Common Clean Power Policies | Clean Power Hub

Common Clean Power Policies

Policymakers have a variety of tried-and-true, cost-effective options to achieve policy goals through increased deployment of clean power.

The options that are best and most appropriate for your power system will depend upon a variety of factors, including the power system’s structure, existing or emerging barriers to clean power, and political economy considerations.

What You Need To Know

  • Common clean power policies include targets, mandates, procurement mechanisms, financial incentives, and information campaigns. These measures are often used in combination with one another.
  • Policies and incentives to support renewable power have evolved over the past decade as the cost of renewables has fallen. While the policies needed to overcome price barriers may not be as relevant today, other barriers remain.
  • Before selecting a policy measure or framework, carefully consider your power system’s structure as well as your country’s political economy and goals. Each policy or incentive model has its own strengths and limitations, and is better suited to some contexts than others.

First, Read This

Targets can create clear signals to power system stakeholders to invest in renewable energy, and continue to be one of the most popular policy mechanisms around the world.

Many jurisdictions have adopted targets for renewable capacity and generation, as well as policies aimed at promoting both large and small-scale renewable power to achieve these targets. In 2019, targets continued to be the most popular form of intervention to spur investment in both large-and small-scale renewables. By the end of the year, 166 countries had in place some form of renewable electricity target, up from 162 countries in 2018. In addition, corporate sourcing of renewables continued to advance during the year, due in part to government support policies.

Several countries adopted new targets in 2019. For example, Pakistan committed to a renewable electricity target of 30% by 2030, and Mauritius committed to a target of 35% renewables by 2025 in its Renewable Energy Roadmap 2030 for the Electricity Sector. Angola set a goal of 800 megawatts (MW) of renewables (representing 74% of its installed power base) by 2025. Ghana adopted a target to increase the share of renewable electricity in the energy mix in order to reduce dependence on traditional biomass, provide distributed renewable energy options for off-grid communities, and promote local content and local participation in the renewables industry by 2030.

At the sub-national level, the Australian Capital Territory reached its 100% renewable electricity target in 2019. At least three large US cities (Chicago, Los Angeles and Philadelphia) also committed to 100% renewable electricity by 2045.

Some countries made existing targets more ambitious. Chinese Taipei passed amendments to its Renewable Energy Development Act to increase its renewable electricity target from 10 gigawatts (GW) to 27 GW by 2025. Nine Latin American countries set a collective target of 70% renewable electricity by 2030. Bulgaria, France and Greece all pledged to update their national renewable electricity targets for 2030. The Republic of Korea increased its renewable electricity target to 35% by 2040, more than four times the previous target.

Text excerpt from REN21: Renewables 2020: Global Status Report

Now, Read This

As renewable energy costs have come down, and unique market and power system conditions have emerged in countries around the world, policymakers have innovated. Existing policies have been adapted and refined, and new policies have been developed and tested.

For example, for many years “feed-in” policies addressed key barriers and were prevalent. Recently, however, auctions and tenders are a more widely used tool to encourage investment in renewables.

Policy mechanisms that promote large-scale, centralised renewable power include renewable portfolio standards (RPS) and other quota obligations, feed-in policies (tariffs and premiums), renewable power tenders and auctions, financial incentives (for example, grants, rebates and tax credits) and more recently community choice aggregation programmes. In 2019, the shift continued away from feed-in policies and towards mechanisms such as auctions and tenders. Feed-in policies have been used to promote both large-scale, centralised renewable energy and decentralised renewables. By the end of 2019, feed-in policies were in place in 113 jurisdictions at the national, state or provincial levels, with no change from 2018. A number of jurisdictions updated their existing feed-in tariff programmes to keep up with changing market conditions. China announced new FIT amounts for large-scale solar PV, which became effective from July 2019. These new FIT amounts were coupled with a scheme to award capacity through a reverse auction, where interested parties bid for a premium to be paid on top of regional benchmark electricity prices. China also implemented new FITs for centralised ground-mounted solar PV systems. In Spain, in response to litigation sparked by retroactive reductions in financial support amounts in the FIT programme, the government approved a plan in 2019 to offer 7% in guaranteed returns for more than a decade to renewable energy projects that agree to scrap ongoing lawsuits over the FIT phase-out.

A number of FIT programmes were cancelled, or scheduled to be cancelled, in 2019. The United Kingdom’s FIT programme ended at the end of March, and in December 2019 Vietnam announced plans to switch from FITs for large-scale solar PV to a new auction mechanism, marking a shift from earlier plans to reboot its FIT scheme. However, in April 2020 Vietnam decided to allow solar PV projects that would commence commercial operation before the end of that year to continue participating in the FIT programme, while all other projects would transition to an auction mechanism.

Many countries continued to turn to competitive auctions and tenders in lieu of feed-in policies to deploy large scale, centralised renewable energy projects. During 2019, renewable energy auctions or tenders were held in at least 41 countries at the national or state/provincial level, down from 48 countries in 2018. However, the total number of countries that have used this mechanism increased to 109 (up from 98 in 2018) as new countries held tenders during the year for the first time. Of the at least 68 auctions held in 2019, most focused exclusively on solar PV or wind power, and some included solar PV plus storage (also called solar-plus-storage); just two of the auctions were technology-neutral (among renewable energy technologies).

Text excerpt from REN21: Renewables 2020: Global Status Report

And Look At This

Next, Read This

Over the past decade, policymakers have increasingly used financial incentives – including credit enhancements, tax incentives, rebates, grants, performance-based incentives, and subsidized loans – alongside other policies to accelerate investment in renewable power technologies.

Now, Review This

Many, if not most, countries deploy multiple clean power policy and incentive measures—the appropriateness and effectiveness of these measures changes as clean power becomes a larger part of a power system and as local clean power markets mature. A deep understanding of your power system’s structure and state of play, as well as clear goals for the future, is fundamental to picking the right policy options.

Your own country may deploy multiple clean power policy measures of which you are not aware. Review this table to refamiliarize yourself with what your country already has in place.

Suggested Actions & Next Steps

  • Define the State of Play: What are the critical barriers to clean power in your power system? Talk to colleagues and stakeholders, or consider convening a stakeholder workshop to develop a consensus around the most important barriers to address.
  • Review & Consider: Many countries use more than one policy or incentive to drive growth and integration of renewables in the power sector. Refer to this chart to refresh yourself on the renewable power policies in your country. And learn more about the state of play in your country using the World Bank's RISE platform. What policy measures are being deployed by countries that are doing more on clean power? And read this article to learn more about how Europe is leading a green recovery as a result of the COVID-19 pandemic.
Want to Talk with Someone Who’s Done it?Ask your questions and share your expertise in the Clean Power Hub Community.


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