Hybrid Power Plants:
Securing Returns in off-grid Energy Investments
Siemens Hybrid Power Solutions
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Decentralized Energy Solutions
Agenda
 Off-grid Energy Investments: Definitions and Market
 Success factors in off-grid Energy Projects
 Conclusions
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Off-grid Investments:
Definitions and Markets
What is an off-grid energy investment?
What markets of off-grid energy investments exist?
For this session: energy is defined as electrical power
Off-grid power systems are found as:
Investment into:
•
Projects with no access to an integrated large scale
power grid
•
Single or limited number of power generation plants
•
Isolated microgrid or minigrid power distribution
•
Special cases: systems with weak grid connection
•
Utility projects for remote islanded grids
•
Utility projects for community grid
•
Utility projects for geographical islands
•
Industry projects in different sectors: e.g. mining, oil
processing, etc.
© 2016 - Mathias Becker
For this session: off-grid energy investment is defined
as a hybrid power plant with integration of renewable
sources
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Market development for off-grid energy investments
Challenges in the off-grid investment
market
Changes in Technology
Generation
Costs
Fuel costs
Weak / inexistent
grids
Emission
restrictions
Hybrid
Power
Plants
Renewable
Systems
Fuel
today
Logistic costs
time
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Essence in Off-grid Energy Investments for all involved Parties:
Equalized Risk Distribution
Utility
Investor
Know-how
End User /
Beneficiary
IPP
Technology
Finance
Owner
Full Ownership
Service
Partial Ownership
Licensing
Leasing Model
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IPP = Independent Power Producer
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1
Project Development
2
Technology
3
Financing
4
Execution
5
Social Economical Setting
Successful off-grid
Investment
Success factors in Off-grid Energy Investments
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Success Factor 1:
Project Development
Forming a sound project setup with fully committed parties
Important elements of Project Development are (selection):
•
Offtake
•
Design according to demand
•
Location
•
Renewable resource exploration & definition
•
Interconnection to distribution of the Microgrid
•
Supply of fuel and other relevant consumables, incl. fresh water
•
Community interaction and licensing
•
Technology supply
•
Logistics
•
Labor & training
In Off-grid Investments everything is about reliability of supply  there is no grid to safeguard operation!
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Success Factor 2:
Technology
Technology Risk Minimization
Selection of knowledgeable & experienced technology provider:
•
Knowledge in power system design
•
Knowledge in plant control design
•
Knowledge in special requirements of hybrid power plants
•
Experienced in execution of complex projects
•
Experienced in operation of complex projects
•
Financially strong to accompany the owner reliably throughout the lifetime of
the project
•
etc.
Uniqueness of each Off-grid investment needs special attention and tailor made design!
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What’s different in a Hybrid Plant?
Wind Plant
Industrial Load
PV plant
Storage
Residential Load
Control Center
Diesel generators
MW
Load
00:00
06:00
12:00
18:00
24:00
Time
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What’s different in a Hybrid Plant?
Wind Plant
Industrial Load
PV plant
Storage
Residential Load
Control Center
MW
Diesel generators
Diesel
Gensets
Load
PV
Power
00:00
06:00
12:00
18:00
24:00
Time
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What’s different in a Hybrid Plant?
Wind Plant
Industrial Load
PV plant
Storage
Residential Load
Control Center
MW
Diesel generators
Diesel
Gensets
Load
PV
Power
00:00
06:00
12:00
18:00
24:00
Time
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Technical challenges within a Hybrid Plant project
MON
Hours
Minutes
Seconds
Milliseconds
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Success Factor 3:
Financing
New Challenges in Financing
New market with much higher risk adversity from financing institutions than in
established power markets, e.g. thermal plants:
•
Little knowledge in financing market about Off-grid Investments
•
Small size of Off-grid Investments
•
Small number of implemented projects
•
Many projects realized under a pilot investment character, with support from
government of development funds, hence only little financing market feedback
•
Perception of technology as embryonic in the financing market
Gain trust in the financing community through transparency by early involvement!
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Success Factor 4:
Implementation
Mastering all Phases of Project Lifetime
Focused interpretation: Implementation is the execution phase of the construction
and erection of an Off-grid Investment
Important aspects to consider in Off-grid Investments:
•
Complex projects with high level of interaction and interfaces
•
Single point of contact on any project implementation aspect
•
Guarantees encompassing the overall plant and its function and not only
components, leaving the implementation risk with the owner
•
Single responsibility to meet the requirements of all components and the
overall integrated plant
•
Single responsibility to meet the implementation schedule
•
Comprehensive support beyond construction phase
Best suited approach for Off-grid Investments: Turnkey implementation!
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Success Factor 5:
Social Economical Setting
Sustainable Embedding of the Project
•
Support the government to introduce high penetration hybrid power
technology: adaption of mindset
•
Support to the government to define suitable technical, commercial and legal
framework
•
Open and transparent communication with affected or benefitted community
•
Support of local capacity building
•
Usage of labor of the region to implement the project
•
Usage of local staff for operation
•
Accompany the customer in commercial operation: careful and supportive
aftersales services
© 2016 - Mathias Becker
A comprehensive project approach beyond pure business is needed!
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Conclusions:
To secure returns in Off-grid Investments it is mandatory …
1. … to care for a sound and strong project setup
2. … to have a strong involvement with local Community and the Beneficiaries of the project
3. … to contract with a Turnkey Supplier with experience in Off-grid Investments / Hybrid Plants
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Published by and Copyright 2016:
Siemens AG
Energy Management
Distributed Energy Systems
Freyeslebenstrasse 1
91058 Erlangen, Germany
Tel.: + 49 9131 / 18 – 83 3 56
To obtain further information, please contact:
andreas.boes@siemens.com
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