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A project financed by the Ministry of Foreign Affairs of Denmark Provision of Technical Support/Services for an Economical, Technological and Environmental Impact Assessment of National Regulations and Incentives for Renewable Energy and Energy Efficiency Country Report Libya December 2009, revised April 2010 Norsk-Data-Str. 1 Döppersberg 19 61352 Bad Homburg, Germany 42103 Wuppertal, Germany Tel: +49-6172-9460-103, Fax. +49-6172-9460-20 Tel: +49-202-2492-0, Fax: +49-202-2492-108 eMail: [email protected] eMail: [email protected] http://www.mvv-decon.com http://www.wupperinst.org - 1 - Table of Contents Page 1. Project Synopsis - 6 - 2. Summary of Energy Situation in Libya - 7 - 3. Comparison of Libyan Practice with International Practice in Energy Efficiency - 8 - 3.1 Strategy - 8 - 3.2 Legal Reform - 10 - 3.3 Price Reform - 10 - 3.4 An Agency - 13 - 3.5 Standards and /or Labels - 14 - 3.6 Financial Incentives - 15 - 3.7 Obligations - 16 - 3.8 Audits and the Promotion of ESCOs - 17 - 3.9 Transport and Spatial Planning - 17 - 3.10 Dissemination of Information - 18 - 4. Comparison of Libyan Practice with International Practice in Renewable Energy - 19 - 4.1 Targets and Strategy - 19 - 4.2 Legal Reform - 21 - 4.3 An Agency - 22 - 4.4 Standards and /or Labels - 23 - 4.5 Financial Incentives (Capital Support) - 23 - 4.6 Feed-in Tariffs and Obligations - 24 - 4.7 CDM Finance - 24 - 4.8 Information - 25 - 4.9 Industrial Policy - 25 - 5. Case Studies - 26 - 5.1 Case Study 1: Policies for the Promotion of Wind Energy in Libya - 26 - 5.1.1 Background and Context - 26 - 5.1.1.1 Promotion of Private Investment in Wind Energy in Libya - 26 - 5.1.1.2 Scope of the Case Study - 26 - 5.1.2 Comparison of Policy Instruments for the Promotion of Wind Power - 27 - 5.1.2.1 Specification of the Alternative Policy Instruments - 27 - 5.1.2.2 Competitive Bidding - 27 - 5.1.2.3 Feed-in Tariff - 28 - 5.1.2.4 Evidence Basis Policy Preparation - 28 - 5.1.2.5 Result of the Comparison - 38 - 5.1.3 Economic Cost-benefit Assessment - 42 - 5.1.3.1 Methodology Applied - 42 - 5.1.3.2 Wind Energy - 42 - 5.1.3.3 Opportunity Costs for Electricity Generation using Natural Gas - 43 - 5.1.3.4 Result of the Assessment (without Netback Costs) - 47 - 5.1.3.5 Return on Investment - 48 - 5.1.3.6 Variation Gas Prices and Return on Investment - 49 - 5.1.3.7 Carbon Credits - 50 - 5.1.3.8 Impact of Netbacks - 51 - Economical, Technological and Environmental Impact Assessment of National Regulations and Incentives for RE and EE: Country Report Libya Libya.doc - 2 - Table of Contents Page 5.1.4 Conclusion - 51 - 5.1.4.1 Methodology - 51 - 5.1.4.2 Policy Instruments for Wind - 51 - 5.2 Case Study 2 - Concentrated Solar Power - 53 - 5.2.1 Background and Context - 53 - 5.2.1.1 Concentrated Solar Power (CSP) - 53 - 5.2.1.2 Scope of the Case Study - 54 - 5.2.2 Evidence-based Policy Making - 54 - 5.2.2.1 Alternative Forms of Intervention - 55 - 5.2.2.2 Base Case - 55 - 5.2.2.3 Impacts - 56 - 5.2.2.4 Consultation - 56 - 5.2.2.5 Compliance - 56 - 5.2.3 Theory-based Evaluation - 56 - 5.2.3.1 Methodology - 56 - 5.2.3.2 Indicators - 57 - 5.2.3.3 Behavioural Matrix - 57 - 5.2.4 Economic Cost-benefit Assessment - 60 - 5.2.4.1 Methodology Applied - 60 - 5.2.4.2 CSP - Assumptions and Data Base - 61 - 5.2.4.3 Opportunity Costs for Electricity - 64 - 5.2.4.4 Comparison of costs of electricity supply - 70 - 5.2.4.5 Impact of Carbon Credits upon "Renewable Values" - 71 - 5.2.4.6 Sensitivity Test - 74 - 5.2.5 Conclusion - 75 - 5.2.5.1 Methodology - 75 - 5.2.5.2 Substance - 75 - 5.2.5.3 European purchase of renewable values as a policy instrument - 76 - 6. Institutional Reform - Strategic Options - 77 - 6.1 Vision Statement by the Libyan Government and Energy Council - 77 - 6.2 Transparency of Decision Making Processes - 78 - 6.3 Define National Efficiency Strategies and Targets - 79 - 6.3.1 Implementation: Introduce Standards, Labels etc. - 80 - 6.3.2 Creation of an Energy Efficiency Authority EEA - 80 - 6.3.3 Establishment of an Energy Efficiency Fund EEF - 80 - 6.4 Foster Renewable Energies - 81 - Economical, Technological and Environmental Impact Assessment of National Regulations and Incentives for RE and EE: Country Report Libya Libya.doc - 3 - List of Annexes Annex 1: Mission Report Annex 2: List of Stakeholders Annex 3: Seminar Programme Annex 4: Presentation on Methodology Annex 5: Preview on Training Annex 6: Energy Situation in Libya List of Tables Table 1: Prices of Petroleum Products to Consumers Table 2: Historic fuel prices to the electricity sector 2001-2009 (Dinar / m3) Table 3: Domestic tariff for electricity 2009 Table 4: History of electricity prices to non-residential sectors (Dirhams / kWh) Table 5: Behavioural model of Competitive Bidding for Wind IPP and Associated Indicators, Risks and Assumptions Table 6: Behavioural Model of Feed-in Tariff for Wind IPP Table 7: Criteria for Choice among Options Table 8: Data for Wind