business and regulatory challenges and solutions with respect ......italia 14,5 gw grecia 0,3 gw...

Business and regulatory challengesand solutions with respect to private sector investments in RE

Accra, Renewable Energy Fair

8 October 2019

1. By number of customers. Publicly owned operators not included

2. By installed capacity. Includes managed capacity for 4.2 GW

3. It includes nuclear

4. Includes customers of free and regulated power and gas markets

2

1st network operator1

World’s largest private

player2 in renewables

Largest retail customer

base worldwide1

73 mn end users

64 mn customers4

43 GW capacity2

46.5 GW capacity3

5.7 GW demand response

Enel Group IntroductionLeader in the new energy world

USA

5 GW

Canada

0,1 GW

Spagna

6,5 GW

Italia

14,5 GW

Grecia

0,3 GW

Romania

0,5 GW

Messico

2,1 GW

India

0,2 GW

Australia

0,3 GW

Sud Africa

0,5 GW

Brasile

2,5 GW

Colombia

3,2 GW

Peru

1,1 GW

Cile

4,7 GW

Argentina

1,4 GW

Guatemala

0,2 GW

Panama

0,4 GW

Costa Rica

0,1 GW

Marocco

Russia

Zambia

Ethiopia

Germany

Indonesia

Kenya

Singapore

3Managed capacity (GW) 10.6 3.7 28.1 0.9

Key figures 2018

Key financials (€bn)

Consolidated

Capacity (GW)

Production (TWh)

EBITDA

Opex

Maintenance capex

Growth capex

2018

39.2

99.1

4.5

1.4

0.3

2.9

Consolidated capacity (GW) 8.2 2.3 27.8 0.8

43.4

108.4

Managed

Hydro SolarWindGeo

Global Footprint

Enel Green Power

Countries with advanced stage of development

Countries of presence3.3

Technology Focus: Proven Renewables

Wind Onshore

Solar Photovoltaic

Geothermal Energy

Hydroelectric

Biomass

Innovation: the key to compete

Storage

Offgrid systems

Hybrid Solutions

Solar Home System

Enel Green Power’s technologies

Marine Energy

EGP is focused on Mature Technologies… …and investigates Innovative Solutions

Market features to attract investorsThe Regulatory perspective - Africa

Source: Poyry, What does it take to accelerate RES Investments in Africa, 2019

1.Openness

2.Attractiveness

3.Readiness

Dim

en

sio

n

ch

ara

cte

risti

cs Assess national

commitment towards

RES development and

openness of renewable

market to private sector

investments

Assess supporting

policies and

instruments to promote

the development of

renewable energy

sources and ensure

attractiveness of

renewable market for

private investors

Assess the readiness of

national power market

to efficiently integrate

and manage increasing

capacities of variable

renewable generation

Regulatory

Dimensions

To

pic

s

Energy strategy

Market framework and

governance

Investment regulation

Production-based

supporting schemes

Investment-based

supporting schemes

Cost reflective electricity

prices

Network development

regulation

Routes-to-market

System Operation

regulation

Grid Connection regulation

Investor perspective

Market features to attract investors

6

The Regulatory perspective - Ghana

…further

enhanced by

Energy policy with specific RES targets for

power generation. Detailed and solid sector

masterplan.

Presence of IPPs and unbundling started

No limitation on foreign equity and equal

treatment of foreign investors

Formal adoption in national legislation;

Add one-stop-shop for permitting and clear rules

for land access

Open

The existing

advantages…


7


Attractive

FiT and RES quota obligations in place

Tenders

Fiscal incentives such as import duty and VAT

exemptions on solar PV equipment

Enforcing regulations

Implement a formal auction program

Cost-reflectiveness of electricity tariff

…further

enhanced by

The existing

advantages…


8


Ready

Network development plan considering RES

integration;

Multiple routes-to-market (dedicated off-taker,

bilateral PPAs, net-metering)

