Incentives for Financing the Renewable Energy Transition : The Case of Qatar's Residential Sector

The environmental concern of conventional fossil fuels in fulfilling increasing energy demand has pushed the wider adoption of Renewable Energy (RE) resources, as well as expanding investment in RE technologies. However, the ease of availability and technological maturity of oil in petroleum-rich nations such as Qatar has contributed to the slow uptake of investment in RE projects specifically for domestic consumers. The presence of heavily subsidized electricity in Qatar has also played a major role in limiting investment in the RE sector.

Transitioning from a subsidized and conventional form of electricity generation to RE-based decentralized electricity generation for domestic users is heavily reliant on intervention from the government in the form of regulatory measures. These measures range from tax benefits to capital grants, incentivizing electricity generation and self-consumption, as well as energy efficiency regulations and mandates. The effectiveness of these measures depends on the design of the introduced policy, region dynamics, and population characteristics. Considering such factors, various policy frameworks are discussed to incentivize the local population in Qatar to provide an opportunity for a RET.

The first section of this thesis provides an overview of the factors that impact the RET, presents the current state of RE, and examines the barriers to the take up of RE as faced by individuals, corporations, and government-linked institutions. Financing has been a major hurdle in realizing the RET. Globally, several policies and strategies have been developed for maximizing RE adoption and have proven to be constructive in encouraging the implementation of RE projects. However, the framework of these policies is mostly based on tax reductions and financial benefits, with minimum or zero subsidies on electricity, which is entirely a different scenario compared to Qatar, where electricity is heavily subsidized. Hence, new incentive policies need to be designed for RET financing in Qatar.

In the second section of the thesis, principal-agent theory is used for the first framework to solve the agency problem between the government and the households that implement a policy imposed by the government. The proposed framework, aimed at residents in receipt of fully subsidized electricity, is employed with carbon prices and rebates as an incentive to influence the energy consumption behavior of individual households and motivate them to shift a portion of their demand towards RE. The study also quantifies the impact of the proposed framework and reveals that the policy could reduce households' energy consumption. The effect of varying model parameters on incentive design is investigated, and a detailed financial analysis is conducted based on the redirection of saved energy resources from domestic consumption to international gas and electricity exports.

In the third section of the thesis, based on Qatar's unique demographics, where the expat population is in the majority, a detailed solar PV adoption incentive framework is developed, including load designing, component modelling, optimal sizing, and optimal energy management. A real community load of Qatar's residential sector, with electric vehicles added, is used to model the requirements of the renewable energy investment. Different penetration levels of RE are analyzed in the presence of the grid and coupled with several proposed incentives. The incentives are classified into three types: investment-based, production-based, and grid-support incentives. A comparative techno-economic analysis is presented to show the profitability of the photovoltaic system with the proposed incentives both for the community and the government. Results show that a considerable amount of RE is fed to the grid, thereby reducing its load and promoting self-generation.

The thesis concludes with a direction for policymakers to provide targeted incentives for Qatar's residential sector. With the incentive frameworks proposed, a significant reduction in electricity usage can be observed, which signifies the importance of government intervention via policy formulation. However, a pilot study would need to be conducted on a subset of households in order to detect issues and risks that can only be identified through real-world implementation.