Renewable Energy Policy_complete1

8/6/2019 Renewable Energy Policy_complete1

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Proposal for National Renewable Energy

Plan for Saudi Arabia

Abdullah M. Al-ShehriECRA


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Plan of presentation

Benefits and potential of renewables

Proposal for incentivizing renewables

Institutional responsibilities

Next steps

Introduction


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Draft

77

Industrial and agricultural processes can alsocreate some renewable potential

Waste to Energy - Waste heat from industrial processes(e.g. steel mills, petrochemical processing, pulp and paper

mills) can be recovered to provide energy for generation

Landfill gas biodegradable waste in municipal landfills

can be decomposed to produce methane, and then used as

fuel for power generation

Municipal solid waste incinerators can burn solid waste

from municipal landfills to generate heat and electricity;

there are about 431 Waste to Energy plants in Europe and

89 in the US

Biomass - agricultural waste (e.g. grains, weed, sawdust,

etc.) and animal waste could be used as feedstock for

boilers/heated steam can be used to generate electricity

Saudi Arabiasagricultural produce

may offer a potential forbiomass energy:

Saudi Arabia produces, inorder of importance, wheat,barley, tomatoes, melons,dates, and citrus fruits; the

main livestock are muttonand chickens

Various crop/vegetableproduction (2.5 million tonsin 2004) and animal wastecould be used as feedstockto generate electricity

However wheat production

gradually being reduced,requiring reliance on othersources for biomass

Waste combustionand slag

management

Hot flue gasesproduced andrise to boiler

Water circulatedin the boiler

(400C)

Converted intohigh-pressure

steam (40 bars)

Fed to turbines anddrives electricity

generator

Residual steam inthe form of heatIn a condenser, heattransformed into water


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Draft

22

Key messages

Saudi Arabia has significant renewable energy potential, and notonly in solar and wind energy

There are four main approaches to incentivizing renewable energy:

- Feed in tariffsset a standard price per kWh for qualifying renewables;

they are effective at guaranteeing a revenue stream to generators, but

if not set at the right price can distort incentives- Central procurementinvolves an agency providing renewable energy

contracts through competitive bidding; such an agency must be

strong, but the process can lead to greater control over capacity and

timing

- Quota systemsdetermine the quantity of renewable energy to be

procured, and allow the market to set the price; they are effective if a

trading infrastructure is in place

- Financial incentives and support mechanismsmake use of existing

systems and are administratively easy, but are often insufficient

In Saudi Arabia, feed in tariffs and central procurement are most

relevant


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Draft

88

Various alternatives are deployed worldwide topromote renewable energy

At least 64 countrieshave renewable energysupport policies

Support policies werefirst deployed in thelate 1970s in Denmarkand the US

As of year-end 2008,renewable capacitywas 280,000 MW,mostly wind and smallhydro

Four main

mechanisms are feedin tariffs, centralprocurement, quotasystems and financialincentives/supportmechanisms

*This classification only applies to jurisdictions that solely rely on financial incentives/supportmechanisms. Virtually all jurisdictions employ financial incentives/support mechanisms along

with one or more of the other three mechanisms (FIT, central procurement, and quotaobligation).

Note: Finland recently implemented a FIT system but the chart does not show this because

financial incentives/support mechanisms remain most prominent in Finland.

Feed-in tariff

Central procurement

Quota obligation

Financial incentives/supportmechanisms*

FIT & Central procurement

FIT and Quota obligation

FIT/Central procurement/Quota


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These mechanisms aim to overcome fundamentalbarriers to entry by renewables by targeting

different aspectsAspects targeted bydifferent approaches

Feed in tariffs set price(and may differentiate

between technologiesand sizes of facilities)

Central procurementsets an installedcapacity target (in MW)

Quota system hasexplicit renewablegeneration target (inMWh)

Financial incentivesimplicitly target thereturn on equity toproject developers

Projects more expensive than alternativeways of generating power; chief barrier todevelopment of renewables

Certain renewable technologies may be lessproven, and unknown risk to financiers(particularly in current credit environment)

