Renewable Energy Policies for Sustainable African Development. International workshop, Addis Ababa, Ethiopia October 9 th & 10 th 2009

Transcription

1 Renewable Energy Policies for Sustainable African Development International workshop, Addis Ababa, Ethiopia October 9 th & 10 th 2009

2 The WFC builds its work on the expertise and networks of Councillors worldwide The Council consists of fifty highly respected personalities represented in governments, civil society, business, science, education, and the arts 2

3 The five interacting programmes of the WFC All of the named programmes are interrelated and cannot be solved in isolation 5 Peace and Disarmament A world at peace Future Justice A world of justice 4 1 WFC Principles and Values Sustainable Economies A world of true wealth Climate/ Energy A world of climate stability 2 Sustainable Ecosystems A world of stewardship 3 Each programme therefore exchanges and discusses its issues with the other programmes to achieve a holistic view and to deduce conclusions WFC Principles: 1. The duty to ensure sustainable use of natural resources 2. The principle of equity and the eradication of poverty 3. The principle of the precautionary approach to human health, natural resources and ecosystems 4. The principle of public participation and access to information and justice 5. The principle of governance and human security 6. The principle of integration and interrelationship, in particular in relation to human rights and social, economic and environmental objectives 7. The principle of common but differentiated obligations Values: The WFC endorses the core values embodied in the Earth Charter 3

4 The WFC working process to achieve our objectives Step 1 Academic research, sufficiently understanding the challenges and their interdependency, identification and development of best policies to cope efficiently and quickly with the challenges Step 2 Awareness raising, making the legislation/politicians and the public aware of what needs to be done and how it could be done Step 3 Political Engagement/Advocacy, educating, consulting/engaging legislation/politicians what to implement and how Step 4 Political Empowerment/Enabling Legislation, developing tools to empower legislation/politicians to introduce the policies in question 4

5 Africa a continent with many faces 5

6 Africa still a continent barely visible 6

7 A continent facing a lot of challenges, but it s time to turn challenges into chances! Achieving the eight Millenniums Development Goals [MDG s] can positively be enhanced by a rapid deployment of renewable energy. Africa now has the opportunity to leapfrog the unsustainable, conventional (combustion of fossil fuels & nuclear) energy production and consumption of industrialised countries. Often the energy infrastructure doesn t need to be changed, as it would be build up from scratch. The technology for sustainable & renewable energy production is ripe and just needs to be adapted to national conditions. Images: UNDP Regional Service Centre in South Africa 7

8 Unsustainable & unhealthy cooking Source: GTZ Uganda 8

9 Africa needs fast-tracks for energy solutions & policies 9

10 How to identify best policies? Step 1: Selection of a challenge to cope with based on the principles and values of the WFC Step 2: Identification of potential best policies through academic research by WFC staff, input from Councillors, input from WFC advisors Input WFC advisors Academic research Best policies Input Councillors 7. The principle of common but differentiated obligations 1. The duty of countries to ensure 6. The principle of integration, in particular ecosys- 4. The principle tems of public participation and integration in relation to human rights and social, economic and environmental objec- ives governance and human security sustainable use of natural resources 5. The principle of 2. The principle of equity and the eradication of poverty 3. The principle of the precautionary approach to human health, natural resources Step 3: Rigorous evaluation of the identified policies with defined best policy criteria 1), guaranteeing an integrated view and access to information and justice Step 4: Adaptation of policies to allow wide spread application 1) The best policy criteria were adapted from the Delhi Declaration 2002 of the International Law Association and amended by the WFC Future Justice Commission. 10

11 WFC Climate/Energy programme Step 1: Step 2: The challenge: Climate Change The need to switch to renewable energy sources quickly Identified best policy: Feed-In Tariff A Feed-In Tariff (FIT) is a policy which guarantees every energy producer a fixed price for feeding renewable energy (RE) to the grid. This provides investment security and allows as well private people to produce RE e.g. through solar panels on their house roofs. Thus FITs serve to accelerate the production of renewable energy, reduce CO2 emissions and help solve climate change. Step 3: Evaluation: Best policy criteria 1. Sustainable use of natural resources. 2. Equity and eradication of poverty 3. Precautionary approach to human health, natural resources and ecosystems 4. Public participation 5. Governance and human security 6. Integration (human rights and social, economic, and environmental objectives) 7. Common but differentiated obligations.. Legend ~ Fulfilled Not fulfilled Half fulfilled Step 4: Adaptation: the FIT book and the website Policy Action on Climate Toolkit 11

