Year in review 2013

Targeting new renewable capacity: Results of two RFP rounds

Over the past year, ERA, KfW and the GET FiT Secretariat have cooperated closely in order to fully realize the GET FiT potential. Specifically, two Requests for Proposals (RfPs) (launched Mar 2013 and Nov 2013) have resulted in 12 approved projects representing 103MW installed capacity. This portfolio build-up would suggest that GET FiT is proving successful in i) providing a credible and transparent time-bound business opportunity which motivates early-stage investment in RE development activities, ii) filtering the market to ensure that viable sites with credible developers emerge for financiers, iii) incentivizing and assisting the GoU and developers in avoiding critical barriers from stopping attractive projects. Specifically, as indicated by Figure 6, both the level and front loaded nature of the GET FiT support is exceptionally well designed and calibrated to ensure that project returns fall within the not-to-high and not-too-low zone. 
 
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Figure 6: The GFPPM has proven well-calibrated in lifting project returns up to the level of FIRR
(financial internal rate of return) hurdle rates (minimum acceptable rate to) applied by investors
 
As illustrated in Figure 7, the two first RfPs were successful in building up GET FiTs portfolio, currently standing at 103MW. This leaves about 47MW for the third round to reach the pre-defined Program target for installed capacity under the GFPPM (not including the 20 MW expected from the Solar Facility).

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Figure 7: Current portfolio bodes well for reaching the overall GET FiT Program target