Expression of Interest to Participate in the Financing of the Scaling-Up Renewable Energy Program (SREP) in Low Income Countries Climate Investment Funds
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Expression of Interest to participate in the financing of the Scaling-up Renewable Energy Program (SREP) in Low Income Countries Climate Investment Funds I. COUNTRY AND GOVERNMENT AGENCY SUBMITTING EXPRESSION OF INTEREST Plurinational State of Bolivia (Estado Plurinacional de Bolivia) Ministry of Hydrocarbons and Energy (Ministerio de Hidrocarburos y Energía) Vice ministry of Electricity and Alternative Energy (Viceministerio de Electricidad y Energías Alternativas) II. DESCRIPTION OF THE COUNTRY AND ENERGY SECTOR CONTEXT The Plurinational State of Bolivia is located in South America and has a population of 10,027,254 inhabitants over an area of 1,098,581 km ². Bolivia's geographic location puts the country in the heart of South America, with mountains and plateaus in the west, valleys in the central and southern regions and tropical plains in the east. The Gross Domestic Product (GDP) per capita in Bolivia is one of the lowest in Latin America (US$2,220 in 2012). The economy of Bolivia is based largely in the export of natural resources, mainly gas and mining products. Figure 1 Map of Bolivia Energy Sector The Constitution of the Plurinational State of Bolivia establishes the right of access to basic services as one of the basic rights for all Bolivians, among which is the access to electricity. Moreover, the energy sector is he most important in the country’s economy; Bolivia’s natural gas exports to Brazil and Argentina are the most important source of revenue, which is used to generate public investment in health, education, infraestructure and allows Bolivia to move forward in its development. Bolivia's electrical system is composed of the National Grid (Sistema Interconectado Nacional, SIN acronym in Spanish) and the Isolated Systems (Sistemas Aislados, SA acronym in Spanish). At 2012 there were 24 hydroelectric, 10 natural gas-fired, one biomass and three diesel power plants connected to the SIN, with an effective installed capacity of 1,455 megawatts (MW) and a peak demand of 1,109 MW. Hydroelectric generation in the SIN accounts for 32.4% of the energy generated, biomass for 1.3% and 66.3 % of the energy comes from thermal power plants (mainly from natural gas, and a small fraction from diesel). In the SIN, there is private and public participation in power generation, transmission and distribution, with the National Electricity Company (Empresa Nacional de Electricidad - ENDE), a state owned corporation with subsidiaries in all the electricity supply chain, being the major stakeholder in the development of generation, transmission and distribution infrastructure. The SIN operates based on a competitive market for power generation, with prices set by marginal costs. The system has a tariff structure that guarantees returns on investments for the public and private copmanies participating in transmission and distribution. Figure 2 shows the arrangement of the electrical infrastructure of the SIN. The SIN covers a fraction of the territory, while part of the country, specially the north and east, is still not connected to the grid. In these areas, electricity is provided by isolated systems (SA), which are small distribution grids connected to one or more generators, usually powered by diesel fuel. The installed capacity of the SA in 2012 was of 221MW, serving around 200,000 users. Figure 2 Bolivia’s National Grid (SIN) The operation, management and commercialization of electricity production in the SA is responsibility of public and private companies and cooperatives such as: Rural Electric Cooperative Ltd. (CRE) in Santa Cruz, a cooperative owned by the customers which operates eight isolated systems in Santa Cruz; ENDE in the Pando department (Cobija); Servicios Eléctricos Tarija SA (SETAR), owened by the local government in Tarija, which operates in the localities of Tarija, Bermejo, Yacuiba, Entre Ríos, El Puente and Villamontes; and several small cooperatives in Beni that operate and manage diesel powered SA. Diesel fuel used for electricity generation in the SA is imported and managed by Yacimientos Petrolíferos Fiscales Bolivianos, (YPFB acronym in Spanish), the state-owned hydrocarbons company. This fuel is provided to operators at a subsidized price of US$0.16 per liter. The market cost for the import of diesel 2 is above US$ 1.30 per liter. Although diesel fuel is subsidized for power generation, electricity tariffs are US$ 0.14 per kWh on average in the SA, and in some cases close to US$ 0.30 per kWh, compared to $US0.08 per kWh for the SIN. The electricity supply in SA, for the most part, is not provided 24 hours a day, and in many cases is limited only to the period between 18:00 to 23:00 hours at night, limiting productive activities and services such as education and health. For this reason, the Government and the operating entities of the SA are very interested in replacing or combining thermal power generation with renewable power generation, including solar, wind and micro hydro. Access to Energy In 