EgyptEra Regulatory Requirements for Wind Project Grid Integration

EgyptEra
Regulatory Requirements for the Integration
of Wind Projects into the Grid
‫الكهرباء‬ ‫بشبكات‬ ‫الرياح‬ ‫مشروعات‬ ‫لربط‬ ‫التنظيمية‬ ‫المتطلبات‬
‫الرياح‬ ‫طاقة‬ ‫لمشروعات‬ ‫اإلعداد‬ ‫خبرات‬ ‫حول‬ ‫الوطنية‬ ‫العمل‬ ‫ورشة‬
‫بيروت‬–‫لبنان‬
Dr. Walid El-Khattam
EgyptERA’s Consultant
9th. May, 2013 1

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Contents
 Background on the Egyptian Electric Utility and Consumer
Protection Regulatory Agency “EgyptERA”
 Electricity Sector Status and Challenges
 Regulatory Requirements for RE Integration into Grids
 Regulatory Measures
 Supporting Policies for RE
 Types of Contracts
 Technical Requirements for RE Integration into Grids
 Codes
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Background on the Egyptian Electric Utility and
Consumer Protection Regulatory Agency “EgyptERA”
 Established in 2000 by a Presidential Decree and came to
effect in 2002 as a legal entity affiliated to the Minister of
Electricity and Energy.
3
 Regulates and supervises all electricity activities
 Ensures availability of supply to users
 Considers interests of stakeholders
 Prepares for fair competition in the electricity sector
Objectives

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Regulatory Operative
Mechanisms
Codes
Performance
Assessments
Competition
Promotion
& Electricity
Market
Development Cost of
Service
Licenses
Draft Electricity
Law
Preparation
for
competitive
Market
Investment
Promotion in
the field
of Electricity
Demand Side
Management
(DSM)




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Electricity Sector Status and Challenges
 Electricity coverage is above 99% of the population
 The electrical peak demand increased by an average of 6%
annually over the last decade, however, it increased more
than 8% in the year 2011/2012.
 To meet the increase in demand an average annual
expansion in generation, transmission, and distribution of
2.5 GW is needed over the next 20 years.
 The potential of adding more hydro-generation is limited.
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 Currently:
o The installed RES (mainly wind) represents only 2% of
the installed capacity (1.2% of the electrical energy
generated). Hydro (almost 10% of the installed
generation capacity), wind (<2%), and small solar
projects.
o Electricity purchased from self generation and
cogeneration units in industry represents only 0.07% of
the total electrical energy generated.
o Electricity tariff does not reflect the cost of service (fuel
cost subsidy is provided). 6

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 High annual rate of increase in electricity demand
 Huge investments required to meet the demand
 Public investments is not enough to cover all additional
capacities
 Fuel needed for the power generation expansion
 The present tariff is less than the economic cost of
service (Subsidy)
Therefore, there is a need to establish an attractive
environment for investors (mainly RE).
7

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Reasons for giving Wind Energy First Priority
 Egypt possesses the best sites with high capacity factor
 Local experience in wind energy since 20 years ago, support by a
current installed capacity of 545 MW
 High potential for an increasing share of local manufacturing of
wind energy equipment
 Electricity generated from wind resources represent a near reach
opportunity where it has the closest price to electricity generated
from oil and gas

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Contents
 Regulatory Aspects for RE Integration into Grids
 Types of Contracts Required
 Technical Aspects for RE Integration into Grids
 Codes
9

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Key Challenges for Promoting RE
10
5
Insufficient available
grid capacity and
coverage
4
Electricity market
structure
3
Lack of experience
amongst decision makers
2
Lack of coordination
between authorities
1
Absence of long
term planning
Regulatory Aspects for RE Integration into Grids

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1- Absence of long-term planning leads to risk in the market and
loss of credibility to investors. To ensure reliable long term-
planning:
o RE Data updates,
o Transparency of Electricity Pricing,
o Standardization of Power Purchase Agreements (PPA)
long-term planning (the Egyptian Experience):
In Feb. 2008, the Supreme Council of Energy has set a target to have
a 20% of the total generated electrical energy from RES by the year
2020 as follows: 12% wind (7.2 GW), 6% hydro, and 2% others.