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13 Feed-In Tariff scheme in a nutshell How do FITs work? FITs oblige energy companies to buy renewable energy from producers, and sets the price which these companies pay per unit of electricity. By guaranteeing access to the grid and setting a favourable price per unit of power, FITs ensure that renewable energy is a sound long-term investment - for companies, for industry, and for individuals - thereby creating a strong economic incentive for investing in renewables. Who pays? The most common method for funding the FIT involves sharing the costs amongst the end-users. The result being that the increase in price per household is very small. What are the benefits of a FIT law? When designed effectively, FITs are proven to: Reduce CO2 emissions by replacing fossil fuel-based power production with clean, renewable sources of energy Create jobs - for example the German renewables industry employs around 234,000 people. Almost 60% of which were employed as a direct result of the German FIT law. Help secure domestic energy supply - enabling countries to stop relying on imported fossil fuels Guarantee investment security for renewable energy investors Drive technological innovation, and Provide fair market conditions for renewables which without this system, compete with heavily-subsidised conventional energy. 13

14 Energy Electricity Off-grid approach Low share of total population connected to the grid Grid-connected approach High share of total population connected to the grid Micro-credits scheme Feed-in tariff for mini-grids Classic feed-in tariff scheme Often when referred to energy one may have electricity in mind. For most African citizens in rural as well as in urban areas energy equals more naturally fuel wood or charcoal for cooking purposes. On the following pages energy is preliminary used in the term of electricity. 14

15 A huge, extreme diverse continent Adapting policies to regional, national and local conditions is key Nigeria, Ethiopia & South Africa could become the role models on RE for the respected regions 15

16 16 Standard financing mechanism - Feed-In Tariff DSO Distribution Service Operator TSO Transmission Service Operator Electricity Money Electricity Money RES-e producer electricity generation from renewable energy sources Supply Company Final consumer Electricity Money Electricity Electricity Money Money Only rarely, in the case of large-scale wind power projects, the producer may decide to directly connect to the Transmission Service Operator.

17 Combining feed-in tariffs with the CDM mechanism As a matter of fact, financial income from the certificate trading on the international carbon market is generally marginal in comparison with the overall costs of a project. Therefore, CDM projects will have to be very close to the profitability threshold (Investment additionally threshold) in order to become interesting for investors. The graph shows that project P2 is too far away from this threshold, as the additional incomes from certificate trading will not allow profitability of the project (P2*). However, CDM mechanism allows overcoming the profitability threshold for project P1/ P1*. Source: Bode & Michaelowa,

18 Feed-in tariffs for mini-grids Feed-in tariffs for mini-grids have to be adjusted according to the ownership structure of the power market and the general regulatory framework, i.e. a regulated, monopolistic structure versus liberalised markets. Important actors in the field of electricity generation in mini-grids are independent power producers, rural energy service companies and co-operatives. Image: SMA, Germany Alliance for Rural Electrification,

19 Feed-in tariffs under regulated service concessions Energy Development Agency Money RESCO Rural Energy Service Companies Money Electricity Final consumer The RESCO usually charges the final consumer below the generation costs in the mini-grid at a fixed and affordable price. In order to compensate for the incurred losses, the RESCO receives additional money from the local Energy Development Agency which is general financed by the local government. The combination of payment from the end-user and the Energy Development Agency shall cover all costs and even guarantee for reasonable returns on investment. If the Energy Development Agency does not dispose of sufficient financial means, money from international donors might be necessary. Source: WFC elaboration based on Joint Research Centre of the EC (JRC)

20 Feed-in tariff for Independent Power Producers in mini-grids Governmental electricity authority (regulator) Money IPP Money Electricity DSO Money Electricity Final consumer The combination of the feed-in tariff payment from the governmental electricity authority and the regulated tariff from the DSO should guarantee the profitability of renewable energy projects run by independent power producers Source: WFC elaboration based on Joint Research Centre of the EC (JRC)

21 Feed-in tariff for power producers/consumers Money Governmental electricity authority (regulator regulator) Money Local utility (DSO) Electricity Money Private RE Producer is Final consumer Electricity Similar to Independent Power Producers, the private producer of renewable electricity can sell the power to the grid at a preferential feed-in tariff. At the same time, the private producer receives electricity at a lower price from the grid operator, as all other consumers in the mini-grid. The difference is paid by contributions from the governmental electricity authority (regulator). The final consumer/private RE producer can use the revenue, i.e. the difference between sales prices and purchase price, to pay of the initial investment cost of the installation. 21

