110804-incentives and penalties renewable energy peru-rmitma

7/31/2019 110804-Incentives and Penalties Renewable Energy Peru-Rmitma

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PERU: INCENTIVES AND

PENALTIESFOR

RENEWABLE ENERGY

Presented by:

Riquel E. Mitma Ramrez

[email protected]
mailto:[email protected]:[email protected]


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Per

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Its located in South America

Its population is about 29 millions of people

Its electrical energy consumption is 30 TWh (2010)

Its maximum demand is 4500 MW (2010)


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Promotion of renewable energy for power

generation Regulatory Framework for Renewable Energy

(DL-1002) Law to promote renewable energy for power generation(may 2008)

(DS-050-2008-EM) Regulation of DL-1002 (october 2008)

(DS-012-2011-EM) New regulation of DL-1002 (february 2011) Bid documentation (Basis) for the auction of electricity generated

with renewable energy (Rules for each RE auction)

More information:

www.osinerg.gob.pe


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Main features of the RER Regulatory framework

Define as Renewable Energy Resources (RER) to: Solar (Photovoltaic, thermal)

Wind

Geothermal

Biomass

Hydroelectric up to 20 MW (Hydro RER)

Establishes as national priority the promotion of renewable

energy

Promote the generation of RER electricity through AUCTIONS

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Main features of RER auctions Every two years the Government will ask for auctions from generators

producing electricity from renewable energy.

The total energy purchased is the sum of the energy required for

biomass, wind and solar (5% of annual electricity consumption) plus theenergy required for hydro RER ( X = ??)

Annual electricity consumption 2010 : 30 000 GWh

5% Consumption : 1 500 GWh/year

For example:

2009: Requiered energy for 1st RER auction : 1314 GWh (Wind, Solar, Biomass) + 2800 GWh (Hydro) 2011: Requiered energy for 1st RER auction : 1300 GWh (Wind, Solar, Biomass) + 681 GWh (Hydro)

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Main features of RER auctions Renewable energy has dispatch priority into the grid.

Auctions are for 20 years and ensure a fixed price including cost indexation.

The auctions are conducted by a committee (one member from the Ministry of

Energy and Mines and two members from the Regulator -OSINERGMIN). The auctions will include a maximum tariff (reserved) for each technology based

on estimated efficient costs (are determined by OSINERGMIN).

The type of auction is a sealed envelope, where participants present their

technical and economical bids. The economical bids (sealed envelopes -

reserved) are held in reserve by Public Notary until the day where theseenvelopes are opened together with the envelope containing the maximum

tariff.

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Key players: MINEM (Ministry of Energy and Mines): Develops and approves the Basis for the

renewable auction

OSINERGMIN (Regulatory Agency): Sets the maximum tariffs for each renewable

auction. Determines the annual income review for every RER generator to ensure theirincome at the price offered.

COMMITTEE: Drives the auction until the contract is signed by the winning bidder and

the MINEM. Has full autonomy to conduct the auction.

PARTICIPANT: is who buys the auction Basis and records his RER project in the data

room. BIDDER: is the Participant that has submitted his bid and meets all technical

requirements (It is certified by de Committee)

WINNING BIDDER: is the Bidder whose bid has been awarded in the auction.

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http://www2.osinerg.gob.pe/EnergiasRenovables/EnergiasRenovables.htmlhttp://www2.osinerg.gob.pe/EnergiasRenovables/EnergiasRenovables.htmlhttp://www2.osinerg.gob.pe/EnergiasRenovables/EnergiasRenovables.htmlhttp://www2.osinerg.gob.pe/EnergiasRenovables/EnergiasRenovables.html


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Key players

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Main objectives of the RER Auction Promote the entry of large-scale RER generation in the energy matrix

Achieve efficiency of the auction process

Maximize benefits for electric users (they pay prices)

Specific objectives:

Avoid the possibility of collusion

Avoid possible barriers to entry

Maintain the credibility of the rules

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Main Incentives

Main Incentives offered:

1. Stable prices to 20 years (set by auction)

2. Dispatch priority into the grid

3. Priority access to T & D networks

4. Simple rules for participating in the auction

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Main Penalties

Penalties (defined in the Bid documentation of the

auctions):

During the auction process:

Penalty: Execution of the Bid Guarantee (20 000 U.S. $ / MW installed)

During the construction process of the RER power plant: Penalty: Execution of the Guarantee of compliance with the construction

schedule (100 000 U.S. $ / MW installed)

During the operation of the RER power plant (20 years):

Penalty: Applying the correction factor for the price if it fails to deliver to

the grid, the annual energy offered.

