A couple of weeks ago, I blogged about an international conference on renewable energy in Ulan Bator.
I will do a series of posts about them.
Next up is a presentation by Jitendra Shah from the Asian Development Bank. Here is the file:
The Asian Development Bank would be an obvious source of funding for any large-scale renewable energy project in the Mongolian Gobi desert.
Before I discuss the presentation, a couple of basic facts about the Asian Development Bank, from the relevant Wikipedia page.
The capital of the Bank was recently doubled in 2009, following a G20 call for strengthening multilateral development banks. It has been able to provide lending volumes of about $12.5-13.0 billion in 2010 and about $11.0 billion in 2011.
The biggest share of the funds of the Asian Development Bank comes from Japan, and it is headed by a Japanese, Haruhiko Kuroda.
That means it makes sense for the Asian Development Bank to give priority to a Gobi Desertec project, since this is in the interest of Japan to diversify its energy sources and keep peace in Asia.
Now to the presentation.
Shah explains that the Asian Development Bank has a “Clean Energy Program” which has financed investments of $1.76 billion in 2010. That figure is supposed to rise to $2 billion per year, with the majority coming from public sources, but also private capital involved.
Shah then gives a few reasons why wind in Asia should get some attention. Wind is clean energy, wind is free, Asia has excellent wind resources mostly untapped, many Asian nations have development targets for wind until 2020, and wind becomes increasingly competetive as the industry has grown mature.
The next slide is the most interesting of this presentation for me. It shows wind potential and compares it to the amount already developed. Mongolia comes out ahead. Of all the Asian nations in the slide, Mongolia leads with about 1.1 TW of potential, with almost nothing of it already tapped. China comes in second place. And while China leads the World now in wind generation capacity, that is still only 4.5 percent of China’s potential.
And the potential for wind in all other Asian nations is much smaller than that of Mongolia and China. Clearly Mongolia is of utmost strategic importance for massive wind development in Asia.
The next slide about the amount paid in feed-in tariffs in Asia for wind gives a range between $0.18 and 0.24 for Japan, which is way off base. The tariffs actually proposed are between 22 and 55 yen, which would be between $0.275 and 0.65 assuming an exchange rate of 80 yen to the dollar. The amount paid in almost all other Asian countries with feed-in tariffs is around $0.08, and the highest are at Taiwan, Thailand and Sri Lanka at a maximum of $0.20, countries without any significant wind resources or development track record.
Another slide then lists the many forms the Asian Development Bank can assist in financing wind projects. This is not restricted to loans by the Bank. There is also technical assistance, as well as support in applying for other sources of funding, which are listed as this: “Clean Energy Financing Partnership, Asia Pacific Carbon Fund, Future Carbon Fund, Technical Support Facility, EEI, EFA”.
I am not sure that I know all of these funding facilities, but I plan to research the field of international renewable energy finance law in the next year or so. Therefore these pointers are very interesting for future reference.
The next slide gives an overview of wind projects the Asian Development Bank was involved over the last couple of years. None of them seems to be in Mongolia. That obviously needs to change, since Mongolia has the best potential in Asia, as noted above.
Shah recommends the use of feed-in tariffs as the most effective policy instrument. I agree. However, in this context one would need to think about the international dimension. Are feed-in tariffs paid if the wind energy is generated in another country? Can a developer in Mongolia deliver electricity to the Chinese grid and participate in the Chinese feed-in tariff system? What is the adequate policy in this regard?
I am not sure I have an answer to this question right now, but I think it needs discussion, especially if one plans to build an “Asia Super Grid”, which was the topic of the presentation by Tomas Kåberger I blogged about yesterday.
Shah then goes on to present an “Asia Development Bank Quantum Leap in Wind” program. That aims to invest a modest sum of about $2 million for “QLW technical assistance”. The annoying abbreviation “QLW” is actually supposed to mean “quantum leap in wind”. I wish Mr. Shah would refrain from using this kind of acronyms, it just took me a couple of minutes of googling to figure that one out.
At the time of the presentation that was just an announcement, but it seems that a conference on this topic has just been held in Manila, the “Asia Clean Energy Forum 2012”.
Mongolia is also a target for this program.
The presentation closes with contact information for Mr. Shah, which I note for further reference.