Opportunities and Challenges for On-Grid Solar · SolarPower Europe Webinar MODERATOR Michael...

SolarPower Europe Webinar

Opportunities and Challenges for On-Grid Solar

06 December 2016 at 16:00 CET

SolarPower Europe Webinar

MODERATOR

Michael Schmela Executive Advisor SolarPower Europe

SPEAKERS

Alexander HuppertzProject ManagerAfrica-EU Renewable Energy Cooperation Programme (RECP)

Eric KariningufuFounder and CEO3E Power

Milicent ChidambaSales Manager, Southern AfricaJinko Solar

Africa-EU Renewable Energy Cooperation Programme (RECP)A European Platform for Private Sector Investments in Africa’s RE Markets

Alexander Huppertz

Background I: Demand and Market Volume in Africa

4

New Investment in Clean energy in Sub-Saharan Africa 2004-15 ($bn); Source: Bloomberg New Energy Finance

SSA: 13% of the world’s population, but only 4% of its energy demand

Since 2000 energy use has risen by 45%

Only 290 out of 915 million people have access to electricity

80% rely on traditional use of solid biomass, mainly fuelwood, for cooking

“Modern” renewables account for less than 2% of the primary energy mix

Annual (private!) investment in the range of double-digit billion US$ is required per year to meet Africa’s energy needs

Enormous challenge = huge opportunities!

$0.0bn$0.2bn$0.2bn

$0.5bn

$1.0bn

$0.3bn

$2.0bn

$1.4bn

$6.5bn$6.8bn

$3.1bn

$5.2bn

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Other clean energy

Geothermal

Small hydro

Wind

Solar

Background II: Key Market Segments for RE in Africa

5

5

Large / Meso- scale on-grid (IPP)Ticket size: XX-XXX US$m (meso: X-XX US$)

Key regulations: PPA (FiT)

Small on-grid (captive power)Ticket size: 0.X-X US$m (bundled X-XX US$m)

Key regulations: FiT / Net-Metering

Off-Grid (Mini-Grids)Ticket size: 0.X-X US$m (bundled X-XX US$m)

Key regulations: Licences, Tariffs, Grid-connection

standards

Off-Grid (Standalone Systems)Ticket size: X-XX US$m (“bundled”)

Key regulations: Standards, Import Tax / Duties

Key Policy Instruments for Promoting Investment in RE

6

7

Policy Matters!!

Analysis of applicants for support through two EU support instruments: ElectriFI and RECP

Distribution of applications indicates perception of developers for viability of certain business models in certain markets (in addition to: market size etc.)

Key driver for IPP: regulation providing for clear framework for investment

What is the RECP?

The RECP is a African-European platform for promoting renewable energy market development and investment in Africa

Funded by the European Commission, the Netherlands, Germany, Austria and Finland

8

How can the RECP provide support?

9

Well structured and accessible Market Information

Identifying Project Opportunities in Partner Countries

Match-Making Eventsin Africa and Europe

Project preparation support and access to financial support

Successful Access to Financing

+ complementary policy advisory

+ support to skills development and innovation


Access to market information

Web-based market briefings introducing the political and economic situation, the electricity sector and the RE potential

Market Studies with “how-to”-information, providing an in-depth analysis of a certain market segment (e.g. Captive-Power/Self-Consumption in Nigeria)

Project scouting: through in-country partners, and consultants

Information events: workshops that introduce certain markets (or segments) presentations or panels; organized through partners

10


Access to potential business partners and project opportunities

RECP matchmaking events help you identify your next project/partner:

Meet technology suppliers, project developers, service providers from Europe

Meet potential clients and business partners from African markets

Meet potential financiers

More than 15 events in preparation, both in Africa and Europe, for 2016 and 2017

Events are organized standalone or attached to other events, through partners (African and European industry associations or equivalent), with structured match-making sessions

11


Information on Financing Opportunities

RECP’s finance database helps you identify sources of funding:

Information on more than 50 individual sources of funding; currently gathering data on funds

Initial risk-mitigation instruments included, to be expanded

Inclusion of local banks is planned

12


Advisory to Project Developers: the “Finance Catalyst”

Provides advisory support to project developers on project development, structuring and access to finance (“bankability TA”)

Cooperation (“two-way-street”) with existing financing instruments (ElectriFI, REPP, SEFA, and many others): “feeding into” as well as “upstream referral”

Delivered through a team of highly experienced professionals

Standardized and fair access procedure through an “intake” on the RECP website

Time “budget” of up to 100 hours per project (deviations possible)

13

Initial Results – Access to Finance

Finance Catalyst is supporting projects in accessing finance since August 2016

First 3-months of operation resulted already in 94 applications!

Clear need in the market for this type of early-stage project preparation support!

