New IEA study on the cost of regulatory delays
3E and London Economics International team up for a study on the costs of regulatory delays on renewable energy projects (RE-DELAYS)
3E’s Grids and Markets team has recently won a contract with the International Energy Agency’s Implementing Agreement on Renewable Energy Technology Deployment (IEA-RETD) to analyze the cost of regulatory delays on renewable energy project development. The “RE-DELAYS” project will span a six-month period, starting early August 2015 and ending late February 2016.
For RE-DELAYS, 3E is partnering with London Economics International (LEI) based out of North America (with offices in Boston and Toronto). This partnership will leverage our complementary expertise in renewable energy development and economic analysis and combine our market knowledge and industry networks across the globe – in North America, Europe, the Middle East, Africa and Asia-Pacific.
The premise behind RE-DELAYS is that the development of renewable energy must be governed by a stable, transparent and efficient regulatory framework to compete effectively with conventional generation. Delays in the regulatory and permitting process, whether they are related to policy or project development, can lead to increase costs and create an environment of uncertainty for investors and developers alike. On a macro level, costly delays can undermine the growth and economic potential of the renewable energy industry and also impede entry of nascent energy technologies. On the other hand, significant regulatory delays may present opportunities for advancement in technologies, lowering capital and operating costs.
The objective of the RE-DELAYS project is to better understand and quantify the impact of regulatory delays and uncertainty to inform regulatory reform initiatives and promote greater efficiency in the global market for renewable energy deployment. The project will involve the development of a flexible financial model to be used by the IEA-RETD to estimate the cost of regulatory delays to renewable energy players and to the broader economy. The model will be validated through six country case studies covering multiple continents and offshore/onshore wind, solar PV and conventional hydro technologies.
Two categories of regulatory delays and uncertainties will be covered in the study:
- Delays related to renewable energy policy decisions at the national, regional or local level. These delays create an uncertain climate for investors who, as a result, may hesitate to move forward with project investments.
- Delays related to administration and regulation. These include delays in disclosing or implementing regulation related to the project life cycle such as permitting, licensing, grid connection, land development, environmental assessments, and market participation.
The project scope is summarised in the figure below:
It is the intention of the IEA-RETD, 3E and LEI to share the results widely to a global audience; this includes you, our loyal newsletter subscriber. There are also opportunities for you to be actively involved in the project.
CALL FOR INPUT: The project is now seeking input from renewable energy developers and policymakers on their experience with regulatory delays and their impact on project development. If you would like to participate in this study, please do not hesitate to get in touch with Ruben Verhaegen (Tiffany.Chow@3e.eu) and Aurore Flament (Aurore.Flament@3e.eu). Depending on your preference, your input can be treated anonymously or we can credit your contribution in our final project publication to the IEA-RETD.