Diesel to Solar Transformation · 2016-08-15 · PV modules decreased 75% between 2009 and 2014....

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2016

Diesel to Solar TransformationAccelerating Achievement of SDG 7 on Sustainable Energy

Assessing Untapped Solar Potential in Existing Off-grid Systems in the Arab Region

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Contents

Acronyms 3About 4Foreword 5Executive summary 6

1| Background 8

2| Regional market analysis and segmentation 10 2.1 Purpose and scope 10 2.2 Target applications 10 2.3 Available solar solutions 12 2.4 Solarretrofitpotential 13

3| The way forward 14 3.1 Situational analysis 14 3.2 Stakeholder involvement 16 3.3 Proposed actions 17

4| Country specific analysis: Djibouti 18 4.1 Diesel consumption trends in remote areas 18 4.2 Marketpotentialforoff-gridsolarenergy 19 4.3 Barriersandsupportprograms 19 4.4 Key stakeholders 20

5| Country specific analysis: Egypt 22 5.1 Diesel consumption trends in remote areas 23 5.2 Marketpotentialforoff-gridsolarenergy 27 5.3 Barriers and support programs 27 5.4 Key stakeholders 28

6| Country specific analysis: Sudan 30 6.1 Diesel consumption trends in remote areas 30 6.2 Marketpotentialforoff-gridsolarenergy 31 6.3 Barriers and support programs 32 6.4 Key stakeholders 32

7| Country specific analysis: Yemen 34 7.1 Diesel consumption trends in remote areas 34 7.2 Marketpotentialforoff-gridsolarenergy 36 7.3 Barriers and support programs 37 7.4 Key stakeholders 38 8| References 40

Appendix A - Methodology for estimating potential PV capacity (electricity generation) 44 A.1 Djibouti 44 A.2 Egypt 44 A.3 Sudan 44 A.4 Yemen 44 Appendix B - Methodology for estimating potential PV capacity (water pumping) 46 B.1 Djibouti 46 B.2 Egypt 46 B.3 Sudan 46 B.4 Yemen 46

Endnotes 47

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List of tables Table1-Dieselconsumptionfiguresforthefourcountries(000stonnes) 6-12Table2-PotentialPVpeakcapacityforthefourcountries(MWp) 7-13Table3-Stakeholdercategoriesconsultedinthereport 16Table4-KeysocioeconomicandenergyfactsforDjibouti 18Table5–Off-gridsolarenergymarketpotentialinDjibouti 19Table 6 – Key socioeconomic and energy facts for Egypt 22Table7-IsolateddieselpowerplantsinEgypt 23Table8–EstimateddieselconsumptionfiguresforirrigationpumpinginEgypt 26Table9–Off-gridsolarenergymarketpotentialinEgypt 27Table10-Electricitypriceincreaseforresidentialconsumption 28Table11-KeysocioeconomicandenergyfactsforSudan 30Table12-IsolateddieselpowerplantsinSudan 31Table13-Estimatedfiguresforsmall-scalewaterpumpinginSudan 31Table14–Off-gridsolarenergymarketpotentialinSudan 31Table 15 – Key socioeconomic and energy facts for Yemen 34Table16-Utility-ownedisolateddieselpowerplantsinYemen 35Table17-Utility-leasedisolateddieselpowerplantsinYemen 35Table18-DieselconsumptioninYemen’stelecomindustry 36Table19-EstimateddieselconsumptionfiguresforgroundwaterpumpinginYemen 36Table20–Off-gridsolarenergymarketpotentialinYemen 36Table21-GenerationprojectionsfortheTadjouraandObockpowerplants 43Table22-PotentialPVcapacityforeachoftheDCsoperatingisolateddieselpowerplants 43Table23-PVpotentialforutility-ownedstationsinYemen 44Table24-PVpotentialforutility-leasedstationsinYemen 44Table25-PotentialPVcapacityfortheindustrialgroup’sfactoriesinYemen 44Table26-PotentialPVcapacityinYemen’stelecomindustry 44Table27–EstimatedfixedirrigationpumpingpowerinEgypt 45

List of figures Figure1-InternationalBrentpricesandaveragedieselpriceinArabcountries Figure2-Threeproblemareasinhibitingmarketdevelopmentofoff-gridsolarenergy applications in focus countries Figure3-Sudan’sretaildieselfuelprices(USD/Liter)2000-2014 Figure4-Yemen’sretaildieselfuelprices(USD/Liter)2000-2014

8 15 28 32

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Acronyms

AC AlternatingCurrent

ADDS Agence Djiboutienne de Développement Social

DC DirectCurrent

DC DistributionCompany

EdD Electricité de Djibouti

EEHC EgyptianElectricHoldingCompany

EGP Egyptian Pound

EgyptSEFF Egypt Private Sector Sustainable Energy Finance Facility

EPC Engineering,Procurement,andConstruction

GDP GrossDomesticProduct

GEF GlobalEnvironmentFacility

GIZ DeutscheGesellschaftfürInternationaleZusammenarbeit

GTU GreenTourismUnit

GWh GigawattHour

HDI HumanDevelopmentIndex

HFO Heavy Fuel Oil

HP Horsepower

IPP IndependentPowerProducer

Ktoe Kiloton Oil Equivalent

kVA Kilovolt Ampere

kW Kilowatt

kWp KilowattPeak

MW Megawatt

MWh MegawattHour

PC PowerCompany

PV Photovoltaic

RCREEE RegionalCenterforRenewableEnergyandEnergyEfficiency

SDG Sudanese Pound

SIHD SociétéInternationaledesHydrocarburesdeDjibouti

UAE UnitedArabEmirates

UNDP UnitedNationsDevelopmentProgramme

USD UnitedStatesDollar

YER Yemeni Rial

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About

TheRegionalCenterforRenewableEnergyandEnergyEfficiency(RCREEE)isanintergovernmentalorganizationwithdiplomaticstatusthataimstoenableandincreasetheadoptionofrenewableenergyandenergyefficiencypracticesintheArabregion.RCREEEpartnerswithnationalgovernments,internationalorganizations and private companies to initiate and lead clean energy policy dialogues, strategies and capacitydevelopmentinordertoincreaseArabstates’shareoftomorrow’senergy. ThroughitssolidalliancewiththeLeagueofArabStates,RCREEEiscommittedtotackleeachcountry’sspecificneedsandobjectivesthroughcollaboratingwithArabpolicymakers,businesses,internationalorganizationsandacademiccommunitiesinkeyworkareas:capacitydevelopmentandlearning,policiesand regulations, research and statistics, and technical assistance. The center is also involved in various local andregionalprojectsandinitiativesthataretailoredtospecificobjectives. Havingtoday17Arabcountriesamongitsmembers,RCREEEstrivestoleadrenewableenergyandenergyefficiencyinitiativesandexpertiseinallArabstatesbasedonfivecorestrategicimpactareas:factsandfigures,policies,people,institutions,andfinance.

ThisreportisproducedwiththesupportofUNDP’sArabClimateResilienceInitiative(ACRI).

UNDPworksinover177countriesandterritories,helpingtoachievesustainabledevelopmentandfindinglow-emission,climateresilientsolutions.UNDPistheUNslargestproviderforcountryassistanceintheareaofclimatechange,withaportfolioofover$1.4billionofprojectshelpingpartnersdeveloppolicies,leadership skills, partnering abilities, institutional capabilities and building resilience of sustaineble development results.

Authors| Amer Barghouth Ana Rovzar Karina Boers

Contributors|Akram AlmohamadiAxelCeglieMohamed ElshazlyPaul Mansley

Editor| RebeccaWalters

Reviewers| FrancescaHessler,UNDP StephenGitonga,UNDPWalidAli,UNDPHindIlIdrissi MatthiasNamgalies

Design and layout| Mostafa Attya

Peer reviewers| Dr. Ahmed BadrDr. Maged Mahmoud

AcknowledgementsTheauthorswould like toacknowledge thevaluable contributionsofMazenAbdullah,YasmeenAbdullah,MaiAbuSerie,AmeerAl-Dafaie,MohamedAouled,AliKhazma,AtifMussa,HamzaBouadane,ReemKhlil,MariemElfarjani,NadaBedir,MahadAbdoulazizandSouhirHammami.TheauthorswouldliketoexpresstheirgratitudetoKishanKhoday,FrancescaHessler,StephenGitongaandLucasBlackfortheircontinuedsupport.

RegionalCenterforRenewableEnergyandEnergyEfficiency(RCREEE) HydroPowerBuilding(7thFloor) Block11-Piece15,MelsaDistrict ArdElGolf,NasrCity,Cairo,Egypt Tel:+20224154755 Fax:[email protected] www.rcreee.org

Disclaimer This report was conducted by the Regional Center for Renewable Energy and Energy Efficiency (RCREEE). The opinions expressed in this report do not necessarily reflect those of RCREEE or its member states. Reference to any specific product, service, process, or method does not constitute an implied or expressed recommendation or endorsement for it. Further, RCREEE makes no warranties or representations, expressed or implied, as to the fitness for particular purpose or merchantability of any product, apparatus, or service, or the usefulness, completeness, or accuracy of any processes, methods, or other information contained, described, disclosed, or referred to in this report. RCREEE makes no representation that the use of any product, apparatus, process, method, or other information will not infringe privately owned rights and will assume no liability for any loss, injury, or damage resulting from, or occurring in connection with, the use of information contained, described, disclosed, or referred to in this report.

mailto:[email protected]

http://www.rcreee.org

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Foreword

ThereisasignificantpotentialintheArabregionforintroducingsolarPV

technologiesintoexistingdiesel-basedoff-gridsystems.Estimatingthis

potentialandhighlightingexistinghangingfruitopportunitiesisimportant

forgovernments,financialinstitutions,technologyprovidersandother

relevantstakeholders.Thefollowingreportisanearnestattempttoshed

light on the market potential in four Arab countries; Djibouti, Egypt, Sudan

andYemen.Thesecountrieshavesignificantoff-griddieselusageforwater

pumping for irrigation. The information and analysis presented in this

marketassessmentreportisbasedonstakeholderconsultation,review

ofexistingliteratureandknowledgeaccumulatedfrominteractionswith

market actors.

AcleanenergydevelopmentalpathinruralareaswillnotonlycontributetofoodandwatersecurityinArab

countries,butwillalsocreatejobs,reduceenvironmentalpollution,andimprovethelivelihoodofrural

populations throughout the region.

Dr. Ahmed Badr

ExecutiveDirector

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Executive summary

Energyinsecurityconstitutesoneofthemainobstaclestoachievingequitable,sustainableandlong-lastingdevelopment. Tens ofmillions of households and businesses in the Arab region suffer from low access toreliableenergyservices.Accesstoelectricityisparticularlychallengingduetotheweaknessandunreliabilityofnationalpowernetworksinmanycountries.Consequently,decentralizeddiesel-basedtechnologiesareoftenused to meet the energy needs of residential and productive sectors, such as agriculture, tourism and industry. Dieseltechnologiesareusedforlighting,irrigationandpumping,agro-processing,heatingandcoolingaswellaspoweringdomesticandindustrialelectricalappliances.

Since the turn of the century, dependence on diesel has become increasingly problematic for households, businesses and national economies due to diesel scarcity and rising costs. On the other hand, solar photovoltaic (PV)hasundergonewhatcanonlybedescribedasauniqueexperiencecurve.AccordingtoIRENA,pricesofPVmodulesdecreased75%between2009and2014.Furthermore,solarPVtechnologieshaveprovedflexibleand adaptable, allowing for highly decentralized applications and seamless integration into existing powergenerationanddistributionsystemsinremoteareastocreate“hybridsolar/diesel”systems.

However,althoughthesetypesofhybridsolutionsmaybethemostefficientoptionfromamarketpointofview,theyremainanuntappedopportunityduetoahostofsoftbarriers,mostlyrelatingtofinancing,management,businessmodels,maintenanceandsustainableoperations(AllianceforRuralElectrification,2011).

Thisreportexploresthemarketpotential for introducingsolarPVintoexistingoff-griddiesel-basedenergysystems in Djibouti, Egypt, Sudan and Yemen1. In doing so, it identifies market segments and businessapplications, which show significant promise for profitable investment by the private sector through off-gridsolarPVretrofittingprojects.Toensuretechnicalandeconomicfeasibility,thereportfocusesonpartialintroductionofsolarphotovoltaic(PV)intodiesel-basedenergysystemstocreate“hybridsystems.”Ideally,thistypeofpartialsubstitutionismerelyasteppingstonetowardcompletereplacementofdieselgeneration.Recentadvancesinbatterystoragesuggestthatcompletereplacementmaybecomearealpossibilitywithinthecomingdecade.Theinclusionofotherformsofrenewableenergysuchaswind,biomassorhydrocanalsoleadtocompletesubstitutionofdieselfuel.However,onlyretrofittedsolarPV/dieselhybridapplicationswillbeconsidered in this report.

Thereportfocusesonfourcommondiesel-intensiveapplicationsforoff-gridareasintheArabregion.Theseapplicationsarecharacterizedbyasteady,long-termelectricityneedthatjustifiestheinvestmentinlong-termPV systems. The focus on these existing, incomegeneratingbusiness applications increases the economicattractivenessofsolarretrofittingprojects,whichinturnservestodrawtheattentionofprivatesectorcompaniesandfinancialinstitutions(AllianceforRuralElectrification,2011).Thetargetapplicationsare:

1. Utility mini-grids

2. Private mini-grids

3. Single-activity applications

4. Water pumping in agriculture

The following table presents the estimated diesel consumption in the four diesel-intensive applications inDjibouti,Egypt,SudanandYemen:

Table 1 - Diesel consumption figures for the four countries (000s tonnes)Category (000s tonnes) Djibouti Egypt Sudan Yemen Total

Utility mini-grids 5 78 40 223 346

Private mini-grids 20 60 - 78 158

Single-activity applications - - - 16 16

Water pumping in agriculture 0.7 3775 52 1,648 5,475.7

Total 25.7 3,915 92 1,965 5,997.7

1.TheinformationforYemenismostlybasedonthesituationbeforetheoutbreakofarmedconflictinearly2015.Thisdevelopmentshould

not prevent international organizations from integrating solar energy applications into their humanitarian assistance operations on the ground.

Inthelongrun,solarenergyisamoreresilientformoftechnologytowithstandarmedconflict.

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Thefourtargetdiesel-intensiveapplicationscanberetrofittedwithvariouscommercially-availablesolarsystemsdependingontheenergyloadprofile,gridconnectionanddieseldependency.Table 2 presents the estimated potentialsolarPVcapacity for theseapplications in the fourcountries.Thispotential isetimatedbasedonconservativeassumptionsandislikelytobesignificantlyhigher.

Table 2 - Potential PV peak capacity for the four countries (MWp)Category (MWp) Djibouti Egypt Sudan Yemen Total

Utility mini-grids 0.7 82 53 280 415.7



Water pumping in agriculture 0.5 1,938 101 894 2,933.5

Total 8.2 2,097 154 1,255 3,514.2

This studyhas identified threemain impediments towide-scale deployment of decentralized off-grid solarPVtechnologies:(1)lowawareness,(2)insufficientimplementationcapacityand(3)perceptionofhighrisk.Takentogether,thesehurdlescomplicateaccesstofinanceandleadtoanunfavorablemarketenvironmentforsolarPVretrofitsinremoteareas.Consultationswithvariousmarketactorsandstakeholdersincludingendusers,technicalsolutionproviders,governmentandpublicagencies,developmentorganizationsandfinancialinstitutionsinthefourcountriesconfirmedthefindings.

Understandingandtargetingthesebarriersthroughacomprehensive,systematicinterventionwillunlockthesignificantpotentialofsolarenergy,openmarketsforclean,affordableandreliableenergyandacceleratethetransition to sustainable economic development in the Arab region.

ThisstudyhasidentifiedthreebroadcategoriesofactivitiesthatcanacceleratethecreationandscalingupofsolarretrofitmarketsinthefourcountriesandthroughouttheArabregion:(1)Marketassessmentsandawarenessraising,(2)Capacitybuildingandtechnicalassistanceand(3)implementationofpilotprojects.

Inorderfortheseactivitiestoyieldthedesiredresults,theyshouldbecarriedoutinanintegratedmannerand coordinated on a regional level in order to capitalize on regional synergies and economies of scale. A clean energydevelopmentalpathinruralareaswillnotonlycontributetofoodandwatersecurityinArabcountries,but will also create jobs, reduce environmental pollution and improve the livelihood of rural populationsthroughout the region.

