Wind Future in Asia Report (Final) Updated23Aug12 - 0 PDF
Wind Future in Asia Report (Final) Updated23Aug12 - 0 PDF
Wind Future in Asia Report (Final) Updated23Aug12 - 0 PDF
Mongolia
Pakistan
Philippines
Afghanistan Sri Lanka
Bangladesh South Korea
China Thailand
Fiji Timor-Leste
Japan Vietnam
India
Indonesia
Kazakhstan
Maldives
Full Report, August 2012
Wind power has experienced 26% annual growth in cumulative installations worldwide in the past 5 years
and is expected to grow at 16% per annum in the next 5 years, despite increasingly turbulent economic
conditions in the short term. Since 2010, Asia has been at the forefront of this growth, as wind energy
installations in the region have outstripped both North America and Europe. While China and India have
been the main drivers of growth, the projected investments in wind projects in the rest of Asia are expected
to exceed US$50 billion between 2012 and 2020. Realizing the full potential of wind energy in the region,
however, will require long-term, consistent policies and upgraded transmission and grid infrastructure.
1
TABLE OF CONTENTS
Acknowledgements .................................................................................................................... 3
Preface ...................................................................................................................................... 4
Executive Summary ................................................................................................................... 5
Introduction ................................................................................................................................ 6
Wind Future by Country ............................................................................................................. 9
1. Afghanistan........................................................................................................................10
2. Bangladesh........................................................................................................................12
3. China, People‘s Republic of ...............................................................................................15
4. Fiji Islands..........................................................................................................................19
5. India...................................................................................................................................22
6. Indonesia ...........................................................................................................................27
7. Japan.................................................................................................................................30
8. Kazakhstan ........................................................................................................................35
9. Korea .................................................................................................................................38
10. Maldives ............................................................................................................................42
11. Mongolia ............................................................................................................................45
12. Pakistan .............................................................................................................................48
13. Philippines .........................................................................................................................53
14. Sri Lanka ...........................................................................................................................58
15. Thailand .............................................................................................................................62
16. Timor-Leste .......................................................................................................................67
17. Vietnam .............................................................................................................................70
Summary ..................................................................................................................................74
Appendix I: Case Studies .........................................................................................................76
Appendix II: CDM for Wind Projects ..........................................................................................80
Appendix III: Wind project development checklists ....................................................................87
Appendix IV: Selected References ..........................................................................................103
2
Acknowledgements
The Wind Energy Future in Asia Report 2012 was prepared by the Asian Development Bank
(ADB). A team led by Jitendra (Jitu) Shah, Advisor, Regional and Sustainable Development
Department with team members Mary Grace Alindogan, Pramod Jain, and Carlo Borlaza,
consultants to ADB, along with Takehiro Kawahara and Emma Dudley, summer interns at ADB,
contributed to and coordinated the production of the publication.
Authors acknowledge the contribution of wind enthusiasts around the world who have
participated in the Asian Development Bank‘s Quantum Leap in Wind workshops which have
been held annually since June 2010.
Global Wind Energy Council, through Steve Sawyer and Shruti Shukla, contributed significantly
to the report by providing country specific data and editing support.
The South Asia Regional Initiative on Energy (SARI/E) of US Agency of International
Development (USAID), especially Srinivasan Padmanabhan of USAID and Amit Dalal of Tetra
Tech, contributed to this report by providing wind energy roadmaps and other materials
developed as part of educational and capacity building initiatives in the South Asian region.
Authors also acknowledge 3-Tier and NREL for contributing color wind maps for the report. All
population data is sourced from the Asian Development Bank Key Indicators 2011. Information
on the major sources of electricity is obtained from the International Energy Agency.
The following individuals and organizations are recognized for their contributions to country
specific data and information:
Prof. Mohamed Shafi Sharifi, Kabul University; Mohsin Amin, DABS; and
Afghanistan
Asad Aleem, ADB
Selim Uddin, MPEMR and Mr. Fazlur Rahman, Pan Asia Power Services,
Bangladesh
Ltd.
China, People‘s Liming Qiao, GWEC and Hu Runqing, Energy Research Institute, National
Republic of Development and Reform Commission
Fiji Hasmukh Patel, Fiji Electricity Authority
Mr. Lakshmanan, Windward Tech; Rajendra Kharul and GM Pillai, World
India
Institute of Sustainable Energy
Kazakhstan Aida Makazanova, Ministry of Environmental Protection
Maldives Akram Waheed, Ministry of Housing and Environment
Sukhabaatar Tsegmid, Bayanjargal Byambasaikhan and D. Gankhuyag,
Mongolia
NEWCOM LLC; J. Osgonbaatar, Renewable Energy Center
Jens Olsen, Nordex China; Saif Ullah and Khaqan Hassan Najeeb,
Pakistan
Government of Pakistan
Jose Layug, Jr., Department of Energy and Poch Ambrosio, Northwind
Philippines
Power Development Corporation
Manjula Perera, Wind Force and Thusitha Sugathapala, Sri Lanka
Sri Lanka
Sustainable Energy Authority
Lino M. N. C. Correia, Technical Adviser, Secretary of State for Energy
Timor-Leste
Policy Timor-Leste
Phil Napier-Moore, Mott MacDonald; Ruangdet Panduang and Sutubutr
Thailand
Twarath, Department of Alternative Energy Development and Efficiency
This report would not have been possible without the support of various departments and
groups within the Asian Development Bank.
3
Preface
The Asian Development Bank‘s long-term strategy pursues an agenda of inclusive economic
growth, environmentally sustainable growth, and regional integration. In line with these goals,
the ADB‘s Quantum Leap in Wind (QLW) initiative assists Developing Member Countries (DMC)
with technical, policy and financing aspects of wind power development. QLW comprises USD 2
million in technical assistance financed by the Asian Clean Energy Fund established by the
Government of Japan, under the Clean Energy Financing Partnership Facility.
The Wind Energy Future in Asia Report 2012 is part of this technical assistance and presents a
compendium of wind energy data and information for 17 countries in Asia and the Pacific. Lack
of readily available information about wind resources, policies, incentives, targets, projects in
pipeline and installed capacity is a serious impediment to investment in wind projects. This
report is an effort to fill this information void and as such is intended to promote investment in
wind energy projects in the select countries.
The report may be used for comparing wind resources, policies and incentives across the 17
countries. Although the data and information is a snapshot as of mid 2012, it should provide a
basis for future validation and additional data collection.
This report summarizes the results of the consultations, conference presentations, country
status and project presentations, and broad discussion among stakeholders at three QLW
workshops conducted by ADB and other workshops conducted by SARI/Energy program of
USAID. The accuracy of data and information in the report depends largely on the source.
Multiple published sources were consulted, but no independent effort was made to verify the
data and information. Readers are therefore advised to verify the data before making
investment decisions.
4
Executive Summary
Asia is the world‘s largest regional market for wind power and while China and India have been
the main drivers of growth, many other countries in the region are now increasingly looking to
renewable power to satisfy growing energy demand in a clean and affordable way.
The current state of wind development in the region can be summarized as follows:
China is the largest market for wind power in the world, adding 17.6 GW of new capacity
in 2011 alone. Cumulative wind power capacity has more than doubled in the past 2
years, from 26GW at the end of 2009 to 62GW at the end of 2011. China has installed
258 MW of wind power offshore.
The wind power market in India grew by 3GW in 2011 to reach a cumulative capacity of
16GW. Since 2010, India has been the 3rd largest market in terms of new installed
capacity, trailing China and USA.
Both China and India have strong manufacturing capacity and are increasingly looking to
compete overseas.
In Japan, there has been renewed interest in wind power partly due to Fukushima
Nuclear accident in March 2011, the passing of the Renewable Energy Law in 2011, and
revised Feed-in-Tariff announced in April 2012.
South Korea has strong local manufacturing capacity and the new ―Green Growth‖
strategy should see significant investments in development of 2.5GW of offshore wind
power by 2019.
Bangladesh, Indonesia, Philippines, Sri Lanka, Thailand and Vietnam have established
pilot wind projects and renewable energy policies. As of mid-2012, a few commercial
wind farms are operational. In Sri Lanka, 30MW is in operation, 30MW is awaiting
interconnection, and 30MW is under construction. In Thailand and Vietnam, more than
100MW and 30MW are under construction, respectively. In Philippines, 33MW is
currently in operation.
Many small island countries such as Fiji and Maldives have attractive wind resource with
good opportunities for small-scale wind and hybrid plants. The Governments of the
Maldives and Fiji are actively promoting wind power.
Each country profile in this report presents the opportunities and challenges specific to each
country context, however it is clear that in all countries, effective government leadership is
imperative to accelerating wind development, particularly in areas of setting appropriate levels
of Feed-in Tariff (FIT), accurate wind resource assessment, and coordinated development of
grid, transmission and supporting infrastructure in wind-rich regions.
