RE development in

developing countries and

the role of public sector Gevorg Sargsyan

Global Lead, Clean Energy

The World Bank Group

11,919

7,226 7,547

7,018

9,445

6,492

-

2,000

4,000

6,000

8,000

10,000

12,000

14,000

2010 2011 2012 2013 2014 2015

FY2010-2015 Commitment (US$m) by Sector

Upstream ExtractivesInvestment and Policy

General Energy Policy andInstitutional Development

Transmission and Distribution

Coal Fired Generation

Oil Fired Generation

Gas Fired generation

Energy Efficiency

Renewable Energy (Non-Hydro)

Hydropower Generation

World Bank Group’s energy portfolio

World Bank Group’s RE portfolio (FY2010-2015)

Biogas 1%

Biomass 1%

Geothermal 10% Solar CSP

14% Solar Lighting

0%

Solar PV 6%

Solar Thermal

0%

Wind onshore

2%

Hydro 54%

Unspecified RE 6%

RE TA, Capacity

Building & Project Mgmt

1%

Hydro TA, Capacity

Building & Project Mgmt

5%

US$ 8b

What are the main challenges?

Meet growing demand

5 Source: IEA, World Energy Outlook 2015

Change in energy demand in selected regions, 2014-2040

Achieve universal access

6

2.9 billion 1.1 billion

Electricity access

deficit

Cooking access

deficit Source: World Bank/IEA SE4ALL GTF 2015

Deliver NDCs and bridge the gap to 2DS Japan committed to 26% reduction in GHG

7 Source: IEA, Special Report on Energy and Climate Change, 2015

Is renewable energy delivering

on promise?

Technology transformation is underway

Demand side transformation

50% cost reduction in the last five years

Supply and installation <$1000/kWp!

Wind and solar cost competitive in several markets

10

Source: WRI The New Climate Economy, BNEF, WB

U.S.

Solar: 5-8 ¢/kWh

Wind: 4.7 ¢/kWh

Chile:

Solar: 8 ¢/kWh

Uruguay:

Solar: 9 ¢/kWh South Africa:

Wind: 5 ¢/kWh Solar: 7 ¢/kWh

Rooftop solar cheaper than electricity retail rates in

a number countries e.g. India Wind and Solar increasingly also reported

competitive with coal in Australia, Chile,

Mexico, New Zealand, Turkey, South Africa

Canada:

Wind: 6.6 ¢/kWh

UAE: Solar: 5.6 ¢/kWh

Parts of India:

Solar: 6-8 ¢/kWh Wind: 6-10 ¢/kWh,

Jordan:

Solar: 6-8 ¢/kWh

Turkey:

Wind: 7.3 ¢/kWh

China:

Wind: 8-9 ¢/kWh

Germany:

Wind: 6.7-10 ¢/kWh

Solar: 9.6 ¢/kWh

Brazil:

Wind: 4.5 ¢/kWh

Solar: 8 ¢/kWh

Australia:

Wind: 4-7 ¢/kWh

Peru:

Wind: 3.8 ¢/kWh

Solar: 4.8 ¢/kWh

Morocco:

Wind: 4 ¢/kWh

Egypt:

Wind: 4 ¢/kWh

Developing countries lead since 2013…

11 Source: IEA, Medium-Term Renewable Energy Market Report, 2015

World renewable power annual capacity additions, main vs. accelerated case

12

Solar potential is the largest in developing

countries (PV to triple in 5 years)

Source: data based on Solar Power Europe: Global Solar Power Map

World: from

178GW to 540GW

USA: from

19GW to 59GW

Chile: from

0.4GW to 5GW

Europe: from

89GW to 158GW

SAFR: from

0.9GW to 4GW

Australia: from

4GW to 12GW

India: from 3GW

to 54GW China: from

28GW to 114GW

Japan: from

23GW to 59GW

Auctions are gaining importance in many markets

13 Source: IRENA, RE Auctions: A guide to design

Many choices in

auction design:

can be custom-made

to fit country’s needs

What can public sector do?

What can public sector do?

15

• Enabling environment

• De-risking

• Greening grids

Enabling Environment: Readiness for Investment in

Sustainable Energy (RISE)

16

RISE is a suite of indicators that assess government support for sustainable energy investments

Pilot was conducted in 17 countries in 2014, first global edition in spring 2016

http://rise.worldbank.org

• Uncertainty in energy planning and continued government

commitment to renewables

• Feed-in tariff has been successful (too generous) ,

especially for solar, but uncertainty as support levels may

decrease after 2017

• Ambitious targets and government

commitment

• Record solar auctions, and large wind

commitments

• Transparent grid connection and use

of system rules

Brazil China

• Solar and Wind growing rapidly in

high-resource regions

• Competitive bidding has replaced

feed-in tariffs for solar in most

states, with very low resulting prices

• Financial viability of offtakers varies

by region, and payment guarantees

not always available.

• Allocation of connection costs not

always clearly specified

India

• Largest renewable energy market in the

world, twice as much new RE since 2000

as next 2 countries combined

• Market growing, but constrained

somewhat by lost revenue from high

curtailment of wind and solar

• Lack of transparent and coordinated

transmission planning can leave projects

without reliable offtake

17

0

5

10

15

20

25

30

0% 5% 10% 15% 20%

Exit

Pri

ce (

US

¢/k

Wh

)

Cost of Capital

Cost of Capital

O&M

Investment

De-risking: Decreasing cost of capital

Source: World Bank analysis

• Focus on decreasing off-take, resource and other risks affecting

cost of capital

De-risking: Maldives Accelerating Sustainable

Private Investment in RE (ASPIRE)

18 Source: World Bank

• Up to 35-50MW of PV

• WB provides off-take and

liquidity guarantee

• Potential subsidy for smaller

islands and batteries

I

Surface Reconnaissance

($1-2 mil)

II

Exploration Drilling

($20-30 mil)

III

Production Drilling

(~$20-120 mil)

IV

SAGS +Power Plant

(~$20-200 mil)

V

Operation + Maintenance

Identification of Resource

High Resource RiskLower Resource Risk

Financing RiskFinancing Risk Operational Risk

Pro

ject R

isk

De

ve

lop

me

nt

Ph

ase

sT

yp

e o

f R

isk

Cu

mu

lativ

e C

osts

o

f De

ve

lop

me

nt

De-risking: Resource Risk

19

Source: Energy Sector Management Assistance Program

Global Geothermal Development Plan March 2015

About $1 billion

5-8 times leverage

Greening grid: Smart grids in Ukraine, Vietnam

and Turkey

20

Source: World Bank

Traditional Distribution System

Distribution System of the Future

Greening Grid: Solar parks and transmission

in India

• World Bank to support over 3000MW of utility scale solar power

21

Charanka solar park (224MW) for comparison

Conclusions

22

• Meeting growing demand, providing access and

addressing climate change are the key challenges facing

developing countries

• Developing countries have largest RE potential and

already lead in deployment

• Private sector is in driving seat

• Governments and developing partners can support RE

developments by: Improving enabling environment

De-risking

Greening grid

Thank You