Venezuela Renewable Energy Policy Handbook Power

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1 Venezuela Renewable Energy Policy Handbook 2017 Report Code: GDAE1107P

2 1 Table of Contents 1 Table of Contents List of Tables Introduction Renewable Energy Policy GlobalData Report Guidance 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 Market Definitions Installed Capacity Electricity Generation Electricity Consumption Thermal Plant Hydropower Plant Nuclear Renewable Energy Resources Abbreviations Bibliography Methodology Coverage Secondary Research Primary Research Modeling and Forecasting Contact Us Disclaimer

3 1.1 List of Tables Table 1: Abbreviations

4 2 Introduction 2.1 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 toward 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, or quota obligations, and Feed-in Tariffs (FiTs) 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 (RECs), and public competitive bidding, are also offered variously by major countries to promote renewable energy capacity building. 2.2 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. It then discusses the major renewable energy policies in Venezuela. 4

5 3 Renewable Energy Policy, Venezuela 3.1 Overview Renewable energy plays a large role in the energy mix of Venezuela. It accounted for 48.7% of the installations made in 2016, with more than 99% of these installations coming from hydropower plants. Solar and wind energy installations are still in their infancy in the country, together accounting for less than 0.7% of renewable energy installations in By 2025, the combined share of wind and solar installations in installed renewable energy capacity is expected to grow to 1.8% and 2.7% by New policies such as the Development Plan for the National Electric System, and the Law of Rational and Efficient Use of Energy are expected to drive this growth. 3.2 Development Plan for the National Electric System The Development Plan for the National Electric System sets the development of renewable energy resources as a medium-term ( ) and long-term ( ) goal. It has established a target of 613 Megawatts (MW) of additional renewable electricity capacity by 2019, of which 500 MW has to come from wind power (IRENA, 2015). 3.3 Electric Service Law This law came into being in December 2010 and comprises guidelines and provisions governing the electricity sector. It places particular emphasis on certain key issues, including the international exchange of electricity, the implementation of agreements related to technology transfer for the purpose of consolidating the power sector, and promoting international conventions to increase electricity trading. It also contains the guiding framework upon which the government plans to formulate the future development plan for the national electric system. Broad guidelines include development strategies and action plans to promote alternative energy sources and mitigate environmental problems, estimating demand, and focusing on areas related to national electricity systems that have so far received little attention. 3.4 Electricity Law The Electricity Law of 2001 allowed independent producers to generate power and decreed that energy efficiency and the use of renewable energy should be considered by the state in the provision of electric services. It also reserved hydropower in the Caroní and Paragua y Caura rivers for the state. 5

6 3.5 Law of Rational and Efficient Use of Energy Under this law, which was implemented in 2011, the government was mandated to promote industrial development for energy transformation. The priority of this transformation is on the development of renewable energy technologies. 3.6 Renewable Energy Development Despite the fact that Venezuela is predominantly an oil-and-gas-producing country, the government has already started introducing initiatives for the development of renewable energy sources. The Simón Bolívar National Plan, relevant between 2007 and 2013, includes energy and environmental policies that provide guidelines regarding the promotion of renewable energy, with special emphasis placed on the development of green energy. Three wind energy projects are currently in the construction or planning stages. In December 2011, the government entered into an energy security agreement with Uruguay covering a period of 10 years and focusing on the sustainable development of regional energy integration. It also emphasizes the development of renewable energy sources. 3.7 National renewable energy registry This measure is not an incentive scheme that would encourage the development of renewable energy. It does, though, create an information repository that would allow research on renewable energy projects. The registry has been created to provide information and control regarding all activities related to renewable energy. This includes equipment as well as research and development projects. Renewable sources of energy that are part of the registry are: solar, wind, hydro, biomass, geothermal, tidal, and hydrogen fuel. 3.8 Sowing Light Program(Sembrando Luz) Funded by the Public Foundation for Electric Development (FUNDELEC), this program aims to spread renewable energy use through the provision of energy and water services in remote and indigenous community areas through solar PV and hybrid systems. Up to the first quarter of 2016, around 3,100 systems totaling 2.5 MW had been installed, serving 270,000 people through this program. 6

7 3.9 Energy Efficiency The government has already introduced regulations detailing the rational and efficient use of energy, which clearly reflects its intentions regarding future energy efficiency and security. In terms of saving energy, it has introduced an energy efficiency program called Mission Revolución Energética, or Mission Energy Revolution, which has replaced over 100 million incandescent light bulbs with compact fluorescent light bulbs. Another program is Sembrando Luz, or Sowing Light, which deals with the implementation of wind, PV, and hydropower. It is especially beneficial to rural, indigenous, and border communities. The government is also considering requesting that major industrial companies set up captive generation units. In order to reduce wasteful consumption, CORPOELEC increased the tariff rates for high-consumption households and restricted the import of energy-intensive appliances. Other private companies that invested in electricity infrastructure were offered tax breaks. 7

