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 Yemen January 2010, 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 Table of Contents Page 1. Project Synopsis 1 2. Summary of Energy Situation in Yemen 2 3. Comparison of Yemeni Practice with International Practice in Energy Efficiency 4 3.1 Strategy 4 3.2 Legal Reform 6 3.3 Price Reform 6 3.4 An Agency 8 3.5 Standards and / or Labels 9 3.6 Financial Incentives 10 3.7 Obligations 11 3.8 Audits and the Promotion of ESCOs 12 3.9 Transport and Spatial Planning 12 3.10 Dissemination of Information 13 4. Comparison of Yemeni Practice with International Practice in Renewable Energy 14 4.1 Targets and Strategy 14 4.2 Legal Reform 16 4.3 An Agency 18 4.4 Standards and /or Labels 19 4.5 Financial Incentives (Capital Support) 19 4.6 Feed-in Tariffs and Obligations 20 4.7 CDM Finance 21 4.8 Information 22 4.9 Industrial Policy 22 5. Case Studies 24 5.1 Case Study 1 - Efficient Lighting in Public Buildings 24 5.1.1 Background and Context 24 5.1.1.1 Programme of Activities 24 5.1.1.2 The Lighting market in Yemen 25 5.1.1.3 Scope of the Case Study 25 5.1.2 Evidence-based Policy Making 25 5.1.2.1 Alternative Forms of Intervention 26 5.1.2.2 Base Case 27 5.1.2.3 Impacts 27 5.1.2.4 Consultation 27 5.1.2.5 Compliance 28 5.1.3 Theory-based Evaluation 28 5.1.3.1 Methodology 28 5.1.3.2 Indicators 28 5.1.3.3 Behavioural Matrix 28 5.1.4 Cost-Benefit Assessment 33 5.1.4.1 Methodology Applied and Data Basis 33 5.1.4.2 Electricity Supply Cost 35 5.1.4.3 Emission Factors 40 Economical, Technological and Environmental Impact Assessment of National Regulations and Incentives for RE and EE: Country Report Yemen Yemen.doc Table of Contents Page 5.1.4.4 Financial Analysis 1 - Individual Investor 40 5.1.4.5 Financial Analysis 2 - Electricity Company / Programme Manager PEC 41 5.1.4.6 Economic Analysis 44 5.1.4.7 Sensitivity Test - Impact of the CERs Value 44 5.1.5 Conclusion 46 5.1.5.1 Methodology 46 5.1.5.2 Cost-Benefit Analysis 46 5.1.5.3 Programme of Action (PoA) as a Policy Instrument 46 5.2 Case Study 2 - Off-Grid PV for Rural Electrification 47 5.2.1 Background and Context 47 5.2.2 Evidence-based Policy Making 47 5.2.2.1 Alternative forms of intervention 48 5.2.2.2 Base Case 48 5.2.2.3 Impacts 48 5.2.2.4 Consultation 49 5.2.2.5 Compliance 49 5.2.3 Theory-based Evaluation 49 5.2.3.1 Methodology 49 5.2.3.2 Indicators 50 5.2.3.3 Behavioural Matrix 50 5.2.4 Cost-Benefit Assessment 53 5.2.4.1 Methodology Applied 53 5.2.4.2 Assumptions and Data Base 54 5.2.4.3 Cost Comparison Photovoltaic vs. Gasoline Diesel Generators 54 5.2.4.4 Subsidy Level for Decentralised Electricity Supply 55 5.2.5 Conclusion 58 5.2.5.1 Methodology 58 5.2.5.2 Results of the Analysis 58 6. Institutional Reform in Yemen – Some Possibilities 59 6.1 Reform of the Pricing System 59 6.2 Communication Structures among Institutional Bodies 60 6.3 Establish reliable Energy Statistics 60 6.4 Create basic Legal Framework for PPP 60 6.5 Broaden University Education 60 6.6 Support the Way to an independent Efficiency and Renewable Energies Authority 61 6.7 Establishment of Standards, Labels and Audit Schemes 61 6.8 Create a domestic Industry for Efficient Appliances 62 6.9 Foster Approaches in the Transport Sector 62 6.10 Renewable Energy Target and general Legal Approaches 63 6.11 Realise Projects and Initiatives 63 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 Economical, Technological and Environmental Impact Assessment of National Regulations and Incentives for RE and EE: Country Report Yemen Yemen.doc Figure 4: Marginal cost of electricity from gas Figure 5: Marginal Opportunity Costs including Emergency Generation Figure 6: Emission Factors in grams of CO2 equivalent per kWh Figure 7. Policy Cycle. Figure 8: Yemen’s Primary Energy Mix, 2006 Figure 9: Historical Primary Energy Consumption in Yemen, 1980-2006 Figure 10: Historical Crude Oil Production in Yemen, 1990-2008 Figure 11: Yemen’s Infrastructure for Oil Transportation Figure 12: Historical Net Electricity Generation and Consumption in Yemen, 1980-2006 Figure 13: Electricity Consumption by Sector in Yemen Figure 14: Primary and Final Energy Intensity in Yemen in Comparison to EU-27 and MENA Figure 15: Benefits of DSM/EE Measures Proposed in the Action Plan of the World Bank Project 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 Information Workshop Annex 6: Energy Situation in Yemen List of Tables Table 1 Estimated savings from energy efficiency in the electricity sector Table 2 Five year programme for DSM / EE Table 3 Prices for petroleum products in Riyal and Euros Table 4 Electricity tariff for 2008 and 2009 Table 5: Behavioural Matrix for a PoA on efficient lighting Table 6: Cost-Benefit Analysis - General Data Table 7: Cost-Benefit Analysis - Electronic Ballast Table 8: Data for the Programme of Activity (PoA) Table 9: Financial Analysis 1 - Individual Investment Table 10: Financial Analysis 2 - Electricity Company / Programme Manager PEC Table 11: Variation of the CERs / Carbon Credit Value Table 12: Economic Analysis of the Programme Table 13: Behavioural matrix for instruments to support off-grid PV for rural electrification Table 14: Basic Data for the Analysis Table 15: Direct Cost Comparison - PV vs. Gasoline Generator Table 16: Determination of Subsidy Level 1 - Decentralised Electricity Supply (PV vs. Gasoline Economical, Technological and Environmental Impact Assessment of National Regulations and Incentives for RE and EE: Country Report Yemen Yemen.doc Generator) Table 17: Determination of Subsidy Level 1 - Decentralised Electricity Supply (PV vs. Gasoline Generator) Table 18: General Information about Yemen in 2008 Table 19: Diesel prices in Rial/l for different consumer types, 2009. Table 20: Grid-Based Renewable Energy Technical Potential in Yemen List of Acronyms AFD Agence Francaise de Development BRT Bus Rapid Transit CCGT Combined Cycle Gas Turbine CDM Clean Development Mechanism CER Certified Emission Reduction CFL Compact Fluorescent Lamp CNG Compressed Natural Gas CPA CDM Programme Activity 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 EE Energy Efficiency EHV Extra high voltage EIA Energy Information Agency EPC Energy Performance Contract ESCO Energy Service Company EU European Union g gram 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 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 LSP Letter of Sector Policy Economical, Technological and Environmental Impact Assessment of National Regulations and Incentives for RE and EE: Country Report Yemen Yemen.doc LV Low Voltage MED-EMIP Euro-Mediterranean Energy Market Integration Project MED-ENEC Euro-Med Project on Energy Efficiency in the Construction Sector MENA Middle East and North Africa MMBTU Million British Thermal Units MEPS Minimum Energy Performance Standards MV Medium Voltage MW Megawatt NET PV Net Present Value NGO Non-Governmental Organisation OCGT open cycle gas turbine OECD Organisation for Economic Cooperation and Development PEC Public Electricity Company PIN Project Idea Note PoA Programme of Activities PPA Power Purchase Agreement PSA Production Sharing Agreement RCREEE Regional Centre for Renewable Energy and Energy Efficiency RE Renewable Energy 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 Yemen Yemen.doc 1 1. Project Synopsis The "Regional Centre for Renewable Energies and Energy Efficiency (RCREEE)" was formally estab- lished June 25, 2008 through the signing of the "Cairo Declaration of Intentions on Establishment of a Regional Centre for Renewable Energies and Energy Efficiency (RCREEE)" by representatives of its member states: Algeria, Egypt, Jordan, Lebanon, Libya, Morocco, Palestine, Syria, Tunisia and Yemen. The overall objective of RCREEE is, through its interventions, to achieve: a) rapid implementation of cost-effective policies and instruments for the increased penetration of re- newable energy (RE) and energy efficiency (EE) technologies and practices in member countries; and b) increased market shares of companies and plants located in MENA-countries on the markets for technologies and services related to RE and EE in the MENA and EU regions.