April, 10 th, Naples, Italy

Transcription

1 April, 10 th, Naples, Italy

2 April, 10 th, Naples, Italy Financial Mechanisms of EE & RES in Lebanon From PEEC to NEEREA Adel Mourtada ALMEE

3 CONTENT 1. LEBANON IN A GLANCE 2. ENERGY CONTEXT 3. ELECTRICITY SECTOR 4. FINANCIAL AND ECONOMIC BARRIERS TO RE AND EE IMPLEMENTATION PROJECTS 5. ENERGY EFFICIENCY IN CONSTRUCTION SECTOR PROJECT (PEEC): REVOLVING FUND 6. FUNDING OF PROGRAMMES: GOVERNMENT BUDGET 7. FINANCING OF SWH BY COMMERCIAL BANKS 8. NATIONAL ENERGY EFFICIENCY AND RENEWABLE ENERGY ACTION, NEEREA 9. KAFALAT ENERGY 10. LESSONS LEARNED AND CONCLUSION 3

4 ALMEE - Total Area: 10,452 km 2 - Population: 4.1 Millions - Pop. growth: 1% per annum Lebanon in a Glance - Electricity: Fuel Oil, Diesel Oil, Natural Gas, Hydro. Primary Energy Use by Sector 2012 Industry sector toe/gwh Hydro 10.7% Energy Strategy RE 12% of Electricity by 2020?? 5% 32% 8% 13% 42% Transport sector Residential sector Tertiary sector 2012 Combine Cycle Combine Cycle Gas Turbine Hydro Agriculture & fishing sector - Primary Energy: 7190 ktoe - Final Energy: 4836 ktoe 4

5 97%. of the Primary Energy imported High Energy Demand Growth, mainly Electricity Increasing Energy Bills Energy Context in Lebanon Concern about Energy Supply & particularly about Electricity Supply RE sources are existing( Hydro, Solar, Wind, Biomass) but not yet significantly developed Increase of Environmental Concern: Primary Energy is mainly very pollutant oil derivatives : Acid Rains,CO2 5 emissions,

6 Energy Context ALMEE Despite an average annual solar radiation of 4.8 kwh/m²/day, it only has less than 0.5% solar energy in its total energy mix; The power sector in Lebanon is suffering from inefficiencies, difficulties and weakness in addition to brown and blackouts. Electricity subsidies are a heavy burden on the public budget (18% of government expenditure in 2012); Growing energy consumption and growing energy prices are heightening this financial pressure. 6

7 Electricity Sector Situation of electricity sector for the period ALMEE Items Subsidy from the government to EdL (M USD)* Total production and purchases of electricity (GWh) breakdown as** : hydro plants Thermal plants Electricity boats Purchase from Syria Purchase from Egypt Share of Electricity from renewable source in the total EdL (%) Share of Electricity from renewable source in the total Electricity Demand (%) Subsidies by the government to EDL Thermal Electricity (USC/kWh)

8 ALMEE Electricity Sector : Tariffs Due to a tariff policy that fixed and froze electricity prices since 1994 (based on a oil barrel cost of 25$), EDL is in a chronic deficit. Subsidies to EDL more than: 2 billion per year. In fact, the tariff is the main cause among putting EDL in very critical situation. Others causes: high technical losses, non recovered bills, human resource problems, technical problems, Electricity Tariffs Low Voltage since 1994 Consumption (kwh/month) Tariff (LL/kWh) Tariff ( /kwh) < > Small to Medium Industry Agriculture Public sector Electricity Tariffs Medium Voltage 2010 Industry and Hotels Tariff (LL/kWh) Tariff ( /kwh) Advanced rate Normal rate Night rate

9 FINANCIAL AND ECONOMIC BARRIERS TO RE AND EE IMPLEMENTATION PROJECTS It includes: High subsidies on electricity (that make the payback period of RE & EE applications too high for end users), No preferential taxation for RE&EE equipments, RE&EE industry has no sufficient incentives to react to market demand (high technology cost), No efficient incentives to promote RE&EE investment in electricity sector: wind farms, CSP, PV farms, etc., Lack of financial mechanisms and instruments encouraging manufacturers of equipments RE&EE, High cost of capital and lack of access to capital & financial institutions (for high investments). 9

10 ENERGY EFFICIENCY IN CONSTRUCTION SECTOR PROJECT (PEEC): REVOLVING FUND» FFEM Execution : ALMEE Coordination : ADEME Institutional Setup: Partnership between the Ministry of Environment and the French Agency for Development (AFD) Financial Support From French GEF, FFEM, 0,89 Million Duration: 1999 à 2004 ALMEE 10

11 11

12 Demonstration projects (French GEF) in Lebanon EE Revolving Funds 12 Paving the way for Thermal Regulation and Green Building

13 ALMEE ENERGY EFFICIENCY IN CONSTRUCTION SECTOR PROJECT (PEEC): REVOLVING FUND» FFEM Results of the Project PEEC : An appreciable energy saving The project shows a real electricity saving at least 1500 kwhe/year per flat of 150 m2 by using SWH and EE Lamps for an investment of 660 /flat. If Energy Conservation Measures are applied for apartments (total investment = 99 M ), the annual electricity saving will be 225 GWh with avoided generation cost of 15.6 M per year. Other benefits : Jobs creation, environmental improvement Paving the way for Thermal Regulation and Green Building 13

14 ALMEE FUNDING OF PROGRAMMES: GOVERNMENT BUDGET 2010: RE Funds ($9.08 M) 1. Phasing out incandescent lamps (3M CFL): $7 M 2. Loans for SWHs: $1 M 3. Efficient Street Lighting (Solar powered, Photo sensor): $0.5 M Limited financing action 14

