session 4 - successful mini grid programs in philippines
DESCRIPTION
Presentations from the Workshop on Sharing Business Models and Scaling up Mini Grids in Asia and Pacific, 6-7 February 2013TRANSCRIPT
Soaltee Crowne Plaza Kathmandu, Nepal
6 -7 January 2013
“The Power of the Future”
1
The PowerSource Group
Sharing Business Models and Scaling up Mini Grids in Asia and
the Pacific
“The Power of the Future”
2
The PowerSource Group
Private Project Developers Best Practices:
Land, Regulatory and Other
Project Development Issues
• Our Objective:
TO PROVE THAT PRIVATE SECTOR CAPITAL CAN BE MOBILIZED TO ACHIEVE SCALABLE
ELECTRIFICATION & SUSTAINABLE DEVELOPMENT IN OFF-GRID COMMUNITIES
IN SE ASIA
– WITHOUT SUBSIDIES
3
PowerSource & Rural Electrification
• With multiple projects throughout the Philippines, we have
proven that:
– Private sector capital can be mobilized with no requirement for matching
grant or multilateral funding or government subsidies
– Rural communities are able and willing to pay for electricity
– Electricity will be put to productive use and result in measurable growth
in per capita GDP
– The provision of basic, sound and reliable infrastructure will kick-start
growth
• But there is no “one-size-fits-all” model to achieve scale and
replication – i.e., sustainable financeability.
4
Good News & Bad News
• Community Selection
• Technical Configuration of Generation System
& Dispatch Regime
• Livelihood Stimulation & Money Velocity
• Transaction Costs & Regulatory “Lubricity”
• Scalability
5
Balance the Critical Variables
“Patient” Capital Does Not Equal “Forgiving”
Capital
• Is it to achieve basic electrification (e.g., household lights and a radio or television)?
or
• Is it to achieve increases in per capita income by providing 24-hour access to an enterprise-
level of electricity?
6
The Starting Point:
Assess the Objective of the Rural Electrification Program
There are gradations of “poor” communities:
Category 1: Poor communities unlikely ever to support enterprise-creation or become economically self-sustaining in power tariff terms
Category 2: Poor communities able potentially to support enterprise-creation and with properly designed catalysts to become self-sustaining in power tariff terms
7
Differentiate the Target Communities by Type
Different communities require different solutions:
Category 1: Ideally suited to stand-alone renewable systems
with limited power capacity & supported by capital cost
subsidies and/or grants
Category 2: Higher load levels dictate hybrid renewable/
conventional power models with enterprise-level capacity &
supported on an interim basis by consumption-based subsidies
8
Customize the Electrification Solution to the Community
Different solutions yield different results:
Category 1:
• Achieves minimum electrification where none would otherwise be available
• Non-dispatchable & focused on basic lighting needs
Category 2:
• Achieves increases in per capita income through enterprise creation & growth
• Dispatchable & scalable
9
The Outcome is Positive & Sustainable
10
1
Generation &
Services Platform: CEP™
2
Distribution
System
3
Service
Connection
4
Livelihood
Training
Objective: > Increase productive uses of electricity
> Increase community income
WATER
FILTRATION
MODULE
COLD STORAGE &
ICE-MAKING MODULE
ELECTRIFICATION MODULE
COMMUNICATION
MODULE
ENTERTAINMENT
MODULE
Micro-Business
Technical Training
Educational Support
Technology Transfer
THE FOUR ELEMENTS PowerSource Achieves Economic Sustainability By Addressing
Four Critical Components of Electrification
11
Vacant Community Land – Pre-CEP™ Installation (Southern Palawan)
12
PowerSource Community Energizer Platform™ (Rio Tuba)
13
CEP™ Power Module – Hybrid Diesel & Biogasification
14
2 x 260 kVa Volvo Generators, Control Room & Transformers
15
Small Modular Biopower Multi-Purpose Platform:
Scaled from Initial 60 kW Installation
GPM
GPM
GPM
Engine
Engine Generator
Biomass Heat for drying,
refrigeration, ice
making, etc.
Shaft power
Heat Electricity
GPM = gas production module
Combustor
PowerSource 60kW Biogasification System:
Hybrid Community Electrification System, Palawan
Solar PV Diesel-Displacement Program:
Scaled from Initial 100 kW Installation
17
18
Portion of 20 Circuit KM Distribution System (3-Phase, 13,800 Volts)
19
Barangay Power Association (BAPA) Offices – Local Operations,
Maintenance & Collections Staff & Facility Established by PowerSource
20
Barangay Power Association (BAPA) Operations – PowerSource-trained
21
Water Filtration & Purification Module
22
Before & After of Purified Water Supply
400
500
600
700
800
900
1,000
1,100
1,200
1,300
1,400
1,500
2005 2006 2007 2008 2009 2010 Year 2011
No
. o
f C
us
tom
er
Se
rve
d
CUSTOMER CONNECTIONS TO POWERSOURCE RIO TUBA GRID
Connections
Financial Highlights – Rio Tuba, Palawan Community Energizer Platform™
24
Financial Highlights – Malapascua, Cebu Community Energizer Platform™
25
• Modularization of Engineering, Procurement &
Construction (“Plug-and-Play”)
• Remote Dispatch & Monitoring Capabilities (Centralized,
Real-Time)
• Remote Management Pre-Payment/Post-Payment Systems
(Mobile Phone-Based)
• Accelerated Site Identification via Local Alliances
• Regulatory Streamlining via Templates & Cooperative
Redrafting
26
Challenges & Opportunities to Scale & Replicability
27
• Rural electrification typically addresses communities of less
than 1,000 households
• Excessive regulation & transaction costs make electrification
commercially non-viable or require higher subsidies
• To energize one small community in the Philippines now
requires two complex levels of development approvals:
– On-the-ground development at the regional & local level
– Regulatory approval at the national level
The Need for a One-Stop Shop – A Reality Check
28
• Level 1: On-the-ground development at the regional & local level
– Project Site Visits: Remote, Unreliable data, hard to find contacts
– Presentation Meetings: Barangay, Municipality, Provincial
– Resource/Logistics/Technical Survey Visits (2-3 per site)
– Resolutions (3-6 months):
• Barangay: 1-3 visits: presentations, discuss resolutions, approvals
• Municipal: 1-2 visits
• Provincial: 1-5, depending on site
• Electric Cooperative: 3-5 visits/presentations, depending on site
– Additional general/relationship building visits/meetings
– Coordination between local/provincial/national agencies
– Post-project “closing” meetings often required
The Need for a One-Stop Shop – A Reality Check
29
• Level 2: Regulatory approval at the national level
– NEA verification of the waived area
– DOE declaration of the area as a waived area
– DOE certification of QTP pre-qualification
– DOE endorsement of winning QTP to the ERC
– Legal opinion re: QTP qualifications/status
– QTP Service Contract with NPC/SPUG
– Distribution Utility Waiver Agreement
– Subsidy Disbursement Agreement (with NPC)
– ERC Operational Approval
– ERC Tariff Approval
The Need for a One-Stop Shop – A Reality Check
30
• The Inevitable Outcome:
– Development lead times become unpredictable
– Transactions costs spiral to unacceptable levels
– Project replication (economies of scale) comes to a halt
– Investment capital flows to other opportunities
– The private sector loses interest in an investment climate that is at
once over-regulated & unpredictable
The Need for a One-Stop Shop – A Reality Check
“The Power of the Future”
31
The PowerSource Group
Thank You!