Published on December 14th, 2015 | by Tobias Engelmeier3
Why We Need “Green Market Design”
December 14th, 2015 by Tobias Engelmeier
Green market design is the need of the hour. Renewables and energy efficiency solutions have reached meaningful parity with conventional energy sources in many parts of the world. The timing is extremely opportune. It presents a historic coincidence. Firstly, just now, many fast-developing countries in Asia, Latin America, the Middle East, and Africa are getting ready to design and build their future energy system. They have choices today that were not available even 5 years ago. Secondly, the need is evident to change our energy systems very quickly to avoid the worst effects of climate change. We now have the opportunity to nudge countries towards creating a modern, renewables-based energy system before traditional path dependencies set it.
From Government Initiatives to Green Markets
However, many developing countries lack the institutional and business framework to grasp this opportunity in a rapid manner. Their challenges are often similar: low contractual security, high cost of debt, weak infrastructure, and erratic, non-transparent politics. Even more importantly, many developing countries follow very statist economic and industrial policies. They have little knowledge about green market design – which is exactly what is needed at this point, where renewables and energy efficiency technologies step out of their protected niche to offer mainstream energy solutions.
Architects of Green Market Design
I want to bring together a group of “Green Market Architects” to provide excellent, directly usable toolkits for regulators, for entrepreneurs, and for investors and banks. Today, these three crucial market stakeholders are still fending for themselves. They also lack insights into each other’s decision-making processes. How can that brilliant solar entrepreneur in an Indian second-rung city be supported? He needs best in-class information about financing, business models, sourcing, or contracts. How can a well meaning regulator be munitioned with ideas, arguments, data, and examples? He would want to reduce risks, increase opportunities, and fight vested interests. Investors need reliable, business-relevant, and inspiring analysis. At my previous company, Bridge To India, we sought to provide that as consultants to paying customers and we also provided free analysis. However, the more detailed, comprehensive, and insightful paid work also should be made available to everyone — it is a common good in the green market of the future.