oas (kevin de cuba), from vision towards bankable renewable energy projects, st. kitts and nevis...
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From Vision towards BankableRenewable Energy ProjectsSt. Kitts and Nevis Example
IRENA-CARILEC Renewable Ener Forum Bermuda Se t 17 2012
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OAS: Background
The General Secretariat of the Organization ofAmerican States (GS/OAS) is the premier forum for
multilateral dialogue and concerted action in Latin
America and the Caribbean.
GS/OAS serves 34 member states of the hemisphere
Representative Offices in most of its member states
Department of Sustainable Development
Energy and Climate Change Mitigation Section
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ECPA Caribbean Initiative
Goals:I. Market conditioning: Promote sustainable energy policies
II. Commercialization: Assist governments deploying and
commercializing renewable energy projects
III. Regional integration: Support dialogue to address long-termCaribbean energy security challenges and promoting regional
integration
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When is a project bankable?
Starts with recognizing that what is needed to make a renewable energy
project bankable is challenging for both developers seeking fundingand forfinanciers seeking a suitable investment.
Our role is assisting in bridging the gap between developer andfinanciers needs to make a renewable energy project bankable.
RE resourceassessment
Marketconditioning
Project ID /
TechnologyTransfer
ProjectFinancing
Project Execution(Build/Own/Operate)
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What is the basic check-list for a bankable project?
Project objectives, design, scale, and conditions must be clearly defined
and be able to fit within existing sectors/branches of interest;
A (pre-)feasibility assessment needs to be performed(developer/investor (Bank/FI);
Due diligence confirming technical and financial viability(public/industry (private)
Environmental and operational standards/protocols compliance (notonly local laws but internationally accepted standards);
Be the least-cost solution after CBA/Life Cycle Costs analysis of project;
Investors Final spread sheet - All inputs needed to perform a comprehensivefinancial analysis (including O&M costs, energy price forecasts, expected savings,etc.) have to be in place.
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Case Study: Federation of St. Kitts and Nevis
Item Value
Land Area
269 km (total)
176 km (St Kitts)
93 km (Nevis)
Population
42,000 (total)
30,000 (St Kitts)
12,000 (Nevis)
Geographic coordinates 17 20 N, 62 45 W
SKN is the smallest OAS Member State
Federal Ministry of
Public Utilities, Energy,
Housing & Works
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Conditions in 2005
In summer of 2005 SKN started transition fromagricultural based economy to a tourism industry
Need to assess alternative uses of available land
Economy needed to become diversified and morecompetitive and energy is a key ingredient in
facilitating this transition
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Energy Sector Conditions in 2005
No Energy Plan or Policy in place (2005);
100% dependent on imported fossil fuels for energy
generation, transportation, and other uses;
St. Kitts Electricity Department (Government
Department) and NEVLEC (corporatized in 2000); Limited market size (ie. Electricity demand);
Shift to tourism and banking in commercial sector (ie.
high quality power requirements);
Water sector created considerable demands for power
sector;
Considerable renewable energy natural resources.
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RE Development in SKN?
What is the current energy situation?
What are the RE resource potentials?Technical Perspective
What is the long term vision of SKN?
Is there a strategy in place to achieve vision?Political Perspective
How conducive is the existing legal structuretowards RE deployment?Legislative Perspective
Does SKN Govmnt have the required capacity toassess and close contractual RE Project deals?Institutional Perspective
Can RE projects be identified on the short/mediumterm to attract investors?Project Development
How can finance be secured for identified REprojects?Financing
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Qualitative RE resource and supply mix assessment
(2005-2006)
http://www.gseii.org/PDF/NWS-E-2006-21.pdf -
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St. Kitts (2005-2020)
Nevis (2005-2020)
0
10
20
30
40
50
2005 2010 2015 2020
PeakDemandandOperational
Capacity(MW)
Year
solar
wind
conventional
low
medium
high
0
10
20
30
40
50
2005 2010 2015 2020PeakDemandand
OperationalCapacity
(MW)
Year
geothermal
wind
conventional
lowmedium
high
SKN Energy Outlook Scenarios (2006)
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Solar Irradiation(2010)
Bio-energy(2007)
Geothermal Potential(2005)
Renewable Energy Resource Mapping
(20052011)
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National Energy Outlook
St. Kitts and Nevis (2005-2020)
0
10
20
30
40
50
60
70
2005 2010 2015 2020
PeakDemandandOperatio
nalCapacity(MW)
Year
solar
geothermal
wind
conventional
low
medium
high
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National Energy Policy Development
(20082011)
Vision Statement:
The Federation of St. Kitts and Nevis wants to become a
twin-island nation with a sustainable energy sector where
reliable, renewable, clean andaffordable energy services
are provided to all its citizens.
