Developing Renewable Energy Capacity – Addressing Regulatory and Infrastructure Challenges in Emerging Markets

The renewable energy industry still faces obstacles to continued growth – particularly in new and emerging markets – despite a significant increase in global investment in the sector in recent years, mobilization of a stream of clean stimulus funding, and initialization of a number of multilateral initiatives to realize the potential of renewables.

Scaling up renewables is not centred on financial incentives alone. Non-financial challenges such as the regulatory framework, time required to complete administrative processes and grid access are equally important in enabling conditions to reach scale. This report seeks to understand the key regulatory and grid infrastructures challenges that currently affect the development of renewable energy and highlights actions required by governments, utilities and developers for successful large-scale deployment. The challenges identified include, but are not limited, to the need for strategic renewable energy long-term planning, coordination between relevant authorities, experience among decision-makers, electricity market structure and grid capacity and coverage. These are all integral to reducing risks and increasing investors’ confidence to commit capital.

To provide key learning and understand regulatory and infrastructure issues in emerging markets, five reference group countries (Indonesia, Jordan, Mexico, Morocco and South Africa) were chosen for investigation. They possess abundant renewable resources that could support a considerable share of national electricity demand. Although the reference group countries have been studied in detail for our analysis, by design this report is not an in-depth country assessment. These countries were selected because they have begun to lay essential foundations to shift to a renewables future despite the great challenges ahead. The report is a collection of learning and insights gained from their experience in establishing renewables markets, seen through the eyes of public and private sector contributors, which we believe will be valuable to other emerging countries that are going through a similar transition.

In this report, we propose six recommendations, which we trust will provide decision-makers with valuable ingredients as they determine regulatory and infrastructure frameworks to enable and accelerate the renewable energy sector to reach scale. In addition, we hope that these recommendations will also encourage partnership among stakeholders to establish a clean energy future.

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