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Guidelines for Developers of Gri

VIEWS: 20 PAGES: 35

									Guidelines for Developers of
Small Power Projects (SPP) in
         Tanzania

             Main features of a
            draft for discussion


            25 Feb 2009
                  Chris Greacen
            chrisgreacen@gmail.com

                                                     1
     Prepared with financial assistance from ESMAP
                         Outline
• Small Power Producer (SPP) international
  examples
• Tanzania SPP program
  – Objectives
  – Table of SPP documents
• “Guidelines for Developers of
  Small Power Projects (SPP) in Tanzania”
  – Tariffs for different SPP cases
     • Main grid, mini grid, wholesale and retail sales
                              (discussion, lunch)

  – Required permissions and approvals, procedures for
    application; process rules                            2
      Small
   hydropower
• 1 MW
• Mae Ya, Thailand




                     3
   Small
hydropower

• 2 MW
• “Eco Power”
• Sri Lanka




                4
Micro hydropower




•40 kW
•Mae Kam Pong, Chiang Mai,
Thailand
Rice husk-fired power plant
 • 9.8 MW
 • Roi Et, Thailand
       Biomass (wood chips)
• 1 MW
• Landhanavi, Sri Lanka
• Wood is grown specifically for electricity
  production




                                               7
Biogas from Pig Farms
 •8 x 70 kW generator
 •Ratchaburi, Thailand
              Windfarm
• Each wind turbine is 1.5 MW
• Texas, USA




                                9
           Solar Photovoltaic (PV)
• 1 MW
• Bangkok Solar, Thailand
11
     SPP program objectives
• Facilitate development and
  interconnection of SPP projects
• Light-handed regulation
  1. Minimize amount of information that is
     required.
  2. Minimize the number of separate regulatory
     requirements and decisions.
  3. Use standardized documents, or perhaps
     documents used by other agencies, to the
     maximum extent possible (reduce need for
     case-by-case negotiation)                  12
                  Definitions
• DNO: the licensee responsible for the operation
  of a distribution network in Tanzania. (Currently
  Tanesco)
• SPP: a power plant using a renewable energy
  source or waste heat, or cogeneration of heat
  and electricity, with an export capacity of up to
  ten (10) MW
• Embedded Generator: a single generator or a
  group of generating plant of total export capacity
  between 100 kW and 10 MW, connected to a
  Distribution Network in Tanzania, at 33 kV or
  below.                                            13
             Table of SPP documents
                                 Main grid                                  Mini-grid
Process             Guidelines for Developers of Small Power Projects (SPP) in Tanzania (under
Guidelines          consultation)
(roadmap)
Process rules                                       (Not yet named)

Interconnection     Guidelines for Grid Interconnection of Small Power Projects in Tanzania (Parts
Guidelines          A, B, C) (under consultation)
Interconnection                                     (Not yet named)
rules
Standardized         Standardized Power Purchase               Standardized Power Purchase
PPA                 Agreement for Purchase of Grid-            Agreement for Purchase of Off-Grid
                    Connected Capacity and Associated          Capacity and Associated Electric
                    Electric Energy Between Buyer and a        Energy Between Buyer and a Small
                    Small Power Project                        Power Project
Tariff               Standardized Tariff Methodology for      Standardized Tariff Methodology for
methodology         the sale of Electricity to the Main Grid   the Sale of Electricity to the Mini-grids
                    in Tanzania Under the Standardized         Under the Standardized Small Power
                    Small Power Purchase Agreements.           Purchase Agreements
Tariff              Detailed Tariff Calculations under the     Detailed Tariff Calculations under the
calculations for    SPPA for the Main Grid for year 2009       SPPA for the Mini-grids for year 2009
year 2009
                                                                                                           14
Approved and proposed SPP documents will be made available at: www.ewura.go.tz/sppselectricity.html
 What are the Guidelines for Developers of
   Small Power Projects in Tanzania?
• Audiences: SPP developers, EWURA,
  Tanesco, bankers…
• Purpose: Guide to steps necessary to acquire
  necessary permits and clearances to develop
  and operate a SPP
  – Selling electricity to the DNO (Tanesco) main grid
  – Selling to an isolated mini-grid and/or
  – Selling directly to retail customers (main grid-
    connected & isolated SPPs)
• Guidelines: roadmap to rules. There will be a
  separate „rules‟ document.                             15
Contents of Guidelines for Developers of Small
         Power Projects in Tanzania