5
Introduction
For the third consecutive year, Asia is the world‘s largest regional market for wind power. In
2011, the annual installed wind power capacity in Asia exceeded the combined total for both
North America and Europe. As a result of this dynamic growth, Asia will surpass Europe as the
world leader in cumulative installed capacity sometime in 2013.
Source: Global Wind Energy Outlook, various issues, Global Wind Energy Council (GWEC)
China and India have been main drivers of growth in wind installations, both in Asia and globally
While the growth of wind power in other Asian countries has been subdued, many are now
increasingly looking to renewable power to provide clean and affordable energy.
Source: Global Wind Energy Outlook, various issues, Global Wind Energy Council (GWEC)
6
Wind Energy Potential
Wind energy is abundant in most Asian countries yet installed wind capacity is currently only a
fraction of realizable potential. In the Asia Pacific region, only 2% of the estimated 5,300 GW
potential has been harnessed. With appropriate incentives, installed wind capacity in Asia could
increase 8 times in the next 10 to 20 years.
Wind power not only addresses the challenges of energy security, climate change and access
to energy for all, it is also becoming increasingly cost competitive. In markets such as the EU
which accounts for carbon emission costs, projected costs indicate that wind is a cheaper
alternative to coal and gas (see Chart 5 below). Evidence shows that even when not including
externalities, the levelized cost of wind energy is approaching the cost of new build coal-fired
7
energy production. In Brazil, Mexico and New Zealand, wind energy does not enjoy subsidies,
yet successfully competes with other forms of energy generation.
Chart 5: Projected Electricity generating costs in the European Union, 2015 and 2030
8
Wind Future by Country
9
Afghanistan
1. Afghanistan
Opportunities:
Afghanistan is rich in renewable energy resources and has a strong culture of
commerce and trade.
Hybrid Small Wind Turbines with diesel, PV and batteries are promising options to
supply electricity for rural electrification or for small grids.
Only 25% of the population has access to electricity. Poorest provinces connected to
diesel generators pay as much as USD 0.50/kWh
Up to 8 m/sec wind speeds are reported. The lowlands in southern and western
Afghanistan have around 120 windy days in a year
Challenges:
Security is still the primary issue for donors and the government of Afghanistan
Even in Kabul, the electrical system is islanded due to non-synchronized power
systems. The other population centers are dispersed and remote and the supporting
infrastructure are not in place.
Energy policies and regulations for wind are still not in place
10
Afghanistan
References
1. ―Afghanistan – Status and Development of the Power Sector‖, presentation by Prof. Mohammad
Shafi Sharifi to QLW3 Workshop at Asian Development Bank, Manila, June 4-5, 2012.
2. ―Afghanistan Wind Energy Roadmap Panel Discussion‖, presentation by Asad Aleem, Energy
Specialist, ADB at QLW3 Workshop at Asian Development Bank, Manila, June 4-5, 2012
1
US Energy Information Association
11
Bangladesh
2. Bangladesh
Opportunities:
Small Wind Turbines (SWT) are widely considered the most appropriate option for
Bangladesh given its land use constraints. They can be transported and installed with
minimum land and infrastructure requirement. The cost of SWT generated electricity is
approximatelyTaka10 – 15/kWh (USD 0.14 – 0.20/kWh)2, which is significantly less than
the cost of solar photovoltaic electricity, which is estimated to be around Taka 50/kWh
(USD 0.68/kWh).
Large Utility-Scale Turbines may be viable in coastal and higher altitude areas.
Challenges:
Detailed wind resource maps to support the establishment of bankable wind farms are
not available for key areas.
Bangladesh‘s wind regime is characterized by low average wind speed and high
number of extreme weather events (cyclones). Current wind resource maps indicate
highest wind areas have resources in the range of 6 to 6.5m/s at 80m, which would
require large rotor turbines for achieving reasonable plant load factor; however, to
minimize damage during extreme weather events smaller rotor turbines are required.
2
USD 1 = Taka 74
12
Bangladesh
3
Bangladesh Power Development Board, as of March 2011
4
Source: Wind Assessment over Bangladesh has been done independently by RISOE National Laboratory, Denmark
using KAMM (Karlsruhe Atmospheric Meso-scale model). It shows several locations with power density of above
2
200W/m over an area ~ 2,000 km.
13
Bangladesh
References
1. ―Bangladesh,‖ Presentation by Md. Fazlur Rahman to QLW2 Conference at Asian Development
Bank, Manila, June 20-21, 2011.
2. ―Country Report of Solar and Wind Energy Resource Assessment – Bangladesh,‖ SWERA,
February, 2007.
3. ―Policy & Regulatory Review 2010,‖ Renewable Energy & Energy Efficiency Partnership
(REEEP), 2010.
4. ―Strategy for Promotions and Development of Wind energy in Bangladesh,‖ by Hossain et al. to
the National Seminar on Renewable Energy-2011, Dhaka, Bangladesh, April 6-8, 2011.
14
China
Opportunities:
Abundant untapped wind resource in the country can feed increasing demand for
electricity.
Locally manufactured and competitively priced supply of wind turbines available from a
large base of manufacturers.
Ownership and operation of wind power generation is open to the private sector,
while power grids are owned and managed by the Government.
Strong policy and regulatory support for wind energy
Challenges:
Need for coordinated grid planning: New wind power projects must be coordinated
with grid planning and expansion. Grid planning has not kept pace with wind power
development. The areas with the best wind resource are sparsely populated regions
where domestic electricity demand is low. Inner Mongolia, a region with very strong
wind resource suffers from severe transmission constraints. High voltage transmission
lines are needed to connect these areas with electricity consumers in rapidly developing
eastern parts of China.
Grid curtailment is 25% in Gansu; 17% in ten windy provinces
Need for locally produced wind turbines to be at par with international standards.
15
China
There is an oversupply of wind turbines, with local wind turbine prices approaching RMB
4,000/kW (about USD 619/kW5). Quality improvement of the domestic wind turbine
manufacturers has not kept pace with the impressive installation rates after almost a
decade of experience in producing and installing wind turbines domestically.
Offshore Targets:
Target of 5GW by 2015 and 30GW by 2020.
1GW of concessions have been granted
Exploitable potential is estimated at 210 GW
5
USD 1.00 = RMB 6.46
6
The wind resource map and assessment is done by National Meteorological Administration (Wind and Solar
Resource Assessment Center). It is currently undertaking a detailed survey including meso-scale modeling and 400
wind masts for onsite measurements. For onshore wind resources, exploitable potential at 50m height with wind
4
resource coverage of 146.4x10 sq km amounts to 2,380GW. For offshore region at 50m height, wind resource
4
coverage is 20.6x10 sq km and exploitable potential amounts to 210GW (as of 2009).
77
Source: GWEC: Global Wind Statistics 2012.http://www.gwec.net/fileadmin/images/News/Press/GWEC_-
_Global_Wind_Statistics_2011.pdf
8
Presentation by Hu Runqing of Energy Research Institute , China to ADB-QLW event on 20-21 June,2011
16
China
The Chinese National Energy Administration selected locations from the provinces with the best
wind resources and set targets for each of them to be reached by 2020.According to the plan,
wind power bases will add up to 138 GW of wind power capacity by 2020, on the assumption
that a supporting grid network is established. So far, the Chinese government has confirmed
seven GW-scale Wind Power Bases, which amount to 83 projects.
Table 3.5 Relevant Policies
Relevant Policy Supporting Wind Power Year
1. China announced concession projects, during this round of concession 2003
project bidding – the lowest bidder were granted the project.
2. The National Renewable Energy Law became effective, major principles of 2006
renewable energy development such as guaranteeing access to the grid for
renewable energy producers.
3. Medium and Long Term Renewable Energy Planning in China was issued. 2007
The national targets for wind are 5GW by 2010 and 30GW by 2020, which
were passed long before the stipulated deadline.
4. New Feed-In Tariff for wind electricity was offered. The value of FIT 2009
depends on wind resource and is in the range of RMB 0.51 - 0.61/kWh
(USD 0.08-0.09/kWh).
5. After 2010, a new VAT policy was announced in which VAT for wind farm 2010
equipments (WTGs) is deductible. Because of this, local government
income diminished from wind projects for the first 6-7years.
9
Source: Global Wind Energy Council
17
China
References
1. ―Update on China‘s Wind Development,‖ presentation by Liming Qiao to the QLW3
Workshop at Asian Development Bank, Manila, June 4-5, 2012.
2. ―China Wind Market is Booming: Growth not only on-shore but off-shore,‖ Presentation
by Li Junfeng to the Quantum Leap in Wind Workshop at Asian Development Bank,
Manila, June 2010.
