REwiRE: Rural Electrification with Renewable Energy Kelcie Abraham, Himani Phadke, & Jonathan Strahl Milken Global Conference 2 May 2012
REwiRE: Rural Electrification with Renewable Energy
Kelcie Abraham, Himani Phadke, & Jonathan Strahl Milken Global Conference 2 May 2012
Meet the REwiRE team
5/3/2012 2 © K. Abraham, H. Phadke, M. Riaz, J. Strahl – Stanford University
MA International Policy Studies, Energy, Environment & Natural Resources
Fulbright scholar, 2007-08
Fluent in Bahasa Indonesia
MA International Policy Studies, Energy, Environment & Natural Resources
Financial consulting, UK Treasury and UN Foundation
Current research on cookstoves in India
PhD Civil & Environmental Engineering, Sustainable Design & Construction
Civil Engineering & Economics at MIT
Gabilan Stanford Graduate Fellow
MA International Policy Studies, Energy, Environment & Natural Resources
Goldman Sachs and IFC
Collaboratory on Global Projects, Stanford University
Jon Strahl Himani Phadke Kelcie Abraham Maria Riaz
Overview
Mission
Motivation
Technology
Business Model
Risk Mitigation
Next Steps
5/3/2012 © K. Abraham, H. Phadke, M. Riaz, J. Strahl – Stanford University 3
Photo credit: J. Strahl
Mission
REwiRE will finance locally co-owned renewable energy mini-grids in rural communities of Indonesia
5/3/2012 5 © K. Abraham, H. Phadke, M. Riaz, J. Strahl – Stanford University
Photo credit: Jane Erickson
Motivation
Rural electrification is a 1.1 billion-person issue
Globally, 1.3 billion people lack access to electricity; 84% live in rural areas.
5/3/2012 7 © K. Abraham, H. Phadke, M. Riaz, J. Strahl – Stanford University
Image source: http://geology.com/press-release/world-at-night/
Rural electrification positively impacts welfare
Household income
Productivity of home businesses
Agricultural productivity
Public health
Educational attainment
Public good benefits (security)
Quality of life
World Bank estimates annual welfare benefits of electrification at $600 per household.
5/3/2012 8 © K. Abraham, H. Phadke, M. Riaz, J. Strahl – Stanford University
Photo credit: Erin McGough
Rural electrification efforts face many challenges
Extending the national grid can be expensive
Remote areas with low population density, low demand, and difficult geography
5/3/2012 9 © K. Abraham, H. Phadke, M. Riaz, J. Strahl – Stanford University
Image source: http://www.un.org/esa/sustdev/sdissues/energy/op/parliamentarian_forum/indonesia_sugiharto.pdf
Indonesia is an ideal country for REwiRE
Strong government support
Goal: 95% electrification by 2025!?!
Abundant renewable resources
Remote island populations
Archipelago has 18,000 islands
Fuel costs are high and diesel shipments are intermittent
23% of national electricity is produced from oil
Renewables at grid parity on remote islands
67 million citizens (28% of the population) still lack access to electricity.
5/3/2012 10 © K. Abraham, H. Phadke, M. Riaz, J. Strahl – Stanford University
Photo credit: Erin McGough
Past off-grid projects have experienced several problems
Limited local ownership
Electrification of productive activities neglected
Lack of technical and engineering expertise in remote areas
Inadequate financing for long-term sustainability and scalability
5/3/2012 11 © K. Abraham, H. Phadke, M. Riaz, J. Strahl – Stanford University
Image source: www.alibaba.com/product-free/115259576/broken_solar_panel.html
IBEKA, our partner, has overcome classic rural electrification challenges in Indonesia
Local ownership of micro hydro facilities through community co-operatives
Community values electricity as an asset
Sustainable O&M model
Over 20 years of experience, with ample technical and engineering expertise
50 projects, 0.5M people
5/3/2012 12 © K. Abraham, H. Phadke, M. Riaz, J. Strahl – Stanford University
However, as a nonprofit organization relying solely on grant funding, IBEKA has limited scale and impact.
