Driving renewable energy development in ASEAN through Feed-in-Tariffs

Feed-in-tariffs (FiT) can be an effective driver of renewable energy growth for ASEAN, said the ASEAN Centre for Energy (ACE) and China Renewable Energy Engineering Institute (CREEI) in their latest joint publication ASEAN Feed-in-Tariff Mechanism Report.

Defined by the report as “a policy focused on supporting the development of new renewable energy projects by offering long-term purchase agreements for the sale of renewable energy electricity,” FiT already dominates renewables policy worldwide. The popularity of FiT stems from its ability to stimulate the market in the early phases of renewables generation as it ensures costs are competitive with other conventional generation methods.

There are currently five ASEAN Member States (AMS) using this scheme – Indonesia, Malaysia, the Philippines, Thailand and Vietnam. These AMS have the most progressive FiT capacity installed.

The report details the following best practices for implementing FiT policies:

• Develop a robust guiding system for the setting of renewables targets: through comprehensive resource surveys, the setting of energy consumption targets, and the cultivation of industrial chains.
• Implement a subsidised subsidy mechanism: to take affordability into consideration and avoid increasing the renewables tariff burden of terminal users when developing renewable energy.
• Establish a renewable energy information system: to ensure clarity when policymakers adjust and optimise tariff application and distribution.
• Promote multiple solutions for renewables consumption: to innovate the approach of hybrid energy utilisation, and to coordinate the grid plan with the construction of renewables power stations.

Once the respective renewable generation markets reach maturity, the report predicts that these AMS will gradually shift their FiT policies towards mechanisms that encourage market competition such as auction or bidding systems to further reduce the cost of renewables. 

Credit: ASEAN Centre for Energy & China Renewable Energy Engineering Institute