DESERTEC industrial initiative · Swiss Energy Council use only • Aktuelle Fragestellungen olg...

Confidential. © 2012 BearingPoint

DESERTEC industrial initiative

Desert power – From vision to reality

Schweizerischer Energierat: Energie-Lunch

Montag, 22.Oktober 2012

AXPO an der Zollstrasse 62, Zürich

Dieter Weber, Dr. Samyr Mezzour, Mario Becker

BearingPoint AG, Switzerland

Swiss Energy Council use only

Confidential. © 2012 BearingPoint 2


Disclaimer

•Die in der vorliegenden Präsentation enthaltenen Informationen wurden sorgfältig zusammengestellt und aus heutiger Sicht zutreffend gewichtet und bewertet. Eine Gewährleistung für die Zuverlässigkeit, Aktualität, inhaltliche Richtigkeit, Genauigkeit oder Vollständigkeit dieser Informationen wird nicht übernommen. Jegliche Haftungsansprüche wegen Schäden materieller oder immaterieller Art, die aus der Nutzung der hier enthaltenen Informationen entstanden sind, werden vollumfänglich ausgeschlossen.

BearingPoint Switzerland AG



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Tarifierung

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http://www.eon-ruhrgas.com/cps/rde/xchg/SID-3F57EEF5-BEBF2739/er-corporate/hs.xsl/index.htm

http://www.wienenergie.at/we/ep/home.do;jsessionid=D718B222BC5AEC2A521E5B44B79C5E94?tabId=0&pageTypeId=11888



•Agenda

DESERTEC Vision & Dii

The first Dii reference project

Opportunities & Challenges

1

2

3



The convenient truth! Large potential of renewables in EUMENA

Solar power potential Wind power potential

Source: Dii, Fraunhofer ISI



The 2050 DESERTEC Vision for EU-MENA*

*MENA: Middle East North Africa

Vision Supply 15% of Europe’s electricity consumption by 2050 (ca. 700 TWh energy; ca. 200 GW total installed power).



Dii: 56 partners from 15 countries

21 Shareholders 35 Partners

Cooperations with: Arab League, EIB, ENTSO-E, MEDGRID, World Bank, KfW, African Development Bank, AHK…

Network of numerous organisations: EU-Comission, Ministries of Energy in EU and

MENA, Research Institutes…

http://www.morganstanley.com/



Five work areas derived from Dii‘s mission and objectives

Roll-out plan

Economic assessment and implementation roadmap

Regulatory Concept

Creating a sustainable regulatory and legislative framework

Generation Converting RE from sun and

wind in the deserts

Markets Bridging the gap between

expected revenues and costs

Transmission Enabling transport from source to

local/remote markets

Our mission is to enable the roll-out of the Desertec concept with the target of supplying MENA and Europe with power produced from sun and wind energy sources.

The long-term goal is to satisfy both a substantial part of the energy needs of the MENA countries and to meet about 15% of Europe’s electricity demand by 2050.

Develop a Roll-out Plan until 2050

Create a favourable Regulatory

Environment

Enable concrete Reference Projects



Shareholders

Transmission System Operators HVDC Systems Manufacturers Other organisations

Dii Transmission staff works closely with WG Transmission experts: ─ Quarterly all-day meetings (in Munich, Rome, Madrid) ─ Monthly conference calls and ─ frequent bilateral calls

Universities

Technical consultants

Working Group “Transmission” has been supported by experts from the following organizations



•BearingPoint was leading or coordinating the following transmission working packages at Dii

Topic Analysis Result 1. Optimal transmission technology

Assessment of current & future (2030) high-voltage transmission technologies

Selection of high-voltage transmission systems for 2016–2030–2050

2. Optimal transmission path

GIS analysis to evaluate optimal transmission paths (topographical, technical, economical) and their feasibility to relax bottlenecks

Assessment of EUMENA interconnector capacities

Transmission paths to convey desert power

3. Transmission cost model

Evaluation of CAPEX and OPEX Calculation of Levelized Cost of Transmission (LCOT) Transmission cost model 2012–2030–2050

Cost of transmission systems 2012–2030–2050

4. Implementation challenges

Identification and prioritization of implementation challenges (regulatory, financing, markets, permitting, public acceptance, technical, operational)

Definition of action plan

Action plan for implementation challenges

5. Grid studies

Long term (2030-2050): Holistic grid analysis for the EUMENA region, measuring the impact of desert power on European grids and defining concrete new AC/HVDC lines along major MENA-EU transit paths

Short term (2016-2020): Grid analyses assessing congestions/reinforcement needs due to Dii reference projects on local MENA grids and on Spanish and on Italian grids.

