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Wind Energy Developments in Emerging Markets

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. Outline.

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Wind Energy Developments in Emerging Markets

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  1. 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

  2. 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?

  3. Policy Drivers for Renewables • Electricity Demand Growth - Least Cost! • Poverty: Access to Electricity • Energy Security / Portfolio Diversification • Environmental Concerns • Industrial Development • International Pressure

  4. 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

  5. Established Growth Markets - India • Largest installed base in developing world (7GW) --Technical potential of >45GW • 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

  6. INDIA Good Wind Resources & Established Regulations • ESTIMATED WIND POTENTIAL = ~46 GW • Based on mapping of <33% 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 = >1800 MW • 1,840MW added in 2006 • >7,000MW 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

  7. Mexico Wind Market • Wind technical potential of >40,000MW (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

  8. Brazil’s Wind Market • Wind Technical Potential of >143,000 MW (mainly in Northeast, Central and Southeast coast) • Installed capacity of 256MW (incl. small turbines) • >7,000MW 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

  9. 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

  10. Morocco, 10 years from now: • From 54 MW to… 1,000 MW of wind power? Thanks to new regulatory framework

  11. 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!

  12. Doing 10 MW? • Demonstration project with a view to 100-200 MW?in Yemen

  13. 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!

  14. 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

  15. 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)

  16. WBG Renewable Energy and Energy Efficiency Commitments, 1990 - 2006

  17. http://www.worldbank.org/re http://www.worldbank.org/retoolkit For more information… FY06 RE & EE Progress Report Published in November 2006

  18. IFC’s 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 >$1.3B 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

  19. 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.

  20. Thank You ! • Contacts: • Soren Krohn, World Bank, skrohn@worldbank.org • Dana R. Younger, International Finance Corporation, dyounger@ifc.org

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