                                                 16
   Tariff determined by SPP type

                           Connected to main Connected to
                           grid              isolated mini-grid


  Selling wholesale                Case 1                  Case 2
  (to DNO*)
  Selling retail                   Case 3                  Case 4
  (directly to final
  customers)

                                                                    17
* DNO: Distribution Network Operator (currently TANESCO)
Tariff Case 1: selling wholesale
          to main grid
                   Clrmc  Csrmc
          Ccase1 
                         2
Where Clrmc is the long run marginal cost as defined by Tanesco‟s long-term power plan;
and Csrmc is the budgeted cost of thermal generation in the next year.

Note: the actual calculations are somewhat more complicated, taking into account:
     • Transmission losses
     • Seasonality
     •Price floor & cap
They are available in: Standardized Tariff Methodology Under the Standardized Small
Power Purchase Agreements available from EWURA. Order 08-015 on Dec 30.2008



                                                                                      18
       Tariff Case 2: selling to
       wholesale to a mini-grid
               CLmrcGrid  C AveMini
      Ccase2 
                        2
Where CLmrcGrid is the long run marginal cost for grid-power (adjusted for
losses), and CAveMini is the average incremental cost of mini-grid power
(calculated as the levelized cost of electricity from a new mini-grid diesel
generator).

Note: the actual calculations are somewhat more complicated than this – and
available in: Standardized Tariff Methodology for the Sale of Electricity to the
Mini-grids Under the Standardized Small Power Purchase Agreements
available from EWURA.


                                                                                   19
 Tariff Cases 3 and 4: selling at
  retail to end use customers
• Tariff is proposed by SPP generator,
  subject to EWURA review
  – Less oversight demanded in cases in which
    community is in agreement with proposed
    tariff
  – Where possible, EWURA draws on financial
    analysis submitted to REA for rural
    electrification subsidy

                                                20
 Necessary permits, clearances and
    procedures for application
                      Land title or lease

Resource Rights (e.g. water rights from River Basin Water Office)

          Letter of Intent (LOI) with DNO (Tanesco)
                                                                    Sequence is
            Business license, tax registration, etc.                important to
                                                                    avoid
                                                                    competing
                                                                    claims on
                        Building Permit                             project sites


       Environmental and Social Clearance (NEMC)

                             SPPA

                       EWURA license                                           21
Necessary permits and clearances
   and process for application

• For each permit…
  – Description
  – Project types exempt
  – Issuing authority and application
    procedure




                                        22
                                                             Land title or lease

                                          Resource Rights (e.g.   water rights from River Basin Water Office)


                                                         LOI with DNO (Tanesco)


                                                   Business license, tax registration, etc.




               LOI request                                    Building Permit


                                               Environmental and Social Clearance (NEMC)

                                                                       PPA


                                                              EWURA license




1. Name and Address
2. Locations
3. Fuel type (hydro, biomass, wind, gas, etc.)
4. Power capacity (MW), planned power export
   (MW), annual energy generation (GWh).
5. Copy of deed of title or lease agreement
6. Rights to resource




                                                                              23
Proposed rules regarding LOI process #1
 • Acknowledgement of receipt: The rules require that within seven
   days of receiving the LOI request, the DNO will acknowledge receipt
   of the request.
 • Notice of decision: Within 30 days of receiving the complete LOI
   request, the DNO will send the project developer notice of its
   decision. Approval for the project will be in the form of a Letter of
   Intent (LOI).
     – A template is shown in Appendix 2: Template for Letter of Intent.
 •  Reasons for disapproval by DNO stated: If DNO disapproves of
   the project, the reasons for disapproval must be clearly stated in
   writing.
 • Site Reference Number: The LOI shall include a Site Reference
   Number designated by the DNO.
     – The Site Reference Number will be used to refer to the Site in all subsequent
       documentation and correspondence


