An Implementation Guide for Regulators and Policymakers Presented by Bernard Tenenbaum and Chris...
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- Slide 1
- An Implementation Guide for Regulators and Policymakers
Presented by Bernard Tenenbaum and Chris Greacen USAID E3 Energy
Division Seminar Washington, DCMarch 10, 2014 Co-authored with
Tilak Siyambalpitya and James Knuckles Available for free
downloading at
http://bit.ly/OKR_fromthebottomuphttp://bit.ly/OKR_fromthebottom
From the Bottom Up: How Small Power Producers and Mini-Grids Can
Deliver Electrification and Renewable Energy in Africa*
- Slide 2
- We need megawatts, not megawords. ~Zambian Government Official,
2010 2
- Slide 3
- Outline Electrification: The Centralized vs. Decentralized
Approaches SPPs/Mini-Grids and Regulatory Overview What is an SPP?
4 Types of SPPs and Overlap with Mini-Grids Regulation 3 Types of
Regulatory Decisions Key Regulatory Issues Retail Tariff Setting To
Regulate or Deregulate? Selling To and Buying From the Main Grid
(Feed-In & Backup Tariffs) When the Big Grid Connects to a
Little Grid The Case of Tanzania 3
- Slide 4
- The books focus is on regulation. But regulation is only one
piece of the puzzle! Tanzanias program 1. SPP regulatory framework
developed by EWURA More complete than anywhere else in Africa.
Goal: Light-handed regulation Process as well as prices. (Kenya
versus Tanzania) 2. Grants from donors through REA or directly to
M-Gs Connection grants (US $500 per new connection for mini-grids)
Grants for feasibility studies (business plans and environmental
assessments) 3. Availability of financing (equity, loans from local
commercial banks supported by a US $25 million WB line of credit,
risk guarantees) 4. Technical assistance for developers, the REA
and the electricity regulator (side-by-side assistance not reports)
4
- Slide 5
- Electrification: Centralized vs. Decentralized Tracks Two
Tracks of Electrification Decentralized Track Centralized Track
Centralized Track Solar Lanterns Solar Home Systems Mini-Grids
& SPPs Grid Extension Main or Regional Micro- Grids ?
- Slide 6
- ATTRIBUTESTier-0Tier-1Tier-2Tier-3Tier-4Tier-5 Peak Available
Capacity (W eq ) ->1>20>200>2000 Duration (Hrs)-4 81622
Evening Supply (Hrs) -2 4 Formality (Legality) --- Quality
(Voltage)--- Appliances and services Task Lighting AND Phone
Charging General Lighting AND Television AND Fan Tier-2 AND any
low-power appliances Tier-3 AND any medium-power appliances Tier-4
AND any high-power appliances Possible electricity supply
technologies Dry Cell (DC) Solar Lantern (DC) Recharg. Batteries
(DC) Solar Lantern (DC) Recharg. Batteries (DC) SHS (DC) SHS (DC or
AC) Micro-grid (DC or AC) Mini-Grid(AC) Grid (AC) Mini-Grid(AC)
Grid (AC) 6 Levels of electrificationit is not all or nothing!
- Slide 7
- Micro-grid vs. Mini-grid
- Slide 8
- What is a Small Power Producer (SPP)? Small independently
operated electricity generator (private, coop or community owned)
Supplies and usually operates an isolated mini-grid or sells to a
utility on the main grid or to an existing utility-owned isolated
grid Usually defined by regulators according to size, fuel and
technology (10MW or less?). Should include hybrid generators! AKA
distributed generation (US and Europe) or decentralized generation
or decentralized distributed generation (India) or mini-grids
(worldwide) or mini-utilities (IFC 2012) 8
- Slide 9
- 9 4 Types of SPPs / Mini-Grids Location of Generation Connected
to Isolated Mini- grid Connected to Main Grid Nature of Customers
Selling Retail to End Customer Case 1 SPP + M-G Case 3 SPP + M-G
Selling Wholesale to Utility Case 2 SPP Case 4 SPP
- Slide 10
- Case 1 SPP selling at retail on an isolated mini-grid Small
generator connected to a few kms of distribution selling to village
customers. Best with an anchor customer. Electrificationdirect.
