Wind Energy Developments in Emerging Markets

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Wind Energy Developments in Emerging Markets

• Global Challenges and Opportunities Session
• European Wind Energy Conference
• Milan, Italy May 9, 2007
• Prepared by Soren Krohn,World Bank, ESMAP
• and Dana R. Younger,International Finance
  Corporation
• Presented by Soren Krohn

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Outline

• What is driving wind energy in emerging market
  countries?
• Where is wind energy market growth in the
  developing world?
• Key problems and solutions?
• What is the World Bank Group doing?

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Policy Drivers for Renewables

• Electricity Demand Growth - Least Cost!
• Poverty Access to Electricity
• Energy Security / Portfolio Diversification
• Environmental Concerns
• Industrial Development
• International Pressure

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Key Wind Energy Markets

• Largest Markets India 7,000MW, China 2,600MW,
  Brazil 256MW, Egypt 230MW, Poland 204MW, Turkey
  190MW, Morocco 124MW, Mexico 88MW, Ukraine 86MW,
  Costa Rica 74MW, Hungary 61MW, Carib. 57MW, Czech
  R. 56MW, Lithuania 56MW, Estonia 35MW, Bulgaria
  30MW, Latvia 27MW, Argentina 27MW, Philippines
  25MW, Colombia/Tunisia 20MW (each)
• Growth Leaders India, China, Brazil
• Poised for Growth Turkey, Mexico, Poland, Chile,
  Pakistan
• Planned Projects e.g. Argentina, Bulgaria,
  Chile, Colombia, Costa Rica, Croatia, Dominican
  Republic, Ecuador, Ghana, Honduras, Hungary,
  Jordan, Kazakhstan, Malaysia, Kenya, Mongolia,
  Morocco, Nicaragua, Pakistan, Panama,
  Philippines, Romania, Russia, South Africa, Sri
  Lanka, Tanzania, Namibia, Tunisia, Uruguay
• Market Growth is Still Slow and Uneven

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Established Growth Markets - India

• Largest installed base in developing world (7GW)
  --Technical potential of gt45GW
• New electricity law - RE standards at state level
• Indian non-energy companies expanding investments
• Project finance for wind projects beginning
• Larger projects (300-500MW) announced
• Manufacturing base is growing Suzlon
  expansion/globalization, LM Glasfiber blade
  factory and Gamesa/Asia Pioneer assembly plant
• IFC financing wind and private power facilities

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INDIA Good Wind Resources Established
Regulations

• ESTIMATED WIND POTENTIAL 46 GW
• Based on mapping of lt33 of the country
• Recent studies by MNES have estimated total
  potential as high as 100 GW
• CURRENT TECH POTENTIAL 13 GW
• Assume 1 usage of land 20 connectivity to
  grid
• ANNUAL GROWTH gt1800 MW
• 1,840MW added in 2006
• gt7,000MW installed to date
• Supply capacity constraints may hold back growth
  but India met its long held target for 5,000 MW
  in 2006 (6 years ahead of schedule!)

More than 50 of installed base
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Mexico Wind Market

• Wind technical potential of gt40,000MW (Oaxaca,
  Yucatan Baja)
• Only 5MW installed in last decade 2MW is La
  Venta I plant of CFE in Isthmus of Tehuantepec in
  Oaxaca State
• 83.3MW La Venta II now commissioned for CFE by
  Gamesa/Iberdrola 850kW WTGs
• 101MW La Venta III First Wind IPP bids due to
  CFE by June 2007
• 404MW of additional wind IPPs by 2010 101MW per
  year
• 7 private wind projects at 957MW have CFE
  permits as self-supply projects
• Additional 2,250MW of self-supply projects in
  Private Developers Pipeline
• Major Companies involved including EDF,
  Iberdrola, Endesa, Union Fenosa, Gamesa, Clipper,
  and Preneal
• Regulatory/transmission constraints involving CRE
  (regulator) and CFE (utility) have limited
  private investments in self-supply market
• World Bank is developing IPP segment with GEF
  support

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Brazils Wind Market

• Wind Technical Potential of gt143,000 MW (mainly
  in Northeast, Central and Southeast coast)
• Installed capacity of 256MW (incl. small
  turbines)
• gt7,000MW in 117 private sector wind projects have
  ANEEL (regulator) approvals
• PROINFA Phase I has awarded 1,400MW of wind
  projects (Ceara, Rio Grade do Sul, Santa
  Catarina have 230 MW each)
• 20 year PPA with Electrobras at favorable tariff
  (higher tariffs for lower wind speeds) --
  94-107/MWh
• Wobben/Enercon making 800kW and 2MW WTGs locally
  Suzlon,GE Wind and Fuhrlander may also supply
  locally (60 local content requirement)
• 200 MW commisioned in last year with 300-500MW
  seeking equity finance
• New entrants include Pacific Hydro, Econergy
  Enel
• Phase II of PROINFA will be 10 RE RPS including
  wind, biomass and small hydro