14

PV 34

SHS12

Biomass10

Biogas8

Small Hydro

8

Other22

Applications by Technology

0

20

40

60

IPP Mini-Grids SHS Other

Applications by Market Segment

Initial Results – Access to Finance II

Strong interface with ElectriFi established

Very close collaboration on working and management level between ElectriFi and RECP Finance Catalyst.

Mutual referral system in place.

Close exchange facilitates targeted advisory from FinanceCatalyst Team towards „feeding“ into ElectriFi.

Additional interfaces established with:

RECP services are bridging the gap between projects and finance!

15

EEP

REPP

SEFA

FMO

DEG

Energy Access Ventures

Et. Al.

How can the services and products be accessed?

Countries, Partners and Access

The RECP operates „in depth“ in six African countries (Nigeria, Rwanda, Uganda; Senegal, Zambia and Mozambique in preparation)

We cooperate with and implement through a network of partners, both in-country as well as global or European industry associations

Information and support services are accessible through www.africa-eu-renewables.org

16

http://www.africa-eu-renewables.org/

Thank you for your attention!

Suggestions & Feedback always welcome!

www.africa-eu-renewables.org

Contact: Alexander Huppertz, [email protected]

http://www.africa-eu-renewables.org/

mailto:[email protected]

• Flexible European Technical Assistance instrument promoting sustainable energy for equitable development

• Services: donor coordination support, political dialogue, policy advice, private sector promotion

• Studies and Resources, e.g.

– Mini-Grid Policy Toolkit

– Building Energy Access Markets

– Low Cost Grid Electrification

– Etc.

www.euei-pdf.org

Bonn 6 December 2016 page 18

EU Energy Initiative – Partnership Dialogue Facility (EUEI PDF)

06.12.2016 Seite 19

Goal: support coordination between donors,

access to information for all stakeholders

Objective: provide analytical framework for

orientation, map all relevant initiatives in Africa

Methodology: public sources, expert consultation,

validation with initiatives directly

Findings: 58 ongoing initiatives,

~5bn USD in 2013

Available at: http://www.euei-pdf.org

AEEP Mapping of Initiatives

http://www.euei-pdf.org/

Opportunities and Challenges for On-grid Solar in Sub

Saharan Countries

History

3E power, founded in 2012, is a Project

development company, whose main

objective is the structuring and financing

of power infrastructure assets

Global Reach

3E power operates in Africa, with a

specific focus on pre transitioning and

transitioning countries in the Sub Saharan

Africa region

Key Facts and Figures

3E Power counts two major power

projects:

$ 28 M On-grid Solar PV plant.

Off-grid : $ 60M SHS deployment at

seed stage development.

Services & Solutions

Acting as a Project developer allocating

resources

i) to develop projects from the idea stage to

the bankable stage and

ii) to facilitate the required financing in

debt and equity

Key References

3E Power has taken part in the following

selected flagship projects:

Goldsol II 11.2 MWp Solar PV plant in

a JV with Gesto Energia (Portugal) and

TMM Renewables (South Africa),

Rwanda

Off-grid expansion (3 yrs plan:

250,0000 SHS) in Rwanda

Snapshot of 3E Power

Africa is still the dark continent

~ 600 million people have no

access to electricity (1.2 billion

globally)

2010-2015: yearly GDP average

growth rate at 4.4% ( excluding

oil exporters and Arab spring

countries)

90% of the Africa population uses fuelwood for cooking.

The average rate of annual deforestation is estimated at 0.8%.

2.7 billion people globally do not have access to clean cooking energies

Africa is the only region where population with no access to electricity is actually increasing.

Why are in business?

3E Power primarily role is to develop projects from the idea to realization

In addition, 3E Power can still be involved after financial closure to ensure project completion and then after to assist in the management and optimization of the structure

Project preparation

Financial Close

Monitor Construction

Manage relationship with banks

Contractual Management Follow up operations

Maximize profit

Exit strategy

Primarily a Developer

Renewables Asset Finance by Region,

2005-2015 ($BN)

• South Africa emerges as the largest market. Probably reached saturation

• East Africa comes second with opportunities in Wind, Hydro and Solar PV

• Largest untapped region is certainly Central Africa ( DRC alone has mapped out 10 GW of renewables capacity)

• West Africa is yet to see expansion the way East Africa has.

Renewables by Region and Technology,

2005-2015 ($BN)

• Largely

dominated by

Solar ( PV and

thermal)

• Wind is

growing

• Enormous

opportunities in

Central, West

and Southern

Africa ( SA

excluded)

PV Asset Finance, 2004-Q3 2016 ($BN)

• IEA estimates an annual investment of $ 48 BN to achieve universal access by 2030. Electricity access will have a larger share in the overall investment need ( almost 90%).

