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Feed-in Tariff: Driving Innovation & Cost Reductions? Ir. Ahmad Hadri Haris hadri(a)mbipv.net.my Chief Technical

Feed-in Tariff:

Driving Innovation & Cost Reductions?

Ir. Ahmad Hadri Haris

hadri(a)mbipv.net.my

Chief Technical Advisor (Renewable Energy)

Ministry of Energy, Green Technology & Water

21 st June 2011

DRAM – Moore’s Law

DRAM – Moore’s Law Source: Applied Materials 2

Source: Applied Materials

2

Flat Panel Displays

Flat Panel Displays Source: Applied Materials 3

Source: Applied Materials

3

Photovoltaic (RE)

Photovoltaic (RE) Source: Applied Materials 4

Source: Applied Materials

4

RE Learning Curves & Cost Reduction

RE Learning Curves & Cost Reduction 5

What are the differences?

Consumer Goods

Strategic Goods

Mobiles Laptops Flat panel displays Automobiles Etc.

The way electricity is produced The way transportation is done The way people are living in urban environment

 

Only need global trade fair because consumers want the new products

Do need initial political and public support

In summary:

New technologies in the beginning always have high costs (prices)

Cost (price) can only reduce with large demands (Price Experience Curve)

Only market pull with technology drive (innovation) will create the Price Experience Curve, not technology push by its own Q: What is the best market pull mechanism for RE?

6

Grid Parity

Driver: Environment & Energy Security GRID PARITY 2010 2020 Years Europe, USA, Japan Asia Source:
Driver: Environment
& Energy Security
GRID PARITY
2010
2020
Years
Europe, USA, Japan
Asia
Source: BP, REC
Electricity Prices ($/k
Wh)

Market Pull Mechanism: Effectiveness Indicator

FiTs are more effective and cost-efficient
FiTs are more effective
and cost-efficient

Historically observed efficiency of support for onshore wind: Effectiveness indicator compared to the expected profit for the year 2006

FiT rates significantly influence market reaction (pull)

Conducive FiT rates
Conducive
FiT rates

©2011

9

FiT Degression

FiT Degression Promote prices reduction towards grid parity Promote early commissioning and reward early birds Point

Promote prices reduction towards grid parity Promote early commissioning and reward early birds Point of control for ‘high’ FiT rates

reduction towards grid parity Promote early commissioning and reward early birds Point of control for ‘high’
reduction towards grid parity Promote early commissioning and reward early birds Point of control for ‘high’

FiT is the best ‘Market Pull’ for RE Eg. Solar PV: Opportunity for Households

House type

terrace

semi-d

bungalow

Electricity bill/month (RM/month)

80

350

800

BIPV capacity (kW)

3

6

14

BIPV space requirement (m2)

30

60

140

BIPV capital cost (RM)

54,000

102,000

224,000

Down-payment for BIPV - 10% (RM)

5,400

10,200

22,400

FiT rates (RM/kWh)

1.74

1.71

1.71

FiT revenue/month (RM)

522

1,026

2,394

Bank loan - 90%

48,600

91,800

201,600

Loan repayment/month: 3%, 9yrs (RM/month)

514

971

2,133

Loan repayment/month: 4%, 12yrs (RM/month)

426

804

1,765

Loan repayment/month: 5%, 15yrs (RM/month)

384

726

1,595

Balance: FiT revenue - loan repayment, 9 yrs (RM/month)

8

55

261

Balance: FiT revenue - loan repayment, 12 yrs (RM/month)

96

222

629

Balance: FiT revenue - loan repayment, 15 yrs (RM/month)

138

300

799

Total revenue (21 years) - 15% total performance loss

111,812

219,769

512,795

Total repayment - 9 yrs (RM)

55,512

104,868

230,364

Total repayment - 12 yrs (RM)

61,344

115,776

254,160

Total repayment - 15 yrs (RM)

69,120

130,680

287,100

Thank You