Executive summary

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1 BackgroundEnergyinsecurityconstitutesoneofthemainobstaclestoachievingequitable,sustainableandlong-lastingdevelopment. Tens ofmillions of households and businesses in the Arab region suffer from low access toreliableenergyservices.Accesstoelectricityisparticularlychallengingduetotheweaknessandunreliabilityofnationalpowernetworksinmanycountries.Consequently,decentralizeddiesel-basedtechnologiesareoftenused to meet the energy needs of residential and productive sectors, such as agriculture, tourism and industry. Dieseltechnologiesareusedforlighting,irrigationandpumping,agro-processing,heatingandcoolingaswellaspoweringdomesticandindustrialelectricalappliances.

Since the turn of the century, dependence on diesel fuel has become increasingly problematic for households, businessesandnationaleconomiesduetodieselscarcityandrisingcosts.In2012,internationalcrudeoilpriceswereupalmost500%fromtheiryear2000level.TheincreaseinretaildieselpriceintheArabregionwasevensteeperduetonationalgovernments’commitmenttophaseoutfuelsubsidies.TheaverageretaildieselfuelpriceinArabcountriesmorethantripledbetween2000and2014.ExcludingtheGulfcountries,theaverageretail diesel fuelpricealmostquintupledduring the sameperiod.Evenwhen theglobaloil pricesdeclinedin 2014, diesel prices to end users in many Arab countries continued to climb. The increase in energy costs has placed serious burdens on public and private accounts, leading to decreased economic competitiveness, inflationandlowerstandardsoflivingforaffectedpopulations.

Figure 1 - International Brent prices and average diesel price in Arab countries

Inrecentyears,accesstodieseltooperategeneratorsets(gensets)hasalsobecomeincreasinglyunreliableinmanyArabcountries,especiallyinthecontextofpoliticalinstabilityintheregion.Growingshortageofdieselsuppliesposessignificantriskstofood,waterandemploymentsecurity.InEgypt,forexample,whereagricultureaccounts for15%ofvalue-added in theeconomyandemploys54%of thepopulation, thesectorhasbeenstruggling to remain productive due to increased dependence on insecure and expensive diesel supply. ThechallengeisevenbiggerinYemen,whereabout70%ofruralpopulationdependsonagricultureforitslivelihood(ORSAM,2015).Yemenifarmershavebeenstrugglingtomaintainthesustainabilityoftheagriculturalsectorduetoincreasedcostandshortageofdieselsupply.DieselshortagesinYemen,evenpriortotheconflict,reportedlycausedlow-qualityyieldsofpomegranatesthatresultedina50%revenuedecreaseforYemenipomegranatefarmers.

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InternationalBrentoilpriceAverage retail diesel fuel price in Arab countries$

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Dieselgensetsalsoexposelocalcommunitiesandworkerstoaplethoraofenvironmentalandhealthhazards,includingnoisepollution,noxiousemissionsandsoilandwaterpollution.Furthermore,burningdieseltoproduceelectricitycontributestoglobalclimatechangebyreleasingsignificantamountsofcarbonemissionsintotheatmosphere.Infact,eachkilogramofburneddieselreleases3.2kilogramsofCO2, making diesel electricity one ofheaviestcontributorstoclimatechangeperkWhproduced.

As the cost of diesel continues to rise as a result of subsidy removal and access becomes increasingly unreliable, solarphotovoltaic(PV)hasundergonewhatcanonlybedescribedasauniqueexperiencecurve.AccordingtoIRENA,pricesofPVmodulesdecreased75%between2009and2014.ThisdevelopmenthasledtoasignificantdeclineinthelevelizedcostofelectricityforPVpower,makingitcompetitiveinmarketswheredieselissoldatinternationalprices(InternationalRenewableEnergyAgency).Furthermore,solarPVtechnologieshaveprovedflexibleandadaptable,allowing forhighlydecentralizedapplicationsandseamless integration intoexistingpowergenerationanddistributionsystemsinremoteareas.

In fact, international experience from the past decadehas shown that solar PV/diesel hybrid systems aretheleast-cost, long-termoptionforoff-gridpowergenerationindesertcountries.Thisoptionisparticularlyattractive because a solar PV componentmay be integrated into the existing diesel-based power systemtocreateahybridsystem.Solarpanelsprovideasignificantshareoftheneededpowerandexistingdieselgensetsconsumelessfuel.ThisretrofitlowerstheoverallcapitalcostofthesolarPVprojectandeliminatestheneed for costly storage batteries.

However, although these types of hybrid solutionsmaybe themost efficient options fromamarket pointof view, they remainanuntappedopportunitydue to ahost of soft barriers,mostly relating tofinancing,management, businessmodels,maintenance and sustainable operations (Alliance for Rural Electrification,2011).Thesefactorsincludelowawarenessoftheexistenceofthesehybridsolutions,lackofwell-publicizedandsuccessfulpilotprojects,weaklocalcapacityforthedevelopment,implementationandoperationoftheseretrofitsandabsenceofappropriatefinancialinstruments.Together,thesefactorsleadtothepersistenceoftheinefficientstatusquoandworseningenergyinsecurityinmanyareasintheArabregion.

Understandingandtargetingthesebarriersthroughcomprehensive,systematicinterventionswillunlockthesignificantpotentialofsolarenergy,openmarketsforclean,affordableandreliableenergy,andacceleratethetransition to sustainable economic development in the Arab region. A clean energy developmental path in rural areaswillnotonlycontributetofoodandwatersecurityinArabcountries,butwillalsocreatejobs,reduceenvironmental pollution and improve the livelihood of rural populations throughout the region.

Diesel generators in a Red Sea resort, Marsa Alam, Egypt

Background

Regional market analysis and segmentation

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2 Regional market analysis and segmentation

2.1 Purpose and scope This report explores the market potential forintroducing solar PV into existing off-grid diesel-based energy systems in Djibouti, Egypt, Sudan and Yemen.Indoingso,itidentifiesmarketsegmentsandbusinessapplicationsthatshowsignificantpromiseforprofitableinvestmentbytheprivatesectorthroughoff-gridsolarPVretrofittingprojects.Toensuretechnicaland economic feasibility, the report focuses on partial introductionofsolarphotovoltaic(PV)intodiesel-basedenergysystemstocreate“hybridsystems.”Ideally,thistype of partial substitution is merely a stepping stone toward complete replacement of diesel generation.Recent advances in battery storage suggest that complete replacement may become a real possibility within the coming decade. The inclusion of otherformsof renewableenergysuchaswind,biomassorhydro can also lead to complete substitution of diesel fuel. However, only retrofitted solar PV/diesel hybridapplicationswillbeconsideredinthisreport.

Thereportfocusesonfourcommondiesel-intensiveapplicationsinoff-gridareasintheArabregion.Thesetargetapplicationsarecharacterizedbyasteady, long-termelectricityneedthatjustifiestheinvestmentinlong-term PV systems. Focusing on these existing, income-generating business applications increases theeconomicattractivenessof solar retrofittingprojects,which in turnserves todraw theattentionofprivatesectorcompaniesandfinancialinstitutions(AllianceforRuralElectrification,2011).Thetargetapplicationsare:

1. Utility mini-grids

2. Private mini-grids

3. Single-activity applications

4. Water pumping in agriculture

Thereportdoesnotexploredieselusesandsolarretrofittingprojectsinsinglehouseholdsasthefocusofthisstudy is on the use of energy for productive activities.

2.2 Target applications

ThissectionprovidesanoverviewofthefourtargetapplicationsandtheirestimatedpotentialinDjibouti,Egypt,SudanandYemen.Moredetailedinformationcanbefoundinthecountry-specificchapterslaterinthereport.

2.2.1 Utility mini-gridsUtilitymini-gridsaresmall,isolatedelectricalnetworksthatareeitherownedandoperatedorleasedbypublicutilities. They serve population centers and economic zones that cannot be connected to the central grids due to technical or financial challenges. Eachmini-grid provides electricity tohundreds, or even thousands, ofhouseholdsandsmallbusinesseswhichotherwisewouldbedeprivedofelectricity.Inthisparticularapplication,thegovernment-ownedpublicutilitysuppliesthefuel,maintainstheelectricalnetworkandmaycollectfeesfromconsumerstorecovercosts.Utilitymini-gridsrequireelectricityduringdaytimeandnighttimeduetothefactthattheyserveadiversemixofpublic,commercialandresidentialclients.Mini-gridsintheArabregionarealmostexclusivelydiesel-basedwithmultipledieselgensetsfeedingthemwithelectricity.

Thismarketassessmenthasfoundthereareatleast58utilitymini-gridsinDjibouti,Egypt,SudanandYementhatconsume346,000tonnesofdieselandreleaseover1.1milliontonnesofCO2annually.Utilityoperatorshavereportedmanyproblemsassociatedwithsecuringtheneededsupplyofdieselduetostockshortage,rising prices and logistical challenges related to fuel storage and transportation.

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Diesel-basedutilitymini-gridscanberetrofittedwithsolarPVcomponentstoreducetherelianceondieselduringdaytime.Egypthasactivesolarhybridizationprojectsforitsisolatedutilitymini-grids.Theotherthreecountrieshavenotyetplannedorimplementedstrategiesorinitiativesinthatrespect,leavingthissegment’spotentiallargelyuntappedandopeningthedoortonewprojectsandinvestmentopportunities.

2.2.2 Private mini-gridsFromatechnicalperspective,privatemini-gridsarethesameasutilityones.Inbothapplications,dieselgensetssupplyalocaldistributionnetworkwithelectricity.Themaindifferenceresidesintheenduserprofile.Privatemini-gridsserveasingle(orafew)largeenterprise(s)insteadofmultiplehouseholdsandbusinesses.Thesingleenterprisemaybearesort,aportoranindustrialfacility.Privatemini-gridsaretypicallyownedbythesameenterprise,althoughinsomeinstancesthedieselgensets,andeventhedistributionnetwork,maybeownedandoperatedbyanindependentinvestor,whatiscommonlyknownasanindependentpowerproducer(IPP).

Inpreparingthisreport,concretedataaboutprivatemini-gridswereavailableonlyforEgyptandYemen,whichhaverevealedsignificantoff-griddieselgenerationinprivatesectoractivitiesinthetourismandindustrialsectors.Thesesectorscangreatlybenefit fromsolarenergyretrofitting.Privateelectricitygeneration isestimatedtoconsume around 158,000 tonnes of diesel and release over 400,000 tonnes of carbon emissions each year.

InEgypt,thispotentialisespeciallyprevalentinthetourismsector.TheRedSearesortareaofMarsaAlamandmanybeach resortsalong theNorthCoastareentirelyoff-grid,withmultiple luxuryhotelsandwaterdesalinationplantsoperatingsolelyondieselgensets.Therearecurrentlynoplanstoextendthecentralgrid,indicatingpromisinglong-termprospectsforsolarretrofittinginEgypt’stourismsector.

Yemen’sindustrialsectorisalmostentirelydependentondieselgensetsforelectricityduetotheunreliabilityoforinaccessibilitytogridsupply.ConsideringthescarcityofquantitativedataaboutYemen’sindustrialsector,actual consumption is likely to be much higher than the estimate provided in this report.

Diesel-basedmini-gridscanberetrofittedwithsolarPVtocreatesolar-dieselhybridsystems.SomeresortsinEgypthavebegunexperimentingwiththissolutioninrecentyearsasaresultofdieselsupplyshortagesandthe phasing out of fuel subsidies.

2.2.3 Single-activity applicationsSingle-activityapplicationsarededicatedtoservingonepublic,commercialorindustrialactivityusuallywitha relatively constant load profile and schedule. Examples include telecom base stations, construction siteequipment,oilandgasextractionrigs,healthclinicsinrefugeecampsitesandminingequipment.Unlikemini-grids,thedieselgensetsintheseapplicationsaredirectlyconnectedtotheequipmentwithoutlocaldistributionnetworks.With the exception of telecom base stations, single-activity diesel gensets require a degree ofmobilitytobetransportedwiththeattachedequipmentwithinthesiteortoanothersite.

Quantitativedataaboutsingle-activityelectricitygenerationisscarce.Thislackofdataismostlyattributedto contractual restrictions regarding the release of information to third parties. Furthermore, most of these activitiesaretemporaryinnature,whichmakesitdifficulttotrackandrecordtheirenergyusepatterns.Theactualdieselconsumptioninsingle-activityelectricitygenerationis,therefore,likelytobemuchhigherthanestimated in this report.

DatafromYemen’stelecomcompaniesshowanestimatedannualdieselconsumptionof18,000tonnesinthissector.TelecomcompaniesEgypt,SudanandYemenhaveexplored introducingPV intotheirbasestations,whilesomehavealreadybeguntoconductfeasibilitystudiesorimplementpilotprojects.

2.2.4 Water pumping in agricultureTheeconomicsignificanceoftheagriculturalsectorvariesfromonecountrytoanother,rangingfrom14.8%ofGDPinEgyptto28%inSudan(WorldBank,2014).Allfourcountries,however,usedieselpumpsextensively.Agriculture tends to be a rural activity that takes place in areas that are not covered by national grids in developing countries. It is the sectorwith thehighestdiesel consumption inmostof the target countries,estimatedatapproximately5.5milliontonnesperyear.Withlowpercentagesofgridconnectivity,Djibouti,SudanandYemenareespeciallydependentondieselforwaterpumping.

InEgypt,despitethehighelectrificationrate,agriculturalfarmlandis increasingly locatedinoff-gridareas,particularlymega-farmsintheWesternDesertwhichcultivatecropsintendedforexport.Someofthesefarmsaretensofthousandsofacresinsizeandhavemorethan7MWofdiesel-basedpumpingsystems.Egyptisthusthecountrywiththehighestpotentialforsolarretrofittingintheagriculturalsector.Agricultureonnew


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reclaimedlandsusuallyusesgroundwaterforirrigation.Largerpumpsareneededwhichrunbetween12to24hoursaday,dependingontheseason.Insomecases,additionaldesalinationunitsareusedtopurifythehighsaltcontentofthegroundwater.ThesedesalinationunitsalsorunondieselandcanberetrofittedtorunonsolarPV.

Thefollowingtablepresentstheestimateddieselconsumptioninthefourdiesel-intensiveapplicationsinthefourcountries:

Table 1 - Diesel consumption figures for the four countries (000s tonnes)Category (000s tonnes) Djibouti Egypt Sudan Yemen Total

Utility mini-grids 5 78 40 223 346



Water pumping in agriculture 0.7 3,775 52 1,648 5,475.7

Total 25.7 3,915 92 1,965 5,997.7

2.3 Available solar solutions Thefourtargetdiesel-intensiveapplicationscanberetrofittedwithvariouscommerically-availablesolarsystemsdependingontheenergyloadprofile,gridconnectionanddieseldependency.

In astand-alone solar solution, solar energy completely replaces the diesel gensets. It is the simplestformofasolarsystemasitonlygeneratessolarenergytopowertheconnecteddeviceswhensufficientsunirradiationisavailable.Thecostofastandalonesystemisrelativelylowcomparedtomorecomplexsystems.Maintenanceandoperationcostsarearealsolowcomparedtoconventionaldieselgensets.Thissolutionisappropriateforapplicationsinwhichenergyisonlyneededduringthedayandbudgetisaconstraint,suchasin simple agricultural pumping for small farms.

Themaindrawbackofastandalonesolarsystemisitsunavailabilityatnightandoncloudydays.Toovercomethislimitation,abatterybanktostoreelectricityisneeded,whichincreasestheinitialcostofthesystemaswellasoperationsandmaintenancecosts.Astandalonesolarsystemwithabatterybankisusuallyappropriatefor telecom base stations.

Hybrid solutionscombinesolartechnologieswithotherpowersources,suchasdieselgensetsorwindturbines.Hybridsystemscanbemorecost-effectivebecausetheydonotrequirelargebatterybanks.Maintenanceandreplacementcostsarealsorelatively low incomparisontodiesel-onlysystems. The fuel saver option is a hybridapplicationinwhichsolarpanelsanddieselgensetsoperatesimultaneouslythroughoutthedayinorderto secure a stable electricity supply independently of grid connection. The simultaneous operation of solar and dieselgeneratorsrequiresacontrolsystemtoensureoptimalutilizationofbothtechnologiestomaximizethesolar fraction1duringsunhours.Toimprovetheefficiencyofthesystem,dieselgensetsshouldbeconfiguredtorampupanddownproductionbasedontheavailabilityofpowerfromthesolarpanels.Fuelsavingsofupto30%canbeachieved(AschoffSolar,FraunhoferISE,&Steinke,2014).Fuel-saverhybridsolutionsareparticularlywell-suitedformini-grids.

