Common forms of renewable energy, Practical Law UK Articles 2-524-3139

Common forms of renewable energy

by Practical Law

Articles | Published on 01-Sep-2019 | Argentina, Australia, Belgium, Bolivia, Brazil, Canada, Chile, China, Egypt, Ethiopia, Finland, France,
Germany, Guatemala, India, Indonesia, Italy, Japan, Kenya, Mexico, Morocco, Nigeria, Portugal, Qatar, Romania, Russian Federation,
Singapore, South Africa, Spain, Thailand, Turkey, United Kingdom, United States, Vietnam

This table summarises the common forms of renewable energy sources used for the generation of electricity and the
incentives there are to promote the use of renewable energy. Please note that law stated dates for each jurisdiction
may differ. Click on each jurisdiction to see the full answers and to check the law stated date.

This table is part of the global guide to energy and natural resources.

Jurisdiction What (if any) renewable energy What incentives are there to promote the use of
sources are used for the renewable energy?
generation of electricity?
Argentina In order of current importance: Incentives mainly consist of tax benefits, including the
following:
• Wind.
• Exemption from import duties.
• Photovoltaic.
• Rapid amortisation of capital expenditure.
• Biomass.
• Early return of VAT.
• Geothermal.
• Exclusion of certain assets from taxable base for
income tax pruposes.

• Certain additional tax benefit for projects involving

local components.

Australia • Hydro (12.9% / 6.7%).*
• Wind (10% / 8.2%).*
• Solar (5.2% / 2.5%).*
*(capacity/output) as a percentage
of total generation in the 2019/20
financial year.
Belgium In 2019, 20.3% of the electricity
in Belgium was generated from
renewable energy sources:
• Wind: about 10.2%.
• Solar: 4.2%.
The Renewable Energy Target scheme targets 23.5% of
generation from renewable sources nationally by 2020
by legislating demand for small-scale and large-scale
generation certificates.
Some states have their own renewable energy targets
and incentives that are more ambitious and renewable
friendly than the national approach.
The most widely used incentives are:
• Green certificates for renewable energy
generation.
• Certificates for CHP.

• Non-pumped hydro: 0.3%. Other incentives include:

• Biomass: 3.4%.

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Common forms of renewable energy, Practical Law UK Articles 2-524-3139
• Renewable rural waste:
1.1%.
• Biogas: 1%.
Bolivia Bolivia is in the process of
developing large hydroelectric
power plant projects with powers
installed above 70 MW.
Brazil • Hydroelectric. Brazil has
1,369 hydroelectric power
plants with an installed
capacity of 109.1 GW,
representing 63.1% of
installed capacity.
• Biomass. Brazil has 572
biomass power plants with
an installed capacity of 15.1
GW, representing 8.7% of
installed capacity.
• Wind. Brazil has 646
wind power plants with an
installed capacity of 15.4
GW, representing 9.1% of
installed capacity.
• Solar. Brazil has 3,898
solar power plants with an
installed capacity of 2.9
GW, representing 1.7% of
installed capacity.
Canada • Hydroelectricity (59.1%).
• Nuclear (14.7%).
• Wind (4.7%).
• Biomass (1.7%).
• Solar (0.5%).
• Others (such as tidal)
(<0.1%).
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• Premiums for the use of various ecological
alternatives, including small-scale generation using
a home battery (Flanders).
• A tender mechanism for specific solar and wind
installations (Flanders).
• Off-shore renewables certificates.
• There are promotion mechanisms, including
preferential dispatch, financing mechanisms
and import tax exemptions for renewable energy
equipment that cannot be locally manufactured.
• Fiscal incentives are provided on a case-by-case
basis or with regional and time-limited scope.
• Concessional loans from international donors for
the development of renewable energy projects are
accepted by law on a case-by-case basis.
• The Programme to Foster Electric Power
Alternative Sources (PROINFA).
• Brazilian National Bank for Economic and Social
Development (BNDES) financial programmes to
support the development and implementation of
wind and solar energy projects in Brazil.
Incentivised by the Paris Agreement (2016), the federal
Canadian Government released the Pan-Canadian
Framework on Clean Growth and Climate Change. The
framework promotes the use of renewable energy as a
means to grow the Canadian economy (creating jobs,
investing in clean technology and so on) while reducing
emissions. Provinces such as Alberta are also motivated
by the risks associated with heavy dependence on the
fluctuating oil and gas market. The federally enacted
Greenhouse Gas Pollution Pricing Act 2018 has further
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Common forms of renewable energy, Practical Law UK Articles 2-524-3139

