,Indonesia

Chasing renewable project incentives: How are they working their charm in Asia?

Countries with a combination of incentives have experienced the greatest growth in renewable power.

When ASEAN countries ask which single renewable energy, or RE, incentive will prove most beneficial to their development plans, the question itself could be flawed as the region has seen the most effective results not from a single bullet solution but from a basket of measures. Countries with a combination of incentives have experienced the greatest growth in renewable power, said Supawan Saelim, renewable energy policy specialist at USAID Clean Power Asia.

“FiT have been the key incentive, usually combined with soft loans and tax incentives,” said Saelim, but so far, only three ASEAN countries — Indonesia, Malaysia and Thailand — offer this optimal trio of incentives for grid-connected RE power. The Philippines and Vietnam have FiT and tax incentives in place, but do not provide lower-interest-rate loans. Myanmar, Singapore, Cambodia and Lao PDR only provide tax incentives. Meanwhile, Brunei has none of the three. 

Is combination the key?
Whilst a combination of incentives can significantly accelerate RE development, Melati Wulandari, technical officer, ASEAN-German energy programme at ASEAN Centre for Energy noted that policy measures that target the reduction of capital and operating costs can lead to lower RE costs, which then creates a similar enabling effect for the sector.

Wulandari said the two policies that lead to the lowest RE cost, citing the levelised cost of electricity of selected renewable technologies in ASEAN. First, reducing ROE at 12% brings the RE cost to US$0.1626/kWh from the current US$0.187/kWh with baseline parameters. The second is lowering the interest rate at 3%, which brings the RE cost down to US$0.1637/kWh. 

Two other policies that bring down the RE cost are increasing the debt share to 80%, which results in a  US$0.1671/ kWh cost, and removing duties and taxes, which reduces it to US$0.17/kWh.  Meanwhile, policies such as 5-year income tax holidays and longer 10-year  loan terms will not lower the RE cost. Finally, a lower corporate tax of 18% actually raises the RE cost to US$0.1909/ kWh. 

With incentives and policies showing a  palpable positive effect in RE development, ASEAN countries are striking a balance between finetuning existing initiatives and new ones. The Philippines, for example, is in the process of rolling out Renewable Portfolio Standards, the Green Energy Option Program, and net metering alongside FiTs and fiscal incentives, said Marissa P. Cerezo, assistant director at the Renewable Energy Management Bureau. The country is looking to finalise the implementing rules on Renewable Portfolio Standards, or RPS, that creates a mandated minimum  percentage of RE generation. Regional public consultations were completed in 2017, and a draft has been  endorsed to the Department of Energy for consideration.

Another key policy in the pipeline is the Green Energy Option Program, which creates open access enabling end users to choose to purchase electricity from RE facilities. This, too, has finished nationwide public consultations and has been endorsed to the energy department.  

Join Asian Power community
Since you're here...

...there are many ways you can work with us to advertise your company and connect to your customers. Our team can help you dight and create an advertising campaign, in print and digital, on this website and in print magazine.

We can also organize a real life or digital event for you and find thought leader speakers as well as industry leaders, who could be your potential partners, to join the event. We also run some awards programmes which give you an opportunity to be recognized for your achievements during the year and you can join this as a participant or a sponsor.

Let us help you drive your business forward with a good partnership!

The two will collaborate to assess the role of green hydrogen in India’s energy transition.
This was met by renewables as well as coal, and gas generation.
It forms part of a 470MW battery project.          
About 120GW of new solar and wind capacity is expected in 2022.  
The agreement includes exploration of offshore wind projects.
The growth rate stabilises following an 8% increase in 2021.
This is a 10-fold increase from the Philippines grid-connected solar capacity.
32 nuclear reactors under construction are expected to bring 30GW in electricity per year.
Without banking power, the business model of solar power becomes unviable.
It is ideal for India because of its geographical location and the socio-economic opportunities it will offer, IEEFA Contributor Charles Worringham argues.
It will look into the development of a 1.2GW solar capacity in Indonesia.
The joint venture will operate under the brand Solar Radiance.
This is to support the increasing demand, according to Wood Mackenzie.
The joint venture is expected to start operations in the first half of 2022.
The product will allow coverage of consequential loss due to damages on property during PV installation.