Fuelsavingsmayincreasebeyond30%byaddingsmart grid features to enable closer management of the mini-grid.Thesystem isequipedwithadequate sensors toenable two-waycommunicationbetweenvariouscomponents of the system and to monitor solar irradiation. Active components in the grid are connected for exchangingbasicinformationabouttheirstateofoperationandtransferofpower.Acentralizedmanagementsystem continuously adjusts generation and loading based on the availability of the solar resource. Multiple hotels orpumpsonafarmcanbeconnectedtoonecentralizedgrid.(AschoffSolar,FraunhoferISE,&Steinke,2014).

For agricultural pumping, special inverters can be used. Such inverters are based on frequency inverters orso-calledvariable speed drives(VSD).Theywereespeciallydevelopedforapplicationswithpumpsorotherthree-phasemotorswithsimilarcharacteristics.ThehybridsystemsusingVSDaresimpletosetupevenonexistingfarms,asonlyasolarsystemisaddedtothewell.Duringsunhoursthesolarsystemisrunningthepumpaccordingtothesameprinciplesasforastand-alonesystemrunningonlyonsolarenergy.Ifthesolaroutputislowerthantheminimumpowerrequiredforthepump,thesystemswitchestodieselgensetoperation.Thisswitchisdonebyaswitch control. Fuel savings are dependent on the total required irrigation time and the designed operating time of the solar system.

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Water reservoirscanalsobedeployedinthesolarirrigationsystemaswaterpumpedduringsunhourscanbestoredinthewaterreservoirsorhightanks.Theynotonlyserveaswaterstorage,butcanalsobeusedtopurify thepumpedgroundwater to increase theefficiencyof the irrigationsystemonthe farm.Buildingwaterreservoirsonfarmlandseliminatestheneedforcostlybatterybanksandoffersthepossibilitytoirrigateatnight,minimizingthedieselconsumption.Thewateristhenonlydistributedacrossthefieldsusingsmallboosterpumps(AschoffSolar,FraunhoferISE,&Steinke,2014).

2.4 Solar retrofit potential

The followingtablepresents theestimatedpotentialPVcapacity in the fourdiesel-intensiveapplications inDjibouti,Egypt,SudanandYemen:

Table 2 - Potential PV peak capacity for the four countries (MWp)Category (MWp) Djibouti Egypt Sudan Yemen Total

Utility mini-grids 0.7 82 53 280 415.7



Water pumping in agriculture 0.5 1,938 101 894 2,933.5

Total 8.2 2,097 154 1,255 3,514.2

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3 The way forwardAsdiscussedinthepreviouschapter,thereissignificantmarketpotentialforsolarPVretrofittingofdiesel-basedsystemsinoff-gridareasinDjibouti,Egypt,SudanandYemen.Suchprojectswouldbringaboutmuchneededeconomic,environmentalandsocio-economicbenefitstothecountries’remoteareas.However,researchandstakeholderconsultationshaverevealedmany“soft”barriersinallcountriespreventingwide-scalesolarPV-hybridizationofdiesel-basedpowersystems.

Addressingthesebarriersrequiresanengagedandwidenetworkoflocal,nationalandinternationalstakeholders.Thesestakeholdersprovidecontinuedunderstandingfromanon-the-groundperspective,contributemarketdevelopment insights, monitor and report change and play a vital role in the development and implementation ofsupportprograms.Indeed,acomprehensivestrategyrelyingonthecloseinvolvementofstakeholdersiskey to tapping into this market potential for solar energy and catalyzing transformational economic, social and environmentalbenefitstoruralcommunities.

3.1 Situational analysis Thestudyhasidentifiedthreemainimpedimentstowide-scaledeploymentofsolarPVhybridsolutions:low awareness, insufficient implementation capacity and perception of high risk. Taken together, these hurdlescomplicateaccesstofinanceandleadtoanunfavorablemarketenvironmentforsolarPVretrofitsinoff-gridremoteareas.Consultationswithvariousmarketactorsandstakeholdersincludingendusers,technicalsolutionproviders,governmentandpublicagencies,developmentorganizationsandfinancialinstitutionsinallfourcountrieshaveconfirmedthefindings.

1. Low awareness:

Although the global solar PV market has developed rapidly in recent years due to technologicaladvancementand fallingcosts, researchand interviewsconductedduring this studyshow that thepotentialbenefitsofsolarPVarenotfullyunderstoodintheArabregion.Thereisagenerallackofawareness on solar PV hybrid solutions among energy users, energy service providers and policymakers.Commonknowledgegapsinclude:

Lowawarenessandunderstandingof theexisting technical solutions to retrofitexistingdiesel-based systemswith solar PV technologies. This awarenessgap is particularly prevalent amongenergy users in the industrial, tourism and agricultural sectors. Many end users in the industrial andtourismsectorscitedduring the interviewsacommonmisperceptionaboutelectricity fromsolarPVnotbeing“strong”enoughtopowermachineryandair-conditioning.

MostenergyserviceprovidersandtechnicalsolutionprovidersthatwereinterviewedforthisstudydidnotviewsolarretrofitsasapotentialmarketsegmentwithprofitableinvestmentopportunitiesforsolarPV.Theseserviceproviderscontinuetosteertheiroff-gridclientstowarddieselgensets.TheywerecompletelyunawareofthefactthatcompaniesinSub-SaharanAfricaandpartsofAsiahavebeenmakingprofitsfrommarketingsolarPVsolutionsforoff-gridsystems.

Lowawarenessandunderstanding,particularlyamongpolicymakers,ofthepotentialeconomic,socio-economicandenvironmentalbenefitsofsolarPVretrofittingofoff-griddieselpowersystems.

2. Insufficient implementation capacity:

Generally speaking, market actors in the four countries suffer from insufficient implementationcapacityatmoststagesthevaluechain,including(1)identificationanddesignofprofitableprojects, (2) development of financing packages that reduce risk to investors, (3) implementation of publicsupportschemesforthepromotionofdecentralizedsolarenergyapplicationsand(4)deliveryofafter-sales operations and maintenance support. A particularly important gap lies in the absence of local businessmodelsthataretailoredtothespecificmarketconditionsineachofthefourcountries,whicharekeytomarket-orientedsolarenergysolutions.Othercommonbarriersthatemergedinthestudyinclude:

Energyusers thatwere interviewed in thisstudydonothaveanenergymanageronsite.Thesiteengineersinthesefacilitiesdonothavefirsthandexperiencewithsolarenergy.Theyalsodonothavesufficienttrainingtosolicittechnicalandfinancialoffersfromserviceprovidersforsolarretrofits,muchlessevaluatetheseoffers.

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The way forwardThe way forwardThe way forward

Mostsolarsolutionprovidershavenothadexperiencewithhybridsolarsystems.Theirexperiencehasbeenlimitedtosimplesolarhomesystemsorsolarpumps.Thislackofexperiencehashinderedtheirabilitytoidentify,designandimplementsolarPVhybridizationprojects.

Mostsolutionprovidersalsosufferfrominsufficient“businessdevelopment”capacitytounderstandtheirmarkets,attractclientsanddevelopappropriatebusinessmodelsforsolarPVhybridizationsolutions in off-grid remote areas. For the most part, solar solution providers approach theirbusiness as a retail business, not as an energy service business.

Bankersinterviewedinthisstudydonothavethenecessaryfinancialmodelsandtoolstoevaluateloanapplicationsforsolarprojects.Evenwhenthesetoolshavebeenmadeavailable,banksstilldonothavesufficientin-houseanalyticalandtechnicalcapacitytounderstandandusethesetools.

Althoughsomepolicymakersand civil servantshaveexpressed interest inpromoting solarPVretrofitsinremoteareas,theylackthetechnicalandfinancialknowledgetodesignandimplementcost-effectivesupportprogramstocreateandupscalethismarket.

3. Perception of high risk:

Anotherbarrieristheperceptionofhighriskassociatedwithsolarenergytechnologies.Mostofthebankersinterviewedduringthisstudyexpressedseriousdoubtsabouttheaccuracyoftheexpectedenergyandfinancialsavingsfromretrofittingdiesel-basedsystemswithsolarPV.Evensomeenergysolutionprovidersseemeddoubtful thatsolarPVsystemsareas reliableasdieselgensets.Energyusersinoff-gridareasareparticularlyalarmedbystoriesoffailingsolarequipment;althoughwhenaskedtopointtoaspecificexample,theyadmittonothavingfirsthandknowledgeofsuchfailures.Thesemisperceptionscanbeattributedtotheabsenceofwell-publicizedsuccessstoriesthatservetodispelthesemythsanddemonstratethereliabilityandbenefitsofsolarPVsystems.Theperceptionof high risk has been a limiting factor to the development of solar energy markets in these countries because they prevent actors across the value chain from investing in them.

Figure 2 – Three problem areas inhibiting market development of off-grid solar energy applications in focus countries

Thereareotherregion-specificissuesthataffectthemarketuptakeofthesesolarPVhybridsolutionsinoff-gridremoteareas.Theyincludeissuessuchas:

y Regionalconflictandpoliticalturmoilincertaincountriesattimeofwriting

y Slowmarketliberalizationandrigidmarketstructures

y Unsupportive and unharmonized economic policies regarding solar energy and the importing ormanufacturing of solar energy equipment

!

1. Low awarenessCompaniesandbanksareunawareofmarketpotentialandtheexistenceofprofitableinvestmentopportunities

2. Low capacityLocalbusinesses,banksandgovernment agencies do not havesufficientcapacitytoidentifyprofitableprojectsandexperimentwithnew

business models

3. Perception of high risk

Insufficientwell-documented demonstration projects and success stories to overcome

initial distrust

Limited access to finance

$!

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3.2 Stakeholder involvement Enabling the uptake of decentralized solar energy solutions in the Arab region cannot take place withoutinvolving local stakeholders. Engaging various stakeholders in each country is instrumental to developing a broader situational understanding, gauging market potential and transforming the market through concrete projects.Areal-timeassessmentofthestakeholders’perspectives,concernsandneedshelpstobuildamorecomprehensive picture of the situation on the ground. This study conducted a preliminary stakeholder mapping andconsultationexercisewithdiversestakeholdersinDjibouti,Egypt,SudanandYementocomplementthequantitative research.

Thereportfocusedonmappingandtargetingfivedifferentstakeholdercategories:energyendusers,technicalsolutionproviders, government and public agencies, development organizations and financial institutions and investors.Throughout the study, representative stakeholders were involved in the data collection and consultationprocess,althoughcertainprivatesectoractorsexpressedreservationsonprovidingdetailedinformationandinsightsduetocontractualrestrictionsandconfidentialityagreements.

Table 3 - Stakeholder categories consulted in the reportStakeholder category Examples

1. End users Hospitals, army bases, hotel owners, farms, etc.

2. Solution providers Local diesel providers, local solar energy providers, etc.

3.Governmentandpublicagencies Ministry of energy, ministry of development, sustainable energy agencies, etc.

4. Development organizations UN organizations, international NGOs, foundations, etc.

5. Financial institutions and investors National banks, commercial banks, national funds, etc.

Typically, stakeholders vary from country to country, but can be assessed in terms of their awareness ofdecentralized solar energy technologies, their influenceandwillingness to embarkon theseprojects, theircapacitytodosoandtheiraccesstocapital.Eachstakeholdercategorydiffersinknowledge,experiencewithsolar energy solutions, needsand capacity.Stakeholders assess themarket situationdifferently, and theirspecificareasofexpertisecanaddressdifferentmarketdevelopmenthurdles.Takentogether,afullerpictureof themarket potential for off-grid solar energy emerges, including the barriers that currently impede itsdevelopmentandtheincentivesneededtomoveforward.

At later stages, the preliminary stakeholder mapping conducted in this study can lead to a proactive engagement strategytodrivetheuptakeofoff-gridsolarenergysolutionsandpractices.Stakeholderscanbetargetedwithawareness-raisingandcapacitydevelopmentactivitiesbasedon theirneeds.Differentstakeholderscanbebroughttogethertoimplementpilotprojectsandformbusinessandtechnicalnetworkswhichwillamplifytheimpact of their individual actions.

The most relevant stakeholders for each country vary depending on the targeted sector. Overall, governmental and public agencies are key stakeholders across all four countries given the high degree of government pariticipation in managing economic activities in general and particularly in the energy sector. Typically, ministriesofelectricityandenergyneedtobeinvolvedinpermitsandpoweragreements,whereasministriesof economics, trade and investment determine large parts of the procedures for customs, land permits, fuel subsidies,taxationandfiscalincentives,allofwhichdeterminethefeasibilityandprofitabilityofsolarretrofits.InSudan, forexample,off-gridsolarenergyapplicationsaredifficult to implementand installbecausethecustomsdutiesonsolarequipmentareprohibitivelyhigh.Giventheir influenceandaccesstopublic funds,governmentagenciescanfacilitatetheintroductionofmarket-specificbusinessmodelsandfinancialincentivestopromotesolarretrofittingprojectsinoff-gridareas.

Solarenergysolutionprovidersexistinallfourcountriesandareeagertodevelopthisnewmarketsegement.However, they openly acknowledged the need for technical and business development training and easieraccesstofunding.Manylocalbanksandfinancial institutionshaveexpressedtheirwillingnesstoworkwithsolar solution providers to finance these projects.However, they alsomay benefit fromawareness-raisingand technicalassistance tobecomemorecomfortablewith the technologiesandfinancialmodels involved.Developmentagencieswith localpresences,suchasUNDP,arewell-positioned tobring thesestakeholderstogetherinasystematic,integratedway,toempowerindividualactorsandcreatemarketmomentum.

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The way forward

3.3 Proposed actions

ThisstudyhasidentifiedthreebroadcategoriesofactivitiesthatcanacceleratethecreationandscalingupofsolarretrofitmarketsinDjibouti,Egypt,SudanandYemenaswellasotherArabcountries.Theproposedactionsaimtoaddressthethreemainimpedimentstothemarketoutlinedearlierinthechapter:lowawareness,insufficientimplementationcapacity,andtheperceptionofhighrisk.Inorderfortheseactivitiestoyieldthedesired results, they should be carried out in an integrated manner and coordinated on a regional level in order tocapitalizeonregionalsynergiesandeconomiesofscaleintheimplementationofsolarPVretrofittinginthefour countries and beyond.

3.3.1 Market assessment and awareness buildingWhilethisreportprovidesahigh-levelassessmentofthemarketpotentialforsolarretrofits,investors,banksand policy makers need more detailed market information in order to identify bankable projects and design informedpolicies.TargetapplicationsidentifiedforfuturemarketassessmentsincludeagricultureinDjibouti,Egypt,SudanandYemen;minesandhydrocarbonextractionsitesinEgyptandSudan;mini-gridsinDjibouti,Egypt, Sudan and Yemen; and industrial facilities in Egypt and Yemen. The market assessments should include fieldsurveysandsitevisits tospecificcompanies in thesesectors.Fieldsurveyswillnotonly improve thequalityofthedata,butwillalsohelpidentifypotentialsolarretrofitprojectsandeventuallygenerateapipelineofbankableprojectsforsolarsolutionprovidersandfinancialinstitutions.

Futuremarketassessmentsandfieldsurveysshouldalsoexamineexistingbusinessmodelsforpowergenerationanddistributioninthesesectors.Thisexercisewillhelpidentifythebusinessmodelsthataremorelikelytosucceed in the target countries and sectors.

Theknowledgegeneratedfromtheseassessmentsshouldbedisseminatedtokeystakeholdersineachcountryinordertobuildtheirawarenessandincreasethepossibilityoftheirinvolvementinfurtheractivitiestodevelopthe solar retrofitmarket. A region-wide network of relevant stakeholdersmay be an effective channel toengageandfacilitateknowledgeexchangeamongthem.Thisnetworkwillhelpdisseminatelessonslearnedandsuccessstorieswithintheregionandwillserveasaplatformforpolicydialogueandtheformationofpublic-private partnerships in support of this market.

3.3.2 Capacity building and technical toolsAsuccessful interventiontocreateandupscalethesolarretrofitmarketshouldbuildthetechnicalcapacityofsolarsolutionproviderstodesign,implementandmaintainsuchsystems.Withoutsuchcapacity,itwillbedifficulttoimagineaprofitableandsustainablemarketforsolarretrofitsinthesecountries.However,boostingthetechnicalcapacityofsolutionproviderswillnotbeenoughtogeneratemomentuminthismarket.Thereshouldbeaspecialfocusonbuildingthecapacityofsolutionprovidersandfinancialinstitutionsinnon-technicalareas,suchasbusinessdevelopmentandmarketing,businessmodeldesignandfinancialproductdesign.

Capacitybuildingactivitiesshouldbecoupledwiththedevelopmentofasuiteofappropriatetechnicalandfinancialtoolstobeusedasreferencematerialbybanks,endusersandsolutionproviders.Thesetoolsshouldbe made available to market actors in order to reduce transaction costs and avoid unnecessary delays in project design,financingandimplementation.Theavailabilityofthesetoolswillservetostandardizeandstreamlinecreditapprovalprocesseswhichwouldmakefinancingmoreaccessible.

