ENEA Roma, 22 settembre 2015

Mediterranean Platform for Renewable Energy and Energy Efficiency

Renewable Energy Solutions for the Mediterranean is a not for profit

association created in 2012:

Leading platform for public-private dialogue on renewable energy issues in the Mediterranean

Advisor and facilitator to regional institutions, local governments and regulatory bodies

Network of 23 international leading utilities, industries, TSO, agencies, technical service providers and academia, actively engaged in the Southern and Eastern Mediterranean countries (SEMCs)

RES4MED Association Who we are

Academia – Honorary Members

Supporter members

Ordinary Members

Associated Partners

2

Equipment manufacturers

Project developers

Financing EPC

Contractors IPP/

Investors

O&M Asset

management

Advisory – Consulting – Engineering services

• Airlight (CSP) • MegaCell (PV

module) • Carraro

Group (Inverter)

• Friem (Inverter)

• Terni Energia

PwC - Poyry - Althesys - CESI

Regulatory – TSO – Industry association

GSE - Terna - assoRinnovabili

Academia – R&D

Politecnico di Milano - Politecnico di Torino - Bocconi University - RSE - FUB

• Hfv • Terni

Energia

• EGP • Edison • Italgen • Asja • IREN

• EGP • Edison • Italgen • Asja

RES4MED membership snapshot Members’ core business in the value chain

3

Wind

PV

CSP

• Energy demand growth and population boom • Energy security and diversification strong drivers for RE in importing countries

(e.g. Morocco, Jordan) or to face in the short time relevant issues (e.g. Egypt, chronic power shortages, new capacity on time)

• Combination of outstanding RE resources and RE technology costs falling • Cost of capital is the key driver to compete with GCC players • Socio-economic impacts and capacity building, Morocco and Egypt candidate as

strategic hub for Africa and Middle East

Source: Dii map Q2/2014 RES4MED elaboration

59 $/MWh

41 $/MWh

New benchmarks for RE in MENA region (1/2)

61 $/MWh

140-145 $/MWh

250 MW 20 years PPA

200 + 150 MW 25 years PPA

4 x 50 MW 20 years PPA

200 MW 25 years PPA

Main dynamics

Source: IRENA, Renewable Energy and Gas: Implications for the GCC power sector, 2015

Egypt: 250 MW Wind bid (April 2015) won by GDF/ Toyota/ Orascom at 4.1 cents $/kWh is the lowest ever in the world – and the competitors offered in the range of 4.5 and 4.99 cents $/kWh

UAE: the DEWA bid (January 2015) for 200 MW of PV at 5.98 cents $/kWh is the lowest ever in the world, the lowest six bidders were below 9 cents$

Jordan's Round 2 (May 2015) - PV IPP Tender (4X50 MW projects)- the bidders confirmed this new disruptive trend: a revenue of $ 6-8 cents $/kWh is the new benchmark for utility-scale solar projects in the stable markets within the Middle East

Solar in GCC can compete with gas even if the price is as low as 4.5 $/MMBtu or oil as low as 25 $/barrel

Gas can’t compete with $0.06/kWh even with 4$/ MMBtu

The bidding process for the 200 MW PV project in Dubai, 4x50 MW PV in Jordan and the competitive bidding for 250 MW Wind in Egypt send clear signals of how cheap RE can be delivered representing a new benchmark in the MENA

New benchmarks for RE in MENA region (2/2)

169

61

PPA

$/M

Wh

Round 2 Round 1

-64%

Jordan PV R1-R2 analysis

2014 2015

5

The Euro-Mediterranean cooperation The new context

The Italian Presidency of the European Union and the European Commission organized on 19 November 2014 a Ministerial Conference on "Building a Euro-Mediterranean energy bridge: the strategic importance of Euromed gas and electricity networks in the context of energy security"

Three Thematic Platforms to provide a permanent high level forum for discussing energy policy objectives and measures, with a view to identifying specific and concrete partnership

actions and following up on their implementation

The overall objective of the Platform is to carry out a structured policy dialogue on firm ground between the Euro-Med partners to address the challenges and opportunities facing the Euro-Mediterranean gas market

The overall objective of the Platform is to promote the gradual integration of the electricity systems and markets in the Euro-Mediterranean region

The overall objective of the platform is to support the development of an RE/EE legislative and institutional environment enabling investments and of RE/EE technologies and practices

Platform on Gas Platform on Regional

Electricity Market Platform on Renewable

Energy and Energy Efficiency

6

• During the preparatory meeting with UfM Member States (27 April 2015), the UfM co-Presidency invited RCREEE in partnership with RES4MED to be animator of the RE Working Group of the Platform, and to draw up a working program for the Platform activities

• A scoping document was jointly prepared by RCREEE and RES4MED setting out the common vision and approach of the platform, the state of the play in the region, and recommended areas of action for Platform activities

• Based on the preliminary analysis, RCREEE and RES4MED set out the priorities for recommended areas of action that will shape a bi-annual working program for the Platform. A draft work program is to be presented in future meetings with the co-Presidency on June 15 2015 and to the UfM Member States on 23 July 2015 in Barcelona

• These processes will shape the final work program in preparation for the launch of the Platform on RE/EE in Cairo

