The Way Forward for Renewable Energy in Central America

Transcription

1 The Way Forward for Renewable Energy in Central America Workshop, INCAE Campus Francisco de Sola, Managua, Nicaragua, 30 August, 2012 Alexander Ochs, Director of Climate & Energy

2 Overview 1. Project motivation: The energy situation in Central America 2. The Sustainable Energy Roadmap Approach 3. Technical assessments 4. Socioeconomic assessments 5. Policy analysis and recommendations 6. Financial/investment analysis and recommendations 7. Project summary and goals of the workshop

3 1. Project motivation: The energy situation in Central America 2. The Sustainable Energy Roadmap Approach 3. Technical assessments 4. Socioeconomic assessments 5. Policy analysis and recommendations 6. Financial/investment analysis and recommendations 7. Project summary and goals of the workshop

4 Central America Electricity Mix 4% Share by Source 34% 51% Hydro Non Hydro RE Petro Fuels Coal 13% Source: CEPAL 2012

5 3500 Growth of geothermal and wind generation in Central America (GWh) Geothermal Wind Cogeneration Source: CEPAL 2012

6 Installed Wind Capacity (MW) Costa Rica Nicaragua Honduras Panama

7 Cost of petroleum products (% of GDP) Costa Rica Honduras Nicaragua Region Average Source: CEPAL/USE-SICA, Strategy 2020

8 1. Project motivation: The energy situation in Central America 2. The Sustainable Energy Roadmap Approach 3. Technical assessments 4. Socioeconomic assessments 5. Policy analysis and recommendations 6. Financial/investment analysis and recommendations 7. Project summary and goals of the workshop

9 Sustainable Energy Roadmaps Financing Options Policy Assessment Renewable Energy Assessment Energy Efficiency Grid Integration and Technical Assessment Staged and integrated approach Technical, socioeconomic, political, financial analysis Stakeholder participation and insight allows for capacity building through interactive input Makes specific recommendations based on this approach Socioeconomic Analysis

10 1. Project motivation: The energy situation in Central America 2. The Sustainable Energy Roadmap Approach 3. Technical assessments 4. Socioeconomic assessments 5. Policy analysis and recommendations 6. Financial/investment analysis and recommendations 7. Project summary and goals of the workshop

11 Technical Assessments Knowledge Barriers Knowledge gap SERs provide the information that important decision-makers at national, subnational, and international levels often lack in terms of technical knowledge Deficient dissemination of information SERs disseminate gathered knowledge to stakeholders, enabling them more effectively and efficiently develop renewable energy projects Capacity building SER technical assessments help develop the capacity needed to implement renewable energy projects International knowledge sharing Results of technical assessments are available to a wide range of international stakeholders in the public and private sectors; best-practice learning

12 We are currently exploring the extent to which resource assessments have been done including the level of detail and granulation. Solar and Wind Energy Resource Assessment by SWERA: The Solar and Wind Resource Assessment Tool developed by UNEP, hosted on OpenEI and maintained by NREL Country specific NREL wind and solar maps Geothermal Resource Inventory in Central America: ESMAP El Salvador: Jica- Master Plan for the Development of Renewable Energy

13 Geothermal installations and potential (MW) Nicaragua Guatemala Costa Rica Installed Potential El Salvador Source: ESMAP

14 National Wind Assessment

15 Wind Resource by Zone

16 Complementarity Daily (Diurnal) Variation

17 Complementarity Seasonal Variation

18 Grid Analysis: El Salvador

19 1. Project motivation: The energy situation in Central America 2. The Sustainable Energy Roadmap Approach 3. Technical assessments 4. Socioeconomic assessments 5. Policy analysis and recommendations 6. Financial/investment analysis and recommendations 7. Project summary and goals of the workshop

20 Knowledge Bars Public Accept. Pol. Bar s Cost Barriers Socio-economic Assessments Energy Priorities Socio-economic Impacts of Renewables Security Barriers Unaccounted external benefits and costs Economic Priorities Social Development Industry development Jobs Energy access Health Policies and Enablers Higher Levelized Cost of Energy (LCOE) Political challenges Public opposition Education Redistribution/Equality Environmental Integrity Climate change Natural resources Knowledge gap Capacity development

21 Real Costs of Energy Climate Change Costs Pollution & Health Costs LCOE LCOE

22 The Hidden Costs of Fossil Fuels Local air and water pollution Health United States: 120 bn/yr China: 10% of GDP

23 Development of Domestic Resources Harnessing renewable energy resources will enable Central America to keep investment within the country rather than sending huge amounts of its GDP overseas to pay for fossil fuel imports Vulnerability to high oil prices and shocks plays a large role in high electricity prices developing the region s strong renewable energy resources will result in more stable prices for households and businesses in Central America For example, new wind energy plants in Panama create 300 plus jobs in construction and 50 permanent jobs in operation and management Address electrification needs: 90 percent by 2020 (CEPAL/SICA Strategy 2020)

24 1. Project motivation: The energy situation in Central America 2. The Sustainable Energy Roadmap Approach 3. Technical assessments 4. Socioeconomic assessments 5. Policy analysis and recommendations 6. Financial/investment analysis and recommendations 7. Project summary and goals of the workshop

