Legal Framework for Renewable Energy. for Development

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1 National Energy Commission i Republic of Honduras Legal Framework for Renewable Energy in Honduras and Prospects for Development MIGUEL ÁNGEL FIGUEROA RIVERA - National Energy Commission (NEC) - de Energía

2 Contents Contents t 1. Data on the Electricity Subsector in Honduras 2. Energy Portfolio for the Electricity Subsector 3. Legal Framework for Renewable Energy Incentives 4. Prospects for Renewable Energy Development 5. Promotion of and Investment in Projects (NEC) de Energía 2

3 1. Data on the Electricity Subsector in Honduras Maximum demand (2010): 1245 MW System losses~ 23 % Interconnection: - Nicaragua - El Salvador Principal characteristic: System weakly networked (radiality) Substations Existing Future Generation Hydroelectric Biomass Future hydroelectric Thermal SIEPAC 230 kv Power lines 230 kv Existing Future Power lines 138 kv Existing Future Power lines 230 kv Existing de Energía 3

4 1. Data on the Electricity Subsector in Honduras 29% State and Private Generation Empresas Electricity Eléctricas Generators Generadoras in Honduras de Honduras 3% 4% State Hidro water: Estatal: ~ 464 MW State Térmica thermal: Estatal: ~ 64 MW Private Hidro Privada: water: ~ 55 MW Private Térmica thermal: Privada: ~ 1,026 MW 64% State: Estado: ~ 528 MW Private: Privado: ~ 1081 MW Hidroeléctrica State hydroelectric Estatal Térmica State thermal Estatal Private Hidroeléctrica hydroelectric Privada Private Térmica thermal Privada Installed capacity approximately 1,610 MW de Energía 4

5 1. Data on the Electricity Subsector in Honduras 89.46% Electricity Service Coverage 74.55% % 69.13% 71.00% 59.64% 44.73% 29.82% 14.91% 45.09% 47.33%49.76% 50.16% 51.70% 54.89%57.48% 60.13% 62.09%64.62%66.53% Coverage 2010: ~ 76 % Urban sector: ~ 98% Rural sector: ~ % 0.00% de Energía 5

6 2. Energy Portfolio for the Electricity Subsector Electricity Subsector Energy Portfolio Tipo de Generación Instalada Type of Generation Installed 7% 32% HIDROELÉCTRICO HYDROELECTRIC TÉRMICO THERMAL BIOMASA BIOMASS 61% de Energía 6

7 2. Energy Portfolio for the Electricity Subsector Renewable Energy Potential Renewable Potencial de Energy Energía Renovable Potential in en Honduras 5000 MW Tipo Type de of potential Potencial Hydroelectric Hidroeléctrica Wind Eólica Biomasa Biomass Geotérmica Geothermal de Energía 7

8 2. Energy Portfolio for the Electricity Subsector Renewable Energy Potential Areas of high potential coincide with zones of little electricity coverage or zones isolated from the SIN grids * Wind Energy Resources Assessment (SWERA) Recurso solar Recurso solar Recurso solar Recurso solar de Energía 8

9 2. Energy Portfolio for the Electricity Subsector de Energía 9

10 3. Legal Framework for Renewable Energy Incentives Decree No dated November 1994; Framework Law of the Electricity Subsector Decree , published in May 1998; Creates the de Energía Decision No dated September 1997; Regulations of the Framework Law of the Electricity Subsector Decree dated April 1998; Law on Incentives for Renewable Sources Decree dated December 1998; Reform of the Law on Incentives Decree dated May 2000; Reforms Art. 12, of Decree Decree ; Law on Promotion of Electricity Generation with Renewable Resources dated October 2007 de Energía 10

11 4. Prospects for Renewable Energy Development Incentives Decree : Exemption from sales tax for the purchase of equipment, materials, and services. Tax credits on the development of project study, design, and construction. Exemption from * income tax. (* < 50 MW, for 10 years) Exemption from taxes, fees, tariffs, and import duties 10% of the Total Base Price of Energy in effect when the 15 year contract is signed (< 50 MW). Sale of electricity in the national and regional markets (third parties) Agreement for the outreach support of the government of Honduras. de Energía 11

12 4. Prospects for Renewable Energy Development International Public Bidding Process No /2009 Purchase of Potential and its Associated Energy Generated with Renewable Resources (Goal: 250 MW) A total of ~ 708 MW of renewable energy 42 renewable energy projects awarded through bidding 9 Projects outside of bidding process for short term term marginal cost Energy Contracts Offered the Empresa Nacional de Energía Eléctrica (ENEE) approximately 225 MW Sale to third parties approximately 484 MW Expected results: increase from 38% (current) to 48% for 2015 de Energía 12

13 4. Prospects for Renewable Energy Development Results of BiddingProcess: Hydroelectric 88 % Biomass 2 % Wind 1% Geothermal e 5 % Cogeneration (Efficiency) 4% Prices offered: Maximum: USD $/kwh Minimum: USD $/kwh Average: USD $/kwh de Energía 13

14 5. Promotion of and Investment in Projects (NEC) Large and Medium capacity projects (>20 MW): 1. Patuca III or Piedras Amarillas [104 MW, in Río Patuca, seeking financing] 2. Los Llanitos [98 MW, in Río Ulua, studies need to be updated] 3. Jicatuyo [173 MW, in Río Ulua, studies need to be updated] 4. El Tablon [20 MW in Rio Chamelecon, Valle de Sula Commission ] de Energía 14

15 5. Promotion of and Investment in Projects (NEC) National Energy Commission s efforts for promotion of and investment in RE Projects: Institutional Cooperation Agreements with NEC: National Program for Sustainable Rural Development (Ministry of Agriculture and Livestock) INTERIOR AND JUSTICE ETHNIC GROUPS Ministry of Natural Resources and Environment Projects identified: Ethanol generation project (30 Million US$ on 20, Hectares) Program for expansion of renewable energy in low income countries (300 Million US$/6 countries, funds for climate change from the World Bank) Project for municipal development through sustainable use of DENDRO ENERGY de Energía 15

16 National Energy Commission Republic of fhonduras Thank you very much for your attention! MIGUEL ÁNGEL FIGUEROA RIVERA, Dr. Ing. de Energía

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