National electricity regulatory systems affecting renewable energy projects
This chapter discusses national electricity sector regulation and its significant impacts on the pace and pattern of renewable energy deployment. National regulators typically have a central role in administering electric grids, which in turn affects the amount of renewable electricity generation and sales. They usually operate under omnibus national laws, such as the Federal Power Act of 1935 (FPA) in the United States and the Zambia Electricity Law of 1995. These laws typically give electricity regulators wide-ranging responsibilities. Other national laws that impact the timing, scope and ultimate success of renewable energy projects, such as environmental and tax regulatory systems, are discussed in Chapters 6 and 8.
To understand national electricity regulators’ importance, it is critical to define the “electricity sector” and understand which activities regulators oversee. The electricity sector essentially encompasses three separate but interrelated activities: generation (production) of electricity; transmission (carrying it from the centrally located utility-scale power plants where it has traditionally been generated to its end users); and distribution (delivering electricity to end users for consumption). The electricity sector includes the individuals and entities involved in these activities, and the governmental laws and regulations that govern these actors and activities.
Electricity’s physical characteristics are also important to understanding regulatory functions. The electric grid is for all intents and purposes a just-in-time system. Electricity must be used as it is generated and cannot be stored in large quantities, although the advent of less expensive and improved storage mechanisms (see section 2.8) may change...
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