Composite RE Index for MENA Region Master Thesis Presentation

In

RENEWABLE ENERGY AND ENERGY EFFICIENCY

Kassel University, Cairo University

Ahmed Salama 19 March 2013

1

Contents

1. Definitions of Composite Index elements

2. Targeted Countries

3. Related Work

4. Aim of the research

5. Proposed Framework for Composite RE Index

6. Weights of Composite RE Index.

7. Scoring Systems for some Indicators 8. Mathematical Methodology.

9. Results of Indices.

10. Robustness Analysis.

11. Areas for future improvement

12. Future Work

13. Conclusion

14. References

2

Indicator 1 Indicator 2 Indicator 3 Indicator 4 Indicator 6 Indicator 5

Index 2 Index 1

Composite Index

Statistical Data Questionnaire

3

1- Definitions of Composite Index elements

2- Targeted Countries

• A composite RE Index has been constructed for RCREEE

Member States.

Ref. MAHMOUD Maged, October 2012, Renewable Energy Development Tracks in MENA Region, Egyptian

Power & Electricity Summit, Cairo, Egypt

3- Related Work

RE country attractiveness Indices

Experts

RE Market Competence Index

(Elrefaie, March 2012) Motivation

Brit Samborsky RE Framework

(September,2012) RE Barriers

5

4- Aim of the research

1- To benchmark countries through a newly developed

Index by assessing:

• RE market Structures.

• Policy Framework.

• Institutional Capacity.

• Finance and Investment.

• Different RE technologies.

2- To make a robustness analysis for the results.

3- Able to clearly display the weak areas.

6

5- Proposed Framework for Composite RE Index

General Index

Institutional Capacity

Market structure

Policy Frame work

Finance & Investment

Wind Index CSP Index PV Index

7

Market structure

Private sector penetration

Independent power producer (IPP)

Power Purchase Agreement (PPA)

availability

Auto producer

Grid connectivity/access

Interconnection availability

Capacity of Interconnection lines

Grid Code availability

Priority Dispatch

7 indicators

8

Policy Frame work

Strategy

Announcement of RE Target with a Road map

% of RE share in MW

Electricity retail price

(residential)

RE Regulations

NET Metering

Competitive bidding

Feed in Tariff

6 indicators

9

Institutional Capacity

Governance quality

Ease of doing Business Index

Corruption perception index

RE Institutions

No. of policies formulated

RE Agencies

3 indicators

10

Finance & Investment

Fiscal incentives

Customs duty

Existing Incentives (Grants, subsidies,

soft loans)

Risk Mitigation

RE fund

sovereign guarantee

Investment size

future RE Investment announced

4 indicators

11

Technology Specific Indices

Installed base

Technology installed capacity

National Target

Technology yearly Target size

Detailed action plan (planned projects)

Resource potential

Resource Quality assessment (map,

Atlas)

Resource potential in TWh

4 indicators

12

6- Weights of Composite RE Index

50%, General index (4/8)

50% , 3 Technology-specific indices (4/8)

General Index (50%) (4)

Institutional Capacity

(1)

Market structure

(1)

Policy Frame work

(1)

Finance & Investment

(1)

Wind Index 23.8%(1.89)

CSP Index 16.4% (1.31)

PV Index 9.8%(0.78)

Wind Market Size:

47.6%

CSP Market Size:

32.8%

PV Market Size:

19.6% 13

Percentage of all RE share in MW scoring system:

0

10

20

30

40

50

60

70 % of RE

14

7- Scoring Systems for some Indicators

Residential Price scoring system:

Average Price for KWh in $ cents based on 482.5 KWh consumption

0 2 4 6 8 10 12 14 16

Syria

Bahrain

Iraq

Egypt

Libya

Yemen

Lebanon

Algeria

Jordan

Sudan

Tunis

Morocco

Palestine

Average

Average Price ($cent/kWh)

$ Cents/KWh

15

• Ease of doing business scoring System:

Missing countries (Palestine and Libya)

• CPI scoring system:

Missing countries (Palestine)

• RE Agencies scoring system: (0.5 - 3)

RE Agency +1

Specific RE Agency +1

Otherwise (Ministry) 0.5

Regulatory Authority +1

16

Future RE investment announced scoring system

RE Investment announced for future RE Projects in Million Euro

0

500

1000

1500

2000

2500

3000

Million Euro

17

• Technology yearly Target size

Expected annual technology target MW Capacity =

Year InitialYearTarget

Capacity InstalledCurrent Target Announced

18

• Resource potential Indicator in TWh/Year MED-CSP study which done by DLR at 2005

missing countries (Palestine and Sudan)

