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EGK 2011: Energy 01 LAFTO TURBINE
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EGK 2011: Energy 01 LAFTO TURBINE

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  • Dietmar Ostermann was named our new CEO in December 2001. He is only the 5 th person to hold this position. He is young – 40 – and has brought a new generation of leadership to the company As well as a new energy and sense of purpose And a new strategic direction, with focus on collaboration and alliances
  • Dietmar Ostermann was named our new CEO in December 2001. He is only the 5 th person to hold this position. He is young – 40 – and has brought a new generation of leadership to the company As well as a new energy and sense of purpose And a new strategic direction, with focus on collaboration and alliances
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    • 1. Wind Energy Development in Ethiopia Status quo, the Wind Energy PPP and Experiences from Aysha Wind Farm Development NEFAS New Energy For African Societies Ethio-German Konnect presentation Addis Ababa, November 09, 2011
    • 2. Agenda
      • Status quo: Energy supply and demand situation in Ethiopia
      • Accessing funds and benefiting from public policy initiatives: PPP case study
      • Experiences from Ethiopian wind farm development: Aysha wind farm
    • 3. Ethiopia will need to add ~ 33 GW electricity over the next 20 years to enable economic growth prospects GDP projection (2009-2030, in bln. PPP$)
      • Historical growth rate of 11.1% (CAGR)
      • Projected growth based on growth scenarios from IMF (9.5%), MOFED (11.0%), Ernst&Young (13.6%) and GTZ-ecbp (10.0%)
      Electricity demand (2009-2030, in GWh) Cumulative investment for power generation (2009-2030, in mil. US$) 1) Actual supply from EEPCo ( EEPCo: Ethiopian Electric Power Corporation, national energy supplying agency) in 2009, which was 43% below demand; 2) Based on an average capacity factor of 33.4%, derived from EEPCo planning; 3) Based on an average capacity factor of 47.0%; Source: EEPCo Strategic Plan Summary (December 2009); IMF World Economic Outlook Database (April 2010); MOFED according to Fortune: “Gov’t: Economy to take off” (August 8, 2010); Ernst&Young Ethiopia: “Investing in Ethiopia” (September 2009); GTZ-ecbp: Human Capital and Economic Growth Evaluation Study of Ethiopia 2009-2030 (April 2009), based on Lisbon Council methodology and statistics from Central Statistics Agency (2008); IEA World Energy Outlook (2009); Own calculations
      • Based on comparable countries’ electricity consumption of 250 Wh per 1 PPP$: 68Wh (2009), 158Wh (2018) and 250Wh (2030)
      • Demand projection is in line with utility demand planning
      • International reference of investment costs of 2.0 mil. US$ per MW of installed capacity
      • Excluding costs for transmission/ grid and logistics
      GDP and electricity projection for Ethiopia (2009-2030)  ~65 bln. US$ 79.0 178.6 560.4 CAGR 10.0 % p.a. 2009 2018 2030 34,035 MW 3,728 28,859 140,131 1,500 MW 8,336 MW 1) 2009 2018 2030 3) 2)  ~33 GW 2018 2030 2009 68,070 16,672 3,000
    • 4. Over the next 10 years, potential supply gaps could open up from uncertain hydro projects [GWh] Gibe IV 1,472 MW Gibe III 1,870 MW Electricity supply vs. domestic demand (2009- 2018, in GWh, in mil. US$)
      • Demand increases to 28,9 TWh until 2018
      • Average capacity factor improves from 28% today to 43% in 2018 with
      • Additional capacity requirement until 2018 is 6,836 MW
      Supply assumptions ~ 50% of supply increase depends on only two projects in Gibe which have experienced delays in the past Supply planning Delayed supply scenario 2) Demand projection Opportunity costs: 8,823 mil. US$ 1) Opportunity costs: 236 mil. US$ 1)
      • Cost of foregone economic income at a price of ~ 52 US$ cents per kWh
      • Gibe III and Gibe IV delayed by 3 yrs. each
      • Source: EEPCo Strategic Plan Summary (December 2009); EEPCo: Ethiopian Power System Expansion Master Plan update (June 2006); NEFAS calculations
