1. Use of EU Policy Initiatives to Promote RE-based
Electricity Generation in MENA Countries
Concept and Thought Inputs to Policy Discussion
By:
Eng. Rafik Youssef Georgy
Supervised By:
Eng. Samir Hassan
1

2. The RCREEE interim secertriat has intiated a studyon one of the
most promosing areas for EU-MENA cooperation which would
cotribute significantly to those objectives, that is RE-based
elecricity generation
The importance of developing EU-MENA RE cooperation to the
benefit of both sides due to geographical proximity, common
shared interests and for the complrmentary energy roles
EU the largest energy consumer
NENA one of the largrst RE resources
A major driver is the need for combating climate change and
protecting our globe invirronment

3. ► Climate Change / Global Warming Concerns and Response
● UNFCCC and Kyoto Protocol flexible mechanisms targeting GHG
emission reductions
● EU ambitious targets for emission reductions and EU ETS
Overall EU target: 20% reductions by 2020 compared to
1990 levels, as previously endorsed by the March 2007
EU council and modified lately in December 2008 to
achieve the same ratio compared to 2005 levels
EU RE ambitious target of achieving “ A binding share of
20% of RE sources in the overall EU energy consumption
3 by 2020”.

4. Present RE Technologies and Cost
● Based on international costs, and
● Considering a benchmark of 5 € cents / kWh,
● Hence we can distinguish between
► Economic / near (short term) economic / relatively
competitive with conventional
Around that benchmark
• small & large hydro
• on – shore wind power
• biomass power
Provided that resources and markets are favorable
4

5. ► Long term economic
Over and above 10 € cents / kWh
• off – shore wind power
• solar electricity generation, including
Solar thermal & PV
But, R&D, learning curve & economy of scale would
turn them into quite economic and competitive
across a shorter term
We shall concentrate on those RE technologies having
abundant potential for electricity generation in MENA and
allowing considerable export to EU
5

6. Initiatives and Tools of Potential Support to RE in MENA and
their Limitations
General Initiatives and tools
► EU – RE Targets Initiative
● EU Council on March 2007 approving a target of “A binding share
of 20% of RE resources in overall EU energy consumption by
2020”.
● On 23 January 2008 EU published a proposal for a formal Directive
confirming 20% RE target and breaking down the 20% overall
target into individual Member States binding targets
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7. ► RE financial support schemes
● Feed – in tariffs → as a price driven method
● RE quota obligations on suppliers and/or consumers mostly with
tradable green certificates (TGC) → as a quantity driven method
● Tendering various schemes
● Tax incentives
Financial support schems vary to a great deal
among EU countries
Harmonization is not expected to take place soon
as judged by EU
7

8. ► Schemes of potential use by EU to support RE in MENA
● Euro-Med wide feed-in tariff would require extensive market
reforms, harmonization and far reaching energy markets
integration
Not to be considered in the 2020 time horizon
Potential should addressed on long run
● Favorable potential for use of green certificates to support RE
electricity generation in MENA
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9. ● Tradable Green Certificates (TGC) scheme would have the
following advantages:-
▬ Allows selling and buying environmental benefits regardless of
where actual production has taken place
▬ Can be traded across countries boundaries
▬ Can overcome physical electricity transfer restrictions
▬ Eliminate the need that supply and demand of RE occur on the
same time
In brief, it allows shifting investments to where RE
electricity can be produced most efficiently at the
lowest and most feasible costs.
9

10. ► New Prospect
● A recent EU Directive opens the door for RE electricity imports from
MENA countries to EU Member States
● Nevertheless, the directive sets conditions on counting such RES–E
as a measure of compliance of the EU state, that electricity has been
actually and physically transferred to EU grid.
● Inter - connections between EU and MENA with the scale and size
anticipated for large exports would only be achieved most probably
on the long run.
● However, the Directive allows potential counting provided that
interconnection is planned on firm and concrete basis where:-
✔ Construction most have started by 2016.
10 ✔ Construction must become operational by 2022.

11. ● Consequences
✔ Delay the potential use of TGC from MENA.
✔ Incompatible with rationale behind TGC of unbundling actual
production and consequent environmental benefits to allow cost
effective use of RES – E to be produced in the most favorable
locations,
But also accepting TGC from MENA into EU energy
market would pose other challenges at least from
the harmonization and regulatory stand points
11

12. ► Emissions Trading Initiative
● Developed in EU in three phases
1. 2005 – 2007 for 3 years (ended)
2. 2008 – 2012 for 5 years coinciding with Kyoto protocol
(operating presently)
3. 2013 – 2020 post Kyoto (planned)
● Presently covers over 10000 installations responsible for 50% of CO2
emission and 40% of the total GHG emissions.
● It is a cap and trade system
✔ Overall EU emission reduction percentage targeted is divided into
Member States various emission percentage targets depending on
development status and GDP per capita of each state.
✔The EU emission reduction target for 2nd phase is 6.5% below 2005
12 levels → generally more than Kyoto targets