3.3.3 Pilot projectsTheabsenceofexisting,operationalsolarhybridsystems isthemainsourceoftheperceptionofhighriskdiscussed earlier in this chapter. Pilot projects serve as a living proof of the reliability of these technologies and theirpositiveimpactonbusinessprofitability.Infact,interviewsconductedforthisstudyhaveshownthattheperceptionofriskisthelowestinEgypt,whichistheonlycountrywithexistingexamplesofsolar-dieselhybridsystemsinoff-gridareas.

Similar pilot projects should continue to be implemented in Egypt and the other three countries. To reduce the riskoffailure,eachpilotprojectcanbesupportedbyavoluntarypublic-privatepartnership(PPP)consistingofrelevantactors,includingenergyendusers,technologyproviders,Islamicandcommercialbanks,developmentorganizations and government entities. Pilot projects should be monitored and evaluated to identify success storiestobewidelydisseminated.

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Table 4 - Key socioeconomic and energy facts for Djibouti

Population HDI ranking GDP (USD) Electrification rate

Diesel price (USD per Liter)

$

872,900(WorldBank,2013)

164 out of 187(UnitedNationsDevelopment

Programme,2013)

1.456 billion (WorldBank,2013)

50%(Africa-EUEnergyPartnership,2013)

1.18 (WorldBank,2014)

Djibouti’seconomydependsprimarilyonitsstrategiclocationalongtheRedSea.Ithasastrongmarketpotentialfor decentralizedsolarenergyapplications,inparticularforutility-minigridsandforagriculturalwaterpumping.Until2011,Djiboutiwashighlyreliantondieselpowerplantstosupplyitsmaingrid,butdieselisgraduallybeingphasedoutandreplacedbyhydroelectricityimportedfromEthiopia.Djibouti’selectricityinfrastructurehasnotkeptpacewiththecountry’seconomicdevelopment,leadingtofrequentloadsheddingandblack-outsinurbanareasandpersistentlackofaccesstoelectricityinperi-urbanandruralareas(IRENA,2015).

4.1 Diesel consumption trends in remote areas

4.1.1 Utility mini-gridsDivisionNorthisanisolatedgridinnorth-centralDjibouti,whichservesprivateandpublicsectorconsumersinthe cities of Tadjoura and Obock. The grid is not connected to the Ethiopian interconnection and depends solely ondieselpowerplantstomeettheneedsofitsconsumers.DuetotherelativeremotenessofTadjouraandObock,therearenoplanstoconnecttheDivisionNorthmini-gridtothemainnationalgridofDjiboutinortoincludeitintheinterconnectionwithEthiopia(ParsonsBrinckerhoff,2009)(RCREEE,2015).TheDivisionNorthisolatedgridseemstobeanattractiveinvestmentopportunityforsolarPVretrofitting.

TheTadjourapowerplanthas6x600kVAdieselgensets,withatotalgeneratingcapacityof2.2MW.Obock’spowerplantincludes3x400kVAand2x600kVAdieselgensets,withatotalgeneratingcapacityof1.2MW.FourofTadjoura’sgensetsandthreeofObock’sgensetswerecommissionedin2005andareapproachingtheendoftheirusefullife(EUEI-PDF,2013).AgoldenopportunityexiststoreplacetheaginggensetswithsolarPVarrays,especiallywhentakingintoaccountthatdemandwillexceedthegeneratingcapacityinthesetwoplantsintheshort-term.

Attheaveragedemandloadfactors,theTadjouraplantisestimatedtoconsume2,970tonnesofdieselperyear,whileObockconsumes1,980tonnesofdiesel.ThetwoplantsreleaseCO2emissionsofapproximately15,000tonnesperyear(ParsonsBrinckerhoff,2009)(Caterpillar,2013).

4.1.2 Private mini-gridsAs a result of the electricity shortage in Djibouti, large consumers of electricity, such as national ports and commercialfacilities,haveresortedtocommissioningprivatedieselpowerplantstomeettheirelectricityneeds.Forexample,theGrainandFertilizerTerminalinthePortofDjibouti,inauguratedin2006,hasitsown1,700kVAdieselpowerplant(Visscher,2011).TheDoralehContainerTerminal,whichstartedoperating in2008,reportedlyhasitsowndieselpowerplant,althoughthecapacityoftheplantisnotpubliclyavailable.WiththePortofDjiboutiexpanding,therewillbegrowingpotentialforsolarhybridizationofdieselpowerplants.

Due to its strategic location in the Horn of Africa, Djibouti hosts multiple foreign military bases. At least one ofthosebases,CampLemonnier,is100%dependentondieselgensetswithaneffectiveaggregatecapacityofover18MW.Thegensetsconsumeover20,000tonnesofdieselandreleaseover60,000tonnesofCO2 per year.WithanaverageestimatedcostofgenerationofatleastUSD0.30perkWh,solarPVisacompetitivesolutionwithrelativelyshortpaybackperiodsandhighreturnsoninvestment(Anderson,2013).ThelandleaseforCampLemonnierwasrenewedin2015for10years,whichreducestheoff-takerriskforanyprivateinvestorwhomaywanttoundertakethisinvestment(Oladipo,2015).

4 Country Specific Analysis: Djibouti

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4.1.3 Water pumping for irrigationAccordingtotheMinistryofAgriculture’s2009-2018plan,theareaequippedforirrigationinDjiboutiis1,250hectaresofthetotalcultivatedareaof2,000hectares.Sincethisfigurewaspublishedin2009,theareaofirrigated landmost likelyhas increasedover the last6years.Djibouti’s agriculturalwaterwithdrawal is 3millionm³peryear,atleasttwothirdsofwhichcomesfromgroundwatersources(Aquastat,2015)(Ministredel’Agriculture,del’Eau,delaPêche,del’ElevageetdesRessourcesHalieutiques,2009).

Informationregardingthenumberofinstalledpumpsorgeneraldataondieselconsumptioninagricultureis,however,veryscarce.BasedonthemethodologyoutlinedinAppendixB,theannualconsumptionofdieselforcropirrigationisapproximately740tonneswithresultingcarbonemissionsofover2,000tonnesperyear.

4.2 Market potential for off-grid solar energy Table 5 – Off-grid solar energy market potential in Djibouti

Target applications Diesel consumption (000s tonnes/year)

Potential PV capacity(MWp)

Utility mini-grids 4.95 0.72

Private mini-grids 20 7

Water pumping in agriculture 0.74 0.53

4.3 Barriers and support programs CostisoftencitedasthemainbarriertosolarPVprojectsinDjibouti.Manystakeholderscomplainedabouthighimporttaxesonsolarequipment:30%forsolarpanelsand33%forothersolarenergyequipmentsuchasbatteriesandinverters.SolarPVcompaniesandsolutionprovidersreportedlychargesignificantinstallationaswellasmaintenancecostsduetothescarcityofqualifiedlocaltechniciansandengineers.

Moststakeholdersagreethat the lackofappropriateandaffordablefinancingoptionsexacerbatesthecostbarrier. Althoughbank loans exist in theory, access to finance remainsdifficult due to lowawareness andperception of high risk. Stakeholder consultations have revealed a serious knowledge gap. Investors andpolicy makers struggle to make informed investment decisions and policies due to the lack of concrete, reliable statisticsaboutprivatesectoractivitiesandcorrespondingenergyconsumptioninoff-gridareas.Dataaboutwaterpumpingandprivatemini-gridsserving industrialandcommercial facilities isparticularlyscarceanddifficulttoaccess.

Suchuncertaintyaboutthemarketsizeanditspotentialmakesoff-gridsolarelectrificationappeartooriskytofinancialinstitutionsandprivatesectorinvestors.Stakeholdershavehighlightedtheneedformorefeasibilitystudies,marketpotentialreportsandawareness-raisingregardingsolarenergytechnology.

Djibouti’sgovernmentseemscommittedtoovercomethesebarriers.Replacingdieselwithsolarenergyhasbeenonitsradarsinceearly2000s.Thegovernmenthassetanambitioustargettogenerate100%ofthecountry’selectricityfromrenewablesourcesby2020(IRENA,2014).Toachievethistarget,thegovernmentofDjiboutihasadoptedmultiple supportpoliciesandprograms for renewableenergy, including the recentadoptionofLawNo.88/AN/15,whichencouragesprivateproductionofelectricityfromrenewableenergytoselltothenationalutilityorforself-consumption.

Followingtheincreaseinfuelpricesin2000duetosubsidyremoval,Djibouti’sgovernmentlaunchedalargenumberofprojectsforsubstitutingexistingdieselpumpswithsolarPVinruralareas.In2006,approximately55wells were equippedwith solar PV systems of 5 kW each, ensuring permanent water supply for ruralpopulations (Ministèrede l’Habitat,de l’Urbanisme,de l’AménagementduTerritoireetde l’Environnement,2012).Basedonthisdemonstrationofpoliticalwillandtheexistinggovernmentpolicies,off-gridareashavehighpotentialforsolarPVretrofittingprojectsforwaterpumping.

In the National Strategy for the Promotion of Solar Energy, developed in 2008 with support from UNDP,thegovernmentofDjibouticommittedtoequipover70wellswithsolarpumpsandtoelectrifyover5,000households,100schoolsandallruralhealthclinicswithsolarenergy.Djibouti’sgovernmenthasalsocommittedtoprovidegrantsandfinancialincentivesforrenewableenergyapplicationsinhouseholdsandpubliclightingthroughAct167/AN/12(LeagueofArabStates,2013).However,theredonotseemtobesupportprogramsspecificallyforprivate investments insolarretrofittingofsmall-tomedium-sizesolarpowerplantsorwaterpumping in the agricultural sector.

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4.4 Key stakeholders

4.4.1 End usersInpreparingthischapteronDjibouti, thestudyteam interviewedasampleofenergyendusers, includinghotels,medicalcentersandatelecommunicationscompany.Theconsultationswithenergyconsumersrevealedageneralinterestinincoropratingsolarenergytechnologiesintotheirsystems.However,theseenergyusersforthemostpartdidnothavefirst-handexperiencewithsolarPVtechnologies,nordidtheyhavethecapacitytoprocuresuchtechnologiesfortheirfacilities.TheonlyexceptionisDjiboutiTelecom,whichcurrentlyhassolarenergyapplications installedforsomeoperatingtowersandplansto increaseits investments insolarenergy solutions.

4.4.2 Solution providersDjiboutihasanumberof localsolutionproviderswithpastexperienceinoff-gridsolarenergyapplications,whichisremarkableforacountryofitssizeandlevelofeconomicdevelopment.ThepresenceofthesesolutionproviderswillfacilitatethecreationandscalingupofthesolarenergymarketinDjibouti.However,whilethesesolutionprovidershavetechnicalexperienceininstallingandmaintainingsolarPVsystems,theirexperiencewithbusinessdevelopmentandbusinessmodelinnovationislimited.Accordingtoonesolutionprovider,hisonly experience has been with projects commissioned by development organizations or the government,becausetherewasnodemandfromprivatecustomers.Inorderforthismarkettogrow,technicalassistancein business development and marketing is needed.

Djibouti does not have a trade association or network for solar energy solution providers.However, somesolutionprovidersaretakinginitiativetomaketheirproductsmorecompetitivewithdieselgensets.ThearecurrentlyworkingtogetherwiththeDjiboutiChamberofCommercetolobbyforreducedimporttaxesonsolarenergyequipment(RCREEE,2015).

4.4.3 Government and public agenciesInDjibouti,themostrelevantpublicsectorstakeholderistheMinistryofEnergyandNaturalResources(Ministèrede l’Energie et des RessourcesNaturelles -MERN),which is responsible for developing and implementingenergypolicies.AstakeholderconsultationwithMERNconfirmedtheMinistry’sawarenessoftheneedofoff-gridsolarenergysolutionsinruralcommunities.ThePublicUtilityofDjibouti(ElectricitédeDjibouti–EdD)isthemostimportantstakeholderforinterventionsrelatingtothecountry’selectricityinfrastructure,includingutilitymini-grids.TheNationalEnergyCommission,responsibleforimplementingandmonitoringtheNationalEnergy Master Plan, is another key stakeholder that needs to be involved.

The Ministry of Agriculture, Livestock and Fisheries (Ministère de l’Agriculture, de l’Eau, de la Pêche, del’ElevageetdesRessourcesHalieutiques)isresponsiblefordevelopingandimplementingpoliciesinthefieldsofagricultureandirrigationandhaspreviousexperiencewithsolarwaterpumpingprograms.

Anotherkeypublic sector stakeholder is theDjiboutiSocialDevelopmentAgency (AgenceDjiboutienneduDéveloppementSocial–ADDS)thatfocusesonthedevelopmentofvarioussectorsincludingenergyandwater.ADDShasexperiencewithsolarenergypilotprojectsinDjibouti.ThedevelopmentagencyisactiveinruralelectrificationandisresponsibleforimplementingthenationaldevelopmentinitiativeforpovertyreductioninareasnotcoveredbytheEdD(IRENA,2015).TheenergycomponentofADDSismanagedbytheDirectorateofRuralElectrification(IRENA,2015).

TheMinistryofEconomyandFinance(Ministèredel’EconomeetdeFinance)overseesindustrialplanningandsetstheelectricitytariffsbydecreefortheuseofnationalutilityElectriciteduDjibouti(IRENA,2015).TheDirectorateofExternalFinanceisresponsibleforimplementingandmonitoringnewprojects(IRENA,2015).TheNationalInvestmentPromotionAgency(NIPA)isanindependentprivateinvestmentspromotionagencythathasarenewableenergyfocus.

4.4.4 Development organizationsDjibouti hosts multiple international development organizations that are typically present in Eastern African countries.TheseorganizationsalsodemonstrateafocusondecentralizedrenewableenergyandsolarpumpingprogramsledbytheGlobalEnvironmentFacility(GEF)andtheUnitedNationsDevelopmentProgramme(UNDP).

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4.4.5 Financial institutions and investorsDjibouti’sbankingsectorisgrowingrapidly.Therewere11bankinginstitutionsin2014,asopposedtotwoin2006.However,thebankingsectorhasnotbeenactiveinfinancingrenewableenergyprojects,and,therefore,banksareunlikelytohavein-housecapacitytoassessandfinancesuchprojects.Consultationswithbankspoint towards the absence of programs for renewable projects due to perceived low demand and lack ofgovernmentsupporttoco-finance.

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5 Country specific analysis:

Table 6 – Key socioeconomic and energy facts for Egypt



$

90,000,000 (CentralAgencyfor

Public Mobilization and Statistics,Nov2015)

110 out of 187 (United NationsDevelopment

Programme,2013)

272 billion (World Bank,2013)

99%(ArabUnionofElectricity,2013)


ThegreatmajorityofEgypt’spopulationisconcentratedalongtheNileValleyandNileDeltawith42%livinginurbanareas.Egypt’spopulationofmorethan90millionlivesononly7.7%ofthecountry’slandareaaccordingtotheCentralAgencyforPublicMobilizationandStatistics(CAPMAS).ThehighlypopulatedNileValleyandNileDeltaregionsarealmostentirelyconnectedtothenationalpowergrid,resultingin99%electrificationrateofhouseholdsandbusinesses.However,manyeconomicactivities,particularly inagriculture, tourism,miningandotherextractiveindustries,takeplaceindesertareaseastandwestoftheNileandrelyondieselgensets.

RelianceondieselpowersystemshasbeenontheriseinEgypt.AccordingtoCAPMAS,EgyptimportedoverUSD300millionworthofdieselgeneratorswithplatecapacitiesof75kVAorhigherbetween2010and2014.AsreportedbyfarmsinandaroundWadiNatrounandtheWesternDesert,pricesofdieselgensetsandpartshavespikedroughly40%overthepast3years,duetothefrequentuseofthesegensetsasbackupsystemsinvarioussectorsaffectedbyblackoutsandtherapidagriculturalexpansionintonewreclaimedlands.

WithinEgypt,themainsectorsofinterestforsolarenergyaretourismandagriculture,astheybelongtothelargestsectorsintermsofemploymentandGDP.Inbothsectors,manyactivitiesinremoteareasareeitherpartiallyorentirelydependentondieselgensets.However,thereisalsoagrowingmarketformini-gridsolarsystems for residential use, as approximately onemillion Egyptians live in population centers outside thenational grid. Real estate developments outside major cities increasingly consider solar systems to meet the rising energy demand.

