1. Workshop on the Adoption of Renewable Energy Technologies in DCs EntDekEn Stakeholder Workshop, Potsdam 19 April 2012

2. Proceeding Non-technical presentation Short round of questions and answers Your views, experiences with regard to RET adoption Discussion What does it imply?

3. Determinants of Renewable Energy Use in Developing Countries – Macro and Micro Evidence Birte Pohl and Jann Lay (GIGA)

4. Drawing on … Pohl, B. (2012) “Determinants of Renewables Energy Technology Adoption – Evidence for Developing Countries”, Work in progress. Lay, J., Ondraczek, J., and Stoever, J. (2012) “Renewables in the Energy Transition: Evidence on Solar Home Systems and Lighting Fuel Choice in Kenya”, HWWI Working Paper. 4

5. Stylized facts Renewable Energy in Developing Countries (DCs) Hydropower –Wide-spread adoption: generated by 83% of all DCs –Average share of total electricity (2009): 34% (26% weighted with total country electricity production) –Top 3 DC producers (billion kWh in 2009): China (549), Brazil (387), Russia (162)  Also have top technically exploitable capability Non-hydropower (biomass, geothermal, solar, and wind) –Generated by about 45% of DCs –Average share of total electricity (2009): 1.7% –Most important: biomass, geothermal –Very uncommon: solar, wind 5

6. Key: Analysis of the determinants of renewables adoption What drives the adoption of renewable energy technology (RET) to produce electricity in DCs? At the macro level (comparing countries) –Level of economic development –Endowments –Governance and institutions –Policies At the micro level (comparing households) –Income –Education –Policy –Particularly relevant for decentralized off-grid options 6

7. 7 Data Source: EIA (2012) Per capita electricity generation from non- hydropower and hydropower Stylized Facts ctd.

8. Macro analysis: Data and methodology To be explained: Electricity production from non-hydro and hydropower (kWh per capita), provided by Energy Information Administration Sample: 137 developing countries, 1980-2009 Explained by: Potential drivers of RET adoption –GDP per capita ≈ energy demand –Opportunity costs: high shares of conventional energy –Regulatory policies: feed-in tariffs –General drivers of technology adoption: FDI, trade, human capital, financial development, governance environment Methodology: Regression analysis, log & level specification, Fixed Effects 8

9. Findings Richer countries (with higher energy demand) invest more in non-hydro and hydropower Feed-in tariffs seem to support investments in non- hydropower Less evidence: positive correlation of non-hydropower electricity generation and open trade markets or better educated population Countries with high shares of conventional electricity less often invest in hydropower Shortcomings: Indirect approach, most control variables not specific to the renewable energy sector 9

10. Micro analysis: Data and methodology To be explained: Use of solar home systems (SHS) Data on households from the Kenyan Integrated Household Budget Survey (KIHBS) 2005/06, 13 430 households Kenya's SHS market one of the biggest worldwide Explained by: Potential drivers of SHS adoption –Income, education, residence (rural, urban) –Kerosene price –Housing situation –Potential grid access –Prevalence of SHS Methodology: Lighting fuel choice model, analysis of SHS adoption as one possible lighting fuel choice (mlogit) 10

11. 11 Finding: Evidence for a cross-sectional energy ladder with very high income threshold for modern fuel use – including solar energy use – to move beyond traditional and transitional fuel

12. Findings ctd. Income and education are key determinants of SHS adoption Pronounced effect of SHS clustering, i.e. the prevalence of SHS systems in the proximity of a potential user increases the likelihood of adoption No negative correlation between grid access and SHS use 12

13. Some reflections Very low adoption rates of non-hydro RET, consistent with very late ‘takeoff’ of SHS at the micro level Even under ‘ideal’ conditions (endowments, mature technology and market in Kenya) slow adoption ‘Decarbonization’ of economic development – in particular the transition – is no trivial task Making countries/households switch to RETs is likely to require deliberate concerted efforts and context-specific policies Some ideas/glimpses of hope: –Some policies may be effective –Spillovers effects may be important –May be useful to think of decentralized approaches as a complementary and not a substitute fuel source 13