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5 Renewable Energy Policies, Markets, and Deployment in China and the United States
Pages 113-150

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From page 113...
... The United States and China have historically taken different approaches to policy making in the energy sector, partly because they have different needs and priorities and partly because they have different systems of government. These factors can make it difficult to comparatively analyze policies, or to find common ground for cooperation on policy-related matters.
From page 114...
... cells produced in China were exported. General and Targeted Policies In China's 11th Fie year Plan, its broad renewable energy policy goal is to "accelerate renewable technology advancement and industrial system develop ment .
From page 115...
... Mandates detailed responsibilities of the power generating companies and the grid companies to develop renewable energy power generation. May 2006 Interim Measures for Management Detailed codes for supporting key areas, such as funding, management, and assessment.
From page 116...
... 2000 10th Five Year Plan for Energy Outlines the national energy resource agenda for the 2000–2005 administrative period with a Conservation and Resources focus on efficiency, energy conservation, consumption reduction, and comprehensive resource Comprehensive Utilization utilization. This includes: 1.
From page 117...
... One of the most important renewable energy policies in China is the Medium and Long Term Development Plan for Renewable Energy. This policy has a specific goal of increasing the share of clean energy (to include large hydro and nuclear)
From page 118...
... as renewable power plant installations increase in quantity and scale, site-specific environmental impacts, if not properly managed, could undermine support for a further proliferation of these projects. Grid Integration The expansion of the electricity grid has not always kept up with the con struction of new renewable energy projects.
From page 119...
... Recent legislation related to DOE activities include the Energy Policy Act of 2005 and the Energy Independence and Security Act of 2007, which was the last comprehensive energy bill passed in the United States. As of July 2010, comprehensive federal legislation on energy was still pending in the House of Representatives (H.R.
From page 120...
... per watt of PV modules installed. States have often been referred to as "laboratories" for policy experimentation, and this has been the case for renewable energy policies since the early 2000s (NAE/NRC/CAS/CAE, 2007)
From page 121...
... Of that sum, $4.5 billion is to be spent on smart grid applications, $4 billion for loan guarantees, $2.3 billion in manufacturing tax credits, and $2.5 billion for research, development, and demonstration within DOE's Office of Energy Efficiency and Renewable Energy. The RPS, the most often used state-level policy to encourage renewable energy development, is complemented by tax credits and other incentives.
From page 122...
... 1994–present Production Primarily Electricity Financial Mandates 2.1 cent tax credit per KWh of electricity generated in the Tax Credit federal incentives first 10 years of new renewables projects. 1986–present Modified Federal Electricity Financial By allowing a wide variety of renewable electricity assets to be Accelerated incentives declared as depreciating rapidly, this system indirectly reduces the tax Cost- burden on entities building renewable energy capacity.
From page 123...
... low-interest loans Varies State goals States (5) Primarily Goal setting Five states that have not established binding renewable energy targets electricity have established nonbinding goals instead.
From page 124...
... 200–present Green power States Electricity Financial Protocol by which consumers can pay a surcharge on their electricity purchasing (mandatory incentives prices to "buy" renewable power. Obvious difficulty is that utility in 7)
From page 125...
... incentives Source: Bezdek and Wendling, 2007. 10 0% Gov't Svcs R& D 9% Market Ac tivit y Gov' t 23 % Svcs 15% Regulation R& D 35% 44% Market R& D Ac tivit y R& D 34% 74% 85% R& D 52 % Ta x Policy 87% Ta x Policy Ta x Policy 52 % 45% Ta x Policy Ta x Policy 33 % 25% Ta x Policy Regulation 15% 14% Oil Gas Coal Hydro Nuclear Wind/ Solar Geo Ta xation Regulation R&D Market Ac tivity Gov' t Svc s Disbursement s FIGURE 5-2 Mix of federal incentives for each energy source.
From page 126...
... COMPARISON OF ENERGY POLICIES Although both China and the United States have implemented policies to pro mote the expansion of renewable energy in their respective markets, their general approaches to policy making differ dramatically. Table 5-5 presents a side-by-side timeline of major renewable energy policy events in each country.
From page 127...
... Renewables Policy Renewables Policy 1978 Public Utilities Regulatory Policy Act enacted, which requires public utilities to purchase power from qualifying renewable facilities. Energy Tax Act provides personal income tax credits and business tax credits for renewables.
From page 128...
... Renewables Policy Renewables Policy 1996 Net metering laws started to take effect Guidelines for the Ninth Five-Year Plan and in many states. 2010: Long-Term Objectives on Economic and Social Development of China State Energy Technology Policy Ninth Five-Year Plan and 2010 Plan of Energy Conservation and New Energy Development by the State Power Corporation Ninth Five-Year Plan of Industrialization of New and Renewable Energy by SETC 1997 States begin to establish policies for Circular of the Communication and renewable portfolio standards (RPS)
From page 129...
