Message-ID: <Pine.3.89.9806010914.C25819-0100000@lan.vita.org> Date: Mon, 1 Jun 1998 09:03:28 -0400 From: Dania Granados <mailto:granados@LAN.VITA.ORG> Subject: DevelopNet News: June 98 To: mailto:DEVEL-L@AMERICAN.EDU
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June 1998 Volume 8, No. 6
IN THIS ISSUE
FOCUS ON ENERGY SECTOR IN DEVELOPING COUNTRIES
Will Reform Affect Market Prospects for Renewables?
LITERATURE REVIEWS
The Rise of the Net Generation
ORGANIZATIONS
Renewable Energy Policy Project
VITA PROJECTS
"Revolution of Inclusion" panel discussions
ANNOUNCEMENTS
Exploring what works and why
There are no boundaries
* * *
DevelopNet News is published monthly by Volunteers in Technical Assistance
(VITA) in Arlington, Virginia, USA. For additional information, please see
the end of this newsletter.
* * *
F o c u s o n
E n e r g y S e c t o r i n D e v e l o p i n g C o u n t r i e s
Will Reform Affect Market Prospects for Renewables
Developing countries need swelling quantities of electricity to power
their emerging economies and serve growing populations. Electricity is
needed both to industrialize and to provide basic energy for the 2 billion
people living off the grid in rural areas.
If current trends persist, escalating energy use will strain the global
climate by boosting carbon emissions, and it will degrade local air
quality, already ominously poor in many areas. To break the link between
the growth in energy demand and pollution in developing countries, clean
energy sources need to be deployed, including renewable energy
technologies powered by sunlight, wind, plant material, flowing water, and
the heat of the earth. Renewables can contribute to bulk power markets, in
which large, centralized generating facilities deliver power to extensive
transmission grids. Renewables also can contribute to distributed markets,
which include small, grid-connected generating units installed close to
where consumers use electricity, free-standing systems that supply
isolated villages, or stand-alone units that power individual households.
As developing nations grow, many will abandon centrally planned,
state-owned electric systems in favor of privately owned and managed
generation, transmission, and distribution companies. These changes are
intended to reduce public debt, enhance accountability, and improve
customer service. This paper reviews the impact of power-sector reform on
bulk and distributed markets for renewable energy and offers
recommendations for policymakers in developing countries seeking to
improve environmental quality as they make their power sectors more
efficient.
Types of Electricity Sector Reform
Developing nations have pursued four types of reform. Under
commercialization, governments maintain ownership of electric utilities
but remove subsidies and preferential fiscal policies, while requiring
full recovery of capital, operations, and maintenance costs. For many
nations, commercialization precedes privatization, which can include the
purchase of power from private power producers, the sale of existing
facilities to private firms, and independent regulation. Nations may
choose to restructure their electricity sectors by "unbundling" utilities
into independent firms that individually provide generation, transmission,
distribution, and retail services. Finally, reforms have also included
competition for wholesale power and, less often, retail services.
How Will Reform Affect Market Prospects for Renewables?
Commercialization should help renewables in distributed markets. Utilities
required to recover the cost of serving isolated rural areas will often
find small renewable energy systems cheaper than grid extension-even apart
from the environmental advantages. Distributed renewables reduce demand
for grid electricity, so that utilities can channel power to cities, where
clustered customers use more electricity per unit of capital outlay.
Commercialization alone will have little effect on bulk power markets for
renewables, although it may improve utilities' ability to adopt new
technologies.
The effects of privatization on penetration of renewables are mixed.
Privatization can promote renewables by introducing new capital. However,
higher discount rates and short time horizons may favor non-renewables.
Private energy suppliers face higher interest rates than government
entities, and will prefer conventional energy options with lower capital
costs. Private electricity companies may also care less about "social
objectives" such as serving rural people. For bulk power markets, since
private producers often must recover their investment over a limited
contract period, renewables with a comparatively high capital cost may
find it difficult to attract private debt financing. Moreover, preparing a
power purchase bid for site-specific renewable energy projects may cost
more per megawatt than for conventional projects.
At best, restructuring will leave prospects for renewables as well off as
they were when the utility was vertically integrated. If retail tariffs
accurately reflect generation, transmission and distribution costs,
customers will have stronger incentives to install distributed generators
than if they cannot avoid these costs by doing so. At worst, no single
player in an unbundled system may be able to fully benefit from avoiding
new generation, transmission, or distribution construction by installing
distributed resources.
Wholesale and retail competition is likely to deter investments in
renewables in the absence of offsetting regulatory incentives. Competition
that includes "spot" markets for wholesale power (that is, markets for
bulk power to be delivered immediately) will be particularly unfriendly to
renewables such as wind and solar that are only available intermittently,
since spot markets value generators that can assure power during peak
periods. Owners of transmission facilities may also charge intermittent
renewable energy projects comparatively more for access to power lines.
Retail competition without inclusion of environmental costs in energy
prices may prove equally troublesome for renewables, as electricity
suppliers eschew more capital-cost-intensive renewable energy in favor of
the cheapest power available in the near term.
