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Commitment of the African Development Bank in the Renewable Energy Sector. The Role of the Private Sector Department of the AfDB. Sustainable Biofuel Development in Africa – Opportunities and Challenges July 30 - 1 st August 2007 –Addis Ababa. Youssef Arfaoui Renewable Energy Expert.

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commitment of the african development bank in the renewable energy sector

Commitment of the African Development Bank in the Renewable Energy Sector

The Role of the Private Sector Department of the AfDB

Sustainable Biofuel Development in Africa – Opportunities and Challenges

July 30 - 1st August 2007 –Addis Ababa

YoussefArfaoui

Renewable Energy Expert

slide2

. Introduction -Bio-Fuel Development. Focus Areas of OPSM - Renewable Energy . Rationale for interest in Renewable Energy . AfDB Commitment, Role and Intervention. Conclusion

Outline:

slide3

Existing capacity end-2004

Power generation

Small hydropower

61 GW

Wind power turbines

48 GW

Biomass power

39 GW

Geothermal power

8.9 GW

Solar PV, off-grid

2.2 GW

Solar PV, grid-connected

1.8 GW

Solar thermal power

0.4 GW

Ocean (tidal) power

0.3 GW

Total renewable power capacity

160 GW

Hot water/space heating

Biomass heating

220 GWth

Solar collectors for hot water / heating (glazed)

77 GWth

Geothermal direct heating

13 GWth

Geothermal heat pumps

15 GWth

Households with solar hot water

40 million

Buildings with geothermal heat pumps

2 million

Transport fuels

Ethanol production

31 billion litres/year

Biodiesel production

2.2 billion litres/year

In 2004, the power generated by RE was around 160 GW.

slide6

OPSM Focus area: The Private Sector Department of the AfDB focuses mainly to develop (a) the wind energy area and (b) the small size hydropower – And (c) the bio-fuel, (d) Geothermal, (e) Co-generation

30 MW hydropower - Tunisia

The Middelgrund wind farm – Copenhagen - Denmark

the reasons the afdb has chosen to focus on re
The reasons, the AfDB has chosen to focus on RE:
  • RE addresses the needs and contributes to improve living

standards of the rural poor

  • RE is in line with the Strategic Plan of the ADB for Infrastructure,

that considers RE as one of the pillars of sustainable development

  • RE is an untapped natural resource in Africa
  • RE is Suitable for the Rural Areas and decentralised power supply
  • RE is Environmentally friendly
  • RE is affordable compared to other fossil fuel resources
  • Significant increase in employment opportunities, mainly in rural areas.
slide8

Commitment of the OPSM of the AFDB is to: “Develop and promote the Application of RE” Example: The wind energy application in Africa. OPSM has initiated the wind energy study for Africa, with the objectives to identify the main barriers, such as:

  • Legal and regulatory
  • Economic and Financial
  • Technical
  • Limited local capacity
slide9
If the biofuel market is to be developed as Bankable projects and exploited efficiently, the following has to be developed:
  • The legal frame / policy has to be prepared and approved
  • Off-taker agreements has to be negotiated (probably standard version)
  • Concession has to be clarified
  • Feed-stock agreements and security has to be negotiated
  • Environment policy related to the bio-fuel production and application has to be prepared / developed
the current adb interventions in promoting the use of renewable energy
The Current ADB Interventions in promoting the use of Renewable Energy
  • Morocco: Solar/Gas Thermal Power Station (250 MW, 30 MW Solar) (EUR 200 Mio)
  • Egypt: Solar/Gas Thermal Power Station (120 to 150 MW)
the current adb investments in renewable energy opsm
The Current ADB Investments in Renewable Energy (OPSM)
  • Madagascar: Small Hydro 15 MW – Euro14 M
  • Uganda: Bujagali Hydro 250 MW – Euro120 M
slide13

Development and deployment of RET:

Objectives – and Strategic Plan 2005 - 2010 of the OPSM:

  • Raising the interest of private sponsors and other potential investors of the potential of RE and existing opportunities in Africa
  • Mobilizing required funds for project preparation
  • Performing feasibility studies and developing most promising RE projects
slide14
RET projects can benefit from the CDM- Carbon Trade facility. The present cost of tCO2 is around Euro 12.(Emission Reduction)
  • Therefore The OPSM’s objective is to Assist the investors to prepare all necessary documentation to qualify RE projects to benefit from the Carbon Trade Facility
slide15

Capital costs

(US$/kW)

Low-side generation

costs

(Cents/kWh)

High-side generation

costs

(Cents/kWh)

Low-side generation

costs by 2010 (Cents/kWh)

Small hydro power

1,000 - 5,000

2 - 3

9 - 15

2

Solar PV power

4,500 -7,000

18 - 20

25 - 80

10 - 15

Concentrating solar power

3,000-6,000

10 - 15

20 - 25

6 - 8

Bio- power

500 -4,000

2 - 3

10 - 15

2

Geothermal power

1,200 -5,000

2 - 5

6 - 12

2 - 3

Wind power

850 -1,700

3 - 5

10 - 12

2 - 4

As guidelines to investors planning investment in RET projects, thePower Generation Costs in 2002 and the projected for 2010are as follows:

Source: IEA 2003

slide16
In order to allow the OPSM of the AfDB to support and participate in financing RE projects, the following conditions have to be fulfilled:
  • The contractual arrangements are in place
  • The project has to be developmental oriented
  • The project is technically feasible
  • The sponsors have the required financial and

technical capacity to run the project

  • The project is financially and economically viable
  • The regulatory framework is favourable for Renewable Energy projects
  • The project has a reasonable size
conclusions
Conclusions
  • Renewable energy is an appropriate response to the needs of the poor / grassroots in Africa
  • The major areas of focus are:
    • Cogeneration
    • Geothermal
    • Hydro power
    • Wind energy
    • The New area of consideration is:
    • The Bio-fuel development/investment

The Bank (OPSM) offers:

    • Flexible and tailor made instruments
    • Support to sustainable projects, through financial and technical assistance and institutional capacity building programs
slide18
For further information:

Youssef Arfaoui

Renewable Energy Expert

Private sector Department

y.arfaoui@afdb.org