Policy Brief

Many electricity markets authorize capacity payments to generators to secure sufficient supply, unintentionally favouring peaking technologies like oil and gas. New approaches are needed to ensure reliability without discouraging investment in low-carbon resources such as solar, wind and nuclear.

Financing costs for renewable energy technologies have decreased substantially over the past 18 years, helping make renewables more cost competitive. Leveraging the effect of financial learning and continuing the policies that facilitated favourable financing conditions are key for greater renewable energy adoption in the future.

Hotel guests changed their resource-use behaviour when they received feedback on their consumption in real time, even though they did not know that they were part of a study and had no financial incentives. Behavioural interventions provided by digital technologies are a scalable and cost-effective policy instrument for fostering resource conservation.

New network tariffs designed to recover grid operating costs can introduce up to a 500% increase in charges for some households. A transition from volumetric to peak-load-based tariffs will require targeted policy measures such as clear price signals, information about household electricity consumption and temporary compensation or mitigation mechanisms.

Hardware costs, cost of labour, favourable cost of capital, low taxes and low, but positive, profit margins all contributed to lowering the price of utility solar power in the Middle East. These prices and policies can be replicated elsewhere without direct subsidies and prices will continue to reduce in the future.