SE4Jobs Toolbox - Actors

SE4Jobs Toolbox – Laying the foundations for a sustainable development

• Overview
• Assessment
• Actors
• Policies & Measures
• Strategic Planning

Responsibilities

Coordination

Participation

Tools PRODUSE EQuIP CADRE Interactive RE Toolkit AILEG HELIO ELMA

What is the issue responsibilities about? [Expand] The issue of responsibilities is firstly a process of identifying relevant stakeholders, and secondly of assigning clear responsibilities (and the required means) to different actors for defined areas. Potentially relevant actors may work at different levels within government or outside of it. It is crucial to make sure that responsibilities, task descriptions and the ways of interacting are consistently defined and broadly accepted. Why are responsibilities important for the expansion of RE and EE in your country? [Expand] The successful implementation of RE/EE strategies and policies requires the cooperation of a broad range of stakeholders. This is all the more the case if the aim is to maximize their socio-economic co-benefits. The relevant players, as well as their actual or potential role and contribution, need to be identified correctly for all the different elements that make up the overall approach. Such elements include financing investments, training a skilled workforce, developing technical standards, and raising awareness both about RE/EE technologies and the government’s strategy for the sector. In addition, it is crucial to ensure that stakeholders are involved in the formulation of a strategy from an early stage, in order to correctly assess what support is needed. What are key questions for addressing the issue of responsibilities? [Expand] Key questions for this issue relate to which groups of actors are important for the overall success of a strategy and the particular field in which their contributions are most needed (as an implementer, as a multiplier, as a regulator, etc.). Examples for such questions are: Which actors are needed for financing RE/EE? Which actors are needed for planning and permitting RE sites and infrastructures? Which actors are needed for workforce and business development? How can the issue of responsibilities be addressed? [Expand] Governmental and non-governmental actors can support the development of local value and employment in and RE/EE by contributing to providing the necessary framework conditions and implementing the aspects of the RE/EE strategy that they are responsible for or feel concerned with. An initial step can be to identify which elements need to be provided by government, in which areas private actors should take the lead and in which areas both need to work together. This relationship between what is being organized by government and by private actors can vary significantly and needs to be adapted to your specific context. Practical aspects of responsibilities and good practice options [Expand] Financing of RE/EE Investments Commercial and public banks play a key role in enabling businesses and supporting investments in RE or EE. The latter often have greater leverage and can offer more favourable conditions to encourage those that would otherwise not invest as much or at all in RE or EE. Public banks also play a central role in mitigating risks and in mobilizing capital from international capital markets and finance institutions (such as multilateral and national development and investment banks) which they, in turn, use to provide long-term low-interest loans directly to customers or to other financial intermediaries. Brazil: Central role of public funding by the national development bank(s) Brazil’s National Development Bank (BNDES) is the largest source of funding for RE power projects and EE investments in Brazil, and is one of the largest financiers in the world. All but one of the country’s wind farms were financed by the bank. BNDES funding also goes to the regional development banks that provide low-interest loans to project developers. In 2012, BNDES disbursed over 24.4 billion BRL (US$8.1 billion) across the green economy – nearly 30% of which went to RE and EE. In 2013 it provided an additional 4.7 billion BRL (US$1.7 billion) for the expansion of the electricity transmission grid. Other publically owned banks, such Banco do Brasil or the development bank Caixa provide financing schemes for businesses investing in EE or for rural communities for the procurement of RE equipment. Due to its central role in enabling large-scale infrastructure investments, BNDES has significant influence – e.g. by attaching local content requirements to its financing it has been able to advance industrial policy and local employment goals. Seen in the context of countries where public development banks play a large role as financiers of investments, BNDES is an example of good practice in fostering the expansion of RE/EE. More innovative forms of RE/EE financing allow for a broader mobilization of private capital. Peer-to-peer lending platforms, for example, help project promoters attract debt finance from a large number of individual financiers. Securitization of RE/EE loans allows generating investment opportunities for large-scale investors who previously lacked access to RE/EE markets. Lease financing models can lower the up-front costs of RE/EE projects, making them price-competitive. Guarantees, currency hedging and other de-risking instruments can also be used to make investment products competitively appealing. These and other innovative financing often capitalize on the growing opportunities offered by digitalization, new technology, social media, increasing availability of data and other developments. Regulation of the electricity grid and EE-related aspects The regulation of the electricity grid, and the conditions under which access is granted and power from RE plants bought, can have a very significant impact on the attractiveness of RE investments and on the direction these investments take. In many countries, the electricity grid used to be managed by monopolistic, vertically integrated state utilities. In some countries, they still are in charge of the grid but are required by law to provide grid access to private competitors (with South Africa’s public utility ESKOM as a case in point). In others, the former monopolies have been broken up into different private and publically-owned companies (see the example of Turkey below) or new agencies have been created to take over the relevant functions of the former monopoly (Mexico’s National Energy Control Centre CENACE is an example for this). Turkey: Separation and privatization of the former integrated monopoly The Turkish electricity sector was dominated until the 1990s by the state-owned Turkish Electricity Authority that integrated the generation of power, its contracting and trading, transmission and distribution in one single company. In 1993, the company was first split into a generation division and a distribution company. The reform of the electricity market, with the goal of liberalizing and privatizing the Turkish electricity market, started in 1998 and remains an on-going