incentivised provinces looking to avoid the carbon tax

Chile • Hydro power (20,797 GWh
in 2019).
• Solar (6,347 GWh in 2019).
• Wind (4,812 GWh in 2019).
• Biomass (1,820 GWh in
2019).
• Geothermal (202 GWh in
2019).
scheme.
Every year each generation company must demonstrate
before the Independent Co-ordinator of the National
Electricity System that a certain percentage of the
energy withdrawn by that generator from the grid for its
customers was injected by renewables. If not, a special
charge must be paid. The national goal is 20% by 2025.
If the goal is not met, the National Commission for
Energy must initiate a bidding process to supply non-
conventional renewable energy

China • Hydropower, which • National subsidy.

generated 1,300,000 million
kWh (17.8% of all electricity • Some local governments provide local subsidies.
generation).
• Offtake in full for certain types of renewable energy
• Wind power, which projects.
generated 405,700 million
• Minimum guaranteed hours (for wind and
kW (5.5% of all electricity
solar electricity generation projects, there are
generation).
abandonment of power issues).
• Solar power, which
• Income tax incentives.
generated 224,300 million
kWh (3.1% of all electricity • VAT rebate.
generation).

• Biomass power, which

generated 111,100 million
kWh (1.5% of all electricity
generation).

• Geothermal power. The

percentage is unknow as
the state has not released
any official statistics on
geothermal power.

• Tidal power. The percentage

is unknow as the state has
not released any official
statistics on geothermal
power.

Egypt • Wind. • Feed-in tariff (FiT) scheme for the development

of wind farms and solar projects, based on long-
• Hydro. term power purchase agreements (PPAs) (20 to 25
years).
• Concentrated solar power.
• Sovereign guarantee of all financial obligations
• Photovoltaic.
under PPAs.

• Exemption from customs and tariffs for renewable

energy equipment.