Conclusions
Historically, few state-owned monopoly utilities in developing countries
have promoted non-hydro renewables on a sustainable basis and seem
unlikely to do so under a business- as-usual future. At worst then,
reforms can strengthen existing biases toward conventional resources. At
best, they can encourage the power sector to weigh new options for
expanding service, especially through the distributed model.
Electricity suppliers will more likely adopt renewables under reforms
where governments eliminate fuel and tariff subsidies; where utilities
account for generation separately from transmission and distribution; and
where utilities extend rural service in the cheapest manner possible.
Renewables are likely to play a larger role in power systems dominated by
the distributed model than by the central station paradigm. However,
successful deployment of distributed renewables in an unbundled system
requires that at least one player can capture system benefits.
Recommendations
The confluence of commercial maturation of renewable energy technologies,
rapid growth in power demand, and growing concern over the environmental
implications of power generation suggests that power sector reform could
be used to stimulate rapid deployment of renewables in developing
countries. Implementing the following recommendations would help this
potential to be achieved:
* To avoid "locking in" polluting technology, developing country
governments should evaluate proposed reforms with respect to the
incentives they create for technology choices.
* Bilateral and multilateral aid agencies should help developing nations
design indigenous, environmentally sustainable models for power sector
structure, operation, and regulation.
* As developing countries reform their power sectors, they should enact
laws and regulations that specify and strengthen the responsibilities of
privatized distribution companies for rural electrification. They should
also clarify sources of funding for rural electrification.
* Regulation of retail electricity suppliers should create economic
incentives that promote full consideration of renewable energy
technologies for bulk power, distributed generation, and demand-side
applications. Power sector reforms should ensure that distributed options
can compete to provide electricity services.
* Power purchase agreements need to be crafted in ways that avoid biases
against participation by renewables in bulk power markets.
* Where transmission services become common carriers, all types of
generation should have equal access to transmission capacity.
* Wholesale power markets should be required to consider the environmental
characteristics of competing generators.
The current period of power sector reform in developing countries will
last at least a decade. It will open huge markets to renewables. In some
of these, renewables will have a competitive advantage. But the moment of
opportunity will eventually pass: if developing nations adopt rules that
lock in conventional technologies, they will lose a unique occasion to
develop a clean, economically efficient power sector.
Note: This article is reprinted with permission; it was first printed as
the Executive Summary of the April 1998 edition of the Renewable Energy
Project Report. For information contact mailto:VirinderS@aol.com. For complete
document contact www.repp.org.
* * *
L i t e r a t u r e R e v i e w s
The Rise of the Net Generation
Tapscott, Don, Growing Up Digital, McGraw Hill, New York, 1998.
This book illustrates its title. It was actually written on the Internet
involving discussion with 300 children between the ages of 4 and 20 on six
continents over a one year period. The book is based on the perceptions of
the "echo" generation, the children of the "boomers," or, as the author
calls them, the N-Gen.
Cute/profound statements by the kids are interspersed throughout the book;
e.g. "I can't remember not using the computer. We had a lot of computers
in the house and everybody played with them all the time." Another: "Many
TV cartoons have such bad graphics. Like on the Flintstones they keep
using the same background over and over again as Fred is running along.
And they aren't even 3D. I guess they made those things before they had
computers."
Of course, the book didn't deal with the young people in developing
countries that don't have access to computers and the marvels they can
reveal. Nevertheless, the easy acceptance and use of computers and
Internet is motivating a whole generation of young people who will make
sure that their peers in developing countries can eventually enjoy the
same benefits. Unlike us, the young people don't have to "relearn" and
adjust to "new" technologies; they never experienced the "old"
technologies that kept viewers and users passive. This generation of kids
is being shaped by the most powerful information technology in history:
television, computers, Internet, the WWW. The words that best characterize
this generation are connected and interactive!
The author spells out 10 themes of the N-Gem culture: fierce independence,
emotional and intellectual openness, inclusion, free expression and strong
views, innovation, preoccupation with maturity, investigation, immediacy,
sensitivity to corporate interest, and authentication and trust.
The author is extremely optimistic about this generation of young people
and where it will take the world. He concludes the book with a plea,
"listen to the children."
Joe Sedlak
mailto:jsedlak@vita.org
* * *
O r g a n i z a t i o n s
Renewable Energy Policy Project
The Renewable Energy Policy Project (REPP) was launched in August 1995
with the support and advice of the renewable energy community. REPP
supports the advancement of renewable energy technology (including wind,
solar, geothermal, biomass, renewable hydrogen, and small hydropower)
through policy research. The organization offers a platform from which
experts in the field can examine issues of medium- to long-term
importance, and which receive little attention compared with more
immediate concerns. REPP's constituency includes renewable energy
businesses, advocates, legislators, regulators, the financial community,
educators, and students both in the U.S. and abroad.