process. Liberalization has led to the setting up of four companies as joint stock companies in public ownership, and each has taken over one aspect of the former state monopoly’s work: the Turkish Electricity Transmission Co. (TEİAŞ), Turkish Electricity Distribution Co. (TEDAŞ), Turkish Electricity Generation Co. (EÜAŞ) and Turkish Electricity Contracting and Trading Co. (TETAŞ). Transmission and distribution of electricity will remain in public ownership as they are perceived as a ’natural monopoly’ of the state. Moreover, they are key in order to control and direct the evolution of the electricity system and the overall parameters for competing in the market. By contrast, the companies responsible for the generation and trade in electricity are set to be privatized and will have to compete with other private power companies in the market. The Turkish approach to privatization – although progressing slower than planned – can be seen as an example of good practice for breaking up a former integrated monopoly and liberalizing an electricity market. Regulation can also serve as an important driver for enhancing the speed and ambition of energy efficiency measures. Performance standards and labelling requirements, such as those applied in European Union and Canada, lead to the stepwise crowding out of less energy efficient appliances from the market. Standards for testing the products’ energy efficiency to ensure compliance with the performance requirements give regulators better control over the quality of energy efficient appliances and infrastructures. Roles in training a skilled workforce and overall capacity building Evidence from good practice case studies and interviews with local experts suggests that large businesses are generally able to provide for their own skill needs by establishing internal training programmes. Collaboration between the government and businesses in training a workforce with the skillsets required for employment in RE and EE is therefore most important for small and medium-sized businesses. South Africa: The Renewable Energy Technology Centre as a good practice cooperation project between government and private businesses The South African Renewable Energy Technology Centre complements the training that takes place via programmes at universities and colleges. It is a specialized centre that is focused on imparting the necessary skills for RE employment. It began operating in 2014 and will train up to 2,000 people annually through short courses and workshops. The centre is an interesting example of public-private cooperation as it is a joint project of the South African government (Department of Higher Education), the South African National Energy Development Institute, the hosting university (Cape Peninsula University of Technology) and international – mostly German – development institutions. Also involved are a number of national and international business partners that guide the development of the curriculum to ensure the employability of the graduates. The South African example is a good example in that it shows how private industry and government can effectively collaborate in developing skill-training programmes that equip people with what they need to succeed in the country’s RE market. The broader task of capacity building activities should not only focus on individual staff members but also address the organizational and systemic levels. Existing or new businesses in the RE/EE market need to be enabled to establish the required management structures, processes and networks to provide their products or services successfully. At the systemic level, institutional and legal frameworks should be developed that support stakeholders in enhancing their strategic capacities. Challenges in implementing the issue responsibilities [Expand] Defining clear responsibilities of involved actors. There is a trade-off between including a broad range of government (and non-government) actors in the development and implementation of strategy processes and maintaining the cohesion and efficiency of the stakeholder coalition underlying them. The more inclusive a strategy process is, the higher its legitimacy, but also the more likely it is that its implementation will involve a lot of different actors that require coordination (which in turn produces transaction costs and time overruns). Developing transparent and inclusive fora for better policy and actor coordination, with substantial participation from the private sector and civil society, will play an important role in this regard. High-profile support from key political decision-makers can also pave the way in this regard. For how to foster such vertical and horizontal coordination, see sections 9 and 10. Ensuring appropriate resources to carry out responsibilities. To successfully establish a host to carry out new responsibilities for the implementation of RE/EE. Additional resources are required to execute those functions properly. Also, in many cases, new roles and responsibilities require the establishment of new agencies, whether these are regulatory agencies, permitting and certification agencies, a procurement office, etc. None of this happens without governments allocating resources to them.. Endowing involved actors with the necessary resources. Specialized departments in line ministries, agencies, and regulators have a crucial role to play for RE/EE-friendly policies and market frameworks, in the same way as they can help to drive the necessary investments. However, they also often suffer from unclear or conflicting political mandates and institutional setups, as well as more generally from a lack of budget, staff, and expertise. It is therefore necessary to make sure that these actors have the political, financial, and human resources they need to perform their function effectively and efficiently, if necessary with the help of customized technical assistance and capacity building, including twinning. Clarifying the roles of state-owned companies. A challenge in developing clear responsibilities in the electricity market is to create a level-playing field between the state-owned companies and its private competitors, which often requires addressing acquired positions and historical roles in and for public policy. This is particularly the case when these companies are not just present in power generation, but are also in charge of managing the electricity grid and are the single buyer of electricity produced in the market. The legal separation of these functions in the power system – with or without the privatization of the companies/organizations in charge of these functions – can have a crucial impact on the overall parameters of a market- and competition-based roll-out of RE/EE.

Good Practices Brazil China India Mexico South Africa Turkey

Reference

This article is part of the RE-ACTIVATE project. RE-ACTIVATE “Promoting Employment through Renewable Energy and Energy Efficiency in the MENA Region” is implemented by the Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) GmbH on behalf of the German Ministry for Economic Cooperation and Development (BMZ).