role of public policies & financing techniques in promoting wind energy
Post on 31-May-2015
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Presentation by –
Swapnil GoreMS in Energy TechnologiesStony Brook University, NYswapnil.energy9@gmail.com
swapnil.energy9@gmail.com
Sector Overview Wind Power commercialized in 83 countries Top 5 - China, US, Germany, Spain & India Total installed capacity – 198 GW Overall investment in wind power sector in 2010- $96bn
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Wind Energy Generation- Brief Broad Classification:
Onshore & Offshore
Onshore:
Capital Costs: 1 to 1.5 million USD/MW
Capacity Factor: 20% to 35%
Trends: High capacity units Largest Operating Project: Roscoe Wind Farm in Texas with a capacity of 781.5 MW Largest Turbine: Enercon
E126, 6 MW capacity
‘Three-bladed, upwind, variable-speed, pitch-regulated turbines currently dominate the industry’swapnil.energy9@gmail.com
Project Details Considered Country Name: Windland Current installed Wind Power: 45 MW Wind Power Generation Target: 6500 MW by 2020 viz. 10% of total electricity
consumption Emission Factor considered: 0.933
Wind Farm specifications: Project Capacity: 25 MW Lifetime: 20 years Capital Cost: $28.55 million ($ 1.142 million/MW) Turbine Used: Vestas V47 – 55m, 32 units of 660 kW Capacity Factor Derived: 27.4% O&M costs: 3% of initial CER generation: 56,132/yr FIT announced- 5.2 US cents (base tariff of 3.2 cents + Production premium of 2
cents) Energy Resource- Wind speed of 8.0 m/s at 55m is considered
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Development Barriers
swapnil.energy9@gmail.com
swapnil.energy9@gmail.com
Policy Formulation Strategy
Policy Model
FiT Premium*(Competitive bidding approach proposed)
Resource Assessment Technical Assistance Single Window clearance* Strengthening Grid
Infrastructure Mandatory RPS* Strong PPA Standards & Testing SEZ formations* Informational systems Human Resource
Development
Soft loans (1.5 %) Publicly Backed Guarantees Accelerated Depreciation Option* Exemption from Import duty* CDM benefits
Renewable Energy Asset Financing
Capital Markets (Domestic & International)
Sectoral Public Private partnership (Like the GET-FiT programme by Deutsche Bank; the South African Wind Energy Programme in collaboration with GEF & UNDP for premium pricing model)
Key funding Sources
Public Funding Sources (like GEF, UNDP, WB)
Concessional & development finance (National banks, Government Energy Finance Institutions, Multilateral/Bilateral FIs)
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*Elaborated FiT Premium: This premium pricing mechanism may be introduced by competitive bidding approach (with
$0.02 being the maximum price) for most cost effective fund utilization
Accelerated Depreciation option: Wind power developers availing the accelerated depreciation would get only 50% of FiT premium
Mandatory RPS scheme for 8 years with annual increase of 1.25% up to 10% by 2020, would help in achieving the target of 6500 MW.
Import Duty exemption: Projects established in the first 2 years would only be eligible for this benefit, from 3rd year domestic material obligation would be introduced to boost wind equipment manufacturing. (Approach followed in China & India)
SEZ formation: Establishing Special economic zones in high wind resource regions to provide lands on long term lease to wind project developers or manufacturers, also they would get the benefits given to other industries
Single Window Clearance Mechanism: All licensing and project related approvals to be done by a single government agency (resolves the issue of uncoordinated authorities & the delay due to it)
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Model 1: Commercial loan (10 %) with no other financial assistance
IRR: -2.8%YPCF: Not in lifetimeNPV: $ - 12,081,827B-C Ratio: -0.55
ReTScreen Analysis Models
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Analysis Models…contd.Model 2: Soft Loan (1.5 %) with no other financial assistance
IRR: 2.4%YPCF: 17.5NPV: $ - 7,138,871B-C Ratio: 0.08
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Analysis Models…contd.
Model 3: On implementation of the Policy ModelSoft Loan (1.5 %) FiT premium ($0.02/kWh)
IRR: 15.1%YPCF: 7.6NPV: $ 39,489B-C Ratio: 1.01
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Attractive ModelModel 4: Policy Model inclusionsSoft Loan (1.5 %) FiT premium ($0.02/kWh)
Additional Financial Assistance 0f $12 millionSources- Funds raised after cutting down fossil fuel subsidies; Financial Assistance from Multilateral & Bilateral FIs and other philanthropic bodies; Carbon TaxFiT being the most accepted approach to attract investments, these funds would be given as additional FiT premium of $0.01/kWh
IRR: 21.8% YPCF: 5 NPV: $ 3,628,669 B-C Ratio: 1.47
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Roadmap for overall Wind sector development of Windland
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Other Innovative Development Measures Establishing wind zones in country with variable FiT corresponding to WPD
HVDC transmission system to be established for Onshore & offshore projects
Training and awareness workshops. Inclusion of wind technology concepts in school curriculum to attract interest of youth.
A single window clearance for all project approval & licensing processes, and to be made online for increased transparency & tracking
Encourage R&D in top national technical education institutions, declaring grants for each new patent registration
Deployment building integrated solar-wind hybrid OR mini stand-alone wind power systems, beneficial for unelectrified areas. Net Metering option.
Progressive Incentive policies & subsidy programs. Moving from commonly-used Inverted Block Tariff (IBT) to Volume Differentiated Tariff (VDT) structures, where the lowest price for the lowest block is only available to the poor, can help to improve the targeting of electricity subsidies.
PBGs for risk sharing
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“It can shape mountains. It can move oceans. Now the wind can even heat up your toaster”
Thank YouPresentation by –
Swapnil GoreMS in Energy TechnologiesStony Brook University, NYswapnil.energy9@gmail.com
Annexures: ReTScreen Analysis
swapnil.energy9@gmail.com
swapnil.energy9@gmail.com
swapnil.energy9@gmail.com
swapnil.energy9@gmail.com
swapnil.energy9@gmail.com
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