Publicly available grid code

Grid connection procedures and costs are

defined and plublicly available and include

priority of access for RES

Implementation of wheeling and net-metering through

secondary legislation

Clearer and cost-based remuneration mechanism for

TSO

Priority of dispatch for RES

Curtailment remuneration

…further

enhanced by

The existing

advantages…

Regulatory framework is fairly

advanced, however lack of

adequate supporting policies for

RES limits market attractiveness

for RE-IPPs

Market features to attract investorsThe Regulatory perspective - Ghana

Source: Poyry, What does it take to accelerate RES Investments in Africa, 2019

Why choosing Renewable EnergyDrivers for RES in a situation of overcapacity

Demand growth: Ghana is experiencing a steady GDP growth and the current

overcapacity will not be able to satisfy increasing demand.1

38%

1%

29%

32%

Hydro Solar Wind Biomass Geothermal

Marine Coal Gas Oil NuclearTotal RES

Ghana – Electricity Market OverviewKey Figures 2018-2030

Source: EGP estimate, UN dataset, Enerdata

8 9

11 12

13

14

18

22

3031

34

38

0

8

16

24

32

40

0

5

10

15

20

25

2018 2020 2025 2030

Mln peopleTWh CAGR

2020-30

Electricity

Demand

4,4%

Population

2,0%

RES

Production

3,7%

Production 2017

Capacity 2017

RES

share

Electricity

Demand

Pro Capita

61% 60% 64% 56%

0,4

MWh

0,5

MWh

0,5

MWh

0,6

MWh

GDP is expected to grow by 6,8% year-on-year up to 2023

Production mix is dominated by gas and hydro

11

40%

54%

6%

14 TWh

4,1 GW

40%

39%

8 89 9

1 2111

8 9

11 12

13 14

18

22

2018 2020 2025 2030

+1,9 GW forecasted by 2030

+0,8 GW Solar PV Utility

+0,3 GW Solar PV Distributed

+0,5 GW Wind Onshore

RES capacity evolution - GW RES Production evolution – TWh

2 2 2 2

11

2

2

3

3

2018 2020 2025 2030

Hydro PV Utility PV Distributed CSP Wind Onshore

Wind Offshore Bioenergy Geothermal Marine

+0,5 GW

+0,9 GW

+0,5 GW

Source: EGP Internal Analysis, Enel electricity demand scenario

Electricity Demand % RES Production on Electricity Demand

56%64%60%61%

Ghana RES Development ScenarioCapacity and Production

12

Why choosing Renewable Energy

Demand growth

13

Drivers for RES in a situation of overcapacity

1

2 Financial and energy security concerns.

RES are cheap.

RES plant are the best substitutes for technological offset of ageing thermal generators.

Energy security: RES help reducing fossil fuel dependence from neighboring countries. Also

in case of domestic resource, gas and oil price are strictly dependent on market

fluctuations. Hydro generation strongly depends on rainfall. Diversifying the energy mix by

including RES increases energy security.

RES and to reduce if not avoid tariff subsidies making tariffs more cost-reflective. Expensive

electricity is a major inhibitor to socio-economic development. RES will allow to decrease

the energy bill.

0

20

40

60

80

100

120

140

160

180

200

220

Solar PV Wind Onshore Solar PV Wind Onshore Solar PV Wind Onshore

2018 2025 2030

Economic

Choice

Average LCOE €cent/kWh – Global Average

Current Coal and Gas

Renewables - What is behind this growth?

Wind

down

~50%

PV down

>80%


Demand growth

17


1

2 Financial and energy security concerns

3 Time-to-market: years can pass from the discovery of gas resource to the operation of a

gas plant, whilst it takes less and slightly more than 1 year for a PV and wind plant

respectively.

Technological scalability: do not think about a single, small PV plant, but think in the

perspective of a pipeline of projects that will promote economic development of a nation in

the long-term (job creation, smart extension,…)

0

20

40

60

80

100

120

140

160

180

200

220


2018 2025 2030

Economic

Choice

Easiest

to do

PV & Wind

8 ÷ 12 months

CCGT

16 ÷ 20 months (open cycle)

26 ÷ 30 months (closed cycle)

Coal

40 ÷ 60 months

Nuclear

120+ months





Demand growth

19


1


3 Time-to-market and technological scalability

4 Sustainability concerns: history is going towards renewable energies; the energy

transition is a fact. International investors are investing more and more in RES. Also

traditional oil&gas companies (ENI, Shell, Statoil,…) are dedicating part of their capex to

RES. RES are environmental friendly and are the perfect match for CSV objectives.

0

20

40

60

80

100

120

140

160

180

200

220


2018 2025 2030

Who is leading the transition

Governments

Corporations

Wise and

sustainable energy

strategy

Innovative and

sustainable growth

Conscious and

sustainable value

chain

Utilities

Economic

Choice

Necessary

For Environment

1.5°C 2°C 2°C vs 1,5°C

2.6xworseEXTREME HEAT

SEA-ICE-FREE ARCTIC

SEA LEVEL RICE

10xworse

.06MMORE

Easiest

to do

PV & Wind

8 ÷ 12 months

CCGT

16 ÷ 20 months (open cycle)

26 ÷ 30 months (closed cycle)

Coal

40 ÷ 60 months

Nuclear

120+ months





Demand growth

21


1


3 Time-to-market and technological scalability

4 Sustainability concerns

5 Political willingness: electricity bill reduction and accelerating RE penetration were a key issue in

the election campaign of Ghana’s President Nana Akufo-Addo.

The Ministry of Energy has recently disclosed that the Renewable Energy Act is being amended to

ensure active participation of the private sector in achieving government’s goal of scaling up the

penetration of renewable energy

Regulatory reliability: RE Master Plan 2019: RE from 42.5 MW in 2015 to 1363 MW in 2030 ->

there is much opportunity for private investors


22


1

2

3

4

5 Political willingness and regulatory reliability

6 Commercial opportunities: export in neighboring countries or wheeling to C&I consumers

leveraging on the inner decentralization of renewable energy plant.

Demand growth

Financial and energy security concerns

Time-to-market and technological scalability

Sustainability concerns

Grid investments

Storage

Digitalization

Flexibility

Key enablers for «100% Renewables»

230

450

950

120

Hydro Wind Solar PV Other RES

260

560

940

80

Hydro Wind Solar PV Other RES

Source: World Energy Outlook 2018, New Policies Scenario - IEA

1.840 GW 1.750 GWAdditional 2020-2030 Additional 2030-2040

15%

38%18%

29%

16%

31%

22%

31%

10.000 GW

RES

Share

47%

RES

Share

53%

12.300 GW

2030 2040

Hydro

Other RES

Coal

Other

Conventional

18%

15%

29%

38%

RES

Share

33%

7.000GW

2017

RES Share

77%RES Share

76%EU

Latam

North AM

China

India

Africa

RoW

World Installed Capacity

How the installed capacity mix will look like

Thank you

26

business and regulatory challenges and solutions with respect ......italia 14,5 gw grecia 0,3 gw...

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