Federal Ministry of
Public Utilities,
Energy, Housing &
Works
Ministry of Natural
Resources and
Environment - NIA
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SKN Policy Objectives
#1 Sector Management: Secure efficient and well-coordinated planning and
institutional management to guarantee sustainable and transparentperformance of supply, generation, distribution and end-use of energy
#2 Diversify Energy Supply: Guarantee safe, reliable and affordable supplies
of petroleum products and their efficient and clean handling while in
parallel significantly increasing the deployment and utilization ofrenewable energy technologies in the Federation of St. Kitts and Nevis
#3 Electricity Generation: Secure safe, efficient, reliable, affordable and
environmentally friendly electricity generation and access by all
consumers of St. Kitts and Nevis
#4 Transportation: Efficient, environmentally clean and cost-effectivetransportation
#5 Energy Use: Minimize energy input and achieve lowest possible energy
intensity of economic services in all sectors of the society
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Wind - Nevis RE Assessment (2005), wind
measurements (2007/08)
National Commitments/Goals National Energy Policy (2011)
Sustainable Energy Plan (ongoing)
RE Policy
RE Solicitations/Bidding (due diligence,2007)
Utility/Developer ContractualFramework IPP legislation (2008)
Standardized PPA (2008)
PPA negotiations (2009)
Commissioned (Aug 2010)
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Geothermal Development Pathway
St. Kitts and Nevis (2005-2020)Geothermal Resource Nevis (2010)
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Geothermal - Nevis Geo assessments +20 studies and OAS (2005)
National Commitments/Goals National Energy Policy (2011) Sustainable Energy Plan (ongoing)
Technology Specific Legislation i.e. Geothermal Resource Law (2008)
Utility/Developer Contractual Framework IPP Geothermal Resource Contract (2008)
Standardized PPA (2008)
Pre-feasibility Interconnection N-SK (2008)
Environmental Impact Assessment (2010)
Interconnection Study Nevis-St. Kitts (Oct2012)
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Generalqualitative REresourceanalysis
Targeted
prefeasibilitystudies (Bio, Wind
and Geo)
Perform due
diligence andLegal
Assistance
Prepare legaldocumenta-tion
Facilitatenegotiations withdevelopers
Close /signing of aPPA/contract
StakeholdersConsultations
Data CollectionMission andResearch
Initial DraftNEP
StakeholdersReview
First NEPDraft
CabinetConsultation/approval of NEP
RE Development in SKN?
2005 2007 2008 2009 Present2006 2010
Quick Scan analysisof sector conditions
CapacityBuilding
Assessment
MOUcreation of
EnergyDepartment
Development andapproval of TOR
Financingstationary/
office
Establishment ofSKN EnergyDepartment
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Is the Geo-Project in Nevis a bankable project?
Project objectives,design, scale, and
conditions must beclearly defined and be
able to fit withinexisting
sectors/branches ofinterest;
A (pre-)feasibilityassessment needs to be
performed(developer/investor
(Bank/FI);
Due diligenceconfirming technicaland financial viability
(public/industry(private) ->
interconnectionneeded
Environmental andoperational
standards/protocolscompliance (not only
local laws butinternationally
accepted standards);
Be the least-costsolution after CBA/LifeCycle Costs analysis of
project;
Final spread sheet - Allinputs needed to
perform acomprehensive
financial analysis(including O&M costs,energy price forecasts,expected savings, etc.)
have to be in place.
