Deploying Renewable Energy Systems: Lessons from Latin America (Dominican Republic, Colombia) Dr. Bernhard Bösl GTZ – Ge

1. Deploying Renewable Energy Systems: Lessons from Latin America (Dominican Republic, Colombia) Dr. Bernhard Bösl GTZ – German Technical Co-operation World Bank Energy Lecture March 28, 2005 Washington DC Dr. Bernhard Boesl, Worldbank Energy Lecture, Washington DC, March 28, 2005

2. GTZ Profile • Non-profit, private-sector company, owned by German Government • Commissioned by BMZ to implement Technical Co-operation • Objective: improve the living and working conditions of people in the partner countries and sustain the natural basis for life. Facts and Figures (2003): • Total turnover: € 885 millions • Clients: BMZ (80 %) other German ministries (6 %) other governments, international organisations (14 %) • 2,726 projects in 131 countries • 1,430 seconded experts, 7,081 local staff • 1,042 employees at GTZ Head Office in Germany Further information: www.gtz.de Dr. Bernhard Boesl, Worldbank Energy Lecture, Washington DC, March 28, 2005

3. GTZ Energy Projects Worldwide pipeline ongoing phasing out Dr. Bernhard Boesl, Worldbank Energy Lecture, Washington DC, March 28, 2005

4. GTZ RE Projects Latin America Mexico Promotion of RE 2 mio €, Dominican Republic Promotion of RE 2 mio € Caribbean Community Promotion of RE 2.2 mio € Colombia Feasibility Wind Park 0.19 mio €, Ecuador Small Hydro Power 1.5 mio €, Brazil RE Rural Electrification 3 mio €, Chile RE Electricity Generation 2 mio €, Dr. Bernhard Boesl, Worldbank Energy Lecture, Washington DC, March 28, 2005

5. Dominican Republic: General Information Area: 48,730 sq km Population: 8,715,602 (July 2003 est.) GDP - per capita: purchasing power parity - $6,300 (2002 est.) Climate: tropical maritime; little seasonal temperature variation Energy Resources: Wind, Solar, Hydro, Biomass, no fossil fuels ! Power Sector: Installed Capacity (July 2003) : 3,596 MW, Hydro: 16 %, Fossil: 84% Peak Demand (2003): 1,950 MW Unserved Demand (2002): 15% of potential demand High technical and non-technical losses: 29% High electricity prices: approx. 20 US cents / kWh Electricity sector collapsed since mid 2003, daily blackouts of 10-20 hours Dr. Bernhard Boesl, Worldbank Energy Lecture, Washington DC, March 28, 2005

6. DR: Project profile Title: Promotion of Renewable Energies in the DR (PROFER) Counterparts: State Secretariat of Industry and Commerce National Energy Commission Duration: March 2003 – December 2006 Objective: Establish favourable framework conditions for the use of RE Volume (GTZ): € 2 mio Dr. Bernhard Boesl, Worldbank Energy Lecture, Washington DC, March 28, 2005

7. Regional cooperation Management mechanisms Project Selection RE Act National Strategy RE Promotion Fund Policy, legal framework Evaluation, Monitoring Evaluate existing projects Project Promotion Investment Guide Micro-Hydro Feasibility Studies Market Analysis Planification, Promotion Capacity Building DR: Fields of Cooperation Dr. Bernhard Boesl, Worldbank Energy Lecture, Washington DC, March 28, 2005

8. DR: RE Act • Draft of Renewable Energy Act, including incentives like: • Tax exemptionsfor imports of RE components • Reduced transmission fees for RE electricity • Fixed feed-in price for RE electricity • Income tax exemptions and fiscal incentives for self-suppliers • Grants up to 50% of the investment costs (to be decided on a case to case base, max. 5 MW) Dr. Bernhard Boesl, Worldbank Energy Lecture, Washington DC, March 28, 2005

9. Colombia: Project profile Counterpart: Public Utility “Empresas Públicas de Medellín (EPM)“ Duration: January 2001 – December 2002 Objective: identification, planning and implementation of a wind park • GTZ services: • wind measurement • site selection • feasibility study • Support during tender process • training of EPM staff • Volume: € 190,000 • Site: Alta Guajira, NE-Colombia Dr. Bernhard Boesl, Worldbank Energy Lecture, Washington DC, March 28, 2005