Photo courtesy of IBEKA
Capital structure achieves scale with minimum transaction costs
13
Joint Venture Co-op & REwiRE
Village 1
Village 2
Joint Venture Co-op & REwiRE
Joint Venture Co-op & REwiRE
Village 3
Holding Company REwiRE LLC
Institutional Investors 40%
Senior
Founders 5%
Impact Investors 25%
SubTier1
MCC Grant 30%
SubTier2
Indonesian Island
Mini-grid
Capital flows
5/3/2012 © K. Abraham, H. Phadke, M. Riaz, J. Strahl – Stanford University
REwiRE will pilot three micro hydro mini-grids on Sumba Island
Only 15.4% of 685,186 people living on Sumba have access to electricity.
5/3/2012 14 © K. Abraham, H. Phadke, M. Riaz, J. Strahl – Stanford University
Technology
Micro hydro is our technology of choice for the pilot project
Viability and low cost of micro hydro demonstrated by our partner NGO IBEKA
We seek minimal technology risk for the first 3 installations
After proving the financial model, we will expand to consider other technologies, seek new partners, and broaden our impact
5/3/2012 16 © K. Abraham, H. Phadke, M. Riaz, J. Strahl – Stanford University
Biomass
Wind
Solar
Micro hydro
Technology choice depends on system scale, available resources, and levelized cost of energy
Predicted Load
System Scale
Available Resources
LCOE Comparison
Model Verification
Technology Selection
5/3/2012 17 © K. Abraham, H. Phadke, M. Riaz, J. Strahl – Stanford University
End-User Surveys Grid-Connected User Surveys Institutional Reports
Feasibility Studies Past Project Data Institutional Reports
Past & Comparable Project Data Institutional Reports
HOMER, Hybrid2, ViPOR
75 kWh/HH/month 250 kWh/village/day
Rated Capacity: 50 kW System: Mini-grid
Solar radiation: 5.9 kWh/m2/day Wind: Promising (NREL Map) Biogas: 56.7 MW (NTT) Micro hydro: 4.5 MW potential
Solar PV: 23¢/kWh Wind: 10¢/kWh Biomass: 6¢/kWh Micro hydro: 5¢/kWh
Biomass Wind Solar
Micro hydro
REwiRE will lower costs and improve service with an integrated energy solution
Micro hydro
Biomass
Wind and Solar
5/3/2012 18 © K. Abraham, H. Phadke, M. Riaz, J. Strahl – Stanford University
Reliable
Inexpensive
Complementary
Business Model
REwiRE is cost competitive
5/3/2012 20 © K. Abraham, H. Phadke, M. Riaz, J. Strahl – Stanford University
Revenue:
Electricity sales to local co-op members at 10¢/kWh
Long term PPA with state owned utility (PLN) at 14.3¢/kWh
10 14.3
6 10.2
20
10
40
0
5
10
15
20
25
30
35
40
45
REwiRE co-opprice
REwiRE PLNPPA
Currentdiesel
30% cut todiesel subsidy
Un-subsidizedelectricity
WTP(World Bank)
WTP(Interviews)
Pri
ce (
¢/kW
h)
Price of electricity (¢/kWh)
Electricity is an asset that increases ability to pay
Alternatively, 120 hours of kerosene light costs $6.56-8.75. This is equivalent to 40¢/kWh!