Zoning and building codes mayinadvertently discriminate against

renewables, particularly small-scale Problems in dealing with multiple levels of

government in seeking approvals

Growing opposition to siting renewablefacilities in close proximity to residential

areas


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10

There are also Saudi specific challenges inincentivizing renewables

Unclear commitment to renewable energy

Uncertainty to developers on who is lead

contract authority or how to obtain

contract from creditworthy counterparty

Uncertainty regarding evolution of

industry; developers need to know how

activities fit in with structure and that

entity contracted with will still exist

Extent of renewables resource base

undefined; developers will gravitate to

jurisdictions with most availableinformation

Permitting and business set up process

not well understood by developers

Low cost of primary fuels

Primary fuel costs

Low and subsidized cost ofprimary fuels accentuatescost advantage of gas-firedpower stations againstrenewables in Saudi Arabia

Indicative levelized cost of renewablesagainst gas-fired entrants in KSA

0

200

400

600

800

1,000

1,200

CCGT

SCGT

Wind

Biomass

S

olar

Th

ermal

Tidal

SolarPV

SaudiRiyal/MWh


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Central procurement can benefit from a strongcentral agency and a specified target capacity

Involve centralagency (such asSingle Buyer orgovernment itself)providing renewableenergy contracts

through competitivebidding process

Agency sets explicitrenewable energytarget (in MW) andissues requests forproposals (RFPs)

Often maximumprice per unitspecified and limitsplaced on capacityby one participant

Centralprocurement

agency

Renewable ProjectDeveloper A

AuctioningProcess

Renewable ProjectDeveloper B

Renewable ProjectDeveloper C

Renewable ProjectDeveloper D

Renewable ProjectDeveloper E

Renewable ProjectDeveloper F

Individuallysubmit bids

Target forprocured

generation

set

Monitor biddingprocess andevaluate bids

Select bids and

act ascounterparty

Bids chosen

May be different targets for different technologies and sizes oralternatively all technologies may compete on equal footing


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Central procurement provides greater controlover capacity and timing, but requires a strongagency to manage process

Provides control overamount of renewable

capacity deployed andtiming

Can incentivize low cost

resources

Provides revenue stability togenerators due to long-termcontracts

No need for any agency tosecond guess price level

More administratively complexthan FITs; requires entities

which are competent enough toundertake competitiveauctioning process, determineselection criteria, evaluate bids,

devise standardized or

individualized contracts, etc. orrely on consultants/experts

Lag between procurement andgeneration

Pros Cons


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2323

Quota systems allow the market to set the pricefor renewables and involve tradable instruments

Determine quantity (MWh) of renewableenergy to be procured, and allow market

to set price

Targets often set by government; quota

placed mainly on load serving entities

for proportion of energy purchased fromrenewables; penalties imposed for

failing to meet quota

Often combined with marketable/

tradable instruments, with transparent

price

Tradable instruments represent

environmental attributes of power

produced from renewables and can be

bought or sold by market participants,

often separately from underlying energy

Set targeted quantity, determine entity tobe targeted (e.g. 10% of all electricity

sales for distribution companies must bepurchased from renewable resources)

Establish tradable instrument which setsprice per MWh to renewable powergenerators. Set terms of trading of

instrument, including across jurisdictions

Determine eligibility criteria forrenewablesunder program and whether

different classes ofrenewables

Establish monitoring, evaluation andverification structure to support program

Determine penalty level to be applied toentities which do not meet target


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Quota system can achieve given renewablequantity at lowest cost, but needs clear,consistent policy and trading infrastructure

Can ensure specifiedquantity of renewable

generation is achieved at thelowest cost

No need for agencies to

second guess the price level

Need stable and wellcommunicated government

policy about eligibletechnologies, who is mandatedto meet targets, etc.

Generators are not guaranteedrevenue stream

Needs developed tradinginfrastructure

Can be administrativelycomplex

Pros Cons


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Financial incentives also can promote renewable

development by targeting a companys ROE

Financial incentives can influence arenewable energy developers future free

cash flows through targeting their return on

equity (ROE)

Financial incentives can be directed both at

renewable energy developers and themanufacturers of renewable energy

products:

Examples of financial incentives targeting

- Investment subsidies

-Grant

- Low interest loans

- Tax credits

- Lower or zero tax rates (value-added tax,

excluding dividends from renewable energy

investments from income tax, etc.)