8 4 Appendix 4.1 Market Definitions refers to the rate of production, transfer, or energy use, usually related to power. It is measured in Watts (W) and often expressed in kilowatts (kw) or Megawatts (MW). It is also known as real power or active power Installed Capacity Installed capacity refers to the generator s nameplate capacity as stated by the manufacturer, or the maximum rated output of a generator under given conditions. It is given in MW on a nameplate affixed to the generator Electricity Generation Electricity generation refers to the process of generating power from other forms of energy. It also refers to the amount of power produced, expressed in Gigawatt hours (GWh) Electricity Consumption Electricity consumption is the sum of power generated, plus imports, minus exports and Transmission and Distribution (T&D) losses. It is measured in GWh Thermal Plant A thermal power plant is a plant in which turbine generators are driven by burning fossil fuels Hydropower Plant A hydropower plant is a plant in which the turbine generators are driven by falling water Nuclear Nuclear power is the energy released from the fission of nuclear fuel in a reactor Renewable Energy Resources Renewable energy resources are those that provide energy that is naturally replenished but limited in the amount of energy available per unit of time. Biomass, geothermal, solar, small hydropower, and wind are examples of renewable resources. 8

9 4.2 Abbreviations Table 1: Abbreviations FiT Feed-in Tariff MW Megawatt REC Renewable Energy Certificates RPS Renewable Portfolio Standards MW Megawatt Source: GlobalData 4.3 Bibliography IRENA (2015). Renewable Energy Policy Brief, Venezuela. International Renewable Energy Agency. Available from: ry_venezuela.pdf 4.4 Methodology GlobalData dedicated research and analysis teams consists of experienced professionals in marketing, market research, consulting background in the energy industry and advanced statistical expertise. GlobalData adheres to the Codes of Practice of the Market Research Society ( and the Strategic and Competitive Intelligence Professionals ( All GlobalData databases are continuously updated and revised. The following research methodology is followed for all databases and reports. 4.5 Coverage The objective of updating GlobalData coverage is to ensure that it represents the most up to date vision of the industry. We track hundreds of Alternative energy news sources on a daily basis. Using this news flow and regular interaction with the industry experts, we identify the key trends being witnessed by the industry. These can be market opportunity, industry consolidation, technological break-through, policy updates, etc. Our articles and reports investigate these trends in detail and evaluates the market implication of these trends Secondary Research The research process begins with exhaustive secondary research on internal and external sources being carried out to source qualitative and quantitative information relating to each market. The secondary research sources that are typically referred to include, but are not limited to: 9

10 Company websites, annual reports, financial reports, broker reports, investor presentations and SEC filings Industry trade journals and other literature Internal and external proprietary databases National government documents, statistical databases and market reports News articles, press releases and web-casts specific to the companies operating in the market Primary Research A primary research effort further substantiates findings and information captured through desk research. This aspect of the research program serves both as a means of obtaining updates regarding issues such as changes in policy frameworks, power sector development, and as a quality control mechanism. GlobalData conducts hundreds of primary interviews a year with industry participants and commentators in order to validate its data and analysis. A typical research interview fulfills the following functions: Provides first-hand information on the market size, market trends, growth trends, competitive landscape, future outlook Helps in validating and strengthening the secondary research findings Further develops the analysis team s expertise and market understanding Primary research involves interactions and telephone interviews as well as face-to-face interviews for each market, category, segment and sub-segment across geographies. The participants who typically take part in such a process include, but are not limited to: Industry participants: CEOs, VPs, business development managers, market intelligence managers and national sales managers Outside experts: Investment bankers, valuation experts, research analysts and key opinion leaders specializing in the power industry Modeling and Forecasting In case of data gaps and especially while forecasting the market, we use in-house models to forecast the data. Historic data and the analysis of trends within it form the basis of all forecasting methodology. Various qualitative and quantitative factors are usually taken into account for estimating the future growth. The forecasted data is validated through various industry experts and back-of-envelope check is also done. 10

11 4.6 Contact Us If you have any queries about this report or would like further information, please contact at the below given telephone numbers or address. North America: Europe: Asia Pacific: Disclaimer All Rights Reserved. No part of this publication may be reproduced, stored in a retrieval system or transmitted in any form by any means, electronic, mechanical, photocopying, recording or otherwise, without the prior permission of the publisher, GlobalData. The facts of this report are believed to be correct at the time of publication but cannot be guaranteed. Please note that the findings, conclusions and recommendations that GlobalData delivers will be based on information gathered in good faith from both primary and secondary sources, whose accuracy we are not always in a position to guarantee. As such GlobalData can accept no liability whatever for actions taken based on any information that may subsequently prove to be incorrect. This report is a licensed product and should not to be reproduced without prior permission. The information in this document has been extracted from etrack by a registered user. GlobalData holds no responsibility for the loss of original context and for any changes made to information following its extraction. All information was current at the time of extraction, although the original content may have been subsequently updated. 11