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- In 2009:
o Presidential Decrees were issued for allocating lands in Gulf
of Suez, to NREA (7,600 Km²) to build wind power plants
either by NREA or through usufruct system (the Cabinet
approved the land allocation regulations in 2012).
o Egypt announced the 1st BOO wind project (250 MW)
following the competitive bidding scheme.

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- In 2011, the Board of Directors of the General Authority of
Investment and Free Zones approved the establishment of
projects in the field of designing, building, managing, operating,
and maintaining power plants from various resources (including
RE) as special free zones projects.

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- In 2012:
o the Cabinet approved activating the “RE Fund” to cover the
difference between the cost of electricity production from RE
projects and the selling price to the Grid.
o the electricity tariffs have been increased to elevate portion of
the governmental subsidy.

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long-term planning (the Egyptian Experience-EgyptERA):
o In 2005, EgyptERA’s Board of Directors of approved the
“Guidelines for Energy Supply to Investment Projects”;
o Prepared Power purchase Agreements (PPA)
o Ensuring private sector participation for 20-years commercial
based projects through enhancing the regulation
o Developed Feed-in-Tariff (FiT) mathematical models (wind &
solar), the contracting template for 15-years project, and the
Tariff’s issuing procedures are under approval by the Cabinet

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long-term planning (the Egyptian Experience-EgyptERA):
o The Grid Code and the Wind Code are completed (Based on
IEC and IEEE standards).
These codes are under approval by EETC and EgyptERA.
o The templates for the “Grid Connection” and “Network Use”
contracts of RE plants are under approval by EgyptERA.
o EgyptERA has approved Network Use tariff structure on
different voltage levels.
o In 2012, the Board of Directors approved the implementation of
“Guarantee of Origin” (GoO) -certification scheme- as a method
for promoting RE trade.

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2- Coordination between relevant authorities; several
governmental entities are responsible for the same decision.
Coordination between relevant authorities (the Egyptian
Experience):
a proposed framework has been developed so that the developer
can submit all of paperwork to one unit that handles all permits.
3- Experience among decision makers; highly delegated
decision-making can rely on committees that are unfamiliar with
the details of the processes of RE projects.

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Experience among decision makers (the Egyptian Experience):
many recommendations are proposed to mitigate the effect of
inexperience among them:
o skills already learnt must be formulated in knowledge systems
o further private sector engagement is essential to provide helpful
feedback to regulators and to find shared solutions.
4- Electricity market structure; many countries have electricity
market structures that do not provide the reliable and long-term
price signals needed to encourage private investment in RES.

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4- Electricity market structure (the Egyptian Experience)
The Egyptian
electricity
market is
proceeding
with its
unbundling
process.

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2020
5- Grid capacity and coverage; technically, it is essential that grids
are not only well connected, but also stable and capable of
accommodating fluctuations on both the supply and demand sides.
Grid capacity and coverage (the Egyptian Experience):
the Egyptian transmission grid is far from the candidate RE
territories. A roadmap for enhancing the grid is under study at the
candidate locations of RES.

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International Policies for Supporting RE Projects
Policies For RE
Supplementary
Polices
Main
Polices
Quantitative
Polices
Pricing
Polices
Feed in
Tariff
Added
Premium
Quota
(RPS)
Green
Certificates , GoO
Competitive
Bids
Financial
Taxes and
Customs
Incentives
Contractual
Power
Purchase
Agreements
TPA with
Privilege in
Dispatching
Related to
Production
Related to
Consumption
Soft Loans
Governmental
Purchases
Net Metering






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Egyptian Supporting Policies for RE
Renewable Energy Incentives
Demand Incentives
(RE consumers)
Production Incentives
(RE producers)
NREA ProjectsCompetitive BiddingFeed in Tariff
Wind Commercial
Projects
GoO Certificates
Power Purchase Agreement (PPA)

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FiTCompetitive Bidding
New and Renewable Energy
Authority
Project size
Medium & Small < 50MW
(Total=2500MW)
Large (Total=10x250= 2500MW)Large (Total 2200MW)
Developer
Private (local)Private (international)NREA
Finances
Commercial financeCommercial finance
Governmental & soft financing from
international development agencies
Tariff Setting
proposed by EgyptERA and
approved by cabinet of
ministers
According to the bid outcome for
the PPA
Proposed by EgyptERA and approved
by the cabinet of ministers
Off taker
Grid or distribution systemGrid
Construction Responsibility and O/M
DeveloperNREA
Egyptian Production Incentives for RE