Financial supportmechanisms in Spain

Alongside the FIT, Spain uses avariety of financial supportmechanisms, including subsidies,tax deductions and low interestloans

Investment subsidiescover 36.4%of installation costs for renewableenergy heating and coolingtechnologies

The 2001 Law on Fiscal,Administrative and SocialMeasures provided corporate taxdeductionsof 10% for investmentsin non-wind based renewableenergy

The Renewable Energy Plan 2000-10 established a financingmechanism to provide low interestloanscovering up to 70% of aninvestment to help renewableenergy developers


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Other support mechanisms exist, such as R&D,resource mapping, and institutions to expeditepermitting

Government funded researchto disseminate

information on renewable energy to interested

parties can be effective support mechanism; can

include resource mapping showing potential of

different renewable technologies Supporting institutions to expedite or streamline

permitting processfor proposed projects are also

widely used

Some jurisdictions provide infrastructure support in

connecting to the gridor in expanding transmissionlinesto accommodate renewable projects in

development of prospective projects

Net metering, which allows consumers to build small

renewable energy systems at homes and businesses

and sell unused energy back at the wholesale

electricity price also used to incentivize development

Wind mapping and netmetering in Ontario

In Ontario, the Wind ResourceAtlas Programhas aimed to helplarge and small wind developersidentify favorable locations for

wind development and widelypublishes such information

The net metering programallowssmall producers of renewableenergy (who produce mainly forown consumption) to connecttheir output to the grid andreceive credits towards their

energy costs. The value ofgenerated renewable electricity iscalculated at the same price aswhat a consumer would pay for akWh of energy

In 2009 Green Energy Actproposal to create a RenewableEnergy Facilitation Officeto shareinformation with developers on

permitting process


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The CDM mechanism has been used in China topromote renewable energy

The Clean Development Mechanism

(CDM) is a component of the Kyoto

Protocol that allows industrialized

countries to offset carbon emission

reductions by buying certified credits

from non-industrialized signatories;credits under CDN known as Certified

Emission Reduction Credits (CERs)

As of April 2008, 18% of all CDM projects

were in China, the leading country

27% of these projects involvedrenewable energy, and were mainly

hydro based

Aligning national renewable energy

regulations with CDM policies could

increase ability to earn future credits

Qualification for CDM projects To qualify for earning CERs, project needs

to be in non-annex 1 country, which isparty to the Kyoto Protocol

Also need for a Designated OperationalEntity (DOE)/ Designated National Authority(DNA), which is independent legal entityaccredited and designated by CDMExecutive Board to validate proposed CDMprojects and verify and certify emissionreductions

Saudi Arabia eligible to participate in CDM;Egypt, Jordan, Israel, Qatar and UAE allhave DNAs and host or are registering aCDM project

Source: Bloomberg

CER Prices (Sep 2007 Dec 2008)

0

10

20

30

40

50

60

Sep-0

7

Nov-0

7

Jan-0

8

Mar-

08

May-0

8

Ju

l-08

Sep-0

8

Nov-0

8

Price(US$)


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Financial incentives and support mechanisms areadministratively straight forward, but if politicized

can create uncertainty and often insufficient

Financial incentives make

use of existing mechanisms(e.g. tax and benefit system)

Administratively straightforward

If constantly changed, due to

political factors, can createuncertainty to projectdevelopers (e.g. sunsetperiod of PTC)

Often insufficient on own;

need one of preceding toolsto incentivize renewablesfurther

Pros Cons


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Next steps

Introduction


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Renewable energy can provide Saudi Arabiawith significant benefits