5/3/2012 21 © K. Abraham, H. Phadke, M. Riaz, J. Strahl – Stanford University
Assume light is used to work from 6-10pm
1.5 hrs = $0.44 basket
30 hrs = $3.28 mat
At 10¢/kWh, monthly lighting bill is $1.64
4 extra hours per day = $13.12-21.87 per month = 10x monthly lighting bill
Photo credit: J. Strahl
$1.42 million is needed to fund three mini-grids
Majority of funds used for transmission work (43%) and mechanical/electrical work (21%)
Explore design improvements to reduce upfront transmission and distribution costs
5/3/2012 22 © K. Abraham, H. Phadke, M. Riaz, J. Strahl – Stanford University
5%
30%
40%
25%
Sources of Funds
Founding Partners
MCC
Institutional Investors
Impact Investors
Base case shows 15.4% IRR with NPV of $1.77 million for three mini-grids
5/3/2012 23 © K. Abraham, H. Phadke, M. Riaz, J. Strahl – Stanford University
Net Present Value $1,771,875
Co-op Revenues $303,542
PPA Revenues $1,736,260
CDM Revenues $293,990 O&M Costs
$561,920
$0
$500,000
$1,000,000
$1,500,000
$2,000,000
$2,500,000
Co
mp
oe
ne
nts
of
Net
Pre
sen
t V
alu
e (
20
13
)
Waterfall Chart for REwiRE Pilot Project (Base Case)
Capacity factor, PPA offtake share, and PPA rate are the most important uncertainties
Capacity factor, PPA offtake share, and PPA rate account for 90% of variance
Even with moderate fluctuations in uncertain values, IRR remains reasonable
5/3/2012 24 © K. Abraham, H. Phadke, M. Riaz, J. Strahl – Stanford University
8 10 12 14 16 18 20
Capacity Factor
PPA Offtake Share
PPA Rate
Co-op Rate
CDM Rate
IRR (%)
Deterministic Analysis of Project Uncertainties
REwiRE will have triple bottom line impacts
5/3/2012 25 © K. Abraham, H. Phadke, M. Riaz, J. Strahl – Stanford University
Social
• Welfare effects • Community participation • Measures: # of households and
businesses connected, # of JV employees, sustained electricity use
Economic
• Robust returns for investors • Measures: o IRR = 10-16% o NPV = $1.77 million
Environmental
• GHG emissions mitigated (CDM) • Measure: Diesel displaced
Risk Mitigation
REwiRE will mitigate numerous risks
5/3/2012 27 © K. Abraham, H. Phadke, M. Riaz, J. Strahl – Stanford University
Political
Local ownership
Government support at the ministerial level
Local NGO partners
Aligned with PLN (state-owned utility)
Counterparty
“Skin in the game” at all levels
Incentives aligned Photo credit: Erin McGough
REwiRE will mitigate numerous risks
5/3/2012 28 © K. Abraham, H. Phadke, M. Riaz, J. Strahl – Stanford University
Technology
Partnership with IBEKA
Micro hydro is well-understood
Cash flow
Diverse assets mitigate risk
Demand and construction
Seek ADB/ OPIC credit enhancements
ADB: Guaranteed 6% return
Operation and maintenance
Community owned and operated
Photo credit: J. Strahl
Next Steps
We have a four-stage growth strategy
1
• Connecting to large PLN grid that has baseload demand • Enough capacity factor
• Easily qualify for carbon offsets by displacing diesel
2 • Mini-grids connected to remote, state-owned diesel gensets
3 • Stand-alone mini-grids managed entirely by the co-op
4 • Expand to other islands and other countries with similar characteristics
5/3/2012 30 © K. Abraham, H. Phadke, M. Riaz, J. Strahl – Stanford University
5/3/2012 31 © K. Abraham, H. Phadke, M. Riaz, J. Strahl – Stanford University
WAIKABUBAK ANAKALANG
PLTM 1X0,8MW
Wanukaka Walakaka
Palla Wewewa
WAITABULA
Kodi
Malata Mamboro
Haharu
WAINGAPU Makamenggit Lewa
Kamanggih Melolo
K. Water
Mangili
Wejelu
Kakaha
Nggongi
Kananggar
Tanarara
Renc. SUTM 17 kms
Renc. SUTM 13 kms
Tabundung
Tanabanss Lenang
Napu
Langgaliru LINDIWACU
GHAURA
Road
Existing Transmission
Planned TM 2012 /2013
Planned TM 2014 / 2015
1
2
1
1
3
4 3
Image source: PLN Tambolaka Seminar presentation, Sumba March 15, 2012
We have a four stage growth strategy 1
• Connecting to large PLN grid that has baseload demand • Enough capacity factor
• Easily qualify for carbon offsets by displacing diesel 2 • Mini-grids connected to remote, state-owned diesel gensets
3 • Stand-alone mini-grids managed entirely by the co-op
4 • Expand to other islands and other countries with similar characteristics
Excellent growth potential within Indonesia
5/3/2012 32 © K. Abraham, H. Phadke, M. Riaz, J. Strahl – Stanford University
Region Electrification Rate Population w/o
Electricity Access
East Sumba 5.8% 214,620
Sumba Island 15.4% 579,667
Nusa Tenggara Timur 33% 3,107,996
Indonesia 72.0% 67,163,862
Electricity demand growth on Sumba for past 5 years averages 15.9%
REwiRE will quickly scale to develop 25 mini-grids on Sumba Island, with a required investment of about $11 million after proving concept in pilot phase
Universal electricity access by 2030 will require $498 million annually, 95% of which is for rural grid and off-grid development
Room to scale a proven model worldwide
Proven model could be applied to emerging economies with:
1. Populations in remote areas,
2. Similar grid extension issues, and;
3. Abundant renewable resources.
5/3/2012 33 © K. Abraham, H. Phadke, M. Riaz, J. Strahl – Stanford University
Country Electrification Rate Population w/o Electricity
Access (millions)
India 75% 289
Bangladesh 41% 96
Nigeria 51% 76
Kenya 16% 33
As of 2011, IEA estimates $275 billion in total investment is needed worldwide to connect 26 million people per year from now until 2030.
REwiRE’s model could enable $5-7 billion in large-scale capital deployment.
Why invest with us?
Renewables have reached “grid parity” on remote islands of Indonesia and remote areas (“electricity deserts”) in other countries
We will help to pioneer a new paradigm for decentralized energy systems and foster clean development of emerging markets
Electricity = access to information = informed citizens = a sophisticated and stable democracy
Earn 10 – 16 % returns on investment
The technology and willingness to pay for it exist. This is an institutional and financial challenge that we know how to solve!
5/3/2012 34 © K. Abraham, H. Phadke, M. Riaz, J. Strahl – Stanford University
We are moving forward with this idea Prize money from International Impact Investing Challenge will finance
another site visit to identify specific pilot locations for three mini-grids
Present to social impact investors with Bank Danamon in Jakarta
Identify Indonesian companies and engineers with expertise in other renewable resources
Ongoing quest for seed funding
Stanford Graduate School of Business Social Innovation Fellowship – financing to pursue a social venture full-time for one year
Stanford SEED fund
Stanford Farmer’s Investment Club
Cherokee Challenge
Aspen Institute
Cleantech Open
Any recommendations?
5/3/2012 35 © K. Abraham, H. Phadke, M. Riaz, J. Strahl – Stanford University
Thank you for your help!
Government of Indonesia Umbu Hinggu Panjanji Umbu T. Terawalangu Kuntoro Mangkusubroto
HelioPower Ty Jagerson
IBEKA Staff
Tri Mumpuni Sapto Nugroho Adi Laksono Pradygdha Jati Petrus Lamba Awang
Stanford University Collaboratory for Research on Global Projects
Ryan Orr
Stanford Graduate School of Business Stuart Coulson Jim Patell
Stanford University Intrepid Field Assistant (International Policy Studies)
Erin McGough
5/3/2012 36 © K. Abraham, H. Phadke, M. Riaz, J. Strahl – Stanford University
REwiRE Advisory Board
Ryan Orr Zanbato Group Stanford University
Ty Jagerson HelioPower
Gil Masters Stanford University
Ben Vitale (In-kind partner) The Climate Trust
5/3/2012 37 © K. Abraham, H. Phadke, M. Riaz, J. Strahl – Stanford University
Questions, Comments & Feedback Welcomed
Appendix
Technology
Many resource options exist for off-grid electrification projects
Photovoltaics, microhydro, and wind account for 82% of these projects.
