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Mitigating GHGs with Solar Power in Africa
Ming Yang, Robert K. Dixon, Yun Wu
Global Environment Facility/World Bank Group,
1818 H Street, NW Washington, D.C., 20433
Mamadou Diarra
Department of Studies and Engineering, NIGELEC,
BP:11202, Niamey, NIGER
Introduction
Solar power: powerful weapon to reduce greenhouse gas (GHGs).
IEA (2008) projected that 11% (4754TWh) of the global electricity demand
until 2050 could be provided from solar energy in order to reduce 50% of
GHG emissions.
Besides photovoltaic panels, CSP plants are estimated to produce about
46% (2200 TWh) of the projected amount of solar power annually.
From 1999 to 2001, the Global Environment Facility (GEF), the World Bank
and Eskom Enterprises, jointly financed a study entitled “CSP-Africa".
IEA (2008) recognize that the African continent has the greatest potential for
using solar PV and CSP.
The GEF has supported the development and deployment of technologies
with low GHG emissions that were not yet commercial, but showed promise
of becoming so in the future (Diarra et al, 2001).
Objectives
1. To identify key issues in financing CSP
plants in Africa.
2. To demonstrate the GEF’s investment in
CSP plants in Africa and its impacts on
climate change mitigation.
3. To present GEF/World Bank’s projects in
South Africa, Egypt and Morocco as case
studies.
1. GEF Project in South Africa
South Africa is a substantial emitter of greenhouse
gases
89% of carbon emissions from energy related
activities in Southern Africa (Energy research centre,
2007).
The country’s power generation is heavily dependent
on coal. 95% of national power demand is supplied
by the predominantly coal-based utility Eskom.
2. Financing Structure of the CSP project in South Africa (1/2)
Figure 1: Financing structure of the GEF project in South Africa
2. Financing Structure of the CSP project in South Africa (2/2)
Financial mechanism
How the GEF resolved the issues
South Africa, Egypt, and Morocco
Insufficient financing
secured;
Leverage in public and private investment
Lack of private investment
High financial risk
Mitigated through investigation of replacement
solutions and cost; demonstration of critical
components
Table 3: Financial mechanism issues and the GEF projects’ contributions to
addressing them.
3. GEF project in Morocco
Electricity demand increased at a fast speed of 8.2% annually
from 2000 to 2006.
Morocco is heavily relying on energy imports with 95% of its
energy need, dominantly from fossil fuels source.
The GHG emissions provided of fossil fuel have grown at an
average rate of 6.3% annually from 2000.
In November 2009, the government initiated a Moroccan Solar
Plan aiming at a 42% renewable energy target by 2020 and a
2000 MW capacity for solar power including CSP by 2020.
4. Financing Structure of the CSP project in Morocco
Total cost: US$ 114.36 million
Co-financed by equity from the plant owner, and the
preferential loan from the AfDB.
Figure 2: Financing structure of the CSP project in Morocco
5. GEF project in Egypt
Egypt ranks the 11th fastest growing GHG emission in the world.
Its CO2 emission increases of 7% annually since 2000.
The CSP project was designed as Integrated Solar CombinedCycle with a capacity of 150 MW including 20 MW from solar.
6. Financing structure of the CSP project in Egypt
Project cost: US$147 million
The local cost is estimated to be 20% of the total investment.
GEF grant shares USD 49.8 million of the total cost.
Figure 3 Financing structure of the GEF project
in Egypt
7. Interrelation of the three CSP projects
Entering the GEF work program: Morocco (1999), Egypt (2004).
Morocco and Egypt projects contribute to Operational Program 7’s
goal of reducing long-term costs of low GHG emitting energy
technologies.
The South Africa project evaluates economic, environmental, and
social aspects of the STE technology. It benefits the Egypt and
Morocco projects in terms of identifying impediments to
sustainable deployment.
Different from the South Africa project, the Egypt and Morocco
projects looked at the market and cost reduction potentials of STE
technologies.
8. GEF contributions on CSP projects in Africa
The GEF plays a catalytic role in developing the solar
industry.
The projects:
•generate domestic side benefits (improved air
quality and/or reduced fuel cost due to capacity
expansion).
•are instrumental
worldwide.
for
future
CSP
projects
They provide momentum for the development of
global solar market, and reveal the barriers in earlier
stages of CSP projects.
9. Barriers removed from the GEF projects:
The major barriers of the three projects include:
• reduced private sector interest,
•higher than expected capital cost,
•weak institutional capacity,
•inadequate market access,
•uncertain regulatory reform, and
•underdeveloped transmission infrastructure.
