1 Promoting Renewable Energy through Auctions: The Case of China 2014/14 88697 A KNOWLEDGE NOTE SERIES FOR THE ENERGY PRACTICE THE BOTTOM LINE Promoting Renewable Energy through Auctions: Although feed-in tariffs are now the cornerstone of The Case of China China’s renewable energy policy, auctions have played and continue to play a role Why is this case interesting? China is an energy giant. Over the last decade, the country has in identifying market prices made extraordinary investments in generation and transmission, for renewable energy in the China has set aggressive renewable energy more than doubling its installed capacity in just six years (from 519 country. Experience with the targets and introduced policy incentives for GW in 2005 to 1,073 GW in 2011) and dramatically expanding access auctioning of wind and solar rapid market development to grid-connected electricity for its 1.3 billion inhabitants. Although concessions enabled the China still relies heavily on conventional electricity sources, particu- Chinese authorities to modify China’s experience with the design and deployment of price- and larly coal, for its expansion, programs to promote renewable energy auctions over time to yield quantity-setting policy instruments to support renewable energy have gained increased traction, to the point that the country is accurate information about development provides valuable insights on how to design, sequence, currently the world leader in total wind power capacity (75 GW at the the costs of generation from and customize different regulatory and market-based mechanisms to end of 2013) and ranks third in total solar photovoltaic capacity (18 renewable sources, allowing develop renewable energy markets. Feed-in tariffs are the corner- GW at end 2013) (REN21 2013). Moreover, China’s renewable energy them to set feed-in tariffs at stone of the Chinese renewable energy policy framework, while the sector has grown very quickly over a short period of time (table 1). efficient levels. auctioning of concessions has played the critical role of establishing The electricity market in China has passed through several appropriate feed-in tariff levels. stages, evolving from a vertically integrated monopoly to a system in which generation is separated from transmission and distribution. Xiaodong Wang is a In 2007, the market exhibited a diverse and senior energy specialist thriving generation segment, with five large Table 1. Evolution of Chinese installed capacity and future targets, 2000–2020 in the East Asia and generation groups owning 40 percent of total Pacific Region of the 2015 2020 installed capacity and more than 4,000 smaller World Bank. Capacity (GW) 2000 2005 2010 targets targets generation companies owning the rest. The Luiz Barroso is a Hydropower 79 117 216 290 420 transmission segment is characterized by large managing director regional monopolies dominated by large grid at PSR, a global Wind power (on-grid) 0.34 1.26 31 100 200 electricity and gas companies, with the State Grid Corporation Biomass energy 1.1 2.0 5.5 13 30 consultancy and research company accounting for 80 percent of the system. The Solar photovoltaic 0.02 0.07 0.8 21 50 in Brazil. distribution segment has a complex structure, % of renewable energy in total primary energy — 7.0% 8.8% 9.5% 15% with more than 3,000 companies at the pro- Gabriela Elizondo is a senior energy specialist Source: 12th Five-Year Plan, Chinese National Energy Administration 2012. vincial, prefectural, and county levels, a third in the World Bank’s a. The 15 percent target for 2020 is for non–fossil fuel primary energy. Renewable energy likely makes up the vast majority of of which are affiliated with the two largest grid Energy Practice. this total. 2 Promoting Renewable Energy through Auctions: The Case of China companies. It is in this context that the renewable energy market has setting of feed-in tariffs. evolved. Introduced partly to respond to growing pressure from the The rapid growth of renewable energy in China followed from international community to take action to slow climate change, the the 2005 Renewable Energy Law, one of the first in the developing law was motivated primarily by local environmental concerns and by world. The law, which took effect in 2006, set a solid foundation for national industrial development policy. achieving the ambitious goals of increasing the share of non–fossil Before the 2005 law, under the 9th and 10th five-year plans, “The aggressive scale-up fuel generation (including both renewable and nuclear energy) to 15 China had failed to meet official targets for expansion of renewable of renewable energy percent of primary energy supply by 2020. Although the law was ini- energy. A first auction to award wind power concessions was continued under the tially intended to support the use of a feed-in tariff, key stakeholders organized in 2003. Before that date, a few isolated wind power could not agree on the tariff level, and an auction-based concession initiatives had been undertaken at prices set by local governments 12th