5/3/2012 41 © K. Abraham, H. Phadke, M. Riaz, J. Strahl – Stanford University
25%
40%
17%
7%
3% 8%
Projects with Off-Grid Components (1980 - 2008)
Microhydro
Photovoltaic
Wind
Biodiesel
Diesel
Diesel/Renewable Hybrid
Source: World Bank 2008
Sumba Island has diverse renewable energy resources
4.5 MW of potential micro hydro
Solar radiation of 5.9 kWh/m2/day
Promising wind potential
56.7 MW of biogas potential (NTT)
Flexibility to target lowest-cost, lowest-risk generation options
5/3/2012 42 © K. Abraham, H. Phadke, M. Riaz, J. Strahl – Stanford University
Image source: http://www.nrel.gov/gis/images/international_wind/id_sumba_50mwind.jpg
Levelized cost of energy can be used to compare energy generation options
Micro hydro has the lowest LCOE at about 5¢/kWh
5/3/2012 43 © K. Abraham, H. Phadke, M. Riaz, J. Strahl – Stanford University
22.55 20.00
10.00
6.00 6.00 4.85
0
5
10
15
20
25
Solar PV Diesel(Unsubsidized)
Small Wind Biomass Diesel(Subsidized)
Micro Hydro
LCO
E (U
S ¢
/kW
h)
Levelized Cost of Energy in Indonesia
Source: IBEKA, US AID
System scale impacts optimal technology choice
5/3/2012 44 © K. Abraham, H. Phadke, M. Riaz, J. Strahl – Stanford University
Each village will require a mini-grid system with a rated capacity of about 50 kW
PicoPV Systems 1-10 W
Solar Home Systems 20-250 W
Wind Home Systems 0.1-5 kW
Mini-Grid 5-500 kW
Small-Grid 1-30 MW
National Grid 21.4 GW
$1
$10
$100
$1,000
$10,000
$100,000
$1,000,000
$10,000,000
$100,000,000
1.E-01 1.E+00 1.E+01 1.E+02 1.E+03 1.E+04 1.E+05 1.E+06
Cap
ital
Co
st (
USD
)
Impact (Number of People)
System scale impacts choice of optimal technology
5/3/2012 45 © K. Abraham, H. Phadke, M. Riaz, J. Strahl – Stanford University
Technology Power Output Resources Primary Applications Unit Cost
PicoPV System 1-10 W Solar DC – Light, TV, radio, mobile phone charger $10 (solar lantern); $65 to $200 (solar module)
Solar Home Systems
< 250 W Solar DC – Light, mobile phone charger, fan, ICT, cooling AC or mixed – Light, fan and cooling on DC AC DC – Light, mobile phone, ICT
$180 to $2,100
Solar Residential Systems
0.5 – 4 kW Solar
AC – Light, mobile phone charger, fan, ICT (radio, cassette player, TV), fans, large working instruments and machines that work on AC power (e.g. drilling machine, grain mill, sewing machine, mixer, etc.)
