De-risking Renewable Energy Investments Lessons to learn, steps to take 26th -27th October, Nairobi, Kenya
ENERGY DEMAND FORECAST Sub-Saharan Africa will consume nearly 1,600 terawatt hours of electricity by 2040 à Four times what was used in 2010 and as much as India and Latin America combined did in 2010 àthe investments needed to reach this production level in 2040 would be $490 billion for new generating capacity 2
ACCESS TO ELECTRICITY Sub-Saharan Africa s facts: 13% of the world s population but 48 % of the share of the global population without access to electricity à Almost 600 million people lack access to electricity. Share of population without grid access (% of total) 3
SOLAR PV ADVANTAGES Long-term stabilization of the electricity price Fast installation and immediate energy delivery Decrease the carbon footprint Security of the supply due to predictable irradiation Independent from Black-out Backup solution thanks to storage system 4
Abstract The Res4Africa paper aims at boosting Renewables and drawing attention of foreign investors by designing the most reliable market conditions. Thirty-six potential risk-issues have been identiqied, grouping them in Qive main areas. Feed-In Tariff and Auctions, the most popular support measures, will be compared by highlighting Pros and Cons of each of them A few recommendations will be presented aiming at supporting institutional players to attract investors. 5
Background Renewable Energy (RE) technologies have experienced rapid deployment over the past few years, enhance energy access and mi,gate climate change Investment in RE can generate new sources of growth, increase income, improve trade balance, industrial development and jobs crea,on Governments have to ensure a reliable framework, both in regulatory and economic terms, ensuring investors with an economic profitability. Need for well-targeted support mechanisms to develop private investments in RE. A stable policy framework and facilitahon incenhves are effechve instruments to ajract investments. 6
IEA* has recently structured a logical scheme to describe this framework by using five criteria IEA - Main Issues 1. Short-term efficient opera,on 2. Long-term efficient investments 3. Appropriate alloca,on of market 4. Efficient long-term rent alloca,on 5. Pricing externali,es *IEA-RETD, Electricity Market Design and RE Deployment (RES-E-MARKETS), September 2016 7
Business Risks Five main risk areas may affect the investments, namely: Legal framework Certainty of revenues Variability of costs Financial structuring Environmental and social issues. 8
Risks Matrix A more detailed view can be presented to highlight the risk percephon of each one. 9
Mitigations Measures Feed-in Tariff schemes (FiT) Auc,ons Third Party Access (TPA) Net Metering Quota Systems Following the slogan any risk should be properly remunerated both in European, US or Mediterranean countries as well as SSA countries, FiT and Auc,ons, are necessary features to ajract private sector requiring sustainable, profitable and bankable investments. 10
FiT vs Auctions 11
Practical Examples KENYA emerges as one of the leading countries for RE in the region. The level of priva,sa,on is improving but shll remains relahvely limited. The regulatory framework enabling investments is favourable, due to ajrachve subsidies offered to developers. The country has successfully dealt with the financial risk area by decreasing the infla,on rate and arranging support from mul,lateral development banks. Together with Tanzania, Kenya has received an USD 145m loan from the African Development Bank (AfDB) for construchon of transmission line between the two countries, as well as an USD457.5m loan from the World Bank to improve its grid infrastructure. 12
Recommendations InternaHonalizaHon and market openness are essenhal to create the correct investment environment and slow down the 3 financial risks: Currency, Sovereign and OFF-Taker Technical assets shall be adequate to RE targets. Governments should remove regulatory barriers to customer-sited generahon (both on and off grid), and encourage greater grid development It is essenhal to dynamically op,mise the use of the two mechanisms (FiT and auc,ons) in perspechve of every market development: residenhal, industrial and UHlity scale: FiT incen,ves as a transiion mechanism achng are an essenhal tool behind the creahon of the main requirements for a sustainable RE market Auc,on system will be more appropriate for mature markets given its boost for price compehhon In conclusion, while compehhve auchons have lately proven more successful at ensuring fair PPA prices especially for large-scale projects, both FiTs and auchons will conhnue to play an important role for SSA energy sector in coming years if rolled out in a stable and transparent way 13
Enerray Company Presentation 14
Enerray Projects Opportunities Morocco: 1 MW CSP in EPC model 2 MW PV in EPC model Nigeria: 100 MW PV in EPC model Egypt: 126 MW PV in IPP + EPC model Tunisia: 50 MW PV in EPC model Chad: 30 MW PV in EPC model Senegal: 30 MW PV in IPP model 17 MW Hybrid PV in EPC model Eritrea: 2,3 MW PV Smart-Grid in EPC model Benin: 21 MW PV in EPC model Kenya: 10 MW PV Plant in EPC model Cameroon: 30 MW PV in EPC model Rwanda: 200 kwp PV in EPC model Mozambique: 30 MW PV in EPC model Madagascar: 20 MW PV in IPP model
Who we are Enerray S.p.A. founded in 2007 and enhrely controlled by SECI Energia, Gruppo Industriale Maccaferri is leader in the design, development and management of medium and large photovoltaic plants. 16
Maccaferri Industrial Group 17
Track Record Kizoren (Turkey) 22,5 MWp Aqaba (Jordan) 10,08 MWp CSP-ORC Plant Ben Guerir (Morocco) 1 MWe Ma an (Jordan) 23,1 MWp 18
Thank You! Mr. Michele Scandellari ENERRAY - CEO 19