13. ● CDM CERs are also accepted in phase 3
✔ But there are restrictions on using CERs within phases 2&3, or an
upper limit not to exceed 50% of the EU wide reductions over the
period 2008 - 2020.
✔Further restrictions on quality are being introduced
✔Restriction on use of CERs to be dependant on forecasted
scenarios for development of worldwide new agreements post
Kyoto .
► Understandable but
● RE CERs are high quality
● would limit use of CERs in phase 3 more than expected
13

14. EU – MENA Cooperation Initiatives & Tools
► Barcelona Process
● Launched in 1995 marking the start of active EU–MENA
cooperation on the regional level
● Creating MEDA I & II as the financial instruments
(MEDA I allocated funds 3.435 billion Euro)
● Encouraging achievements, but
Lower than expected achievement particularly in
terms of actual disbursed financing compared to
allocated / planned ≈ 30% for MEDA I
14

15. ► European Neighborhood Policy - ENP
● It created the European Partnership Instrument – ENPI – succeeding
MEDA for 2007 – 2013 period
● Also succeeded other EU financial instruments for non – MENA, e.g.
TACIS for Eastern Europe
● ENPI is presently the only financial instrument for ENP so far
addressing MENA, Eastern Europe and the Baltic
Lower financing allocations targeting MENA compared
to previous MEDA in spite of potentially larger overall
allocations where out of 11 billion Euro, only 0.5 – 1 is
allocated to MENA, considering also ERDF
Considerably lower than needed for supporting
ambitious EU– MENA cooperation RE goals
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16. Financial and Technical Cooperation Support
► European Investment Bank - EIB
● One of the most important investors in energy
● Investing ≈ 23.7 billion Euro on energy between 2002 – 2006, but
only 3 – 3.6 billion Euro on RE (about 13%), if including hydro
● Things have changed in favor of RE lately where RE financing
exceeded 30% during 2007
But EIB still relatively constrains financing long term
economic project so far.
● Needed innovative financing mechanism to support
EU – MENA ambitious RE goals
16

17. ► Global Energy Efficiency and Renewable Energy Fund – GEEREF –
or “Patient Capital” → Fund for Funds
● Rationale is that despite apparent benefits of RE & EE, particularly
environmental, their projects continue to face difficulties in raising
sufficient financing for investment
● Financing gaps concentrated mainly in the area of risk capital
particularly in the developing countries
● The aim is to set up global public – private partnerships that avail
and offer new risk – sharing and co – funding options
● The EU commission issued a communication to EU council of that
respect in October 2006.
But so far limited financing ≈ 100 – 200 M Euro
17

18. ► Technical Cooperation Towards Energy Market Integration
● EC supports several projects with a key objective of Euro – Med
energy markets integration, e.g. MED – REG, MED – ENEC, MED –
EMIP
● MED – EMIP, Mediterranean Energy Market Integration Project
addresses EU – MENA energy integration as a key topic
Of close relevance to targeted EU – MENA RE cooperation
goals and addressing energy issues of:-
▬ Information collection and dissemination / web portal management
▬ Policy dialogue and energy strategies & policies
▬ Inter – intuitional networking, coordination and cooperation
▬ Human resources development and technical assistance in capacity
18 building

19. ► R & D Cooperation, FP7 - Energy
● EU Framework Programme 7, Theme 5 : Energy, main objective is
to support research in order to develop energy systems into
more sustainable, secure and competitive ones
● It would and should have a major role in RE technology and know
– how transfer to MENA countries
Needed to support targeted RE plans
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20. The Mediterranean Solar Plan (MSP)
● Considered the flag ship project for Union for Mediterranean
Initiative announced by France and supported by EU
● It will encompass all other RE technologies, e.g wind
● Aims to tap the huge MENA solar potential to enable:-
Satisfying local needs
Export considerable RE electricity amounts to EU
● 3 phases for implementation:-
☀ Phase 1 for preparation:-
Mobilizing all interested actors
Identifying technologies and cost
Mobilizing all interested actors in 2020 time frame
20 Addressing needed organization structures

21. ☀ Phase 2, 2009 – 2010 → pilot phase
Immediate action plan
Carrying out first series of pilot project in MENA
20 – 30 MWp PV, 50 MW CSP & 100 MW wind
Enable specifying needed administrative procedures,
conditions of financing, local sale and export of RE
electricity to EU
☀ Phase 3, from 2011 - 2020
Large scale realization of considerable and
increasing amount of RE electricity
Can be, potentially, considered a common pool for EU –
MENA RE cooperation and/or a major step forward
21 supporting other initiatives

