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Role of Public Policies & Financing Techniques in Promoting Wind Energy
- 1. Presentation by – Swapnil Gore MS in Energy Technologies Stony Brook University, NY [email protected] [email protected]
- 2. Sector Overview Wind Power commercialized in 83 countries Top 5 - China, US, Germany, Spain & India Total installed capacity – 198 GW Overall investment in wind power sector in 2010- $96bn [email protected]
- 3. Wind Energy Generation-Brief Broad Classification: Onshore & Offshore Onshore: Capital Costs: 1 to 1.5 million USD/MW Capacity Factor: 20% to 35% Trends: High capacity units Largest Operating Project: Roscoe Wind Farm in Texas with a capacity of 781.5 MW Largest Turbine: Enercon E126, 6 MW capacity ‘Three-bladed, upwind, variable-speed, pitch-regulated turbines currently dominate the industry’ [email protected]
- 4. Project Details Considered Country Name: Windland Current installed Wind Power: 45 MW Wind Power Generation Target: 6500 MW by 2020 viz. 10% of total electricity consumption Emission Factor considered: 0.933 Wind Farm specifications: Project Capacity: 25 MW Lifetime: 20 years Capital Cost: $28.55 million ($ 1.142 million/MW) Turbine Used: Vestas V47 – 55m, 32 units of 660 kW Capacity Factor Derived: 27.4% O&M costs: 3% of initial CER generation: 56,132/yr FIT announced- 5.2 US cents (base tariff of 3.2 cents + Production premium of 2 cents) Energy Resource- Wind speed of 8.0 m/s at 55m is considered
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- 7. Policy Model Resource Assessment Soft loans (1.5 %) Technical Assistance Publicly Backed Guarantees Single Window clearance* Accelerated Depreciation Option* Strengthening Grid Exemption from Import duty* Infrastructure CDM benefits Mandatory RPS* Strong PPA Standards & Testing SEZ formations* FiT Premium* Informational systems (Competitive bidding approach proposed) Human Resource Development Renewable Energy Asset Financing Key funding Sources Capital Markets (Domestic & International) Sectoral Public Private partnership (Like the GET-FiT programme by Deutsche Bank; the South African Wind Energy Programme in collaboration with GEF & UNDP for premium pricing model) Concessional & development finance (National banks, Government Energy Finance Institutions, Multilateral/Bilateral FIs) Public Funding Sources (like GEF, UNDP, WB) [email protected]
- 8. *Elaborated FiT Premium: This premium pricing mechanism may be introduced by competitive bidding approach (with $0.02 being the maximum price) for most cost effective fund utilization Accelerated Depreciation option: Wind power developers availing the accelerated depreciation would get only 50% of FiT premium Mandatory RPS scheme for 8 years with annual increase of 1.25% up to 10% by 2020, would help in achieving the target of 6500 MW. Import Duty exemption: Projects established in the first 2 years would only be eligible for this benefit, from 3rd year domestic material obligation would be introduced to boost wind equipment manufacturing. (Approach followed in China & India) SEZ formation: Establishing Special economic zones in high wind resource regions to provide lands on long term lease to wind project developers or manufacturers, also they would get the benefits given to other industries Single Window Clearance Mechanism: All licensing and project related approvals to be done by a single government agency (resolves the issue of uncoordinated authorities & the delay due to it) [email protected]
- 9. ReTScreen Analysis Models Model 1: Commercial loan (10 %) with no other financial assistance IRR: -2.8% YPCF: Not in lifetime NPV: $ - 12,081,827 B-C Ratio: -0.55 [email protected]
- 10. Analysis Models…contd. Model 2: Soft Loan (1.5 %) with no other financial assistance IRR: 2.4% YPCF: 17.5 NPV: $ - 7,138,871 B-C Ratio: 0.08 [email protected]
- 11. Analysis Models…contd. Model 3: On implementation of the Policy Model Soft Loan (1.5 %) FiT premium ($0.02/kWh) IRR: 15.1% YPCF: 7.6 NPV: $ 39,489 B-C Ratio: 1.01 [email protected]
- 12. Attractive Model Model 4: Policy Model inclusions Soft Loan (1.5 %) FiT premium ($0.02/kWh) Additional Financial Assistance 0f $12 million Sources- Funds raised after cutting down fossil fuel subsidies; Financial Assistance from Multilateral & Bilateral FIs and other philanthropic bodies; Carbon Tax FiT being the most accepted approach to attract investments, these funds would be given as additional IRR: 21.8% YPCF: 5 NPV: $ 3,628,669 B-C Ratio: 1.47 FiT premium of $0.01/kWh [email protected]
- 13. Roadmap for overall Wind sector development of Windland [email protected]
- 14. Other Innovative DevelopmentMeasures Establishing wind zones in country with variable FiT corresponding to WPD HVDC transmission system to be established for Onshore & offshore projects Training and awareness workshops. Inclusion of wind technology concepts in school curriculum to attract interest of youth. A single window clearance for all project approval & licensing processes, and to be made online for increased transparency & tracking Encourage R&D in top national technical education institutions, declaring grants for each new patent registration Deployment building integrated solar-wind hybrid OR mini stand-alone wind power systems, beneficial for unelectrified areas. Net Metering option. Progressive Incentive policies & subsidy programs. Moving from commonly-used Inverted Block Tariff (IBT) to Volume Differentiated Tariff (VDT) structures, where the lowest price for the lowest block is only available to the poor, can help to improve the targeting of electricity subsidies. PBGs for risk sharing [email protected]
- 15. Thank You Presentationby – Swapnil Gore MS in Energy Technologies Stony Brook University, NY [email protected] “It can shape mountains. It can move oceans. Now the wind can even heat up your toaster”
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