OAS (Kevin de Cuba), From Vision towards Bankable Renewable Energy Projects, St. Kitts and Nevis...

7/30/2019 OAS (Kevin de Cuba), From Vision towards Bankable Renewable Energy Projects, St. Kitts and Nevis Example

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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

[email protected]
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



#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

OAS (Kevin de Cuba), From Vision towards Bankable Renewable Energy Projects, St. Kitts and Nevis...

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