• It is assumed 50% of the PPP funding comes from the private sector

• Tremendous investment by the 2 largest global markets – US and China- is helping decreasing the cost of PV modules, enhancing the industry

PV Asset Finance by Region, 2010- May

2016($M)

• SA is the biggest player

• Tremendous opportunities for growth in West and Central Africa.

• East Africa has had lately large deployment tough most in development phase ( ex. 2x50MW in Zambia)

The project is being developed by a consortium of 3E Power ( Rwanda), Gesto Energia ( Portugal) and TMM Renewables ( South Africa).

Goldsol II 11.2Mwp, Rwanda

EoI

•The utility issued an EoI as an initial screening

•40 developers/companies responded

Tender

•The utility issued the a tender for reverse tariff to 10 selected developers/companies.

•6 developers/companies submitted an offer

•Goldsol II was awarded the project

Negotiations

•An initial round of negotiations were conducted on term sheet of the PPA

•An MoA ( Memorandum of Agreement) was signed

•EPC contract was negotiated and signed

Deliverables

•Feasibility studies were conducted and delivered to the utility for approval

•An EIA ( Environmental and Impact Assessment) was conducted. Its approval granted by the Environmental agency

Projects Documents

•A 2nd round of negotiations were conducted on the project documents ( PPA, CA, GG)

•Feasibility study approval was secured

Pre-Financing

•Lenders/DFIs showed interest in the project

•IFC signed a mandate letter with the developer

Challenges

Know your Environment (

Regulations, PPP law, Off taker, Taxations …)

Find the right partners (Technological, Local

Partner)

Financial Analysis ( Keep an eye on your development cost, FX

risk…)

Projects Documents ( PPA, CA, Guarantees)

Debt providers ( T&C, Early engagement)

Thank You

“ What if we mobilized the

resources, scale, and scope of large

firms to co-create solutions to the

problems at the bottom of the

pyramid (BOP), those 4 billion

people who live on less than $2 a

day? “

Dr C.K Prahalad, The Fortune at the

Bottom of the Pyramid: Eradicating

Poverty Through Profits

Email: [email protected]: @ekariningufu

mailto:[email protected]

Opportunities and Challenges for On-Grid

Solar in Southern African Countries

32

Agenda

MWOverview of Jinkosolar1

Product Portfolio2

JinkoSolar in South Africa3

Challenges in Southern Africa

Opportunities in Southern Africa6

Q & A7

Market Overview of Southern Africa4

5

33

Jinko Solar in a nutshell

Listed on NYSE (JKS)

Sold to 70 countries

Offices/Subsidiaries33

Factories in 4 countries5

Employees15.000

Capacity

6,5 GWDelivered

14 GWIn Revenues

+2.5 Billion $

China Fortune 500

The Largest Solar Module Maker Worldwide

Cisco Confidential© 2012 Cisco and/or its affiliates. All rights reserved. 34

Maintaining the top position in terms of shipments

Jinko Solar is the Largest Solar Module Maker Worldwide and a member of big 6 ‘Silicon Module Super League’ (by PV magazine)

Position 2012 Ranking 2013 Ranking 2014 Ranking 2015 Ranking Q1-2016 Ranking

Q2-2016 Ranking

Q3 2016

1 Yingli Yingli Trina Trina Jinko Solar Jinko Solar Jinko Solar

2 Trina Trina Yingli Canadian

SolarTrina Trina Trina

3 Sharp Solar Canadian Solar Jinko Solar Jinko SolarCanadian

SolarJA Solar Canadian

4 Canadian Solar Jinko Solar Canadian Solar JA Solar JA SolarCanadian

SolarJA Solar

5 Jinko Solar JA Solar JA SolarHanwha Q

CellHanwha Q

CellHanwha Q

Cell


Crystalline Silicon Technology evolution

2015-2016Dual-glass Module

1500V Module

Black poly Module

PERC module

2014-2015Eagle anti-PID series

Smart Module

2010-2013Standard Mono, Poly Module

60\72 cell


Jinko Solar in South Africa

• The only Tier 1 PV producer in Africa (144 MW capacity)

• #1 market share position( 30%) with 7 utility scale projects financed by 6 banks

• Supplied 400MW into REIPP Round 1 and 2

• The largest operating PV project in Africa (91 MW De Aar)

• Most present locally: sales representatives in 8 countries


Market Overview of Southern Africa

• Population of about 300 million – 15 countries

• This region includes Africa’s second largest economy, South Africa

• Abundance in Mineral resources- Gold, Platinum, Copper, Diamonds

• All SADC countries have developed policies to encourage renewable energy development e.g. Mauritius-FIT, Botswana –FIT, & Bidding ,Namibia- FIT, SA competitive bidding ( Source:SADC Renewable Energy & Efficiency Report 2015)