Cambodia (198, diesel, private), Mali (150, currently diesel,
private, sell to about 15% of rural population) and Sri Lanka
(250+, micro-hydro, coops). Case 4Grid-connected SPP selling at
wholesale to national utility A pure SPP (just a generator, not a
mini-grid). No retail customers. Sells under a feed-in tariff(FIT).
Sri Lanka (100+, mini-hydro, private), Thailand (264, mostly
biomass, private), Tanzania (3, mini-hydro or biomass, private).
Electrificationindirect or none. I dont want the headaches of
selling to poor households. Case ???Small power distributors (SPDs)
Buy at wholesale and resell at retail. No generation. Nepal
(community), Cambodia (private), India (private franchisees?) and
Bangladesh (coops). Africa-??? How promoted? Option 1-bottom up
project-by-project (Tanzania). Option 2- top- down promoted
concessions (geographic and local) (Senegal & Mali). 10 4 Types
of SPPs (continued)
- Slide 11
- Regulation The less we have to do with government, the happier
we are. ~ Indian micropower developer, November 2012 Regulation can
provide a fertile ground. But regulation does not make a market. ~
IFC Official, World Bank Group Workshop, January 30, 2012 11
- Slide 12
- 3 Types of Regulatory Decisions 12 Economic Technical Process
Retail Tariffs (Cases 1 and 3) Cost of Interconnection (Cases 2 and
4) Feed-in Tariffs (Cases 2 and 4) Price of Backup Power (Case 4)
Safety of Connections Voltage and Frequency Standards Relay
Requirements for Different Generators Stakeholder Consultation
Requirements Negotiated vs Standardized PPAs? Provisional License:
Exclusive? How Long? Milestones?
- Slide 13
- Four Key Issues for Regulators 1.Retail Tariff Setting 2.To
Regulate or Deregulate Small Isolated SPPs? 3.Selling To and Buying
From The Main Grid (Feed-In and Backup Tariffs) 4.When the Big Grid
Connects to a Little Grid 13
- Slide 14
- The Case of Tanzania
- Slide 15
- Good NewsBad News SPP program works TANESCO is insolvent
15
- Slide 16
- 300 kW remote mini-grid 300 kW remote mini-grid Target 1400
customers Target 1400 customers Mawengi village, Njombe, Tanzania
Mawengi village, Njombe, Tanzania LUMAMA hydropower project 16
- Slide 17
- 300 kW remote mini-grid 300 kW remote mini-grid Target 1400
customers Target 1400 customers Mawengi village, Njombe, Tanzania
Mawengi village, Njombe, Tanzania LUMAMA hydropower project
Mini-gridMain grid RetailCase 1Case 3 Wholesale to utility Case
2Case 4 17
- Slide 18
- Mwenga 4 MW hydro 800 households in 15 villages (expanding to
4000) & sells to the grid 18
- Slide 19
- Isolated mini-grid Main grid wholesale to utility Case 1Case 3
retailCase 2Case 4 19 Mwenga 4 MW hydro 800 households in 15
villages (expanding to 4000) & sells to the grid
- Slide 20
- TPC, Moshi 17.5 MW selling 3-4 MW to main grid Cogeneration
Sugarcane bagasse 20
- Slide 21
- TPC, Moshi 17.5 MW selling 3-4 MW to main grid Cogeneration
Sugarcane bagasse 21 Mini-gridMain grid RetailCase 1Case 3
Wholesale to utility Case 2Case 4
- Slide 22
- Regulatory & Commercial Framework Documents
http://www.ewura.go.tz/sppselectricity.html
http://www.ewura.go.tz/sppselectricity.html Main gridIsolated
Mini-grid (off-grid) Standardized PPA* Standardized Power Purchase
Agreement for Purchase of Grid- Connected Capacity and Associated
Electric Energy Between Buyer and a Small Power Project
Standardized Power Purchase Agreement for Purchase of Off-Grid
Capacity and Associated Electric Energy Between Buyer and a Small
Power Project Tariff methodology* (Feed-in Tariffs) Standardized
Tariff Methodology for the sale of Electricity to the Main Grid
Under the Standardized Small Power Purchase Agreements.