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Common forms of renewable energy, Practical Law UK Articles 2-524-3139
Ethiopia Of all the installed electrical
capacity in Ethiopia:
• 98% is from hydropower.
• 2% is from wind and
geothermal sources.
Ethiopia's hydropower potential is
estimated up to 45,000MW. Only
25% of it is exploited so far.
Finland • Hydro power (19%).
• Biomass (18%).
• Wind power (9%).
France In 2019, renewable energy
accounted for 21.5% of electricity
generation, as follows:
• Hydroelectricity: 11.2%.
• Wind: 6.3%.
• Solar: 2.2%.
• Bio-energies: 1.8%.
Germany If percentage figures for the
proportion of total energy
generation are available, please
include them.]
In 2019, renewable energy made
up nearly 47% of total electricity
production, as follows.
• Wind power accounted
for 26% of total electricity
production.
• Photovoltaic accounted for
8.8%.
• Biomass, hydropower and
other renewables accounted
for 12.2%.
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• 30% reduction of net taxable profits from taxable
income for projects depending on, or generating,
renewable energy.
Private sector investors in the energy sector are
eligible for fiscal and non-fiscal incentives. Current tax
incentives are, subject to conditions and the type of
project:
• Income tax exemption.
• Loss carry-forward.
• Exemption from customs duty.
• VAT exemption during electricity supply.
The main incentives are:
• Subsidy schemes.
• Tax incentives.
• Feed-in tariffs.
• Market premium.
• Tender system.
• Tax credits.
• Reduced rate of VAT.
• Interest-free eco-loan.
• Property tax exemption.
• Electricity from renewable energies is granted
priority access to the grid.
• Feed-in tariffs are granted to operators of older
plants and smaller new-built installations.
• A market premium is granted to operators of other
renewable energy plants. Since 2017, this market
premium is established via a tendering process.
• Self-producers of renewable energy are subject to
discounts on the renewable energy surcharge.
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Common forms of renewable energy, Practical Law UK Articles 2-524-3139
Other renewable energy sources
include geothermal energy.
Guatemala • 29% is hydroelectric.
• 5% is geothermal, solar and
wind.
India Total renewable energy
generation (excluding large
hydro) in the country is 90,399
MW (24.2%) as of November
2020. Renewable energy sources
include:
• Small hydro projects.
• Biomass gasifiers.
• Biomass power.
• Urban and industrial waste
power.
• Solar energy.
• Wind energy.
Indonesia By 2018, renewable energy
accounted for about 12% of
electricity generation. This
consists of the following:
• Hydropower: 6.73%.
• Geothermal: 5.3%.
• Other renewable energy,
such as bioenergy, wind, and
solar: 0.2%.
Italy The national energy mix for
generating electricity is as follows
(data in 2016):
• Renewable energy sources:
38.64%.
• Carbon: 15.90%.
• Gas: 37.63%.
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The Incentives for the Development of New and
Renewable Sources of Energy Act 1986 provides for
several incentives to encourage the use of renewable
energy, including:
• Financing for new projects.
• Investment deductions for income tax purposes.
• Charitable donations for renewable energy
projects deductions for income tax purposes.
The incentives include:
• An exemption from paying inter-state transmission
charges and losses.
• Bundling power generated from certain renewable
projects with the unallocated thermal power.
• An exemption from cross-subsidy surcharge and
electricity duty in certain states.
• "Must run" status to renewable energy plants
• Open access on a priority basis in certain states.
Incentives on the use of renewable energy are generally
set out in MOEMR 50/2017.
There are also a number of fiscal incentives on the use
of renewable energy.
The following support schemes are available:
• The Conto Energia feed-in tariffs (former main
support scheme for photovoltaic generation).
• All-inclusive feed-in tariffs for small renewable
energy source plants (excluding photovoltaic
plants). An alternative to the former Green
Certificate regime.
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Common forms of renewable energy, Practical Law UK Articles 2-524-3139
• Oil products: 0.79%.
• Nuclear (imported): 3.89%.
• Others: 3.15%.
The main sources of renewable
energy are:
• Hydro (41%).
• Solar power (21%).
• Bioenergy (17.8%).
• Wind (13.63%).
• Geothermal (5.67%).
For more info please see
www.gse.it.
Japan Renewable energy accounts
for 17% of the total electricity
generation in FY 2017 including:
• Hydro (7.7%).
• Solar (6%).
• Biomass (2.3%).
• Wind (0.7%).
• Geothermal (0.2%).
Kenya Renewable energy accounts for
over 70% of Kenya's installed
capacity. Sources of renewable
energy include:
• Hydropower.
• Wind.
• Solar.
• Geothermal power.
Mexico In 2017, as a percentage of total
electricity generation:
Hydroelectricity: 9.38%.
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• Green certificates, tradable certificate issued to
renewable energy producers for generation by
certain plants commissioned between 1 April 1999
and 31 December 2012. From 2016, replaced by a
feed-in premium mechanism known as GRIN.
• Energy Efficiency Certificates, tradable
instruments certifying the achievement of end-
use energy savings through energy efficiency
improvement initiatives and projects.
• Simplified energy sale and purchase regime for
plants up to 10 MVA.
• Net metering service. The electricity generated
by a consumer/producer in an eligible on-site plant
and injected into the grid can be used to offset the
electricity withdrawn from the grid.
• MD 23 June 2016 incentives. Incentives for
renewable energy facilities commissioned after
1 January 2013 (other than solar photovoltaic
plants).
The feed-in tariff (FIT) programme is available for
photovoltaic (solar), onshore and offshore wind, small
and middle-sized hydro, geothermal and biomass.
Under the FIT programme, electricity retailers must
purchase electricity generated from renewable energy
sources at certain fixed prices for certain periods (with
limited exceptions). The price is set by the authority on a
cost-plus basis.
In April 2022, the feed-in premium (FIP) programme
will be introduced for certain categories of renewable
generators instead of FIT.
Governmental subsidies and preferable tax treatments
may also be available under certain conditions.
The feed-in tariff (FiT) Policy promotes the generation of
electricity from renewable energy sources, by enabling
power producers to sell electricity generated at a pre-
determined tariff for a given period.
• 100% deduction from income for tax purposes
for machinery and equipment used for power
generation from renewable sources (Article 34
paragraph XIII, Income Tax Law).
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Common forms of renewable energy, Practical Law UK Articles 2-524-3139

Wind: 3.19%. • Fixed porter rates for transmission and distribution.

