UNDP/GEF Project –

Decentralized Renewable Energy Power

Generation in Lebanon

UNDP/GEF Renewable Energy Portfolio

Overview

Lucas Black

Regional Technical Advisor – Energy, Infrastructure,

Transport and Technology (EITT)

UNDP – Global Environment Facility

United Nations Development Programme

1

This is a GEF (Global Environmental Facility) project –

What is GEF? • Financial mechanism of: UN Framework Convention on Climate Change Convention on Biological Diversity Stockholm Convention on Persistent Organic Pollutants Several other global environment conventions

• Six focal areas - Climate change, biodiversity, land degradation, international

waters, ozone depletion and persistent organic pollutants.

• 12 GEF agencies – UNDP, UNEP, WB, Regional Development Banks, FAO, IFAD, UNIDO. UNDP and World Bank have the largest share. Several new agencies have just been accredited.

• 142 GEF eligible countries

• Currently the largest global funder for global environment protection

• This project was funded under GEF V (2010-2014) Climate Change Mitigation (CCM) country allocation for Lebanon

Source: GEF

2

Overview of UNDP/GEF energy portfolio:

163 active projects - $ 558 m GEF + $ 4.6 b in co-financing

• $ 217m for 72 projects

• CleanStart; charcoal;

cook stoves

• Mini-grids

• New generation on-grid

Access to clean and

affordable energy 1

• $ 306m for 82 projects

• Next gen EEB projects

(enforcement and market

transformation)

• Green cities with incr.

climate resilience

Low emission urban and

transport infrastructure 2

GEF 6 and beyond:

Redefine focal area strategic priorities; focus on foundational work and innovation;

increased emphasis on scaling-up (link to GCF)

market transformation; public-private partnerships

• $35m for 9 projects

• More NAMA type projects

• Sector Wide Approaches

in Civil Aviation and

Maritime shipping

• Standardized Baselines

for CDM (and NAMAs)

Access to new financing

mechanisms 3

Emissions

(actual)

Em

issio

ns (

tCO

2e)

Emissions (Business as Usual)

Avoided

Emissions

3

Household

• E.g.

Promotion

of energy

efficient

cook

stoves

• E.g.

promotion

of PV in

rural and

peri-urban

Sudan

Village

• E.g. South

Africa

Wind

Energy

Program

National • E.g. Uzbek

gas

pipeline

MDG

Carbon

project

Regional /

Global

Focus of Small Grants Project –

2,554 projects and UNDP’s

Sustainable Energy Programme

GEF,NAMAs,

GCF

• E.g. City of

Varna,

Bulgaria:

issuing

green

municipal

bonds

Municipality

UNDP’s Approach - Promoting clean energy across a range of

scales

4

UNDP is supporting solar energy projects across a range of scales

Off-grid (single-site renewable energy & mini-grids) and on-grid (large- and small-scale, single-site) – Solar PV, SWH, Solar pumping and CSP

5

UNDP’s Market Transformation Approach

“Barrier Removal”

Approach “Derisking”

Approach

Objective: Create an enabled investment environment and

risk/return profile that catalyses private sector investment

Step 1: Identify priority

mitigation and

technology options

Step 2: Assess key

barriers and associated

risks to investment

Step 4: Select financing

options for public

measures

Step 3: Determine

appropriate mix of

public measures to

target barriers/risks

6

UNDP/GEF project implementation and M&E responsibilities

Project approval by

GEFSEC signifies

formal delegation of

authority to

implement the GEF

project

M&E responsibilities

Reporting

responsibilities

GEF Secretariat (DC)

UNDP/GEF (NY))

UNDP Country Office –

Lebanon

Project executing partner

PSC/PB Stakeholders

UNDP/GEF Regional

Center

7

Key UNDP/GEF rule for project management

• Project objective and outcomes are difficult to change…but

project outputs, activities and sub-activities can be adjusted.

• In fact, the project implementers should constantly monitor

them and adapt as necessary, after consultations with key

partners.

• Adaptive management is key, particularly as regards projects in

fast-moving, technology-based sectors where market conditions

and technology costs rapidly evolve.

8

Sectoral Trends - Key findings from IEA Technology Roadmap

Solar Photovoltaic Energy - 2014

• Since 2010, the world has added more solar photovoltaic (PV)

capacity than in the previous four decades.

• The geographical pattern of deployment is rapidly changing.

• PV system prices have been divided by three in six years in most markets, while module prices have been divided by five.

• IEA roadmap assumes that the costs of electricity from PV in different parts of the world will converge as markets develop, with an average cost reduction of 25% by 2020, 45% by 2030, and 65% by 2050.

9

Utlity-scale Solar PV LCOE have been drastically falling over

last five years….

Source: Lazard, 2014

Represents

unsubsidized

LCOE range of

utility-scale

crystalline solar

PV in Europe and

USD.