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Other Markets Poised for Growth - Turkey

• New RE law
• Higher tariff for wind from 2007 for 7 years RE
  law about to be modified to further support
  tariffs and allow payments in hard currency
• Power sector re-structuring moving slowly
  distribution company privatization planned (32
  separate Distribution Comp.)
• 750MW-1.5GW under development
• 31MW installed in 2006
• Local power sector corporate interest grows in
  wind
• Enercon manufacturing blades locally

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Morocco, 10 years from now

• From 54 MW to 1,000 MW of wind power?
  Thanks to new regulatory
  framework

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Argentina,Chubut

• 10-12 m/s mean wind speed
• New 500 kV line
• But wind not competitive with gas-fired
  generation
• Gas for power generation sold at 1/3 of export
  price!

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Doing 10 MW?

• Demonstration project with a view to 100-200
  MW?in Yemen

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Small Wind (100 W - 100 kW)

• Cost is not the problem,people now pay maybe
  1-100 per kWh!
• Creating viable projects IS a problem
• TWO Business concepts needed
• 1) Integration, operation and maintenance
• 2) Business concept for turbine owner clients!

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Key Problems Solutions for Growth

• Regulation vs. de-regulation role of the
  state
• Recognize model cost and fuel price risk
• Simple transparent support needed
• Proper risk sharing to minimize cost
• Perceptions (and realities) on
• Variability (intermittency, reliability)
• real system value, DON'T "firm up" wind
• High capital costs
• Local Manufacturing
• Post-Kyoto Uncertainties

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The World Bank Group

• G8 Gleneagles Clean Energy Investment Framework
• Policy Support for wind and other RE New RE
  laws in Mexico, China, Turkey, Morocco
• US 9 billion for RE and EE since 1990
• US 748 for 41 projects in 28 countries in 2006
• Commitment to increase RE and EE portfolio by 20
  annually through 2010
• Leveraging of public and private resources
• Complementary World Bank/IDA, IFC and MIGA
• Development of carbon finance market (including
  new products)

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WBG Renewable Energy and Energy Efficiency
Commitments, 1990 - 2006
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For more information
FY06 RE EE Progress Report Published in
November 2006

• http//www.worldbank.org/re
• http//www.worldbank.org/retoolkit

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IFCs Commitment to Financing of Renewable Energy

• IFC Promotes Sustainability in all its
  Investments and makes Renewable Energy
  Investments wherever possible
• Since 1990 IFC has financed gt1.3B in 23
  renewable energy projects (15 Hydro, 3 wind, 2
  biomass and 2 geothermal 1 corporate loan 2
  FIs)
• IFC is committed to increase its Investments in
  Renewables as part of the WBG Target to Increase
  RE/EE by 20 p.a. over next five years
• Meeting the Target means IFC Needs to
  Dramatically Increase its Investment Portfolio of
  Renewables including wind

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World Bank Group Carbon Facilities
Total funds pledged US 1.9 billion (13
governments, 56 firms)

• Prototype Carbon Fund. 180 million (closed).
  Multi-shareholder. Multi-purpose.
• IFC-Netherlands Clean Development Mechanism
  Facility 120 milion and World Bank Netherlands
  CDM Facility 249 million (closed). Netherlands
  Ministry of Environment. CDM energy,
  infrastructure and industry projects.
• Community Development Carbon Fund. 128.6
  million (closed). Multi-shareholder. Small-scale
  CDM energy projects.
• BioCarbon Fund. 53.8 million (Tranche One
  closed). Multi-shareholder. LULUCF projects.
• Italian Carbon Fund. 45.4 million (open to
  Italian participation). Multi-shareholder (from
  Italy only). Multipurpose.
• Netherlands European Carbon Facility. Joint IFC
  35 million and World Bank 38 million (closed).
  Netherlands Ministry of Economic affairs. JI
  projects.
• Spanish Carbon Fund. 202.7 million (open to
  Spanish participation). Multi-shareholder (for
  from Spain only). Multipurpose.
• Danish Carbon Fund. 64.1 million (closed).
  Multi-shareholder (for from Denmark only).
  Multipurpose.
• Umbrella Carbon Facility. 810 million (Tranche
  One closed). 2 HFC-23 projects in China.

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Thank You !

• Contacts
• Soren Krohn, World Bank, skrohn_at_worldbank.org
• Dana R. Younger, International Finance
  Corporation, dyounger_at_ifc.org