Geothermal: 1.95%. • Suppliers and qualified users participating in the

wholesale energy market must acquire Clean
Photovoltaic: 0.17%. Energy Certificates. Generators that use clean
energy sources will receive one Clean Energy
Others: 0.83%. Certificate per MWh produced from those sources.

Morocco The following renewable Law 13-09 was promulgated in 2010 to liberalise and
energy sources are used for develop the renewable energy sector through the
the generation of electricity in opening up of renewable energy projects to competition.
Morocco:

• Solar (1.3%).

• Hydroelectricity (4%).

• Wind (9.5%).

14.8% of the total electricity

generated in Morocco is
generated by renewable energy
sources.

This information is based

on data provided by the
International Energy Agency
(IEA) and available at:
www.connaissancedesenergies.org/
la-situation-energetique-du-
maroc-decryptee-par-laie-190516.
Nigeria The main renewable energy The Multi Year Tariff Order (MYTO) II's renewable
sources used are: energy objective is directed at encouraging power
generation from renewables. This establishes feed-
• Solar. in tariffs for the costs specifically associated with the
establishment and maintenance of renewable energy
• Wind. plants.
• Hydro.

• Biomass and biofuel.

Portugal Renewable energy currently
accounts for around 62.4% of
installed generation capacity,
including:
• Hydro (especially large
hydro): around 30%.
The most relevant support scheme published in 2020
refers to promoting hydrogen https://participa.pt/pt/
consulta/en-h2-estrategia-nacional-para-o-hidrogenio.
Successful auctions were held in 2019 and 2020 to
award a grid capacity contract for photovoltaic solar
plants (https://leiloes-renovaveis.gov.pt/).

• Wind: around 23.8%.

• Other sources, such as solar

(2.9%), biofuel, waste and,
in the Azores, geothermal
power.

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Common forms of renewable energy, Practical Law UK Articles 2-524-3139

Photovoltaic power plants are

expected to rapidly increase soon
due to falling technology prices.
Qatar Solar power.
Romania At the end of 2018, the total
installed power in renewable
energy generation units,
accredited to receive green
certificates, amounted to 4,785
MW. The installed capacity of the
main renewable sources is the
following:
• Wind, 2,961 MW.
• Solar, 1,359 MW.
• Hydropower plants with a
capacity up to 10 MW, 341
MW.
Not applicable.
The activity of prosumers has been recently regulated
as a tax-free activity, where no VAT or other taxes are
applied.
As for large generation units, no incentives are currently
applicable to promote new investments in renewable
energy projects.
Renewable energy generation projects commissioned
and accredited before 31 December 2016 benefit from
the green certificates support mechanism for 15 years
from commissioning.

• Biomass, 124 MW.

Also, large hydropower plants

(owned by the state-owned
company Hidroelectrica) operates
large hydropower plants with
a total installed capacity of
6,400MW. This ensuring about
40% of the country's consumption.
Russian Approximately 1% of electricity Between 2009 and 2013, Russia introduced legislation
Federation in Russia is generated from supporting the development of renewable energy
renewable sources of energy. Of projects. Renewable generators are now allowed to
this 1%: bid (through a competitive selection process) for the
opportunity to enter into long-term contracts to supply
• Approximately 60% comes capacity. Capacity is traded separately from energy.
from biomass.
Capacity supply agreements aim to ensure that
• Approximately 25% comes investors secure a return on their investment into
from hydropower. renewable energy projects through guaranteed capacity
payments, payable over a 15-year-period.
• The remaining renewable
energy power comes from
solar and wind power.

Singapore Other electricity sources
(including municipal waste,
biomass and solar) accounted for
approximately 2.9% of electricity
generation
Intermitent Generation Sources (IGS) with less than 1
MWac capacity are exempt from obtaining a generation
licence.
IGS with a capacity of 1 MWac or more but less than
10 MWac and are not connected to the power grid
are exempt from obtaining a Wholesaler (Generation)
Licence.