3. ―Wind Development in China,‖ Presentation by Hu Runqing to the 2nd Quantum Leap in
Wind Workshop at Asian Development Bank, Manila, June 2011.
4. Wind Energy International 2009/2010
5. ―Policy & Regulatory Review 2010,‖ Renewable Energy & Energy Efficiency Partnership
(REEEP), 2010.
6. ―China to boost offshore wind power,‖ http://www.chinadaily.com.cn/business/2011-
06/22/content_12754622.htm, June 22, 2011.
18
Fiji
4. Fiji Islands
Opportunities:
Wind power provides a cleaner and cheaper alternative to expensive fossil fuel,
especially for an island nation.
Limited land and infrastructure provide an opportunity for small-scale wind systems.
Challenge:
Need for wind resource assessment. More accurate wind resource assessment in key
locations needs to be conducted to estimate Fiji‘s overall wind potential.
The existing wind power facility has only achieved 7% capacity factor
19
Fiji
10
Wind turbines at Butoni wind farm are tilt-up 225kW Vergnet turbines that may be lowered to the ground in
response to cyclone warnings. The turbines are secured to the ground fixed in place until high winds have abated to
prevent turbine damage.
11
Including Hydro
20
Fiji
References
1. ―Fiji Wind Development Status,‖ presentation by Hasmukh Patel to QLW3 Workshop at
Asian Development Bank, Manila, June 4-5, 2012.
2. ―Energy Sector Overview,‖ Presentation by Hasmukh Patel to QLW2 Conference at
Asian Development Bank, Manila, June 20-21, 2011.
3. ―Wind farm,‖ Fiji Electricity Authorization http://www.fea.com.fj/pages.cfm/renewable-
projects/wind-farm.html, 2011.
4. ―Policy & Regulatory Review 2010,‖ Renewable Energy & Energy Efficiency Partnership
(REEEP), 2010.
21
India
5. India
Opportunities:
Access to low cost turbines from competitive local wind turbine manufacturers. India
currently has 17 utility scale turbine manufacturers and 9 additional manufacturers slated
to enter the market. The current annual wind turbine manufacturing capacity is 9GW
(2010/11), which is likely to increase to 17GW in 3 years based on projected growth of 2
to 3GW per year.. Indian manufacturers export USD 1.4 billion12worth of wind turbines
and spares.
Availability of small to large-scale investments in the wind industry. Wind turbine
manufacturers provide turn-key solutions for wind projects. Traditionally, investments
were pooled from large numbers of small investors with an appetite for tax credits.
Independent Power Producers are increasingly becoming part of the wind energy market
as an alternative to manufacturer driven development.
200 MW demonstration off-shore wind farm planned
Challenge:
Low wind speed and low average capacity factor. Most locations have class 2 (WPD
around 200 to 300 W/m2) winds while the average capacity factor is in the range of 20%-
23% due to significant number of older and smaller WTGs.
Grid integration for rising wind based electricity generation is increasingly a challenge for
state electricity utilities, especially in States like Tamil Nadu and Maharashtra. There is
an urgent need for proper grid planning and modernization of the grid.
12
2010/11 projection, http://www.mydigitalfc.com/power/india-export-14b-worth-wind-turbine-spares-fy11-590
22
India
13
http://www.cea.nic.in/reports/monthly/executive_rep/may11/1-2.pdf
14
Source: Centre for Wind Energy Technology (C-WET)
15
CWET/MNRE estimate based on 2% land availability across the country
16
World Institute of Sustainable Energy estimate (2010)
17
As of March 2011, Source : Ministry for New and Renewable Energy
18
Source: ―India Wind Development Status‖ presentation by Rajendra V Kharul, QLW3 Workshop, ADB, Manila, June
4-5, 2012
19
The National Action Plan on Climate Change is not legislation and the target is being contested by MNRE.
20
World Institute of Sustainable Energy (2010)
21
Reported in IEA information Paper: Technology Development Prospects for the Indian Power Sector, Feb 2011
23
India
22
https://www.recregistryindia.in/pdf/Order_on_Forbearnace__Floor_Price_23-8-2011.pdf
24
India
25
India
References
1. ―India – Wind Development Status‖, presentation by Rajendra V. Kharul at QLW3
Workshop, Asian Development Bank, Manila, June 4-5, 2012.
2. Wind Energy International 2009/2010, World Wind Energy Association, 2009.
3. ―India Market Overview,‖ Presentation by G.M. Pillai to QLW2 Conference at Asian
Development Bank, Manila, June 20-21, 2011.
4. ―Indian Wind Energy Outlook 2011,‖ Global Wind Energy Council,
http://www.gwec.net/fileadmin/images/India/IWEO_2011_FINAL_April.pdf, April 2011.
5. http://www.iea.org/papers/2011/technology_development_india.pdf4.
26
Indonesia
6. Indonesia
Opportunities:
Small wind farms are ideal in areas south of Papua and small southeastern
islands where wind potential is good.
Smaller islands will require development of wind-solar and wind-diesel systems.
The country is looking into renewable energy such as wind power to address the
country‘s low electrification rate. The Government is intent on developing small- and
medium-scale wind farms ranging from 10kW to 100MW.
Challenges:
Local technical skills are needed to maintain small wind systems in remote off-grid
areas.
Cost-efficient turbines that have good track record are needed in similar island setting.
27
Indonesia
23
Wind Energy International 2009/2010
24
World Bank
25
Source: The National Institute of Aeronautics and Space (LAPAN). Average wind speed is 3-5m/s.
26
REEEP 2010
28
Indonesia
References
1. Wind Energy International 2009/2010, World Wind Energy Association, 2009.
2. ―Indonesia Wind Power Potential,‖ Prepared by Soren Karkov, DNV, June 2011.
3. ―Policy & Regulatory Review 2010,‖ Renewable Energy & Energy Efficiency Partnership
(REEEP), 2010.
4. International Energy Agency Website:
http://www.iea.org/stats/electricitydata.asp?COUNTRY_CODE=ID
29
Japan
7. Japan
Opportunities:
Generous renewable energy incentives have been announced in a shift away from
nuclear power. Attractive Feed-in-Tariffs were approved in June 2012 and the
government expects capacity of wind to increase by 500MW by end of March 201327.
Wind power installations have withstood the impacts of natural disasters that often
occur in Japan. A recent example is of a wind farm close to Fukushima that has survived
the impacts of the March 2011 earthquake and tsunami. This is likely to be a favorable
factor in future technology choices.
Challenges:
27
Japan approves renewable subsidies in shift from nuclear power, June 18 2012, Source:
http://in.reuters.com/article/2012/06/18/us-energy-renewables-japan-idINBRE85H00Z20120618
30
Japan
28
Japan Wind Power Association (JWPA)
29
Japan Wind Energy Association (JWEA)
30
Ministry of Environment, 21 April 2011.
31
Ministry of Environment Wind Map as of June 2011: http://www.env.go.jp/earth/ondanka/rep/index.html
32
Japan Wind Power Association (JWPA)
33
Source: GWEC: Global Wind Statistics 2011.
34
Ministry of Economy, Trade and Industry website:
http://www.meti.go.jp/english/policy/energy_environment/renewable/ref1001.html
35
USD 1.00 = JPY 79.74
36
Japan approves renewable subsidies in shift from nuclear power, June 18 2012, Source:
http://in.reuters.com/article/2012/06/18/us-energy-renewables-japan-idINBRE85H00Z20120618
37
USD 1.00 = JPY 79.10
38
Japan approves renewable subsidies in shift from nuclear power, June 18 2012, Source:
http://in.reuters.com/article/2012/06/18/us-energy-renewables-japan-idINBRE85H00Z20120618
31
Japan
32
Japan
4. Set a target to increase the share of renewable energy to 20% of total 2009
primary energy supply by 2020 to help achieve the mid-term emission
reduction objectives.
5. Feed-In Tariffs Bill for approval in 2012.39 2011/2012
39 th
Submitted to the Diet on 11 March, 2011, same day the Great East Japan Earth Quake occurred.
33
Japan
4. Secure permit for conversion of land from Ministry of Agriculture, Forestry and Fisheries
agriculture to commercial.
5. Secure permit if within Guard Forest. Ministry of Agriculture, Forestry and Fisheries
6. Secure permit for offshore location within Fishermen‘s Association
fishing area.
References
1. ―Global Wind Energy Outlook 2010,‖ Global Wind Energy Council (GWEC), October
2010.
2. ―Renewable Energy Technology White Book,‖ New Energy and Industrial
Technology Development Organization (NEDO), July 2010.
3. ―Study of Potential for the Introduction of Renewable Energy,‖ The Ministry of
Environment of Japan, March 2011 (Japanese).
