ADB and Renewable Energy

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1 ADB and Renewable Energy A Presentation at the Workshop on Participated in a workshop organized by GIZ on Solar Energy in the Philippines Solar Energy in the Philippines - Opportunities for German Companies Berlin, 12 September 2011 Naomi Chakwin Resident Director General ADB European Representative Office Frankfurt, Germany 1

2 About ADB Vision: Asia and Pacific region free of poverty Mission: help DMCs reduce poverty and improve quality of life of their people Development agendas: inclusive economic growth, environmentally sustainable development, and regional integration Based in Manila, owned by 67 members including 48 from Asia and Pacific region 2010 approved financial assistance: Loans and Grants: $12.4 billion Technical Assistance: $326.5 million Equity Investments: $243 million 2

3 ADB Clean Energy (CE) Program Objective (ADB Energy Policy) Reliable, adequate, and affordable energy for inclusive growth in a socially, economically and environmentally sustainable way. - An early shift to the lowcarbon economy Scope Lowering energy demand Improve efficiency in household, utility (water, gas, heating), transport, buildings and industrial applications Lower losses in energy supply Improve efficiency in transmission and distribution of electricity, gas and other fuels Lower CO2 emissions Upgrade power generation technology, including carbon capture use and storage Waste reduction and use, including methane capture Use alternate fuels, electric vehicles, rapid and mass transit modes, bulk freight services Early commercialization of RE technologies Develop wind, solar, biomass (without conflicting food security), geothermal, Off-grid applications to provide Energy for All 3

4 ADB Clean Energy (CE) Program Initiatives Carbon Market Initiative/Program Energy for All Wind Quantum Leap Asia Solar Energy Initiative (ASEI) Low-Carbon Technology Transfer Market Place Asian Renewable Energy Certificates Initiative Asian Clean Energy Venture Initiative Climate Funds PPP Fund and Partnership Clean Energy Financing Partnership Facility (CEFPF) Climate Change Fund Asia Pacific Carbon Fund, and Future Carbon Fund Asia Accelerated Solar Development Fund Investments Renewable Energy Energy Efficiency Cleaner Fuel Knowledge Products Technical Assistance Reports Workshops/Conferences Publications Innovative Instruments 4

5 ADB s Composition of CE Financing (Cumulative , in US$ million) Cleaner Fuel: 318 Clean Energy Funds: 192 Energy Efficiency: 1,234 Renewable Energy : 3,074 Hydro Wind Solar Others 1, % 20.8% 6.7% 18.1% Total Energy-related Investment ( ): $ 9.1 Billion Total Clean Energy Investment ( ): $ 4.8 Billion Note: Others in the breakdown of RE projects pertains to biomass/biogas, waste to energy 5

6 Renewable Energy Potential in Southeast Asia (SEA) RE Resource Potential in SEA Wind 62% Others (i.e. biomass & ocean) 17% Hydropower 14% Solar 4% Geothermal 3% Covering countries of Brunei, Cambodia, Indonesia, Lao PDR, Malaysia, Myanmar, Philippines, Singapore, Thailand, Vietnam 6

7 Salient features of the 2008 Philippines Law on Renewable Energy RE Portfolio Standard also for off-grid supply; all contribute to RE growth Feed-In Tariff priority, valid for 12 years RE Market modify WESM Green energy option, net metering Financial incentives tax holiday (7 y), import duty (10 y), CERs exempted, etc. National RE Board (NREB) Limits on installed capacity No public investment for grid connected Source: Dec 2008, Republic Act 9513 Renewable Energy Act of

8 Public Debate The Manila Bulletin Malaya Business Insight The Board of Investments (BoI) is adopting a cautious approach on renewable energy projects with feed in tariffs (FITs) as this form of government subsidy could further exacerbate the country's cost of power, which is already the highest in Asia. The main contention now is that if the FIT is set at very high rate then consumers may not be able to afford it. "We want to be cautious with those projects that will entail a FIT contract with the Philippine government because we are already the second highest in the cost of power in Asia," said Panlilio. He explained that the high cost of power has been the number one complaint among foreign investments against the Philippines. 8

