Prospects and Incentives for Use of Alternative Energy Technologies in the Arab Electric Power Generation Sector

Transcription

1 Prospects and Incentives for Use of Alternative Energy Technologies in the Arab Electric Power Generation Sector Samir AlKotob Arab Fund for Economic and Social Development

2 Objectives To overview the Arab electric power generation sector, To identify rationales for using alternative energy technologies, To address the question can incentives drive the deployment of alternative energy technologies in the Arab World?

3 Summary The Arab electric power sector is struggling to find ways to overcome existing and anticipated shortfalls in resources and investments. Resource scarce and resource rich countries, both are making plans for large scale deployment of alternative energy technologies, however incentives schemes for their success are not well defined!

4 Agenda An Overview of The Arab Electric Power Generation Sector Demand Forecast and Capacity Growth Challenges Trends Candidate Alternative Energy Technologies Technical Characteristics Deployment Plans in Selected Arab Countries Incentives for RES Deployment? Areas of Further Research? Conclusion

5 An Overview of The Arab Electric Power Generation Sector Demand for energy and peak load in the last decade ( ) grew at an annual high rate of 9% to: Annual Energy Demand 940 TWh Sum of countries peak loads 165 GW Hydro 7% RES 1% Installed generation capacity in 2012: Total capacity 185 GW Thermal units 170 GW ( 91.9%) Hydro units 13.6 GW ( 7.4% ) Alternative energy units 1.4 GW ( 0.7%) Thermal 92% Largest Installed capacities KSA 50 GW, Egypt 30 GW Thermal Units 65 GW Steam Units, 64 GW Open Cycle Gas Turbine, 51 GW CC Weighted Average of Production Cost $100 /MWh Lowest Cost $35 / MWh (country having high percentage of hydro capacities) Highest Cost $166 /MWh (country with high percentage of gas oil capacities) Point of Strength: Arab electric power grids are interconnected,hence enabling sharing of reserves and other benefits. Points of Main Concerns Very high cost of expansion of generation sector to meet future demand: Average Annual Investment Required B$ Several countries are unable alone to finance required expansions Projected shortage in fuel, especially natural gas. High fuel consumption will, on the long run, impact net exports in countries such as KSA and UAE.

6 MW Power Generation Capacities 50,000 45,000 40,000 35,000 30,000 25,000 20,000 15,000 10,000 5,000 0 Steam Combined Cycle Gas Diesel Hydro Wind Solar / Bio-Fuel

7 Mid Term and Long Term Outlooks, and Trends Mid Term 2020 Load Forecast Energy Demand 1590 TWh, AGR 6.8% Sum Of Peaks 294 GW Generation System Capacity Installed Capacity 347 GW Total Investments B$ 300 Long Term 2030 Load Forecast Energy Demand 2460 TWh, AGR 5.5% Sum of Peaks 440 GW Generation System Capacity Installed Capacity 480 GW Total Investment B$ 530 Trends Major shift from steam to CC thermal units, thermal efficiency from 38% 58%, Diversify fuel source and type Gasification Units, Nuclear and Coal Plants, Hydro 4% 2030 RES 6% Enacting laws to enable private investments in power stations BOT, IPP, Strengthening and expanding electric power interconnections, Serious efforts to reduce consumption of fossil fuel, and specially natural energy resources hence, > the move to deploy Alternative Energy Technologies. Thermal 90%

8 Candidate Alternative Energy Technologies Wind Energy (Land Based): Morocco, Tunisia, Egypt Solar Thermal: Concentrated Solar Power(CSP) Parabolic Troughs: Abu Dhabi, Egypt, Morocco Rotating Mirrors and Tower: Being planned in several countries. Solar Photovoltaic: Fixed Panels: Field Mounted: Mauritania, and other countries test sites Roof Mounted: Test programs in many countries, but no well established subsidy or tax incentive plans. Sun Tracking Panels: Concentrating Photovoltaic, Tunisia,. Hydropower: Egypt Sudan Morocco Syria Tunisia Iraq Jordan Lebanon

9 Alternative Energy Technologies Key Characteristics Capacity Factor: Low Stability of Supply: Low and unpredictable Can it supply peak load? Yes if storage is available? Locations: Remote? It requires costly and lengthy transmission lines expansion? Cost: Relatively high, but coming down, specially for photovoltaic Key Drivers for Success: Money: Subsidies and Incentives Feed-In Tariffs Tax Credit Infrastructure Development Subsidies Competitive prices with conventional generation technologies! Comparable to conventional means in predictability and dispatch ability? Sustainability: In doubt with present technologies and cost, in absence of subsidies and incentives! New Negative Development: Expected drop in natural gas prices!