4. ―FY2011. Offshore Wind Power Generation Technology Research and Development:
Call for Proposal,‖ New Energy and Industrial Technology Development Organization
(NEDO), http://www.nedo.go.jp/content/100149662.pdf, June 2011 (Japanese).
5. Ereus Energy website (http://www.eurus-energy.com/english/project_01.html).
6. J Power Factbook 2010 (http://www.jpower.co.jp/english/ir/pdf/fact10e.pdf).
34
Kazakhstan
8. Kazakhstan
Opportunity:
Country-wide good wind potential. Large territories of Kazakhstan are appropriate for
installation of wind-power plants, as shown in Figure 7. Kazakhstan has large areas with
Class 3 and above wind speeds. Of the ten best sites, Djungar Gates and Sheleksky
Corridor are the most favorable due to their proximity to existing transmission lines,
positive correlation of wind season with energy demand, and a good demand for
electricity.
Challenges:
Utilizing wind power is not a priority as cheap electricity is available from coal and gas
power plants.
There is a lack of legislative and regulative support for wind that takes into account
benefits to the environment and society.
35
Kazakhstan
40
World Energy International 2009/2010
41
Kazakhstan Wind Power Market Development Initiative
36
Kazakhstan
References
1. ―Kazakhstan-Country Profile,‖ Renewable Energy Initiative
http://ebrdrenewables.com/sites/renew/countries/Kazakhstan/profile.aspx#Wind
2. ―Prospects of wind energy use in Kazakhstan,‖ Presentation by Makazhanova Aida to
the 2nd Quantum Leap in Wind Workshop at Asian Development Bank, Manila, June 20-
21, 2011.
3. ―Wind Power Market Development Initiative,‖ UNDP in Kazakhstan: Kazakhstan,
http://www.windenergy.kz/eng
4. International Energy Agency Website:
http://www.iea.org/stats/electricitydata.asp?COUNTRY_CODE=KZ
37
Republic of Korea
9. Korea
Opportunities:
Offshore wind development has a high potential in the south-east of the country.
Low FIT was recently replaced with Renewable Portfolio Standard (applicable from
2012), with attractive price for Renewable Energy Certificates.
Large local manufacturing companies have entered the wind turbine onshore and
offshore market
Strong policy and regulatory support from the government under its ―Green Growth‖
strategy , which will see nearly 10.2 trillion won invested in a three-phase, 2.5GWoff-
shore project off its southwestern coast carried out by a consortium of South Korean
companies lead by Korea Electric between 2012 and 2019.
Challenges:
Wind industry has lagged because of low FIT and public opposition.
RPS targets set by Government are aggressive. Assuming 70% of renewable energy is
from wind, 2,390 MW should be built in 2012.The Korean Wind Energy Association
estimates installation of 13.5GW of wind power by 2025.
Efforts are ongoing to ease the permitting process and to provide wind energy easier
access to the power grid.
38
Republic of Korea
42
http://www.eia.gov/cabs/South_Korea/Full.html
43
REEEP
44
Source: GWEC: Global Wind Statistics 2011.
45
Global Wind Energy Outlook 2010 (GWEC)
46
Global Wind Report 2010 (GWEC)
47
USD 1.00 = W 1,108.05
48
South Korea, http://www.gwec.net/index.php?id=177&L=0
39
Republic of Korea
40
Republic of Korea
References
1. ―Global Wind Energy Outlook 2010,‖ Global Wind Energy Council (GWEC), October
2010.
2. ―A review on global wind energy policy,‖ by Saidur, R. et al., Renewable and Sustainable
Energy Reviews, 2010.
3. ―Policy & Regulatory Review 2010,‖ Renewable Energy & Energy Efficiency Partnership
(REEEP), 2010.
4. ―LIDAR Correction by WindSim,‖ presented by Hyun-Goo Kim to WindSim User Meeting,
2011.
41
Maldives
10. Maldives
Opportunities:
Small-scale wind projects suitable for Maldives. The dispersed nature of the islands
makes it ideal for a distributed generation. Each inhabited island operates and
maintains its own power generation and power distribution system.
Majority of the islands have relatively low demand due to small populations. Most outer
and remote islands‘ energy demand is under 500kW, providing good opportunity for
hybrid wind-diesel or wind-solar systems.
Closer islands‘ (small clusters of islands in the same atoll with shallow lagoons in
between) grids can be potentially connected to provide several RE generating facilities
pumping energy into the grid, increasing reliability through redundancy and better
management of loads.
Challenges:
Wind resource data need to be established in key areas. Currently available resource
assessment indicates low average wind speed (6m/s or lower at 50m).
Capacity building is needed at the institutional as well as the utility and island
community level. Institutions need to be strengthened to plan and implement programs
supporting renewable energy. Locals also need to be trained to manage and operate
wind projects.
42
Maldives
49
For inhabited islands only. Resorts have their own supply, amounting to about 120 MW additional electrical
capacity. Energy Supply and Demand Report 2009.
50
Asian Development Bank
51
NREL, 2003.
43
Maldives
References
1. ―South Asia Regional Energy Initiative,‖ USAID, http://www.sari-
energy.org/PageFiles/Countries/Maldives_Energy_detail.asp
2. ―Fund for Renewable Energy Systems Applications (FRESA) launched,‖ United Nations
Maldives, http://www.undp.org.mv/v2/?lid=99&dcid=52, 2009
3. ‖UNDP Welcomes Statement of the Government to Make the Maldives the World‘s First
Carbon Neutral Country Within the Next Ten Years,‖ United Nations Maldives,
http://www.undp.org.mv/v2/?lid=99&dcid=44, 2008
4. ―Wind Energy Resource Atlas of Sri Lanka and the Maldives,‖ Elliot, D et al.,
http://www.nrel.gov/docs/fy03osti/34518.pdf?bcsi_scan_7823DFCE46415F3E=0&bcsi_
scan_filename=34518.pdf, August 2003
44
Mongolia
11. Mongolia
Opportunities:
Huge wind resource. Good to excellent wind resource is available countrywide. South
Gobi region is north of China‘s prominent wind corridor in Inner Mongolia, which has the
largest concentration of wind farms.
Electricity demand expected to increase rapidly. Rapid expansion of mining in the
south and rapidly improving standard of living will result in significant increase in demand
for electricity.
Wind power can be exported to China. Mongolia‘s proximity to China opens up the
possibility of exporting the excess wind power to its neighboring country.
Challenge:
45
Mongolia
52
Wind Energy International 2009/2010
53
The National Renewable Energy Laboratory (NREL) in the US developed a wind energy atlas of Mongolia in 2001.
Following wind measurements were conducted by: Newcom LLC at the level of 50m (2003, 2010); Qleantech at the
level of 50m (2009); and the National Renewable Energy Center at the level of 50m (2010).
53
Total of the following: 50 MW Salkhit Wind Farm for 2012 commissioning; 52MW Sainshand, 100 MW Qleantech,
and 200 MW Clean Energy at Tsetsii, all three at planning stages.
46
Mongolia
References
1. Case Study: ―Salkhit Wind Farm,‖ presentation by Mr. Sukhbaatar to QLW3 Workshop at
Asian Development Bank, Manila, June 4-5, 2012.
2. ―Mongolian Wind Development Status‖ presentation by J. Osgonbaatar to QLW3
Workshop at Asian Development Bank, Manila, June 4-5, 2012.
3. ―Mongolia,‖ Presentation by Bayanjargal Byambasaikhan to QLW2 Conference at Asian
Development Bank, Manila, June 20-21, 2011.
4. Draft Mongolia Wind Energy Roadmap, prepared by Dr. Pramod Jain for the Asian
Development Bank, 2011.
5. ―Wind Energy International 2009/2010,‖ World Wind Energy Association, 2009.
6. International Energy Agency
website:http://www.iea.org/stats/electricitydata.asp?COUNTRY_CODE=MN
7. Inputs from Mr. D. Gankhuyag, Newcom LLC.
47
Pakistan
12. Pakistan
Opportunities:
Very good wind potential in Southern and western part of Pakistan, specifically in
Gharo-Keti, Bandar, and Jhampir wind corridors.
Attractive renewable energy incentives are provided by the Government through its
Renewable Energy Policy and Mid-term Policy. Government bears the wind and grid
availability/connection risk.
Tariff is attractive (cost plus with up to 17% ROE)
AEDB is a one-stop shop to facilitate the development of wind power projects from
land acquisition to actual implementation.
Challenges:
48
Pakistan
54
Source: Alternative Energy Development Board (AEDB) in collaboration with USAID and NREL.
55
Aside from the AEDB wind resource assessment, the Pakistan Meteorological Department has conducted a
detailed Wind Power Potential Survey of coastal areas of Pakistan, which enabled the identification of potential areas
where economically feasible wind farms could be established.
