The schemes to remunerate renewable investment should be effectively open for new entrants to develop projects.

 

Policy schemes should be open for new entrants to the market, in other words they should be ‘inclusive’. Whether incumbents are reluctant to engage or not, a key principle of regulation should be to allow new players in the field to take part. This can be seen as a principle for ensuring competition and as protection against the exercise of market power by dominant actors. This requires that processes for grid access and planning are simple and transparent to allow participation of various investors (i.e. local authorities, corporates, individuals, communities etc.). It also requires that the remuneration mechanism and market design provide for predictable and secure remuneration to allow the financing of plants by actors who may not have an existing portfolio of generation assets. Facilitating market entry can also help to overcome financing constraints since third parties – actors from other sectors – may bring new sources of capital to the market for investments in renewables.

Occasionally it may be difficult to assure fair treatment of new entrants through remuneration scheme design alone. Under such circumstances, proactive market monitoring and/or competition regulation may be needed to ensure realistic open access and should be seen as complementary tools to the remuneration schemes.

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