ECONOMIC AND FINANCIAL CONCEPTS FOR RENEWABLE ENERGIES CAPACITY BUILDING PROGRAM PRICING RENEWABLE ENERGIES CAIRO, EGYPT, 24 OCTOBER 2011 EGYPTERA, RCREEE & NREAMohamed Salah ELSOBKI (Jr.)Professor Electric Power SystemsDirector Energy Research CenterFaculty of EngineeringCairo University
ECONOMIC AND FINANCIAL CONCEPTS FOR RENEWABLE ENERGIES• Financial Concepts (project oriented)• Economic Concepts (country oriented)
FIXED COSTSThe major items of the fixed costs are :1- Interest.2- Depreciation and/or amortization3- Insurance4- Taxes (property taxes)
OPERATING COSTSIn general, the main components ofoperating costs are:1- Energy2- Labor3- Administration and supervision4- Materials, supplies and services5- Maintenance6- Taxes (operating taxes)
Project FeasibilityProfitable Revenues-Cost= Profit Incentives and PoliciesEconomical Revenues-Cost= profit+ jobs created+ Environmental benefits+ Social benefits+ sustainability+ increase exports+ ---- Policies andStrategically Revenues-Cost= Regulations profit+ jobs created+ Environmental benefits+ Social benefits+ sustainability+ increase exports+ ---- + Future prospective+ R&D + local Technology development+ Independence
Project Planning (Example power generation plant)Identification Demand forecast (future electricity demand) Assessing alternatives of location and technologies, Fuel, landPreparation Preparing the feasibility study (Financing, Economical analysis, packages Preparing Environmental AssessmentAppraisal Evaluating the project Securing financing Project detailed designImplementation Project procurement activities Project implementation, supervision Project integration and testingOperation Project commissioning and operation
Electrical Generation Today? [2008 Bus-bar Costs: ¢/KWh] Gas Super Integrated IGCC NuclearCombined Critical Gasification With C Cycle Coal Combined Capture Storage Cycle [IGCC] 9.582 10.554 11.481 17.317 15.3167.3-10.01 10.4-13.41 13.51 9.8-12.61 Biogas Wind Geo- Hydroelectric Concentrated Biomass Thermal Solar Thermal 8.55 8.91 10.18 10.52 12.65 16.49 5-9 9-14.5 Solar PV Fuel Cells Solar PV thin film Land fill Gas Geothermalcrystalline 11-15 11.5-12.5 9.6-12.4 5.0 -8.1 4.2-6.9 Source: CA Energy Comm.; CA Public Utilities Comm. May 2008, Lazard Analysis June 2008
Global Marginal GHG Abatement Cost Curves - 2030
EnergyGovernment Utility (Electric, Central gas planning utility Residential department Electricity users Legislators Media RE Parliamentmanufacturers NGOs
Government Electric Central utility planning Residential department Electricity users Legislators Media PV Parliamentmanufacturers NGOs
Policy, Strategy, Social status , Energy Mix Needs End- Gov. Target userFeasibility study,product survey, statistics Planner Awareness Potential, GDP Energy Saving, Co2 Emission, Install Capacity, Fuel, Measurements, Elec. Growth rate, Environment Impact Manu. R&D, Product NGO’S Specifications
Feasibility study, product survey, Unemployment End- Planner statistics user Subsidy, soft loans, Policy, Strategy, Feed in Low, IncomeEnergy Mix Target Government Tax Reduction Case Study, Draft Incentives, Tax, LowsCopyright (Intel actualproperty) , Control the Prices Manu. Prices, Risk assessment, Submit Lows & Creating Jobs Regulation Lig.
Demand, Potential, GDP Needs,& Market End- AbilityPlanner userR&D, ProductSpecifications Manufacture Technical Support, Price, Payback period Prices, Risk assessment, Creating Jobs Gov. Incentives, Tax, Copyright (Intel actual property) ,Control the Prices
Manufacturers Planers Survey Prices Technical data Demand Pilot project Market study End user Government LegislationPrices Study Survey Maintenance Jobs Technical data Services Demand Pilot project Efficiency Old equipment Opposition Study Jobs Concerns and Demand General Relations
Legislator Planner Government & Opposition Manufacturers Media End users Main Stakeholder• According to the chart and as a conclusion of the analysis in my opinion the government/opposition have the main influence on the technology being applied or not.• All stakeholders have a big influence and it would be unlikely that a technology is applied without the participation of any of them. They are so interconnected ..!!
Manufacturers Planers • Prices Survey Numerical • Demand Technical data Numerical • Market study Pilot project Laws Numerical Numerical End user Politicians Legislation Prices Maintenance Study Laws Survey Services Efficiency Jobs Technical data Old equipment Demand Numerical Pilot project Influence Influence Media Opposition Awareness Discussion Numerical & Promotion Introduction of products non-numerical (Awareness) Complicated/expens Create market Competitiveness Alternatives ive technology Public opinion
Manufacturers Prices Demand Market study Numerical Numerical End user PoliticiansPrices Study Maintenance Jobs Services Demand Efficiency Old equipment Influence Influence Media OppositionAwareness Numerical & Discussion (Awareness) Promotion Introduction of products Alternatives non-numericalPublic opinion Simple/cheapCreate market Competitiveness technology
Who is end user??• The one who use the technology and consume the power and gain money!!!
End user needs• Reliable system .• Less maintenance.• Taxes reduction.• Facilitate the connection between the customers and media.• Applying Win to Win concept (feed in tariff).• Awareness on Renewable energy.