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Egyptian Production Incentives for RE
Generation Companies
IPPs NREA
EETC
(Single Buyer)
Distribution CompaniesCustomers
IPPs

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International FIT Pricing Schemes for Wind Energy

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FIT
Years
Ref site
(worst site)
FIT
Years
Best site
5 15
Project life time Ref site(average site)
5 15
Vertical Model
(French Model)
Horizontal Model
(German Model)
International FIT Pricing Schemes for Wind Energy

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Egyptian FIT for Wind Energy
• Site specific Differentiation
• Tariff design ( flat rate, time blocks or descending)
• Tariff adjustments ( site, capacity, technology ,..etc)
• Return on investment (alternative investment opportunity, premium, hours of
full outputs)
• Payment terms (total foreign currency, local, mixed)
• Termination of contract
• Ownership of carbon credit
• Limiting size (capacity or annual kWh produced)
• Minimum size (yes/No)
• Local manufacturing (premium, minimum requirements, no requirements)
• Eligibility Criteria
• Intersection with other mechanisms
• Second hand machines (allowed/ not allowed)
• Development approach (public wind parks, private, mix, auctioning)

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Recommendations
< or = 50 MW
Minimum capacity determined as the technical
requirements defined by the grid or distribution codes
Capacity
No restrictions concerning the local components
avoiding any complications that could arise
Local
Components
Not allowed for any other mechanisms as an example
projects done through competitive bidding to switch to
the FiT mechanism
Other Previous
Projects
Egyptian currency and foreign currency (at the
changing date according to the central bank change
rate) to distribute the risks
Currency

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Recommendations
Used equipment are not allowed for the
establishment of wind power plant
Installing used
units
The contract is terminated if the wind power plant
stopped producing energy for more than 60 days
Actions in case
of plant failure
2-4 years according to technical and financial changes
that may occur
FiT Revision
Period
Due to EETC or discos (per case)Carbon Credit
Issued by EgyptERAFiT issuing date

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Types of Contracts Required
 Interconnection contract (between the plant and the grid)
 Land Use Agreement (between the plant and the land owner)
 Commercial contract “Power Purchase Agreement (PPA)” (between
the plant (supplier) and purchaser)
 Third Party Access (TPA) (in case if the transmitter is not the off
taker) (between the plant and the grid “commercial contract”)
 Implementation Agreement (cross linked Agreement between All
Parties involved in the project (plant, transmitter, land owner and
purchaser)

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Interconnection Contract:
• It is primarily technical contract between the plant and the
transmitter
• It is subjected to the grid code
• It specifies the point of common coupling (PCC)
• It specifies the responsibilities of each party on his side from
the “PCC”
• It includes operation requirements and obligations

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Land Use Agreement (USUFRUCT AGREEMENT):
 It specifies the relation between the land owner and the plant
developer
 It includes access arrangements
 Payment arrangement could be based on cost recovery or
annual payments
 Liability clearance of the plant owner
 Terms for dual land use
 Terms regarding plant demolition

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Third Party Access (TPA) Contract:
 It is a commercial contract, which specifies the relation
between the plant and the transmitter in case if the grid is not
the off taker
 It is usually subjected to grid access fee
 It specifies metering requirements
 Conditions of limiting access
 Methodology for calculating dimmed capacity and
compensations

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Guarantee of Origin (GoO) Certificates
EU Schemes for Promotion of RE
35
SUPPORT
program
OBLIGATION
to Power Producers
OBLIGATION
to Energy Suppliers or
to Energy Consumers
 Feed-in Tariffs  Power Producers
have to justify X%
generation from RE
sources
 Either they build their
own RE plants, or
they buy the required
amount of Tradable Calls for tenders
 Premium
payments
 Tax Reductions
 Energy Suppliers
or Energy
consumers have to
prove X% of RE
origin in its final
energy
consumption
(through Tradable
Green Certificate)

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EU Schemes for Promotion of RE

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GoO is an Electronic Document whose sole function is to provide
proof to a final consumer that a given quantity of electricity has been
produced by RES (specifies date and location of generation, and RE
generation type):
 Standard size 1 MWh,
Measures for no “double counting”,
 Usage within 12 months from the time of production,
 Issuance, Transfer, and Cancellation,
 Independent Issuing Body (IB) – owns the mechanisms for
Registration, and
 Data on the GoO – Investment Support.

