Focus Areas & Indicators
Risk Mitigation
Generally speaking, risk mitigation refers to measures to reduce the risk for investors in order to reduce the cost of capital and thus the power generation costs of renewable energies. Risk mitigation elements in the design of power purchase agreements (Indicator 1.1.) and procurement incentives for large-scale and small-scale renewables (Indicator 1.2 and 1.3).
“Procurement incentives” cover all aspects that are often summarized under the header “support mechanisms” (e.g., auctions, feed-in tariffs, etc). Since the cost of renewables has decreased rapidly and procuring RE is frequently less expensive than new fossil fuel plants, “support mechanism” is no longer an appropriate terminology. Moreover, the existence of additional fiscal incentives (Indicator 1.4) and carbon pricing (Indicator 1.5) is assessed.
Planning & Permitting
Planning and permitting rules allow for aligned and streamlined processes that reduce project development risk and lower transaction costs. Spatial planning is increasingly important for RE deployment as land availability is often a constraint. Permitting typically includes various actors at national and sub-national level and can become a barrier in the case of lacking coordination and excessive number of permits.
Power System Flexibility for RE Integration
Electricity systems will need to become more flexible in order to integrate increasing shares of variable renewables (wind and solar PV). The integration of electricity from renewable energy sources into power markets requires a dispatch regime (priority dispatch, economic dispatch – see Indicator 3.1) and forecasting of power output (Indicator 3.2). Power system flexibility can be induced via regulatory measures (Indicated 3.3) or market based incentives (liberalization of the power market – Indicator 3.4).
Grids
Grid infrastructure is a key ingredient for a successful energy transition. Grids expansion planning (Indicator 4.1) is a key enabler for renewable energy deployment. To use the grid, grid access regulation is crucial (Indicator 4.2), as are streamlined grid connection procedures (Indicator 4.3). In the future, smart grids (using ICT) will be a key enabler for integrating renewables and balancing the grid (Indicator 4.4).
Fossil Fuel Phase-Out
Achieving electricity systems with very high shares of renewable energies requires a gradual phase-down of fossil fuels. One the one hand, renewable energy technologies need to be phased into the electricity system. Simultaneously, fossil fuels need to be phased out to make space for clean alternatives, thus decarbonizing the power sector.
Targets
Targets are an increasingly important governance tool for managing the complex energy transition process. Renewable energy targets are typically embedded in a larger framework of targets. Ideally, there is a hierarchy of targets, bridging economy wide net zero targets with deployment targets for wind and solar PV in the electricity sector. In total, this includes net zero targets, targets for decarbonizing the energy sector, targets for decarbonizing the electricity sector, targets for renewables in the electricity sector (with specific targets for individual technologies such as solar PV and wind energy).
Just Transition
Organizing the energy transition in general and renewable energy development in particular in a just and equitable manner is key for the success of the energy transition. Important elements of a just transition include consultation with the local community when it comes to the selection of the site (siting – Indicator C1). If public consultation is not done properly, the project cannot move forward and permits will not be issued. In addition, some jurisdictions offer incentives and regulation for local communities to participate financially (Indicator C2). Moreover, policies for harnessing socio-economic co-benefits can be implemented (Indicator C3). Lastly, specific policies are required for coal workers (Indicator C4) and coal-heavy regions (Indicator C5).