9 Current Market Situation Major power sector reform - EPIRA Electric Power Reform Act passed in Bid out over 3,000 megawatts of capacity to the private sector. Philippine Energy Master Plan forecast an additional 16,550 MW capacity for

10 Rural Area Electrification Village level electrification 99.87% Household connection level 74% Connection of about 1.8 million households expected through renewable energy public and private. 10

11 Philippines Energy Program Expand support for energy use efficiency improvement and enhancement of generation capacity in renewable energy. Private sector lending Strengthen electricity distribution Promote renewable Target poor areas, especially Mindanao 11

12 Asia Solar Energy Initiative - Components Strategic Interventions: Knowledge management Components: Asia Solar Energy Forum Solar project identification and development 3,000 MW solar power capacity installed by 2013 Innovative financing (+ long-term debt financing) Asia Accelerated Solar Energy Development Fund (AASEDF) (+ ADB normal funds) 12

13 Asia Solar Energy Forum (ASEF) An international knowledge-sharing platform that will track solar development projects, discuss new solar power proposals and incentive mechanisms, and organize major conferences. Updates: 1 st Meeting, Manila, 5-6 Jul 2010: over 200 participants from 34 countries / territories 2 nd Meeting, Tokyo, 1-3 Dec 2010: Over 300 participants from 38 countries / territories 3 rd Meeting, Bangkok, May 2011: 375 participants from 34 countries / territories 4 th Meeting, venue tbd, early

14 Project Development : 3,000 MW Target Ongoing projects: 567-kW capacity solar power PV project at ADB Headquarters rooftop 73 MW and 44.4 MW projects in Thailand 10 MW solar PV power plants and 10.7MW Building Integrated PV projects, and 1.5 MW pilot CSP plant in China $150 million Credit Guarantee to scale up India Solar Power Sector 5MW grid-connected solar PV system and hybrid wind (1MW), solar (1MW) and diesel (5.5MW) system, 1000km of solar PV street-lighting and light emitting diode-based technology in 6 cities in Bangladesh. Technical Assistance to develop up to 200 kw 5 RE pilot systems using hydro, solar PV, wind to serve rural communities in Mindanao, Philippines Technical Assistance for Uzbekistan to establish a regional solar center and collection of solar resource data at 6 potential power plant sites Projects in the pipeline: Gujarat Solar Park including transmission lines for 500 MW solar power plants Several PPP projects enabling implementation of grid-connected solar power in India Several public and private sector projects in Thailand, Sri Lanka, Maldives, Tonga, Bangladesh and Lao PDR 14

15 Asia Accelerated Solar Energy Development Fund (AASEDF) - Structure To be introduced by AASEDF: Risk Mitigation and Incentive Generation Mechanisms 15

16 Asia Accelerated Solar Energy Development Fund (AASEDF) - Utilization Project/Program Preparation Risk Mitigation Generation Incentives Aggregation of solar market Solar generation capacity build-up Constant price discovery Multi-year, multistage development program Support for insolation data collection R&D incentives Exploration risk Pay or reimburse costs incurred by government for quality data collectinon Specification risk Guarantee against revenue fluctuations due to specified vs. actual insolation levels Off-take and payment risk Provide (or reinsure) partial risk guarantees Tariff shaping Prevent conflict between technocommercial nature of dispatch operations and desirability to buy green electricity 16

17 ADB Contacts ADB European Representative Office Ms. Naomi Chakwin, Resident Director General Tel: Rahmhofstrasse, Frankfurt am Main Energy for All Initiative Mr. Jiwan Acharya, Climate Change Specialist (Energy) jacharya@adb.org - Tel: Asia Solar Energy Initiative Mr. Pil-Bae Song, Senior Advisor and Practice Leader (Energy) psong@adb.org - Tel: