (Norton Rose Fulbright, 2016). The next round for RenovAr is intended to be held in early Renewable Energy Generation Program The Argentine Federal Secretariat of Energy launched GENREN in 2009, in order to ensure that the set target 8% of power from renewable energy by 2016 was met. Under this program, a 15-year purchase contract is awarded for 1,000 MW of renewable power at guaranteed prices. The program is aimed primarily at wind power projects (500 MW) and is expected to create 7,000 jobs. 4.5 Financial Incentives and Policy Support for Solar Although Argentina has favorable climatic conditions for solar energy exploitation, with large areas with low cloud levels near population centers, the technology has not been widely developed, except for very specific small-scale applications. Solar energy was first promoted in Argentina in 1998 through Law /98 on the Promotion of Wind and Solar Energy Production. In 2006, the Law on the Promotion of Renewable Sources of Energy for Electricity Production provided a FiT of ARS0.9 ($0.288) per kwh for solar energy. PERMER supported the installation of solar energy systems in rural areas. This has again been superseded by Law no with a FiT of ARS1.61/kWh ($0.11/kWh). 4.6 Financial Incentives and Policy Support for Wind Wind power was initially promoted by national legislation on wind and solar energy, through Law , which was established in The law established that those that make a capital investment in the installation of wind equipment may defer the payment of VAT for a period of 10 years from the date of implementation of the law. The law also provided for the establishment of a fund to promote power generation from wind power and solar resources and stated that facilities for the generation of power from these sources would enjoy fiscal stability for a period of 15 years. 17

18 The law was subsequently superseded by Law for Promoting Renewable Energy Sources, which was passed on December 6, 2006, and provided a FiT of ARS0.015 ($0.0048) per kwh for wind power. This has again been superseded by Law no with a FiT of ARS0.07/kWh ($0.005/kWh). 4.7 National Strategic Plan for Wind Energy The National Strategic Plan for Wind Energy was initiated in 2005 with the objective of installing approximately 300 MW of wind power capacity within a period of three years. The plan was designed on the basis of an agreement between the Ministry of Planning, Public Investment, and Services, the Regional Center for Wind Energy (Centro Regional de Energía Eolica, CREE) in Chubut province, and the state-owned energy enterprise Energy Corporation Argentina (Energía Argentina SA, ENARSA). The plan requires 80% of the wind power equipment used in the projects to be produced in Argentina. The government has selected several possible sites for the first large wind farms in the country: Plan Vientos de la Patagonia I near Comodoro Rivadavia, in Chubut: 60 MW Santa Cruz: 60 MW Buenos Aires: 100 MW ENARSA has been designated as the co-ordinating body for each of the projects. Chubut province has taken the lead, applying a strategic plan for wind energy, which constituted Law 4,389 and a wind distribution map. Provincial Law of Chubut 4,389: this regulation specifies additional subsidies and tax benefits and establishes the percentage of wind turbine components that must be manufactured or assembled within the province. The subsidies amount to ($0.001) per kwh, on top of the national subsidy. Provincial Law of Buenos Aires 12,603: this regulation specifies additional subsidies for wind energy. The subsidies amount to ($0.001) per kwh, on top of a national subsidy. Provincial Law of Santa Cruz 2,796: this regulation provides for tax exemptions of %, depending on local content, and small subsidies of ($ ), depending on local content, for renewable energy projects. 18

19 4.8 Biodiesel Competitiveness Plan The Biodiesel Competitiveness Plan establishes an exemption for biodiesel from the fuel transfer tax equivalent to approximately $0.05 per liter of diesel for a period of 10 years. The plan also provides special arrangements regarding capital gains tax for investment in biodiesel facilities, with an accelerated period of repayment for new facilities. As part of this process, the provincial governments must exempt biodiesel producers from various taxes for a period of 10 years. 4.9 The Biofuel Law Argentina s Biofuel Law was introduced in April 2006, and regulations for the implementation of the law were published in February 2007 through Decree 109. The law provides the framework for increasing the investment in and production of biofuels. The primary objectives of the framework are to increase the supply of energy, develop environmentally friendly fuels, and develop rural areas primarily non-traditional production areas in order to benefit small and medium producers. The law mandated the use of biofuels by 2010, with gasoline to contain 5% ethanol, and diesel to contain 5% biodiesel. The latter figure was raised to 12% in February The government is responsible for the investment, generation, and marketing of biofuels in the local market. The law provides three alternatives for companies producing biofuels: To generate for the local market, taking advantage of the benefits of tax incentives To generate for self-consumption, taking advantage of the benefits of tax incentives To produce for the export market these companies will be subject to government controls and will not be eligible to receive tax incentives The major features of the Argentine biofuel law (and regulations) are the following: Incentives are provided for the generation and use of biofuels in the local market for a period of 15 years. The Secretariat of Energy is the controlling authority. Tax breaks fall under the purview of the Ministry of Economy. This ministry will determine the maximum overall amount of fiscal incentives provided in relation to biofuels. Every year, the controlling authority establishes the volume of biofuels required to abide by the law, calculates and alters the percentage mixes, determines the price of biofuels for the domestic market, implements volumes, establishes terms and conditions for those producing for their own consumption, and approves exports. 19