Five-Year Plan scheme was adopted to establish market-based tariffs. with a great degree of variation; most of these projects benefited (2011–15), with special The aggressive scale-up of renewable energy continued under from concessional finance provided by international donors and did focus on increasing the the 12th Five-Year Plan (2011–15), with special focus on increasing not go through international competitive bidding (figure 1). Before competitiveness of the the competitiveness of the renewables industry through a combina- the enactment of the 2005 law, it was unclear who would cover the renewables industry tion of regulatory policies and market-based mechanisms. incremental costs between renewable energy and energy generated The 12th Five-Year Plan laid out eight priority renewable energy from fossil fuels. through a combination programs, with emphasis on (i) planned large-scale wind power In the early rounds of concessioning, the prices bid were of regulatory policies bases (each with an installed capacity of 5–10 GW) in the North, lower than the actual costs of production. As a result, some of the and market-based Northeast, and Northwest regions; (ii) off-shore wind development; contracts awarded were not implemented. This outcome reflected mechanisms.” and (iii) large-scale grid-connected solar photovoltaic bases in desert the participation of inexperienced bidders (and the related absence areas. Complementing the large-scale development of grid-con- of sufficiently stringent procedures to qualify bidders), as well as the nected renewable energy, the plan has also made renewables-based fact that large state-owned enterprises wishing to enter the wind- distributed generation a priority, particularly in a hundred planned power business bid very low prices without fear of being outbid, “New Energy Cities” and 200 planned “Green Counties.” knowing that they could cross-subsidize their wind-power activities In addition, the National Energy Administration is preparing from their coal-based generation business. a decree to set mandatory non-hydro renewable energy quotas The lower-than-cost bidding prices had the effect of slowing the for provinces, grid companies, and large-scale renewable energy expansion of wind power in China, sending the wrong market signals developers. and discouraging wind-power developers as well as companies in the supply chain of wind power manufacturing. What challenge did China face? Despite these problems, however, the auctions were effective in revealing costs and establishing cost benchmarks for the setting of Initial renewable energy prices showed significant more appropriate and economically efficient feed-in tariffs. In 2009, variation, and the government’s targets were not the government issued a “Notice of Improved Feed-in Tariff for Wind,” achieved prior to 2005 with geographically differentiated feed-in tariffs in four different regions depending on wind-resource potential, ranging from 0.51 to The most important milestone in the development of renewable 0.61 Y/kWh (≈0.07 to 0.09 US$/kWh). energy in China was the 2005 Renewable Energy Law, which estab- The development of solar photovoltaic followed a similar path— lished a clear roadmap and goals for the development of the industry evolving from concessions to feed-in tariffs. The government issued and cemented the current structure of incentive mechanisms based feed-in tariffs for grid-connected solar photovoltaic at 1.0 Y/kWh in on auction schemes as a price-discovery mechanism to support the 2011 (≈0.015 US$/kWh), based on the concession results, then later 3 Promoting Renewable Energy through Auctions: The Case of China Figure 1. Mean electricity prices for wind power generation projects operational at the end of 2006 (before the auctioning of concessions) 16 14 “Despite problems, 12 auctions were effective 10 US cents/kWh in revealing costs 8 and establishing cost 6 benchmarks for the 4 establishment of more appropriate and efficient 2 feed-in tariffs.” 0 Zhurihe, Inner Mongolia Huitengxile, Inner Mongolia Shangdu, Inner Mongolia Xilinhaote, Inner Mongolia Dali, Inner Mongolia Zhanghbei, Hebei 1st Phase Dabancheng, Xinjiang 2nd Phase Dabancheng, Xinjiang Donggang, Liaoning Dalian Hengshan, Liaoning Cangnan, Zhejiang Dongfang, Hainan Nanao, Guangdong Nanao Zhenneng, Guangdong Nanao Danneng, Guangdong Dongshan Aozai, Guangdong Yumen, Gansu Tongyu, Jilin Chongming, Shanghai Source: Junfeng, Pengfei, and Hu 2010. moved to lower, geographically differentiated feed-in tariffs in three the government reset the feed-in tariff for biomass at a fixed level of regions reflecting their solar resource potential. The regional feed-in 0.75 Y/kWh (≈0.01 US$/kWh). tariffs ranged from 0.9 to 1.0 Y/kWh in 2013 (≈0.015 US$/kWh). Feed-in tariffs for biomass were revised several times during What solution was adopted? the implementation of the policy. There were two reasons for the revisions. First, the prices paid by many biomass-fired plants for fuel China has applied successive adjustments to (notably straw from agriculture