Market Transformation:

What is Market Transformation?

Market Transformation (MT) is the strategic process of intervening in a market to create lasting change in market behavior by removing identified barriers or exploiting opportunities to accelerate the adoption of all cost-effective energy efficiency as a matter of standard practice (NEEA, 2015a).

Market Drivers

Drivers are the factors by which the transformation is encouraged (NEEA,2015a)

Drivers

• Incentives
• Low operating cost
• Energy independence
• Economic development
• Codes/ Laws and Policies
• Reduce enviornmental impact
• Demand for energy (ie. population)

Incentives

Payment or concessions which motivates individuals or organizations to invest in renewable energy systems (NEEA, 2015c).

United States

• The Renewable Electricity Production Tax Credit (PTC) offers wind, solar, geothermal, and closed-loop biomass systems a 1.8 cent credit per kilowatt hour generated. The credit is 0.9 cents per kilowatt hour for open-loop biomass, landfill gas, waste incineration, and small hydro (less than five megawatts) (EPA, 2015).

United states

• For the solar power industry, the key federal incentive of recent years has been the Investment Tax Credit (ITC) which allowed businesses to invest in solar power projects and receive a tax credit for up to 30% of the expense (Campbell, 2014).

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Canada

• Feed- in Tariff: FIT payments can range from CAD 10.3 cents per kilowatt-hour (CAD c/kWh) for landfill gas projects larger than 10 MW to 80.2 CAD ¢/kWh for residential solar rooftop projects 10 kW or smaller (IEA, 2014).

canada

• Canada ecoENERGY: Ontario homeowners can get $1,250 in grants from the Canadian government for a new solar hot water system. The Government of Canada grants up to $5,000 for home energy renovations through the ecoENERGY Retrofit (IEA, 2014).

United kingdom

• Renewable Heat Incentive (RHI) provides incentives for consumers to install renewable heating in place of fossil fuels.
• Feed-in Tariffs (FITs) scheme: pays energy users who invest in small-scale, low-carbon electricity generation systems for the electricity generated, used, and for unused electricity they export back to the grid (IEA, 2014).

China

• Tax: Reduced the VAT on wind power to 8.5% (previously 17%), lower rate encourage the development of wind energy usage (Campbell, 2014).
• For biomass power projects, a $0.04 per kWh subsidy was offered, along with incentives such as risk reserves and tax breaks.

china

• FIT for solar power from ground-based solar farms, rooftop, or building integrated PV systems installed in 2009 with respective rates of $0.31, $0.54, and $0.63 per kWh of electricity generated (Campbell, 2014).

Low operating cost

Operating costs cover operations, maintenance and, where appropriate, costs for fuels. Renewable energy plants tend to be very low on operating costs in comparison with fossil fuel generators (World Bank, 2013).

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Energy independence

Governments are building strong renewable energy sectors to enhance their energy security and building their manufacturing industries.

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Economic development

Improving the economic well- being or structure of the society.

Employment

• Compared with fossil fuel technologies, which are typically mechanized and capital intensive, the renewable energy industry is more labor-intensive. This means that, on average, more jobs are created for each unit of electricity generated from renewable sources than from fossil fuels (USC, 2009).
• Business

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Investment

• Union Concerned Scientist (2009) (USA) analysis found that a 25 by 2025 national renewable electricity standard would stimulate $263.4 billion in new capital investment for renewable energy technologies.

Codes/ Laws and Policies

Government

• Giving energy and grid priority to renewable energy systems

Environmental impact

The effect of current non- renewable energy sources on the surrounding and ultimately global environment (USC 2009).

emissions

• Renewable energy has little or no greenhouse gas emissions, but also other air pollutant emissions which cause smog, acid-rain or hazardous air pollution are zero for most forms of renewable energy. When low-emitting forms of renewable energy are used to replace fossil-fuel energy, reductions in air pollution occur and cleaner air is the result (EPA, 2015).
• UCS (2009) found that health impacts associated with fossil fuels cost between $361.7 and $886.5 billion every five to ten years.

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Demand for energy

The appetite energy sources is growing dramatically, with worldwide energy consumption it is projected to increase by more than 40 percent by 2035 (EPA, 2015; World Bank, 2013).