Energy Table 9: Data for Combined Cycle Gas Turbine (CCGT) Table 10: Wind Energy - Economic Assessment Criteria Table 11: Wind Energy - NPV - Impact of Gas Prices and IPP Wind Return Requirements Table 12: Wind Energy - Economic Assessment Criteria with Carbon Credits (Base case) Table 13: Wind Energy - Economic Assessment Criteria with Carbon Credits Table 14: Impact of Netback Costs Table 15: Behavioural matrix for CSP and a European Purchase Scheme for Renewable Values Table 16: General parameters for the assessment Table 17: Key-data for Concentrated Solar Power (CSP) Plant Table 18: CSP - Financing conditions Table 19: CSP - Assumed financing conditions Table 20: Gas based electricity generation (CCGT) - Fixed unit costs Table 21: Gas based electricity generation (CCGT) - Determination of levelised costs Table 22: Impact of carbon credits upon "renewable values" Table 23: "Renewable values" - Comparison of cases Table 24: General Information about Libya in 2008 Table 25: New Power Plants in Libya, status 2008 Table 26: Technical and economic renewable electricity supply side potentials in TWh/a Economical, Technological and Environmental Impact Assessment of National Regulations and Incentives for RE and EE: Country Report Libya Libya.doc - 4 - List of Figures Figure 1: US LNG Prices Figure 2: Forecasts of crude prices to 2030 (DOE/IEA) Figure 3: Derived forecast of international LNG prices Figure 4: Forecast of Unit Costs for Wind Energy and CCGT-Natural Gas Figure 5: IPP Wind - Expected Return on Investment Figure 6: US LNG Prices Figure 7: Forecasts of crude prices to 2030 (DOE/IEA) Figure 8: Derived forecast of international LNG prices Figure 9: Marginal cost of electricity from gas Figure 10: CCGT and CSP - Comparison levelised costs Figure 11: CCGT and CSP - Comparison of electricity supply costs Figure 12: Impact of Carbon Credits - Reduction "renewable values" Figure 13: Development of additional costs Figure 14: Comparison of scenarios Figure 15: Illustration of the Policy Process Figure 16 Libyan Total Primary Energy Demand, 2006 Figure 17: Reference Scenario of Libya’s Primary Energy Mix until 2030 Figure 18: Libyan Crude Oil Production, 1981-2008 Figure 19: Geographic Dispersion of Libyan Oil and Gas Fields and Energy Infrastructure Figure 20 Development of Produced Power and Peak Load in Libya Figure 21: Annual Energy Supply by Using Vistas V-52 Wind Turbines at Selected Locations in Libya Figure 22: Libya’s Projected Installed Power Capacity. Source: DLR 2005 Figure 23: REAOL roadmap for renewable energy expansion in Libya Figure 24: Libya’s Energy Intensity in 2005 Compared to Other MENA Countries List of Acronyms AFD Agence Francaise de Development BRT Bus Rapid Transit CBL Central Bank of Lebanon CCGT Combined Cycle Gas Turbine CDM Clean Development Mechanism CER Certified Emission Reduction CFL Compact Fluorescent Lamp CNG Compressed Natural Gas CSP Concentrated Solar Power CTF Clean Technology Fund DANIDA Danish International Development Agency DSM Demand Side Management DNA Designated National Authority EBPM Evidence Based Policy Making EC Energy Council EE Energy Efficiency Economical, Technological and Environmental Impact Assessment of National Regulations and Incentives for RE and EE: Country Report Libya Libya.doc - 5 - EGA Environment General Authority EHV Extra high voltage EIA Energy Information Agency EPC Energy Performance Contract ESCO Energy Service Company EU European Union g gram GECOL General Electrical Company of Libya GEF Global Environment Fund GHG Green House Gas GJ Giga Joule GWh Giga Watt hours HV High Voltage IBRD International Bank for Reconstruction and Development (Worldbank) IDA International Development Agency IEA International Energy Agency IISD International Institute for Sustainable Development IPP Independent Power Producer IRI Industrial Research Institute JICA Japanese International Cooperation Agency kWh kilo Watt hours LEED Leadership in Environmental and Energy Design LNG Liquefied Natural Gas LPG Liquefied Petroleum Gas LRT Light Rail Transit LV Low Voltage MED-EMIP Euro-Mediterranean Energy Market Integration Project MED-ENEC Euro-Med Project on Energy Efficiency in the Construction Sector MEW Ministry of Energy and Water MENA Middle East and North Africa MMBTU Million British Thermal Units MV Medium Voltage MW Megawatt NET PV Net Present Value NGO Non-Governmental Organisation OECD Organisation for Economic Cooperation and Development PIN Project Idea Note PPA Power Purchase Agreement PSA Production Sharing Agreement RCREEE Regional Centre for Renewable Energy and Energy Efficiency RE Renewable Energy REAOL Renewable Energy Authority of Libya SWH Solar Water Heater TBE Theory Based Evaluation toe tons of oil equivalent UNDP United Nation Development Program USAID United States Agency for International Development Economical, Technological and Environmental Impact Assessment of National Regulations and Incentives for RE and EE: Country Report Libya Libya.doc - 6 - 1.