European Wind Energy Conference 2006 27 February - 2 March 2006, Athens, Greece
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Transcript of 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 PROMOTING WIND ENERGYWIND ENERGY THROUGH THROUGH THE FLEXIBLE MECHANISMSTHE FLEXIBLE MECHANISMS
OF THE KYOTO PROTOCOL OF THE KYOTO PROTOCOL
D.D. Diakoulaki, G. Dimitropoulos, PDiakoulaki, G. Dimitropoulos, P. . GeorgiouGeorgiou, , CC. . TourkoliasTourkolias National Technical University of AthensNational Technical University of Athens, Lab. of Industrial & Energy Economics, Lab. of Industrial & Energy Economics
Ε. Ε. GeorgopoulouGeorgopoulou, , SS. . MirasgedisMirasgedis, , YY. . Sarafidis, D. LalasSarafidis, D. LalasNational Observatory of AthensNational Observatory of Athens, Inst. for Environmental Research & Sustainable , Inst. for Environmental Research & Sustainable
DevelopmentDevelopment
EWEC 2006 National Technical University of Athens 2
Contents
The Clean Development MechanismThe scope of the presentation
Pre-selection of host countries
Financial analysis of wind energy projectsResults without CDM
Results with CDM
Sensitivity Analysis
Conclusions
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Flexible Mechanisms
A co-operative framework within the Kyoto ProtocolAnnex-I countries: to meet their commitments in
the most cost-effective waynon-Annex-I countries: to support 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
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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 ??????
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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)
Agriculture12%
Energy efficiency14%
Fossil fuel switch4%
Cement4%
Wind11%
Solar1%
Geothermal1%
Tidal0%
CH4 reduction9%
HFC & N2O reduction2%
Biogas4%
Biomass energy22%
Hydro16%
Renewables55%
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 validation22/12/2005
Renewables16%
CH4 reduction15% Biogas
1%
Cement2%
Energy efficiency4%
Fossil fuel switch1%
Tidal0%
HFC & N2O reduction59%
Agriculture4%
Biomass energy5%
Hydro4%
Wind4%
Geothermal1%
Solar0%
EWEC 2006 National Technical University of Athens 9
Geographical distribution of Wind projects
India61%
China16%
Rest of Asia7%
Morocco4%
Central America5%
South America7% 55 Wind energy Projects
Total Capacity: 2140 MW
Total Emissions Reduction: 3100 kt CO2 eq/yr
EWEC 2006 National Technical University of Athens 10
Moldova
Georgia
Armenia
Bosnia & Herzegovina
Serbia & Montenegro
Albania
F.Y.R.O.M.LebanonJordanEgyptLibya
TunisiaAlgeria
Non-Annex I Countries
Pre-selection of host countries
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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
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Data Requirements
Without CDM
Load factorsElectricity tariffs
With CDM
Load factorsElectricity tariffs
+Baseline emission
factorValue of CERs
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Load factors
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
Calculated on the basis of data on average wind speed
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Electricity prices
Determined on the basis of local data
0.0000
0.0100
0.0200
0.0300
0.0400
0.0500
0.0600
0.0700
(€/
kW
h)
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Results of Financial Analysis
-10%
-5%
0%
5%
10%
15%
20%
IRR
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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
0.000
0.100
0.200
0.300
0.400
0.500
0.600
Egypt Armenia Moldova Jordan Georgia Tunisia Algeria Syria
(t C
O2/M
Wh
)
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Value of CERs
Values fluctuations in the carbon market
Basic scenario 15 €/t CO2
Pessimistic scenario 10 €/t CO2
Optimistic scenario 25 €/t CO2
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Results
0%2%4%6%8%
10%12%14%16%18%
IRR
Without With CDM
Registration in CDM is expected to increase IRR by 1.5% – 2%
CERs: 15 €/t CO2
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Sensitivity Analysis
Parameter Pessimistic Optimistic
Load factor -20% +20%
El. tariff - +20%
Investment cost +20% -20%
Emission factor -20% +20%
Value of CERs 10 €/t CO2 25 €/t CO2
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A marginal case: Egypt
0%
2%
4%
6%
8%
10%
12%
Basicscenario
Load Factor Electricitytariff
Investmentcost
Emissionfactor
CERs value
IRR
Pessimistic Optimistic
Sensitivity Analysis
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A promising case: Jordan
0%
5%
10%
15%
20%
25%
Basicscenario
Load Factor Electricitytariff
Investmentcost
Emissionfactor
CERs value
IRR
Pessimistic Optimistic
Sensitivity Analysis
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Average impact
0% 10% 20% 30% 40% 50% 60%
Emission Factor +20%
CERs value 25 € /t CO2
Electricity Price +20%
Load Factor +20%
Investment Cost -20%
IRR increase
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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 lowEmission factor (country specific)CERs value
The most critical factors influencing IRR are:Investment cost: to be reduced through subsidiesLoad factor: to carefully select the site Electricity tariffs: to be provided in host countries
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Thank you
for your attention !