10 Deployment Plans in Selected Arab Countries Morocco: Beginning Year Wind Power Sites, Total 250MW 1 Solar Thermal 450 MW CC+ 20 MW CSP Planned Hydro: MW, Planned Wind: 2000 MW Planned Solar 2000 MW, 1 st phase, Ouarzazate 160 MW + 3 Hr Storage EPC contract signed, 1.2 B$. Commissioning is expected in 2015 Key Driving Factor: Scarcity of Natural Energy Resources Approach: Public-Private Partnership, involving the private sector Will benefit from proximity to European Energy Markets Egypt: Beginning Year 2004 Wind Energy, Gulf of Suez, Zafarana 545 MW, CF 32.6% Solar Thermal, Kuraimat 120 MW thermal + 20 MW CSP National Policy 2008: By 2020 RES capacity 20% of Installed Capacity Distribution of RES 12% Wind, 6% Hydro, 2% Solar Will make land available to projects, with cost 2% of site production Can use national grid, and can sell production to private sector The government will guarantee purchase of energy produced at auctioned price Key Driving Factor: Shortage of natural gas, and inability to keep up with demand, hence RES with private sector role!

11 Deployment Plans in Selected Arab Countries UAE- Abu Dhabi: Masdar City and Company 2006 Shams 1, CSP 100 MW, April 2013, Cost M$ 600, CF 24% Sir Bani Yas Onshore Wind 30 MW, Under Construction Nour 1 Solar PV Planned 100 MW, Under Negotiation Demand is growing fast, UAE has become a net gas importer! Target: 7% of its electricity from RES by Rationale: Extending the life time of hydrocarbon reserves. Ensuring the longevity of the overall economic, social and environmental benefits of the Emirate. Implementation: A Special Purpose Vehicle: Shams Power Company, shareholders Masdar 60%, TOTAL ABENGOA Consortium 40%, Offtaker ADWEC, Tariff is based on 13% ROE. KSA- Kingdom of Saudi Arabia: KA-CARE Target 2020 : RES capacity 23.9 GW, mostly in solar technologies - Target 2032: Doubling RES Present Capacity to 54 GW, Cost B$ 80. Rationale: Forecasted Demand 75 GW 2020, 123 GW by 2032, Rationale: Similar to Abu Dhabi s, i.e. saving 1.2 million barrel of oil/day Otherwise: KSA will be a net oil importer by 2038! (Chatham House 2011)

12 Policies and Incentives and Future Reseach Background: Subsidies drove roll out of solar and wind projects globally, as in Germany, Spain and the US. Background: In most Arab countries, and specially GCC, electricity is heavily subsidized! How to Introduce Policies and Incentives on RES? Arab Governments should learn from other s false moves! The consumer should be part of the solution, i.e. develop incentive plans for roof-top PV, and the outcome is a win-win situation for the national economy, and the public. GCC Governments should encourage the participation of pension funds in future RES government backed projects! Deploy RES technologies when export to more lucrative markets is possible! Local Manufacturing Given the large scale of future RES projects in KSA and Morocco, governments should seek to stipulate localization of production of key high tech components such as PV cells, and other capital intensive components. Future Research For RES to compete with conventional electric generation technologies, it must be cost competitive and dispatchable. Possible areas of research Achieve economy of scale for CSP projects Improve efficiency and lower cost of energy storage technologies. Study and develop incentives schemes that can work even in presence of high subsidies.

13 Conclusions Need for Realism? Proper technical and economic studies should be the foundation for any new government goals and related policies on future large scale RES deployment! Power infrastructure development to support large scale RES deployment could not be achieved overnight! Must always remember that targets and goals in the energy and power sectors should be realistic to be realizable! Need for Practical and Fair Incentive Schemes! Practical to introduce, and to manage! Fairness in allocation of RES resources, and in Feed-in Tariffs. Return on Equity (ROE) should be equitable to government, to consumers, and to investors. Large scale alternative technologies deployment will truly succeed only when it is economically sound!

14 Thank You