residues) turned out to be much concessions auctions to improve their usefulness in higher than originally anticipated owing to fuel price volatility. As a setting appropriate feed-in tariffs result, feed-in tariffs for biomass were raised to factor in the fluctua- The ability of auction schemes to attract international players, foster tion of biomass fuel prices. Second, feed-in tariffs for biomass were competition among investors, and enable the rapid development of originally designed to yield a fixed premium of 0.25 Y/kWh (0.03 US$/ nascent economic sectors makes them attractive as a price-discovery kWh ) to top up baseline prices (based on coal-fired power plants) mechanism for generation technologies for which feed-in tariffs have in each province, which resulted in wide discrepancies in biomass not been established (Elizondo-Azuela and Barroso 2014). The use tariffs in different parts of the country. Learning from these lessons, 4 Promoting Renewable Energy through Auctions: The Case of China of auctions enabled the government to gather cost information from Although feed-in tariffs are now the cornerstone of Chinese renewable energy project developers in order to set appropriate renewable energy policy, auction mechanisms continue to play a feed-in tariffs, with the auction price being used as a proxy for the key role in identifying market prices for renewable energy. Since the actual project cost. In theory, of course, the more competitive the initial burst of renewable energy auctions in 2003–07 (a period in environment, the closer the bidding price will be to the actual costs. which five wind power tenders were carried out), tenders for solar By improving the competitiveness of concessions auctions, the gov- photovoltaic have been carried out (in 2008 and 2010), for offshore “The Chinese authorities ernment was eventually able to find a reasonable price benchmark for wind power (2011), and solar thermal (2011). had learned that power generated from specific technologies (Qiu and Anadon 2012). Feed-in tariffs are now regarded in China as better suited for prequalification criteria, While early experience with auctions as price-discovery mecha- rapidly expanding renewable capacity than the auction-based nisms had been generally positive (as evidenced by their continued schemes. Feed-in-tariff policies provide the same price certainty as well as penalties for role under the Renewable Energy Law), concerns persisted that the to investors, while also minimizing bureaucracy and transaction noncompliance and lowest bids received in the auctions were in fact below marginal costs (Elizondo-Azuela and Barroso 2014). They do this by including nonperformance by the investment costs. The issue of aggressive bidding was clearly unac- a purchase obligation and rules on how, and how often, prices are winning bidder, are critical ceptable, as ultimately investors needed to be adequately remuner- modified. If these modifications are made through auctions, investors to the success of auctioned ated to ensure the long-term sustainability of the market, as well as need to know the frequency and schedule of the auctions. the achievement of the national targets. When winning bids in early Today, feed-in tariffs for various technologies in China are concessions.” auctions of concessions proved too low, the minimum price criterion competitive and comparable to international benchmarks (Wang and was supplemented with other criteria designed to discourage irratio- Wu 2013). The levels of FITs in both wind and solar reflect the prices nal bidding behavior, to reward technological innovation, and to take that resulted from auctions (figure 2). into account bidders’ previous experience. The Chinese government also added local content requirements, intending to promote its wind Figure 2. Comparison between Chinese FITs and auction results, power manufacturing industry and to reduce costs. In the auction 2003–14 launched in 2005, the price criterion made up 40 percent of the index 200 used to compare bids; in the 2006 auction it represented only 25 Solar FIT percent. Even with the addition of the other criteria, the winning bids 175 Auction prices and FIT levels (US$/MWh) Wind FIT were still those that offered the lowest prices. 150 Solar auction prices In the 2007 auction, the price criterion was completely rede- Wind auction prices 125 signed, so that the advantage would go not to the lowest bidder, but to the bidder that was closest to the average price resulting from all 100 bids, after excluding the highest and lowest bids, which were consid- 75 ered outliers (GWEC 2007). This practice was designed to screen out wild cards (irrational or inexperienced, poorly informed bids). 