10

…and rooftop PV as well…

Source: Lazard, 2014

Rooftop solar has

benefited from the rapid

decline in price of both

panels and key balance-

of-system components

(e.g., inverters, racking,

etc.).

While the small-scale

nature and added

complexity of rooftop

installation limit cost

reduction levels (vs.

levels observed in utility-

scale applications), more

efficient installation

techniques, lower costs

of capital and improved

supply chains will

contribute to a lower

rooftop solar LCOE over

time

11

Commercial tariffs in MENA are still highly subsidized…

Source: RECREE staff/network, national energy utilities, AFEX 2014 (draft)

Commercial electricity prices and subsidies benchmarked to Palestine (2013)

12

… however fuel subsidy changes across MENA region are making

PV more cost-effective

• Egypt’s government embarked on a five-year plan to phase out subsidies in the

electricity sector. This plan was officially endorsed by the cabinet with the

passage of Prime Minister Decision No. 1257 on July 17th, 2014. This Decision

approved annual tariff hikes for most user segments on July 1 each year until

2018.

• A year earlier, Jordan embarked on a five-year program to reform electricity

pricing. Faced with growing debt of the national utility NEPCO, Jordan’s

Cabinet approved on June 19th 2013 a plan to increase electricity tariffs for

most segments until 2017. The biggest tariff increases fell on the industrial,

tourism and banking sectors with annual increases of 15%.

• In Tunisia, a program to increase the tariffs has been introduced and the latest

increase came in January 2014 when prices were raised by 8%. Another 10%

rise was announced in May 2014. Tariff structure reforms were done in

January 2014 to improve the effectiveness of the tariff system and better cover

the cost of electricity consumed at different times (time of use tariffs).

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The Solar PV DG revolution – Power to the People

Germany has put in

place a long-term

target of having

between 2.5 and 3.5

gigawatts of solar

panels installed each

year…

California could see 15

gigawatts of

distributed energy

resources come on-

line this decade,

including 12 gigawatts

of distributed solar and

1 gigawatt of grid-scale

energy storage

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Small-scale distributed generation – Jordan case study

• In Jordan the Renewable Energy and Efficiency Law 13 (REEL) of 2012 as well as

bylaws enable Independent Power Producers (IPP) to provide electricity from

renewable sources to NEPCO within long-term Power Purchase Agreements (PPA).

• High generation costs from conventional power plants in combination with

subsidized electricity rates for many small electricity consumers, which are down to

JD 0.033 [USD 0.05] per kWh, have led to a massive deficit for NEPCO. The current

policy for Jordan provides for further price increases of between 5% and 15% per

year until 2017 for many consumer categories.

• Private investors may also invest in their own PV system up to 5 MWp to directly

consume the electricity produced and offset it against their entire demand within a

net-metering scheme. The REEL even allows the generation of electricity at a

different site than where the actual consumer is located – “energy wheeling.”

• Apart from off-grid installations, around 3 to 4 MWp of solar PV systems under the

net-metering scheme had been realized by April 2014, with another 4 to 5 MWp

pending within the application process waiting list.

Source: Enabling PV in the MENA Region, The Emerging PV Market in Jordan, GIZ (2014)

15

Small-scale distributed generation – Jordan example #1

Example No. 1 displays a

plant on a warehouse in

Amman with a 90-kWp PV

system. The investment,

made in 2013, generates

around 162,000 kWh of

electricity per year.

The owner of the warehouse

saves around JD 27,216 per

year (USD 38K) over a 20-year

lifetime at current prices. The

payback period of the system

is 4.2 years. In 2014,

electricity consumers falling

in the “commercial tariff”

category usually pay between

JD 0.12 and JD 0.168 / kWh,

depending on the amount of

consumption. Source: Enabling PV in the MENA Region, The

Emerging PV Market in Jordan, GIZ (2014)

16

Distributed generation – Jordan example #2

Example #2 - This university housing

project in Maan is one of the biggest

systems in Jordan to date, totaling

1,028 kWp.

It was installed in April 2014 and will

produce around 1,900,000 kWh per

year. At current electricity rates, the

payback period is around 3 years,

since it will save approximately JD

500,000 (705k USD) / year over 20-year

grid connection contract.

The current electricity tariff for this

user category is up to JD 0.259 per

kWh.

Source: Enabling PV in the MENA Region, The Emerging PV Market in Jordan, GIZ (2014)

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Pioneering Feed-in-Tariff Scheme for Small-Scale RETs

Prior to 2010, there was no framework in Mauritius that

allowed small independent power producers or households

to sell renewable energy back to the grid. With support from

a UNDP/GEF project, the GoM developed a small-scale

grid code to promote the connection of small-scale

independent auto-producers to the national grid.

The project supported the development of a Feed-in

Tariff (FiT) scheme for small-scale distributed generation

(SSDG) energy systems (up to 50 kilowatts)

The initial scheme attracted over 400 applications for

residential and commercial PV systems (totaling 3.8 MW

of installed capacity) and over 80 applications from

public, educational, non-governmental and religious

organizations.