Country Wind Resource

potential

CSP Resource

potential PV Resource potential

Algeria 35 168972 13.9

Bahrain 0.1 33 0.3

Egypt 90 (87) 73656 36

Iraq 10 28647 6.8

Jordan 2 6429 4.5

Lebanon 0.2 14 1.5

Libya 15 139477 3.9

Morocco 25 20146 17

Palestine 0.2 14 1.5

Syria 12 10210 8.5

Sudan 45 73656 36

Tunisia 8 9244 5

Yemen 3 5100 25.8

• Resource Economic potential Indicator in TWh/Year

19

8- Mathematical Methodology

• Treat potentially problematic indicators, those with

(skewness >2 AND kurtosis > 3.5)

• MVPstats, January2013, http://mvpprograms.com/help/mvpstats/distributions/SkewnessKurtosis

•MICHAELA Saisana, A do-it-yourself guide in Excel for composite indicator development, European

Commission Joint Research Centre, Ispra, Italy, Version: October 2012

20

Mathematical Methodology (cont.)

• Normalizing all Indicators data to a common scale from (0 to 1)

using Min-Max formula:

• Normalized data are aggregated using arithmetic averaging using

Excel Program Formula for unequal weights:

score=sum product(weights*normalized values)

21

directiondirection 1*5.0*min-max

min- valueold

9- Results of the proposed Indices

Scores out of

1.893 Countries Ranks

1.893 Egypt 1

1.006 Morocco 2

0.457 Jordan 3

0.375 Tunisia 4

0.320 Sudan 5

0.311 Algeria 6

0.222 Libya 7

0.201 Syria 8

0.083 Iraq 9

0.074 Yemen 10

0.062 Lebanon 11

0.007 Palestine 12

- Bahrain 13

General Index Ranking Results Wind Index Ranking Results 22

Scores out of 4 Countries Ranks

3.162 Jordan 1

2.804 Morocco 2

2.734 Egypt 3

2.502 Tunisia 4

2.258 Algeria 5

2.241 Palestine 6

1.413 Syria 7

1.357 Lebanon 8

1.110 Sudan 9

0.687 Bahrain 10

0.584 Yemen 11

0.531 Iraq 12

0.450 Libya 13

Results of the proposed Indices (cont.)

CSP Index Ranking Results PV Index Ranking Results

Scores out of 1.3 Countries Ranks

1.042 Algeria 1

0.753 Morocco 2

0.591 Egypt 3

0.360 Tunisia 4

0.288 Libya 5

0.145 Sudan 6

0.135 Jordan 7

0.076 Iraq 8

0.022 Syria 9

0.016 Yemen 10

0.004 Palestine 11

0.001 Lebanon 12

0.000 Bahrain 13

Scores out of 0.78 Countries Ranks

0.466 Algeria 1

0.381 Egypt 2

0.351 Yemen 3

0.253 Morocco 4

0.250 Jordan 5

0.232 Sudan 6

0.191 Tunisia 7

0.171 Syria 8

0.131 Iraq 9

0.121 Libya 10

0.023 Palestine 11

0.011 Lebanon 12

0.001 Bahrain 13

23

Results of Composite RE Index (cont.)

Composite Index Ranking Results Composite Index Ranking Scores 24

Scores out of 8 Countries Ranks

5.598 Egypt 1

4.816 Morocco 2

4.076 Algeria 3

4.003 Jordan 4

3.428 Tunisia 5

2.275 Palestine 6

1.808 Sudan 7

1.807 Syria 8

1.431 Lebanon 9

1.081 Libya 10

1.026 Yemen 11

0.821 Iraq 12

0.688 Bahrain 13

0

1

2

3

4

5

6

Egyp

t

Mo

rocc

o

Alg

eria

Jord

an

Tun

isia

Pale

stin

e

Sud

an

Syri

a

Leb

ano

n

Lib

ya

Yem

en

Iraq

Bah

rain

Ranking Scores

10- Robustness of the Composite RE Index

Through:

1- Correlation analysis.

2- Indicators sensitivity analysis

3- Experts Survey analysis

25

Correlation analysis

• high correlation between some indicators:

• Wind yearly target size, Detailed wind planned projects

Correlation Coefficient (0.93)

• CSP yearly target size, CSP Installed capacity

Correlation Coefficient (0.95)

26

Indicators Sensitivity Analysis

• By exclusion of one indicator at a time (for all 32 Indicators).

• Low difference in scores between some countries and they are:

Sudan with score: 1.8083, Syria with score: 1.8076.

Algeria with score: 4.076, Jordan with score: 4.003.

Libya with score: 1.081 , Yemen with score: 1.026.

The Results:

• The highly sensitivity for RE Agencies Indicator.

• Strong effectiveness of the Indicator which include just 2 scores

(0 or 1).

27

Expert Survey Analysis

• A prepared survey sent to 5 regional Experts.

• One reply received.

• Highly correlation between Expert Result and Composite RE

Index with correlation coefficient = 87%.