9. Barriers removed from the GEF projects:
Therefore, the GEF program helps
mitigate the risks by removing their
barriers in the areas of:
• Capacity building,
• Technology transfer,
• Policy framework, and
• Financing mechanism.
a.) Capacity building
Capacity restriction and a lack of industrial infrastructure are big
hurdles for new technology.
Building broad-scale capacity of key stakeholders is critical to
project design and implementation of new technology penetration
in developing countries.
Stakeholders can then be provided with knowledge of the new
technology for risk analysis, project implementation and
monitoring.
Supports and participation from stakeholders and communities can
greatly catalyze market entry of CSP technologies.
Capacity building issues How the GEF built capacity
SOUTH AFRICA
Lack of tech know-how
and expertise
Low industry response
Developing local expertise, know-how, and intellectual capital
Facilitating establishment of local manufacturing enterprises to take advantage
of CSP projects
EGYPT
Lack of infrastructure
Trade of power, adding transmission projects to buy down the market access
risk for potential private investors
Low industry
response/interest
Moving towards increased private sector participation (varying electricity market
characteristics and different types of implementation models);
Corporatizing of private sector and public enterprises; andGaining momentum
on private sector development of renewable energy.
MOROCCO
Low capacity of power
trade Between countries
Adding transmission projects
Institutional frame in host
country for the electricity
market
Enhancing interconnection with Spain, Algeria;
Developing and extending grid towards the center and the east; and;
Modernizing national dispatching
Table 1: Capacity building issues and the GEF projects’ contributions to addressing them
b.) Technology transfer
The lack of CSP technology application from developed countries has impaired credibility of the
technology in developing countries, and the lack of knowledge and expertise in host countries makes it
even harder to implement.
Without participation and advocates of new technology, the CSP technology transfer can be difficult.
Technology transfer issues
How the GEF resolved the issues
South Africa
Lack of knowledge and awareness Research, development, demonstration, testing of diff technologies;
of the technology
establishment of testing and certification facilities, development of local
standards and codes; education, training, and information dissemination
programs
Egypt & Morocco
Economic and institutional barriers
Mitigated through capacity building and financing mechanism
Lack of knowledge and awareness Transfer of know-how and learning: Training of staff in CSP operations;
of the technology;
monitoring/evaluation and dissemination of performance results to support
future replication;
Limited public acceptance of ISCC
Research, development, demonstration, testing of diff technologies;
establishment of testing and certification facilities, development of local
standards and codes; education, training, and information dissemination
programs
Table 4: Technology transfer issues and the GEF projects’ contributions to addressing them
c.) Policy
The GEF has implemented energy policies and/or energy efficiency policies in the three countries and
encourages solar power to meet the targets set by each government.
Policy issues
How the GEF resolved the issues
SOUTH AFRICA
Lack of supportive framework for CSP
Implements SA’s energy policy, and the energy efficiency policy; Encourages
renewable energy to meet the targets set by the government;
EGYPT
Existing energy subsidy
Project implementation under reform program of reducing energy subsidies
Lack of regulatory framework for CSP
Implemented Egypt’s energy policy: renewable energy share target of 20% by
2020; Gained more experience on enabling environment
MOROCCO
Existing Energy subsidy
Energy subsidies are low by regional standards
Lack of regulatory framework
Implemented energy policy:
Moroccan solar plan of achieving 42% renewable energy target by 2020 and
2000 MW solar power target by 2020
More experience on enabling environment;
Table 2: Policy issues and the GEF projects’ contributions to addressing them
d.) Financing Mechanism
There is strong need for national or regional loan guaranteed programs and long-term
financing mechanisms to ensure sustainable deployment of CSP.
Cooperation with bilateral and/or multilateral financial mechanisms, such as Clean
Development Mechanism, diversifies the financial risk from single institutes and
reduces the inherent financial risk of new technologies.
The GEF is able to mitigate high financial risks through mobilizing private sector
participation, investigating alternative solutions and costs, and leveraging public and
private investment.
Financial mechanism
How the GEF resolved the issues
South Africa, Egypt, and Morocco
Insufficient financing secured;
Leverage in public and private investment
Lack of private investment
High financial risk
Mitigated through investigation of replacement solutions and
cost; demonstration of critical components
Table 3: Financial mechanism issues and the GEF projects’ contributions to addressing them
9. Conclusions
The GEF has experienced difficulties and learned valuable lessons.
Developing new, large-scale technologies in developing countries has various
challenges: lack of appropriate policy, legislation, institutional structures, human
resources, capital resources, and industrial partners.
The GEF will continue to facilitate the establishment of financing mechanisms to
sustain future funds, encourage communications among CSP host
countries, continue to develop local know-how and intellectual capital, and
integrate solar projects into a broader international power generation pool.
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