1. 1 Commitment of the African Development In the renewable Energy Sector The Role of the Private Sector Department of the AfDB Youssef Arfaoui Renewable Energy Expert Promoting the utilisation of Small size Hydropower in Africa

2. 2. Renewable Energy – Development World Wide. Rationale for interest in Renewable Energy. Small size Hydropower (SSHP) Potential in Africa. Development of SSHP and The role and intervention of the AfDB. Conclusion The presentation will Cover:

3. 3 ‘In 2004, investment in the RE sector reached US$30 billion, and pushed RE capacity to 160 GW – 4% of global power’

4. Existing capacity end-2004Power generation Small hydropower61 GW Wind power turbines48 GW Biomass power39 GW Geothermal power8.9 GW Solar PV, off-grid2.2 GW Solar PV, grid-connected1.8 GW Solar thermal power0.4 GW Ocean (tidal) power0.3 GW Total renewable power capacity160 GW Hot water/space heating Biomass heating220 GWth Solar collectors for hot water / heating (glazed)77 GWth Geothermal direct heating13 GWth Geothermal heat pumps15 GWth Households with solar hot water40 million Buildings with geothermal heat pumps2 million Transport fuels Ethanol production31 billion litres/year Biodiesel production2.2 billion litres/year In 2004, the power generated by Small Size Hydropower (SSHP) was 61 GW.

5. Small Size Hydropower Developing Countries In 2004 the installed capacity of SSHP in developing countries has toped 40MW, which is 67% of the world total installed capacity.

6. 6  RE addresses the needs and contributes to improve living standards of the rural poor  RE is in line with the Strategic Plan of the ADB for Infrastructure, that considers RE as one of the pillars of sustainable development The reasons the AfDB has chosen to focus on Renewable energy:

7. 7 RE can address the problem of electricity shortage in Africa  RE is an untapped natural resource in Africa  RE is Suitable for the Rural Areas  RE is Environmentally friendly  RE is affordable compared to other fossil fuel resources (the recent increase of oil prices)

8. 8 The Private Sector Department of the AfDB focuses mainly to develop (a) the wind energy area and (b) the small size hydropower The Middelground wind farm – Copenhagen - Denmark 30 MW hydropower - Tunisia

9. 9 The Private sector of the AFDB (OPSM) is committed to develop and promote the Application of wind energy in Africa. Therefore OPSM has (a) initiated the wind energy study for Africa, (b) identified the main barriers, such as:  Legal and regulatory  Economic and Financial  Technical  Lack of local capacity

10. 10 In Addition the PSD of the AFDB has chosen to focus on the SSHP, where the utilisation will be appropriate for remote areas far from the national grid and having reliable running water source.

11. 11 From 2000 to 2004, the Average Annual Growth of Hydropower World Wide is 7% for SSHP and around 2,8% for Large Hydro.

12. 12 Africa has a huge potential in Small size-Hydro power, such as Madagascar Site NameRiver Project Area/Year of StudyStageEstimated capacity Faritany de ANTSIRANANA AnalalavaAntsahatopyVohemar1988Reconnaissance Bevory-A/manjavonaRamenaAmbanja1988Préliminaire 6.5 MW IrodoIrodoAntseranana1981Reconnaissance LokohoLokohoAndapa1999Faisabilité 4 MW TsiafampianaRamenaAmbanja1983Reconnaissance6.75 MW DangoroMaintinandryAmbositra1982Reconnaissance14 MW -Namorona IINamorona2000 Reconnaissance16 MW DangoroMaintinandryAmbositra1980Reconnaissance33 MW Faritany de MAHAJANGA AmbodirokaBetsibokaMaevatanana Marovoay 1988Faisabilité19.5 MW Ambato/boeny, Mahajanga AmbodirokaBetsibokaMaevatanana Marovoay1982APD40 MW Faritany de ANTANANARIVO ManankazoManankazoAnkazobe 1988Reconnaissance1.530 MW SahofikaOniveRI Tana1981Préliminaire105 MW -TsinjoarivoOniveRI. Tana1976Préliminaire20 MW LohavananaMangoroRI Tana2000Préliminaire93 MW AntafofoIkopaRI Tana2000Préliminaire105 MW RanomafanaIkopaRI Tana2000Préliminaire70 MW

