Overview of RE Policies in the Mekong Region

1. Overview of RE Policies in the Mekong Region Policy and Incentive Mechanism for Renewable Energy Development in EEP Mekong Countries 20 November 2012 Melia Hotel, Hanoi, Vietnam Anthony Jude Director, Energy Division, Southeast Asia Department Asian Development Bank

2. Structure of Presentation • Diversity of Mekong Countries • Policy Drivers • Policy Targets • Policy Measures • Current RE Deployment • RE Barriers • Best Practice Policy Guideline • Final Remarks test

3. Mekong CountriesDiversity in economic development levels, energy resources, and markets Income Conventional Energy Resources HH Electrification (2011) Installed Capacity (2011) RE share in power generation (2011) Cambodia 0.5 GW 3.7% hydro 0.4% other RE Low Large hydro 26% Lao PDR 2.10 GW 100% hydro Lower Middle Coal Large hydro 57% Myanmar 3.36 GW 53.9 % hydro Low Oil and Gas Coal Large hydro 25% 31.45 GW 8% hydro 5% other RE Upper Middle Oil and Gas Coal Large hydro 99% Thailand 25.0 GW 43% hydro Lower Middle Oil and Gas Coal Large hydro 95% Vietnam Share of HH with access to electricity Excluding large hydro, share of RE is relatively small For countries with lower energy access rate: RE plays an important role in providing services in off-grid areas Hydropower investments were mostly carried out by state owned utilities.

4. Renewable Energy Policy DriversPolicy objectives Energy Security Economic Development Climate and Environment Cambodia “Energy Policy” Provide adequate energy supply - Promote environmental and sustainable development Lao PDR “RE Development Strategy” Ensure adequate supply Bring socio-economic benefits Ensure environmental and social sustainability Myanmar “Proposed Concepts RE Forum’ Reduce reliance on imported fuels Alternative markets for agri; rural employment; SME development Reduce pollution; environmental sustainability Fossil fuel substitution, enhance energy security Development of domestic RE industry Green utilization in communities; R&D of efficient, technologies Thailand “Alternative Energy Dev’t Plan” Replace and conserve fossil energy; enhance energy security Development of RE projects for economic development Clean energy supply, enhance sustainable dev’t, reduce GHGs Vietnam “RE Development Strategy”

5. RE Policy Targets

6. RE Policy Measures Fiscal Incentives Regulatory Instruments Information and Education RD&D Public Financing and voluntary Cambodia Demonstration projects Utility investments - - - Lao PDR - Utility investments Tax incentives - - Myanmar Demonstration projects Investments by Ministries involved - - - Research and Support, prototype demonstration Utility investments, cooperation with stakeholders BOI incentives, low interest loan, capital support Feed-in Adder (solar, wind, biomass, MSW, biogas, etc) Information on energy potential Thailand S&T Development Fund Utility investments Tax incentives, low interest loan, exempt land and environmental fees Feed-in tariff (wind), avoided costs for other RE Wind potential information Vietnam • One could expect that more RE investments were carried out in countries with combination of policy instruments • In countries with less policy instruments, RE investments were mostly carried out by state-owned utilities or donor agencies

7. RE Policies and Electricity Supply IndustryPolicy design must be consistent with the structure of the market • All Mekong countries are under various • variants of purchasing agency model • Cambodia: EdC, IPPs, rural entreprises • Lao PDR: EdL, IPPs • Myanmar: MOEP • Thailand: EGAT, IPPs, MEA and PEA • Vietnam: EVN and IPPs

8. Current RE DeploymentMarket diffusion - for one country, some RE technologies may have reached the take-off phase while other technologies may still be at the inception phase Market Consolidation Phase Where deployment grows towards maximum practicable level Vietnam Small hydro: 600 MW Biomass: 150 MW Wind: 37.5 MW MSW: 2.4 MW Solar: 2 MW Myanmar Mini-hydro: 33 MW Wood gasifier: 0.36 MW Wind: 0.0054 MW Solar: 0.006 MW Thailand Wind: 7.28 MW Solar: 256.13 MW Hydro: 95.7 MW Biomass: 1796 MW MWS: 27.48 MW Cambodia Small,micro hydro: 13.37 MW Biomass: 0.087 MW Solar: 3 MW Lao PDR Small hydro: 11.3 MW Biomass: 3.5 MW Solar: 0.1 MW Take-Off Phase When the market grows rapidly, leading to widespread deployment Inception Phase When first examples of a technology is deployed Inception Take-Off Consolidation Source: IEA, 2011

9. RE Barriers Source: IEA, 2011

10. RE Barriersbased on literature survey Techno Economic Regulatory & Policy Institutional & Admin. Market Financial Infrastructure Awareness & skilled personnel Acceptance & Environmen-tal Cambodia X X X X X X X X Lao PDR X X X X X X - X Myanmar X - X - - X X - X - X - - - X X Thailand X X - - X - X - Vietnam

11. RE Barriers and Technology Market Diffusion • Take-Off Phase • When the market grows rapidly, leading to widespread deployment • Significant Barriers • Economic • Market • Financing • Socio-cultural • Regulatory • Administrative • Medium Barriers • Grid integration • infrastructure • Market Consolidation Phase • Where deployment grows towards maximum practicable level • Significant Barriers • Grid integration • Market integration • Medium Barriers • Socio-cultural • Inception Phase • When first examples of a technology is deployed • Significant Barriers • Economic • Technical • Regulatory • Administrative • Medium Barriers • Financing • Socio-cultural Inception Take-Off Consolidation Source: IEA, 2011

12. Best Practice Policy GuidelinesSolutions are country specific which take into account national context • Inception Phase • Immature market • Technologies are not well established • Local supply chain is not in place • Financing institutions perceive investments as risky • Policy Measures • Develop a clear road map (including targets) • Provide a suitable mixture of support • Establish streamlined regulatory framework • Stimulate R&D • Take-Off Phase • Deployment of a specific technology is increasing in the national market • Supply chain is in place even not fully developed • Financing institutions have increased knowledge of technology • Policy Measures • Ensure predictable support environment (with ambitious target) • Ensure adaptability to market and technology developments • Provide appropriate incentives • Focus on removing non-economic barriers and implementation details Inception Take-Off Consolidation Source: IEA, 2011

13. Final Remarks • The Mekong Region is composed of countries at various levels of economic development, with different energy resource endowments, at various stages of energy market development • Countries with lower electrification rates have RE policies aimed at increasing energy access while those with higher electrification ratio, the focus is on grid-connected development. • Though most countries have RE policy targets, only Thailand and Vietnam have introduced more complex intervention and implementation measures to promote RE development • For each country, some RE technologies may have reached the ‘take-off phase’ of RE deployment while other technologies are still at the ‘inception phase’. • A combination of intervention measures is necessary to address both economic and non-economic barriers. The choice of measures is country and technology specific, and depends on the current level of market diffusion of a given RE technology as well as the national context

14. Thank you ajude@adb.org www.adb.org