$4,000 to $32,000
Biomass Generator
15 kW Biomass Light, TV, radio, mobile phone charger, agricultural applications
$38,400
Pico Hydropower
< 20 kW Hydro Light, TV, radio, mobile phone charger, small business enterprises
$4,000 per kW installed
Small Wind Turbines
< 50 kW (typically 1-10 kW)
Wind Local businesses and telecommunication centers (productive uses of power); mostly project based
$3,250 to $9,800 per kW installed
Micro Hydropower
< 100 kW Hydro Domestic needs of a small community or small business enterprises in remote areas
$3,000 per kW installed
Mini Hydropower
< 1 MW Hydro May be either a stand alone scheme or feed into the grid $1,200 per kW installed
Small Hydropower
< 10 MW Hydro Usually feeding into a grid $1,200 per kW installed
Financial
REwiRE requires initial $1.42 million in funding
Securing MCC or a similar grant is important for funding
Transmission work dominates uses of funds
Explore ways to reduce upfront transmission and distribution costs
5/3/2012 47 © K. Abraham, H. Phadke, M. Riaz, J. Strahl – Stanford University
10%
30%
25%
35%
Sources of Funds
Founding Partners
MCC
Impact Investors
InstitutionalInvestors
3%
19%
21% 43%
2% 6%
6%
Uses of Funds
Preparatory Work
Civil Work
Mechanical andElectrical WorkTransmission Work
House Installation Work
Feasibility and Design
Millennium challenge = $332.5 million in RE in Indonesia over the next 3 years
JICA
Japanese Embassy
SKATT (for workshop empowerment)
GTZ (for tech dissemination)
HIVOS (NGO from Netherlands)
5/3/2012 48 © K. Abraham, H. Phadke, M. Riaz, J. Strahl – Stanford University
ASHOKA
SOCIENTAL
GDF SUEZ - Rassembleurs d'Energie (France)
GPOBA
Also potential from: World Bank, ADB, Rockfeller Foundation, Bill & Melinda Gates Foundation
UN Sustainable Energy for All initiative
REwiRE is currently seeking grant funding from multiple parties
REwiRE seeks patient capital for the pilot project
5/3/2012 © K. Abraham, H. Phadke, M. Riaz, J. Strahl – Stanford University
8 year payback period for three mini grids
Initial investors will need to be patient
REwiRE will seek impact investors with patient capital: Acumen Fund, Rockefeller Foundation, Calvert Foundation, Bamboo Finance (Oasis Fund), Canopus Fund, Omidyar Network, Green Ventures
As REwiRE scales and diversifies assets investors can recover their investment over a shorter period
Other investors:
Indonesia: Bank Danamon, Bank Negara Indonesia (BNI)
Expected grant from Millennium Challenge Corporation
$600 M Indonesia Compact signed November 19, 2011
$332.5 M Green Prosperity Project
MCC Website: “The Green Prosperity Project will provide technical and financial assistance for projects in renewable energy and natural resource management to raise rural household incomes.”
0% of available funds have been committed
Jon Strahl spoke personally with MCC representatives in Jakarta on March 29, 2012
5/3/2012 50 © K. Abraham, H. Phadke, M. Riaz, J. Strahl – Stanford University
REwiRE projects will qualify for carbon offsets under the Gold Standard
Gold Standard uses the “suppressed demand” methodology
Offset values are based on expected future demand, not current demand
Income effect
Energy cost effect
Lack of physical access to energy
High unit cost of energy
UNFCCC COP Durban 2011: Suppressed demand likely to enter CDM language
5/3/2012 51 © K. Abraham, H. Phadke, M. Riaz, J. Strahl – Stanford University
Development doesn’t have to be dirty before it can be classified as clean!
Risk Mitigation
Diverse assets help mitigate cash flow risk
53
Joint Venture co-op & REwiRE
Village 1
Village 2
Joint Venture co-op & REwiRE
Joint Venture co-op & REwiRE
Village 3
Holding Company REwiRE LLC
City/ Town
5/3/2012 © K. Abraham, H. Phadke, M. Riaz, J. Strahl – Stanford University
Cash flows
Existing state-owned utility grid
Mini-grid
Capital flows
Future transmission expansion
