Deploying Renewable Energy Systems: Lessons from Latin America

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Deploying Renewable Energy Systems Lessons from
Latin America (Dominican Republic, Colombia) Dr.
Bernhard Bösl GTZ German Technical
Co-operation World Bank Energy Lecture March 28,
2005 Washington DC
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GTZ Profile

• Non-profit, private-sector company, owned by
  German Government
• Commissioned by BMZ to implement Technical
  Co-operation
• Objective improve the living and working
  conditions of people in the partner countries and
  sustain the natural basis for life.
• Facts and Figures (2003)
• Total turnover 885 millions
• Clients BMZ (80 )
• other German ministries (6 )
• other governments, international organisations
  (14 )
• 2,726 projects in 131 countries
• 1,430 seconded experts, 7,081 local staff
• 1,042 employees at GTZ Head Office in Germany
• Further information www.gtz.de

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GTZ Energy Projects Worldwide
pipeline
ongoing
phasing out
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GTZ RE Projects Latin America
Dominican Republic Promotion of RE 2 mio
Mexico Promotion of RE 2 mio ,
Caribbean Community Promotion of RE 2.2 mio
Colombia Feasibility Wind Park 0.19 mio ,
Ecuador Small Hydro Power 1.5 mio ,
Brazil RE Rural Electrification 3 mio ,
Chile RE Electricity Generation 2 mio ,
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Dominican Republic General Information
Area 48,730 sq km Population 8,715,602 (July
2003 est.) GDP - per capita purchasing power
parity - 6,300 (2002 est.) Climate tropical
maritime little seasonal temperature variation
Energy Resources Wind, Solar, Hydro, Biomass, no
fossil fuels ! Power Sector Installed Capacity
(July 2003) 3,596 MW, Hydro 16 , Fossil
84 Peak Demand (2003) 1,950 MW Unserved Demand
(2002) 15 of potential demand High technical
and non-technical losses 29 High electricity
prices approx. 20 US cents / kWh Electricity
sector collapsed since mid 2003, daily blackouts
of 10-20 hours
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DR Project profile
Title Promotion of Renewable Energies in the
DR (PROFER) Counterparts State Secretariat of
Industry and Commerce National Energy
Commission Duration March 2003 December
2006 Objective Establish favourable framework
conditions for the use of RE Volume (GTZ) 2 mio
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DR Fields of Cooperation
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DR RE Act

• Draft of Renewable Energy Act, including
  incentives like
• Tax exemptions for imports of RE components
• Reduced transmission fees for RE electricity
• Fixed feed-in price for RE electricity
• Income tax exemptions and fiscal incentives for
  self-suppliers
• Grants up to 50 of the investment costs (to be
  decided on a case to case base, max. 5 MW)

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Colombia Project profile
Counterpart Public Utility Empresas Públicas de
Medellín (EPM) Duration January 2001 December
2002

• Objective identification, planning and
  implementation of a wind park
• GTZ services
• wind measurement
• site selection
• feasibility study
• Support during tender process
• training of EPM staff
• Volume 190,000
• Site Alta Guajira, NE-Colombia

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Colombia Results

• Wind Conditions
• Average wind speed 10 m/s at 50 m height
• Max. wind speed lt 20 m/s
• Contiuous wind direction
• Low air density (90)
• High outside temperatures (25-40 C)
• Annual variation complementary to hydropower

• Technical
• Low interest by suppliers during tender process
• Installed capacity 19.5 MW
• Windturbines 15 NORDEX N60, 1,300 kW each
• Grid connection 13.2/110 kV substation, 800 m
  connection line
• In operation since December 2003

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Colombia Results

• Economical
• Colombian electricity market liberalized and
  competitive
• Very low prices on electricity market (approx. 2
  US cents / kWh)
• Regulatory frame without specific incentives for
  RE
• Generation costs approx. 4 US cents / kWh
• Approved by Prototype Carbon Fund (approx. 3.2
  mio US carbon credits)
• Tax exemption as innovative project (approx. 8
  mio US tax reduction)

• Social
• Project site located in indigenous reservation
• Cautious negotiations and considerable
  compensation measures necessary
• Institutional
• Very dynamic and motivated counterpart EPM

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Lessons Learnt technical

• Technology is not the main issue
• Reliable and mature RE technologies are available
  for application in developing countries
• International cooperation should concentrate on
  broad dissemination of proven technologies
• BUT Counterparts often interested in RD

Some technical adaptations maybe necessary E.g.
adaption of wind generators to extreme wind
conditions in Colombia and Mexico (high average
wind speeds, low air densities, high temperatures
etc.) Technology adaptations in cooperation with
providers (Public Private Partnerships)
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Lessons Learnt financial, economical
Renewable energy technologies are feasible Due to
high fuel and electricity prices and low supply
reliability in the Caribbean, some RE
technologies are more feasible than in other
regions (e.g. wind power, solar water
heating), BUT need a level playing field
No financing without mechanisms Financing schemes
are crucial for massive deployment of RE
technologies BUT badly managed financing
instruments can do more harm than good and rules
of the game have to be defined before starting
an instrument
CDM, the big push? Carbon credits are nice to
have, BUT in most cases they wont turn an
unfeasible RE project into a feasible one
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Lessons Learnt social
Acceptance of technology core driver for
success Many projects still to technology
oriented Selection of technology should be based
on users need (demand side orientation) rather on
technology preferences (supply side orientation)
Poverty eradication or poverty illumination? Creat
ion of income generation opportunities is of core
importance Productive uses of energy must be
included in the planning process from the very
beginning
Energy and the MDGs No doubt that RE technologies
contribute to achieve the MDGs BUT since there is
no explicit MDG on energy, we constantly have to
monitor and disseminate this energy-poverty
impact chain
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Lessons Learnt institutional
Multi level approach Good experiences with
combined policy advisory and project
development approaches Strengthening links
between macro and micro level speeds up the
learning curve, improves effectiveness, and
credibility
Multi stakeholder approach One of main barriers
of RE dissemination is the sectors institutional
variety How to create benefits/synergies from
this variety? International cooperation can play
the role of moderation between institutions and
interests, as an interest free honorable broker
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Thank you for your attention !
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Publications

• Energy and Sustainable Development in Latin
  America and the Caribbean
• Guide for Energy Policymaking
• OLADE, ECLAC, GTZ
• June 2000
• Download (spanish, english) www.eclac.org/drni/pr
  oyectos/energía/proyecto.htm

• Update 2003, only in spanish

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Publications

• Energy-policy Framework Conditions for
  Electricity Markets and Renewable Energies
• 21 Country Analyses
• Latest Edition June 2004
• Including Jamaica, Dominican Republic, Mexico,
  Colombia, Chile, Brazil
• (Argentina and Cuba in 2002 version)
• Download (english, german) www.gtz.de/wind

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Publications

• Renewable Energy Sources in Latin America and the
  Caribbean
• Situation and Policy Proposals
• ECLAC, GTZ
• May 2004
• Download (spanish, english) www.eclac.org