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.
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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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