Helps diversification of fuel andtechnology sources

Can reduce growth of Saudi emissions

(NOx, SOx and CO2), effluents and

water usage

Reduces opportunity costs ofsubsidized fuel inputs

Provides alternative means of serving

remote areas

Can foster creation of a domestic

market for renewable energy products

Introduces new players into wholesale

market, enhancing innovation and

potentially competition

Can be more scaleable than

conventional technologies

Subsidized fuel inputs

Natural gas and petroleum productssold to power producers at ratesconsiderably below market prices

A reduction in use of subsidized fuelsfor future capacity could potentially

increase export revenues, even ifrenewable energy itself is subsidized

Domestic fuel charges for power facilitiesrelative to current global market prices

Source: Bloomberg, proprietary contracts

0

2

4

6

810

12

14

Light fuel oil(SR/liter)

Heavy fuel oil(SR/liter)

Ethane gas(SR/MMBtu)

Domestic fuel charges

Global market prices

Saudi Riyals


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Renewable energy plan is needed to incentivizedevelopers to build; it also signals efforts arebeing taken by KSA to reduce greenhouse gases

A plan is needed to providepotential investors with clearunderstanding of how they will getpaid, how much, who will make the

payment, and have confidence incommitment of authorities torenewables

If properly designed, a plan canensure that renewable projects will

be developed in a cost-efficientfashion

As increasing pressure oncountries to reduce greenhousegas emissions, can show stepsare being taken by Saudi Arabia

The Copenhagen Conference

Successor agreement to Kyoto beingsought to reduce greenhouse gasemissions

65 Heads of States have thus far

committed to attending the conference,scheduled to end on December 18th

Agreement on a global target for thereduction of greenhouse gasemissions and timeline to achievetarget are key objectives of conference

Will require commitment fromdeveloped countries to reduce theirCO2 emissions, while developingcountries contribute to a collectivesolution through sharing oftechnologies, research anddevelopment

Any agreement on global climateregime should not restrain economic

growth or distort competition


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Developing a renewable energy plan is consistentwith developments in neighboring countries

UAE Established carbon-neutral, zero

waste city and launched $250million company to develop newrenewable energy sector (MasdarInitiative)

Considerable use of solar energy:parking meters, water heating,cooling, and 500 MW plant

Opened solar-cell production line

Lebanon

Developingproject for solar-powered desalination plant

Significant installed hydro Increasing installations of solar

water heaters

Syria Completed wind farm feasibility

study Establishing National Center for

Energy Studies and Researchtodevelop a National RenewableEnergy Plan

Significant amount of installedhydro, biomass and solar waterheaters

Jordan Developed energy sector strategy

with a goal of 5% of renewables by2015

Established a National EnergyResearch Center

Established a solar energyindustry: stand-alone PV, PVpumping systems, R&D and

training Two operating wind farms

Qatar

Investing $20 million forRenewable Energy Center

Set up a $403 million clean energyfundwith the UK

Building solar complex of 3,500MW by 2013

Oman Study proposing a National

Renewable Energy Plan publishedin 2008; evaluating proposed pilotschemes

Significant use of solar waterheatingsystems

PV used for power in remote

areas Significant R&D

Yemen Significant PVapplications for

both urban and domestic use

Established solar water heaterindustry

Kuwait

Goal of 5%of total electricityfrom renewable energy by 2020

Call for $150 million for R&D


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But future potential from other renewableresources should not be ignored

Wind energy and speeds in KSA

From available data, mean annual windenergy between 250 and 500 kWh/m2 onRed Sea, dropping to 50 kWh/m2 inland

Annual average wind speeds of 3.2 to5.3 miles per second

Available data does not appearcomprehensive

-

10,000

20,000

30,000

40,000

50,000

60,000

70,000

80,000

90,000CHP installed capacity (MW)

in select countries

Wind- best potential lies along

Arabian Gulf and Red Sea coast

Waste to energy incineration with

energy recovery most potential

using urban solid waste; 0.3-1.1 GW

of installed capacity estimated tobe technically feasible

Geothermal there are 10 hot

springs with varying deep

temperatures of 50 to 120oC

Other innovative technologies,such as hydrokinetic energy and

waste heat recovery exist

CHP using the heat for cooling

purposes via absorption cycles;

efficiency rate as as high as 80-90%

compared to 47-60% for CCGTs


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14

There are Saudi-specific challenges in promotingrenewables

Low cost/subsidization of primary fuels

Uncertainty on who is lead contractauthority or how to obtain contract fromcreditworthy counterparty maydiscourage investors