Other government policies and incentives include:

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Common forms of renewable energy, Practical Law UK Articles 2-524-3139
South Africa South Africa has the following
renewable energy sources:
• Solar PV.
• Concentrated solar power.
• Wind.
• Hydro.
Spain According to REE, the quota
generation of electricity by
renewable energy sources
technologies was as follows:
• Hydraulic: 13%.
• Wind power: 18.43%.
• Photovoltaic solar: 3.1%.
• CSP: 2%.
• Waste: 1%.
Thailand • Solar.
• Wind.
• Small hydro power plants.
• Large hydro power plants.
• Biomass.
• Biogas.
• MSW (municipal solid
waste).
Turkey In 2021, the percentage of total
licensed electricity generation with
renewable energy sources is as
follows:
• Hydropower: 34.68%.
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• Renewable Energy Integration Demonstrator –
Singapore.
• SolarNova.
Some tax incentives are on offer, but the biggest
incentive is the assumption by the sovereign of political
and payment risk.
The way in which the procurement programmes are
set up allows for a risk-related return against the
sovereign's balance sheet.
Royal Decree 413/2014 establishes specific rules to call
tender process to grant renewable facilities with specific
remuneration regime.
The Board of Investment offers tax and non-tax
incentives for investments in renewable energy,
including:
• Exemption from, or reduction of, import duties and
corporate income tax.
• The right to employ foreign workers and to own
land for renewable energy projects.
• The right to remit foreign currency abroad.
• 100% foreign ownership in renewable energy
projects.
The Energy Policy and Planning Office (Ministry
of Energy), the Department of Alternative Energy
Development and Efficiency, the Ministry of Natural
Resources and Environment, and the Ministry of
Science and Technology also provide support.
YEKDEM (Renewable Energy Support Mechanism):
• Eligible generation facilities can sell all the power
they generate to the government at a regulated
minimum price.
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Common forms of renewable energy, Practical Law UK Articles 2-524-3139

• Wind: 10%. • Additional incentives if local contents are used in

building the generation facility.
• Solar: 0.37%.
• Priority in connection to the grid in some
• Geothermal: 1.82%. circumstances (solar).

• Exemption from stamp tax for some transactions.

For more information see www.eie.gov.tr.

United Renewable Energy sources in the • Domestic Renewable Heat Incentive (RHI).
Kingdom UK include:
• Non-Domestic RHI.
• Solar.
• Feed in tariffs.
• Onshore wind.
• Renewables obligation.
• Offshore wind.
• Renewable energy guarantees of origin.
• Biomass.
• Contracts for difference.
• Hydroelectric generation.

• Anaerobic digestion.

United States 2015 US renewable energy The US has three primary policy vehicles it currently
sources (% of US net electricity uses to support renewable energy development:
generated):
• Production tax credits.
• Conventional hydropower
(6.1%). • Investment tax credits.

• Wind (4.7%). • Renewable portfolio standards and renewable

• Solar (0.9%).
• Biomass (1.6%).
• Geothermal (0.4%).
All data from the Energy
Information Administration
(www.eia.gov/electricity/data/
browser/).
generation capacity goals.
More details can be found at "Renewable
Electricity Production Tax Credit" (http://
programs.dsireusa.org/system/program/
detail/734), "Renewable Energy Investment Tax
Credit (ITC)" (http://selectusa.commerce.gov/
investment-incentives/renewable-energy-
investment-tax-credit-itc.html) and "State
Renewable Portfolio Standards and
Goals" (www.ncsl.org/research/energy/renewable-
portfolio-standards.aspx).

Vietnam • Hydropower. • Zero import duty for assets to form the fixed assets
of a renewable energy project, and for materials
• Wind. and semi products that are unavailable in the
domestic markets.
• Solar.
• Corporate income tax exemption or reduction.
• Bioenergy.
• Land rental exemption or reduction.

• Government funding for research and technology

of pilot projects.

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Common forms of renewable energy, Practical Law UK Articles 2-524-3139

END OF DOCUMENT

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