49
Pakistan
50
Pakistan
51
Pakistan
References
1. ―A Case Study for EPC Projects in Pakistan‖, presentation by Jens Olsen to QLW3
Workshop at Asian Development Bank, Manila, June 4-5, 2012.
2. ―Pakistan Wind Development Status‖, presentation by M. Azim Hashimi to QLW3
Workshop at Asian Development Bank, Manila, June 4-5, 2012.
3. ―Wind Energy Status: Pakistan,‖ Presentation by Imtiaz Hussain Qazi and Zargham
Eshaq Khan to QLW2 Conference at Asian Development Bank, Manila, June 20-21,
2011.
4. ―Opportunities and Challenges to Scaling Up Wind Power in Pakistan,‖ Presentation by
Saif Ullah and Arif Alauddin to the QLW Structured Consultation Workshop at Asian
Development Bank, Manila, June 21-22, 2010.
5. Current Status of On-Grid Wind Power Generation Projects by AEDB from AEDB
website: http://www.aedb.org/Downloads/windstatus.pdf
6. ―Wind Energy International 2009/2010,‖ World Wind Energy Association, 2009.
52
Philippines
13. Philippines
Opportunities:
FiT Rates for wind have been approved. The Philippine Energy Regulatory
Commission approved in July 2012 a FiT rate for wind (P8.53/kWh or USD
0.197/kWh)56, which is considered attractive enough to draw developers to build wind
farms in the country.
Wind rich corridors have been identified with contracts already issued to some; all
awaiting further development.56 wind service contracts with a potential total capacity of
about 1,700 MW have already been awarded.
Challenges:
High cost of electricity. Public not receptive to additional increase in electricity rate
(through a ―Feed-in-Tariff Allowance or FIT-ALL‖) to add RE into the energy mix as
existing cost of electricity is already high compared to other countries in the region.
Approval of the RPS and other enabling guidelines and mechanism (related to fiscal and
non-fiscal incentives) are still pending.
56
USD 1.00 =P43.31
53
Philippines
54
Philippines
55
Philippines
References
1. Case Study: ―Northwind Bangui Bay 33 MW Wind Farm‖, presentation by Poch
Ambrosio, to QLW3 Workshop at Asian Development Bank, Manila, June 4-5, 2012.
2. ―Philippines Wind Development Status,‖ presentation by Jose M. Layug, Jr. to QLW3
Workshop at Asian Development Bank, Manila, June 4-5, 2012.
3. ―Wind Energy International 2009/2010,‖ World Wind Energy Association, 2009
56
Philippines
4. ―Policy & Regulatory Review 2010,‖ Renewable Energy & Energy Efficiency Partnership
(REEEP), 2010.
57
Sri Lanka
Opportunities:
Government offers high feed-in-tariff at LKR 21.56(0.195 USD/kWh)60 for wind power.
The country benefits from consistent winds over flat landscapes in the south-eastern
and north-western coastal belt. But winds over mountainous regions are highly site
specific.
Challenges:
Limited land available for wind farms. Finding suitable land for development is
becoming very difficult. Central highlands are inaccessible for wind development.
Wind power competing with hydropower. Operation of wind plants in high wind
seasons (coinciding with the high hydro season) during off-peak hours restricts future
development. At present, power purchase agreements feature a forced shut down
period during off-peak periods.
There is lack of transmission capacity in high wind areas and grid stability when
significant wind is injected into the grid.40 MW in recently installed wind capacity has
been unable to connect to the grid, which has resulted in losses for the developer.
Government has decided to develop a 100 MW large-scale wind farm and have stopped
issuing licenses to the private sector.
60
USD 1.00 = LKR 110.55
58
Sri Lanka
61
USAID/SARI Energy
62
NREL
63
CEB assured Ministry of capacity to absorb 250 MW of wind by 2015 coming from Puttalam (90 MW), and other
areas.
59
Sri Lanka
60
Sri Lanka
References
1. Case Study: ―Seguwantivu & Vidathamuni Wind Power Project― by Manjula Perera at
QLW3 Workshop at Asian Development Bank, Manila, June 4-5, 2012
2. ―Sri Lanka Wind Development Status‖, presentation by Noel Priyantha at QLW3
Workshop at Asian Development Bank, Manila, June 4-5, 2012
3. ―Sri Lanka,‖ Presentation by Thusitha Sugathapaia to QLW2 Conference at Asian
Development Bank, Manila, June 20-21, 2011.
4. ―Wind Power in Sri Lanka,‖ Wind Power.lk, http://www.windpower.lk/index.html
5. ―Policy & Regulatory Review 2010,‖ Renewable Energy & Energy Efficiency Partnership
(REEEP), 2010.
61
Thailand
15. Thailand
Opportunities:
Challenges:
Low wind speed in most areas of the country. Best wind speeds in certain areas are
between 6-7 m/sat 90 meter elevation.
Wind rich areas are in protected national parks and rugged mountainous areas.
Policy on land use especially on agriculturally designated land
62
Thailand
64
Source: Ruangdet Panduang, Director, Wind Energy Group, Thailand.
63
Thailand
Srithammarat
64
Thailand
Chaiyaphum
65
Thailand
References
1. Case Study: ―Huaybong Wind farm‖, presentation by Philip Napier-Moore to QLW3
Workshop at Asian Development Bank, Manila, June 4-5, 2012
2. ―Update on Wind Energy Developments in Thailand‖, presentation by Twarath Sutabutr,
Sc.D to QLW3 Workshop at Asian Development Bank, Manila, June 4-5, 2012
3. ―Thailand‘s Wind Energy Status,‖ Presentation by Engr. Ruangdet Panduang to QLW2
Conference at Asian Development Bank, Manila, June 20-21, 2011.
4. ―Wind Energy International 2009/2010,‖ World Wind Energy Association, 2009.
5. DEDE Wind Power Generation for 60 Communities
6. Thailand Renewable Energy Policies and Wind Development Potentials, Department of
Alternative Energy Development and Efficiency, Bangkok, 2010.
66
Timor-Leste
16. Timor-Leste
Opportunities:
Challenges:
The power system infrastructure is in poor condition, suffering from high technical
losses and needs urgent equipment replacement
Commercial losses of the government power utility Electricidade de Timor-Leste (EdTL) is
very high with only around 40% of commercial customers in Dili paying their electricity bills
67
Timor-Leste
65
Sector Assessment (Summary): Energy, Country Partnership Strategy: Timor-Leste, 2010-2015, ADB
68
Timor-Leste
References
1. ―Timor-Leste Wind Development Status‖, presented by Lino M. N. C. Correia to QLW3
Workshop at Asian Development Bank, Manila, June 4-5, 2012
2. Timor-Leste Strategic Development Plan 2011-2030
3. Sector Assessment (Summary): Energy, Country Partnership Strategy: Timor-Leste,
2010-2015, ADB
69
Vietnam
17. Vietnam
Opportunities:
Challenges:
66
United Press International Asia - Energy Resources Vietnam‘s high wind power potential, Article, July 2009
70
Vietnam
67
Source: GWEC: Global Wind Statistics 2011.
68
USD 1.00 = VND 20,656.70
69
―Opportunities and Challenges to Scaling Up Wind Power in Vietnam,‖ Presentation by Nguyen Anh Tuan to QLWP
Conference at Asian Development Bank, Manila, June 21, 2010. ―Wind power development status in 2011‖, Institute
of Energy internal report December 2011.
71
Vietnam
72
Vietnam
References
1. ―Vietnam Wind Development Status‖, presentation by Pham Thuy Dzungto QLW3
Workshop at Asian Development Bank, Manila, June 4-5, 2012
2. ―Opportunities and Challenges to Scaling Up Wind Power in Vietnam,‖ Presentation by
Nguyen Anh Tuan to QLWP Conference at Asian Development Bank, Manila, June 21,
2010.
3. ―Policies on Promoting Low Carbon Energy Supply in Vietnam,‖ Presentation by Nguyen
Anh Tuan to Asia Pacific Energy Research Centre (APERC) Annual Conference 2011,
Tokyo, March 7 & 8, 2011.
4. ―Wind Energy International 2009/2010,‖ World Wind Energy Association, 2009.
73
Summary
This compendium of wind energy data was undertaken by ADB to help facilitate the
development of wind energy projects in the Asia Pacific region. The report provides a source of
technical and country specific information to prospective wind developers, investors and
manufacturers to facilitate the development of future wind projects. The initiatives and
implementation philosophies highlighted in this report may also serve as guideposts to power
utilities, policy makers and regulators in the crafting of their own wind energy strategies.