    • 5. Wind energy could play an important role to master this challenge and set the example for energy projects with a private institutional set-up Cumulative capacity costs, effects of financing levers 1) (2009-2030, in mil. US$) Characteristics of wind energy in Ethiopia 65,071 53,354 35,824 25,077 [mil. US$] 1) Capacity costs based on EEPCo planning for the period 2009 – 2018 and capacity needed to supply projected demand in following years; cost per MW for the period 2019 – 2030 of 2 mil. US$ Source: EEPCo Strategic Plan Summary (December 2009); IEA World Energy Outlook (2009); NEFAS calculations 1. Complementary to hydro power 2. Pipeline to fill supply gaps and serve energy demand growth already exists 3. Potential to achieve long term growth prospects 4. Local value addition possible to finance immense capacity costs 5. Can trigger Ethiopian metal sector and offer high export potential
    • 6. Promising wind sites have been identified …
      • MW: 50
      • Financing structure: tbd
      • Finalization: 2012 -2015
      • Status quo: Pending
      • MW: 50 - 100
      • Financing structure: tbd
      • Finalization: 2018 -2020
      • Status quo: Under construction
      • MW: 300+
      • Financing structure: EPC, Partnership
      • Finalization: 2011 -2014
      • Status quo: Feasibility study completed
      • MW: 100
      • Financing structure: tbd
      • Finalization: 2013 -2014
      • Status quo: Pending
      • MW: 120
      • Financing structure: EPC + Financing
      • Finalization: 2012 -2013
      • Status quo: Under construction
      • MW: tbd
      • Financing structure: tbd
      • Finalization: 2018 -2020
      • Status quo: Pending
      • MW: 100+
      • Financing structure: EPC + Financing
      • Finalization: 2013 -2015
      • Status quo: Under pre-feasibility study
      Development target: ~ 1,000 MW until 2014, ~ 5,000 MW until 2030 Identified wind farm sites - mean annual wind power density (at 50 m in m/s) Source: EEPCo ; NEFAS Mesobo Ashegoda Aysha Debre Birhan Adama Asela Mega Speed (m/s) Density (W/m 2 ) 1.0 -3.5 3.5 -5.6 5.6 -6.4 6.4 -7.0 7.0 -7.5 7.5 -8.0 8.0 -8.8 1 -50 50 - 200 200 - 300 300 - 400 400 - 500 500 - 600 600 - 800 >8.8 >800
    • 7. … but the wind sector currently is in an early development stage Status quo of Ethiopian wind sector (in MW) Ashegoda Adama I Aysha Adama I Ashegoda Debre Birhan Aysha Adama I Ashegoda Asela Adama II Messebo Debre Birhan Aysha Adama I Ashegoda Others Asela Adama II Messebo Debre Birhan Aysha Adama I Ashegoda 5,000 -3,780 1,220 -350 870 -400 470 -300 170
      • Overview:
      • ~ 5,000 MW potential to be developed
      • < 5% with feasibility studies
      • > 3% under construction
      Source: EEPCo ; NEFAS CONSTRUCTION STUDY PRE-STUDY IDENTIFIED TOTAL MW
    • 8. Agenda
      • Status quo: energy supply and demand situation in Ethiopia
      • Accessing funds and benefiting from public policy initiatives: PPP case study
      • Experiences from Ethiopian wind farm development: Aysha wind farm
    • 9. Success depends on overcoming inter-depending hurdles along the value chain and financing local activities Success factors in the Ethiopian environment Source: NEFAS 1. Collaboration of key players along the value chain 2. Acquisition of funds to finance local activities 3. Combination of suitable technical solutions with financial sources
    • 10. Interest in Ethiopian wind is high – common resistance predominantly found in the market Inter-depending hurdles in Ethiopia (Exemplifications) “ There is not enough MW installed yet” “ No local project development capacity” “ No local S&M, Operations capacity” “ No FIT, longevity for tariffs, low level of tariffs” “ Limited possibility for private sector involvement” … . Source: NEFAS experiences 1. Collaboration of key players along the value chain
    • 11. Collaboration of key players along the value chain is needed to get things started Operations Construction Manufacturing Service and Maintenance Supply chain management Operations Construction Manufacturing Service and Maintenance Supply chain management Project development Capacity building on ministerial, institutional and private sector level Policy dialogue on Prime Minister, Ministerial, Regulatory Level Gaps along the value chain to be addressed Source: NEFAS 1. Collaboration of key players along the value chain
    • 12. The PPP avails the financial means to develop local capacity, finalize the feasibility studies and educate local HR MINISTERIAL LEVEL
      • Capacity development for Ministries and decision makers to formulate policies that foster the development of Ethiopian wind energy sector
        • Training on wind park development
        • Feasibility studies
        • Enabling policy environment (energy directives, FIT proclamation, etc.)