Standardized Tariff Methodology for the Sale of Electricity to the
Mini-grids Under the Standardized Small Power Purchase Agreements
Process Guidelines (roadmap) Guidelines for Developers of Small
Power Projects (SPP) ; Includes standardized forms Process
rulesRules for Developers of Small Power Projects (SPP)
Interconnection Guidelines* Guidelines for Grid Interconnection of
Small Power Projects (Parts A, B, C) Interconnection Rules* Rules
for Grid Interconnection of Small Power Projects (Not yet provided)
Annual Tariff Calculations * (Feed-in-Tariffs) Detailed Tariff
Calculations under the SPPA for the Main Grid for each year
Detailed Tariff Calculations under the SPPA for the Mini-grids for
each year 22 * Applies to cases 2 and 4 only.
- Slide 23
- Key Features of SPP framework (cases 2 and 4) 23 Small Power
Purchase Agreement (SPPA) Buyer must take SPPs output if SPP is
connected to the main grid Term 15 years (expanding now to 25?)
SPPA type depends on context: (1) selling to an existing isolated
mini-grid; (2) selling to main grid Isolated SPPA switches to Main
grid SPPA upon interconnection with main grid Concern by some
investors / developers: too simple to get international finance (?)
Standardized Feed In Tariff (FIT) Methodology Avoided Costs of the
Utility (possible switchover to technology specific FITs?) Local
Currency Denomination Reflect Seasonality (Main Grid) Floor and Cap
Prices Technology Neutral
- Slide 24
- Annual Feed-in-Tariff Levels (Calculated by EWURA for SPP
wholesale sales) 20092010201120122013 MAIN GRID TZS/kWh
96110121152.54174.89 Mid Yr Rate (TZS/$)13221394159815871630.5
US$/kWh $0.073$0.079 $0.076$0.096$0.107 ISOLATED MINI-GRIDS
TZS/kWh334.8369380480.50490.5 US$/kWh $0.253
$0.265$0.238$0.303$0.301 24
- Slide 25
- SPPs in Operation (tiny.cc/SPPstats) ProjectMWType of Resource
Grid typeStatus ACRA - LUMAMA 0.3HydroNew isolated mini(Case 4) In
operation / community based TANWAT2.34Biomass wood Main (Case 1)In
operation. Selling 1 MW (2010) TPC Co- Generation 17Biomass --
Bagasse Main (Case 1)In operation. Contracted to Sell up to 9 MW to
TANESCO Mwenga Mufindi Tea 4HydroCases 1 & 3 In operation
Ngombeni1.5Biomass coconut wood Existing mini (case 2) In
operation. 25
- Slide 26
- SPPs with signed PPAs (tiny.cc/SPPstats) ProjectMW export
ResourceGrid typeExpected COD Symbion KMRI Tunduru
0.3BiomassTANESCO isolated July 2014 Symbion KMRI Kigoma
3.3BiomassTANESCO isolated Dec 2014 St. Agnes Chipole Songea
7.5HydroTANESCO isolated Jan 2015 NextGen Solawazi2.0PVTANESCO
isolated Jan 2015 Andoya Hydro Electric Co. 1.0HydroTANESCO
Isolated Feb 2015 EA Power Tukuyu10HydroTANESCO main Feb 2015
Darakuta Hydro0.24HydroTANESCO main Nov 2015 Mapembasi
Hydro10HydroTANESCO main 26
- Slide 27
- Promoting Mini- and Micro-Grids Regulatory Actions Proposed in
Tanzania Key regulatory issue Tanzania proposed regulatory action
1Retail Tariff Setting Do not mandate that the operator must charge
the same tariff as the national utility. Allow operators to
cross-subsidize between customer classes Allow operators to sign
power sales contracts with customers above a specified kW without
requiring prior regulatory approval. Allow operators to make loans
to potential and actual customers to connect and to buy appliances
and machinery. 2To Regulate or Deregulate Small Isolated SPPs?
Exempt small system operators (less than 100 kW) from licensing and
prior tariff approvals.
- Slide 28
- Promoting Mini- and Micro-Grids Regulatory Actions Proposed in
Tanzania Key regulatory concern Tanzania proposed regulatory action
3Selling To and Buying From The Main Grid (Feed-In and Backup
Tariffs) No peak power component to backup power tariffs if load
factor