Despitethehighelectrificationrateof99%,Egypthasbeensufferingfromanenergyshortagesince2008.In2014,Egypt’selectricitydemandamountedto27,700MW,20%abovethecountry’spowerproductioncapacity(Kingsley,2014).Rapidpopulationgrowth, summerheatwavesandoutdated, inefficientpowerplantsarereasonsforfrequentpoweroutagesinrecentyears,althoughthesituationbegantoimprovein2015withtheadditionofnewpowerplants.Electricitydemand,metprimarilyfromnaturalgas(47%)andoil(43%),willlikelyreach57,000MWin2027,anincreaseofaround30,000MWinjust12years.

ThecostofenergyinEgyptishighlysubsidizedbythegovernment.TheretailpriceofdieselfuelisUSD0.23,whilethecostofimportingitisreportedlyhigher,althoughexactfiguresarenotreadilyavailable.Governmentsubsidy spending amounted to USD 18.2 billion in oil product subsidies andUSD 1.8 billion on electricitysubsidiesinthefiscalyearof2013/2014.EnergysupplyshortagesandtheperceiveddiminishinghydrocarbonreservesofEgypthaveledtotheintroductionofthefive-yearplantoremovefossilfuelsubsidiesentirely.Thegovernmentaimstoachieveinternationalmarketpricesonfossilfuelsby2019.Thefirstadjustmentofdieselpriceinthesecondquarterof2014amountedtoa63%increase.AgribusinessesarereportedlyexpectingtopayaroundUSD0.70toUSD1.00perliterin2019includingtransportationcoststothesite.

Solarenergyisincreasinglyseenasacost-effectivealternativeenergysource,particularlytomeetthegrowingenergydemandinoff-gridareasacrossthesectorsofagriculture,tourismandextractiveindustries.

Egypt

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5.1.1 Utility mini-gridsUtilitymini-gridsinEgyptshowsignificantpotentialforsolarretrofittinginitiatives.Accordingtothe2013AnnualReportofEgypt’snationalutilitytheEgyptianElectricityHoldingCompany(EEHC),thecountryhas29isolateddieselpowerplantsinremoteareas.Theseplantsfeedelectricityintolocalmini-grids,whicharemanagedbyfourdistributioncompanies(table7).EEHCreportedthattheyconsumed78,000tonnesofdieselin2013,whichresultedinover200,000tonnesofannualCO2 emissions.

Table 7 - Isolated diesel power plants in Egypt

Company Number of plants

Installed capacity (MW)

Gross energy generation (GWh/year)

Canal DC 18 145 184.7El-Behera DC 4 12.3 30.7

Middle Egypt DC 6 41.3 24.3Upper Egypt DC 1 2.9 -

Total 29 201.5 239.7

Solar hybrid home systems in remote villages

An Egyptian solar company, Complete Energy Solutions, has installed 2.5 MW solar hybrid mini-grids systems for 3,441 homes in Sohag (Upper Egypt), Marsa Matrouh (North Coast) and North and South Sinai. The solar systems are mini-grids solutions backed by diesel gensets to serve 24-hour electricity to the remote villages. These 3,441 homes had been completely reliant on diesel gensets. During times of diesel shortage, they had no access to electricity.

The project has been funded by the United Arab Emirates under the grant to Egypt for solar energy retrofitting.

5.1.2 Private mini-gridsPrivatemini-gridsthatareretrofittedwithPVsolarenergyarethemosteconomicalsolutionformanyindustrieswithoutaconnectiontothenationalgrid.Especiallyonnewdesertfarmsandhotelresorts,centralizedmini-gridssystemssupplyenergytoanetworkofoutletsandoftenresultinthemostoptimalsolutioncomparedtodecentralized systems.

Tourism Sector

Whilethetourismsectoraccountsfor15%ofEgypt’sGDP,notalltouristdestinationsareconnectedtothenational electricity grid. Many hotels and resorts along the Red Sea and Mediterranean coasts are not connected tothenationalgridandareentirelydependentondieselforalloperationsincludingwaterdesalination.Thesehotelscarrysignificantpotentialforsolarretrofitting.

AnexampleofthisuntappedpotentialarethehotelsinandaroundMarsaAlam,aresortareabytheRedSea,whichis100%dependentondieselforelectricitygeneration.Therearemorethan56hotelswith12,500hotelroomsinMarsaAlam.Withanaverageannualdieselconsumptionof5,600litersperroom,MarsaAlam’shotelsconsumeapproximately60,000tonnesofdieselperyearandreleasearound200,000tonnesofCO2 emissions into the atmosphere.

Manyhotelshavenotbeenabletosecuresufficientdieselforalltheiroperationsinthepastfouryearsandhadtobuyfuelatapremiumthroughtheinformalmarket.Thesectorwillbefurtherpressuredasaresultoftheexpectedincreaseindieselpriceperliterfrom1.8EGP(=USD0.23)to5EGPby2019whenthesubsidyisfullyremoved.Manyhotelownersarebeginningtoseesolarenergyasawaytoloweroperatingcostsandavoid service disruptions.

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Pilot projects in the tourism sector

Other Industries Inaddition to tourism,Egypt’sextractive industries, includingminesandpetroleumsites,are idealcandidatesforsolarretrofitting,althoughtheirpotentialhasbeendifficulttsoquantifyduetoscarcityofdata.AnexampleofthispotentialistheSukarigoldmine,westofMarsaAlam,with40MWofinstalledofdieselgensetcapacity.Thisminehashaddifficultiessecuringdieseltomaintainoperationsinthepastfewyears,particularlyin2013whenit temporarilyshutdown itsoperationsduetodieselshortages.Similarly, informaldiscussionswithcompaniesconnectedtoEgypt’spetroleumindustryrevealedthattheinstalledcapacityofdieselgeneratorsvariesfromonenaturalgasoroilsitetoanother,rangingbetween3MWforthesmallersitesallthewayto300MWforlargerones.

5.1.3 Single-activity applicationsThetelecomindustryinEgyptreliesondieselgensetstopowernetworkbasestationsinremoteareas.In2012,Mobinil,oneofthemaintelecomcompaniesinEgypt,operatedover150off-gridstationswhichwouldbenefitfromsolarretrofitting.Ofthese150stations,approximately50havesufficientloadstojustifyhybridPV/dieselsolutions.TheremainingsitesaresmallenoughtoconvertcompletelytoPVandbatterystoragewithoutneedingabackupdieselgenset.Theestimatedpotentialsavingsindieselconsumptionrelatedtotheseretrofitsis1,870tonnesofdieselperyear(GSMA,2012).Thisestimateissolelybasedondatafromonecompany,Mobinil.WithatleasttwomoretelecomcompaniesoperatinginEgypt,thepotentialsavingsindieselconsumptionfromsolarretrofitsarelikelytobemuchlargerthanstatedinthisanalysis.

Some factories reportedly use diesel gensets to operate arc furnaces that consume higher loads of electricity than can be supplied by the national grid. These factoriesmay have sigificant potential for solar energyretrofitting,butfurtherinvestigationisrequiredtodeterminethecurrentlevelsofdieselconsumptionandthefullpotentialforretrofitting.

5.1.4 Water pumping for irrigation In2014Egypt’sagriculturalsector,onethecountry’stopeconomicdrivingforces,accountedfor14.51%ofitsGDP(El-Nahrawy,2011).Agriculturehasthehighestdirectandindirectemploymentrateof30%and54%,respectively.In2014,theMinistryofAgriculturereportedthatatotalof9.29millionacreswerecultivatedinthecountryofwhich6.09millionacreswereintheNileValleyandDeltaregion,the“oldlands,”and3.2millionacresinthereclaimed“newlands.”

TheNilevalleyandNileDeltaregionsareprimarilycultivatedbysmallholders(lessthan5acres)thatmakeuparound90%offarmersinEgypt.Theincreasingre-zoningofagriculturallandforresidentialusehaslimitedtheavailabilityoffertilelandalongtheNile,whichforcedlarge-scaleagriculturalcompaniestoexpandintodesertareas.LandreclamationforagriculturaluseisoneofthetopprioritiesoftheEgyptiangovernment.AccordingtotheMinistryofAgricultureandLandReclamation,Egyptplanstoincreaseitsagriculturalproductionlevelbyreclaiming1.5millionacresofdesertlandby2017andanother3millionacresby2030(El-Gindy,2011).

Theenergyintensityofirrigationinthenewreclaimedlandsandthelackofgridconnectionstomeetthisneedconstitutethebiggestchallengeforthisplan.Currently,farmsinnewlandsusediesel-poweredpumpstofeedtheirirrigationsystems.Increasingly,farmsintheoldlandsarealsousingdieselpumpstosupplementtheelectricalgrid-connectedpumpsduetopowershortages.

Lahamy Bay Beach Resort and Gardens in Marsa Alam

LahamyBayBeachResortandGardensisabeachresortanddivingcenteronthecoastoftheRedSea.The184-room resort is situated 120km south of Marsa Alam.

The resort entirely relies on diesel fuel using multiple gensetsamounting to2MW,and itsownersaspire toinstalla650kWpsolarPVsystemontothedieselmini-grid.

Asafirststep,thehotelownersinstalleda13kWpsolarsystem in 2014. The pilot projectwill help themgainexperienceinoperatingasolarsystem.

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Basedonexamplesoffarmsinthenewlands,anaveragegensetburnsapproximately30to40litersofdieselfuelanhourtopowerasinglepumpthatwilldraw100m3fromadepthofaround180meterstoirrigate25-60acres.Thelowefficiencyofdieselgenerators,duetooversizingandoverheating,resultsinhighoperatingcostsoftheirrigationsystem.Furthermore,thepoorinfrastructureinandaroundthenewlandsmakesthetransportationofdieselariskyandcostlyactivity.Inthepastfewyears,manyfarmshaveinstalledlargedieselreservoirstostorediesel for times of shortage. Despite having already built and secured many diesel reservoirs, agriculture companies reportedly continue to face shortages, especially during spring and summer.

Imagery ©2016 DigitalGlobe, Map data ©2016 Google 1 km

Google Maps https://www.google.com/maps/@22.7230835,28.4807454,7907m/data=!3m1!1e3

1 of 11/22/2016 2:53 AM

Imagery ©2016 DigitalGlobe, Map data ©2016 Google 200 m

Google Maps https://www.google.com/maps/@22.7152431,28.4908289,2283m/data=!3m1!1e3

1 of 1 1/22/2016 2:55 AM

Imagery ©2016 DigitalGlobe, Map data ©201650 m

Google Mapshttps://www.google.com/maps/@22.7278359,28.4843873,312m/data=!3m1!1e3

1 of 11/22/2016 2:59 AM

Wadi Natroun

Bahareya Oasis

North and South Sinai

Siwa

Western Desert

South Valley

West Menya

Thegovernment’ssolarpumpingplansdonotcurrentlycoverexisitngdiesel-poweredpumpingsystemsinthenewandoldlands.Anestimated258,000diesel-operatedpumpsarecurrentlyinoperationoutofthe880,000pumps used for irrigation throughout the country as reported in the Bulletin of Agricultural Machinery and Equipmentpublishedby theMinistryofAgriculture(EgyptianMinistryofAgriculture,2013).Theestimatednumberofdiesel-poweredpumpsincludes111,000pumpsthatserveasprimaryirrigationpumpsinthenewlands.Theremaining147,000diesel-poweredpumpsareusedforbackuppurposesingrid-connectedold-landfarms.

In total, diesel-poweredpumps in Egypt consumeanestimated3.7million tonnes of diesel per year, andrelease over 10 millions tonnes of carbon emissions.

Sofar,Egypt’sgovernmenthasbuilt600wellsacrossthesouthoftheQattara,Toushka,FarafraOasisandintheWesternDeserttosupplynewfarmswithwater.Giventhechallengesrelatingtodiesel,thegovernmenthasannouncedplanstopowernewwellswithsolarenergy(Al-AhramOnline,2015).Tosecuresustainablewatermanagementandlowerenergyintensity,farmsinthenewlandsarerequiredtousedripirrigationandsprinklersystems.Dripirrigationsystemsarepreferredwhenusingsolarenergy,astheirlowevaporationrateofapproximately5%makesirrigationduringthehotsunhourspossiblewithoutlosingwaterorburningthecrops.

BasedonvariousEgyptianagriculturalcompanies,themainareasfornewfarmlandreclamationare:

Off-gridpotatofarminsouth-westEgypt

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Table 8 – Estimated diesel consumption figures for irrigation pumping in Egypt

Nameplate capacity (HP)

Estimated operational

capacity (kW)

Yearly energy consumption4

(kWh)

Diesel consumption per kWh (gm)

Number of pumps

Total diesel consumption

(000s tonnes)

Portable:< 5 2.625 15,750 400 45,599 294

6 – 9 5.625 33,750 350 89,951 1,08610 – 12 8.25 49,500 300 36,178 549

> 12 10.5 63,000 250 15,467 249

Fixed:< 15 7.5 45,000 250 27,549 317

16 – 25 14.25 85,500 235 24,716 50826 – 45 26.25 157,500 220 8,597 304

> 45 37.5 225,000 200 10,182 468

Total 258,239 3,775

AsshowninTable8,thedieselgensetspoweringthepumpsvaryconsiderablyinsize.ThemajorityofEgypt’swaterpumpsareusedforrelativelyshallowdepths(surfacewaterornearsurfaceaquifers)anduseportablemachines(over80%).Mostofthemachinesarebelow9HP(74%oftheportablemachines)andareover20yearsold(68%ofallmachines).Intheoldlands,mostpumpsonlyliftwaterfromsmallbranchcanalsoftheNile(MesqaorMarwalevel).Inthenewlands,themainwatersourceisgroundwater,anddependingontheaquiferdepth,thepumpsizecanvaryfrom40to130kW.Unlikeintheoldlands,desertfarmsusesprinklers,pivots and drip irrigation. These irrigation systems require constant pressure. For solar energy to be a feasible alternative, the constant pressure can be achieved via water tanks, solar/diesel hybrid systems or waterpressuremanagementviaanopenirrigationsystemonthefarm.Thetrendwithinthesectorisclearlytowardsusingmorelarge-scalefixedpumpsthanportable,smallpumps,duetodiminishingfarmlandintheNileDeltaandNileValleyregions.

Pilot projects in the agricultural sector in Egypt

Solar water pumping and agricultural photovoltaic greenhouses in the Bahareya oasis of Egypt

InMarch 2015, SEKEM, an Egyptian SustainableDevelopment Initiativewith an organicfarmbasedontheoutskirtsofCairo,has installeda60kWstand-alonesolarsystemontheirdesertfarmintheBahareyaOasis.The60kWpolycrystallinesolarsystemisoperatinga37kWpumpirrigating60acresofdatepalms.Asthefarmhasan open irrigation system, the pressure can be regulated by opening and closing thewater valves. Therefore, thehigher theoutput of the system(higherirradiation),thelargerthespacethatcanbeirrigatedatatime.

Until today,thesystemdelivers inaverage800m3adaywithmorethan1,000 m3 a day during summer days. SEKEM decided not to use any diesel to back-uptheirsolarsystem.Unreliableandcostlydieseltransportationtothefarm is no longer part of the operating costs. The project has been installed by a German solar company, Aschoff Solar GmbH, together with a localpartner,Egreen,andpartlyfinancedthroughthelocalleasingfirmTamweel.

Afterthesuccessfulinstallationofthefirstsolarenergyoperatedwaterpump,SEKEMhasinstalledanothersolarsystemof53kWpattheendof2015.ItisthefirstAgri-PhotovoltaicsysteminEgypt.

The Agri-PV solar system is constructed as a greenhouse offering shade for high-valuecrops, whileproducingsolarenergy.The600m2greenhouseusesa18kWsubmersibleanda12kWsurfacepumpforanexpectedaverageof600m3wateroutputaday.Thepumpsare connected to an automated irrigation control system irrigating 18 acres of Jojoba plants and30acresofdatepalms.Inordertostoreandfilterthewaterfromitshighironcontent,threewaterreservoirshavebeeninstalled.

TheSEKEMsmanagementisplanningtorely100%onsolarenergyfortheirentireirrigationsystem on the farm. The project has been installed by the Egyptian firms Egreen andAcropolandpartlyfinancedbytheGermanInvestmentandDevelopmentBank(DEG)andtheAustrianDevelopmentBank(OeEB).