10. Colombia: Results • Wind Conditions • Average wind speed 10 m/s at 50 m height • Max. wind speed < 20 m/s • Contiuous wind direction • Low air density (90%) • High outside temperatures (25-40 C) • Annual variation complementary to hydropower • Technical • Low interest by suppliers during tender process • Installed capacity: 19.5 MW • Windturbines: 15 NORDEX N60, 1,300 kW each • Grid connection: 13.2/110 kV substation, 800 m connection line • In operation since December 2003 Dr. Bernhard Boesl, Worldbank Energy Lecture, Washington DC, March 28, 2005

11. Colombia: Results • Economical • Colombian electricity market liberalized and competitive • Very low prices on electricity market (approx. 2 US cents / kWh) • Regulatory frame without specific incentives for RE • Generation costs approx. 4 US cents / kWh • Approved by Prototype Carbon Fund (approx. 3.2 mio US$ carbon credits) • Tax exemption as “innovative project” (approx. 8 mio US$ tax reduction) • Social • Project site located in indigenous reservation • Cautious negotiations and considerable compensation measures necessary • Institutional • Very dynamic and motivated counterpart EPM Dr. Bernhard Boesl, Worldbank Energy Lecture, Washington DC, March 28, 2005

12. Lessons Learnt – technical • Technology is not the main issue Reliable and mature RE technologies are available for application in developing countries International cooperation should concentrate on broad dissemination of proven technologies BUT Counterparts often interested in R&D • Some technical adaptations maybe necessary • E.g. adaption of wind generators to extreme wind conditions in Colombia and Mexico (high average wind speeds, low air densities, high temperatures etc.) • Technology adaptations in cooperation with providers (Public Private Partnerships) Dr. Bernhard Boesl, Worldbank Energy Lecture, Washington DC, March 28, 2005

13. Lessons Learnt – financial, economical • Renewable energy technologies are feasible • Due to high fuel and electricity prices and low supply reliability in the Caribbean, some RE technologies are more feasible than in other regions (e.g. wind power, solar water heating), • BUT need a level playing field • No financing without mechanisms • Financing schemes are crucial for massive deployment of RE technologies • BUT badly managed financing instruments can do more harm than good and “rules of the game” have to be defined before starting an instrument • CDM, the big push? • Carbon credits are “nice to have”, • BUT in most cases they won‘t turn an unfeasible RE project into a feasible one Dr. Bernhard Boesl, Worldbank Energy Lecture, Washington DC, March 28, 2005

14. Lessons Learnt – social • Acceptance of technology – core driver for success • Many projects still to technology oriented • Selection of technology should be based on users need (demand side orientation) rather on technology preferences (supply side orientation) • Poverty eradication or poverty illumination? • Creation of income generation opportunities is of core importance • Productive uses of energy must be included in the planning process from the very beginning • Energy and the MDGs • No doubt that RE technologies contribute to achieve the MDGs • BUT since there is no explicit MDG on energy, we constantly have to monitor and disseminate this energy-poverty impact chain Dr. Bernhard Boesl, Worldbank Energy Lecture, Washington DC, March 28, 2005

15. Lessons Learnt – institutional Multi level approach Good experiences with combined “policy advisory” and “project development” approaches Strengthening links between macro and micro level speeds up the learning curve, improves effectiveness, and credibility Multi stakeholder approach One of main barriers of RE dissemination is the sectors “institutional variety” How to create benefits/synergies from this variety? International cooperation can play the role of moderation between institutions and interests, as an interest free “honorable broker” Dr. Bernhard Boesl, Worldbank Energy Lecture, Washington DC, March 28, 2005

16. Thank you for your attention ! Dr. Bernhard Boesl, Worldbank Energy Lecture, Washington DC, March 28, 2005

17. Publications • Energy and Sustainable Development in Latin America and the Caribbean • Guide for Energy Policymaking • OLADE, ECLAC, GTZ • June 2000 • Download (spanish, english): www.eclac.org/drni/proyectos/energía/proyecto.htm • Update 2003, only in spanish Dr. Bernhard Boesl, Worldbank Energy Lecture, Washington DC, March 28, 2005

18. Publications • Energy-policy Framework Conditions for Electricity Markets and Renewable Energies • 21 Country Analyses • Latest Edition: June 2004 • Including: Jamaica, Dominican Republic, Mexico, Colombia, Chile, Brazil • (Argentina and Cuba in 2002 version) • Download (english, german): www.gtz.de/wind Dr. Bernhard Boesl, Worldbank Energy Lecture, Washington DC, March 28, 2005

19. Publications • Renewable Energy Sources in Latin America and the Caribbean • Situation and Policy Proposals • ECLAC, GTZ • May 2004 • Download (spanish, english): www.eclac.org Dr. Bernhard Boesl, Worldbank Energy Lecture, Washington DC, March 28, 2005