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| | = Introduction = | | = Introduction = |
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| − | Independent Power Producers (IPPs)or non-utility generator (NUG)are private entities (under unbundled market),which own and or operate facilities to generate electricity and then sell it to a utility, central government buyer and end users. IPPs may be privately-held facilities, cooperatives or non -energy industrial concerns capable of feeding excess energy into the system.<ref>http://www.saippa.org.za/main.html</ref> <ref>http://en.wikipedia.org/wiki/Independent_Power_Producer</ref> | + | Independent Power Producers (IPPs)or non-utility generator (NUG)are private entities (under unbundled market),which own and or operate facilities to generate electricity and then sell it to a utility, central government buyer and end users. IPPs may be privately-held facilities, cooperatives or non -energy industrial concerns capable of feeding excess energy into the system.<ref>South African Independent Power Producers Association,2011.Available at:http://www.saippa.org.za/main.html</ref> <ref>Wikipedia, 2014. Available at :http://en.wikipedia.org/wiki/Independent_Power_Producer</ref> |
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| | IPPs invest in generation technologies and recover their cost from the sale of the electricity. They can be great help to country's energy sector (especially when the public sectore do not have the required financial capacity for investment). | | IPPs invest in generation technologies and recover their cost from the sale of the electricity. They can be great help to country's energy sector (especially when the public sectore do not have the required financial capacity for investment). |
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| − | There are different goals for integrating IPPs into the nationals, but USAID has summarized the following three goals:<ref>http://pdf.usaid.gov/pdf_docs/PNACQ956.pdf</ref> | + | There are different goals for integrating IPPs into the nationals, but USAID has summarized the following three goals:<ref>Gardiner, M.& Montpelier, V., Best Practices Guide: Implementing Power Sector Reform.Available at:http://pdf.usaid.gov/pdf_docs/PNACQ956.pdf</ref> |
| | *''"Attract outside capital to meet rapidly growing electricity needs without imposing large strains on the nations internal financial capabilities;'' | | *''"Attract outside capital to meet rapidly growing electricity needs without imposing large strains on the nations internal financial capabilities;'' |
| | *''Reduce electricity costs though competitive pressures; and,'' | | *''Reduce electricity costs though competitive pressures; and,'' |
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| | = Integrating IPPs into the Grid = | | = Integrating IPPs into the Grid = |
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| − | The criteria for integrating IPPs into the electricity market depends on the specific country. However, there are generally four models used to describe the integration of IPPs into the grid. The picture below summarizes the four different models.<ref>http://www.naruc.org/international/Documents/S17%20-%20Eberhard.pdf</ref> [[File:Integrating IPPs into the grid.JPG|center|533px|RTENOTITLE]] Source:[http://bit.ly/1pKLE33| Independent Power Producers and Power Purchase Agreements: Frontiers of International Experience]<br/> | + | The criteria for integrating IPPs into the electricity market depends on the specific country. However, there are generally four models used to describe the integration of IPPs into the grid. The picture below summarizes the four different models.<ref>Eberhard, A.Independent Power Producers and Power Purchase Agreements:Frontiers of International Experience. Available at:http://www.naruc.org/international/Documents/S17%20-%20Eberhard.pdf</ref> [[File:Integrating IPPs into the grid.JPG|center|533px|RTENOTITLE]] Source:[http://bit.ly/1pKLE33| Independent Power Producers and Power Purchase Agreements: Frontiers of International Experience]<br/> |
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| | = Risk for IPPs = | | = Risk for IPPs = |
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| − | Before investing in electricity generation, IPPs need to consider various factors like revenue security, market demand, and contract procurement. The following table from ''Best Practices Manual from USAID'' summarizes the risks of IPPs.<ref>http://pdf.usaid.gov/pdf_docs/PNACQ956.pdf</ref> [[File:Risk of IPPs.JPG|center|633px|alt=Risk of IPPs.JPG]] Source:[http://1.usa.gov/1oDvAMA Best Practices Guide:Implementing Power Sector Reform] | + | Before investing in electricity generation, IPPs need to consider various factors like revenue security, market demand, and contract procurement. The following table from ''Best Practices Manual from USAID'' summarizes the risks of IPPs.<ref>Gardiner, M.& Montpelier, V., Best Practices Guide: Implementing Power Sector Reform.Available at:http://pdf.usaid.gov/pdf_docs/PNACQ956.pdf</ref> [[File:Risk of IPPs.JPG|center|633px|alt=Risk of IPPs.JPG]] Source:[http://1.usa.gov/1oDvAMA Best Practices Guide:Implementing Power Sector Reform] |