Wind is a high potential alternative energy source for Asia and the Pacific. The current trend
indicates higher growth of wind power installations in Asia compared to both North America and
Europe. Despite the high rate of growth in the past few years, only 2% of the estimated 5,300
GW potential has been harnessed to date. The largest fraction of installations in Asia is in
China and India, but the rest of Asia is poised for high growth as new policies and incentives
emerge to support wind energy development. This report highlights that to accelerate wind
development, many countries need to resolve major issues including lack of accurate wind
resource data, transparent feed-in-tariffs, and supporting infrastructure.
Notes:
a. An estimate of $2,000/kW was used to compute the projected investment cost.
b. For countries without 2020 target wind capacity, the pipelined total was used to estimate the projected total investments.
c. Some countries have set targets for 2015, 2022, 2025, and 2030. The 2020 projected investment cost is a very rough
estimation of the expected capacity by 2020.
74
d. Installed wind capacity is as of Dec 2011. Asian country not on the list with significant wind installation is Taiwan with 564
MW. Total installed wind capacity is for all of Asia. Source, GWEC: Global Wind Statistics 2011.
The countries reviewed expect to install about 82 GW of wind power in the medium-term (5 to
10 years), equivalent to about 1.5% of the region‘s wind potential. In 10 to 20 years, the total
operational wind power is projected to be 255 GW70, four times that of the existing capacity.
This estimate could double with appropriate support and incentives in countries with abundant
wind energy potential like Mongolia, Kazakhstan, Pakistan, and Sri Lanka. To realize this
potential, however, countries need to focus on the following key activities:
Formulate and implement clear and transparent policies on land use, tariffs and
incentives. Policies were identified as the most important drivers for wind and renewable
energy investments. Countries cannot focus solely on hardware and technology. The
entire system, both software and hardware must be smarter to increase the chance of
success.
Engage and involve the transmission and distribution utilities and regulators in the early
stages of development. Grid integration is a universal concern for large and small-scale
wind energy development and is a fundamental ingredient to success.
The Feed-In-Tariff (FIT) must not be treated as a static number. It is something that
needs to be monitored, changed, and evolved. FIT should indeed fit the local political,
cultural and economic situation of the country.
70
Total includes installed and pipelined capacity in countries that were not able to provide a 2020 target.
75
Appendix I: Case Studies71
This appendix presents two case studies from India and Sri Lanka that provide insights into the
various methodologies being adopted in the South Asian region for appraising and developing
wind power projects.
Project Description
ONGC Ltd. floated a tender for the development of a wind power project in Gujarat on a
turnkey basis. After the technical and financial due diligence were completed, the project was
awarded to Suzlon Energy Ltd. This 51 MW
project has 34 wind turbines with a capacity of
1.5 MW each. The project development activities
included site identification, turbine supply, site
development, wind turbine erection,
development of electrical lines and substation for
the evacuation of power, obtaining necessary
permissions and approvals, and commissioning of
the project. The project was commissioned in
September 2008 and has been in operation since
then.
Equipment Package
The equipment package included nacelle assembly, tower, hub, blade set, power panel, DP VCB
yard, electrical lines, and 34 WTGs of 1.5MW each.
71
Source: Supporting Wind Power Take-off in the SARI/Energy Region, Draft Report, Prepared for USAID India,
Prepared by Tetra Tech India, December 2010.
76
Wind Regime
The annual average wind power density at the Jakhau site where the project is located is 311
W/m2 measured at the height of 50m from ground level.
Grid Interconnection
The 51MW wind farm is connected to the 220/33kV substation situated at the project site. This
substation was developed as part of the wind project. The 220 kV NaniSindhodi substation is
further connected, through a 220kV line, to the substation of Gujarat Electricity Transmission
Company located at NaniKhakad, which is about 30km from the wind project location.
Costs
The total project cost for the 51MW wind project was about INR 3070 million. The power
generated from the wind project is wheeled at different locations, 98 plants/offices of ONGC,
and used as captive power. Four percent of the power generated from the project is deduced
from the final unit adjustment, and put towards open-access charges (charges for using the grid
infrastructure). The 4% deduction also includes wheeling and transmission losses. By using wind
power at different locations, ONGC reduced its power purchases from the distribution utility at
the industrial rate for power, which is about Rs6.00/kWh.
77
Incentives
The incentive mechanisms used by the projects are:
1. Concessional open access charges of 4%, whereas the normal charges are higher for
transactions involving conventional power (e.g., the transmission charge alone is about
INR 2,000/MW/day and 18% transmission losses).
2. There are special provisions for the banking of energy. In the case of wind power plants,
energy generation cannot be scheduled, often resulting in excess generation in real time
rather than demand in the case of captive use. However, the consumer gets credit for all
energy produced and sold on a monthly basis (i.e., the excess generation during the
month is “banked” in the grid).
Equipment Package
The equipment package included the
nacelle, blade, tower, anchor, rotor hub, and
electro-mechanical accessories for the tower and nacelle, as required by the customer.
Project Timeline
In order to complete the scope of work – which included supplying the equipment, erecting the
project, commissioning, and supervising the civil foundation – the project’s timeline was
78
originally envisioned to be six months. However, due to a few unforeseen events related to
logistics, it was completed in about eight months.
Wind Regime
The wind regime that prevails at the Puttalam site is class IIIA as per the IEC classification. It is
suitable for AE59-800 kW machines that were installed for this project.
Grid Interconnection
A 33 kV grid is connected to the wind farm to evacuate the power generated and a 14.7 km
transmission line has been constructed to the nearby substation in Kallady.
Incentive Mechanism
As a government policy initiative, the Ministry
of Power and Energy has set a target of 10% of
renewable power by 2015. Apart from the
tariff, which is attractive at present, there is no
other incentive mechanism available in Sri
Lanka to promote wind energy at this time.
79
Appendix II: CDM for Wind Projects72
The United Nations Framework Convention on Climate Change (UNFCCC) was held in 1992 to
address the issues surrounding climate change and their implications. Developed countries,
referred to as Annex I countries in the Convention, were given emission reduction targets. The
Clean Development Mechanism (CDM), developed in 1997 at the Conference of Parties under
the UNFCCC, is a market mechanism to encourage the sustainable development of developing
countries, referred to as Non-Annex I countries, in a way that reduces greenhouse gas (GHG)
emissions.
The CDM, as defined in Article 12 of the Kyoto Protocol, allows a country with an emission-
reduction or emission limitation commitment under the Kyoto Protocol (Annex I of UNFCCC) to
implement emission-reduction projects in developing countries. The CDM is the first global,
environmental investment and credit scheme of its kind, providing a standardized emission
offset instrument called a Certified Emission Reduction (CER).
In order to participate in the CDM, there are certain eligibility criteria that countries must meet.
All parties must meet three basic requirements: voluntary participation in the CDM, the
establishment of a national CDM authority, and ratification of the Kyoto Protocol.
The CDM is supervised by the CDM Executive Board (CDM EB) and is under the guidance of the
Conference of the Parties of the UNFCCC. The Executive Board supervises the operation of CDM
and has the final say on whether a project is approved or not. It also lays out procedures and
guidelines for CDM. The figure below outlines the procedures involved for a successful CDM
project.
72
Source: Supporting Wind Power Take-off in the SARI/Energy Region, Draft Report, Prepared for USAID India,
Prepared by Tetra Tech India, December 2010.
80
FigureII-1. The CDM Project Cycle
Executive Board
Executive Board
Insurance
Certified Emissions
Reductions
The most important step in developing CDM projects is the preparation of the Project Design
Document (PDD), which provides all the information about the project. It also contains a
description of the baseline methodology and how the project satisfies the additionality criteria.
(“Additionality” means that the project is additional to what would have happened in the
normal course of policy implementation and technological development; it is intended to prove
that the project would not have been implemented without CDM benefits.)
81
II.2 Baseline
The baseline is the emissions that would occur in the absence of the proposed CDM project,
and it must be developed for the project. A number of baseline methodologies have already
been approved by the CDM EB; they can be used if the project is similar to the project for which
the baseline has been approved. There is also an approved simplified methodology (ACM 002)
that most small-scale (less than 15 MW) wind projects can use. While the ACM 002 provides a
number of baseline options, the proposed project must provide baseline data related to
emissions from other generating sources, primarily thermal power generation, in addition to
generation data.
The development of CDM projects and their construction can occur in parallel. The best time to
initiate CDM project development is at the time of project conceptualization and certainly
before the investment decision. Table II-1 provides the approximate timing for the steps
involved in CDM project development, up to the issuance of CERs.
82
MW of installed capacity have applied for CDM registration. Of these, 1,665 energy projects
have been registered. In the SARI/Energy region, India leads wind power project registration
with some 104 wind projects now registered.
Wind power projects, like any other renewable energy project, have high initial investment
requirements with longer payback periods, which increase project risk. Various governments
have provided incentives to overcome this risk. Registering a wind power project as a CDM
project also provides additional revenue through the sale of CERs generated from the project. A
number of financial analyses have found that CDM revenue is capable of raising the return on a
wind project by 3-4%.73 Thus, CDM would help projects that fall just below the viability
benchmark in terms of IRR, to become viable.