50 Ultimately, however, this approach was not retained. In subse- 25 quent auctions for solar plants and offshore wind power generation capacity the minimum price criterion was restored as the basis for 0 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 selecting the winning bid. In the meantime, the Chinese authorities had learned that Source: Authors. prequalification criteria, as well as penalties for noncompliance and Note: An exchange rate of 6.1 Y/US$ was assumed. FITs for wind power were established in nonperformance by the winning bidder, are critical to the success of 2009 and vary between 0.51 and 0.61 Y/kWh depending on the wind region. FITs for solar power were initially established in 2011 at 1 Y/kWh (constant throughout the country); in 2013 they auctioned concessions. were revised to vary between 0.9 and 1.0 Y/kWh, again, depending on region. 5 Promoting Renewable Energy through Auctions: The Case of China What is the key lesson? China’s policy for the development of renewable energy policy MAKE FURTHER has reflected the country’s specific needs and characteristics Auctioning of concessions was an effective (including the size and rapid growth of its energy market). Simply CONNECTIONS price-discovery mechanism for the determination replicating another country’s successful policies with insufficient Live Wire 2014/12. “Promoting of feed-in tariffs regard to underlying circumstances is not likely to lead to the most Renewable Energy through effective choice. The Chinese government is used to regulating prices Auctioning of concessions has played an important role in China’s Auctions,” by Gabriela under its traditional planned economy; in other countries where the scale-up of renewable energy, particularly as a price-discovery Elizondo-Azuela and Luiz government has not refined its price-setting power to the degree mechanism for the determination of feed-in tariffs. Barroso. seen in China, auctions may be the right choice even if they do not The use of auctions for price discovery in China has significantly help to perfect a system of efficient feed-in tariffs. Live Wire 2014/13. “Promoting reduced the likelihood of feed-in tariffs being set above market Renewable Energy through equilibrium prices, thus avoiding excessive additions of renewable Auctions: The Case of Brazil,” energy capacity and the heavy surcharge on consumers that excess capacity has entailed elsewhere (Elizondo and Barroso 2014). Of References by Gabriela Elizondo-Azuela, Luiz Barroso, and Gabriel course, in China, the risk of excess capacity is mitigated through the Elizondo-Azuela, Gabriela, and Luiz Barroso. 2014. “Promoting Rocha. country’s very fast load growth and the ease of diluting renewable Renewable Energy through Auctions: Overview.” Live Wire energy costs in consumers’ electricity bills. Presently, renewable 2014/12, Energy Practice, World Bank, Washington, DC. Live Wire 2014/15. “Promoting energy costs are passed through to consumers in the form of a GWEC (Global Wind Energy Council). 2007. China Wind Power Report. Renewable Energy through surcharge of 0.008 Y/kWh (≈0.0013 US$/kWh). Beijing: China Environmental Science Press. Auctions: The Case of India,” The chief lesson from China’s experience with auctioning of Junfeng, L., S. Pengfei, and G. Hu. “2010 China Wind Power Outlook.” by Ashish Khana and Luiz concessions is that winning bid prices that are lower than actual Chinese Renewable Energy Industries Association, GWEC, Barroso. costs wind up deterring the development of renewable energy. Some Greenpeace, 2010. of the winning bidders during the first and second rounds of China’s Qiu, Yueming, and Laura D. Anadon. 2012. The Price of Wind Power wind-concession auctions were inexperienced players whose goal in China during Its Expansion: Technology Adoption, Learning- was to get into the promising wind market first rather than to maxi- by-Doing, Economies of Scale, and Manufacturing Localization. mize profits. Some of them did not fully understand the wind-power Energy Economics 34(3): 772–85. business, having failed to conduct high-quality feasibility studies and REN21. 2013. Renewables 2013 Global Status Report. Paris: REN21 thus lacking sufficient data on the potential of the wind resource. In Secretariat. the later rounds of the wind concessions, large, state-owned power Wang, Xiaodong, and Yun Wu. 2013. “China’s Renewable Energy generators dominated the tenders, but their core business was Development Story.” Unpublished paper, East Asia and Pacific coal-fired power generation, which they used to cross-subsidize Region, World Bank, Washington, DC. the marginal wind business. Even after the government adjusted its criteria for choosing the winners of wind-concession auctions, Gabriel Cunha (consultant, PSR) and Yun Wu (consultant, East Asia and Pacific Region, World Bank) provided research support in the preparation of this the winning bids in most cases were still those that had offered the note, which was peer reviewed by Luiz Maurer (principal industry specialist lowest prices. Therefore, careful design of the concession scheme is for climate strategy and business development, IFC) and Katharina Gassner necessary to ensure the success in the performance of auctions. 