20 Companies will be accredited a percentage of the total tax break offered by the government. In the assigning of tax breaks, priority will be given to small and medium enterprises, farmers, and entities operating in non-traditional production areas. Biofuels will be exempt from three particular taxes on fossil fuels. Producers are also exempt from VAT. Producers may take advantage of a direct subsidy Biodiesel Content Requirement In July 2010, the Ministry of Federal Planning, Public Investment, and Utilities passed a resolution that increased the blending mandate for biodiesel in regular diesel to 7% from the previous rate of 5%. The blend rate was subsequently raised to 10% and then, in February 2016, it was raised to 12% (IEA, 2016) National Bioenergy Program The National Bioenergy program aims to facilitate national energy security, sustainable development, the attenuation of climate change, and the achievement of environmental equilibrium through the supply of bioenergy. The program has three main objectives: Identifying bioenergy sources and characterizing their potential Studying the potential of non-traditional crops for bioenergy development Identifying new enzymes to develop second-generation biofuels 4.11 Energy Efficiency Project The Energy Efficiency Project was approved on June 26, 2008, with the primary objective of increasing energy efficiency by developing appropriate services and equipment. The total cost of the project is $99.44m, and it will be active until June 30, The project is divided primarily into three parts. The first is the development of the country s energy efficiency fund. This involves: The development of pipeline projects, which will be funded with the help of grants The development of an Argentina Energy Efficiency Fund The second component of the project is the development of a Utility Energy Efficiency program, which includes: Supporting the acquisition and distribution of compact fluorescent lights; providing information, training, and supervision; measuring the effectiveness of the program; and providing an equal share of the benefits derived from the program to residential customers 20

21 The provision of technical assistance, with the help of utilities, to experiment with new delivery mechanisms for energy efficiency services The last component of this project focuses on increasing capacity within the private and public sectors in order to boost the incentives for investing in energy efficiency Energy Efficiency Policies for Appliances A variety of labeling rules and provisions are applicable for appliances such as air conditioners and electrical appliances for washing, drying, and lighting purposes. The implementation of these policies is still voluntary, although it has become mandatory in the areas where it was already implemented in the country National Program for Rational and Efficient Use of Energy The Program for Rational and Efficient Use of Energy (Programa Nacional de Uso Racional y Eficiente de la Energía, PRONUREE) was approved by the government in December The program focuses on increasing energy efficiency by adopting highly efficient technologies, as well as educating people about energy efficiency. The program also necessitates the involvement of public and private institutions. PRONUREE includes short- and long-term objectives for the improvement of energy efficiency in the industry and includes a target of 10% energy savings by the end of The services sector and public buildings have been allocated respective energy saving targets of 12% and 10%, to be achieved by the end of The following are the major measures to be initiated by the program in the short term: Spreading awareness and conducting campaigns in order to educate and inform the general public on energy efficiency Initiating the replacement of inefficient lamps with more efficient lighting systems Establishing a system of energy efficient labeling for energy consuming equipment The following major measures are to be initiated in the medium- and long-term: Introduction of cost-reducing management tools for the efficient use of energy resources by developing an energy efficiency program for the industry sector The joint development of actions alongside participating companies, aimed at establishing consumer profiles, identifying improvement opportunities, and implementing management programs in production processes, and setting goals for improving them Initiation of a funding mechanism to facilitate investment in energy efficiency projects in the sector of small and medium enterprises 21

22 Formulation and revision of regulations for buildings with different applications, promoting the development of building codes that include energy efficiency aspects, such as the use of specific materials Promotion of more efficient public lighting systems and traffic lights across the country Promotion of energy savings in the transport sector through the expansion and improvement of public transport management. 22