DONEDONE DONE DONE
Geothermal Resource in Nevis
Project objectives, design,scale, and conditions mustbe clearly defined and beable to fit within existing
sectors/branches ofinterest;
A (pre-)feasibilityassessment needs to be
performed(developer/investor
(Bank/FI);
Due diligence confirmingtechnical and financial
viability (public/industry(private)
Environmental andoperational
standards/protocolscompliance (not only local
laws but internationallyaccepted standards);
Be the least-cost solutionafter CBA/Life Cycle Costs
analysis of project;
Final spread sheet - Allinputs needed to performa comprehensive financialanalysis (including O&M
costs, energy priceforecasts, expected
savings, etc.) have to be inplace.
Electrical Interconnection NevisSt. Kitts
DONE Ongoing Ongoing
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212005 2007 2008 2009 Present
Global Sustainable Energy Islands Initiative (GSEII), see: www.gseii.org
Eastern Caribbean Geothermal Project (GeoCaraib)
US-Brazil Biofuels Initiative
Caribbean Sustainable Energy Program (CSEP) and in 2010 with NRELunder Low Carbon Communities in the Caribbean (LCCC)
Energy and ClimatePartnership of the
Americas (ECPA), see:www.ecpamericas.org
How have we been able to assist SKN?
2006 2010
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Lessons learned and recommendations
Country vision and commitment is critical
Need to focus multilateral assistance on capacity building for stats/data generation,gathering, analysis, monitoring and evaluation (compliance to NEP);
Specific resource assessments (bio, wind, geothermal) are required for someislands for others not;
OAS Strength is Presence, Continued Engagement, Liaison, and Spokesperson
Synchronization among multilaterals, development entities, etc.
Island Communities are united but not uniform
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Energy and Climate Change Mitigation
Department of Sustainable Development - DSD
Executive Secretariat for Integral Development - SEDI
Organization of American States
1889 F St. N.W. Washington, D.C. 20006, USA
T. 202.458.6261
F. 202.458.3560
www.oas.org; www.oas.org/dsd
www.sepa-americas.net
www.ecpamericas.org
ing. Kevin de Cuba, MSc.Senior Energy Specialist
http://www.oas.org/dsdhttp://www.sepa-americas.net/http://www.ecpamericas.org/mailto:[email protected]:[email protected]://www.ecpamericas.org/http://www.sepa-americas.net/http://www.sepa-americas.net/http://www.sepa-americas.net/http://www.oas.org/dsd -
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OAS: Policy Organization and Development Strategy
St. Kitts Electricity Company (SKELEC) as per 2011Unit Technology Capacity (MW) Installation year#1 Mirrlees KV12 3.6 1971#2 Mirrlees KV12 3.6 1971#3 Mirrlees K8 3.5 1987#4 Caterpillar 3616 (#1) 4.4 1989
#5 Caterpillar 3616 (#2) 4.4 1995
#6 Mirrlees 12MB430 7.9 1999
#7 Mirrlees 8MB430 6.1 1999
Total 33.5
Nevis Electricity Company (NEVLEC) as per 2011Unit Technology Capacity (MW) Installation year#2 Blackstone 0.9 1983
#3 Blackstone 0.9 1985
#4 Blackstone 2 1990
#7 EMD (GM) 2.5 1992
#5 Blackstone 2.2 1996
#6 Blackstone 2.5 1996
#8 Wartsila 2.7 2003
Total 13.7
WindWatt Ltd.Unit Technology Capacity (MW) Installation year
Maddens farm Vergnet Wind Turbines (8x275kW) 2.2 2010
Total 15.9
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OAS: Policy Organization and Development Strategy
St. Kitts Nevis Regional
Wind Solar Wind Geothermal RETsFossil
fuels
Short term (1-3 yrs)
Installed Capacity (MW) 5.4 - 2.2 10.0 - -
Average power output (MW) 2.3 - 0.9 9.0 - -
Sum additional average
capacity (MW)12.3
Timing 2011 - 2010 2012 - -
Medium term (3-10 yrs)
Installed Capacity (MW) 10.0 5.0 10.0 35.0 - -
Average power output (MW) 4.2 2.0 4.2 33.0 - -
Sum additional average
capacity (MW)43.4 - -
Timing 2014 2014 2015 2015 - -
Long term (10-20 yrs) Installed Capacity (MW) 50.0 (20.0) -30.0
Timing 2021 2021
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Geothermal Development
Technical Assistance, Geo-Carabes (2005ongoing)
I. Technical: Assess the resource/technicalpotential for the several sites and electricityinterconnection scenario = Reduce resourceuncertainty and development risks
II. Policy/Legal: Reform legal framework andDevelop Local/Regional Capacity = Reducecontract/policy uncertainties, expeditelicensing/permitting, and strengthen local inputs
III. Financial: Prepare Geothermal Drilling Risk Fund= Reduce financial risks associated with initialcommercial exploration
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Pre-feasibility study electrical interconnection
NevisSt. Kitts (2008)
Resources: >98% imported fossil fuels (1.1 MW wind in Nevis and 5 MW windin planning for St. Kitts) and WTE.