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Once a year, the Energy Practice takes stock of all notes that appeared, reviewing their quality and identifying priority areas to be covered in the following year’s pipeline. https://openknowledge.worldbank.org 1 U n d e r s ta n d i n g C O 2 e m i s s i O n s f r O m t h e g lObal energy seCtOr 2014/5 A KNOWLEDGE NOTE SERIES FOR THE ENERGY PRACTICE THE BOTTOM LINE Understanding CO2 Emissions from the Global Energy Sector the energy sector contributes about 40 percent of global 2014/4 emissions of CO2. three- Why is this issue important? xas The Case of Te renewable ene rgy T o T h eof quarters r i d : emissions gthose Mitigating climate change requires knowledge of the Figure 2. energy-related CO2 1 TransmiTTing come from six major Figure 1. CO2 emissions sources of CO2 emissions by sector emissions by country economies. although coal-fired LICs plants account for just Identifying opportunities to cut emissions of greenhouse gases 0.5% requires a clear understanding of the main sources of those emis- 40 percent of world energy Residential Other were Esions. N E R Carbon G Y P R A C T dioxideICE(CO2) accounts for more than 80 percent of 6% sectors Other MICs production, they S FOR T H E LEDGE NOTE SERIE 10% 15% A KNOW total greenhouse gas emissions globally, primarily from the burning 1 China responsible for more than Other HICs 30% of fossil fuels (IFCC 2007). The energy sector—defined to include Energy 8% 70 percent of energy-sector Energy to the Grid: fuels consumed for electricity and heat generation—contributed 41 Industry 41% Japan 4% emissions in 2010. if warming is Transmitting Renewable 20% Russia to be limited to two degrees percent of global CO2 emissions in 2010 (figure 1). Energy-related 7% USA THE BOTTOM LINE CO2 emissions at the point of combustion make up the bulk of such Other transport Road India 19% Celsius, therefore, steep 7% EU The Case of Texas emissions and are generated by the burning of fossil fuels, industrial 6% transport 11% states reductions will have to be made Texas leads the United 16% waste, and nonrenewable municipal waste to generate electricity with 9,528 mw of installed in the use of coal to generate face? and leakage emissions What challenge did they and heat. Black carbon and methane venting Notes: Energy-related CO2 emissions are CO2 emissions from the energy sector at the point wind power capacity—a electricity in the larger bunkers, domestic note. of combustion. Other Transport includes international marine and aviation ? are not included in the analysis presented in this level exceeded by only four Why is this case interesting economies. t was contingent on aviation and navigation, rail and pipeline transport; Other Sectors include commercial/public Transmission investmen yet needed to precede it tion, and other emissions not specified elsewhere; Energy = fuels consumed for electricity and and heat genera- services, agriculture/forestry, fishing, energy industries other than electricity countries. The state needed and accelerate more infrastructure to transmit Texas needed to prioritize Where do emissions generation come ents commitm from? HIC, MIC, and LIC refer to high-, middle-, wind sites tremendous needs for trans-heat generation, as defined in the opening paragraph. electricity generated from development of remote EmissionsTexas are faced the challenge of meeting concentrated in a handful of countries from and low-income countries. producer of generation renewable sources, but the century, Texas was a major e triggered by the scale-up Source: IEA 2012a. During much of the twentieth is now taking advantage and primarily mission come infrastructur from burning coal infrastructur e can take longer to regulator could not approve States. The state of petroleum in the United Vivien Foster is sector renewable sources. Transmission projects wind.for the Sus- leads It currently The geographical pattern of energy-related CO2 emissions closely transmission expansion a major renewable energy resource:manager only 0.5 percent by all low-income of power capacity middle-income countries, and in the absence of financially 9,528 MW of installed wind Depart- tainable Energy mirrors the distribution of energy consumption (figure 2). In 2010, To solve the United States with ment at the fifth World rank in wind Bank two zones energy with the countries put together. committed generators. were a country, would almost half of all such emissions were associated competitive renewable a (ERCOT 2011) and, if it (vfoster@worldbank.org). Figure 1. Texas’s five Coal is, by far, the largest source of energy-related CO2 emissions the problem, Texas devised largest global energy consumers, and more than three-quarters quickly generation worldwide. Daron program in 1999, it vowed to were associated with the top six emitting countries. Of the remaining Bedrosyan globally, accounting for more than 70 percent of the total (figure 3). planning process that When Texas reformed its energy works energy mix. It now uses a energy-related CO2 emissions, about 8 percent were contributed for London This reflects both the widespread use of coal to generate electrical connects energy systems increase the role of renewables in its Toronto. to increase