Use: Public

Regulatory and Commercial Barriers to the

Development of Renewable Energies
III Seminario Iberoamericano de Energas Renovables
Montevideo, 20th September 2013

Carlo Zorzoli
Head of Business Development
Iberia and Latin America
Enel Green Power

Enel Green Power: Global leadership in renewables development

Values as per 30th June 2013

Iberia&Latam

North America

Italy&Europe

Capacity: 2,912 MW
Production: 8.5 TWh
Technologies:

Capacity: 1,673 MW
Production: 4.5 TWh
Technologies:

Capacity: 4,104 MW
Production: 14.8

TWh

Technologies:

Capacity by
technology

Production by
technology

57%

38%
20%

9%
30%

2%

3%
1%

39%
2

Geo

Hydro

Wind

Total = 8.7 GW
1.
2.

1%

Reported capacity as of June 30, 2013. Reported production latest twelve months
Including co-generation

Biomass

Solar

Total = 27.8 TWh

Enel Green Power, a leader in Latin America

Latin America footprint June 30th, 2013
Mexico
Guatemala
Operation

163 MW

Operation

197 MW

In execution

202 MW

Panama

Costa Rica

Operation

Operation

55 MW

In execution

50 MW

300 MW

Brazil
Operation
In execution

Chile
Operation

182 MW

In execution

189 MW

El Salvador strategic participation in

LaGeo (204 MW geothermal installed
capacity)
Colombia Business Development
Per Business Development
Uruguay Business Development

93 MW
283 MW

Total EGP installed capacity: 990 MW

Why renewables?

The energy trilemma and how renewable energies respond to it

1. Very reduced levels of

environmental impact,
almost CO2 free

The
response of
Renewable
Energies
Security of supply (independence)

2. Predictable generation
cost because
predominantly driven by
capital cost

3. Increased energy
independence as
sources are normally
domestic

Common barriers to renewables in Latin American markets

1. The false myth of lacking reliability and predictability

- Long term Access to capacity payment or firm energy recognition

- Long term Generation expansion planning, time to market
- Short term Grid management and intermittnet resources
2. The false myth of high cost

- Cost competitiveness
- Market access and long term remuneration stability
3. Other barriers

- Environmental permitting
- Interconnection point securing
- Stakeholders response
4

The false myth of lacking reliability and predictability

Long term

Wind and solar show very

important complementarity
with dominant hydro
generation
Adding exclusively hydro to
the power supply system in
order to secure rising
demand increases the
exposure of countries to
drought effect
Some countries (e.g. Brazil,
Costa Rica) are inserting
significant wind generation
as a natural hedge for their
large hydro exposure

Example of complementarity of
Hydro Flows and Wind Generation

The false myth of lacking reliability and predictability

Long term

Indicative time to market

Solar

Wind
Small Hydro
Large Hydro
Min

Geo

Max

Nuke

Coal
CCGT
0

4
6

The false myth of lacking reliability and predictability

Short term

Geographical considerations:

Greater the considered area lower the relative variation: local

0,8

phenomenon filtering

media 12h

0,6

media 4h

In the graphic, the dispersal decreases with area considered

0,4
media 2h

Temporal

considerations:

0,2

Lower the forecast time, lower the relative variations

media 1h
media 30min
media 5min
100
200

In the graphic, the dispersal decreases with the term

minutes.

Prazo de Variao

Maximum geographical attenuation at terms around 1 to 10

500

N de Turbinas

considered
Geo-Temporal attenuation:

300
400
Distancia (km)

1 Segundo
1 Segundo
1 Minuto
1 Minuto
10 Minutos
10 Minutos
1 Hora
1 Hora

Media
Std
Media
Std
Media
Std
Media
Std

14
0,4%
0,5%
1,2%
2,1%
3,1%
5,2%
7,0%
10,7%

The variability impacts of Wind Energy decreases with short

term forecast and geographical diversification.

61
0,2%
0,3%
0,8%
1,3%
2,1%
3,5%
4,7%
7,5%

138
0,1%
0,2%
0,5%
0,8%
2,2%
3,7%
6,4%
9,7%

> 250
0,1%
0,1%
0,3%
0,6%
1,5%
2,7%
5,3%
7,9%

The false myth of reliability and predictability

Short term

Balancing Dont ask what the grid can do for you, ask what you can do for the grid
Be Visible

Keep Going

Provide operational data to SO

Operate in wide range of voltage

and frequency
Ride through system faults

ACTUAL CAPABILITIES

Reactive Power Control

Power factor to stay in tight range

FUTURE

Active Power Control

(Where requested and paid)

Or controllable over wide range

Cap, delta

Or controllable for voltage support

Ramp Rate Limits

Supporting primary frequency control - Technology

Storage - Technology, Market

The best use of intermittent resources depends on the

technology and regulatory development.

The false myth of reliability and predictability

Wind generation penetration historic and projected
2008 vs. 2015 (estimated)

The false myth of high cost

Cost competiteveness Wind
Supply chain cost
improvements

Competition
WTG capital
cost
reduction

Economies
of scale
Innovation
(materials, control
systems)

Cost estimation Wind plant 2012-2022 (/W)

1.4
1.2
1.1
1.1

0.9

Base Case
Low Case

0.8

0.9
0.7

0.5
2012

2017

2022

Note: wind plant cost estimation is based on a standard onshore 50 MW plant, equipped with 2 MW wind turbines (HH=80m, D=90m)
Source: McKinsey, May 2012; BNEF, Wind turbine price index, July 2012.