                                                                                       24
Proposed rules regarding LOI process #2
 • Reservation of Network Capacity: The LOI in the case of sites
   operating on hydroelectric or wind power, or any other primary
   source of energy which is site-specific by way of its availability, will
   also imply the exclusivity of the interconnection to the Developer,
   within the period of validity of the LOI.
 • Point of Interconnection: The LOI shall specify the Point of
   Common Coupling and the Point of Supply, to enable the
   Generating Company to develop the cost estimates for the
   interconnection.
 • Estimate of interconnection costs: Within 30 days of sending the
   LOI, the DNO shall send the Seller a rough initial estimate of the
   interconnection costs and an engineering assessment of whether
   the identified interconnection point can absorb the full power
   amount proposed by the SPP.
 • Information exchanged between Seller and DNO: While the LOI
   is still valid, the Seller and DNO shall exchange technical
   information on its proposed generator and expected fault levels. 25
Proposed rules regarding LOI process #3
 • Upgrades to DNO system: If the interconnection point, in its
   present state, cannot absorb the amount of power that the Seller
   proposes to export then the DNO will also estimate the costs to
   upgrade the distribution system (lines, substations, etc.) to sufficient
   capacity such that the full proposed amount of electricity exported
   by the Seller can be safely injected at the identified interconnection
   point.
 • The rules allow the Seller to upgrade the DNO‟s facilities as an
   alternative to construction by the DNO as long as the upgrade
   meets the same standards that the DNO would have used. In the
   event that the Seller upgrades the DNO‟s distribution system,
   ownership of all improvements beyond the Interconnection Point
   (as defined in the PPA) will be transferred to the DNO upon
   commissioning.



                                                                         26
Proposed rules regarding LOI process #4
 • Maximum allowable generation capacity: If the Seller‟s proposed
   generation capacity exceeds 10 MW, even if the Seller‟s proposed
   export capacity does not exceed 10 MW, then the DNO may
   propose a maximum allowable generation capacity allowed to
   interconnect at the proposed interconnection point.
 • LOI expiry: The rules require that within twelve (12) months from
   receipt of the LOI from the DNO, an “Application for Interconnection
   and Sale of Electricity” must be completed and submitted to
   Director General of Transmission of DNO (or some other individual
   designated by the Managing Director of DNO). At the sole
   discretion of the DNO, the validity of the LOI may be extended six
   (6) months at a time, for a maximum of two (2) years from the date
   of the LOI.
 • If the Developer does not apply for Interconnection and Sale of
   Electricity before the validity of the LOI expires, the DNO may issue
   an LOI to a different Developer for the same site.
                                                                      27
                                                                      Land title or lease




Environment and Social Clearance                   Resource Rights (e.g.   water rights from River Basin Water Office)


                                                                  LOI with DNO (Tanesco)


                                                            Business license, tax registration, etc.




  from National Environmental                                          Building Permit


                                                        Environmental and Social Clearance (NEMC)




  Management Council (NEMC)
                                                                                PPA


                                                                       EWURA license




 • SPP developer approaches NEMC for opinion on the
   need for EIA, preliminary EIA or Scoping Report.
 • After appropriate report (EIA, etc.) is written and
   submitted, NEMC evaluates and, if acceptable, gives
   clearance.
 • In the event that the NEMC is delayed in issuing a full
   clearance, NEMC may issue a „no objection‟ letter
   allowing the developer to proceed with the project
   including acquiring bank loans, procuring equipment,
   and site development.
 • In its licensing determination, EWURA will consider
   NEMC „no objection‟ letter a sufficient substitute for
   NEMC clearance provided that the developer commit to
   inform EWURA upon final NEMC clearance.
                                                                                       28
                                                                     Land title or lease

                                                  Resource Rights (e.g.   water rights from River Basin Water Office)




 Power Purchase Agreement
                                                                 LOI with DNO (Tanesco)


                                                           Business license, tax registration, etc.