EUMENA grid 2050 & Reference projects Congestion analyses NTC for 2030-2050 Required length of new lines Location of new lines and necessary grid

reinforcements Location of balancing power solutions Total costs of transmission

INPUT



Dii open to all field-proven technologies

Photovoltaics (PV)

Concentrated Solar Power

(CSP) Wind Power



Kramer Junction (Mojave Desert, California, USA) SEGS III-VII, 5 x 30 MWe CSP, Owner: Nextera

Picture: Siemens ©

a Dii Partner



Picture: Abengoa ©

Solucar Platform, Spain: PS10, Sevilla PV, Eureka 5 and PS20 (left to right)

a Dii Partner



Tucson Electric Power: Springerville, Arizona – USA (500 kW) Picture: First Solar©

Utility-scale PV power plants require a large amount of space; which is a problem in Europe, but not in the Sahara!

a Dii Partner



Picture: Siemens ©

Wind Park Lillgrund, Sweden: 48 Offshore Turbines (~110 MW)

a Dii Partner



•Agenda




1

2

3



Challenges on the way

Bridge the gap between costs of renewable energy and market prices until competitiveness is achieved

Create favorable regulatory conditions that integrate renewable energy from outside Europe into the European energy market.

Integrated energy grid to facilitate local and intercontinental distribution of generated power

1. Business Case

4. Socio-economic benefits

2. Transmission

Energy producing nations must benefit: economic growth, knowledge transfer, clean energy security

3. Regulatory framework



Whatever scenario, RE need to become attractive in the commodity market

Grid parity

* PV and Wind are corrected to reflect the lack of dispatchability and storage capacity.



Arab spring: An opportunity for DESERTEC!

Opportunities long-term

Development of a sustainable and innovative industry

Job creation

Stability and social peace

Photo: Presseurop, AFP, Inhabitat

Challenges

High unemployment among young graduates and the younger population

Rising global food and energy prices…

Growing poverty

…

Tunisia

Egypt

Libya

http://www.inhabitat.com/2008/01/14/energy-breakthrough-storing-solar-power-with-salt/



Transmission technologies for high capacity land and undersea electricity transport are already available

HVDC Land Cable

Australia: „Murray link“

Power capacity: 200 MW (150kV)

Distance: 180km

[ready for market: 1,100 MW]

State of the art transmission projects allow high capacity long distance transport over 2,000 km via OHL (in China) and over 500 km via sea cables (Norway-Holland)

HVDC Overhead Line

China: Xiangjiaba-Shanghai

Power capacity: 6,400 MW (800kV)

Distance: 2,000 km

HVDC Submarine Cable

SAPEI (Sardegna-Penisola Italiana):

Power capacity : 1,000 MW

Distance: 400 km

Depth: 1’600 m



Consequences of bulk power from the desert on European grid: a challenge.

Challenges

Today the European power grid is not able to absorb bulk power from MENA

The injection of massive desert power would create bottlenecks, which may result into a chain reaction of black-out across Europe

Possible (and existing) Mediterranean grid connections



Objective Transmission projects in Europe in the context of the 3 pillars of EU Energy policy: Security of Supply Renewable Energy Integration Internal Energy Market

AC> 300kV

29.600

DC

9.600

5.000

0 Total

Projects

42.100

AC< 300kV

2.900 45.000

40.000

35.000

30.000

25.000

20.000

15.000

10.000

new

upgrade km

A chance: Transmission projects in Europe according to ENTSO-E Ten-Year Network Development Plan

ENTSO-E: a trans-European network (2009): 42 TSOs from 34 countries 525 million customers 828 GW generation capacity 305,000 Km of transmission lines Total demand:3,400 TWh/year Electricity trade volume: 400 TWh/year



Only few transmission paths feasible due to deep waters of Mediterranean

•Red =>2000m depth, actual technical limit for laying submarine cables

However, cable manufacturers are confident that the depth technical limit can be extended to 3´000m before 2030. This will then open new corridors across the Mediterranean Sea!

Morocco

Tunisia

Algeria

Libya

Spain

Italy

Algeria

Italy

https://www.cia.gov/library/publications/the-world-factbook/flags/flagtemplate_ly.html





Only few transmission paths feasible due to deep waters of Mediterranean

•Red =>2000m depth, actual technical limit for laying submarine cables

However, cable manufacturers are confident that the depth technical limit can be extended to 3´000m before 2030. This will then open new corridors across the Mediterranean Sea!