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1st Auction Results

Required energy = 4314 GWh/year (15% total energy consumption)

Deadline for the operation of the RER projects: December, 2012

Starting the process: August 21, 2009

Submission of bids: January 18, 2010

All information and documentation are confidential

Day of the bid adjudication: February 12, 2010

Opening of the offer and the maximum tariffs envelopes

Starting the process: April 28, 2011

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1st Auction Results


Required Energy (amount of energy by tecnhology):

For Biomass, Solar and wind: 1314 GWh/year (500 MW with f.p.: 30%) Biomass : 813 GWh/ao

Wind : 320 GWh/ao

Solar : 181 GWh/ao

For RER Hydro: 3000 Gwh/year (500 MW with con f.p.: 70%)

Total auction requiriment total: 1000 MW ( 4314 GWh/ao)

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MW GWh/year


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Adjudicated energy:

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1st Auction Results

Number of projects adjudicated : (27 projects) 3 wind farms (142 MW) 2 Biomass Power (27 MW) 4 solar farms(80 MW) 18 small hydro (180 MW)MW Total allocated: 429 (43% of total)GWh Total allocated: 1972 (45% of total energy required)

The energies allocated through the auctionwere:

100% wind power, 96% solar PV, 25% biomass and 36% hydroelectric RER.

The 1st Call was declared partially deserted, therefore, be called a 2nd Call to cover theremaining energy, it was declared desert.


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Prices resulting from de auction:

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1st Auction Results


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International expectations:Number of web visits to the Data Room of the auction

1st Auction Results


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2nd Auction: In progress

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Required energy: 1981 GWh/year (7% total energy consumption)


Starting the process: April 28, 2011

Submission of bids: July 15, 2011

All information and documentation are confidential

Day of the bid adjudication: August 23, 2011

Opening of the offer and the maximum tariffs envelopes


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Conclusions

The auction results confirm the high credibility of the regulatory framework to

promote Renewable Energy. Good results are expected in the current running

and future RER auctions.

Although, it was not covered 100% of the required energy, the main objective

was achieved: to promote large-scale participation of electricity with RER in

the energy matrix.

Only at the end of 2012 (deadline for the 1st auction) will be known with

certainty the efficiency of the auction, when all projects operate.

The confidentiality of the maximum tariffs has allowed for bids with

competitive prices, despite the limited number of Participants.

The RER is a long-term commitment and correspond to an inevitable solution

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WWW.OSINERGMIN.GOB.PE

MORE INFORMATION
http://www.osinerg.gob.pe/http://www.osinerg.gob.pe/


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Thank you for your attention

[email protected]


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FAQ Answers

What is the validity of RER tariffs? Tariffs that are adjudicated in the auctions will have a period ofvalidity between 20 and 30 years.

The term of validity be determined on the basis of the auction.

What is the adjudication Tariff?

Is the tariff that is guaranteed to each successful bidder for thesale of its production of energy, expressed in cents. U.S. $ /kWh or $ / MWh.

this tariff will be a result of the auction of RER projects, it isfirm for the period of validity.

How to pay the generators RER? It is paid in two ways: For the sale of energy at marginal cost (income 1)

With a premium (income 2) if the first does not cover theadjudication tariff. The premium is paid ex-post (1 year rate later, after the annual

settlement).

AUCTIONS OVERVIEW


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Stages of the auction

1. Previous notice (MINEM)

2. Approval of Basis (MINEM)

3. Convocation (OSINERGMIN)

4. Registration and basis sale (OSINERGMIN)

5. Questions and comments to the basis (Participants)

6. Publication of Consolidated Basis (MINEM)

7. Submission of Bids (Participants)

8. Evaluation of technical proposals (Committee)

9. Publication of List of Bidders (Committee)

10. Adjudication and Awarding (Committee)

11. Signing of Agreement (MINEM + winning bids)

AUCTION OF RENEWABLE ENERGY

110804-incentives and penalties renewable energy peru-rmitma

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