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Financing and commercialising solar energy activities

Second solar energy seminar for South and East Asia in Yunnan

by John O'Donoghue

On account of its geographical conditions, South and East Asia has an enormous renewable energy potential. Delegates to a solar energy seminar in Yunnan stressed the importance of financing strategies and a clear definition of consumer needs for solar energy system manufacturers.

The first solar energy seminar for South and East Asia, highlighting the "Prospects for Photovoltaic Systems in Thailand and Neighbouring Countries", was held in Chiang Mai, Thailand in 1994. This event allowed an exchange of relevant information on solar energy applications that were in use or planned by the respective countries within the region. This seminar generally recognised that solar energy technologies were significantly mature, pragmatic, environmentally sound, and highly appropriate for indigenous local conditions. However, within an all but favourable setting, they were only marginally delivering the commercialisation they promised.

The second seminar, "Financing and Commercialization of Solar Energy Activities in South and East Asia" was held in Yunnan Province in the People's Republic of China from August 26-30, 1996. Its rationale was to focus on the potentials and constraints to achieve commercialisation of selected solar energy technologies, particularly at a time when various activities are being proposed or nearing implementation within the region. This integral meeting point also further strengthened the existing close interregional linkages between the delegates, who have now formed a Council on Renewable Energy in the Mekong Region (CORE - cf. previous articles) allowing for a serious review of the requirements of elevating solar energy into a commercially favourable position across the region.

This second seminar was sponsored and organised by the Carl Duisberg Gesellschaft (CDG), on behalf of the German Federal Ministry for Economic Cooperation and Development (BMZ), the Yunnan Science and Technology Commission, the Institute of Scientific and Technical Information of Yunnan (ISTIY) and the Council on Renewable Energy for the Mekong Region, in co-operation with the Regional Information Service Centre for South East Asia on Appropriate Technology (RISE-AT) and the Solar Energy Research and Training Centre (SERT), Thailand. Additional support was provided by a number of private institutions, including the Fraunhofer Gesellschaft, Interpark Ltd. and Deutsche Aerospace.

Financing strategies

There were 70 delegates from ministries and institutes of energy, experts from research institutions, project planners, solar energy companies and distributors, representatives from financing and development planning institutions. They represented the Royal Kingdom of Cambodia, the People's Republic of China, Lao People's Democratic Republic, the Philippines, the Kingdom of Thailand, the Socialist Republic of Vietnam, the Republic of Indonesia, India, Nepal, Sri Lanka, Finland, Australia, the USA and the Federal Republic of Germany.

The seminar strongly emphasised financing strategies and proven mechanisms that are already in place within the South and East Asian region and have encouraged the dissemination of solar energy technologies in some countries with closely-related social, economic and environmental conditions. Presentations highlighted establishing ways to pursue sustainable development goals by identifying, evaluating and financing solar energy activities, and by viewing project risks and feasible financing structures to direct funds from users to suppliers.

The delegates of the seminar concluded that solar energy was the only known technology with global potential to ensure a sustainable energy supply in the long term. There is an enormous renewable energy potential in South and East Asia due to the geographical conditions of the region and the fact that large proportions of population who still do not have access to regular energy supply. Solar electricity has special advantages as a modular technology: it can be generated in small stand-alone systems for individual households, as well as in electricity generation units on larger power grids. The responsibility for the extra costs of solar energy devices arising from small production quantities should be carried globally, since the scale-up of photovoltaic manufacturing serves the future sustainable energy supply globally. Simultaneously, the provision of well-established joint programmes among the South and East Asian Countries will have a far stronger influence on an international forum than any individual project alone.

With limited and diminishing fossil fuel sources, greater awareness to decision makers is extremely important in considering the use of renewable energy resources, not only as a technology for remote rural areas, but also as a mature technology to be applied on a wider scale. Basic financing structures for the establishment of solar energy should be developed as an integral part of implementing national energy plans. Greater awareness of such alternative energy solutions is unlikely to emerge from in- country institutions.

Private sector initiatives should be encouraged to activate project development into the existing institutional and policy framework. Delegates agreed on the future task of combining existing bilateral and multilateral financing instruments in order to introduce and disseminate large numbers of decentralised solar energy systems in rural areas, as well as large installations for urban and industrial energy supply. They will approach their respective governments as well as donor agencies for the provision of equity and loans for setting up rural energy service companies. Where financing institutions and banks are restricted from granting loans to users and manufacturers of solar energy systems, the respective countries and responsible agencies should attempt to harmonise their legal and financing instruments with a view to promoting solar energy activities.

Well-defined consumer needs

Solar energy system manufacturers and suppliers are asked to provide comprehensive energy services adopted to well-defined consumer needs, and not only to sell energy technology. This requires an exact matching of climatic conditions, system layout and expected energy services. However, the approach needs a supportive governmental regulation system, as well as services with tailored financing mechanisms.

It was also noted that the responsible institutions for the application, promotion, planning, and financing for solar energy are unclear, overlapping and scattered. Thus it would appear to suggest itself that the responsible bodies point out the institutions for these areas to enable a better understanding of the relevant channels to streamline efforts for project initiation and development. Mutual co-operation, the exchange of know-how, as well as the promotion of programme activities for supporting renewable energy technologies among the CORE countries should be further strengthened. Appropriate communication technologies, such as electronic mail, discussion groups and document distribution should be established.

Neighbouring CORE member countries expressed their sincere intention to continue co-operation and exchange information for ongoing and future activities in the field of solar energy development and promotion in South and East Asia.

Besides regional cooperation amongst the countries in South and East Asia, delegates would also welcome the setting-up of National and Local Energy Fora to create public awareness among policy makers, promote the application of solar energy technology, elaborate positive framework conditions, and foster human resource capabilities.

A third seminar focusing on the application of solar energy for South and East Asia has been proposed to take place in Hanoi, SR Vietnam, in 1997.