2001, electricity coverage was of 25% in rural areas and 89% in urban areas. By 2005, electricity coverage decreased to 87% in urban areas and increased to 33% in rural areas. Overall the national electricity coverage shifted from 64% in 2001 to 67% in 2005. This behavior shows the lack of sustainable public policies to foster access to electricity over that period, which resulted in extreme differences between electricity access in rural and urban areas. Figure 3 Evolution of energy access in Bolivia Since 2006, the government of Bolivia has been making considerable efforts to increase electricity access in the country, in contrast with previous policies. Firstly, the vision and concept of access was redefined, starting from the definition of electricity access as a fundamental right for every Bolivian, in the Bolivian Constitution approved in 2009. Also, in 2008, the Government created the Electricity Program for Living with Dignity (Programa de Electricidad para Vivir con Dignidad, PEVD), through the Supreme Decree No. 29635, which integrates all electricity access projects, both from conventional energy and alternative energy, to achieve universal service by 2025, articulating the different sources of financing with the autonomous territorial governments and organizations related to this activity. Also, under the "Plan for Universal Energy in Bolivia" prepared in 2010 by the Vice-Ministry of Electricity and Alternative Energy (Viceministerio de Electricidad y Energías Alternativas, VMEEA for its acronym in Spanish) strategies were designed to achieve a gradual increase in electricity coverage. All these policiess have had effective results in the period 2006 – 2012, as access to energy rose to 81% in 2012, according to the National Census, with urban coverage estimated at 96% and rural at 58% (see figure 3). Despite these efforts, there are still 413,218 households in rural areas without access to electricity. The provision of electrical power to the rural population is a great challenge in Bolivia as a result of geographical conditions, low population density and long distances from remote rural areas to electricity 3 networks. These conditions make the use of renewable energy one of the best options that Bolivia has to achieve universal access by 2025, as it is planned. Renewable Energy Policy In 2012, the Government of Bolivia, through the Ministry of Hydrocarbons and Energy (MHE), published its Policy for Alternative Renewable Energy for the power sector1. This Policy promotes and strengthens the development of renewable energy sources for rural access, power generation and other applications, while preserving the environment, with the following strategic goals: 1. Contribute to universal access to basic electricity services, including productive uses of electricity. 2. Develop and promote the applications and the efficient use of renewable energy. 3. Strengthen national institutions involved in renewable energy. 4. Contribute to the diversification of the energy matrix. The Patriotic Agenda, an official policy document of the Plurinational State of Bolivia, established the goal of reaching full coverage in all basic services throughout the country (including access to electricity) by 2025. To achieve this objective, the Bolivian government is working through the PEVD in different projects, measures and actions, integrating electrification projects (including both, grid extension in the SIN, and alternative energy supply in SA and non-served areas), and involving government institutions, development banks, international cooperation, public sector organizations, and private organizations. These projects are listed in section VI of this document. Renewable Energy Potential in Bolivia Because of its geographic location, close to the Equator, Bolivia has an enormous solar energy potential, with high solar irradiation through most of its territory. In particular, the area of the Bolivian Plateau (western region) has one of the highest average annual irradiation in the World (from 5.7 kWh/m2/day to 7 KWh/m2/day). Solar irradiation maps have been developed by the Universidad Mayor de San Simón in Cochabamba. With this high potential, several residential photovoltaic systems have already been installed in the country, with favorable results for the target population. Likewise, private enterprises have installed a large number of solar thermal systems in most of the main cities for hot water supply, yielding savings in energy consumption of beneficiary families. In addition, the government, in cooperation with the GIZ (the German Cooperation Agency) and public/private partnerships has managed to install improved cook stoves, which helped to reduce the use of biomass for cooking. Wind energy has also promising projections for exploitation in Bolivia. A wind map has already been developed, by 3TIER2, identifying the most promising regions for the development of this resource. In January 2014, the first commercial wind farm (3 MW) began operation in the town of Qollpana in Cochabamba. Currently, the National Electricity Company (ENDE) is measuring the wind potential in nine other sites, and wind capacity is expected to be added in the coming years.