The RE market is still nascent and needs to be proactively developed if the huge potential it offers is to be realised. The barriers to RE have been discussed in detail in RE literature. In the initial stages of development, technical barriers predominate. In order for a technology to become cost-effective, market barriers such as inconsistent pricing structures typically have to be overcome. Then there are institutional, political and legislative barriers, which hinder the market penetration of technologies. These tend to arise from a lack of awareness of, and experience with, new technologies, and the absence of a suitable institutional and regulatory structure. Finally, there are social and environmental barriers, which result mainly from a lack of experience with planning regulations that hinder the public acceptance of a technology. A sound strategy to increase market penetration of renewables will need to address all these barriers.

However, the biggest barrier to greater renewable energy use is cost, despite the reductions achieved over recent years. Other obstacles, particularly for the increased use of renewable electricity, include subsidies and other support mechanisms for competing conventional fuels (especially coal and nuclear power). Lack of full cost pricing when determining the cost of competing energy supplies also hinders the development of renewable energy since the cost of environmental impacts are usually not included in energy prices. High discount rates and competition on short-term electricity prices, as seen in electricity markets undergoing a change in regulatory framework, may disadvantage projects with high capital costs but low running costs, such as renewable electricity systems — unless governments set up schemes designed to replace estimated deficiencies in the market place. The high cost of renewables and perceptions about the technology make it difficult for RETs to access finance. As a result, financial barriers

appear to be most prominent for developing renewables. Several financial support programs have been taken up by international agencies and public as well as private funds have been created to provide access to finance (Wohlgemuth and Painuly, 1999).