25 Policy analysis and recommendations Systemic Vision Policy and Regulatory Cost Finance Political Entrenched Interest Infrastructure Innovation Public Acceptance Knowledge Barriers Energy sector and industry vision Misplaced incentives, policy/regulatory uncertainty and complication High LCOE, unaccounted costs, market and currency fluctuations Cost of capital, unavailability of financing, unmanageability for banks, upfront costs Politicization of key issues, short-term priorities Monopolistic behavior/vertical integration, anti-re lobby Unsuitability of infrastructure, high cost of development, intermittency/storage Patent protection, lack of R&D NIMBY, cost of RE to consumers Knowledge gap, capacity building, deficient and uncoordinated dissemination of information Inform policy/enabler development Long-term Vision Policies (policy toolkit) Effective Governance and Administration Enablers RE support policies Climate Policies Energy Market Regulation International Cooperation Trade Tariffs, trade disputes

26 A Long-term Vision for the Promotion of Renewables Long, loud, and legal climate & energy targets Sustained for a duration reflecting financing periods of projects Ambitious enough to make a real difference Anchored in a legally established regulatory framework Central America fairs well in this regard: All countries have National Energy Plans which address the importance of renewables for locally generated, sustainable new capacity as well as energy efficiency Renewable energy targets: Costa Rica 100 percent by 2021, Guatemala 70 percent by 2022, Nicaragua 80 percent by 2017

27 Effective Support Mechanisms Central American countries have policies in place but many of these need to be strengthened or fully implemented; what additional measures should be implemented? Regulatory Policies Production Schemes/Feed-in-tariffs Quota Schemes/Renewable portfolio standards Tendering Schemes/Auctions

28 Administrative & Organizational Effectiveness A One-Stop Shop single administrative window Reduce bureaucratic burdens on sustainable energy investors Review project bankability and availability of funds Increase stakeholder participation in the decision-making process to ensure that policies and support mechanisms address investor and developer needs and concerns and have public support Monitoring, reporting, and evaluation of policy implementation

29 Administrative & Organizational Effectiveness Integrated policy goals and mainstreamed policies Application for a provisional concession at CNE CNE publishes the concession request in a national newspaper CNE publishes the granting of the provisional concession Application to Electricity Supervision Board (SIE) CNE includes the applicant in the Special Regime Production Facilities Register Granting of provisional concession Application for a permanent concession Environmental Impact Study (SEMARENA) Resource and production analysis by a company authorized by CNE Grid study CDEEE guarantee of PPA Guarantee CNE receives the reports of the SIE and SEMARENA Definitive concession (Administrative procedure to obtain a renewable energy concession)

30 1. Project motivation: The energy situation in Central America 2. The Sustainable Energy Roadmap Approach 3. Technical assessments 4. Socioeconomic assessments 5. Policy analysis and recommendations 6. Financial/investment analysis and recommendations 7. Project summary and goals of the workshop

31 Policy Barriers Cost Barriers Finance Barriers Financial investment barriers and enablers Barriers Cost of capital Unavailability of public financing Unavailability of private loans Unmanageability of small projects for development banks and international funders High upfront capital costs Higher Levelized Cost of Energy (LCOE) Unaccounted external benefits and costs Market and currency fluctuations Misplaced incentives Policy and regulatory uncertainty and complication Inform policy/enabler development Enablers National renewable energy targets Regulatory policies (Feed-in tariff, RPS, etc.) Fiscal incentives (tax incentives, subsidies, grants, rebates, etc.) Public financing (public investment, loans, grants, etc.) Energy market regulations Trade agreements Streamlining processes (planning, permitting) Vision Concrete Policies and Mechanisms Governance

32 Financial/Investment Incentives Fiscal Incentives Exemptions on customs duty/import tax exemption Income tax incentive Public Financing Grants Loan guarantees International development funds CDM How else to improve the attractiveness of RE investments? Project bundling etc.

33 1. Project motivation: The energy situation in Central America 2. The Sustainable Energy Roadmap Approach 3. Technical assessments 4. Socioeconomic assessments 5. Policy analysis and recommendations 6. Financial/investment analysis and recommendations 7. Project summary and goals of the workshop

34 Project Goals Develop a sustainable energy roadmap that designs a pathway for the region and individual countries to harvest their full potential for renewable energy based on: Domestic technology, socioeconomic, policy, financial analysis International best practices Through a participatory process based on input from all key stakeholders

35 Muchas gracias por su participacion! Online Forum:

36 Some examples of regional sources: 1. CEPAL/USE-SICA, Strategy 2020 (2007) 2. CEPAL, Statistics (2012) 3. OLADE, Statistics (2012) 4. ESMAP/World Bank, Three examples of seven recent studies: SIEPAC Study (2010), Regional Power Integration (2011), Geothermal (2012) 5. ARECA Commissioned by BCIE/CABEI (Guides for the development of RE by country, market & policy analysis by country) ( ) (one report percountry (6) on three topics development, market, policy) = 18 total studies) 6. Climate Scope, Bloomberg/MIF (2012) 7. Numerous electricity expansion plans at country and regional level. For example: Consejo de Electrificación de America Central, regional electricity expansion plan (2010) 8. JICA (Japanese International Cooperation Agency), Master Plan for the Development of Renewable Energy in El Salvador (2012) 9. IADB, Renewable Energy Best Practices in Promotion and Use for Latin America and the Caribbean (2011) 10. CEPAL, Climate Change Economy in Central America (2011) 11. USAID, Promoting Sustainable Energy Integration with Central America Emphasis on El Salvador (2010) 12. IRENA Renewable Energy in Latin America - study and country profiles (2012) 13. SWERA (UNEP/GEF/NREL), Solar and Wind Energy Resource Assessment (20??)