Greenpeace proposes a funding mechanism to roll out renewables in developing countries

At the Conference on the Mediterranean Solar Plan in Valencia (Spain) last week, Greenpeace presented a financial mechanism to boost renewable energy uptake in developing countries that would "give rise to the most clean energy at the lowest cost, so that between 1,600 and 2,300 GW of renewable capacity could be installed in non-OECD countries between 2010 and 2030”.

According to Greenpeace, the main objective of the proposed mechanism is to aid the enactment in developing countries of “laws on feed-in tariffs or premiums to support renewables, such as those already in use in forty countries (mostly industrialised), since this system is the most efficient for promoting clean energy because more renewable energy is achieved at a lower cost”.

The mechanism would involve establishing an international fund that would finance feed-in tariffs or premiums to support renewables in developing countries. It would be bolstered by contributions from developed countries through funds collected from the auction of carbon allowances or taxes on dirty energy.

The environmental organisation says that such a system would cover "the transition from the current situation, in which renewable energy has a greater cost than energy generated using dirty fuels (as dirty energy producers do not pay have to for their environmental impacts), until the cost of renewable generation falls below that of dirty energy, which is expected to occur around 2030".

According to Greenpeace’s Head of Climate Change and Energy, Jose Luis Garcia Ortega, "the dilemma is not between expensive clean energy and cheap dirty energy, but between continuing to pay for dirty and unsustainable energy, which is increasingly expensive, or investing in clean energy, which is increasingly cheaper".

These are what Greenpeace calls "the key parameters of the mechanism":

1. The mechanism shall guarantee the payment of feed-in tariffs or premiums to support renewables during a period of 20 years while projects operate correctly.

2. The mechanism will receive annual income from emissions trading or direct funding.

3. The mechanism will pay annual feed-in tariffs or premiums only on the basis of electricity generated.

4. Each project will have a professional maintenance company to ensure high availability.

5. The grid operator must monitor and send data on electricity generation to the international fund. Data from project managers and grid operators are to be compared regularly to check consistency.

Valencia did not not allowed submission of proposal in plenary meeting

This proposal is part of Greenpeace's Energy [R]evolution study, the 2010 updated edition of which is close to publication. This study considers two scenarios for the development of renewable energy which, with the proposed funding mechanism would provide additional renewable energy generation in developing countries equivalent to between 19 and 29 times the total electricity generated in Spain each year. With average carbon credit prices at $23 per tonne, the total program would cost between $76.3 and $61.4 billion per annum.

As for solar thermal electric energy, which has the greatest potential in the Mediterranean region, the proposed financial mechanism would permit between 130 and 255 GW of capacity to be installed in developing countries by 2030, according to Greenpeace, an NGO which "invites the Spanish government to consider this proposal and incorporate it into the Mediterranean Solar Plan, so that the first steps can be taken to implement the funding mechanism for fed-in tariffs or premiums to support renewables under this plan”.

The Conference on the Mediterranean Solar Plan was held in Valencia on 11 and 12 May, organised by the Spanish Presidency of the European Union. Greenpeace attended the conference, although it was not allowed to submit its proposal during the plenary meeting. A gigawatt equals a thousand megawatts, which is the typical power of a nuclear plant. Spain currently has about 19 GW of wind power and about 4 GW of solar. In the first four months of 2010, renewables generated twice the amount of energy as nuclear power in Spain.

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