28

Correlation between Composite RE Index and Expert

survey Results

0

2

4

6

8

10

12

14

0 2 4 6 8 10 12 14

Composite Index Ranks

Expert Ranks

29

Correlation between the results of Technology

Indices and Expert evaluation

Wind Index Expert

evaluation CSP Index

Expert

evaluation PV Index

Expert

evaluation

Egypt 1 1 Algeria 1 1 Egypt 1 2

Morocco 2 2 Morocco 2 2 Morocco 2 1

Tunisia 3 3 Egypt 3 3 Tunisia 3 3

Wind Corr. Coef. 1 CSP Corr. Coef. 1 PV Corr. Coef. 0.5

30

Countries have been divided into two groups

0

1

2

3

4

5

6 Composite RE Index Ranking Scores

Transition phase countries Pre Transition phase countries

31

11- Highlighting the Weak areas for future

Improvement

scores out of 1 Countries Ranks

0.810 Morocco 1

0.751 Algeria 2

0.707 Jordan 3

0.622 Egypt 4

0.573 Palestine 5

0.529 Syria 6

0.510 Tunisia 7

0.224 Lebanon 8

0.187 Bahrain 9

0.125 Libya 10

0.119 Sudan 11

0.119 Iraq 11

0.119 Yemen 11

Scores out of 1 Countries Ranks

0.834 Palestine 1

0.771 Jordan 2

0.566 Morocco 3

0.501 Lebanon 4

0.493 Syria 5

0.479 Algeria 6

0.473 Egypt 7

0.464 Tunisia 8

0.424 Sudan 9

0.295 Yemen 10

0.129 Iraq 11

0.093 Libya 12

- Bahrain 13

Market Structure sub general Index

scores and Ranks

Policy Framework sub general Index

scores and Ranks 32

Scores out of 1 Countries Ranks

0.796 Morocco 1

0.739 Egypt 2

0.684 Jordan 3

0.665 Algeria 4

0.585 Tunisia 5

0.500 Bahrain 6

0.380 Lebanon 7

0.333 Palestine 8

0.219 Libya 9

0.161 Yemen 10

0.128 Syria 11

0.045 Sudan 12

0.033 Iraq 13

Scores out of 1 Countries Ranks

1.000 Jordan 1

0.943 Tunisia 2

0.899 Egypt 3

0.632 Morocco 4

0.522 Sudan 5

0.502 Palestine 6

0.362 Algeria 7

0.263 Syria 8

0.252 Lebanon 9

0.250 Iraq 10

0.012 Libya 11

0.009 Yemen 12

- Bahrain 13

Institutional Capacity sub General

Index scores and Ranks Finance &Investment sub general Index

scores and Ranks 33

12- Conclusion

• Composite RE Index (32 Indicators) consist of:

1- General Index (20 Indicators) depends on the RE barriers.

2- Three Technology Indices (4 Indicators for each)

• Check the robustness of the result by :

Correlation Analysis: Highly correlation for 4 Indicators.

Indicator Sensitivity analysis: highly sensitivity for RE Agencies.

Expert Survey analysis: Highly correlation ,87%.

• Ranking reflects the situation of the country among RCREEE

Countries.

• Countries have been divided into two groups.

• Weak areas are clearly displayed from the low scores in the sub

Indices tables (Barriers).

34

13- Future Work

• Investigate the weak areas and provide improvement

suggestions for each country as a separate case.

• Include additional Indicators like (resource quality assessment

with technologies maps and atlases, Grid parity map for each

technology, Local manufacturing,…)

• Widen the area of the composite Index by dragging other

countries.

• Using different weighting and scoring schemes.

35

14- References

• ELREFAEI Hatem, 2012, a Methodology for Deriving a Renewable Energy Market Competence Index with Application to CSP Technology, MSc. Thesis, REMENA, Cairo University, Giza, Egypt, Uni- Kassel, Germany.

• SAMBORSKY Brit, 2012, the Arab State of Renewable Energy, an Investigation of Potential for Progress in Arab Electricity Markets, MSc. Thesis, Environmental Management and Policy, Lund, Sweden.

• MICHAELA Saisana, A do-it-yourself guide in Excel for composite indicator development, European Commission Joint Research Centre, Ispra, Italy, Version: October 2012

• Data collection sources:

• RCREEE Focal Points

• Arab Union of Electricity Statistical Bulletin 2012. AUE.

• Arab Union of Electricity, Electricity Tariff in the Arab Countries, June 2012

• GARCIA David et.al., 2010, FEMIP, Study on the Financing of Renewable Energy Investment in the Southern and Easter Mediterranean Region, European Investment Bank, Summer report

• REN21-2012, Renewable Energy Policy Network for 21st century (REN21); Renewables

2012: Global Status Report;

http://www.ren21.net/Portals/0/documents/Resources/%20GSR_2012%20highres.pdf

36

37