... Renewables Policy Renewables Policy Renewable Energy Promotion Law Rural Energy Development Plan to 2020 for Western Areas 2004 Five new states enact RPSs in a single year, bringing the total to 18 states plus Washington, DC; PBFs were operating in 15 states 2005 Energy Policy Act extends the PTC for wind and biomass for 2 years and provides additional tax credits for other renewable including solar, geothermal, and ocean energy. 2006 Management Rules of Renewable Energy Power Generation Interim Measures for Renewable Energy Power Price and Cost-Sharing Interim Measures for Management of Special Fund for Development of Renewable Energy National 11th Five-Year Plan for Environmental Protection 10th Five-Year Plan for the Development of the Environmental Protection Industry 2007 Energy Independence and Security Medium and Long-Term Development Plan Act of 2007 provided support for for Renewable Energy in China accelerating research and development on solar, geothermal, advanced hydropower, and electricity storage.
From page 130...
... China and the United States have different attitudes toward the place of biofuels in their energy policies. The United States considers the development of biofuels relatively more important than China does because of concerns about energy security and transportation fuels.
From page 131...
... Table 5-6 lists the projected material requirements for the United States to meet a goal of producing 20 percent of its electricity from wind energy by 2030, which will require installing at least 7,000 turbines per year for 13 years beginning in 2017 (DOE, 2008a)
From page 132...
... Year kWh/kg Perm. Magnet Concrete Steel Aluminum Copper GRP CRP Adhesive 2006 65 0.03 1,614 110 1.2 1.6 7.1 0.2 1.4 2010 70 0.07 6,798 464 4.6 7.4 29.8 2.2 5.6 2015 75 0.96 16,150 1,188 15.4 10.2 73.8 9.0 15.0 2020 80 2.20 37,468 2,644 29.6 20.2 162.2 20.4 33.6 2025 85 2.10 35,180 2,544 27.8 19.4 156.2 19.2 31.4 2030 90 2.00 33,800 2,308 26.4 18.4 152.4 18.4 30.2 Notes: kg = kilograms; GRP = glass fiber reinforced plastic; CRP = carbon fiber reinforced plastic.
From page 133...
... Other support staff Independent Operation of Electrical, environmental, and civil engineers for the power the wind farm management of the plant producers, and sale of Technical staff for the O&M of the plants utilities the electricity Health and safety experts produced Financiers, salespersons, marketing people to sell the electricity Consultancies, Diverse Programmers and meteorologists for analyzing wind regimes legal entities, specialized and output forecasts engineering, activities linked Engineers specialized in aerodynamics, computational fluid R&D centers to the wind dynamics and other R&D areas energy business Environmental engineers Energy policy experts Experts in social surveys, training, and communication Financiers and economists Lawyers in environmental matters Marketing staff, event organizers Manufacturers Wind turbine Highly qualified chemical, electrical, mechanical, and producers, material engineers dealing with R&D issues, product design, including sub- management and quality control of production process component Semi-skilled and non-skilled workers for production chains and assembly Health and safety experts factories Technical staff for O&M and repairing turbines Other support staff (admin., sales managers, marketing, others) Developers Managing Project managers (engineers, economists)
From page 134...
... at national laboratories. Table 5-10 shows the number and types of jobs created by the renewable energy sector in 2007.
From page 135...
... TABLE 5-10 Renewable Energy Jobs Generated in the United States in 2007, by Selected Occupations Industry Type Jobs Industry Type Jobs Agricultural Equipment Operators 4,260 Industrial Production Managers 760 Biochemists and Biophysicists 1,580 Inspectors, Testers, and Sorters 2,400 Bookkeeping and Accounting Clerks 8,228 Janitors and Cleaners 3,610 Business Operations Specialists 3,390 Machinists 1,820 Carpenters 780 Mechanical Engineers 1,950 Chemical Technicians 1,880 Payroll and Timekeeping Clerks 1,160 Civil Engineers 3,080 Plumbers, Pipefitters, and Steamfitters 4,670 Computer and IT Managers 1,210 Purchasing Agents 1,280 Computer Programmers 2,660 Sales Representatives 4,140 Computer Software Engineers 3,260 Security Guards 1,310 Database Administrators 560 Sheet Metal Workers 1,600 Electrical and Electronic Equipment Assemblers 840 Shipping and Receiving Clerks 2,210 Electricians 6,330 Surveyors 690 Engineering Managers 1,350 Tax Preparers 580 Environmental Engineers 630 Tool and Die Makers 620 Environmental Science Technicians 1,690 Training and Development Specialists 650 Employment, Recruitment, and Placement Specialists 600 Truck Drivers 9,500 Forest and Conservation Workers 1,440 HVAC Mechanics and Installers 2,130 Industrial Engineers 1,340 Source: ASES, 2009.