Uncertainty regarding evolution ofindustry; developers need to know howactivities fit in with structure and thatentity contracted with will still exist

Extent of renewables resource base is

undefined; developers will gravitate tojurisdictions with most availableinformation

Permitting and business set up processnot well understood by developers

Indicative levelized cost ofrenewables against gas fired

entrants in Saudi Arabia

0 500 1,000 1,500 2,000 2,500

Solar PV

Tidal

SolarThermal

Biomass

Wind

SCGT

CCGT Levelized costs ofgeneration at world

market gas prices(green = subsidizedelement)

Upper and lowerrange of

levelized costs

SR/

MWh


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Next steps

Introduction


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Mechanisms to promote renewable energy shouldencourage the lowest cost resources, betransparent, and be tailored to the jurisdiction

Instrument should attempt to incentivize the lowest cost, mostefficient resources, rather than encourage a gold rush frominefficient entry

Mechanism should be transparent, flexible and administrativelystraightforward

Option chosen should be tailoredto the specific institutionalcapacity and market structure of thejurisdiction

Ideally if a price is being set for renewables, a device forrevealing the priceshould be formulated rather than agencieshaving to second guess

Instrument should consider geographical distributionofprojects and grid impact


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Procurement arrangements base eligibility onenvironmental attributes

Suggested initial qualifyingresources

Minimum size:greater than 10MW

Emissions:zero emissions,except for qualifying biomassfuels and waste to energyfacilities

Online date:project must beoperating no later than threeyears from date of award

Biomass:any biomass fuels mustbe procured within KSA andemission and effluent levelsshould be consistent with KSA

regulations

Waste to energy:waste should bedelivered from radius no greaterthan 100 km from facility (ifdelivery is solely by road), andemissions and effluent levelsshould be consistent with KSA

standards

Eligibility standards based onenvironmental attributes rather thantechnologies

Initially a size limitation would be imposed,as administering multiple small contracts

administratively burdensome for REPD Initial procurement arrangements designed

with anticipation of seeking contracts up to2,000 to 4,000 MW by September 2011

Also requirement projects be connected to

transmission voltage level, as projects atdistribution voltage may cause additionalcost incurrence (except in remote areas)

Requirements can be revised in futurerounds, including possibility of energy

efficiency projects


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Contracts would be for 20 years or more, withselection based on a scoring mechanism

Proposed selection criteria Bids would be submitted for contractterms of 20 years; could be submittedfor longer terms if results in lowerlevelized cost

Request for EOIs would include draft

standard contract template for commentby potential developers; commentsused by REPD to refine template

On award of contract, negotiations willbe related to specifics of contract

addendums/exhibits and projectdevelopment milestones, not contractitself

Drafts of addendums/exhibits tocontract would be part of RFP

submission

Levelized cost

Technological diversity

Geographical diversity

Impact on grid

Impact on reliability

Likelihood of reaching completion(including both technical and

financial considerations)

Each category would be allocatedcertain number of points, reflectingREPDs weightings; proposal would

be scored by multiple evaluators;average score would determine

selection


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20 year contract terms are consistent with centralprocurement processes in other jurisdictions andPWPA lengths

Lengths of recent centralprocurements (in years)

20 year length is consistent with

recent procurements in other

jurisdictions, including in Arizona,

California, and Ontario, as shown

in accompanying box Also consistent with recent length

of power and water purchase

agreements (PWPAs) for

Independent Water and Power

Producers (IWPPs), including:- 20 year PWPA for Shoaiba 3

project in KSA

- 25 year PWPA for Hidd project in

Bahrain 0 20 40

Arizona Public ServiceCompany*

City of Palo Alto(California)*

Ontario Power Authority

Pacific Gas andElectricity Company

Southern CaliforniaEdison*

Southwestern PublicService Company*

Source: applicable entities websites; *consistutes maximum


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An initial Renewable Resource Inventory wouldoccur prior to the first procurement round