Figure II-1shows a decreasing number of wind power projects in the CDM pipeline. When it
comes to India, about 755 MW of wind power projects have not achieved registration. These
projects have either been rejected by the Executive Board, been withdrawn by the developers,
or given a negative validation report by their respective Departments of Energy, or the
developers have terminated the project themselves. Out of these, projects comprising almost
600 MW had started the validation process during 2006-2008. Clearly, the frequent and drastic
changes brought about during this time have adversely affected the projects in the pipeline.
73
http://cd4cdm.org/Publications/WindCDM.pdf
83
FigureII-1. Number of Wind Power Projects Registered under CDM Annually74
90
80
70
60
50
40
30
20
10
0
04
04
05
05
06
06
07
07
08
08
09
09
1-
3-
1-
3-
1-
3-
1-
3-
1-
3-
1-
3-
Q
Q
Serious Consideration of CDM Revenue
Recently, the CDM Executive Board released a guideline to establish that project promoters
consider CDM as one of the critical sources of revenue before seeking investment in the
project. This guideline, which also leaves much open to interpretation, greatly affected projects
that either started the CDM process recently or have not been able to complete their
validation. The worst affected are projects that were already in the pipeline or in advanced
stages of validation. As a result of the release of this guidance, the validation for existing
projects was started all over again. There have been a number of cases when even after the
submission of number of official documents; the project promoters have not been able to
convince their Department of Energy of the worth of their project. The result has again been
either a rejection of the project or a delay in project execution.
74
UNFCC, CDM Projects Search, http://cdm.unfccc.int/Projects/projsearch.html, CDM project pipeline, 2010.
84
Increased Transaction Costs and Other Procedural Issues
The transaction costs for getting a project registered have seen a multifold rise. This can be
attributed to the increased number of rules and regulations in CDM, and the simultaneous rise
in the number of CDM projects. This is especially true in the case of the validation/verification
fee, which has increased by at least 50% over the past four years. This issue is further magnified
because of the fact that CER prices have been falling. If this trend continues, small-scale project
promoters might not feel encouraged to apply for CDM revenue at all.
S. No Description Cost
1 Project development charges US$ 10,000- 15,000 + Success Fee 0.5-5%
2 Validation charges US$ 13,000– 20,000 (one-time fee)
3 Monitoring &verification charges US $ 8,500 – 10,000 (Every Year)
4 UNFCCC registration charges 0.1 US$/CER up to 15,000 CERs, 0.2 US$/CER after
15,000 CERs
No charges if annual average is less than 15,000
CERs
5 Adaptation fund fee to UNFCCC 2% CERs per annum
6 Carbon exchange fee (If CER 2 – 5 % of CER transacted
transacted through an exchange)
Currently, two standards are dominant in the voluntary market: The Voluntary Carbon Standard
and the Chicago Climate Exchange. These standards do have a disadvantage, however: because
they are not as stringent as those in the CDM, the price that the voluntary emission reductions
fetch is quite low as compared to CERs. At present, a Voluntary Carbon Unit (from the
Voluntary Carbon Standard) and a Carbon Financial Instrument (from the Chicago Climate
Exchange) are being traded at approximately 4€ and $2 per instrument, respectively, as
85
compared to a CER, which is being traded at around 14€ (the spot market price on 5 September
2010).
On the other hand, the future of projects that were recently, or are currently being,
commissioned is beginning to look brighter under the CDM. Post-2012, such projects are likely
to be registered with minimum difficulty. In addition, the CDM’s new Gold Standard is a
qualifying project standard with a focus on sustainable development. A Gold Standard project is
likely to earn a premium of at least 3-4€/ CER above the usual CER prices.
While the opportunity for increased CDM support for wind projects is substantial – clearly a
large proportion of the more than 5,500 MW of the development pipeline could benefit from
CDM – the opportunity has not been fully explored by the region’s governments and policy
makers. CDM remains a powerful tool to further augment private sector investment in wind
power and Power Ministries should fully support project registration.
86
Appendix III: Wind project development checklists75
This appendix was adapted from Soren Krohn’s paper “Wind Power Projects in Developing
Countries: Key Barriers and Solutions for Wind IPP/BOO Projects,” September 2010.
75
Source: Supporting Wind Power Take-off in the SARI/Energy Region, Draft Report, Prepared for USAID India,
Prepared by Tetra Tech India, December 2010.
87
Institution and Capacity Building,
First Pilot / Demonstration Project
Barrier Possible Solutions
masts be correctly installed in than those needed for weather forecasting: An error of 1% on the
accordance with the IEC mean wind speed may translate into a loss of 3% of power
standard and equipped with generation. The first meteorology masts in the country should be
MEASNET or equivalent installed by certified international wind measurement consultants,
calibrated quality instruments and local staff should be trained to erect and maintain masts (guy
wire tensioning, visual inspection, safe data collection). Local
cellular phone mast erection contractors often have staff that can
be trained for this purpose.
5 Technicians for turbine O&M First-rate turbine suppliers will train local staff to do routine O&M
are not available work. Experienced operators of diesel gensets or engineers
managing ship engines are excellent candidates for this type of
work.
6 Procurement expertise in Training programs are required. Because thermal projects are
relation to wind IPP/BOO technically and economically different from wind projects (wind
projects is missing projects resemble small run-of-river hydro projects to a certain
extent), some specific wind expertise is required in writing requests
for proposals and assessing bids.
88
Economic Barriers for Wind at Power Generation Planning Stage
Barrier Possible Solutions
thermal power allows fuel the fuel is free, and that the electricity offtaker can do 20-year fixed
price risks to be passed onto price contract for electricity supplies.
clients - or de facto absorbed
by public budgets
5 Electricity markets not geared “Gate closure times” in electricity markets (i.e., the planning
to wind horizon for power generation in number of hours between the time
power plants offer their electricity for sale and the time when it has
to be delivered) may be too long to benefit from short-term wind
energy forecasting. Gate closure times should be shortened to what
is technically necessary for actual dispatch.
89
Energy Tariff & PPA Issues
Barrier Possible Solutions
subsidized fuel for power generation.
90
Public Land Use Policy
Barrier Possible Solutions
least risk for the developer and thus the lower acceptable tariff) if
the annual rent is based on actual energy production, i.e., on an
amount per MWh.
91
Wind Resource & On-Site Measurements
Barrier Possible Solutions
3 The government does little or Pre-development work on promising sites with good wind
no pre-development work for resources, grid access and good accessibility makes sense only if the
potential sites, and little or no sites are tendered competitively (by bidding for a MWh price). If the
regulatory work related to site is thus pre-selected, it is important that the government take
wind energy on all the project risks under its control in order to minimize the risk
for bidders and their MWh price. Prior environmental impact
assessment, screening is also necessary. The regulatory framework
needs not be complete for the first projects; the problems may be
solvable by “regulation by contract.” (See Section III.1.)
92
Wind Resource & On-Site Measurements
Barrier Possible Solutions
been built.
7 No geotechnical sampling The Egyptian tender model mentioned above includes geotechnical
prior to tendering sites sampling.
increases risks for bidders
(foundation costs).
93
Environmental and Social Impacts
Barrier Possible Solutions
neighbors and workers on site type certified for a technical lifetime at least equal to the duration
of the PPA by an accredited entity in accordance with the most
recent version of the IEC 61400 standards as fit for purpose in the
site environment.
9 Ornithological concerns about Ornithological studies (1 year) may be required as part of
bird or bat populations environmental impact assessment (EIA) in critical areas. Mitigation
measures may be needed (e.g., temporary stoppage during high-
density migration, if the wind farm is placed in an important bird
migration path). The determination of whether an area needs
additional studies is best done in the environmental screening
phase (point 1 above), where zones may be labeled as red
(prohibition), yellow (bird studies required), or green (no bird
studies required).
94
Public Spatial Planning (Zoning)
Barrier Possible Solutions
concrete decisions may need to be taken in relation to topography
(mountain ridges) and proximity to air corridors (e.g., end of
runways in airports are off limits, but no major problems elsewhere
around airports).
4 Telecommunications Turbines should not be placed directly in microwave transmission
authorities may object to corridors. Standard rules are available for this. Otherwise, there are
siting generally no major radio or TV interference problems. Wind
turbines often have double use as towers for cell phone
communications.
5 Road authorities may object The setback from roads is usually regulated to be about 100 m.
to siting
6 Decommissioning Decommissioning requirements should be defined in the PPA or
requirements for wind farm regulated generally. The best practice is to require that foundations
undefined, risk of ghost wind are removed to 1 m below grade and that land is restored to its
farms original state after the PPA ends. Any turbine that has been out of
service for a year must be removed from the site and the terrain
restored when decommissioning. A security/guarantee
arrangement for this (bond) is useful to include in the RPF
documents or the PPA.