From page 136...
... Certification indicates that an individual meets competency standards for a predefined task; existing certification programs for the solar PV industry could serve as a template for certification programs in the wind energy industry. Accreditation denotes that an institution is capable of teaching students at a level that meets predetermined standards.
From page 137...
... Figure 5-5 shows experience curves for a variety of renewable energy technologies as well as natural gas combined-cycle and pulverized-coal technolo gies. As the latter figure illustrates, prices do not fall uniformly with experience; in some cases they rise as a result of market forces.
From page 138...
... . As renewable power installations increase in number, such competition will likely become more acute.
From page 139...
... Figure 5-6 shows the growth of renewable energy sources in the United States and China from 1980 to 2009. Despite that growth, however, questions about long-term viability remain, particularly as both countries approach a material share of renewables in their power generation portfolios.
From page 140...
... . Arguably, tax equity has been the most powerful recent driver in renewables development in the United States, through production and investment tax credits, which help project developers access financing.
From page 141...
... A number of insights have emerged from the increasing integration of wind power into existing power systems (VTT, 2008)
From page 142...
... risks with particularly perceived risks institutions and experience with and energy access markets CFIs credit enhancing Project loan Debt providing by CFIs unable to address the Strong political environment to Large- and medium-scale facility development finance sector enforce contracts and enable EE and RE institutions (DFIs) laws for special purpose entity directly to projects Private equity fund Equity investments in Lack of risk capital; Highly developed capital Large-scale grid companies or projects restrictive debt-to-equity markets to allow equity connected RE; energy ratio investors to exist from investee companies Equity Venture capital Equity investments in Lack of risk capital for new Developed capital markets to Any new technology fund technology companies technology development allow eventual exits
From page 143...
... projects and to enforce contracts Carbon transaction Contracting for the Lack of regulatory Availability of underlying Any GHG emissions Carbon in post-2012 purchase of carbon framework and short-term financing. Adequate institutional reduction project credits credits to be delivered compliance driver buyers capacity to host clean after 2012 development mechanism/joint implementation project and enforce contracts Project Grants "loaned" without Poorly capitalized Can be needed in any financing Any sector development grants interest or repayment developers; costly and time market context until projects are consuming development financially viable process Loan softening Grants to help CFIs Lack of FI interest in Competitive local lending Medium- and small-scale programs begin lending their own lending to new sectors; markets EE and RE capital to end-users limited knowledge of initially on concessional market demand terms Innovative Grants Inducement prizes "Ex-ante prizes" to High and risky technology Sufficient financing availability Any technology sector stimulate technology development costs and spill- to deploy winning technologies development.
From page 144...
... Actual 44 Forecast Actual Forecast FIGURE 5-7 Requirements and expectations for a quality5-7.eps wind forecast. Source: Edelson, 2009.
From page 145...
... transmission for its new lines and has begun building transmission that would be primarily served by large renewable power bases in the west and northwest regions, e.g., Gansu province's construction of high-voltage lines for PV and wind. More efficient lines, cost sharing for interconnections, and advances in system flexibility, including storage, should help to mitigate concerns over new transmission costs.
From page 146...
... Although China will continue to use coal as its primary energy source for the foreseeable future, it is evident that its renewable energy policies have stimulated the creation of a strong manufacturing sector for renewable energy, and more recently, a domestic market for deployment. Both the national and some provincial governments in China and some state governments in the United States have established goals and mandates for the share of electrical generation from renewables.
From page 147...
... Examples include: promoting time-of-use rates to better match retail prices with generation costs, encouraging advanced metering to enable more demand response, and facilitating or streamlining transmission operation and expansion. Government energy policies can have a critical impact on clean energy development, and legacy energy policy, regulations, and subsidies are key drivers in determining the success of clean energy initiatives and the achievement of green energy goals.
From page 148...
... Operating experience will become a valuable tool -- utility and grid operators in both countries have much to gain from sharing their experiences in integrating and managing larger shares of renewable power generation. Costs can come down as market participants gain experience with a new technology.
From page 149...
... • China should establish national facilities with capabilities to test perform ance and safety characteristics of complete renewable power systems and their subcomponents. Examples include testing PV systems to Underwriters Labora tories (UL)


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