Morocco

Tunisia

Algeria

Libya

Spain

Italy

Algeria

Italy

https://www.cia.gov/library/publications/the-world-factbook/flags/flagtemplate_ly.html



•Agenda




1

2

3



Dii sequenced planning of reference projects

500 MW

Capacity

Timeline

500 MW

2-3 GW

2016 2010

Dii’s initial planning horizon

Dii reference projects

2012

1 GW

1 GW

... 2020

= Start of operation

= Tender

2011

Morocco

Tunisia

Algeria



Two CSP plants

(Power 400 MW)

Mix PV / Wind power plants

(Power 100 MW)

The first Dii reference project in Morocco will generate a cumulated power of 500 MW

CSP1: 150MW parabolic trough with 4h storage, and dry cooling

CSP2: 250MW parabolic trough with 4h storage, and dry cooling

PV: Poly-Si 50 MW

Wind: onshore 50 MW

Export share: 100% Local consumption: 100%

Export share: 80% (400 MW)

Local consumption: 20% (100 MW)

600 M€ (30% equity from a Sponsor Group of Dii)

~150 M€ Sponsor Group lead by RWE Innogy



•In a nutshell…

•Why EU & MENA countries, plus 56 established corporations, engage

themselves for the realization of DESERTEC?

*MENA = Middle East and North Africa

1. Tremendous potential of clean energy is unexploited

2. Technology exists and is evolving rapidly

3. Economic and social opportunity for the EU and MENA*

4. Political willingness of the EU and MENA* countries is available

5. Pilot projects are being planned



Thank you very much for your attention!



•Current installed capacity and projects mainly located in the US and Spain

Focus countries with (high) CSP potential

Equator

Tropic of Cancer

Tropic of Capricorn

CSP capacity – installed capacity and project pipeline (in GW, until 2015)

Australia

Pipe-

line

0.5

Inst.

cap.

0.0

MENA

Pipe-

line

0.8

Inst.

cap.

0.0

Spain

0.3

Pipe-

line

2.5

Inst.

cap.

US

Pipe-

line

8.0

Inst.

cap.

0.4

RoW

Pipe-

line

0.5

Inst.

cap.

0.1

Source: Interviews with industry experts; Estella analysis; NREL

Current capacities and planned projects mainly located in US and Spain1)

MENA expected to ramp up in mid term

DNI levels ≥2,000 are prerequisite for the deployment of CSP

… However capacity in MENA will increase strongly



DESERTEC Foundation & Desertec industrial initiative (Dii): 2 different organizations

DESERTEC vision



„Desert Power 2050“ (DP 2050), an integrated

view of the EUMENA system as a whole

Develop RE Projects

Construct RE plants

Operate RE plants

Country strategies

System Strategy

Enable first RE Reference Projects

Market players

Market players

Market players

•A comprehensive, but pragmatic strategy for the entire EU-MENA region…



2.61.30.80.60.50.40.3

150.0

90.0

62.0

44.7

25.8

12.05.9

2005 2000 2010 2020 2015

•If China can install 150 GW of wind energy by 2020, why can’t the MENA region install 200 GW by 2050?

Today

Cumulative wind power capacity installed in China (GW)

Source: Green Chip Stocks (2008), CWEA (2011), Renewables International (2012)

China is on track to install more than 90 GW of wind power capacity by 2015 and 150 GW by 2020.

Wind power (GW)

MENA: Middle East North Africa



A CSP plant is expensive, however, various instruments may be used to close the financial gap

Tax Transmission Dii base case

Concessionsal Finance

Gap Electricity price

Total Debt & lenders’

requirements

Plant OPEX Plant CAPEX

Base case Gap

Required revenue per c€/kWh

Sites with high solar yields

Efficient technologies

Process innovation

Vertical integration

Market consolidation

Feed-in-Tariff

Utility PPAs

Green or CO2 certificates

Concessional Finance

Grants

Reduce cost of electricity

Increase revenue from electricity

GAP



•What is technological feasible today will be economically viable tomorrow

System cost development per kW1 in percent of 2010 cost estimate

Source: Dii 1. Refers to nameplate capacity, i.e. kWp (kW peak) for Utility PV and Wind and kWe (kW electric) for CSP

70%

40%

30%

0%

2045 2040 2035 2030 2025 2020 2015 2010

50%

80%

2050

100%

80%

60%

40%

20% Utility PV

Wind off-shore

CSP with 8h storage

Wind on-shore



•Energy security debate: the process

Criticism Desired outcomes Response

MENA countries are / will

be unreliable suppliers.