The Euro-Med Platform on RE/EE Background and mandate

7

Platform objective

• To support and foster the sustainable energy transition in the SEMC’s by fostering the development of an RE/EE legislative and institutional environment enabling investments and of RE/EE technologies and practices in the SEMC’s through the engagement of relevant stakeholders and the fostering of market transformations in the region

Platform perspective

• To contribute with an inclusive and bottom-up approach building on:

– Local SEMC’s contexts & needs

– Lessons learned from previous cooperation experiences

– Integrating potential inter-regional synergies and linkages in existing cooperation mechanisms

8

The Euro-Med Platform on RE/EE Main principles

• The Platform will focus strategically on applying fostering cohesive policies, regulations, and market enabling measures that accelerate deployment of cost effective RES solution in SEMCs

• The Platform will do so by:

– Generating comprehensive and bottom-up situational energy knowledge that will help identify challenges and design targeted recommended opportunities for action in SEMC’s

– Building on existing work of partners and UfM energy working groups, and synergizing with other MED energy platforms and existing initiatives in the region

– Pursuing active and wide public-private partnerships involving governments, private sector, academia and civil society to pursue action in SEMC’s through Mediterranean-wide network of member states and stakeholders for regional impact

– Including the industry’s perspective given their market and financing requirements expertise for deployment of successful RES practices in SEMC’s

9

Our vision for the MED Platform on RE/EE An inclusive and bottom-up approach

Considering the ambitious targets, many SEMC’s have recognized the significant role of the private sector in implementing RES programs and plans

Regulatory barrier

Proper legal and regulatory frameworks aiming to support the private sector involvement are needed. There is a lack of incentives for private sector participation and competition

Market barrier

Market structures. Although power sector reforms have been initiated in almost all countries, electricity system reforms and market opening to private sector participation is lagging. Most of today’s electricity generation remains state-owned.

Policy makers to provide public-private partnerships instruments through which industry and business actors may be engaged in cooperation processes

10

Our vision for the MED Platform on RE/EE Involvement of industry

RES Investments in SEMC’s mainly financed by governments or through development assistance and regional development banks. SEMCs have established renewable energy funds to finance investments through a mix of financing schemes, but efforts remain inadequate compared to the scale of ambition and set targets

Access to finance barrier

High upfront costs for RES development. Further efforts to design proper domestic financial schemes, increasing financial solutions

Share of private investments

barrier

So far investments allocated to renewable energy in SMCs have been mainly financed by governments. The setting up of public-private instruments supported by regulatory incentives is recommended

MED RES/EE Platform to support and strengthen the efforts in engaging financial actors and development partners, by providing an engagement

process for presenting and testing of various business models and financing schemes

11

Our vision for the MED Platform on RE/EE Financing issues

= 3x3 Matrix Rationale

= 9 Work Packages

Policy&Regulatory

Environment

BusinessModels&

Financing

Environmental&

Socio-economic

Benefits

WP1 WP2 WP3 WP1 WP2 WP3 WP1 WP2 WP3Po

licy

Asse

ssm

ent&

Mon

itorin

g

Stre

amlin

ing

Regu

lato

ry&

Adm

inist

rativ

e

Proc

edur

es

Qual

ityA

ssur

ance

of

RES

yste

ms&

Inst

alle

rs

Impr

ovin

gFin

anci

ng

ofR

Epr

ojec

ts

Mar

ketP

oten

tialf

or

Dece

ntra

lized

RE

Appl

icat

ions

Desig

ning

Bus

ines

s

Mod

els

Unde

rsta

ndin

gVal

ued

RES

ocio

-Eco

nom

ic

Com

pone

nts

Soci

o-Ec

onom

ic

Impa

ctA

sses

smen

t

Optim

izin

gLoc

al

Valu

eCre

atio

n

Research&

Analysis

Technical

Assistance

CapacityBuilding

Common

Knowledge

Management

SystemandE-

WorkSpace

Our programme for the MED Platform on RE/EE A comprehensive proposal by RCREEE and RES4MED

12

13

Unlocking the renewable energy investment opportunities in the Mediterranean: a Regional Perspective

Cairo, XX/XX/2016

Concept

Southern and Eastern Mediterranean Countries (SEMCs) have embarked on ambitious programs to rely on renewable energy to cover a substantial part of the growing domestic demand. Most countries have set quantitative renewable energy targets and consistent deployment plans to cover their increasing energy demand, improve energy security of supply, while promoting jobs and industrial development. The priority is to attract investments in order to have the necessary power facilities built in time. The Conference will gather public and private energy stakeholders coming from both SEMCs and Europe fostering the dialogue between the two shores to trigger investments in the clean technology sector

Topics sessions (tbc)

RES in the Region: challenges and opportunities

The Mediterranean energy transition: how to get investments right?

How to rise competitiveness of RES in the Region, a multi perspective view: the road to overcome financial and technical challenges (Round table)

Launch of Platform on RE/EE RES4EMED proposed support to the industry side event

14

Contacts

Roberto Vigotti Secretary General, RES4MED roberto.vigotti@res4med.org Silvia Dovidio Senior policy analyst Silvia.dovidio@res4.med.org

Thanks for your attention!