Investment environment, barriers and opportunities to scale-up renewable energy deployment. 26 April 2018

Transcription

1 Investment environment, barriers and opportunities to scale-up renewable energy deployment 26 April 2018

2 Striking a Balance TRILEMMA Energy is supplied to all consumers at a price that allows them to meet their basic needs Affordability Energy reliably supplied, transported and delivered on an uninterrupted basis Energy is delivered in a manner that to enjoy the same level and quality of services by degrading the natural or human environment Security Sustainability 2

3 EBRD direct investments in renewables 2007 Oct Poland 1,083 MW wind 130 MW biomass Latvia 79 MW wind 23 MW solar Romania 557 MW wind 50 MW solar Hungary 158 MW wind Serbia 184 MW hydro 263 MW wind 72 MW wind Montenegro 381 MW wind 20 MW biomass 22 MW biomass Ukraine 50 MW wind 100 MW hydro 114 (+ 50) MW solar Kazakhstan 150 MW wind Mongolia 48 MW wind Greece 120 MW wind 120 MW Hydro rehab Morocco 216 MW wind 26 MW hydro Bulgaria 12 MW solar Cyprus 750 MW solar Egypt 278 MW wind 150 MW geothermal Turkey 214 MW solar 82 MW wind Jordan 297 MW hydro 20 MW wind Georgia 127 projects in 25 countries 142 MW hydro Tajikistan 6,500 MW of renewable capacity EUR 4.1 billion of EBRD investment EUR 12 billion of project value MW total is greater than totals shown on map due to regional projects not included and other minor adjustments. 3

4 Catalysing new markets First utility scale renewables in the region, building on years of discussion and consultancy advice to prepare the regulatory and contractual framework Serbia First private renewable projects and design and implementation of the regulatory framework Ukraine First private renewable projects after years of support to put in place the renewable regulatory framework. Kazakhstan First solar projects, following detailed engagement with the government on PPA drafting. Jordan Support for development of the NREAP Turkey First private renewable projects, coupled with policy dialogue and consultancy advice on the underlying regulations Mongolia First private-to-private renewable windfarm, alongside extensive consultancy advice to open up MV and LV networks. Morocco First private renewable projects, building on three years of support to the government on PPA drafting, grid code and environmental assessment. Egypt Selected examples show how in key countries EBRD combines policy dialogue and consultancy advice to create the enabling framework, before supporting first of a kind projects.

5 EBRD Portfolio in Renewables Renewables accounted for 34% of PEU s portfolio as at October 2017 Renewables - by Country Renewables - by Technology GREECE 4% MONGOLIA 4% BULGARIA 4% OTHERS 16% POLAND 16% EGYPT 15% Geothermal 11% Biomass 5% Hydro 6% Various 2% Wind 48% MOROCCO 4% KAZAKHSTAN 5% SERBIA 7% JORDAN 10% TURKEY 15% Solar 28% Others include Ukraine, Romania, Montenegro, Lithuania, Georgia, Cyprus, Macedonia, Albania *Data as of 31 October, Source: EBRD data 5

6 RES market overview: Power Market Reform Objectives The objective of the power market reform to provide non-discriminatory, efficient, locational market-based signals both in the short and long term while maintaining quality and reliability of supply The region needs stronger macroeconomic policies and clear, independent and predictable sector regulation LONG TERM REGULATORY CERTAINTY/PREDICTABILITY IS THE KEY! Modern capacity markets The capacity market - fully integrated with the electricity market to promote competition in both the wholesale and retail electricity markets Capacity purchases - committed several years in advance and for long-term periods Power consumers - entitled to participate in the power market through energy efficiency projects and demand side management Renewable energy producers - fully incorporated in, or non-discriminated by the power market design While the mechanism may commence solely with central purchases and sales, the scope for bilateral trading is introduced Any distinction between old and new capacity - eliminated to avoid discriminatory treatment 6

