2 ND JOINT ECRB MEDREG ROUNDTABLE THE ROLE OF REGULATORS IN PROMOTING INVESTMENTS Feed-in Tariff for Wind and Solar Energy in Egypt Eng. Marwa Mostafa Athens Sep. 2015
Contents Overview of the RE Mechanisms in Egypt Feed-in Tariff for Wind and Solar I. Feed-in Tariff Decree II. III. Feed-in Tariff for Wind Feed-in Tariff for PV IV. Process Outline.. Licenses, Agreements & Permits V. Legislative, Regulatory & financial Challenges
RE Mechanisms in Egypt Law No. 203 for year 2014 The law states four mechanisms: o Power plants built by New and Renewable Energy Authority (NREA) o Competitive Biding issued by the Egyptian Electricity Transmission Company (EETC) o Feed-in Tariff o Commercial Scheme where generators conduct bilateral contracts directly with customers and EETC is contracted only for transmitting the generated electricity 3
RE Mechanisms in Egypt Projects Ownership Off taker RE Type/ Capacity Status Price $ cent/kwh State Owned projects Competitive Biding Projects (BOO) NREA EETC Wind 750 MW 7 projects IPP EETC Wind 250 MW 1 project Feed-in Tariff IPP EETC Wind 2000 MWseveral projects Commercial Plants IPP Bilateral contracts with customers PV 2300 MW several projects Wind 720 MW 2 projects In operation < 3 Development phase Development phase Development phase Early Development < 5 6.51 11.48 (w.r.t FOH) 13.6 14.3 (W.r.t size) Not yet 4
RE Mechanisms in Egypt Projects Price $ cent/kwh Finance Site preferences (FoH) Major Financial Challenges State Owned projects Competitive Biding Projects (BOO) < 3 Soft loans ( i < 3% ) < 5 Good financing cond. ( i < 5% ) ~ 3000 Subsidized selling price to EETC > 4500 Sovereign guarantee Feed-in Tariff 6.51 11.48 (w.r.t FOH) 13.6 14.3 (W.r.t size) Commercial loans ( i < 6% ) 4000-2500 Sovereign guarantee convertibility 1700 Commercial Plants Not yet ~ 3500 Bankability Poor demand on RE 5
Feed-in Tariff Decree Prime Minister Decree No. 1947 for year 2014 Feed-in Tariff has been issued for wind and PV projects targeting either of the following conditions: o For 2 years from the date of issuance of the decree o Reaching total capacities of 4300MW; 2000 MW for wind, 2300 MW for PV, where 2000 MW for utility scale + 300 MW for small scale (<500KW) 6
Feed-in Tariff Decree Feed-in Tariff is issued in $ cent/kwh whereas it is paid in local currency according to the below equation: Wind: Feed-in Tariff (EGP) = [30% of FiT ($ cent) * 7.15 (EGP)] + [70% of FiT * exchange rate on due date] PV: Feed-in Tariff (EGP) = [15% of FiT ($ cent) * 7.15 (EGP)] + [85% of FiT * exchange rate on due date] 7
Feed-in Tariff for Wind Stepwise Reduction for Wind FIT 1 st period 2 nd period Worst Site: Low FOH Same IRR Best Site: High FOH 5 15 Year s 8
Feed-in Tariff for Wind(issued Sept.2104) Full Operating Hours (FOH) FiT in the 1st period $ cent/kwh FiT in the 2nd period $ cent/kwh Full Operating Hours (FOH) FiT in the 1st period $ cent/kwh FiT in the 2nd period $ cent/kwh 2500 11.48 2600 10.56 2700 9.71 11.48 2800 8.93 2900 8.19 3000 7.51 3100 8.93 3200 8.33 3300 7.76 3400 7.23 3500 6.73 9.57 3600 6.26 3700 5.81 3800 5.39 3900 4.98 4000 4.60 9
Feed-in Tariff for PV(issued Sept.2104) Project s Capacity FiT piasters/kwh Project s Capacity FiT $ cent/kwh Residential 84.4 <200 kw 90.1 500 - <20 MW 13.6 20MW 50 MW 14.3 200kW - <500kW 97.3 10
Interrelations.. Licenses, Agreements & Permits EETC(Egyptian Electricity Transmission Company) - GAFI (General Authority for Investment) MoF ( Ministry of Finance) - NREA (New and Renewable Energy Authority)
Legislative, Regulatory & Financial Challenges There are different challenges that need to be crucially considered; Legislative Regulatory Economic Technical Financial Challenges as well as Solutions are faced, shared and solved by the involved parties
Legislative, Regulatory & Financial Challenges Legislative: no challenges so far Regulatory: o Major regulations have developed during the planning phase, other regulations are being developed along with the progress of the process, o This causes: delays in the procedures - continuous need to more regulations to reach a mature regulatory framework
Legislative, Regulatory & Financial Challenges Financial: o o o o Vulnerability of Financial Structure of EETC Sovereign Guarantees Pre-requisites to financial closure Convertibility Items Creditworthiness (Moody s rating) Country Risk Total Equity Risk premium Therefore: Acceptable IRR WACC Egypt Caa1 11.25% 17% 16.5% 10%
Thanks for your attention Eng. Marwa Mostafa Khalil Head of Planning Dept. Egyptian Electric Utility and Consumer Protection Regulatory Agency(EgyptERA) Phone + (202) 23421475 Ext. (139) Fax + (202) 23423482 E-mail marwa.mostafa@egyptera.org, marwa_mostafa75@yahoo.com Website www.egyptera.org 15