Importance of continuallyupdating resource mapping for

potential investors

Need for Saudi Arabia to assure up-to-date dataabout renewableenergy resources is publicly

available and accessible Program would build upon initial

Renewable Resource Inventory,including regular updates andconsideration of new technologiesand improvements to old ones

Work of National Renewable Energy

Laboratory (NREL) in the US is oneexample

Maintenance of RenewableResource Inventory would beappropriate role for SREO inconjunction with REAC andPresidency of Meteorology and the

Environment (PME)

Need for Renewable Resource Inventoryto assess economic and technical

feasibility of renewable projects in Saudi

Arabia

Based on generic projects across

multiple technologies at appropriate

scale (at minimum covering solar, wind,

municipal waste and geothermal)

Would identify most promising regions

and approximate technologically

feasible amounts of capacity at current

technology

Also provide guidance on how land and

other inputs can be obtained in most

promising regions

Should be on fast-track basis, completed

by mid-2010 in conjunction with REAC


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Competitive procurements would occur on arepeated cycle and have three distinct periods

December

2010

March2011

June2011

September

2011

December

2011

December

2013

March2014

June2014

September

2014

December

2014

June2016

expressions ofinterest due for

2011 procurement

request forproposals

issued for 2011procurement

response to 2011procurement RFP

due

winning biddersselected for 2011procurement

referent prices issuedby technology for

January 2012-March2014

expressions ofinterest due for 2014

procurement

request forproposals issued

for 2014procurement

response to 2014procurement RFP

due

winning biddersselected for 2014

procurement

referent pricesissued by

technology forJanuary 2015-

March 2017

NREP review

In 2017 the same cycle will be repeated, dependent upon results of NREP review


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Referent pricing would be used to serve as a formof FIT in between procurement rounds

Envision procurement rounds heldtriennially

Results of 2011 procurement used to

inform prices for procurements in-

between 2011 and 2014 rounds; new entity

REPD would use results to establish

referent prices for each technology

(expressed in Riyals per MWh in each

year)

Qualified bidders would execute standard

contract at referent price

Prior to 2014 procurement, REPD would

commission study determining whether

any adjustments should be made (e.g. on

size threshold, connection to distribution

level voltage, inclusion of energy

efficiency projects, etc.)

Submission of EOI

End of March

Notification EOI accepted

End of June

Submit project application

End of September

Sign contract

End of December

Indicative timeline for eachprocurement round


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The shortfall would primarily be covered throughconventional tariffs and the Balancing Fund

Voluntary REC pricing inUS

Voluntary certificatedprograms in the US,otherwise known as non-compliance renewable

energy certificates (RECs)

have value

The two key methods for recovering the costs ofrenewable energy procurement will be:

- Selling the energy from the contracts, compensated

at a rate equivalent to conventional generation

under the tariff

- Charging remaining shortfall to the government as

part of the Balancing Fund (designed to stabilizerates)

In future, green certificates could also be marketed

by REPD to buyers wishing to establish

environmental credentials:

- Initially envision system as being purely voluntary

through quarterly auctions; platform could be used

later for transition to private procurement or trading

of environmental attributes

- Voluntary green certificates produced non-zero

values in other jurisdictions; even small payment

will help offset added costs of renewables

procurement

Selected green e tradable

renewable certificate prices inthe US for 2008 ($/MWh)

0

2

4

6

8

10

12

14

National -any

technology

National -landfill gas

National -wind

WECC -wind

National -solar

California -wind

Bid pri ce (2008)

Offer price (TRC)

Source: Evolution Markets


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FIT in other jurisdictions show extent of costdifferential from existing Saudi tariffs

Source: OPA FIT price schedule as at September 30th, 2009; Reinhard Hass et al (2008) and EREC, RES National PolicyReviews, European Renewable Energy Council, April2008; exchange rate to SR uses 2008 average

Note: In disaggregating the generation component from the total tariff, the revenue requirement allocation from LEIs tariff modelto ECRA over the 2007-09 period is used