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| − | However, there are different mechanism to curb these risks namely,Power Purchase Agreement (PPA),sovereign guarantees or feed in tariffs. <ref> http://www.clarke-energy.com/2013/gas-engines-for-ipps/</ref> | + | However, there are different mechanism to curb these risks namely,Power Purchase Agreement (PPA),sovereign guarantees or feed in tariffs. <ref> Clark Energy. Available at: http://www.clarke-energy.com/2013/gas-engines-for-ipps/</ref> |
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| | = Corruption during IPPs Contract Procurement = | | = Corruption during IPPs Contract Procurement = |
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| − | Normally, the involvement of private parties in contract procurement is expected to reduce corruption and increase transparency, but IPPs contract procurement can be corrupted due to the following reasons:<ref> http://siteresources.worldbank.org/INTENERGY2/Resources/electricitysourcebookch7.pdf </ref> | + | Normally, the involvement of private parties in contract procurement is expected to reduce corruption and increase transparency, but IPPs contract procurement can be corrupted due to the following reasons:<ref>Deterring Corruption and Improving Governance in the Electricity Sector: A Sourcebook. Available at: http://siteresources.worldbank.org/INTENERGY2/Resources/electricitysourcebookch7.pdf </ref> |
| | *IPPs contract are of a high value and thus attract embezzlement from public and private entities. | | *IPPs contract are of a high value and thus attract embezzlement from public and private entities. |
| | *IPPs contract are generally drafted under the crisis situation and are flexible. Thus, the involved parties can justify the deviation from least-cost method and can embezzle the funds. | | *IPPs contract are generally drafted under the crisis situation and are flexible. Thus, the involved parties can justify the deviation from least-cost method and can embezzle the funds. |
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| | *IPPs procurement is usually handled between high ranking officials (as compared to other power sector procurement).This situation can provide extra level of protection for corrupt behavior. | | *IPPs procurement is usually handled between high ranking officials (as compared to other power sector procurement).This situation can provide extra level of protection for corrupt behavior. |
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| | = Further Information = | | = Further Information = |
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| | *[[Portal:Grid|Grid Portal on energypedia]] | | *[[Portal:Grid|Grid Portal on energypedia]] |
| − | *[http://pdf.usaid.gov/pdf_docs/PNACQ956.pdf Best Practices Guide: Implementing Power Sector Reform , Chapter 2]<br/> | + | *[http://pdf.usaid.gov/pdf_docs/PNACQ956.pdf Best Practices Guide: Implementing Power Sector Reform , Chapter 2]<br/> |
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| | = References = | | = References = |
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| | <references /><br/> | | <references /><br/> |
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| − | [[Category:Electricity]]
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| | [[Category:Grid]] | | [[Category:Grid]] |
| | + | [[Category:Electricity]] |
Independent Power Producers (IPPs)or non-utility generator (NUG)are private entities (under unbundled market),which own and or operate facilities to generate electricity and then sell it to a utility, central government buyer and end users. IPPs may be privately-held facilities, cooperatives or non -energy industrial concerns capable of feeding excess energy into the system.[1] [2]
IPPs invest in generation technologies and recover their cost from the sale of the electricity. They can be great help to country's energy sector (especially when the public sectore do not have the required financial capacity for investment).
There are different goals for integrating IPPs into the nationals, but USAID has summarized the following three goals:[3]
The criteria for integrating IPPs into the electricity market depends on the specific country. However, there are generally four models used to describe the integration of IPPs into the grid. The picture below summarizes the four different models.
Before investing in electricity generation, IPPs need to consider various factors like revenue security, market demand, and contract procurement. The following table from
summarizes the risks of IPPs.
However, there are different mechanism to curb these risks namely,Power Purchase Agreement (PPA),sovereign guarantees or feed in tariffs. [6]
Normally, the involvement of private parties in contract procurement is expected to reduce corruption and increase transparency, but IPPs contract procurement can be corrupted due to the following reasons:[7]
