re development in developing countries and the role of ......re development in developing countries...
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RE development in
developing countries and
the role of public sector Gevorg Sargsyan
Global Lead, Clean Energy
The World Bank Group
11,919
7,226 7,547
7,018
9,445
6,492
-
2,000
4,000
6,000
8,000
10,000
12,000
14,000
2010 2011 2012 2013 2014 2015
FY2010-2015 Commitment (US$m) by Sector
Upstream ExtractivesInvestment and Policy
General Energy Policy andInstitutional Development
Transmission and Distribution
Coal Fired Generation
Oil Fired Generation
Gas Fired generation
Energy Efficiency
Renewable Energy (Non-Hydro)
Hydropower Generation
World Bank Group’s energy portfolio
World Bank Group’s RE portfolio (FY2010-2015)
Biogas 1%
Biomass 1%
Geothermal 10% Solar CSP
14% Solar Lighting
0%
Solar PV 6%
Solar Thermal
0%
Wind onshore
2%
Hydro 54%
Unspecified RE 6%
RE TA, Capacity
Building & Project Mgmt
1%
Hydro TA, Capacity
Building & Project Mgmt
5%
US$ 8b
What are the main challenges?
Meet growing demand
5 Source: IEA, World Energy Outlook 2015
Change in energy demand in selected regions, 2014-2040
Achieve universal access
6
2.9 billion 1.1 billion
Electricity access
deficit
Cooking access
deficit Source: World Bank/IEA SE4ALL GTF 2015
Deliver NDCs and bridge the gap to 2DS Japan committed to 26% reduction in GHG
7 Source: IEA, Special Report on Energy and Climate Change, 2015
Is renewable energy delivering
on promise?
Technology transformation is underway
Demand side transformation
50% cost reduction in the last five years
Supply and installation <$1000/kWp!
Wind and solar cost competitive in several markets
10
Source: WRI The New Climate Economy, BNEF, WB
U.S.
Solar: 5-8 ¢/kWh
Wind: 4.7 ¢/kWh
Chile:
Solar: 8 ¢/kWh
Uruguay:
Solar: 9 ¢/kWh South Africa:
Wind: 5 ¢/kWh Solar: 7 ¢/kWh
Rooftop solar cheaper than electricity retail rates in
a number countries e.g. India Wind and Solar increasingly also reported
competitive with coal in Australia, Chile,
Mexico, New Zealand, Turkey, South Africa
Canada:
Wind: 6.6 ¢/kWh
UAE: Solar: 5.6 ¢/kWh
Parts of India:
Solar: 6-8 ¢/kWh Wind: 6-10 ¢/kWh,
Jordan:
Solar: 6-8 ¢/kWh
Turkey:
Wind: 7.3 ¢/kWh
China:
Wind: 8-9 ¢/kWh
Germany:
Wind: 6.7-10 ¢/kWh
Solar: 9.6 ¢/kWh
Brazil:
Wind: 4.5 ¢/kWh
Solar: 8 ¢/kWh
Australia:
Wind: 4-7 ¢/kWh
Peru:
Wind: 3.8 ¢/kWh
Solar: 4.8 ¢/kWh
Morocco:
Wind: 4 ¢/kWh
Egypt:
Wind: 4 ¢/kWh
Developing countries lead since 2013…
11 Source: IEA, Medium-Term Renewable Energy Market Report, 2015
World renewable power annual capacity additions, main vs. accelerated case
12
Solar potential is the largest in developing
countries (PV to triple in 5 years)
Source: data based on Solar Power Europe: Global Solar Power Map
World: from
178GW to 540GW
USA: from
19GW to 59GW
Chile: from
0.4GW to 5GW
Europe: from
89GW to 158GW
SAFR: from
0.9GW to 4GW
Australia: from
4GW to 12GW
India: from 3GW
to 54GW China: from
28GW to 114GW
Japan: from
23GW to 59GW
Auctions are gaining importance in many markets
13 Source: IRENA, RE Auctions: A guide to design
Many choices in
auction design:
can be custom-made
to fit country’s needs
What can public sector do?
What can public sector do?
15
• Enabling environment
• De-risking
• Greening grids
Enabling Environment: Readiness for Investment in
Sustainable Energy (RISE)
16
RISE is a suite of indicators that assess government support for sustainable energy investments
Pilot was conducted in 17 countries in 2014, first global edition in spring 2016
http://rise.worldbank.org
• Uncertainty in energy planning and continued government
commitment to renewables
• Feed-in tariff has been successful (too generous) ,
especially for solar, but uncertainty as support levels may
decrease after 2017
• Ambitious targets and government
commitment
• Record solar auctions, and large wind
commitments
• Transparent grid connection and use
of system rules
Brazil China
• Solar and Wind growing rapidly in
high-resource regions
• Competitive bidding has replaced
feed-in tariffs for solar in most
states, with very low resulting prices
• Financial viability of offtakers varies
by region, and payment guarantees
not always available.
• Allocation of connection costs not
always clearly specified
India
• Largest renewable energy market in the
world, twice as much new RE since 2000
as next 2 countries combined
• Market growing, but constrained
somewhat by lost revenue from high
curtailment of wind and solar
• Lack of transparent and coordinated
transmission planning can leave projects
without reliable offtake
17
0
5
10
15
20
25
30
0% 5% 10% 15% 20%
Exit
Pri
ce (
US
¢/k
Wh
)
Cost of Capital
Cost of Capital
O&M
Investment
De-risking: Decreasing cost of capital
Source: World Bank analysis
• Focus on decreasing off-take, resource and other risks affecting
cost of capital
De-risking: Maldives Accelerating Sustainable
Private Investment in RE (ASPIRE)
18 Source: World Bank
• Up to 35-50MW of PV
• WB provides off-take and
liquidity guarantee
• Potential subsidy for smaller
islands and batteries
I
Surface Reconnaissance
($1-2 mil)
II
Exploration Drilling
($20-30 mil)
III
Production Drilling
(~$20-120 mil)
IV
SAGS +Power Plant
(~$20-200 mil)
V
Operation + Maintenance
Identification of Resource
High Resource RiskLower Resource Risk
Financing RiskFinancing Risk Operational Risk
Pro
ject R
isk
De
ve
lop
me
nt
Ph
ase
sT
yp
e o
f R
isk
Cu
mu
lativ
e C
osts
o
f De
ve
lop
me
nt
De-risking: Resource Risk
19
Source: Energy Sector Management Assistance Program
Global Geothermal Development Plan March 2015
About $1 billion
5-8 times leverage
Greening grid: Smart grids in Ukraine, Vietnam
and Turkey
20
Source: World Bank
Traditional Distribution System
Distribution System of the Future
Greening Grid: Solar parks and transmission
in India
• World Bank to support over 3000MW of utility scale solar power
21
Charanka solar park (224MW) for comparison
Conclusions
22
• Meeting growing demand, providing access and
addressing climate change are the key challenges facing
developing countries
• Developing countries have largest RE potential and
already lead in deployment
• Private sector is in driving seat
• Governments and developing partners can support RE
developments by: Improving enabling environment
De-risking
Greening grid
Thank You