Institutional Investors 40%
Senior
Founders 5%
Impact Investors 25%
SubTier1
MCC Grant 30%
SubTier2
Co-op model helps mitigate risk
Community ownership is essential to sustain operations and maintenance of the facility. As part-owners, community
members will value the resource and work to maintain it
Upfront investment in training saves having to send technicians to remote areas in the future
IBEKA has proven this model of ownership with successful installations operational for 20 years
Indonesia has over 130,000 community cooperatives across a variety of industries
5/3/2012 54 © K. Abraham, H. Phadke, M. Riaz, J. Strahl – Stanford University
Photo credit: J. Strahl
Credit enhancements mitigate demand & construction risk
5/3/2012 55 © K. Abraham, H. Phadke, M. Riaz, J. Strahl – Stanford University
Holding Company REwiRE LLC
10%
10%
6%
6%
Credit enhancement from the ADB
Guaranteed 6% return to institutional investors
ADB favors guarantees over explicit capital commitments
Institutional Investors 40%
Senior
Founders 5%
Impact Investors 25%
SubTier1
MCC Grant 30%
SubTier2
Strong government support mitigates political risk
March 2012 presentation to UKP4 and Presidential Advisory Council
Kuntoro Mangkusubroto – former CEO of PLN and current head of UKP4
UKP4 staff to encourage small-scale procurement by PLN
5/3/2012 56 © K. Abraham, H. Phadke, M. Riaz, J. Strahl – Stanford University
Photo credit: Erin McGough
REwiRE has multiple strategies for mitigating technology risk
Focus on micro-hydro as core technology
IBEKA has developed expertise
Technology agnostic with respect to resource
Biomass
Wind
Solar
All technologies must be simple, modular, and inexpensive
5/3/2012 57 © K. Abraham, H. Phadke, M. Riaz, J. Strahl – Stanford University
‘Skin in the game’ at all levels minimizes counterparty risk
Founders
Impact Investors
MDFI
Local Government
Co-operatives
Consumers
5/3/2012 58 © K. Abraham, H. Phadke, M. Riaz, J. Strahl – Stanford University
Incentives aligned at all levels
Strategy
An Indonesian island is the perfect place for renewables to reach grid parity
5/3/2012 60 © K. Abraham, H. Phadke, M. Riaz, J. Strahl – Stanford University
Fuel costs are high although currently heavily subsidized, and diesel shipments are intermittent.
44%
23%
21%
7% 5%
Sources of National Grid Power Production in Indonesia (2011)
Coal
Oil
Natural Gas
Hydroelectric
Geothermal
Source: EDSM, Government of Indonesia
Policy recommendation: PNPM should be involved during all stages of a project
5/3/2012 61 © K. Abraham, J. Strahl, H. Phadke
Educate citizens to evaluate renewable resource potential
Budget time and money for training community members and building a receptive social structure
Monitor the success of installed projects
Assess Design Build Operate Maintain Monitor
Social Capacity
Financial Model
Cash flow model
5/3/2012 63 © K. Abraham, H. Phadke, M. Riaz, J. Strahl – Stanford University
-$1.5
-$1.0
-$0.5
$0.0
$0.5
$1.0
$1.5
Val
ue
($
mill
ion
s)
Mill
ion
s
Year
REwiRE Cash Flow
Total Operating Revenues Development and Construction Funding Total Operating Expenses Total Development Expenses
Tornado diagram data
Uncertainty Low Value Base Value High Value Low IRR Base IRR High IRR
Capacity Factor 60% 85% 92% 8.99% 15.44% 17.09%
PPA Offtake Share 0 80% 100% 10.66% 15.44% 16.55%
PPA Rate $0.12/kWh $0.143/kWh $0.165/kWh 12.96% 15.44% 17.69%
Co-op Rate $0.08/kWh $0.10/kWh $0.20/kWh 14.91% 15.44% 18.00%
CDM Rate $7/mtCO2 $10/mtCO2 $15/mtCO2 14.62% 15.44% 16.80%
5/3/2012 64 © K. Abraham, H. Phadke, M. Riaz, J. Strahl – Stanford University
Uncertainty Swing (Swing)2 % of Variance Cumulative Variance
Capacity Factor 8.099 65.59 47.91% 47.91%
PPA Offtake Share 5.886 34.64 25.30% 73.21%
PPA Rate 4.732 22.40 16.36% 89.57%
Co-op Rate 3.085 9.52 6.95% 96.52%
CDM Rate 2.182 4.76 3.48% 100.00%
Sum 136.91
Financial model operating assumptions
