UNDP has carried out DREI analyses in several countries.121 Over the course of the Strategic Plan period, analyses were carried out as project activities in Kazakhstan (utility-scale solar and wind energy), Belarus (utility-scale wind energy) and Tunisia (utility-scale solar and wind energy). In preparation for upcoming activities (i.e., outside of a UNDP project), a DREI study was prepared for Nigeria (solar mini-grids) and for Cambodia (utility- and small-scale PV, solar mini-grids and solar home systems). Its potential is recognized by midterm reviews and internal and external interviewees, but so far only in Kazakhstan has UNDP applied the DREI analysis to the point where its results can be assessed (see box 5).
BOX 5. The DREI process in Kazakhstan Kazakhstan presents the clearest case for the value of the DREI framework. The analysis was carried out at the beginning of a project promoting small- and utility-scale renewable energies (including off-grid systems). Previous interventions by other agencies (especially by the European Bank for Reconstruction and Development (EBRD) and to some extent the International Finance Corporation) succeeded in establishing a legal and regulatory framework, which resulted in the establishment of an auctioning scheme in 2018 with the support of the United States Agency for International Development (USAID) and others. One achievement of this project was that it demonstrated clearly how and to what extent de-risking can reduce the cost of capital, and thus lower the levelized cost of electricity of utility-scale renewable energy. The UNDP project developed a new site-specific auction mechanism which was applied to a 50 MW solar project in Shaulder, a village in southern Kazakhstan. This new auction mechanism included the preparation of a pre-feasibility study, solar resource assessment, grid connection analysis or the securing of permits, factors which can lower bidding prices according to international experience. The auction for the Shaulder project was held in 2019, and resulted in a bid of $0.032/kWh by Italy’s Eni Group, a price approximately one third lower than under the first renewable energy auctions in 2018.122 The midterm evaluation elaborated that “other international agencies (notably EBRD under the funding of the Green Climate Fund, as well as USAID) have been very active in supporting large-scale renewable energy policy and finance in the country, [but] they had not worked on the detailed development and implementation of the site-specific mechanism, nor on the Shaulder auction itself.” This is a particularly interesting observation, suggesting that UNDP succeeded in occupying a very specific niche, complementing the work of others. It is noteworthy that this approach was replicated by the EBRD in support of a wind farm.
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The first DREI analyses were carried out as pilot case studies in Kenya, Mongolia, Panama and South Africa. The illustrated examples were presented in the original DREI report for grid-tied renewables published in 2013. In South Africa, the analysis informed the preparation and design of a project. In the DREI report for off-grid electrification (published in 2018), DREI analyses were carried out as illustrative case studies in Kenya as well as in India (Uttar Pradesh). In Kenya, the analysis was used as a source of information for preparing the Kenya project in the Africa Mini-Grids Program. See UNDP & ETH Zurich (2018). Derisking Renewable Energy Investment: Off-Grid Electrification. United Nations Development Programme, New York, NY and ETH Zurich, Energy Politics Group, Zurich, Switzerland. PV Magazine, Italy’s Eni wins Kazakhstan’s 50 MW solar auction with $0.032/kWh bid. 2019. Online: https://www.pv-magazine. com/2019/12/02/italys-eni-wins-kazakhstans-50-mw-solar-auction-with-0-032-kwh-bid/. Accessed 23 September 2021.
Chapter 4. FINDINGS
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