Commitment of the African Development Bank in the Renewable Energy Sector

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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.
Commitment of the African Development Bank in the Renewable Energy SectorThe Role of the Private Sector Department of the AfDBSustainable Biofuel Development in Africa – Opportunities and ChallengesJuly 30 - 1st August 2007 –Addis AbabaYoussefArfaouiRenewable Energy Expert . Introduction -Bio-Fuel Development. Focus Areas of OPSM - Renewable Energy . Rationale for interest in Renewable Energy . AfDB Commitment, Role and Intervention. ConclusionOutline:Existing capacity end-2004Power generationSmall hydropower61 GWWind power turbines48 GWBiomass power39 GWGeothermal power8.9 GWSolar PV, off-grid2.2 GWSolar PV, grid-connected1.8 GWSolar thermal power0.4 GWOcean (tidal) power0.3 GWTotal renewable power capacity160 GWHot water/space heatingBiomass heating220 GWthSolar collectors for hot water / heating (glazed)77 GWthGeothermal direct heating13 GWthGeothermal heat pumps15 GWthHouseholds with solar hot water40 millionBuildings with geothermal heat pumps2 millionTransport fuelsEthanol production31 billion litres/yearBiodiesel production2.2 billion litres/yearIn 2004, the power generated by RE was around 160 GW. Ethanol and Bio-Diesel Production - Top12 Countries, 2004 (Billion liters) Estimated Job creation by developing RE-projectsOPSM 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-generation30 MW hydropower - TunisiaThe Middelgrund wind farm – Copenhagen - DenmarkThe 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.
  • 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
  • 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
  • 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)
  • Madagascar: Small Hydro 15 MW – Euro14 M
  • Uganda: Bujagali Hydro 250 MW – Euro120 M
  • Identified RE - Capacity 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
  • 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
  • Capital costs(US$/kW)Low-side generationcosts(Cents/kWh)High-side generationcosts(Cents/kWh)Low-side generationcosts by 2010 (Cents/kWh)Small hydro power1,000 - 5,0002 - 39 - 152Solar PV power4,500 -7,00018 - 2025 - 8010 - 15Concentrating solar power 3,000-6,00010 - 1520 - 256 - 8Bio- power 500 -4,0002 - 310 - 152Geothermal power 1,200 -5,0002 - 56 - 122 - 3Wind power 850 -1,7003 - 510 - 122 - 4As guidelines to investors planning investment in RET projects, thePower Generation Costs in 2002 and the projected for 2010are as follows:Source: IEA 2003In 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
  • 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
  • For further information:Youssef Arfaoui Renewable Energy ExpertPrivate sector Departmenty.arfaoui@afdb.orgThank you
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