0

50

100

150

200

250

300

halala

/kWh

Wind

Solar

Existing average tariff

Estimation of generation componentof existing average tariff


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Next steps

Introduction


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44

There are three key implementing bodies to beestablished within existing or soon to be createdinstitutions

Ministry of Waterand Electricity

(MoWE)

King AbdullahCity for Science

and Technology

(KACST)

Saudi PowerProcurement

Company (SPPC)

Saudi RenewableEnergy Office

(SREO)

RenewableEnergy Academic

Council (REAC)

RenewableEnergy

ProcurementDivision (REPD)


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Implementation bodies, within existing or soon tobe created institutions, need to be established

Creating implementation bodies within existing organizations orsoon to be created institutions will:

- minimize extent new entities need to be chartered;

- allow the use of existing oversight mechanisms; and

- potentially keep costs lower, as less need for new boards or more expensivebureaucracy

Propose a Saudi Renewable Energy Office (SREO) in the Ministry ofWater and Electricity to play key role in defining renewable targets,and working with project developers to assist permitting and overalldevelopment process

Renewable Energy Procurement Division (REPD) in Saudi PowerProcurement Company (SPPC) to act as counterparty to renewableenergy contracts, and develop and run procurement process

Another implementation body is Renewable Energy AcademicCouncil (REAC), which it may be beneficial for King Abdullah City of

Science and Technology (KACST) to host


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SREO would set a target percentage of generationfrom renewables, initially 10% by 2020

Target amount of renewableenergy would be set by SREOin consultation with its parentministry and ECRA

Proposed target level takes

into account technicalfeasibility, project gestationperiods, costs and impact onreliability

10% target by 2020

corresponds to around 8,500MW level over last 10 years;has been achieved in severalcountries, including Spain(10,563 MW ) and Germany(19,304 MW).

Proposed target percentage of load derivedfrom renewable energy, 2014-20

Indicative renewable capacity at 40% loadfactor (MW)

0%

2%

4%

6%

8%

10%

12%

2014 2017 2020

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

9,000

2014 2017 2020


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SREO would create an ombudsman/liaison officeto provide single window permitting

SREO liaison office

As part of SREO, a liaison Officewould be devoted to working withrenewable energy projectdevelopers

Would particularly assist

developers through permittingprocess (what permits needed,how filled out, and likely timing fordecisions); can provide for allpermits being applied forsimultaneously

Key role to play in inter-Ministerial

coordination As part of duties, would develop a

how to guide for renewable

project developers, which willinclude focus on market rules andmechanisms, permitting andenvironmental standards

Problems with permitting for renewable energyproject developers across the world

Need to shepherdmultiple permit

applicationsthrough diverseagencies at

different levels ofgovernment

Deadlinesforconsideration of

permits may not beconsistentwithfinancing orconstruction

schedules

At times,requirementsfromdifferent agencies

may becontradictory

Challenges can beexacerbated if

foreign developerunfamiliarwith

local procedures


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Renewable ombudsman offices are used in otherjurisdictions, including Canada and Australia

Renewable Energy Facilitation Officein Ontario, Canada

In Ontario, the Renewable EnergyFacilitation Office (REFO) was establishedunder 2009 Green Energy Act

REFO is located within the Ministry ofEnergy and Infrastructure

Aims to provide single window accesspoint for information on renewable energyproject requirements

Provides information on regulatoryapprovals and permits, incentives underthe Ontario FIT program, and how to bringa renewable energy project to life

Opportunity for renewable energydevelopers to set up with REFO acoordinated orientation meeting todiscuss and clarify project requirements

The Office of Clean Energy inQueensland, Australia

Established in October 2008, as partof the Department of Employment,Economic Development andInnovation in the Queensland

government

The Office of Clean Energy aims to bea one stop shop assisting potentialdevelopers by helping to fast trackeligible clean energy projects

Role includes removing regulatorybarriers to renewable energy industrydevelopment

Part of role is also identifying,mapping and sourcing potentialrenewable energy locations aroundthe state