      INSTITUTIONAL LEVEL
      • Capacity development for universities and sector associations to integrate wind energy into existing curricula and service portfolios , to build up a future HR-Pool for an Ethiopian wind energy industry
        • Strategic partnerships between associations/ universities and the private sector
        • Scholarships on wind energy topics in relevant areas
        • Coaching by internationa l specialists on curriculum enhancement
      PRIVATE SECTOR LEVEL
      • Setting the pace for the Ethiopian metal work sector to become future supplier for products and services
        • Strategic relationships of technology and management skills transfer
        • Enhancement of private sector cooperation with universities
        • Internships and placement programs in Ethiopia and in Europe
      Total Budget for 3 Years: ~ 1.7 mil. EUR Capacity development levels of the PPP Source: NEFAS 2. Acquisition of funds to finance local activities
    • 13. The PPP supports our local activities and helps us to build local capacity for the emerging industry 1 Oct. 2010 Date Key Activity Private Goal Public Goal Aug. 2010 June. 2011 Nov. 2011 Oct 2011 Apr. 2011
      • Initiate the process of local capacity building
      • Identify the private opportunities of a PPP
      • Recruiting potential candidates for a PPP training program
      • Institutionalize another platform to enhance capacity building in general
      • Institutionalize a platform to support local activities
      • Initial training program for the wind energy fellowship
      • Transfer of knowledge and improved effectiveness of local capacity
      • Further refining process for the retaining of personnel
      • On-going trainings on personal effectiveness and project management
      • Upgrading opportunities for the facilities and tech-transfer
      • Setting up a production facility for the local components of WTG
      • Identification of a localization of components opportunity with local industries
      • Identifying parts to be localized and others to be imported – saving foreign currency
      • Capacity assessment of the local facilities
      • Support the education of local HR pool
      • Initiating the process of local production of the identified parts
      • Ongoing capacity assessment of the local facilities
      Example 2: local capacity building Source: NEFAS
      • Build local capacity on local resource assessment process
      Implementing Pre- evaluations Commencing the program Progress made Establishing a joint design team Preliminary capacity assessment Continued assessment Continuous development of the process and further identification of local partners Time Line 2. Acquisition of funds to finance local activities
    • 14. Agenda
      • Status quo: energy supply and demand situation in Ethiopia
      • Accessing funds and benefiting from public policy initiatives: PPP case study
      • Experiences from Ethiopian wind farm development: Aysha wind farm
    • 15. Location for the wind farm with promising site characteristics – 120 MW MoU and studies showing feasibility Reliable, high average wind speeds during the year Sandy gravel with strong load carrying capacity Location close to grid and heavy duty all-weather road Very flat terrain with some wind-bent vegetation Source: Aysha feasibility studies 120 MW MoU Site characteristics SITE CHARACTERISTICS
    • 16. Aysha 30 – 120 MW wind farm in Somali Regional State
      • Exclusive development rights for 120 MW installations at Aysha, Ethiopia; Aysha 30 is the initial 30 MW installation out of a projected total of 300 MW; the initial phase could be expanded up to 60 MW.
      • Favorable wind conditions have been confirmed for Aysha, in a location with easy access to 230 kV transmission line to Djibouti , as well as to overland road from Dire Dawa to Djibouti. Other feasibilities (environmental impact, grid assessment, transport study) are completed.
      • Ethio-German wind farm development joint venture in advanced discussions with three different turbine providers and two different construction companies for erection and local civil works joined by highly regarded and experienced operations and service companies, EnerVest and Renewco ; local project office with staff of 5 (2 German, 3 Ethiopian).
      • Strong interest from African Development Bank and other multilateral institutions to fund the investment budget on the basis of a private sector governance regime.
      • Estimated time to &quot;shovel-ready&quot; status: 6-18 months .
      Source: NEFAS The wind farm and description of the status quo
    • 17. Resulting from the institutional set-up, the financing structure is the key component in the cycle from capacity increase to economic growth Capacity increase/ economic growth cycle Source: NEFAS Tech transfer Debt burden Economic growth Electricity demand FDI Local manufacturing and value added Financing Institutional set-up Capacity increase Determines price per MW, FDI and potential for technology transfer
    • 18. NEFAS – New Energy for African Societies Project Office Zola Road, near Mozambique Embassy Addis Ababa Ethiopia Mobile: + 251 920 312 036 Email: [email_address] Webpage: www.ethiopianwind.com NEFAS

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