Towards a green economy

mechanisms that address the particular needs of rural developing country customers. These mechanisms can make renewables attractive and cost effective for addressing energy poverty in off-grid situations (Box 4).

Beyond private companies and governments, however, bilateral and multilateral development assistance agencies are also expected to scale up funding while collaborating with existing energy programmes and funds43

to administer and distribute resources (IEA

2010d). Engaging developing countries in the global mitigation challenge will require international funding and the agreement to establish the Copenhagen Green Climate Fund at the 2009 UNFCCC conference represents potentially significant progress in this area. Countries producing renewable energy may also benefit from increased revenues from selling emissions credits (through the CDM) or green certificates, and lower risk

5.4 Electricity infrastructure and regulations

The increased use of renewable energy in power generation faces specific barriers due to the demands it makes on existing electricity infrastructure. Electricity generation by wind and solar PV adds variability and lower predictability to the power system, requiring more attention to the design and regulation of energy

systems and markets (Owen 2006; Heal 2009; IEA 2008d). More reserve capacity, storage or increased trade between countries or regions is needed to provide the necessary flexibility to match demand with variability in supply. Smart grids with variable cost pricing and micro-metering is a new area of development with the potential to provide increased demand flexibility and enhance energy efficiency.

The additional investment costs for adapting the distribution and transmission systems, though substantial, should be manageable. For example, the ECF (2009) roadmap 2050 indicates that the investments required to expand the grid and effectively reduce intermittency challenges amount to around 10 per cent of overall investment in electricity generation.

In some situations, vested interests and control of access to the grid by incumbent power companies can pose barriers for independent providers of power from renewable sources. Similarly, oil companies may impede the distribution of biofuels through networks, such as pipelines, that they control. The construction sector may be reluctant to integrate renewable heating and cooling technology in their practices and building codes. Authorities have to be alert to signals from renewable

43. Such as the Climate Investment Funds, the Global Environment Facility and GTZ’s Energising Development (IEA 2010d).

Box 4: Grameen Shakti programme in Bangladesh

Grameen Shakti (or Grameen Energy in English), founded in 1996, provides electrification to rural communities in Bangladesh through a market- based approach: micro-credit. The experience of Grameen Shakti provides an example of successful entrepreneurship combined with effective energy policy. Capitalising on the network and experience of the Grameen Bank, Grameen Shakti provides soft credits through different financial packages to make solar-home systems (SHSs) available and affordable to rural populations. By creating a market for solar energy and providing multiple advantages over kerosene, Grameen Shakti succeeded in installing over 320,000 SHSs by December 2009.

One aspect that has been essential to the success of the program has been the creation of partnerships with indigenous organizations that have succeeded in cutting programme costs and increasing business development (United Nations 2011). Government financial and policy support provided

the coordination necessary for safe investments in renewable energy. Through effective policy guidelines, the industry had a greater potential for success and future growth (IPCC 2011). Grameen Shakti

has also installed numerous improved

cooking stoves and biogas plants that contribute to the reduction of woody biomass use and, in turn, decrease indoor pollution, while biogas technology further helps with sustainable waste management.

Grameen Shakti aims to install over 1 million SHSs by 2015, and simultaneously provide the necessary maintenance, while training the necessary technicians and users, thereby generating local employment, and generating social value through stakeholder

engagement. Grameen Shakti

demonstrates the potential that can be mobilised to reduce energy poverty efficiently, while also contributing to mitigate climate change, with innovative financing and business models in partnership with public support (Wang et al. 2011).

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