2 BOO or BOOT contracts? According to IEC standards, wind farms have a standard certified
technical lifetime of 20 years. PPAs should generally have a term of
15-25 years and a decommissioning requirement, and terminate
thereafter. It is unwise to insert any option for the bidder to
continue projects after this point, since economic conditions may
change substantially in the meantime (giving windfall capital gains
to project owner).
3 Price indexation of PPA The primary economic advantage of wind energy is that the
contracts electricity offtaker can do fixed-price electricity contracts for a 20-
95
Experience/Capacity for IPP/BOO Projects
Barrier Possible Solutions
(applies to FIT contracts as year period. Wind farm projects should thus normally be done as
well) primarily fixed-tariff (energy only) take-or-pay contracts for the
duration of the PPA. Wind farm owners are safe with this solution,
since they will take out nominal, not real (price-indexed) loans from
their financiers. A small component limited to labor and parts
content in O&M (maximized to about 15-20% initially) could be
indexed.
96
Critical Mass Issues, Local Participation, Local Content
Barrier Possible Solutions
based (FIT) system than in Volume and suppliers can be controlled accurately in a pipeline of
quantity-based tariff systems IPP/BOO tenders (or EPC tenders by the national
utility/government).
6 Small project size fails to Large, experienced international wind developers with good access
attract experienced to finance focus on projects in the 100-250 MW range, or on
international bidders and pipelines or bundles of projects from this size and up. Small projects
turbine manufacturers in below 50 MW may have difficulty getting turbines, if they are the
tenders first in a region without an established service network.
3 Grid studies, including For larger wind farms it is necessary to include such studies in the
dynamic grid stability transmission project related to the wind farm.
studies, are not available for
the project
4 Weak grids and long radials It is extremely useful to prepare a generic grid reinforcement cost
to reach (often remote) study for each (wind-relevant) section of the transmission grid (to
windy areas require grid be updated, say, after 3-5 years).
reinforcement / grid
extension. Wind developer This study will complement a national meso-scale wind resource
97
Typical Transmission Grid Issues in Developing Countries
Barrier Possible solutions
demands for grid connection map in order to search for economically suitable sites and begin
in remote areas may be local wind measurements.
costly to meet.
A separate transmission queue is needed for an IPP project
5 No clear responsibility for pipeline, with clearly defined responsibilities for the transmission
transmission systems system operator.
operator to provide
interconnection for IPP wind
farms
6 Transmission master
planning not adapted to
IPPs: Long transmission
project queue, often
requiring waits of 3 years or
more. Master plan revision is
slow.
7 Wind projects are often The transmission grid should be considered a public good, to be
required to bear the cost of financed through a “postage stamp” transmission tariff.
grid reinforcement / grid
extension, even if a stronger Central planning can be useful to make wind energy development
local grid or a grid extension take off: Governments and development banks can help finance
to remote areas also grid extension to windy areas, where pre-assigned sites can be
benefits local consumers tendered as a pipeline of IPP projects.
and the electrical utility.
Example: Egyptian Red Sea Coast, where 3,500 MW of IPP &
8 First projects in a remote, government-owned projects will be built 300 km away from the
high-wind area cannot bear main transmission grid. The Egyptian Government, World Bank,
the cost of grid extension, African Development Bank, EIB and KfW are financing the grid and
but additional projects EIA for the whole area.
could. This “chicken and
egg” problem prevents wind
development from taking off
in potentially promising
high-wind zones.
9 Auto-generation wind Replicable models have been developed in India and Morocco, for
projects face problems of example.
negotiating interconnection
fees, wheeling and banking
rights, and agreements on
the cost of balancing power.
10 Grid maintenance planning IPP contracts need to be take-or-pay contracts, with damages to IPP
not adapted to wind IPPs: equal to the actual lost production in case of any grid interruption,
TSO may demand right to since the maintenance event is controlled by the TSO and can be
98
Typical Transmission Grid Issues in Developing Countries
Barrier Possible solutions
interrupt grid, say 1% of the planned for the low-wind season. Otherwise, the developer may
hours of the year. require some (1% / capacity factor) in the risk premium!
11 Connection requirements for No technical need to apply transmission codes at the distribution
small wind farms (connected voltage (MV) level.
at the distribution voltage
level) are sometimes as
demanding as for large wind
farms connected to the
transmission grid.
12 Long “gate closure times” in Gate closure times can be shorter, limited only by technical
electricity market / least- requirements for dispatch.
cost dispatch planning
makes it difficult for wind The dispatch center needs to run a short-term wind generation
supplies to be scheduled forecast model, if there is a high level of wind penetration in the
efficiently grid control area. Larger IPP wind farms should be required to
supply real-time wind data from on-site meteorology masts and
generation and availability data from SCADA systems for the wind
forecasting model.
13 Large concentrations of wind Grid codes should provide for remote control of wind farms or
farms in remote areas put clusters of wind farms by the dispatch center, e.g., for variable
additional demand on grid reactive power compensation, and in emergency situations where
management functions to the possibility of energy curtailment ranges from 0-100%.
ensure grid stability
14 Capacity credit - if part of Wind does have a capacity value in the grid, which can be
the tariff system - may determined by simulation models including historical data for wind
discriminate against wind by and electricity demand, and observing a given loss-of-load
assigning it zero capacity probability. These analyses indicate that for moderate amounts of
value wind in the grid, say, up to 20% by energy, the capacity value is
about equal to the average capacity factor for wind power.
99
III.4 Financing and Costs
This chapter addresses financing and cost issues related to large-scale wind projects. There is a
considerable overlap with the previous chapters, in particular policy & regulation and project
development. The table attached below lists typical barriers to financing projects. Each subject is treated
in more depth in the other chapters.
100
Examples of Major Risks for Wind Farm Financing
Barrier Possible Solutions
6 Land risk, property rights Property rights programs for land registration may be needed, and
poorly defined, lack of a government land use policy is needed.
government land use policy
7 Environmental and social Prior screening of land use by the government is extremely useful
risks (good examples can be found in Denmark and Germany). Such
screening may involve bird studies, mapping microwave corridors
for telecommunications, aerial marking requirements close to
airports, potential archeological finds, etc.
101
Examples of Major Risks for Wind Farm Financing
Barrier Possible Solutions
An experienced wind farm operator with an appropriate training
program for local staff is required.
13 Health & safety risks Adequate health & safety program is required from the developer.
Occupational safety requirements should be state-of-the-art from
developed markets (e.g., fall protection, lifts in large turbines).
14 Inadequate legal and In countries new to wind power, in particular developing countries,
regulatory framework there is often a legal and regulatory vacuum. This makes it
impossible to design projects so that they can be shown to be
compliant with existing regulations, which may in turn make it
impossible to finance projects. Developers are attracted to markets
where the framework conditions are known, or where at least the
government is aware of the regulatory gaps and capable of plugging
them through contracts.
15 CDM/JI and other carbon CDM/JI and other carbon finance is difficult to handle for
finance is difficult to handle developers, and hence attributed little or no value, when
for developers calculating their required tariff. Consequently, it is best for the
government to handle carbon finance.
16 Depth of local long-term If it is not possible to obtain long-term finance in local capital
capital market insufficient markets, then contracts will have to be in hard currency - or
indexed against hard currency.
102
Appendix IV: Selected References76
American Wind Energy Association. ―Wind Energy Fact Sheet: 10 Steps in Building a
Wind Farm.‖
Brish, Arie. ―Optimizing Wind Farms Maintenance Cost,‖ Distributed Energy: The
Journal of Energy Efficiency & Reliability. May/June 2010 Issue.
Capacity Development for the Clean Development Mechanism. CDM Pipeline overview
http://cd4cdm.org/index.htm
Indian Ministry of New and Renewable Energy, New Delhi website www.mnre.gov.in
Indian Ministry of Power, Indian Electricity Act 2003, and National Electricity and Tariff
Policy.
Power Grid Corporation of India Ltd. Model Bulk Power Transmission Agreement for
Long Term Open Access.
Pramod, Jain. ―Wind Energy Engineering,‖ McGraw-Hill Professional, New York, 2010.
103
Smith, J. Charles, et al. ―Best Practices in Grid Integration of Variable Wind Power:
Summary of Recent US Case Study Results and Mitigation Measures,‖ paper presented
at EWEC ‘07, Milan, Italy. May 2007.
WISE. Wind Power in India, Towards A 5000 MW Annual Market by 2015. Co-
sponsored by Indian Wind Energy Association, 2009.
World Bank. ―RE Toolkit: A Resource for Renewable Energy Development,‖ June 30,
2008.
104