Electricity Price: >US$.40/MWh
http://www.oas.org/dsd/reia/Documents/St.%20Kitts%20-%20RenewableEnergyProjectsandInter-connectionAssessment.pdfhttp://www.oas.org/dsd/reia/Documents/St.%20Kitts%20-%20RenewableEnergyProjectsandInter-connectionAssessment.pdf -
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Geothermal: Opening doors for economic development
Development Opportunities: -Interconnection between St.
Kitts and Nevis
-Strengthen power grid = attract
new investment (tourism, hightech, light to heavy
industry/minerals)
-Water processing (desalination)
-Interconnection with PuertoRico (and/or other islands)
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World Bank Assessment: Energy Supply
Interconnections and Regional Sources of Energy (2011)
Interconnections MW Energy
Source
Km Viability (Nexant Analysis)
Nevis St. Kitts 50 Geothermal 5 Highly economic
Nevis Puerto Rico 400 Geothermal 400 Highly economic if displaced fuel
is HFO
Not economic if displaced fuel is
LNG
Nevis US Virgin Islands 80 Geothermal 320 Only marginally economic even
though it displaces distillate
Saba-St. Maarten 100 Geothermal 60 Highly economic if displaced fuel
is distillate and St. Maarten can
accept 100 MW
Dominica - Martinique 100 Geothermal 70 Marginally economic if displaced
fuel is pipeline gas
More economic if displaced fuel
is higher cost
Source: Garner and Hansen (2011)
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World Bank Assessment: Energy Supply
Interconnections and Regional Sources of Energy (2011) - Cntd
Interconnection MW Energy
Source
Km Viability (Nexant Analysis)
Dominica - Guadeloupe 100 Geothermal 70 Moderately economic if
displaced fuel is pipeline gas
Highly economic if displaced fuel
is HFO
US (Florida) - Cuba 400 Coal-fueled
steam plant,
gas fueled
combined
cycle
400 Highly economic if displaced fuel
is HFO
Dominican Republic Haiti (Land
Connection)
250 HFO 560 Not economic unless export is
from lower cost unit/fuel
combination
ECGP Tobago- Barbados-
Martinique(St. Lucia)
Guadeloupe
Up to 100
MMs cf/d
Natural gas 1000 Highly economic if displaces HFO
and diesel
Source: Garner and Hansen (2011)
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Energy SupplyInterconnections and
Regional Sources of Energy (2011)
According to recent World Bank Study, Relying on diesel
and HFO is the most costly solution
There are multiple fuel and power supply options that
offer cost-effective alternatives to the current situation,
including, pipeline gas, shipped LNG, and renewables
(geothermal, wind) interconnected via submarine cable
Investment requirements are large but production costs
saving are huge
A variety ofprivate, public and IFI support will benecessary
Requires countries to improve legal, regulatory and
institutional framework and cross-country cooperation
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World Bank preliminary analysis of supply alternatives
ECPA US State OAS/KEMA/NREL: pre-feasibility study of
SKN Puerto Rico interconnection (Oct 2012)
Other regional studies:
-PR-USVI (US DOE/NREL)
-PR-DR (World Bank)
-Dominica-Martinique-Guadeloupe (EU/France)
(Pre)-feasibility studies of interconnections (2011ongoing)
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Snapshots of Several Caribbean
Interconnection Scenarios (Source: Nexant Study/World Bank)
Eastern Caribbean Gas Pipeline Proposed RouteDominica Interconnections
Northern Ring Interconnections AlternativePuerto Rico and St. Kitts and Nevis US Virgin Islands Interconnections