Economic and_financial_concepts_for_re-dr.mohamed_el_sobki

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Capacity Building Program “Pricing Renewables: Feed-in Tariff (FiT) Design and Structure for Wind Farms and Solar Plants” - October 23-27, 2011

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Economic and_financial_concepts_for_re-dr.mohamed_el_sobki

  1. 1. 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
  2. 2. ECONOMIC AND FINANCIAL CONCEPTS FOR RENEWABLE ENERGIES• Financial Concepts (project oriented)• Economic Concepts (country oriented)
  3. 3. FIXED COSTSThe major items of the fixed costs are :1- Interest.2- Depreciation and/or amortization3- Insurance4- Taxes (property taxes)
  4. 4. OPERATING COSTSIn general, the main components ofoperating costs are:1- Energy2- Labor3- Administration and supervision4- Materials, supplies and services5- Maintenance6- Taxes (operating taxes)
  5. 5. 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
  6. 6. 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
  7. 7. Project monitoring stages Objectives Activities Output Outcomes/results (Indicators) Indicators Capacity kW Procurement Energy kWhAccess Installation AccessElectricity security Testing Electricity securityReliable operation Integration Reliable operation operation Risk mitigation
  8. 8. Renewable Project Costs & Revenues Costs Revenues ElectricityCapital Equip., Sales (prices)O&M FinanceResource Supply/ Equity &/or Debt Subsidies/Uncertainty IncentivesCost of Money Attribute SalesDebt: Interest Rate (e.g. RECs)Equity: ROI
  9. 9. Reference Scenario: Generating costs ofrenewable energy technologies Dollars (2007) per MWh 700 600 500 400 300 200 100 0 2006 2015 2030 2006 2015 2030 2006 2015 2030 2006 2015 2030 2006 2015 2030 2006 2015 2030 2006 2015 2030 Hydro Geothermal Wind onshore Wind offshore Biomass Concentrating Solar PV solarThe costs of power generation from renewables are set to fall in response to increaseddeployment, which accelerates technological progress & increases economies of scale (world energy outlook)
  10. 10. Cost of UK electricity Generation
  11. 11. Cost of Generation US 2000 &2005
  12. 12. 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
  13. 13. Global Marginal GHG Abatement Cost Curves - 2030
  14. 14. EnergyGovernment Utility (Electric, Central gas planning utility Residential department Electricity users Legislators Media RE Parliamentmanufacturers NGOs
  15. 15. Government Electric Central utility planning Residential department Electricity users Legislators Media PV Parliamentmanufacturers NGOs
  16. 16. 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
  17. 17. 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.
  18. 18. 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
  19. 19. Stakeholders Relationships
  20. 20. Planners
  21. 21. GDP, energy security strategy, feasibility study, market analysisGovernment/ Politicians Planners environmental concerns, statistics, potential Awareness Manufacturers End Users
  22. 22. GDP, energy security strategy, feasibility study, market analysis Government/ policies Politicians Planners environmental concerns, statistics, potential Awarenesscase studies Manufacturers Legislators End Users
  23. 23. GDP, energy security strategy, feasibility study, market analysis Government/ policies Politicians Planners environmental concerns, statistics, potential Awarenesscase studies Issue laws Manufacturers Legislators End Users
  24. 24. GDP, energy security strategy, feasibility study, market analysis Government/ policies Politicians Planners environmental concerns, statistics, potentialcase studies, decree laws Awareness Issue laws Manufacturers Legislators End Users
  25. 25. GDP, energy security strategy, feasibility study, market analysis Government/ policies Politicians Planners environmental concerns, statistics, potential incentives,case studies, decree laws taxes, custom Awareness duties Issue laws Manufacturers Legislators subsidies, loans, feed-in tariffs, laws End Users
  26. 26. GDP, energy security strategy, feasibility study, market analysis Government/ policies Politicians Planners prices, specs, risk environmental concerns, assessment statistics, potential incentives,case studies, decree laws taxes, custom Awareness duties R&D, create jobs Issue laws Manufacturers products, pricing, quality, technical support Legislators subsidies, loans, feed-in tariffs, laws End Users
  27. 27. GDP, energy security strategy, feasibility study, market analysis Government/ policies Politicians Planners prices, specs, risk environmental concerns, assessment statistics, potential incentives,case studies, decree laws taxes, custom environmental concerns, Awareness duties R&D, create technology jobs Issue laws requirements, demand, Manufacturers social status purchasing power, feedback products, pricing, quality, technical support Legislators subsidies, loans, feed-in tariffs, laws End Users
  28. 28. Stake holders Relations
  29. 29. 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
  30. 30. 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 ..!!
  31. 31. 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
  32. 32. 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
  33. 33. I am end user!!
  34. 34. Who is end user??• The one who use the technology and consume the power and gain money!!!
  35. 35. 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.
  36. 36. Result 36 11/9/2011
  37. 37. Government Electrical Media utility parliament End User NGO’s legislator manufacturer Planner37
  38. 38. Thank for your participation Mohamed Salah ELSOBKI (Jr.) sobki54@hotmail.com Your are required to give your input re the sack holders for possible RE projectsClarifications & further contributions

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