“Smart grids from invention to implementation” Preliminary Findings

WEC Knowledge Network on Innovative Financing Mechanisms

EU North America Japan South Korea China India Brazil

Innovative Financing Mechanisms

WEC Knowledge Network

* Brazil has recently joined

Policy Recommendations

To formulate Policy Recommendations towards Innovative SG Financing Mechanisms

Summer 2012

End of June 2012

Preliminary Analysis

Final report

Late 2012

Regional Context

Main SG drivers

Main challenges

Currently available Financing Mechanisms

Spring 2011

SG Main Drivers and Challenges WEC - Preliminary Findings

• OECD Countries Low Carbon and Energy Efficiency

• OECD Asian Countries Green Economy Growth Agenda

• Emerging Countries Fast Growth Infrastructure

Main Drivers

• Most Countries Business case and Financing

• EU and North America Regulation

• EU and North America Public awareness/acceptance

Main Challenges

Drivers strongly depend on the regional context

No significant challenges reported by South Korea

Just a few from China (where state-owned network companies enable rapid construction)

High technical and non technical losses reported in India (mainly from thefts) and Brazil

Available Financing Mechanisms WEC - Preliminary Findings

• New Tailored Mechanisms: •AEEG (IT) ‘Del39/10’

•OFGEM (UK) ‘RIIO, LCNF’, IFI, RPZ’,

•‘R-APDRP’ (India)

• North America: Partnership GE/venture capital firms

• South Korea: Government + private funds (0.5 +18.1 billion USD)

•USTDA $686,447 grant for SG implementation

•DRUM Training Program: $30 million by the USAID and the Indian Ministry of Power for SG development

• European Union: EU funding programs for RD&D projects (FP7, IEE, NER300, Connecting EU facilities)

• USA: over $4 billion from DOE

Public Funding

External Grants

Regulatory Incentives

Private Funding

Some Best Practice examples

BACK UP

EU North America Japan South Korea China India

Main Drivers

Low Carbon

Agenda

Grid upgrading and

energy efficiency

Re-examination

of nuclear

energy policy

Green Economy

Growth Agenda

Fast Growth

Infrastructure

Fast Growth

Infrastructure

Integration of RES

Infrastructure

upgrade

Infrastructure

upgrade

Surge in wind

capacity

Energy

efficiency

Enhancing

energy

security

Environment

al protection

Boosting

manufacturin

g and IT

industry

Consumption

growth

Long-term

economic

growth

Energy

consumption

growth

Rising

demand

High levels

of losses

Main Challenges

Large Scale Demos

Coordination needs Unsuitable Funding

(inappropriate

regulatory frameworks)

Deployment

Technology

Standards

Unclear Regulation

Negative Business

Cases

Public awareness

Unclear

Regulation

Insufficient funding

Abundance of

natural gas (over

RES)

Consumer

pushback to smart

meter rollout

Insufficient

funding

(need of

appropriate tariff

mechanisms

reported)

No significant

reported

challenges up to

date

Few reported

barriers

State-owned

network

companies

enable rapid

construction

Inaccurate

billing

High

electricity

thefts Insufficient

finances

SG Innovative Financing Mechanisms (1/2) WEC - Preliminary Findings

SG Innovative Financing Mechanisms (2/2) WEC - Preliminary Findings

Formulating Policy Recommendations Late 2012

Preliminary Analysis

Final report

Summer

* to be presented at an Int. Conference still to be chosen

EU North America Japan South Korea China India

Main available financing mechanisms

EU funding (FP7, IEE)

Regulatory Incentives

New Tailored

funding mechanisms

(Italy ‘Del39/10’,

Ofgem’ RIIO, LCNF’,

IFI, RPZ’)

Changing

Framework (Finland,

Portugal)

Traditional

Regulatory

Frameworks

(Austria, Germany)

Private

Funding/Venture

Capital

Best practice

example:

partnership among

GE and venture

capital firms

Public Financing

With funding from

the Recovery Act,

the DOE invested

over 4 billion USD

Public

National

Funds

METI

National

Funds (157

M USD+

111 M USD

in 2012 for

large scale

demos)

No

regulatory

incentives

Private/Public

funds

18.6 billion USD

by 2030

(0.5 billion USD

from

government +

18.1 billion USD

from private

funds)

Govt.

Funds

Funds from

State Grid

Corporation

of China

(SGCC)

Regulatory

incentives

Policies for

onto-grid

electricity

prices of

renewable

energy

Public National Funds

USD 134 million from government

on 8 pilot s

External grants

•USAID and the Indian Ministry of

Power : $30 million also with

training

•USTDA : $686,447 grant for SG

implementation

Regulatory Incentives

Re-structured Accelerated Power

Development and Reforms

Programme (R-APDRP) is a Govt.

of India financial incentive scheme

(~ USD 9 billion) for strengthening

and up gradation of sub-

transmission and distribution

network through adoption of IT and

implementation of SG technologies