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5.2 Market potential for off-grid solar energy Table 9 – Off-grid solar energy market potential in Egypt

Target Applications Diesel consumption (ktoe/year) Potential PV capacity (MWp)

Utility mini-grids 78 825

Private mini-grids 60 77.36

Water pumping in agriculture 3,775 1,9387

Single-activity applications 1.87 0.09(GSMA,2012)

5.3 Barriers and support programsIngeneral,Egypt’scurrenteconomicsituation isthemostsignificantbarrier forthewide-scaleadoptionofdecentralizedsolarenergysolutions.Dueto thedevaluationof theChineseYuan,competitiononavarietyof goods including agricultural products hasharmedmanydeveloping countries’ exportmarkets, includingEgypt’s.Theoveralldemandforagriculturalproductshasalsodecreased,duetothestagnatingeconomyofEurope.TheEgyptiantourismsectorhasbeennegativelyimpactedforfiveyearsduetotherevolutionandtheperceived instability of the country. Further, the devaluation of the Egyptian pound has made the import of solar systemsmoreexpensiveforlocalendusers.

TheEgyptiangovernmenthasintroducedseveralincentivestoencourageinvestmentinrenewableenergy.Twoofthekeyincentivesare(LeagueofArabStates,2013):

1. The removal of customs duties for all renewable energy equipment and spare parts2. Allocating land for renewable energy IPP investment

A feed-in tariffprogramwas introduced inEgypt in2014.Producersof renewableelectricitywill receiveapremiumforthepowerthattheyselltotheutilityfor25years.Thefirstroundoftheprogram,whichwaslaunched in late2014,hasreceivedmuchattentionfromrenewableprojectdevelopersand investors,bothdomesticandinternational.However,decentralizedutilityisolatedgridshavebeenexcludedfromtheprogramwithnoplanstoincludetheminthenearfuture.

TheUAEhasprovidedtheEgyptiangovernmentwithagranttofinancesolarretrofitsofutilitymini-grids.Thefirstprojectfinancedthroughthisgrantistherecentlyinauguratedlarge-scalePV-dieselhybridsysteminSiwa.The10MWsolarplantservesanisolated,utilitymini-gridoperatedbyEl-BeheraDistributionCompanyandproduceselectricityinparallelwiththe4.5MWdieselpowerplantalreadyinplace.MiddleEgyptDistributionCompanyhasplanstousethegrantfundstoinstallupto6MWofsolarPVretrofitstohybridizeFarafra,AbuMonqarandQoraAlArbaeendieselmini-grids.Oncethisgrantfundingisexhausted,thedevelopmentofabusinessmodelforprivateinvestmentiscrucialforthesustainabilityofsolarenergyretrofittingandothersolarprojects in Egypt.

TheGreenTourismUnit(GTU)oftheMinistryofTourismofEgypthasalsodesignedasupportprogramtoprovideinterest-freeloansforhotelsinoff-gridregionsofEgypttoreceiveelectricityfromPV-dieselhybridsystems. This program aims to mitigate the anticipated sharp increase in the cost of generating electricity fromdieselcausedbythegovernment’splanstograduallyliftfuelsubsidiesoverthenextfiveyears.TheGTUwillusefundsallocatedbytheMinistryofFinancetocoverthecurrentdifferenceingenerationcostsbetweenPVanddiesel.Under thisprogram,an independentpowerproducerwill sell thehotelownerPV-generatedelectricityforthesamekWhpriceasdiesel.TheGTUwillcoverthecostdifferencetotheIPPuntilthetwogenerationtypesreachcostparityoncethesubsidiesaresufficientlyremoved.

Thehotelwillflexiblyrepaytheaccumulatedloan,dependingonitsoccupancylevel,byaddingagreensurchargeofUSD1.00peroccupiedroom.Therefore,theprogramensuresthatthehotel’sincomeisnotimpacted.Thisprogramisespeciallyattractivetosmallerhotelswithcreditratingsthataretoolowtoqualifyforbankloans.

KarmSolar, an Egyptian solar company specialized in solar pumping.

KarmSolarisanEgyptiansolarcompanywithafocusonsolarwaterpumpingforirrigatedagriculture.Sincetheirfirstcontractforasolar-poweredpumpin2012,thecompanyhasbuiltandcontracted34pumpsinoff-gridareas,whichgenerate1.7MWintotal.

KarmSolarisoneofthelargestprivateoff-gridsolarenergyintegratorsinEgypt.ThecompanyhasimplementedEgypt’sbiggest solaroff-gridhybridpumpingandirrigationsystemof147kWonafarmintheBahareyaOasis.

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5.4.1 End users

Tourism sectorThelevelofawarenessamongendusersofthepotentialofsolarretrofittingisrelativelyhigh,particularlyinthetourismsector.ManyhotelownersinMarsaAlamandHurghadahaveconductedfeasibilitystudiesandsolicitedoffersfromhybridsystemsolutionproviderstointroducesolarenergyintotheirmini-grids.Hotelownersseeksolarsystemstoreducetheiroperationalcostsandtargetenvironmentally-conscioustouristsfromEurope.

Political instability,however,hasweakened the sector since the revolution in2011.Thehigh initial capitalexpenditureofsolarsystemshaspreventedmanyhotelownersfrominvestinginsolarenergythusfar.Evenwitharecoveryofthesectorintheupcomingyears,profitsareexpectedtobeusedforrenovatingresortsthathavebeenneglected.WithoutthesupportmechanismsponsoredbytheMinistryofTourism,adoptionofsolarenergyinthetourismsectorwillremainslow.

Agricultural sectorIn theagricultural sector, over adozen solar pumpingprojectshavebeen implementedparticularly in thereclaimeddesertlandstothewestoftheNilebasin.Otherfarmowners,particularlylargefarmsexportingtoEuropean markets, are at various stages of the solar project development cycle. Their interest in introducing solar energy stems from diesel supply concerns and the push from European supermarket chains to reduce the carbon footprint of imported crops. Particularly diesel supply concerns are the prime motivator, as irrigation deficienciesnotonlynegativelyaffectthecurrentharvest,butalsopermanentlyaffecttheorchards.Long-terminvestmentsintoorchardscanbetotallylostifirrigationdeficienciesoccuroftenandoverperiodoftime.

Housing and villagesTheuseofmini-gridsislikelytogrowforresidentialuse,particularlyforhousingandvillageslocatedawayfromthenational grid. Over the past decade and particularly since the revolution in 2011, Egypt has seen an immense increaseinresidentialconstructioninandaroundmajorcities.Thegrowthoftherealestatemarketismainlydue to the rapid population increase, high urbanization rate and the devaluing of local currency.

Yet,manyresidentialcompoundswerenotabletosecuretheirelectricitysupplyfromthenationalutilityEEHCfortheplannednumberofhouseholdsinthehousingdevelopment.Manyofthesehousingdevelopmentswilllikelyresorttobuildingtheirownmini-grids,especiallywhentakingintoconsiderationthefive-yearplanoftheMinistryofElectricityandRenewableEnergytoincreaseelectricitytariffsby2019.Heavyelectricityconsumerswhoarelikelytoliveinnewresidentialcompoundswillexperiencethesharpestincreaseintariffs(Table10).Thehighcostsofgridconnectionandin-housecablingwithinthenewresidentialareasfurtherhighlighttheneedforsolarenergymini-gridssolution.

Table 10 - Electricity price increase for residential consumptionConsumption categories

(kWh/Month) 2014-2015 2015-2016 2016-2017 2017-2018 2018-2019

Piasters/kWh0-200 0.16 0.20 0.26 0.31 0.37201-350 0.24 0.29 0.35 0.45 0.55351-650 0.34 0.39 0.44 0.50 0.55651-1000 0.60 0.68 0.71 0.76 0.86

Higher than 1000 0.74 0.78 0.81 0.86 0.86

Althoughdozensofendusershaveexpressedstronginterestinimplementingsolarretrofitsintheirfacilities,mosthavenotbeensuccessfulinsecuringfinancingfortheseinvestments.Internationalfinancialinstitutionsconsidertheseprojectstoosmallfordirectfinancing,andlocalbanksandleasingcompanieshavebeenreluctanttofinancetheseprojectsduetounfamiliaritywiththetechnology.

5.4.2 Solution providersGivenEgypt’spastexperienceswithhybridsolar-dieselsystemsandoverallmoreadvancedlevelinrenewableenergy development, there are over a hundred solar energy solution providers. These market players have varying levels of technical capacity and field expertise. There are at least four companies whose level oftechnicalcapacitymayallowthemtoimplementimmediatesolutionsandbecomemarketleadersforoff-gridsolar energy applications.

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5.4.3 Government and public agenciesInEgypt,theMinistryofElectricityandRenewableEnergy(MOERE)andtheMinistryofAgricultureandLandReclamation (MoALR)are themost relevantpublic sectorstakeholders,as their input isessential formostprojectprocedures.TheNewandRenewableEnergyAuthority(NREA)isthemaingovernmentalinstitutionforrenewableenergyinthecountry.Theysettechnicalstandards,accreditsolarcompaniesandgenerallyworkongrowingthemarketforrenewableenergyinEgypt.EgyptERA,theindependentregulatorandconsumerprotectionagency,regulatesthefeed-in-tariffandotherIPP–basedrenewableenergyprojects.TheEgyptianElectricityHoldingcompany(EEHC),thepublicutility,isresponsibleforisolatedpowerplants.

TheGreenTourismUnitGTU isdevelopingfinancial incentives forsustainableenergy in thetourismsectoracrossEgyptandservesasanexampleofapublic agency thathasalreadydemonstratedawarenessandwillingnesstofocusonoff-gridsolarenergysolutions.

5.4.4 Development organizationsThe donor and international development community in Egypt is the largest of all four countries. Similar to the internationalfinancialinstitutions,thereisanimportantpresenceofdevelopmentagenciesandinternationalorganizations, such as UNDP, GEF, GIZ and USAID. These organizations have introduced a developmentalagenda focusing on sustainable development, renewable energy and employment creation, indicating highlevelsofawarenessandwillingnesstoparticipateinoff-gridsolarenergyprojects.

5.4.5 Financial institutions and investorsByvirtueofEgypt’slargeeconomyandintegrationintotheglobalmarket,mostinternationalfinancialinstitutions(IFI’s)arepresentinthecountry.TheseIFI’salsoshowaspecificfocusonrenewableenergyprojectsinEgypt,indicatingsignificantlevelsofawareness.Mostofthisfocushasbeendirectedtowardslarge-scalerenewableenergyprojects,highlightinganeedtoraisetheprofileofinvestmentsinoff-gridsolarenergyinremoteareas.

Egypt’sbankingsectorisoverallliquidanddeveloped,withdozensofbanksoperatinginthecountry.Thesebanks have access to capital, and while their interest in renewable energy solutions is growing, this hasnottranslated intoconcreteprogramsorcredit linesforrenewableenergyprojects,particularlyforoff-gridapplications.ThelimitedknowledgeofsolarPVtechnologieshaspreventedprivateandnationalbanksfrominvestinginrenewableenergyprojects.

However,theEuropeanBankforReconstructionandDevelopment(EBRD)haslaunchedanewcreditlinecalledEgyptSustainableEnergyFinancingFacility(EgyptSEFF).ThecreditlineisdedicatedtoenergyefficiencyandrenewableenergyinvestmentsinEgypt.ItiscurrentlyavailabletoclientsinEgyptthroughtheNationalBankofEgypt(NBE).EgyptSEFFoffersaone-stop-shopsolutiontothenation’senergyconsciousbusinesscommunitytodeveloptheirsustainableenergyprojects.ThemaximumloanamountisUSD5millionwitharepaymentperiodofuptofiveyears.

EgyptSEFFservicesmanysectorsincluding,butnotlimitedto:

• Manufacturing• Agribusiness

• Tourism• Commercial and administrative buildings

InitiativeslikeEgyptSEFFarecrucialforthedevelopmentofthesolarenergymarketinEgypt.Nationalandcommercialbanksneedtogainexperienceindevelopingcreditlinesforrenewableenergyprojects.

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$0

0.1

0.2

0.3

0.4

0.5

0.6

2000 2002 2004 2006 2008 2010 2012 2014

6 Country Specific Analysis:

Table 11 - Key socioeconomic and energy facts for Sudan



$

37,960,000 (WorldBank,2013)

166 out of 187 (UnitedNationsDevelopment

Programme,2013)


34.5%(ArabUnionofElectricity,2013)


SudanholdssignificantpotentialfordecentralizedsolarPVapplicationsthatcanbringaboutsignificantpositiveimpacttothelivelihoodofitsruralcommunities.Sudan’slowelectrificationrate(34.5%)indicatesthatalargesegmentof thepopulation reliesondiesel-basedpowergeneration.The largestpotential fordecentralizedsolarPVapplicationsliesintheagriculturalsector.InSudan,agricultureemploysover80%ofthepopulationandcontributestoapproximately30%ofSudan’sGDP(2013),makingittheprimarysourceofincomeandemployment(UnitedNationsDevelopmentProgramme,2015).

Figure 3 - Sudan retail diesel prices (USD/Liter) 2000 - 2014Moreover, the steadily rising price of diesel as a result of subsidy removal has been one of the main drivers of highinflationinSudan,affectingpoorfarmersinremoteareas of the country. In 2012, fossil fuel subsidiesaccountedfor15%ofgovernmentexpenditure.Therehas been a steady reduction in subsidies, which hasresultedina45%increaseindieselpricein2011andafurther114%priceincreasein2013(UnitedNationsDevelopmentProgramme,2015).

Given the importance of the agricultural sector tothe overall economy, reducing the cost of energy, particularly for small farmers, will be amajor driverof economic growth (United Nations DevelopmentProgramme,2015).


6.1.1 Utility mini-grids HydroelectricityisSudan’slargestsourceofpower,accountingfor80.85%ofgenerationin2012(ArabUnionofElectricity,2013).Althoughpowergenerationhasmorethantripledsince2000,themajorityofSudanesepeoplearestillwithoutaccesstoelectricity(U.S.EnergyInformationAdministration,2014).

The lowelectrification rate (34.5%)means thatasignificantportionof thepopulationdependsonoff-gridgeneration,mostlybiomassanddieselgensets. Inorder tomitigate the limitedreachof thenationalgrid,the Sudanese government has resorted in the past to building isolatedmini-grids to supply electricity tomajorregionalcities.Off-gridgenerationaccountedfor2%ofthetotalelectricitygeneration,followingmajorexpansionsinthenationalgrid(SudaneseMinistryofOil,2014).Thetablebelowshowssomeofthemajoroff-griddieselstationsandtheircapacities(Mahjoub,RestructuringtheSudaneseElectricitySector,2013).

DespiteSudan’slimitedpastexperiencewithnon-hydrorenewableenergy,thereisagrowingtrendtowardsincreasingtheuseofsolarenergyinremoteareas,withexistingruralelectrificationsolarPVprojectsamountingtoapproximately2MWintotal(SudaneseMinistryofOil,2014).

Sudan

Sudan

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Table 12 - Isolated diesel power plants in Sudan

Name of station Capacity (MW)

Port Sudan 24.65Al-Fashir 10Al-Geneina 7.8Kadugli 7.2Nyala 5Al-Nahud 4Al Foula 4Wadi Halfa 3.3Al-Daeen 2Total 63.8

Based on the amount of generated electricity and theaveragefuelconsumptionforthespecificgensetmodels installed in these off-grid stations, theyconsume an estimated 40,000 tonnes of diesel per yearwithestimatedCO2 emissions of 120,000 tonnes (Mahjoub,PowerGenerationUsingDieselinSudan,2013)(Caterpillar,2013)(MTU,2014)(MANDiesel&Turbo).

6.1.2 Private mini-gridsMines in Sudan have onsite electricity generation using diesel gensets. However, the hybridizationpotential of private mini-grids for mines, factoriesandotherprivateinstallationsisdifficulttoestimatedue to a lack of data.

6.1.3 Water pumping for irrigationInSudan,agricultureemploysover80%ofthepopulationandcontributestoapproximately30%ofSudan’sGDP(2013),makingittheprimarysourceofincomeandemployment(UnitedNationsDevelopmentProgramme,2015).AlthoughasignificantportionofSudan’scultivatedareadependsonrainfallforwater,irrigatedlandscontributeapproximately75%oftheaddedvaluefromagriculture.Therearethreeirrigationsystemswithinthecountry:pumped,gravity-drivenandfloodirrigation(UnitedNationsDevelopmentProgramme,2015).

ThecultivatedlandareainSudanrangesbetween13to17millionhectaresbasedonrainfallintensityanditsdistribution.IntheNorthernStatesofSudan,thecultivatedareaisapproximately5.88millionhectaresoutofwhichonly5%(273,000hectares)ispump-irrigatedusingapproximately25,000pumpsrunningmostlyondiesel.Thenumberofoperatingpumpswilllikelyincreaseinthenearfutureasaresultofthegovernment’splan to allocateUSD500million to increase the area of the pump-irrigated land ten-fold (UnitedNationsDevelopmentProgramme,2015).