China alone, demand is expected to increase by 75 percent by 2035 (EPA, 2015; World Bank, 2013).

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Market Barriers

Non- technical issues that block or shield the adoption of some from of renewable energy technology (Jack, 2013).

Barriers

• Funding (initial cost etc.)
• Public opinion
• Insufficient infrastructure
• Codes/ Laws and Policies
• Market unfarmiliarity

Funding

Being provided the money to support and develop renewable energy project and initiatives (World Bank, 2013).

financing

• RE technologies tend to have high up-front costs and low . Without long-term financing, investment decisions are biased toward conventional technologies that can be financially viable with shorter-term loans.
• The small scale of many RET projects creates significant problems in obtaining private financing.

Project examples

• Concentrating solar power. Three projects with total capacity of 70 MW and cost of $1.04 billion (average project size of $350 million or 23 MW) (World Bank, 2013).
• Wind. Forty projects with total capacity of 1 gigawatts (GW) and cost of $2.15 billion (average project size of $31 million or 25 MW) (World Bank, 2013).

Public opinion

The majority of the communities position on the usage and development of solar energy.

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Insufficient infrastructure

The renewable resources that a country has that can be harvested easily, efficiently, and in abundance.

technical

• - Lack of regulatory framework for land securement (NEEA, 2015c). - High risk of land speculation due to mining concessions (NEEA, 2015c). - Lack of coordination among relevant institutions (NEEA, 2015c).
• - Inadequate infrastructure to accommodate renewables (NEEA, 2015c).

Codes/ Laws and Policies

government

• Laws and policies being outdated.
• Laws and policies needing to be passed by governing bodies.
• Laws and policies lengthy time period to be passed.

Market unfamiliarity

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• Renewable energy technologies are often viewed by investors as unproven and therefore renewable energy investments are often considered a high risk. This unfamiliarity with the technologies can greatly deter lenders from making an investment.

Ways the energy market can or has been transformed

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• Efficient washers/ dryers
• Solar water heater
• Solar a/c
• Efficient lighting (LED)
• Mandated renewable energy building codes

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works cited

• International Energy Agency. (2014). Annual Report: 2014. IEA. Retrieved October 14, 2015 fromhttps://www.iea.org/publications/freepublications/publication/2014_IEA_AnnualRe port.pdf
• Northwest Energy Efficiency Alliance. (2015a). Market Transformation. NEEA. Retrieved October 13, 2015 from http://neea.org/docs/default-source/marketing- tookits/neea_definition_of_markettransformation.pdf?sfvrsn=2

works cited

• Northwest Energy Efficiency Alliance. (2015b). Market transformation and the northwest energy efficiency alliance: A brief history. NEEA. Retrieved October 13, 2015 from http://neea.org/docs/default-source/default-document-library/history-of-nee... mt.pdf?sfvrsn=4
• Northwest Energy Efficiency Alliance. (2015c). Market transformation: Business plan. NEEA. Retrieved October 13, 2015 from https://neea.org/docs/default-source/default-document- library/neea-2015-2019-natural-gas-market-transformation-business-plan.pdf?sfvrsn=13

Works cited

• Jack, K. (2013). Photovoltaics (PV) in North Texas Barriers, Drivers, Opportunities. NCTCOG. Retrieved October 21, 2015 from http://www.nctcog.org/trans/air/solar/KATHY-JACK-NCTCOGPVBarriers_6-14-14.p...
• Union of Concerned Scientists (UCS). 2009. Clean Power Green Jobs.

Works cited

• UCS. 2009. Climate 2030: A national blueprint for a clean energy economy.
• The World Bank, 2013. Financing Renewable Energy - Options for Developing Financing Instruments Using Public Funds.

Works cited

• Environmental Protection Agency. (2015). Energy and Environment Guide to Action. EPA. Retrieved October 18, 2015 from http://www3.epa.gov/statelocalclimate/documents/pdf/slb-executivesummary.pd...
• Campbell, R. (2014). China and the United States—A Comparison of Green Energy Programs and Policies. FAS. Retrieved October 21, 2015 from https://www.fas.org/sgp/crs/row/R41748.pdf