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TRANSCRIPT
Eng. Marwa Mostafa
Senior Planning Engineer
Egyptian Electric Utility and consumer Protection Regulator Agency (EgyptERA)
Sep. 2014
Workshop Program
Lifting Energy Subsidies: A Pathway to Renewables
Feed-in Tariff Design for
Wind and Solar:
Case of Egypt
Defnition of TargetsDefnition of Targets
Choice of policies / instrumentsChoice of policies / instruments
Concrete design of instrumentsConcrete design of instruments
ImplementationImplementation
Administration, monitoring, and adjustmentAdministration, monitoring, and adjustment
RE Policy Making
Defnition of TargetsDefnition of Targets An ambitious target of 20% electricity from RES by 2020,
3500 MW of solar energy by 2027
RE Policy Making
Defnition of TargetsDefnition of Targets
Choice of policies / instrumentsChoice of policies / instruments
RE Policy Making
Defnition of TargetsDefnition of Targets
Choice of policies / instrumentsChoice of policies / instruments
Concrete design of instrumentsConcrete design of instruments
Getting the prices right:
• Details on cost
• Tax levels
• Tariff levels
• Infation rates
Inappropriate instrument design either leads to failure in achieving the targets or – if the support level is too high – targets could possibly
be met at the expense of welfare losses for the whole economy.
RE Policy Making
Defnition of TargetsDefnition of Targets
Choice of policies / instrumentsChoice of policies / instruments
Concrete design of instrumentsConcrete design of instruments
ImplementationImplementation
• Institutional setup
• Design / drafting of laws and regulations
• Assignment of responsibilities
RE Policy Making
Defnition of TargetsDefnition of Targets
Choice of policies / instrumentsChoice of policies / instruments
Concrete design of instrumentsConcrete design of instruments
ImplementationImplementation
Administration, monitoring, and adjustmentAdministration, monitoring, and adjustment
• Monitoring of actual developments
• Measuring contribution to target achievement
• Re-assessing policies
• Adjustment of targets, strategies, policies and
instrument design
RE Policy Making
Defnition of TargetsDefnition of Targets
Choice of policies / instrumentsChoice of policies / instruments
RE Policy Making
In Egypt, there are four mechanisms to establish RE projects:
1. Projects built by NREA ( as a developer)
2. BOO projects by EETC through Tendering
3. Commercial Projects
4. Feed-in Tariff
In Egypt, there are four mechanisms to establish RE projects:
1. Projects built by NREA ( as a developer)
2. BOO projects by EETC through Tendering
3. Commercial Projects
4. Feed-in Tariff
Obstacles facing the existing three mechanisms:
1. Sovereign Guarantees
2. No effectives demand on RE
3. Vulnerability of Financial Structure of EETC and NREA
4. RE fund not active
In Egypt, there are four mechanisms to establish RE projects:
1. Projects built by NREA ( as a developer)
2. BOO projects by EETC through Tendering
3. Commercial Projects
4. Feed-in Tariff
WHY Feed-in Tariff:
1. Faster to achieve RE targets
2. For medium and scale projects
3. Escrow accounts instead of Sovereign guarantees
4. Less technical losses
… but still more support is needed
Defnition
• FiT is a mechanism that encourages the adoption of renewable energy sources.
• It depends on purchasing RE from its developers with an obligatory cost-based price,
maintaining a reasonable return on the investments through long term PPA’s (20-25
years).
• These long-term contracts for electricity are typically offered in a non-discriminatory
manner to all producers of electricity generated from renewable energy sources.
Feed-in Tariff
Main features
• The system ensures the economic and fnancial viability of the RE project.
• The system shall reduce the investment risk to a manageable level.
• Under a feed-in tariff regime fuctuations in revenues of wind power projects only
depend on fuctuations in generation and not on potentially volatile electricity prices..
Feed-in Tariff
Economic Tradeoff:
The system should provide a suffcient level of promotion but should also minimize the
associated economic cost.
The fnancial support provided by the tariff must be high enough to attract investors and thus
achieve the given target, on the other hand over-subsidization may help to achieve specifc
RES-E targets in due time but could impose a huge burden on some or all sectors of the
economy.
Feed-in Tariff
Design of Feed-in Tariff
Four Pillars are considered:
1. Legal Framework
2. Regulatory Framework
3. Contractual Framework
4. Tariff Calculation and Adjustment
Design of Feed-in Tariff
1. Legal Framework
A proposed law that sets commitments on parties who share various responsibilities for establishing
any RE project under any scheme; it includes (but not limited to);
•. Land allocation
•. Energy production, purchase and trade
•. Connection to Electricity networks
•. Demand creation
•. Tariff review and issuance
Design of Feed-in Tariff
2. Regulatory Framework
It includes (but not limited to):
• Projects Capacities
• Situation of projects previously built before FiT issuance
• Currency of payment
• FiT adjustment
• Regulatory period for reviewing the FiT
• Licenses
• Codes
Design of Feed-in Tariff
3. Contractual Framework
It includes:
• Power Purchase Agreements
• Connection Contracts
In Egypt will be based on the production costs.
Production Cost Based Systems Premium-Market Prices Based Systems
Feed-in-Tariff
Design of Feed-in Tariff
4. Tariff Calculation and Adjustment
FiT over Project Lifetime
Design of Feed-in Tariff
International Schemes for Wind FiT:
French Model vs. German Model
International Schemes for Wind FiT:
French Model vs. German ModelFIT
Years
Ref site
(worst site)
FIT
Years
Best site
5 15
Project life timeRef site(average site)
5 15
French Model
German Model
Design of Feed-in Tariff
Stepwise Reduction for Wind
Ref site(worst site)
FIT
Years
5 15
The Egyptian approach for FiT
Flat Rate for Solar
Ref. site
FIT
Years
25
The Egyptian approach for FiT
The Egyptian approach for FiT
Basis for FiT structure
Solar Wind
Projects Capacities • Residential
• <200k.w.(other than res.)
• 200 kW - 500 K.W
• 500 kW – 20 MW
• 20MW – 50 MW
Up to 50 MW
PPA duration 25 years 20 years
Tariff Adjustment No adjustment After 3 years
32
Support
• Soft loans for 4% interest rate
• One stop shop … coordination between different entities
• Land allocation
• Sovereign guarantees for medium size projects
Thanks For Your Attention
Marwa Mostafa Mohamed
Senior Planning Engineer
Egyptian Electric Utility and Consumer Protection Regulatory
Agency(EgyptERA)
E-mail [email protected], [email protected]
Website www.egyptera.org