13. 13 Potential of Small size-Hydro power in Africa (for Tea factories)

14. 14 The Current ADB Interventions in promoting the use of Renewable Energy  Capacity building and small hydropower projects 10 Countries (Institutional Strengthening, Feasibility & Pilot projects - EUR 40 million)  Madagascar Small size Hydro Power: Rural Electrification Project (6 and 15 MW – total cost of Euro 30 m)  Renewable Energy Studies for Uganda, Tanzania, Kenya, Gambia  Gambia Solar PV Project (EUR 15 million)  Morocco: Solar/Gas Thermal Power Station (250 MW, 30 MW Solar) (EUR 200 Mio)  Egypt: Solar/Gas Thermal Power Station (120 to 150 MW)  Kenya: 30 MW Wind farm (US$60m) to be financed this year,  Kenya :[ 250 MW, 300MW – under preparation]

15. 15 The Objectives – and the Strategic Plan 2005 - 2010 for the PSD of the AfDB for the Development and Application of Small size Hydro power are: Design and implementation of adequate institutional and regulatory framework, specifically to favour development by private sector Study of electrical grid integration National capacity building in all aspects relating to hydropower development Development of demonstration projects (of viable commercial small size Hydropower projects)

16. 16 Raising the interest of private sponsors and other potential investors in small size hydro power opportunities in Africa Mobilizing required funds for project preparation Performing feasibility studies and developing most promising Small Size Hydropower projects The Objectives – and the Strategic Plan 2005 - 2010 of the PSD of the AfDB for the Development and Application of Small size Hydro power are: (cont’d)

17. 17 Therefore The PSD of the AfDB objective is to Assist the sponsor to prepare all necessary documentation to qualify hydropower projects to benefit from the Carbon trade facility (CDM – Kyoto protocol ) Small SSHP projects can benefit from the CDM- Carbon Trade facility. The present cost of tCO 2 is around Euro 12. (Emission Reduction)

18. As guidelines to investors planning investment in SSHP projects, the Power Generation Costs in 2002 and the projected for 2010 are as follows: Capital costs ($/kW) Low-side generation costs (Cents/kWh) High-side generation costs (Cents/kWh) Low-side generation costs by 2010 (Cents/kWh) Small hydro power 1,000 - 5,000 2 - 39 - 152 Solar PV power4,500 - 7,000 18 - 2025 - 8010 - 15 Concentrating solar power 3,000- 6,000 10 - 1520 - 256 - 8 Bio- power 500 - 4,000 2 - 310 - 152 Geothermal power 1,200 - 5,000 2 - 56 - 122 - 3 Wind power 850 - 1,700 3 - 510 - 122 - 4 Source: IEA 2003

19. 19 Conclusion Renewable energy is an appropriate response to the needs of the poor / grassroots in Africa. The three major areas of focus are: Wind energy Hydro power The Bank (OPSM) offers: Flexible and tailor made instruments Support to sustainable projects, through financial and technical assistance and institutional capacity building programs

20. 20 In order to allow the PSD of the AfDB to support and participate in the financing of SSHP projects, the following conditions have to be fulfilled:  The contractual arrangements are in place  The project has to be developmental oriented  The project is technically feasible  The sponsors have the required financial and technical capacity to run the project  The project is financially and economically viable  The regulatory framework is favourable for Renewable Energy projects  The project has a reasonable size

21. 21 For further information: Youssef Arfaoui Renewable Energy Expert Private sector Department y.arfaoui@afdb.org

22. 22 Thank you