22 Feed-in tariffs in Africa Feed-in tariffs are an effective and flexible instrument to spur the development of grid-connected renewable energy plants. Some African countries, Kenya, South Africa and Mauritius have already successfully implemented a feed-in tariff scheme while other countries are currently working on it, including Ghana and Nigeria. When implementing feed-in tariffs in African countries, some special design options have to be taken into account, especially with respect to the financing of the support scheme. Modifications of the tariff calculation approach are also necessary when combining feed-in tariff with the CDM mechanism of the global climate change regime. One major shortcoming of these schemes is to exclude solar PV, given the high irradiation. 22

23 Financing feed-in tariffs through special FIT-Fund State budget or CDM tax International FIT Fund Money Money National FIT Fund (Renewable Energy Fund) Money Payment for producers under the feed-in tariff scheme To avoid an increase of electricity cost for households in developing countries the WFC proposes to set-up national feed-in tariff funds that can cover the feed-in tariff rate. While some of the assets of such a fund should be mustered by the respective dev. country itself, the majority should be provided by a global fed-in tariff fund. 23

24 Grameen Shakti, Bangladesh Number of villages covered Total beneficiaries Unit offices Installed Solar Home Systems Installation of biogas plants A successful example of a truly integrated RE business model. Micro credits for off-grid renewable energy deployment Local GS staff works regularly & closely with the villagers Assembling of Solar Home Systems in own workshops Education and training on RE facilities and their operation & maintenance Biogas plants for RE cooking Improved cooking stoves 38,000 More than 2 million people ,000 6,000 24

25 Key ingredients for Grameen Shakti success 1/2 Innovate installment based payments to make renewable energy technologies affordable. Developing awareness, creating the environment for forging community partnership through local demonstrations, meetings/ rapport with community leaders. For example, Grameen Shakti organizes special programs for school children to increase their awareness about renewable energy technologies. Focusing on consumer needs instead of subsidies through innovative consumer friendly approach such as buy back system (allowing customers to return systems at depreciated prices, if their areas are connected to the grid ), scholarship for school children of solar users, gifts, certificates for full payment etc. Free after sales service for nearly 3 years during which GS staff pay monthly visits to clients homes. Clients can also sign annual maintenance agreement after the end of free after sales service. Source: Dipal C. Barua, Managing Director Grameen Shakti 25

26 Key ingredients for Grameen Shakti success 2/2 Strong after sales service at the local level through local technician training, user training etc. Tapping into local market forces through entrepreneur development, job creation, creation of new business opportunities and linking these to renewable energy technologies. For example, GS s Improved Cooking Stove Program has created 20,00 ICS technicians who are working on a commission basis with GS. More than 40 local manufacturing units for stove accessories have been set up run by local entrepreneurs. Focus on women as main actors and agents of change. GS has set up 45 Grameen Technology Centers and trained more than 1,500 women solar technicians who are working independently and with GS to assemble, repair and maintain solar accessories. Many of them have also set up their own businesses at their homes. GS plans to create 100,000 Green Jobs for women by Eventually, they will become full fledged energy entrepreneurs. Source: Dipal C. Barua, Managing Director Grameen Shakti 26

27 Supportive Policies A de-centralized bottom up approach instead of centralized top down approach Creating a Strong network of proactive branches staffed with Social engineers Strong Internal Audit Department for quality checking of different programs at customer level Custom duty policy changed in favour of RE technology (RET) Tax breaks and other financial incentives should be provided to manufactures Governments should encourage financial institutions to provide soft loans to RET companies Linkage between livestock, agriculture and biogas technology should be emphasized and scaled up Feed-in options and tax breaks should be provided to consumers Source: Dipal C. Barua, Managing Director Grameen Shakti 27

28 Climate Change vulnerability in Africa Source: Anna Ballance, UNEP/GRID-Arendal,

29 Towards a just climate protection agreement We had to adjust the climate goals a bit you understand The recession!... Of course! 29

30 Prerequisites for RE boost & sustainable development Good governance Rule of law, Transparency and Corruption Safety and Security Participation and Human Rights Sustainable Economic Opportunity Human Development Ibrahim Index of African Governance Thorough educational system Education is the key for development & to become independent Independent & impartial media channels Access to information is the foundation of a conscious society Supportive administrational framework Lean structure with committed civil servants Stable financial institutions Trustworthy public and private banks servicing the peoples needs POLITICAL WILL to implement the necessary POLICIES 30