• Estimated total installed capacity of approx. 59GW, approx. 49GW of this installed capacity belongs to South Africa alone (although not all of it is operational)

• Core power generation is from Hydro and Coal

• Energy can be traded between countries through the Southern Africa Power Pool (SAPP)


Market Overview Southern Africa- Sweet spots

• South Africa

– Power generation skewed towards coal- 92%

– Integrated Resource Plan (IRP) 2010 targets an increase in capacity to 17,8GW of renewable by 2030. Determination for solar – 8,4GW

– Renewable Energy Independent Power Producer Procurement Programme (REIPPPP)- 4 Bid Windows; 2,292 GW for Solar

– Small IPP- 2 bid windows to date.49MW already allocated during the first window

– Distributed generation is gaining momentum

MW in Round 1 MW in Round 2 MW in Round 3 MW in Round 4 MW in Round 4.5 MW in Round 4.5.5 MW in Round 5

Solar PV 632 417 435 415 457 XXX XXX

No of projects 18 9 6 6 6



• Namibia

– A net importer of power

– Power sector undertook reforms, unbundling which resulted in regional distribution companies ( REDS)

– Current Refit Programme 14 licensees, of which 13 were PV

– Net Metering discussions at an advanced stage

• Zambia

– Exclusively depends on Hydro power

– low electrification rate of 26%

– Scaling Solar which will act as a catalyst

– 150MW Solar RFP from the Ministry Energy & water Development. Minimum size of 10MW

• Botswana

– Coal dominates the energy mix

– Government issued an RFI for 100MW Solar- early this year



• Mozambique

– Hydro is the main source of electricity

– The electricity sector is based on a concession system

– Renewable Energy Policy which call for the establishment of feed-in tariffs

– Mocuba Solar Plant 40MW will pave way for future solar developments

• Madagascar

– Candidate for scaling solar-30-40MW

• Zimbabwe

– Great potential, rely on imports from SA and Mozambique

– Greatest challenge is the political risk

– Heard of planned projects of 50MW, 10MW, 100MW


Challenges for on grid solar in Southern Africa

• Limited institutional capacity- many governments lack the knowhow to structure, manage and negotiate private power concessions

• Political risk- political instability, infights, election cycles, succession

• Limited Access to Financing

• Poor credibility of the Utility Off-takers; most of them not bankable

• Lack of Grid Infrastructure

• Incoherent Government policies- e.g. local content, empowerment


Opportunities for on grid solar in Southern Africa

• No brainer that Southern Africa has one of the world’s best solar resources-many African countries receive on average 325 days of bright sunlight per year

• Scaling Solar acting as catalyst to open up the doors e.g. Zambia/ Madagascar

• Power cuts and load shedding are a fact of daily life in most African countries

• Industrialization Drive

• Mining Applications-the mining sector is the biggest power user group-generally consume about 50% of the national grid. There is a trend towards hybrid diesel and PV systems to lower the cost of electricity supply

• Dramatic fall in price of PV Technology. In particular solar modules, since beginning of the year prices have fallen down by 30%


Opportunities ctnd

• The lower tariff of 6,02 cents/kWh in Zambia now set the benchmark for the

region. This makes solar a viable option to fossil fuel based generation

0

2

4

6

8

10

12

14

16

18

20

Cost per kWh of electricity from Solar

Tariff ¢

Thank You!!!

44

Q&A

MODERATOR

Michael Schmela Executive Advisor SolarPower Europe

SPEAKERS

Alexander HuppertzProject ManagerAfrica-EU Renewable Energy Cooperation Programme (RECP)

Eric KariningufuFounder and CEO3E Power

Milicent ChidambaSales Manager, Southern AfricaJinko Solar

Upcoming Webinars

13 December 2016, 15:00 CET

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Presenter:

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To register please Visit out Webpage:www.solarpowereurope.org/events/upcoming-events/

http://www.solarpowereurope.org/events/upcoming-events/

© 2016 IHS

© 2016 IHS

SolarPower Europe (European Photovoltaic Industry Association)Rue d’Arlon 69-71, 1040 Brussels, BelgiumT +32 2 709 55 20 / F +32 2 725 32 [email protected] /www.solarpowereurope.org

SolarPower Europe Webinar:

Opportunities and Challenges for On-Grid Solar

Presentation available:www.solarpowereurope.org/events/past-events/

SolarPower Europe (European Photovoltaic Industry Association)Rue d’Arlon 69-71, 1040 Brussels, BelgiumT +32 2 709 55 20 / F +32 2 725 32 [email protected] /www.solarpowereurope.org

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