5/3/2012 65 © K. Abraham, H. Phadke, M. Riaz, J. Strahl – Stanford University
Operating Assumptions Value Units
Total size 150 kW
Co-op (for all the mini-grids) 30 kW
PLN PPA (for all the mini-grids) 120 kW
No. of mini-grids 3
Co-op (at full capacity) 262,800 kWh/year
PLN PPA (at full capacity) 1,051,200 kWh/year
Capacity Factor 85%
Inflation Rate 3%
No. of households/mini-grid 100
Usage / household 0.1 kW
PLN Factor 4 x
Revenue and expense assumptions
5/3/2012 66 © K. Abraham, H. Phadke, M. Riaz, J. Strahl – Stanford University
Revenue Assumptions Value Units
Co-op Rate 0.100 $/kWh
Wholesale Price (PPA Rate) 0.143 $/kWh
PPA Escalator 3%
Contract Term 25 Years
CDM 10 $/mtCO2
Avoided CO2/year 2,792 mtCO2
Residual Value 0% of project cost
Expenses Assumptions Value Units
O&M Costs 283 $/kW
Capital cost and other assumptions
5/3/2012 67 © K. Abraham, H. Phadke, M. Riaz, J. Strahl – Stanford University
Capital Costs Assumptions Value Units
Preparatory work 248 $/kW
Civil work 1,827 $/kW
Mechanical and Electrical work 1,977 $/kW
Transmission work 4,026 $/kW
House installation work 229 $/kW
Feasibility and Design 553 $/kW
Other + Contingency 586 $/kW
Other Assumptions Value Units
Discount Rate 8.00%
Exchange Rate 9,145 Rupiah / $
Works cited and consulted
EUR 23284 EN – Joint Research Centre – Institute for Environment and Sustainability, “A New Scheme for the Promotion of Renewable Energies in Developing Countries: The Renewable Energy Regulated Purchase Tariff.” Moner-Girona, M., ed. Office for Official Publications of the European Communities, Luxembourg. 2008.
Martinot, E., et al. “Renewable Energy Markets in Developing Countries.” Annual Review of Energy and the Environment. 27: 309-48. 2002. Matser, E., de Groot, R. “Sumba: An Iconic Island to Demonstrate the Potential of Renewable Energy.” Hivos. http://www.hivos.nl/english/About-
Hivos/Focus/Iconic-Island-Sumba. 31 March 2011. Niez, A. “Comparative Study on Rural Electrification Policies in Emerging Economies.” Information Paper. OECD/International Energy Agency, Paris,
France. 2010. OECD/IEA. “Energy for All: Financing access for the poor.” Special early excerpt of the World Energy Outlook 2011. International Energy Agency,
Paris, France. October 2011. Republic of Indonesia. Ministry of Energy and Mineral Resources (EDSM). “Electricity Along 2011 was Better.” EDSM, Jakarta, Indonesia.
http://www.esdm.go.id/news-archives/electricity/46-electricity/5454-electricity-along-2011-was-better.html. February 2012.
Rolland, S. “Rural Electrification with Renewable Energy.” Alliance for Rural Electrification, Brussels, Belgium. June 2011. Rolland, S., Glania, G. “Hybrid Mini-Grids for Rural Electrification: Lessons Learned.” Alliance for Rural Electrification, Brussels, Belgium. March 2011. Tumiwa, F., Rambitan, H.I., Tanujaya, O. “Cinta Mekar Micro-Hydro Power Plant.” Institute for Essential Services Reform (IESR). www.iesr-
indonesia.org. 26 January 2011. World Bank Independent Evaluation Group. “The Welfare Impact of Rural Electrification: A Reassessment of the Costs and Benefits.” IEG Impact
Evaluation, International Bank for Reconstruction and Development/The World Bank, Washington, DC. 2008. World Bank Group. “Technical and Economic Assessment of Off-Grid, Mini-Grid and Grid Electrification Technologies.” World Bank Group, Energy
Unit, Energy, Transport and Water Department, Washington, DC. 2006.
World Bank, “Assistance to the Government of Indonesia’s Demand Side Management Program.” Econoliner International. January 2006. Yadoo, A., Cruickshank, H. “The value of cooperatives in rural electrification.” Energy Policy. 2010. Zerriffi, H. 2011. “Rural Electrification: Strategies for Distributed Generation.” New York, NY: Springer Science+Business Media.
5/3/2012 68 © K. Abraham, H. Phadke, M. Riaz, J. Strahl – Stanford University