                                                                      Building Permit




          (PPA)                                        Environmental and Social Clearance (NEMC)

                                                                               PPA


                                                                      EWURA license




• To initiate the PPA agreement process, the
  Seller completes and submits to Tansco an
  “Application for Interconnection and Sale of
  Electricity”
  – technical engineering information (one-line diagrams,
    specifications of key equipment) that DNO needs in
    order to determine if the proposed project is in
    compliance with the Interconnection Rules and
    Guidelines
  – Includes information submitted in the „exchange of
    information‟ as part of the LOI process.
                                                                                      29
    Proposed rules related to PPA #1
•   The rules specify that the DNO‟s decision to sign or reject the standardized
    PPA is based solely on its evaluation of whether the design of the Seller‟s
    facility as described in the Appendix 4: Application for Interconnection and
    Sale of Electricity is in compliance with the “Guide for Grid Interconnection of
    Embedded Generators to the Main Grid and Isolated Mini-Grids in Tanzania”.
•   Within 30 days from the date the DNO receives all the required information
    specified in the application form the DNO will notify the applicant whether the
    application is accepted and will indicate the DNO‟s willingness to sign the
    PPA. No later than 30 days after this, the DNO shall make itself available for
    signing the PPA.
•   The DNO will then provide the applicant with details of interconnection costs
    within 90 days from the date of sending acceptance notification. Seller will
    pay mutually agreed-upon interconnection costs, including costs, if any, of
    upgrading DNO‟s system to accept capacity proposed by Seller. (As noted in
    LOI section, Seller has the option of undertaking the upgrade of the DNO
    facilities.)

                                                                                 30
    Proposed rules related to PPA #2
•   If the DNO and Seller cannot agree on interconnection costs, then parties
    shall pursue the arbitration process described in Article 8 of the SPPA.
•   The Seller and DNO must sign a PPA within 60 days from the date that the
    DNO sends details of interconnection costs or acceptance notification
    (whichever comes last). If the Seller fails to sign the agreement within this
    time frame, the application submitted will be considered void.
•   The Seller who has signed the power purchase agreement may dispatch
    power into the grid only after the DNO has checked whether the
    interconnection as well as the installed connection equipment meets the
    standards specified in the application form and the PPA. Such compliance
    will be indicated in an „interconnection certificate‟ granted by the DNO upon
    satisfactory installation of the required equipment.
•   The DNO shall complete the testing within 30 days from the date the Seller
    has completed the installation of all required equipment.
•   If the Seller is required by law to obtain a license from EWURA, it must show
    the DNO that it has been issued a license prior to the commencement of the
    sale of electricity.
                                                                              31
  Proposed rules related to PPA #3
• The rules require that Commissioning Date shall be within two years
  from the date of signing the SPPA. The developer is required to
  submit quarterly progress reports indicating progress towards this
  goal. In an exceptional circumstance, the SPPA at the time of signing
  may state a time longer than two years allowed for construction. If the
  developer does not commission the project within the agreed upon
  timeframe, the SPPA will be considered void unless both parties
  agree to an extension.




                                                                      32
                                                                            Land title or lease

                                                         Resource Rights (e.g.   water rights from River Basin Water Office)


                                                                        LOI with DNO (Tanesco)


                                                                  Business license, tax registration, etc.




      EWURA license                                                          Building Permit


                                                              Environmental and Social Clearance (NEMC)

                                                                                      PPA


                                                                             EWURA license




• SPPs up to 1 MW are exempt from
  EWURA‟s licensure requirements
  – Must submit completed registration form
    • Location, business registration, capacity of facility,
      GWh/yr, date of planned construction
• Non-exempt (>1 MW)
  – Submit license application
    • Same as registration, plus
       –   Section on managerial competence
       –   Feasibility study
       –   Business plan.
       –   Permits and clearances (NEMC, water rights, etc.)                                 33
 Proposed rules related to EWURA
              license
• The rules require that EWURA will respond with a
  license or an explanation of why a license was denied
  within 45 days. The rules specify that an initial license
  will be granted for fifteen years. Subsequently, renewed
  licenses will be granted for fifteen years. All generators
  are also required to submit, on an annual basis, a
  completed SPP Annual Reporting Form.

• The EWURA license application requires a fee of Tsh
  100,000 paid to EWURA.




                                                               34
          Thank you


For more information, please contact
     chrisgreacen@gmail.com

   This presentation available at:
           www.rea.go.tz
         www.ewura.go.tz

								
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