As of Oct. 2014, 2.5 MW of these new green power

systems had been installed and commissioned in the

residential/commercial sector.

UNDP’s pioneering work on Clean DG FiT schemes

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Tunisia: Private Sector-Led

Development of Wind $5m

Morocco: Energy efficiency in

buildings and transport , Solar

PV pumping $40m

Egypt: Waste-to-energy,

rooftop solar, energy efficiency

lighting, energy efficiency

transport $96m

Sudan: Solar PV pumping,.

Promoting Utility-Scale Power

Generation from Wind Energy

$210m

Lebanon: Solar water

heating, decentralized

renewables

Saudi Arabia: National Energy

Efficiency Programme $6m

UAE: LowCarbon Development

and CDM $1m

Yemen: Solar PV for

Productive Applications (new) -

$3 million

Selected UNDP Climate Mitigation/Energy

National Projects

Tunisia: De-Risking Solar

Investments - NAMA Support

for Tunisian Solar Plan $68m

Jordan: Solar water heating,

decentralized renewables $14m

Palestine: Decentralized solar

for schools and clinics $1m

Iraq: Rooftop solar PV and

distributed solar power $2.3m

(GEF only)

Solar applications are among the most popular

UNDP/GEF-funded projects in MENA

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Grid-connected Small Scale Photovoltaic Systems

(Egypt) – approved in Jan. 2015

Implementing Agency: Industrial Modernization Centre of the Min. of Industry and Foreign Trade

Project budget: $3.54 million

Four outputs:

1. Installation of grid-connected PV systems (4 MWp target – estimated at approximately 1,500

PV systems of 2.5-3 kWp each) – largest component with $2.3 million of GEF funds allocated

for financial schemes

Builds on and complements the plans of EgyptERA to introduce a Guarantee of Origin (GoO)

(which will allow the sale of electricity from renewable energy sources at a premium price) and a

net-metering scheme to provide adequate financial incentives to the private sector to invest in

small decentralized PV power generation.

Financial incentive = price would consist of LE 0.67 (USD 0.095) per kWh from the net-metering

scheme (being the highest residential tariff category at the moment), the anticipated value of LE

0.40 (USD 0.06) per kWh of the RE GoO certificate, and an LE 0.27 (USD 0.04) per kWh premium

for 10 years to be paid by the UNDP-implemented, GEF-financed project as an upfront grant

equal to LE 4,000 (USD 570) per kWp.

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Grid-connected Small Scale Photovoltaic Systems

(Egypt)

Output #1 (cont.) – eligibility requirements

- Eligible applicants: Residential electricity consumers and private-sector SMEs

- Amount of support: LE 4,000 (USD 570) per installed kWp to be paid as an upfront grant either

to the investor (i.e. the owner of the new PV system) or directly to the system supplier after the

commissioning test has been successfully passed (i.e. the quality of the installation has been

verified and the system has entered successfully into operation);

- Eligible size of the systems: From 2 kWp to 50 kWp

- A call for investment proposals to be renewed annually for the duration of the project – subject

to the availability of financial resources. In order to avoid damaging “stop and go” dynamics,

the support scheme will be subject to an annual review concerning its performance and the

related need for adaptive management.

2. Policy, institutional and regulatory framework

3. Strengthening the PV technology supply and maintenance chain

4. Create a financing framework to support the development of PV systems (and renewable

systems in general) – replication of NEEREA

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• Support to Regional Center for Renewable Energy and Energy Efficiency (RCREEE) for

development of 2014 AFEX, first native Arab index dedicated to monitoring and analyzing

sustainable energy competitiveness. AFEX offers quantitative and qualitative analysis for

key renewable and energy efficiency dimensions. Countries are ranked under 20

indicators on policies, institutional capacities, strategies and investments.

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Key findings AFEX Arab Future Energy Index™(AFEX)

Renewable Energy 2013

• Of 13 countries, five have no presence of private power producers. The supporting policies in most countries are still absent or ineffective. Less than half the countries provide policy instruments ensuring long-term power purchase agreements to private developers.

• Of 13 countries, only Morocco has so far been able to attract private RE investment

• On the positive side, almost all countries have adopted long-term technology-specific RE targets. More than half the countries have established dedicated agencies to promote renewables.

• Currently there are more than 15 large-scale projects under construction with total capacity exceeding 1,550 MW, which is more than double the current installed capacity in the region. Seven countries have identified over 5,000 MW of new generation for private development. Six countries have now established RE funds to mobilize funding and accelerate the deployment of renewables.

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200 MW

385 MW

2016 2020 2030

630 MW

815 MW

180 MW

1,930 MW

1,545 MW

600 MW

585 MW

1,625 MW

4,075 MW

Onshore Wind

Solar PV

CSP 2030 TSP target: renewable energy at 30% of total power generation