Given by Dr. Liu Xiying The second in our series of workshops designed to gather input from stakeholders involved in existing off-grid projects in Africa, Asia and Latin America. This event is workshop scheduled to be held in Malaysia for the ASEAN countries will be organised by the Academy of Sciences Malaysia (ASM) in collaboration with Universiti Malaysia Sarawak (UNIMAS).

1. Policy Instruments in Facilitating Renewable
Energy Off-grid (REOG) Investment in ASEAN:
Lessons from International Experiences
Dr. Shi Xunpeng, Dr. Liu Xiying, Dr. Yao Lixia
Workshop on Energy for Off-grid Village in South East Asia Programme
29 January 2015, Kuching, Sarawak, Malaysia

2. Research Question
• What are the appropriate policy instruments that can be used to
facilitate the REOG Investment in ASEAN?
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Policy framework for
policy makers in ASEAN
Outcome

3. Methodology
• Literature review
• Comparative study
• Case study
• Expert survey
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4. Expert survey
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5. Objectives
1. Target the major challenges/risks which REOG projects are
facing at, especially from the perspective of investment and finance.
2. Select and category the policy instruments that are widely used
in facilitating REOG projects.
3. Build up a instrument assessment index to assess the
performance of these instruments.
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6. REOG project: Supply-side & Demand-side
Stage 1 Stage 2 Stage 3 …
Long-term
Sustainability
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…
Plan Feasibility
study
Establishment Total life-cycle

7. Project stage Risks to be addressed Policy instruments
Plan,
development &
establishment
Provide financial support at start-up phase,
including both feasibility research and
establishment of the project
Start-up grant
Cover part of the capital costs during
installation phase Capital subsidy
Help reduce equipment purchase expenses Import duty exemption for equipment
Increase the access to finance Crowd-funding (bottom-up solution)
Ensure investment return/reduce project
uncertainties Feed-in tariffs/premiums
Help manage market risk to reduce
uncertainty and ensure return on investment Power purchase agreement (PPA)
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Policy instruments – Table 1

8. Project stage Risks to be addressed Policy instruments
Operation &
maintenance
Target to cover part of the operational/
maintenance costs and eventually profit gaps
Fixed grant/ Variable grant
Operational subsidy
Tax concession & Exemption
Encourage equipment purchase Accelerated depreciation
Reduce external cost on maintenance and
operation
Local community engagement in
ownership, operation and maintenance
(cost saving and income generation)
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Policy instruments – Table 2

9. Project stage Risks to be addressed Policy instruments
Total life cycle
Implement de-politicization of rural
electrification, attract private investors,
implementation of priority projects and efficient
allocation of capital subsidies
Private Public Partnerships (PPP)
Provide electricity service by engaging both
private sector and local stakeholders
Build Operate and Transfer (BOT),
Built-Owned-Operated-Maintained
(BOOM), Built-Operate-Maintain
(BOM), Built & Maintain (BM)
Help offset market and political risks Loan guarantee
Help cover maintenance and operational
expenses and part of capital investment Concessional finance (soft loan)
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Policy instruments – Table 3

10. Risks to be addressed Policy instruments
Demand-side
Support consumers’ purchase power, thus help
ensure investment return
End-user subsidy
End user financing /Microfinance
/Consumer credit
Leasing
Revolving fund
Improve energy efficiency on the user-side and
strengthen their payback capability Tiered electricity tariff
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Policy instruments – Table 4

11. Instruments Assessment Index
Index Explanation Weight
Feasibility Establish the project and realize the
project viability within a short-term
[ ] %
Sustainability Achieve long-term commercial viability
(beyond support phase)
[ ] %
Replication Potential to be replicated in other projects [ ] %
Others (please specify): [ ] %
Sum up 100%
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12. Primary findings
1. Government’s support is crucial for REOG, and policy
mechanisms need to be set up with diversified
instruments and strategic thinking.
2. In order to increase the access to finance, industry needs
to be more engaged.
3. Financial support from outside foundations/donors plays
very important role.
4. Community funding is a self-sustained source for
financing REOG projects, it should always be included in
the financial plan.
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13. Next steps
• Further literature review
• Case study & comparative study
• Conduct surveys (need your cooperation)
• Policy implications on ASEAN
• Research results will be shared
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14. Thank you for your attention!
Energy Studies Institute
29 Heng Mui Keng Terrace
Block A, #10-01
Singapore 119620
http://www.esi.nus.edu.sg/
For enquiries:
Dr. Liu Xiying
Tel: (65) 6516 5360
Fax: (65) 6775 1831
Email: esilx@nus.edu.sg
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