Desert power will have a negative impact on EU security of supply

Energy security is thus seen as a major challenge to RoP implementation.

A realistic and constructive

discussion, based on scientific literature

Showing positive effects important for EC: energy security is an important factor in infrastructure investment decisions (see 2nd Strategic Energy Review)

Driver of EU and member state support

Risks of political supply

interruption or terrorist attacks on infrastructure are generally minor and manageable.

Energy security should not be a defensive issue for desert power.

On balance, desert power will improve EU security of supply.

Positive stance: show positive net effects Negative stance: energy security as „negative“



•Terrrorist attacks on energy infrastructure: an international perspective (2005-2010)

Country # of attacks (% of global total)

Pakistan 743 28.9%

Iraq 669 26.0%

Colombia 261 10.1%

Afghanistan 215 8.4%

Nigeria 112 4.4%

Thailand 70 2.7%

Russia 70 2.7%

Philippines 67 2.6%

Israel 49 1.9%

Yemen 42 1.6%

Total 2298 89.3%

Countries with >40 attacks / year Dii countries vs. selected Western countries (bold)

Source: Worldwide Incident Tracking System (WITS, 2012) Terrorism is defined in statute [22 USC § 2656f(d)(2)] as: premeditated, politically motivated violence perpetrated against noncombatant

targets by sub-national groups or clandestine agents. (“Noncombatant” includes civilians and military personnel who at the time of the incident are unarmed or not on duty.)

Country # of attacks

Algeria 17

Spain 11

France 5

Egypt 3*

Canada 3

Greece 2

Lebanon 2

Saudi Arabia 2

Morocco 0

Tunisia 0

Jordan 0



60

65

70

75

80

85

90

95

100

105

110

3,000 2,900 2,800 2,700 2,600 2,500 2,400 2,300 2,200 2,100 2,000

Tariff/LCOE development over DNI level (in % compared to reference plant location Spain)

Tariff decrease about -4.5%-points with an increase of DNI by 100 kWh/m²a due to increasing plant output

At DNI of 2,500 kWh/m²a tariff range between 81-83% compared to reference plant location in Spain (DNI 2,084 kWh/m²a), e.g. in Saudi Arabia

At DNI of 2,700 kWh/m²a tariff ranges between 74-75% compared to reference plant location, e.g. in Algeria

Source: Estella

• Portugal • United Arab Emirates

• Italy • Greece • Southern Turkey

• Spain • Tunisia

• Arizona/US • Saudi Arabia

• Morocco • Nevada/US • Australia • California/US

• Algeria • South Africa

DNI in kWh/m²a

Reference plant location – DNI 2,084 kWh/m²a (100%)

-33-35%

-18-19%

-24-25%

-4.5% per 100 kWh/m²a

• Chile

•Electricity cost of CSP decrease significantly with increasing irradiation level



•CSP: Overlay of generation potentials with transmission cost emphasizes northern areas

Source: Dii

CSP site attractiveness based only on solar resource

CSP site attractiveness for export based on solar resource and transmission



BearingPoint assisted Dii in developing the business case for the 1st reference project

Equity investor 1

Investor 2

…

Bank 1

Bank 2

…

Lead equity investor

Lead debt provider

30

% E

qu

ity

70

% D

eb

t

> 600 M€

Other equity investors

Other lending institutions

1st Dii project

150 MW solar power plant in Morocco

Dii developed a business case for the 1st pilot project in Morocco, and attracted several capital providers to arrange a “club deal”.

A solid and proven financial model used by BearingPoint has proven to be key for discussions with investors (see next slide).

1st Dii project (Morocco)



•About Dr. Samyr Mezzour

Citizenships

Swiss-Moroccan

Education

BSc. Mechanical Engineering, ETHZ

MSc. Industrial Engineering, ETHZ

PhD Economics, HEC Lausanne

Professional Experience

Private Equity analyst @ Winterthur Asset Management

Sr. Consultant @ BearingPoint Consulting

& Project Manager at Dii



•Ihre Ansprechpartner

Pfingstweidstr. 60

CH-8005 Zürich

Dieter Weber Partner Leiter Public Services Schweiz

T +41 43 299 64 70

C +41 79 400 40 65

[email protected]

www.bearingpoint.com

Pfingstweidstr. 60

CH-8005 Zürich

Mario Becker Business Consultant

T +41 43 299 6565

C +41 79 521 1569

[email protected]


Pfingstweidstr. 60

CH-8005 Zürich

Dr. Samyr Mezzour Sr. Business Consultant

C +41 79 751 38 12

F +41 43 299 64 65

[email protected]


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