22. ● Solar energy utilization as a key element in achieving MSP & EU –
MENA RE goals
● Special attention should be given to CSP and PV
● Probably CSP will start to take over on the medium term
hence PV on a longer term
But a lot of work remains to be performed
A wide and complex initiative such as MSP would start by
developing a ROADMAP rather than specific projects for
implementation.
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23. Preliminarily Conclusion
► Even if adding all available financial support initiatives and tools,
they will fall extremely short of matching RE ambitious goals for EU
– MENA cooperation‼
► Considering the installation of 20 GW RE electricity generation by
2020, this would require between 60 – 100 billion Euro‼
► and would even require more for larger capacities
► What would be the lessons learned than can be drawn in view of
previous EU – MENA cooperation?
It is important to develop thoughts about potential tools that
can be used to support achieving ambitious RE targets of
envisaged EU – MENA cooperation
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24. Lessons Learned and Recommendations for Proposed
Instruments
► Present EU – MENA cooperation initiative and tools are diverse and
cover wide range of RE fields
● Considered an advantage as allowing MENA a variety of options
and alternatives that cover many areas.
● Nevertheless, duplication and overlapping can be noticed.
● Anticipated ambitions RE plans, e.g. 20 GW or more of solar
electricity to be exported from MENA to EU → Requires minimum
level of coordination, integration and streamlining to optimize the
use of resources.
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25. ► Initiatives implementation should be Evaluated & closely monitored
● Initiatives should be translated into specific fields of
implementation along with quantifiable targets
● Also should allow developing action plans along with adequate
monitoring mechanisms.
MEDA financial instrument of Barcelona as an example
► Present ENPI, that replaced MEDA, funds cannot cope with
ambitious RE targets of EU - MENA
It is even less generous than MEDA, and the bulk of
allocations is for Eastern Europe and new EU members
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26. ► Newer studies should be always related to older studies
achievements
● Studies should build on each other and accumulate achievements.
● Older studies in some instances were not comparable to results
and achievements
● Not catching all benefits and realizing full scope of proposed
actions of older studies may have lead to repetition
New studies should address barriers confronted older
studies achievements to present solutions as part of new
studies.
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27. ► Consequences of EU – MENA Ambitious RE Targets
●Present targeted RE cooperation is quite complex
Involve many states both in EU & MENA
Multidisciplinary
✔ adequate technology selection, e.g. CSP, PV, Wind, other
✔ issues of grid interconnections, e.g. HVDC
✔ considerable financing required and the need for
innovative mechanisms
✔ cost – benefit analysis issues
✔ the need to develop selection criteria in every area
✔ the need to well- define stakeholder roles
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28. Need for Road Map approach rather than straight forward
action plans
Should address
✔ roles of stakeholders
✔ elaborated and recommended options
✔ development phases
✔ well defined follow up and monitoring mechanisms
✔ possible gaps and short comings
✔ feed back for adjustments and possible correction
✔ adequate level of flexibility to provide even for
modification of some intermediate goals
✔ how to estimate and allocate necessary funds & tools
28 ✔ developing a master plan for actual implementation

29. ► Use of RE Electricity in EU Requirements
● Very recent EU Directive allows such use for compliance purposes,
but
With a restriction that use is pending on actual
transfer, hence
There is a need to remove such constraint at
least on the short to medium terms until
interconnection issues are resolved
● Hence that calls for the use of TGC as a means of unbundling
actual environmental benefits and actual generation location
29

30. ► Use of TGC from MENA in EU Requirements
● An issue that should be addressed seriously
Need to foster more energy market common rules
and an ever developing degree of integration
Need for changing the closed inward – focused
RES – E market in EU
Need to address adequate regulatory frames
● EUcan benefit from fossil fuel saved in MENA due to use of RE
until interconnection becomes a reality
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31. ► Use of CERs within EU ETS Requirements
● Need to have more flexible rules and a compromise between CERs
and EAUs use
● It is important to differentiate between lines of focuses between EU
and MENA
Emissions reduction is a priority for EU
Also important for MENA but comes after the
overriding priority of economic development,
increased employment and welfare
● If EU will become reluctant, MENA countries would even become
more reluctant to contribute to emission reduction efforts
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32. ► The important role of RCREEE to support MENA RE efforts and
EU – MENA cooperation
● Can contribute significantly in supporting various cooperation
areas, technical, financial and regulatory and propose relevant
● It targeted activities permeates all aspects of cooperation
●Should act as a policy think tank for policy and tools formulation
and development in support of RE diffusion.
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33. ► Financial Support Indispensable Role
●A key element for success if not the most important exclusively
● Innovative financing mechanisms very important
● EIB important role → softer loans and better conditions in
financing RE
● GEEREF concept of patient capital to be expanded to be expanded
● Grants would be absolutely necessary to cover incremental cost
of RE
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34. Recommendations in Brief
● Need for integration and harmonization in all levels particularly for
electricity markets
● Need for developing a Road Map
● Need for better defining goals and phases of implementation
across time
● Need for adapting some EU Directives particularly those
addressing RE goals compliance, use of TGC and use of CERs
within EU EMS
● Need to support technology transfer
● Need to secure adequate financing as well as corresponding
competent tools and mechanisms
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