Economics in utilities power, as well as the exceptionally high CO2 intensity of coal-fired to the transmission system. portfolio standard to require energy by other high-income countries, another 15 percent by other the renewable Previously, he was renewable sources. an To minimize power (figure 4). Per unit of energy produced, coal emits significantly The system is based on their energy generation from eligible energy analyst with the energy program created more CO2 emissions than oil and more than twice as much as natural designation of “competitive the state’s renewable Practice. Greenhouse Gas Inventory costs to the taxpayer, World Bank’s Energy rely on the private sector United Nations Framework Convention 1 on Climate Change, gas. renewable energy zones. energy zones that Data—Comparisons By Gas (database). http://unfccc.int/ghg_data/items/3800.php competitive renewable and trans- e and operations for generation to provide infrastructur and regulation provides planning, facilitation, mission, while the state (figure 1). electricity pro- standard mandated that The renewable portfolio by 2009. 2,000 MW of additional renewable energy viders generate and was followed Marcelino Madrigal met in just over six years (mmadrigal@worldbank This 10-year target was and mandated 20, which raised the targets .org) is a senior energy up in 2005 by Senate Bill reach 5,880 energy generation must specialist in the World that the state’s total renewable Furthermore, the 2015 and 2025 respectively. Bank’s Energy Practice. MW and 10,000 MW by energy target 500 MW of the 2025 renewable With Rhonda Lenai Jordan legislation required that sources other than wind. (rjordan@worldbank.org) be derived from renewable in is an energy specialist Source: ERCOT 2008. the same practice. 7 D o y o u h av e s o m e t h i n g t o s ay ? S ay i t i n L i v e W i r e ! If you can’t spare the time to contribute to Live Wire, but have an idea for a topic, or case we should cover, let us know! Do you have something to say? We welcome your ideas through any of the following Say it in Live Wire! channels: Via the Communities of Those working on the front lines of energy development in emerging economies have a wealth of Practice in which you are technical knowledge and case experience to share with their colleagues but seldom have the time to active write for publication. By participating in the Energy Live Wire offers prospective authors a support system to make sharing your knowledge as easy as Practice’s annual Live Wire possible: series review meeting • Trained writers among our energy sector staff will be assigned upon request to draft Live Wire By communicating directly stories with staff active in operations. with the team (contact • A professional series editor ensures that the writing is punchy and accessible. Vivien Foster, vfoster@ • A professional graphic designer assures that the final product looks great—a feather in your cap! worldbank.org) Live Wire aims to raise the profile of operational staff wherever they are based; those with hands-on knowledge to share. That’s your payoff! It’s a chance to model good 2014/4 Texas d: The Case of rgy To The gri “knowledge citizenship” and participate in the ongoing change process at the Bank, 1 TransmiTTing renewable ene where knowledge management is becoming everybody’s business. A KNOWLEDGE NOT E SERIES FOR THE ENERGY PRACTICE Energy to the Grid: Transmitting Renewable gy sector 2014/6 1 s u lt s o f W o r l d B a n k l e n d i n g i n t h e e n e r M e a s u r i n g t h e r eLINE THE BOTTOM The Case of Texas states Texas leads the United with 9,528 mw of installed face? wind power capacity—a What challenge did they level exceeded by only four G Ethis E S Einteres case ting? was contingent on A KNOW WhyL E D is NOT RIES FOR THE ENERGY PRACTICE Transmission investment countries. The state needed Texas needed to prioritiz e and accelerate yet needed to precede it more infrastructure to transmit generation commitments wind sites for trans- electricity generated from development of remote faced the challenge of meeting tremendous needs Measuring the Results of World Bank Your Name Here THE BOTTOM LINE producer Texas of generation from renewable sources, but the century, Texas was a major mission infrastructure triggered by the scale-up During much of the twentieth e take longer to regulator could not approve States. The state is now taking advantag sion infrastructure can renewable sources. Transmis Lending in the Energy Sector petroleum in the United this note is the first report of leads n projects resource: wind. It currently of energy-sector indicators transmission expansio of a major renewable energy ly power capacity Become an author in the absence of financial 9,528 MW of installed wind reflecting the World Bank’s the United States with rank fifth in wind zones committed generators. To solve were a country, would the effort ive renewable energy to measure broad lending patterns during (ERCOT 2011) and, if it What challenges were faced Figure 1. in Texas’s five competit the problem, Texas is this a Whydevised issue important? fy 2000–13. to compile it, generation worldwide. 