7 Renewables in Caucasus and Central Asia Opportunities and Challenges Starting point Exceptional resource potential (especially wind, solar, hydro) for developing renewables Strong but pragmatic political will Existing/developing legal framework, support mechanisms Untested market Opportunities Attracting reputable foreign and local investors Attracting know-how and the best available technology on the market Diversification of the economy relevant for the energy sector dominated by aged power stations Carbon footprint and emission reduction Supply of carbon credits to the carbon credit market currently being launched Intermittent and unpredictable nature of wind and solar power, seasonality of hydro Growing competitiveness of technologies Challenges Impact of large power volumes interfering with system stability because of priority of dispatch ( balancing market in imitation regime) 7

8 RES market overview: Transition Challenges of Regional Integration in the Power Sector STRENGTHS Existing but ageing infrastructure Political will for integration and trade OPPORTUNITIES Increased market that offers innovation, the fixed costs of which can be spread across a larger customer base Optimization of regional projects in the power sector Liberalization of services markets WEAKNESSES Institutional infrastructure and market development Technical and regulatory harmonization THREATS Coordination of different objectives Different market characterizations Possible aggravation of macroeconomic vulnerabilities One size does not fit all 8

9 Renewables in Kazakhstan General framework Significant renewable energy resources o Mostly hydropower plants A strategic initiative launched Green Economy Renewable Energy Law passed in June 2013 accompanied with a number of follow-on secondary legislation acts in 2014, which set: o o o o o Priority of dispatch for electricity generated by RES Exemption from balancing responsibility 15 year feed-in-tariffs ( FIT ) indexed at CPI and limited FX The unified off-taker the Cost Settlement Centre ( CSC ), a LLC, subsidiary of the National Grid Operator KEGOC The Ministry of Energy ( ME ) as a policy making body for RES o Reverse auctions to be held throughout 2018 * 20% of the current annual consumption 9

10 EBRD and Renewables What role can we play? Bankable transactions attracting other lenders and third party finance Promoting dialogue amongst Sponsors, Governments, Civil Society Help organise independent due diligence and in introducing international public procurement principles Experience in transactions with complicated environmental aspects Addressing project problems through technical design improvements Assisting in preparation of feasibility studies (e.g. wind and solar reports) Project implementation assistance Technical co-operation: policy dialogue & finance 10

11 Renewables financing Project requirements Robust project economics Reliable, financially stable shareholders (sponsors), preferably with successful track-record implementing similar projects, equity at 30% of project cost The use of advanced technologies for renewable source facilities Adequate cost of equipment, construction, and total project cost Confirmation of renewable energy resources potential (wind/radiation study) Independent Technical/Environmental/Legal due diligence Procurement plan (EBRD procurement rules) Possibility to mobilize commercial financing or A/B loans 11

12 Barriers for deployment of renewables in Kazakhstan (FAQs) Licensing of EPC? Auction bidding with vs without land? Land for the transmission line? Grid connection? Substation modernization? Curtailment? 15 year PPA is it long enough? Logistics? 12

13 Barriers for deployment of renewables in Kazakhstan (survey) Bankable PPA and overall legal framework? Availability of financing? Limited FX indexation? Creditworthiness of the off-taker? 13

14 Case 1: EBRD s RES projects in Kazakhstan Yereymentau Wind Farm (50MW) first large-scale wind farm in Kazakhstan EBRD loan EUR 59.2 MM CTF loan EUR 18 MM Shardara Hydro Power Plant EBRD loan EUR 46 MM Burnoye extension Solar Park (50MW) EBRD loan USD 44.5 MM CTF loan USD 10 MM Burnoye Solar Park (50MW) first large-scale PV power plant in Kazakhstan EBRD loan USD 76 MM CTF loan USD 15 MM 14

15 Thank you! For further inquiry please contact: Xeniya Rogan Principal Banker Energy Russia, Caucasus & Central Asia Tel: Июль 2017 г. 15