Although the Clean Development Mechanism (CDM) could see billions of dollars invested in the development of renewable energies in developing countries, this report argues that successful development of viable markets in renewable technologies is highly dependent on context-specific factors.

This report looks at the context-specific factors behind the success of three renewable energy developments that have taken place in developing countries- without significant foreign investment or the CDM.

These are biogas cogeneration in Mauritius, ethanol production in Brazil, and hot water in from solar energy in China.

Analysis of these three case studies points to a variety of country-specific factors that contributed to the successful development of these energies and their successful deployment, related to:

• geography and the availability and distribution of energy resources
• industrial capacity and innovation policy
• socio-political attitudes and values.

The report argues that the potential for developing renewable energies is best understood on a case by case basis, rather than looking at the generic costs or policy approaches for given technologies or through the lens of technology transfer alone. However, it offers a number of findings to aid effective investment in renewable energy development. These include:

• market-based policy support in the form of pricing, taxation and incentives, while important in most cases for promoting renewables, is not necessary in all cases -especially where there is low demand for a renewable technology or where zero fuel costs are immediately realisable by consumer
• the key role of technological adaptation from existing industrial capacities points to the importance of niche innovations, and of assessing existing industrial capacities and opportunities from which to launch or support renewable technologies in developing countries, as well as new technological development and technology transfer from industrialised countries
• governments play an indispensable role in coordinating between renewable technology companies, established service providers and infrastructure suppliers.

The report concludes that renewable energy planning should be approached strategically by developing countries, with specific technological strategies grounded in national industrial capacity and energy resources. The CDM and other international facilities for technology transfer related to carbon management can be approached most effectively as agents for scaling up existing technological efforts and innovative adaptations in local energy sectors.