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Relate to the RE generated in a
given calendar year.
Issued on response to a request
from a producer of RE
1 MWh
Issued,transferredandcancelled
electronically
Electricity
Energy Source Hydro
Identity Arlanza MHP
Location E-09346
Type Mini-hydro
Capacity 600 kW
Operational from 10/10/2009
Issued on: 01/02/2011
Issued in: Spain
Unique Id Number E-2010-MH-54213
Investment aid :
Type
IDAE
(national)
Junta CyL
(regional)
Amount 10 k€ 5 k€
Each Member State designates a
Single Competent Body
NATIONAL
REGISTER
Issues, records transfers
and cancels GoO

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GoO’s life cycle:
RE Generation Consumption
Electricity
Cancelation
Transfer
Issuing
GoO Certificate System
GoO Certificate Market

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SUPPORT
program
OBLIGATION
to Power Producers
OBLIGATION
to Energy Suppliers or
to Energy Consumers
Feed-in Tariffs
Calls for tenders
Premium
payments
Tax Reductions GoO
VOLUNTARY
OBLIGATION
To Energy Consumers
The Proposed Schemes for National Promotion of RE

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The Proposed Schemes for National Promotion of RE
41
 Tourism Facilities represented as “Green Tourism Facility”
 X% from hotel consumption is required to obtain the Green Hotel
Certificate from Ministry of Tourism.
GoO have to
be submitted
VOLUNTARY
OBLIGATION
to Energy
Consumers
 Exporting Industries & Services “Green Products”
 X% from facilities consumption is required to obtain the Green
Label Certificate from Ministry of Trade and Industry.
 Companies/Identities with International
Share Holders “Green Companies/Identities”
 X% from facilities consumption is required to
obtain the Green Companies/Identities
Certificate from Ministry of Foreign Affair or
Ministry of Finance.
 Bidding Participants.
 X% greater than the bidding price is
guaranteed for approval with a GoO
Certificate from an IB.
 Upgrading Facilities’ Electricity Supply Contacts.
 X% of the facility demand can be upgraded if contracted with
RE producers.

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Contents
 Regulatory Aspects for RE Integration into Grids
 Types of Contracts Required
 Technical Aspects for RE Integration into Grids
 Codes (Grid Code & Wind Code)
43

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44
Grid Code Purpose & Scope
44
o Sets out the relationship between Generating Companies,
Distribution Companies and EHV/HV Customers connected to
the Transmission System (collectively referred to as Users), and
the TSO and applied on all the parties mentioned above.
o Imposes obligations on all Parties to ensure safety, efficiency and
security of the Transmission System while ensuring that all
Users are treated equally and fairly.
o The terms and conditions of this Code also apply to each User of
the Transmission System that requires to make a new connection
to the Grid or to modify an existing connection to the Grid.

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Sections of the Grid Code
Section 1: Data Code
Section 2: Connection Code
Section 3: Testing Code
Section 4: Protection Code
Section 5: Performance Code
Section 6: Planning Code
Section 7: Operation Code
Section 8: Metering Code
Section 9: Scheduling and Dispatch Code
Section 10: Wind Code

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Section 2: Connection Code
It includes all technical requirements and limits for interconnecting
the wind farms with the grid. It includes:
 General requirements
 Disconnection from the grid (voltage, frequency, ,..etc)
 Power quality
 Active power control
 Startup of the wind farm
 Conditions for connection
 Reactive power control
 Temporary voltage drops
 Grid protection
 Real time data processing
 Verification of electrical Characteristics

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Section 10: Wind Code
This section provides the requirements for Wind
Generation, including the specific requirements for
induction generators used by Wind Generators

EgyptEraThank You
48
Dr. Walid El-Khattam
walid_el_khattam@hotmail.com

EgyptEra Regulatory Requirements for Wind Project Grid Integration

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