23 5 Renewable Energy Policy, Brazil 5.1 Overview Brazil is the largest and fastest-growing economy in South America and the seventh-largest economy in the world. The economy is expected to grow at an average of 4.5 5% annually between 2014 and Strong economic growth has led to increased demand for power, and the government has adopted a hybrid approach to meet part of its future demand by allowing both public and private investment in new power generation and distribution projects. Electricity prices in Brazil are among the most expensive in the world, even after the government cut them in September 2012 for homes and businesses in order to boost industry competitiveness. A law to that effect was passed in January It led to a reduction in electricity prices by 18% for domestic consumers and 32% for industry, which was previously $180 per Megawatt hour (MWh). The move brought much-needed relief to the industry, which was negatively affected by slow economic growth between 2011 and Brazil derives the majority of its power requirements from hydropower, making use of its most abundantly available natural resource. However, drought conditions have impacted hydropower generation in the recent past and forced electricity generating companies to compensate the demand with costlier thermal power sources. These conditions caused a strain on the electricity generating price. The Ministerio de Minas e Energia (Ministry of Mines and Energy, MME) plans to diversify the power mix in order to reduce the risk of electricity shortages. The diversification and energy security strategies for the forecast period will increase the share of thermal, nuclear, and alternative energy sources in the power mix. Persistent economic growth has resulted in the need for increased investment in power production. The MME is the primary regulator of the Brazilian electricity sector. The Brazilian Electricity Regulatory Authority (Agência Nacional de Energia Elétrica, ANEEL) is an autonomous federal agency whose main responsibility is to regulate and supervise the electricity sector according to the policy determined by the MME. In 2011, the government announced an investment of $255 billion through the second Accelerated Growth Program in order to increase power generation. This amount was to be invested over the period. Brazil uses capital subsidy and rebate schemes, and some of its states also offer FiTs. Policy measures such as renewable energy acts and financial subsidies have boosted the renewable energy sectors and are expected to continue to drive industry growth. The renewable power sector is expected to grow enormously, especially in the wind, biomass, and solar energy segments, as a result of government initiatives and increased private sector participation. Wind energy development has gained prominence in the power market since the introduction of wind power auctions in Onshore wind capacity is expected to increase at a Compound Annual Growth Rate (CAGR) of around 15% between 2015 and 2025, although no contribution from offshore wind is expected. 23

24 Solar photovoltaic (PV) capacity, which was introduced in 2010, is expected to grow at a CAGR of 47% between 2015 and 2025, while the biomass sector is expected to increase at a much lower CAGR of 4%. Renewable power capacity increased significantly, from 2.1 GW in 2001 to 22.1 GW in 2015, owing to the support of a variety of federal policies and measures. Brazil is aiming at increasing the share of renewable energy sources in its annual generation to 10% by 2020 and 20% by 2030 and is particularly focusing on wind, small hydropower, and biomass. The government introduced the Program of Incentives for Alternative Electricity Sources (Programa de Incentivo a Fontes Alternativas de Energia Elétrica, PROINFA) in 2002, to boost the adoption of renewable energy sources. The first phase of PROINFA, in 2004, awarded auctions for 3,300 Megawatts (MW) of wind, biomass, and small and medium-sized hydropower. PROINFA was succeeded, in 2011, by auction procedures, to encourage the further development of the power generation sector. Hydropower, thermal, nuclear, and renewable energy are the four major sources of power generation. Brazil has the largest capacity for water storage in the world and is heavily dependent on hydropower generation, which accounted for 64.7% of installed capacity in The MME plans to diversify the power mix, in order to reduce the risk of power shortages caused by droughts. Thermal, nuclear, and alternative energy sources will all replace some part of the power supply as part of the diversification and energy security strategy during the forecast period. Brazil is a tropical country with abundant biomass resources. Sugarcane is produced in the country for the production of sugar and alcohol, and the biomass produced from this is used for the generation of power with low carbon emissions. Brazil possesses an estimated 50 Terawatt hour (TWh) per year of potential power generation from solid waste. The management of waste for energy generation purposes will reduce dependence upon fossil fuels, decrease environmental pollution, and generate thousands of jobs for unskilled workers. Brazil has a wind power potential of more than 350 GW. Therefore, wind can be considered a potential supplementary source to the energy generated by hydropower. 5.2 Renewable Energy Auctions The government is able to call an auction to make an agreement regarding renewable capacity, with the resulting agreement functioning as a FiT system. The auction approach is a significant tool in Brazil in terms of driving the use of renewable sources, and the technology-specific approach enables organizations to contract for auctions. ANEEL conducts the auctions to provide contracts to power generation projects for future power demand. The projects contracted in the auctions have either three or five years from the date of the auction to the start of delivery of power to the grid. Auctions where projects are given three years are referred to as A-3 auctions and are generally contracted for wind, solar and small hydropower projects, while auctions that allow five years are referred to as A-5 auctions and are provided for large hydropower and conventional power generation projects. 24