15 ALMEE FINANCING OF SWH BY COMMERCIAL Very cheap results BANKS IN LEBANON 15

16 CENTRAL BANK OF LEBANON The Central Bank of Lebanon (BDL) can facilitate financing investments in specific economic sectors by exempting banks from part of the required reserve to finance these projects at low cost. 16

17 NATIONAL ENERGY EFFICIENCY AND RENEWABLE ENERGY ACTION, NEEREA BDL is currently working with Ministry of Energy, UNDP and the European Union (EU), to provide potential investors in green technology, specifically in energy saving and renewable energy technology, with low cost financing and medium to long term maturities. 17

18 Figure Source: BDL 18 2

19 ENERGY RELATED (NEEREA MECHANISM) Objective Overcoming the initial investment barrier, Using the measure as a communication vector, Market transforming by involving the banking sector (leverage effect). 19

20 ENERGY RELATED (NEEREA MECHANISM) Any undertaking related to Energy Saving and Renewable Energy. Lighting, Ventilation systems, Generators, Heating and Cooling, Refrigeration, Furnaces, Boilers, Solar Energy, Photovoltaic, Biomass, Wind energy, Buildings envelope, IT Equipment Applications. 20

21 ALMEE Energy Loan BDL 236 M RR Exemption BDL 313 M Soft loan RR: Reserve Requirement Source: BDL 21

22 NEEREA: SOLAR WATER HEATERS Figure 2 Source: BDL 22

23 Up to 20 M Figure 2 Source: BDL 5% to 15% Max 1 M 23

24 The value of the loan extended to finance Environmental Projects would be calculated as follows: Nature of Project Rating Loan Amount New Project Not rated Environmental Cost Only for rich people! GREEN BUILDING PROJECTS Certified Silver Gold Platinum The cost of the property is excluded from the above scheme. 15% of Total Project Value 25% of Total Project Value 35% of Total Project Value 45% of Total Project Value Existing Project Rated or Not Rated Environmental Cost The certification system developed by LEED is adopted, or equivalent classifications from other internationally recognized systems. Source: BDL 24?

25 ALMEE NEEREA (ACTUAL RESULTS 2014) NEEREA (Actual Results to Date in millions US$) Total Value of Financed Projects 510 Total Granted Loans 85% of granted loans and EU grants for 13 GB buildings. Loans cover all construction cost not only EE and RE measures!!!??? Number of Beneficiaries 109 Value of Certified Projects Number of Certified Projects GB 13 Allocated EU Grant 8.88 Disbursed EU Grant Source: BDL 25

26 ALMEE KAFALAT ENERGY PROGRAMME Kafalat Energy is the result of a partnership between the European Union and Kafalat SAL to address energy constraints faced by SMEs, while ensuring reduction of negative environmental impact. This programme will provide eligible SMEs with loan guarantees for investments in Energy Efficiency and Renewable Energy. The EU support enabled the extension of resources to increase the maximum loan amount and extend the duration of the guarantee and the grace period. Applicants who benefit from a Kafalat Energy loan guarantee are automatically eligible to benefit from a grant made available by the European Union through the Central Bank. The grant is 5% of the project value and is disbursed after the complete implementation of the project. 26

27 ALMEE The Kafalat Energy programme distinguishes between three types of investments, and thus three types of guarantees: Name of Programmes Investment type Maximum loan amount Programme A - Energy Efficiency To finance the adoption of or conversion to sustainable energy consumption, i.e. to optimize an energy system to consume less LBP 600 Millions 0.35 M Programme B - Renewable Energy generation for internal use To install a renewable power generation system, and consume the produced electricity for internal use, to replace fossil fuel based electricity LBP 600 Millions 0.35 M Programme C - Renewable Energy generation for sale to third parties To install a renewable power generation system, with the aim of selling all or part of the produced electricity to others, including the public grid LBP 1,320 Millions 0.75 M Loan Duration Up to 10 years Up to 15 years Up to 15 years Guarantee 75% 75% 75% Grace Period Between 6 months Between 6 months and Between 6 months and and 1 year 2 years 3 years Source: Kafalat

28 LESSONS LEARNED Measures Advantages Disadvantages Applicability Specific credit mechanisms Specific credit lines Interest rate subsidy Credit guarantee systems - Reduce the capacity constraint investment '- Mobilization of the banking sector '- Good communication vector - Solve the problem of down stream resources - Involvement of banking sector - Good vector of awareness - Good vector of awareness - Improve the profitability for the HH - easy access to the credit - Incentive for the banking sector - Exclusion of the unbanked population '- Transaction costs and default payment risk - High cost of loan distribution and management - Exclusion of non banked housholds - Currency risk coverage - Sustainability of the interest subsidy - Financial market distortion - Pressure on public finance - Complexity of implementation in developing countries - Risk of derive ++ ++

29 CONCLUSION Electricity tariffs should be gradually reformed to phase out subsidies in maximum four years period. The existing financing mechanisms and instruments need to be optimised and made more effective and sustainable (RE funds). Financing mechanisms to promote RE&EE high investments in the electricity sector (wind, CSP, PV, etc.) still to be designed. Financing mechanisms for Green Building Projects should adopt the Lebanese GRASS certification system to reach social buildings and social population. Distribution of 3M CFL for free don t have any sensible effect on phasing out incandescent lamp. Grants and Soft loans for individual SWH don t showed high impact on the promotion of this technology. Focus should be on centralized SWH system in Lebanon (more than 75% are high rise buildings) (Obligation + Capacity Building of installers + specific credit mechanisms). 29

30 Thank you Photo : A. Mourtada 30