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European Wind Energy Conference 2006 27 February - 2 March 2006, Athens, Greece

European Wind Energy Conference 2006 27 February - 2 March 2006, Athens, Greece. PROMOTING WIND ENERGY THROUGH THE FLEXIBLE MECHANISMS OF THE KYOTO PROTOCOL.

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European Wind Energy Conference 2006 27 February - 2 March 2006, Athens, Greece

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  1. European Wind Energy Conference 200627 February - 2 March 2006, Athens, Greece PROMOTING WIND ENERGY THROUGH THE FLEXIBLE MECHANISMS OF THE KYOTO PROTOCOL D.Diakoulaki, G. Dimitropoulos, P. Georgiou, C. Tourkolias National Technical University of Athens, Lab. of Industrial & Energy Economics Ε. Georgopoulou, S. Mirasgedis, Y. Sarafidis, D. Lalas National Observatory of Athens, Inst. for Environmental Research & Sustainable Development

  2. Contents • The Clean Development Mechanism • The scope of the presentation • Pre-selection of host countries • Financial analysis of wind energy projects • Results without CDM • Results with CDM • Sensitivity Analysis • Conclusions EWEC 2006 National Technical University of Athens

  3. Flexible Mechanisms • A co-operative framework within the Kyoto Protocol • Annex-I countries: to meet their commitments in the most cost-effective way • non-Annex-I countries: tosupport sustainable development • Emissions Trading • Joint Implementation • Clean Development Mechanism EWEC 2006 National Technical University of Athens

  4. Clean Development Mechanism • Article 12 of KP:“any Annex I country or any licensee legal entity of Annex I country is allowed to be credited for emissions reductions achieved by investing in projects located in non-Annex I countries” that would not have been implemented without the incentive of CDM Lack of knowledge and/or financial resources in non-Annex-I countries Lack of satisfactory profit for Annex-I countries EWEC 2006 National Technical University of Athens

  5. Questions • Is wind energy • an appropriate type of CDM project? • Is CDM • an appropriate tool for the development of wind energy exploitation in developing countries ??? EWEC 2006 National Technical University of Athens

  6. The scope of the presentation • To demonstrate the effect of CDM on typical Wind Energy projects • To identify attractive investment opportunities on wind energy in smaller CDM markets • (of particular interest for Greek investors) • To investigate the impact of key-parameters on the project’s profitability EWEC 2006 National Technical University of Athens

  7. Existing CDM projects (1) 513 projects registered or under validation 22/12/2005 EWEC 2006 National Technical University of Athens

  8. Existing CDM projects (2) 107 Mt CO2/yr from projects registered or under validation 22/12/2005 EWEC 2006 National Technical University of Athens

  9. Geographical distribution of Wind projects • 55 Wind energy Projects • Total Capacity: 2140 MW • Total Emissions Reduction: 3100 kt CO2 eq/yr EWEC 2006 National Technical University of Athens

  10. Pre-selection of host countries Non-Annex I Countries Moldova Georgia Armenia Bosnia & Herzegovina Serbia & Montenegro Albania F.Y.R.O.M. Lebanon Jordan Egypt Libya Tunisia Algeria EWEC 2006 National Technical University of Athens

  11. Project specification • Capacity: 51 MW (60 x 850 kW) • Hub height: 60 m • Rotor diameter: 52 m • Investment cost: 1000 €/kW • Operational and Maintenance cost: 15 €/kW,year • Assumed to be the same in all host countries EWEC 2006 National Technical University of Athens

  12. Without CDM Load factors Electricity tariffs With CDM Load factors Electricity tariffs + Baseline emission factor Value of CERs Data Requirements EWEC 2006 National Technical University of Athens

  13. Load factors Calculated on the basis of data on average wind speed EWEC 2006 National Technical University of Athens

  14. Electricity prices Determined on the basis of local data EWEC 2006 National Technical University of Athens

  15. Results of Financial Analysis EWEC 2006 National Technical University of Athens

  16. Baseline Emission Factors • Calculated on the basis of local data as the average of: • Operating margin: existing electricity system • Build margin: recent additions to the system EWEC 2006 National Technical University of Athens

  17. Value of CERs • Values fluctuations in the carbon market • Basic scenario 15 €/t CO2 • Pessimistic scenario 10 €/t CO2 • Optimistic scenario 25€/t CO2 EWEC 2006 National Technical University of Athens

  18. Results Registration in CDM is expected to increase IRR by 1.5% – 2% CERs: 15 €/t CO2 EWEC 2006 National Technical University of Athens

  19. Sensitivity Analysis EWEC 2006 National Technical University of Athens

  20. A marginal case: Egypt Sensitivity Analysis EWEC 2006 National Technical University of Athens

  21. A promising case: Jordan Sensitivity Analysis EWEC 2006 National Technical University of Athens

  22. Average impact IRR increase EWEC 2006 National Technical University of Athens

  23. Conclusions • Interesting investment opportunities on wind energy exist in some developing countries • The CDM has a relatively small impact on the project’s profitability • The influence of CDM relevant parameters is very low • Emission factor (country specific) • CERs value • The most critical factors influencing IRR are: • Investment cost: to be reduced through subsidies • Load factor: to carefully select the site • Electricity tariffs: to be provided in host countries EWEC 2006 National Technical University of Athens

  24. Thank you for your attention ! EWEC 2006 National Technical University of Athens

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