Through its Issue Briefs, Research Reports, long-term research projects,
and presentations, REPP focuses on growth strategies for renewables that
respond to competitive energy markets and environmental needs.
REPP has analyzed opportunities in competitive markets through reports
such as Green Power for Business, Cooperative Wind, Clean Hydrogen
Transportation, Net Metering, and Renewables in Indian Country. A
research project underway (in conjunction with The Energy Foundation of
San Francisco) will identify actions to expand the U.S. photovoltaic
market.
REPP has examined environmental needs through reports such as Energy and
the Environment: The Public View, and Dying Needlessly: Sickness and Death
Due to Energy-Related Air Pollution. A current research project is
examining how renewables can meet U.S. air quality goals under the U.S.
Clean Air Act and the Kyoto Protocol on climate change. Also, REPP is
developing tools that can help educate both the renewable energy community
and air pollution regulators on renewable energy's role in reducing air
pollution.
Increasingly, REPP is expanding its focus to the international arena.
Recently, REPP released a report by Keith Kozloff on the impact of
electricity reform in developing nations on the adoption of renewables.
At least three more reports will target the international market. Chris
Flavin and Seth Dunn will discuss renewable energy business opportunities
presented by the Kyoto Protocol. Curtis Moore will survey policies in
Japan and Europe to promote renewables domestically and as an export
product. And Steve Kaufman will determine the potential for photovoltaics
to reduce greenhouse gas emissions in developing nations.
REPP disseminates its products several ways. First, all REPP materials
are posted on the Internet at http://www.repp.org. Second, a mailing list
covers approximately 2,700 contacts. It includes contributions from the
National Council of State Legislators, the World Bank, and others, and
will be expanded shortly with targeted lists (for example, American Indian
tribal leaders). In the international arena, it includes non-government
organizations, foreign policymakers and legislators, multilateral and
bilateral assistance officials, and researchers.
REPP is guided by a distinguished and active Board of Directors, who
represent diverse parties in the renewable energy community. The Board
helps shape REPP's research agenda, and reviews its products to assure
their relevance, accuracy, and quality. The board is chaired by Carl
Weinberg, former director of research and development for the Pacific Gas
& Electric Company, and a consultant to numerous projects in developing
nations.
REPP welcomes research suggestions, comments, and requests. You can
e-mail REPP's Research Director, Dr. Adam Serchuk, at mailto:aserchuk@aol.com;
write to REPP at 1612 K St., NW, Suite 410, Washington DC, 20006, USA; or
call REPP at 202-293-2833.
* * *
V I T A P r o j e c t
"Revolution of Inclusion" second panel discussion to commence on June 1
The purpose of this series of small panel electronic discussions is to
develop a plan of action to ensure that developing countries can dip into
the information steams encircling the rest of the world for the knowledge
they need to improve their living conditions. The final number of panels
hasn't yet been determined, but discussions will focus on baseline issues,
education, health, disaster, and other critical information needs of
people in developing countries. A final discussion will focus on
developing the plan of action.
Fifteen interested people with "hands on" experience in developing country
communications were selected as the first panelists whose discussion
started on April 9, 1998 and ended on May 8, 1998. (See VITAlink panelists
on www.vita.org)
The first panel discussion topic was "Developing Country Communications
Baseline Issues." Five questions were posed to the panel to stimulate
discussion. Details may be found at www.vita.org, VITAlink, Issues.
The second panel discussion will focus on communications for developing
country distance education. It will take place June 8 - June 19. Anyone
interested should send name and 10-12 page biography to mailto:vitalink@vita.org.
* * *
C o n f e r e n c e A n n o u n c e m e n t s
What Works and Why
"Partnerships and Participation in Telecommunications for Rural
Development: Exploring what works and why" is scheduled for October 26 &
27, 1998 at the University of Guelp, Guelph, Ontario, Canada. The
conference will focus on telecommunication for participatory rural
development in the Canadian context, but with an eye to seeing how
lessons-learned in Canada might be applied by people in developing
countries.
There will be an online preconference October 1-21. This preconference
will cover lessons learned, current rural activities involving
telecommunications and Internet, and building on the lessons learned.
For more information contact Susan Rimkus at mailto:srimkus@uoguelph.ca.
There Are No Boundaries
The first international conference on rural telecommunications is
scheduled for November 30-December 2, 1998 at the Hyatt Regency Capitol
Hill Hotel, Washington, DC. It is sponsored by the World Bank, under the
umbrella of the Global Knowledge Partnership. The other sponsor is the
National Telephone Cooperative Association.
This conference is devoted exclusively to the issue of rural
telecommunications development. Finding ways to serve rural residents is
one of the most critical concerns in international communications
technology development, and this will be the first worldwide attempt to
address this specific issue in a comprehensive manner.
This conference, by bringing together the worlds practitioners and policy
makers in rural telecommunications development, is designed to stimulate
new ideas, new working partnerships, resource sharing and information
exchange.
For information contact www.globalknowledge.org.
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* * *
DevelopNet News is an electronic newsletter published monthly by
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