1999, it vowed to inresults? energy projects back to fy 2000 planning The need for accountability process that quickly has made When Texas reformed it critical its energyfor the program of Live Wire and energy mix. It now uses a to be retrieved and aligned for connects energy systems results of renewab les in its Data back to FY 2000 had were manually screened Energy Practice to measure increase the role utilities to increase results data comparable with to the transmission system. renewable portfolio standard to require energy with the new CSIs the tracks the outcomes on Bank of its projects in order to le sources. To minimize the standardized indicators The system is ThebasedWorld n from eligible renewab their energy generatio poverty le energy endingrenewab program created project in the energy sector had devised its own “competitive the goals of state’s each contribute to your how well they are advancing Previously, now used in the Bank’s designation of understand costs to the taxpayer, the zones. shared prosperity. For some years now those on the private sector which made it difficult to report the Bank’s corporate scorecard. in the renewable energyand promoting competitive renewab le energy zones that rely indicators of results, Corporate Scorecard s for generatio n and trans- in terms that were both broad and precise. With the outcomes have been reported in a Bank-wide and operation achievements future, automation will make to provide infrastructure that measure and n,of n Corporate Scorecard, however, the clear advantages of regulatio based on a set of so-called core sector indicators (CSIs) provides planning, facilitatio advent the it easier to collect, aggregate, mission, while the state practice and career! impact at the project level and permit aggregation of standardized being able to demonstrate results led the Energy Practice to examine and analyze data on project (figure 1). pro- data across the Bank. Each CSI is anrenewab indicator of output or outcome d that energy projects back to FY 2000 and, to the extent electricity Bank’s outcomes. The le portfolio standard mandate the to a particular sector or theme, such as l renewab le energy possible, to by 2009. retroactively harmonize or align the indicators used in that is strategically relevant MW of additiona Madrigal viders generate 2,000 years and was followed with those devised for the Corporate Scorecard. The Marcelino the energy sector. was met in just over six those projects (mmadrigal@worldba nk This 10-year target Energy Practice, targets and mandated exercise are reported in this note. Three CSIs are particularly central to the Bank’s Bill 20, which raised the results of this “archaeological” .org) is a senior energy up in 2005 by Senate must reach 5,880 here for the fiscal years 2000–13 are the because they reflect its engagement state’s in every step of the energy generationThe results reported specialist in the World that the total renewable energy the value chain—from generation to transmission and distribution (T&D) by 2015 and 2025 respectiv ely. first Furtherm such reportore, of energy-sector indicators reflective of the broad Sudeshna Ghosh With Bank’s Energy Practice. MW and 10,000 MW are: renewable energy target the World Bank during this period. customer connections. The to “last mile”Jordan three indicators that 500 MW of the 2025 lending patterns of Banerjee is a senior Lenai legislatio n required energy specialist in the Rhonda of people provided with access to electricity le sources other than wind. through To compile the report, all World Bank projects approved in the • The number (rjordan@w orldbank.o rg) be derived from renewab World Bank’s Energy specialist in connections energy space between FY 2000 and FY 2013 (approximately 70–80 household is an energy Source: ERCOT 2008. Practice (sgbanerjee@ same practice. projects per year on average) were screened to extract those the• T&D lines constructed or rehabilitated, measured in kilometers worldbank.org) that had adopted indicators similar enough to those used in the (km) Ruchi Soni (rsoni@ Corporate Scorecard that they could be mined for comparable data. worldbank.org) is an • Generation capacity constructed, measured in megawatts (MW). Information was extracted from two types of project documents: energy analyst in the More recently, additional indicators have been developed cov- the Implementation Completion and Results Report (ICR) for same practice. ering measurement of energy efficiency in heat and power (lifetime closed projects and the most recent Implementation Status and Elisa Portale (eportale@ savings, captured in MWh). Results Report (ISR) for active projects. In some cases, information worldbank.org) is an was referred back to project staff for confirmation or, where energy consultant, also discrepancies had been spotted, for correction. In a few cases in the Energy Practice. where indicators were not explicitly mentioned in the ICR or ISR, 8 Get Connected to Live Wire