Sudan’sestimateddieselconsumptionforirrigationisshowninTable13.ThisestimateisextremelyconservativeandismostlybasedondatafromtheNorthernStates.TheactualdieselconsumptionforagriculturalpumpingislikelytobesignificantlyhigherinSudan,especiallywhentakingintoaccountthatlarge-scalefarmsoutsidetheNileBasinhasbecomemorecommoninrecentyears.Moredataisneededaboutdieselconsumptionoflarge farms particularly in reclaimed desert areas.

Table 13 - Estimated small-scale water pumping in Sudan

Estimated average operational capacity

(kW)

Yearly energy consumption9

(kWh)

Estimated diesel consumption per kWh

(gm)

Estimated number of

pumps

Total diesel consumption

(000s ti)

4.45 8,010 350 18,154 52

6.2 Market potential for off-grid solar energy

Table 14 – Off-grid solar energy market potential in Sudan

Target applications Diesel consumption (000s tonnes/year) Potential PV capacity (MWp)


Water pumping in agriculture 52 10111

Sudan

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6.3 Barriers and support programs

Despitetheexistingmarketpotential,theuptakeofdecentralizedsolarenergyapplicationsinSudanremainsslow.CostisoftencitedbystakeholdersasthemainbarriertoscalingupsolarenergyapplicationsinSudan.EnergysolutionproviderspointtocustomsdutiesandtaxesonimportedsolarPVcomponentsasthebiggesthurdletowide-scaledeploymentofthistechnologyinremoteareas.InSudan,borderofficialsestimatecustomsdutiesbasedontheirexperiencewiththeimportedproduct.SolarPVisarelativelynewtechnologytotheseofficialsandreportedlygetstaxedupto60%oftheproduct’sprice.Asolutionprovidermentionedthathetypicallypayscustomsdutiesof25-30%,“income”taxof15-20%andafluctuatingVATtax.StakeholdersalsosuggestedthatforeigncurrencyfluctuationsanddifficultyintrasportingbulkyPVequipmenttoremoteareasmake diesel gensets seem comparatively easier and cheaper to use.

Lowawarenessandnegativeperceptionofsolarenergytechnologiesposeanimportantbarriertowide-scaleadoption.Interviewswithadiversegroupofstakeholdersrevealedageneralmisunderstandinganddistrustofoff-gridsolarenergyapplications,whichareperceivedtobefitonlyforlow-capacityneedssuchaslightingandwaterpumping.Lackofwell-publicizedsuccessstoriesinSudanfurthercurtailsmarkettrust,inparticularamong end users and banks. As a result, this information gap causes behavioral barriers and reluctance to try solarenergyasanalternativetodieselgensets.Inturn,solutionprovidersandfinancialinstitutionshavecometobelievethatthereisnodemandforoff-gridsolarenergyapplications.

Interviews with development organizations, end users and solution providers also highlight significantinstitutional capacity hurdles. According to many stakeholders, inadequate regulations for private sector participationinpowergeneration,excessiveredtapeandinstitutionalinertiacausesignificantdelaysinprojectimplementation,therebyreinforcingtheperceptionthatsuchprojectsaretoocomplicatedtobotherwith.

Currently, access tofinancing for solar energyapplications is limited inSudan.Banksprefer togive loansforprojectswith low-riskprofilesandtenorsof less thanfiveyears,which isnot thecasewithmostsolarprojects.Thegovernmentdoesnotprovideloanguaranteesorotherfinancialincentivesthatwillreducetheriskassociatedwithsolarenergyprojects.Inaddition,banksforthemostpartlackthecapacitytoevaluatethefeasibilityofloansfortheinstallationofsolarPVequipment.WhilemostbanksinSudanhavemicrofinanceschemes in place, solar energy applications do not currently qualify.

Despitethesebarriers,thevastmajorityofstakeholdersareawareoftheissuesassociatedwithwidespreadusageofdieselgensetsand that solarPV technologies representa suitablealternative tomeet thepowerneeds of remote communities. The increase in diesel prices has improved the attractiveness of solar energy retrofitting inmostsectors.In fact,sometelecomcompanieshavealready installedorplanto installsolarPVsystemsfortheirtelecomtowersandremoteservicecenters.Taxexemptions,supportprogramsandtheintroduction of regulations favoring private sector participation can further spur market uptake.

Conductingsector-specificmarketassessmentsandshowcasingpilotprojectsandsuccessstoriescanraiseawarenessandbuild trust foractorsacross thevaluechain.Ensuring training togovernmentandfinancialinstitutionstoimprovetheircapacityforassessingprojectfeasibilitycanbepivotaltofast-trackloanapprovals.ManystakeholdershavepointedtowardsTheNationalCenterforEnergyResearch(NERC)asapotentialhubfortrainingonrenewableenergyapplications,whoseroleshouldbestrengthened.


6.4.1 End usersEnd users in Sudan include hotels, small and large farms, mining sites and telecommunications companies. ConsultationswiththeseactorsconfirmthatsomeendusersareawareofthebenefitsofsolarPVandwillingtoswitchfromdiesel.Forexample,ZainTelecomhasinstalledover58hybridsystemsthatuse40%lessdieselinSudan(Zain,2011).

Inthepast,agriculturalendusershavebenefitedfromawareness-raisingactivitiestopromotesolarpumping.GiventheimportanceofthissectorinSudan,UNDPiscurrentlydevelopingaGEF-fundedprojecttoencouragetheuseofsolarpumpinginthenorthernregionthroughpilotprojectsandaccessiblefinancing.Suchprojectsservetoreducethecountry’scarbonemissions,astheagriculturalsectorhasthelargestshareofCO2 emissions inSudancomparedtotheenergy,industrial,landuse,forestryandwastesectors.In2000,theemissionsfromagriculturalsectorrepresentedapproximately74%oftotalemissionsproducedinthecountry(UnitedNationsDevelopmentProgramme,n.d.).

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6.4.2 Solution providersSudanhasanumberoflocalsolutionproviders,predominantlybasedinKhartoum,thathavepastexperienceinoff-gridsolarenergyapplicationsandexistingoperationsinremoteareas.ThesesolutionprovidershaveimplementedsolarPVprojectsforawiderangeofcustomersincludingfarmowners,manufacturers,governmententitiesandinternationalorganizationsactiveinSudan.Thepresenceoftheseexperiencedcompaniesinthemarketwillfacilitateitsexpansioninthefuture.Traininginbusinessdevelopmentandbusinessmodeldesignwillenhancethesecompanies’abilitytoexpandtheirreach.

6.4.3 Government and public agenciesInSudan,themostrelevantpublicsectoractorsaretheMinistryofWaterResourcesandElectricity,responsiblefordevelopingandimplementingpoliciesforenergyandelectricity,andtheMinistryofAgricultureandNaturalResources.TheMinistryofFinanceandNationalEconomyprovidesfundingforsolarenergyprojectsandtheMinistryofInvestmentispivotalforcustomsandlandissuesrelatingtosolarequipementandprojects.Thelattercreatedaruralelectrificationprogramthattargetssolarpumpingapplicationsamongotherrenewableenergytechnologies.TheNationalCenterforEnergyResearch(NERC)organizescapacitybuildingactivitiesandprovidespolicyadviceinthefieldofrenewableenergy.Becausediesel-basedpowergenerationiswidespreadinvarioussectors,consultationsandengagementwiththeseministrieswillbenecessarytopavethewayforsolar energy adoption in Sudan.

6.4.4 Development organizations Sudan has many international development projects targeting rural electrification and development thatincludesustainableenergycomponents.OrganizationssuchasUNDP,theGlobalEnvironmentFacility(GEF)andPracticalActionareactiveinprojectsrelatedtosolarwaterpumpinginparticular.TheUNDPhasdevelopedaprojecttopromotetheuseofsolarwaterpumpsforirrigationinSudanwithfundsfromtheGEF.

6.4.5 Financial institutions and investorsSudan’sbankingsectorconsistsof35banksand ismostlydominatedby largebankswithmorethanUSD17billion in outstanding loansandadvances (Global Impact InvestingNetwork,2015).Commercial banksrepresentaround97%ofthefinancialsystem,basedontotalassets.Thegovernment-ownedbanksincludethreespecializedfinancialinstitutions(SFIs),jointlyownedbytheCentralBankofSudan(CBOS)andMinistryofFinanceandmandatedtofillspecificaccess-to-financegaps.ThethreeSFIsaretheAgriculturalBankofSudan(ABS),theIndustrialDevelopmentBankandtheSavingsandSocialDevelopmentBank(SSDB).TheABSsuppliesabout53%ofthebankfinancingoftheagriculturalsector,andtheSSDBspecializesinsupportingmicrofinanceactivity.

Sudan’sbankingsystemfollowsIslamicSharia law,whichprohibitscharging interestondebt. Instead, thebankingsectorreliesonpartnershipandrisksharing(GlobalImpactInvestingNetwork,2015).FrequentlyusedfinancialproductsincludeMudarabah(passivepartnership),Musharakah(activepartnership),Murabaha(salecontractataprofitmarkup)andSalam(forwardsalecontract).Themicrofinancesectorissmallbutgrowingbecause the government actively promotes its development.

BanksconsultedinthisstudyincludeFarmer’sCommercialBankthattargetstheagriculturalsector,theAlNileBankforCommerceandDevelopment,BankAlBaraka,BankAlOusra,SavingandSocialDevelopmentBankandSudaneseEgyptianBank.Mostofthebankofficialsinterviewedexpressedconcernsregardingfinancingsolarenergyapplicationsbasedonperceivedlowreturnoninvestments,littlepastexperiencewithsuccessfullyfinancedsolarenergyprojectsandweakin-housecapacitytoevaluateprojectfeasibility.

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7 Country Specific Analysis:

Table 15 – Key socioeconomic and energy facts for Yemen

Population HDI ranking GDP (USD) Electrification rate Diesel price (USD per Liter)

$

25,956,000 (CentralStatisticalOrganization,2014)

154 out of 187 (UnitedNationsDevelopment

Programme,2013)


40% (UnitedNationsDevelopment

Programme,2014)

0.7012

(YemenPetroleumCompany,2015)

Yemen’s low access to electricity and heavy reliance on isolated diesel generation makes it a promisingcandidateforoff-gridsolarenergyretrofitting.Yemen’spopulationsuffersfromlowaccesstoelectricity,with

Yemen

$

Figure 4 - Yemen retail diesel prices (USD/Liter) 2000 - 2014only 40% of the population connected to the grid.Inequalitiesintermsofaccessexistamongruralandurbanhouseholdsandbusinesses.Although75%ofthepopulationisregardedasrural,only23%oftherural population has access to electricity, compared to about85%oftheurbanpopulation.

Almost half of the population relies on electricity from private diesel gensets (UnitedNationsDevelopmentProgramme, 2014). The reliance on diesel hasbecome problematic as a result of supply shortages and increasing diesel retail prices. Diesel shortages have been exacerbated by the ongoing violence inthe country. According to RCREEE contacts in theRural Cities Electricity Administration, most off-gridgenerating stations only receive enough diesel fuel to generate electricity at night, if any supply at all. Retail dieselpriceshaveincreasedten-foldsince2000asaresultofsubsidyremoval.

Yemen’s solar energypotential is vast. In2014,UNDPestimatedYemen’s solar technical potential aroundover18,000MWwithtwoofthemostfeasibleapplicationsbeingruralelectrificationandsolarwaterpumping(UNDP,2014).


7.1.1 Utility mini-gridsIngeneral,electricitysupplyinYemenislimited.Theweakgenerationcapacity,highgridlossesandincreasingdemandareamongthetopchallengesfortheenergysector(UnitedNationsDevelopmentProgramme,2014).Tomitigatethelimitedreachofthenationalgrid,thenationalutilityownsandleasesdiesel-basedpowerstationstosupplyisolatedareaswithelectricity,withanestimateddieselconsumptionof223,000tonnesperyear.

Utility-owned isolated stationsThePublicElectricityCorporationownsandoperatesanumberofisolatedstationsdistributedinseveralregionsofthecountry.Thefollowingtableshowsestimatesregardingtheconsumptionofpublicoff-gridstationsinYemen(PublicElectricityCorporation,2014):

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Table 16 - Utility-owned isolated diesel power plants in Yemen

City Averageload (MW)

Annualenergy production

(MWh)

Annualdiesel consumption

(ktoe)

Average diesel consumption (liter/kWh)

Al-Rayyan 3.814 28,29615 5.76 0.248Al-Monawwara 4.22 6,741 1.82 0.231

Khalaf 2.48 6,010 1.54 0.270Al-Shehr 1.24 8,012 1.1 0.264Seiyun NA16 62,513 14 0.263Socotra 1.18 5,863 1.3 0.228Hajja 2.48 6,068 1.49 0.287

Al-Bayda 1.22 4,316 1.07 0.290Al-Hodeida 1.69 5,332 1.39 0.305Al-Mahra 3.36 14,882 3.53 0.277Shabwa 2.93 17,843 3.97 0.260

Lahjj 2.58 10,059 2.55 0.296Sa’da 2.09 34,778 8.52 0.287Total - 210,713 48 -

Utility-leased isolated stationsTofillthegapbetweensupplyanddemand,theMinistryofElectricityandEnergyleasespowerstationsfromprivatecompaniessuchasAggreko,Al-Ahram,Saqr,BelhamadandAdenforIron.Theleasedstationssupplyelectricityeitheron-gridoroff-grid,andthegovernmentprovidesthesestationswithdieselfuel.Thefollowingtableshowsestimatesregardingtheconsumptionofleasedoff-gridstationsinYemen(PublicElectricityCorporation,2014):

Table 17 - Utility-leased diesel power plants in Yemen

Governorate Purchased energy (MWh)

Annual diesel consumption (ktoe)

Average diesel consumption (liter/kWh)

Al-Mahra 62,776 14.7 0.274Al-Bayda 28,849 6.96 0.273

Coast of Hadhramaut 224,551 55.71 0.280Al-Wadi 31,264 7.78 0.281Shabwa 114,229 27.85 0.271

Lahjj 19,910 5.23 0.297Mareb 235,132 57.62 0.277Total 716,741 175.85 0.273

7.1.2 Private industrial facilitiesThenationalgridofYemenfrequentlyexperiencespoweroutagesandsupplyintermittency.Asaresult,mostindustrialfacilitiesremainisolatedfromthenetworkandconsumealargeamountofdieseltogenerateelectricityonsite.OneofYemen’slargestindustrial/commercialgroupsoccupiesthelargestshareintheindustrialsectorinYemen.AccordingtoRCREEEcontactsatthisgroup,theestimatedon-sitegenerationcapacityofthegroup’sfactoriesandmallsisaround126MW.Thestationsareestimatedtoconsume78,000tonnesofdieselannually.Dieselisprovidedtotheindustrialsectoratapriceof150Riyalsperliter,orUSD0.70perliter.

7.1.3 Single-activity applicationsThe most prevalent single-activity application for diesel gensets is in the telecommunication sector. Twocompaniesdominatethissector.MTNhasthelargestnumberofoff-gridtowersinYemen,followedbyY.Thefollowinginformationwascollectedduringinterviewsregardingdieselconsumptioninoff-gridtelecomtowers.

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Table 18 - Diesel consumption in Yemen’s telecom industry

Company Number of off-grid towers

Average genset capacity (kVA)


MTN 680 15 15.35Y 20 14 0.6

Total 700 - 15.95

7.1.4 Water pumping for irrigationAccordingtotheMinistryofAgriculture’s2012annualreport,thecultivatedlandratiodeclinedcomparedtothepreviousyears,duetolackofrainanddieselshortagesbroughtaboutbythecountry’spoliticalcrisis.Anotherimportantfactoristheremovalofofthesubsidyondiesel,withpricesreachingUSD0.7perliterin2015.Thisindicatesgreatpotentialforsolarenergyretrofitting,whichwillprovebeneficialtothiseconomically-significantbutenergy-intensivesector.Manyfarmersreportedlylefttheirlandsuncultivatedduetodieselshortageandhigh black market prices.