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Next steps

Introduction


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3636

Next steps are for a COM decision, creation ofimplementation bodies and gearing up for initialprocurement

Council ofMinisters

decision onadoption ofdeterminedrenewable

energy plan,supported

by

regulations

Step 1 Step 2

Establishimplementation

bodies SREO,REPD andREAC, and

RenewablesInterconnection

Planning andOversight

Group

Step 3 Step 4

Focus begins oninitial

procurementround andrequirements

including:

amount to beprocured;

determining

exact weightingsand scoringmechanism; and

development ofthe standardcontract template

Step 5

Considernew building

codes andstandards,

trainingschemes

and ways toincentivizesolar water

heating

Creation ofRenewables

WorkingGroup andbegin InitialRenewables

ResourceInventory


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A Renewables Working Group and InterconnectionPlanning and Oversight Group would be created

A Renewable Working Group would be responsible for coordinating theinitiation phase of the NREP:

- Would initially consist of representatives from ECRA, Ministry of Water and

Electricity and Ministry of Finance

- Would meet monthly until Implementation Bodies have been established

- Once established, ECRA, and heads of each Implementation Body would sit on

the Group

- During meetings, each member will provide monthly report on progress in

establishing the Bodies

A Renewables Interconnection Planning and Oversight Group would

also be created to plan and monitor the impact on the transmission grid:

- Developers will need accurate estimates of transmission interconnection costs

- Need to also identify which grid strengthening projects necessary to

accommodate significant renewable energy in particular regions

- Also need to assure interconnections and grid strengthening occurs in timely

fashion once need identified

- Will consist of members form REPD, ECRA and STC


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New building codes and standards and training inrenewables would complement the NREP

Building codes and standards should beconsidered:

- Assure existing codes do not unnecessarily

prevent installation of renewable energy

facilities

- Determine extent to which codes for new

buildings can encourage energy efficiency

Players such as REAC and Ministry of

Labor and Social Affairs may focus on

creating training programs in renewable

energy field for skilled workers:

- New jobs unlikely to occur immediately

- Programs should focus on technical skills;

recognizing that many technologies not labor

intensive once installed

- Energy efficiency programs (particularly

building retrofits) may generate moreemployment

Building standards

Throughout the world, variousstandards are being developed to ratebuildings on their sustainability, oftenincluding: site selection, water use,energy consumption, materials used,indoor environmental quality, and

innovation and design process

Often projects can be rated in stages:in design, on completion, and after thebuilding is occupied

Known standards include:

- The Green Starsystem of the Australian

Green Building Council;- The US Leadership in Environmental

Design (LEED) ratings;

- The British Research EstablishmentEnvironmental Assessment Method(BREEAM); and

- The recently unveiled PearlDesignSystem ratings by the Abu Dhabi Urban

Planning Council (Estidama initiative)


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Incentivizing solar water heating may be anotherpillar of Saudi Arabias renewable plan

Solar water heaters can be used to heat water for

variety of residential, commercial and industrial

uses, including space heating and cooling

In Spain, standards introduced where 60 percent

of hot water demand must be met by solar water

heating in all new and/or renovated buildings

Many countries, including Greece, Japan, China

and Turkey have succeeded in making solar

water heaters standard technology that

competes with conventional systems

Source: World Energy Council, May 2007

Solar water heatersin operation

Solar water heating in Turkey Significant potential for future

growth in solar generally:

- Technically feasible solarpotential in Turkey is estimatedat 88 million tons of oilequivalent per year

-40 percent of this is consideredeconomically usable, ths ofwhich is suitable for thermal use,and th for electricity production

The Turkish solar water heatingmarket is the third largest in theworld and has increased by 15%per annum from 2001 onwards,

reaching over 5,000 MWth Turkish manufacturing capacity

for solar water heaters was 1million m2 per year in 2008

A solar water heating systemcosts approximately200-300/m2

in Turkey

Source: MDPI (Sensors) Feb 2008

-

5,000

10,000

15,000

20,000

25,000

30,00035,000

40,000

45,000

50,000

MWth


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Thank You

Renewable Energy Policy_complete1

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