The false myth of high cost

Cost competiteveness Solar PV

PV modules spot market price

($/W)
4.5

Innovation
(materials,
efficiency)

4.0

Throughput
efficiency

3.5
3.0
2.5

Economies
of scale

Competition

PV modules
cost
reduction

2.0
1.5
1.0
0.5

2008

09

10

11 Jan 2012

Cost estimation - PV plant 2012-2022 (/W)

1.7
1.4
1.4

1.2
1.0

1.1

Base Case
Low Case

1.0

0.8

0.8
0.5
2012

2017

Note: cost estimates refer to c-si PV modules

Source: McKinsey, May 2012; Photon Consulting, The true cost of solar power, July 2012; PV Insight, Sept 2012

2022

The false myth of cost

Cost competitiveness Do we really need monetary incentives?

Incentive effectiveness for on-shore wind

18
%
Effectiveness**

Long term objective definition

Coherence between incentive

costs and development costs

Complexity of incentive
scheme

Simplicity of administrative
procedures

0%
6

12
Level of remuneration* (c/kWh)

18

Stability of incentive level

High remuneration is not the main driver for an

effective support scheme
Source: OECD-IEA, preliminary result GREMMP
* Considering 15-year incentives
** Measured as the ratio new generation over residual potential

Souce: IEA

The false myth of cost

Cost competitiveness Effect of long term remuneration

200
180

Expected CFE
tariff (USD/MWh)

160
140

Mexico 2012
Oaxaca wind tender

CFE Bid offer

(USD/MWh)

120
100
80
60
40
20

0
2014 2017 2020 2023 2026 2029 2032

Brazil tenders 2011-2013

Natural gas: 2011, 2012

Coal:
2013 A-5 only

The false myth of cost

Cost competitveness Watch out for energy matrix diversification

Leilo
A5A3
Ago
2013
Leilo
2011
Leilo
Reserva
2011
A5
Leilo
A5
2012
Technology
Registered
Registration
% Contracted
Contracted Contracted
Contracted%
%
Technology
Registered
Registration %
Contracted
Contracted
%
Technology
Registered
%
Contracted
Contracted
%
Technology
Registered
Registration
Contracted
Contracted
%
Wind
0%
0%
Wind
6.052,00
43%
1.067,70
39%
861,10
71%
Wind
11.879,00
84%
281,90
49%
Wind
5.149,00
82%
976,50
81%
Biomass
919,00
26%
347,00
27%
Biomass
2.750,00
20%
197,80
7%
357,00
29%
Hydro
988,00
7%
292,40
51%
Biomass
602,00
10%
100,00
8%
Carvo
1.840,00
52%
300,00
24%
Hydro
450,00
3%
450,00
16%
0%
Gas
368,00
3%
--0%
Hydro
388,00
6%
0%
Hydro
400,00
11%
400,00
32%
Mini
Hydro
443,00
3%
0%
Mini Hydro
443,00
3%
0%
Biomass
583,00
4%
--0%
Gas
0%
0%
Mini
Hydro
147,00
2%
135
11%
Gas
4.388,00
31%
1.029,10
37%
GasHydro
4.388,00
31%
0%
Mini
Hydroand AHE
363,00
3%
-0%
Mini
376,00
11%
218,48
17%
TOTAL
6.286,00
1211,5
100%
TOTAL
14.083,00
2.744,60
100%
14.083,00
1.218,10
100%
TOTAL
14.181,00
574,30
100%
TOTAL
3.535,00
1.265,48
100%

When all sources compete together, the market selects the

technology and hence the energy matrix of the country. When
sources compete separately (wind on wind, hydro on hydro,
etc.) the regulator decides the energy matrix and the market
competes for lower prices
Souce: IEA

Other barriers

Environmental and interconnection point

Environmental
process

1. Unexpected prescriptions Lack of

experience by the environmental
authorities
2. Step process Single authorization
(construction and operation) versus phased
process
3. Time

Interconnection
point and
transmission

1. Third party access

2. Time to secure interconnection point versus
PPA and investment decision
3. Management of cues and avoidance of
speculators

Souce: IEA

Other barriers

Stakeholders response

Empowering
people
Working on reputation before
working on
generation
2013-2017 plan reach

Colombia, La Guajira Region

Issues
5 Barefoot Solar Engineers actually in India for

training
Local acceptance of
Around 250 families involved

projects

Government intervention

EGP Colombia established 2013

0 MW in operation
10 projects in pipeline under evaluation, mainly
wind in La Guajira

Approach
Peru,
Tacna Department,
Candarave District
Early
engagement

5 Barefoot
From Solar
CSREngineers
to CSV trained
387 families electrified

EGP Peru established 2012

0 MW in operation
50 projects in pipeline under evaluation, wind,
geo, pv in southern regions

Current footprint

New countries

Barefoot College in LatAm

Luisa Teran, from Caspana
(135 families), Chile,
assembling an electrical board
at Barefoot College, Tlonia,
India

Enel Green Power

Thank You!
Carlo Zorzoli
Head of Business Development Iberia and Latin America
Enel Green Power S.p.A.
carlo.zorzoli@enel.com