Yemen’slandareais45,550,246hectares,withonly3.01%cultivated,equivalenttoabout1.4millionhectares.IrrigationinYemendependson4mainsourcesofwater,mappedbypercentageofagriculturalareaasfollows(MinistryofAgricultureandIrrigation,2012):

Forirrigationbygroundwater,farmersrelyondiesel-basedpumpstodrawwaterfromtheaquifersthroughwells.Anestimated70,000activedieselpumpswereoperationalinYemenin2009,pumpingfromavarietyofwellswith awide range of depths (World Bank, 2015). The following table shows the estimated dieselconsumptioningroundwaterpumping(MinistryofIndustryandTrade,2015):

Table 19 - Estimated diesel consumption figures for groundwater pumping in Yemen

Area Annual groundwater withdrawal (billion m3)

Specific diesel consumption (liters/m3)


Highlands 1.6 0.75 1,026Coastal areas 1.4 0.43 514.7

Eastern Plateau 0.6 0.21 107.73Total 3.6 - 1,648.43

7.2 Market potential for off-grid solar energy

Table 20 – Off-grid solar energy market potential in Yemen

Focus area Diesel consumption (ktoe/year) Potential PV capacity (MWp)


Private mini-grids 254.29 29318

Water pumping 1,648.43 89419

Single-activity applications 15.95 520

47% 11%38%

Rainwaterirrigation

Groundwaterirrigation

Floodwaterirrigation

Springwaterirrigation

4%

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7.3 Barriers and support programs TheongoingviolentconflictinYemenisthegreatestbarriertowide-scaleuptakeofsolarenergytechnologiesinoff-gridareas.Facedwiththephysicalandfinancialinsecurities,businessesarelesslikelytomakelong-termcapitalinvestments.Althoughinthelong-runsolarenergyisamoreresilientformoftechnologytowithstandarmedconflict,itwouldbedifficulttoimport,transportandinstallsolarPVsystemunderthecurrentpoliticaland security conditions in Yemen.

In2014,UNDPpilotedaprojectforsolarwaterpumpingincoastalplainfarmlands,specificallyinHadhramout,Abyan and Tehama. This pilot project revealed a number of barriers that hinder the sustainable development ofsolarwaterpumpinginYemen,suchaslackofsupportivepolicyframeworksandpracticalmarket-basedbusinessmodels,compoundedbyrelativelyhighupfrontcapitalcostofsolarPVtechnologies.Moreover,thehighprevalenceofpoverty,proliferationoflow-qualityPVequipmentandlackofawarenesshavereducedthepaceofsolarmarketexpansioninYemen(UnitedNationsDevelopmentProgramme).

The Yemeni government introduced a rather successful incentive program for solar pumping shortly before the outbreakoftheconflictinearly2015.TheAgricultureandFisheriesProductionPromotionFund,incollaborationwithCACBank,introducedaninterest-freeloanprogramforfarmers.Thisprogramenablesthemtopurchasesolar-poweredpumps,forwhichdemandisincreasingnoticeably,toreplacediesel-poweredones,aspartofagovernmentprogramtomitigatethenegativeeffectsofdieselfuelsubsidycuts.

AccordingtoRCREEEcontactsatCACBank,thebankadministerstheinterest-freeloanstofarmerstopurchasesolar-poweredpumps,whilethegovernmentcoversloanservicefees.Thegovernmentalsoprovidesgrantsdependingontheloan’srepaymentperiod,asfollows:

20% 15% 10% grant no loan is taken and

cost is paid in cashgrant if the loan is repaid in installments over a period of

12 months

grant if the loan is repaid in installments over a period of

24 months

Theprogramhasbeenimplementedand170pumpswerefinancedsofar.Publicandprivatesectorstakeholdershave,however,reportedthatonlyprominentandwealthyfarmersoragribusinessinvestorswereabletobenefitfromthisprogram.Thisismainlyduetothelargeloanguaranteesrequiredbythebank,whichrenderstheprograminaccessibletofinancially-strainedfarmers.CACBankonlyfundseligibleprojectstopumpingdepthsoflessthan500meters,asitwasdeemedinfeasibleotherwise.

ThroughtheSmallEnterprisesDevelopmentFund,theMinistryofIndustryandTradehasalsostartedfinancingsolarenergyprojectsinlate2014,withfivesuppliersofPVequipmentsignedupfortheprogramasofApril2015.Theloanhasarepaymentperiodofthreeyearsandanannualinterestrateof12.5%.Thefeaturesofthisloanprogramarenotsignificantlydifferentfromthe13.5%interestrateandthetwo-yeardisbursementperiod for other projects.


7.4.1 End usersManyoftheend-usersthatwereinterviewedforthisstudyseemedtohaveabasicunderstandingofrenewableenergy,especiallyfarmownersandcommercialusers.Theseusersexpressedinterestinexploringthepossibilityofintroducingsolartechnologiesintotheirfacilities.Somewentasfarasaskingthestudyteamfortechnicalassistanceinsolicitingandevaluatingtechnicalandfinancialoffersfromsolarenergysolutionproviders.

7.4.2 Solution providersDue to increasing insecurity of diesel supplies and electricity blackouts, Yemen has seen a market increase in thenumberofsolutionproviders.However,mostofthesesolutionprovidersarefocusedonsmallapplicationsand typically act as import agents of large international manufacturers. They do not necessarily have the technicalcapacitytoimplementthetypesofprojectsthatwouldberequiredforoff-gridsolarenergyretrofittinginremoteareas.Thesesolutionproviderswouldneedsignificanttechnicalcapacitybuilding.Thestatusofthesecompaniessincethebreakoutoftheconflictisunknown.

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7.4.3 Government and public agencies In Yemen, themost relevant public sector actor is theMinistry of Electricity and Energywith its GeneralRuralElectricityAuthorityandRenewableEnergyDepartment,responsiblefordevelopingandimplementingpoliciesinthefieldsofenergyandelectricity.TheGeneralRuralElectricityAuthorityfocusesontargetedruralelectrificationanddevelopment.TheMinistryofAgricultureandIrrigation isresponsiblefordevelopingandimplementingpoliciesinthefieldsofagricultureandirrigation,withpastexperienceinsolarwaterpumpingprograms. TheMinistry of Industry and Trade’s Small Enterprises Development Fund provides funding fordiverse solar energy projects.

7.4.4 Development organizationsPriortotheoutbreakofarmedconflictinYemen,manyinternationaldevelopmentorganizationswereactiveinthefieldofsolarenergypromotioninYemen.TheseorganizationsincludeUNDP,GIZ,WorldBank,USAIDandOFID.Underthecurrentconflictsituation,thefocusofdevelopmentorganizationshasshiftedtohumanitarianassistance and conflictmitigation for the foreseeable future. This shift in focus should not prevent theseorganizations from integratingsolarenergyapplications into theiroperations,suchaspoweringclinicsandotheressentialfacilitiesinrefugeecamps.Solarenergyapplicationsshouldalsobetakenintoaccountwhenplanningforpost-conflictreconstruction.

7.4.5 Financial institutions and investorsGivenYemen’songoing issues, thebankingsector isnotasdevelopedas in theothercountries.While theCooperativeandAgriculturalCreditBank(CAC)hasgainedsignificantexperienceinsolarpumpingfundingasdiscussedinprevioussection,therestofthebankingindustryhaslittleexperienceinfundingrenewableenergyprojects.Thebankingsectorhaslikelysustainedsignificantdamageduringtheconflict.

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Appendix A

Appendix A Methodology for estimating potential PV capacity (electricity generation)

A.1 Djibouti

(ParsonsBrinckerhoff,2009)presentedthefollowinginformationabouttheTadjouraandObockpowerplants:

Table 21 - Generation projections for the Tadjoura and Obock power plants

Tadjoura Obock

Installedcapacity (MW)

Projected demand for 2015(MW)

Projected energy generation for 2015

(GWh)

Installedcapacity(MW)

Projected demand for2015(MW)

Projected energy generation for 2015

(GWh)

2.2 1.37 5.081 1.4 0.6 2.844

TheTadjourapowerplantis,therefore,loadedataround62.3%ofitscapacity,whileObockisloadedatonly42.9%ofitscapacity.Forefficientoperation,adieselgensetcannotrunonlessthan40%ofitsinstalledcapacity(SMA,2015).

IfallthegensetsatTadjouraandObockarerunning(i.e.nobackupgensets),solarPVpenetrationcanonlycover22.3%ofthegeneration inTadjouraand2.9%ofthegeneration inObock.AtDjibouti’saveragespecificannualyieldof1,908kWh/kWp(SMA,2015),theTadjouraandObockplantscanbehybridizedwith655and45kWpofPV,respectively,or700kWp in total.

A.2 Egypt

Utility-owned mini-gridsBasedonthegeographiclocationsoftheisolatedstations,theaveragePVspecificannualyieldforeachoftheDCswasestimated(Solar-Med-Atlas,n.d.).Table22showstheestimatedpotentialPVcapacity,basedonamaximumenergygenerationshareof60%(SMA,2015).

Table 22 - Potential PV capacity for each of the DCs operating isolated diesel power plants.

Distribution company

Annual energy generation (GWh)

Potential annual PV energy generation

(GWh)

Average specific annual yield (kWh/Wp)

Potential PV capacity (MWp)

Canal 184.7 110.82 1,787 62El Behera 30.7 18.42 1,743 10.6

Middle Egypt 24.3 14.58 1,843 8Upper Egypt 421 2.4 1,760 1.4

Total 243.7 146.22 - 82

Privately owned mini-grids BasedonasurveyconductedbyRCREEEinMarsaAlam,andtakingintoaccountthedifferentscalesofandlevelsofserviceintheparticipatinghotels,anannualaverageelectricityconsumptionfigureof19,576kWhperhotelroomwasyieldedbytheensuingfeasibilitystudy.Foraminimumof12,500hotelroomsinMarsaAlam(Tripadvisor,n.d.),thetotalannualelectricitydemandisestimatedtobe244.7GWh.AtaPVshareof60%andaspecificannualyieldof1,900kWh/kWp(Solar-Med-Atlas,n.d.),thepotentialPVcapacityisaround77.3MWp.

A.3 SudanFortheareaswhereisolateddieselpowerplantsarelocatedinSudan,theaveragespecificannualyieldforPVisapproximately2,073kWh/kWp (SMA,2015).Fora60%PVshare(SMA,2015)inthetotaloff-gridenergygenerationof183GWh,thepotentialPVcapacityisapproximately53MWp.

A.4 YemenUtility-owned stationsDueto the relative lackofPV-specificmeteorologicaldataandmeasurements, theaveragespecificannualyieldforSan’aa(1,979kWh/kWp)(SMA,2015)wasusedtoestimatethepotentialPVcapacityforalloff-gridstations.Table23showstheestimatedpotentialPVcapacity,basedonamaximumenergygenerationshareof60%(SMA,2015).

Appendix A

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Table 23 - PV potential for utility-owned stations in Yemen

City Averageload (MW)

Annualenergy production

(MWh)

Potential annual PV energy generation (MWh)


Al-Rayyan 3.8 28,296 16,978 8.58Al-Monawwara 4.22 6,741 4,045 2

Khalaf 2.48 6,010 3,606 1.82Al-Shehr 1.24 8,012 4,807 1.122

Seiyun N/A23 62,513 37,508 18.95Socotra 1.18 5,863 3,518 1.78Hajja 2.48 6,068 3,641 1.84

Al-Bayda 1.22 4,316 2,590 1.3Al-Hodeida 1.69 5,332 3,199 1.62Al-Mahra 3.36 14,882 8,929 4.51Shabwa 2.93 17,843 10,706 5.4Lahjj 2.58 10,059 6,035 3Sa’da 2.09 34,778 20,867 10.54

Total - 210,713 126,428 63

Utility-leased stationsSimilarly,Tables24showtheestimatedpotentialPVcapacityforutility-leasedstations.

Table 24 - Potential PV capacity utility-owned stations in Yemen

Governorate Purchased energy (MWh)

Potential annual PV energy generation (MWh)


Al-Mahra 62,776 37,666 19Al-Bayda 28,849 17,309 8.75

Coast of Hadhramaut 224,551 134,731 68Al-Wadi 31,264 18,758 9.48Shabwa 114,229 68,537 34.63

Lahjj 19,910 11,946 6Mareb 235,132 141,079 71.29Total 716,741 430,026 217.15

Private Mini-gridsTable25showstheestimatedpotentialPVcapacitytheaforementionedindustrialgroup’spowerstations

Table 25 - Potential PV capacity for the industrial group’s factories in Yemen

Factory Generation capacity (MW) Potential PV capacity (MWp)

Total 126 75.6

Single-activity electricity generationBasedonthedataprovidedbytelecomoperatorsinYemen,PVpotentialisestimatedbasedonthenumberofoff-gridtowersandtheaveragegeneratorpowerforeachcompany.Assuminga60%PVshareandageneratorpowerfactorof0.8(Caterpillar,2013)(MANDiesel&Turbo)(MTU,2014)(SMA,2015),Table26showstheestimatedPVpotentialintheYemenitelecomindustry.

Table 26 - Potential PV capacity in the Yemeni telecom industry

Company Number of off-grid towers

Average genset power (kW)

Total genset power (MW)


MTN 680 12 8.2 4.92Y 20 11.2 0.22 0.132

Total 700 - 8.44 5

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Appendix A

Appendix B Methodology for estimating potential PV capacity (water pumping)

B.1 Djibouti

AtDjibouti’saveragewelldepthof72m(Houssein&Jalludin,1996)and6.19dailypeaksunhoursasanannualaverage(Sougal,Pon,Bates,&Petersons,2009),mostmodernsubmersibleelectricpumpswouldhavean average pumping rate of 14 m3perdayperkWofmotorpower(PentairWater).

AssumingDjibouti’saveragedailygroundwaterwithdrawalis5479.45m3(seesection4.1.3),theaveragetotalelectricpumpingcapacitythroughoutthecountrywouldamountto392kW.ThisisequivalenttoaPVcapacitypotentialof500kWp intotal,toaccountforvariationsinsolarirradiationandotherlosses(NewYorkStateEnergyResearchandDevelopmentAuthority).

B.2 Egypt BasedonthedataprovidedbytheMinistryofAgriculture,thetotalnon-portable(on-gridandoff-grid)electricalpumpingpowercanbeestimatedasshowninthefollowingtable:

Table 27 – Estimated fixed irrigation pumping power in EgyptPump size (kW) Number of pumps Total pumping power (kW)

7.5 66,697 500,22714.25 60,309 859,40326.25 19,423 509,85337.5 19,178 719,175Total 165,607 2,588,658

Assuminga PVgeneration share of 60% (SMA,2015), the total potential PV share of non-portable dieselpumping power is approximately 1,550MW, which requires an approximate PV capacity of 1,938MWp in total, to account for variations in solar irradiation and other losses (NewYorkState EnergyResearch andDevelopmentAuthority).

B.3 Sudan Insection6.1,theestimatedtotalpumpingpowerofdieselpumpsis80.8MW.TheuseofelectricalpumpsofthesamepowerwouldrequireanapproximatePVcapacityof101MWp in total, to account for variations in solar irradiationandotherlosses(NewYorkStateEnergyResearchandDevelopmentAuthority).

B.4 Yemen AccountingforthedifferenceintheannualaveragepeaksunhoursbetweenYemenandDjibouti(6.12fortheformerand6.19forthelatter),anestimatedpumpingrateof13.8m3perdayperkWofmotorpowercanbeused for the purpose of this analysis.

AssumingYemen’saveragedailygroundwaterwithdrawal is9,863,014m3 (seesection7.1.4), theaveragetotalelectricpumpingcapacitythroughoutthecountrywouldamountto714.7MW.ThisisequivalenttoaPVcapacitypotentialof894MWpintotal,toaccountforvariationsinsolarirradiationandotherlosses(NewYorkStateEnergyResearchandDevelopmentAuthority).

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Endnotes

1. Solar fraction is the ratio of the amount of input energy contributed by a solar energy system to the total input energy required for a specific application.

2. See Appendix A for methodology.3. See Appendix B for methodology.4. Assuming the pumps operate for 20 hours per day and 300 days per year (6,000 hours per year).5. See Appendix A for methodology.6. See Appendix A for methodology.7. See Appendix B for methodology.8. To exclude South Sudan and the areas irrigated by gravity, an irrigated area of 400,000 hectares (half of

Aquastat’s figure) was assumed for the purpose of this analysis.9. Assuming the pumps operate for 12 hours per day and 150 days per year (1,800 hours per year).10. See Appendix A for methodology.11. See Appendix B for methodology.12. This pump price does not apply to utility-operated or privately operated generating stations. According to

the Yemen Petroleum Company, generating stations buy diesel at a subsidized price of USD 0.186 per liter.13. Al-Rayyan station is primarily operated by HFO, but includes a sizeable installed capacity of diesel gensets.14. The average station load is 29.84 MW. The above figure was estimated based on comparing the shares of

diesel and HFO in electricity generation.15. Total energy production for the station is 222,782 MWh. The above figure was estimated based on comparing

the shares of diesel and HFO in electricity generation.16. Maximum load is 30 MW for this station.17. See Appendix A for methodology.18. See Appendix A for methodology.19. See Appendix B for methodology.20. See Appendix A for methodology.21. Estimated based on installed capacity.22. Estimated as 60% of the 1.8-MW maximum load (Public Electricity Corporation, 2014).23. Maximum load is 30 MW for this station.

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