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Arab ee guidline session 6 5effectiveness tests for ee measures plans

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RCREEE Continues Supporting the Implementation of the Arab EE Guideline …

RCREEE Continues Supporting the Implementation of the Arab EE Guideline
23 November 2011


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  • 1. Euro-MediterraneanEnergy Market Integration Project Germany France Lebanon Five Cost Effectiveness Tests for Belgium NEEAP Winners and Losers Khartoum, 22 November 2011 Dr. Albrecht Kaupp MED-EMIP Team Leader “The contents of this publication are the sole responsibility of the author and can in no way be taken to reflect the views of the European Union”. This project is funded by the European Union 1
  • 2. Utilities may ask Utilities may be regulator for rate interested to investincrease because of themselves in NEEAP activities NEEAP activities Why Tests ? To avoid over To identify looser subsidizing and winners andfinancially attractive find a way to NEEAP activities This project is funded by the European Union compensate looser
  • 3. The benefit/cost B/F ratio =3 means ratio from five the benefits aredifferent points of three times higher view than the costs What is tested ?The tests had been They are standard applied to over since 1980 for 2000 programs regulators This project is funded by the European Union
  • 4. Participant Test (15) Administrator Test (10) Rate Payer Impact (0.9) Total Resource Test (2) Society Test (15)This project is fundedby the European Union
  • 5. Over 2000 DSM programswere tested, designed andimplemented based on twomanuals This project is funded by the European Union
  • 6. Next Steps under NEEAPNEEAP Decision makerNAPEE decidesPlan A Perform the five testsPlan B Select a NEEAP project Incentives ? To whom ? How much?This project is fundedby the European Union
  • 7. Wrong type of Subsidies too high subsidies Paying for the same “kWh saved” twice ! Subsidies as poorSubsidies as an easy substitute for theway to show results “stick”This project is fundedby the European Union
  • 8. What is an electricity consumer ? “Power Station Use” is a nonpaying consumer of electricity with no billing address and therefore a target for energy efficiency
  • 9. What is an electricity consumer ? “Distribution System” is a nonpaying consumer with no billing address and therefore a DSM candidate. This one consumes for sure 15% electricity called technical losses.
  • 10. What is an electricity consumer ? “Transmission System” is a nonpaying consumer with no billing address and therefore a DSM candidate.
  • 11. What is an electricity consumer ?All other technologiesconverting electricityinto other forms ofuseful energy
  • 12. The first objective of NEEAP• An activity under NEEAP should let some electricity consumers make more profit and reduce the electricity bill . However negative effects on power generation, transmission or distribution companies are also likely.The objective of an energy regulatory authority• A NEEAP should cost effectively balance investments for power capacity expansion and power system improvements versus energy demand reduction of consumers. This project is funded by the European Union
  • 13. Diverging objectives of three stakeholder groups •Reduce energy subsidies Authorities •Keep tariffs low for consumers •Balance supply and demand •Reduce energy bill •Minimize investment costs Consumers • Resist lifestyle changes to reduce energy consumption •Flatten load curve •Shift loads and increase sales Utilities •Manage DSM for better control and financial benefitThis project is fundedby the European Union
  • 14. The load shaping options considered under NEEAPs 1 2 3 4 5 6This project is fundedby the European Union 14
  • 15. •Shaping load curves1972 •Flattening the load curve •EE declared as a source of energy2000 •Regulators demand EE and DSM •Selling EE becomes a profitable business2006 •EE Service provider market increases This project is funded by the European Union
  • 16. The NEEAP market development Trading “energy saved” required to set a price The California five cost effectiveness tests methodology was born Energy efficiency traders entered the marketThis project is fundedby the European Union
  • 17. Today’s NEEAP situation • Regulator asks for integrated resource plan • IRP public hearings and approval • National experts prepare NEEAP strategy • National energy efficiency action plan budget resources provided • Certified energy auditors identify projects • Financially strong EE service providers implement and provide financing.This project is fundedby the European Union
  • 18. This project is fundedby the European Union
  • 19. This project is fundedby the European Union
  • 20. Calculate B/C List all costs List all benefits List all avoided costsWhich load shaping options ?
  • 21. This project is fundedby the European Union
  • 22. PCT sample for CFL campaign Costs = € 3 Benefits = € 6.7 Tariff 3.3 17.4 €C/kWh €C/kWh Costs 3 3Benefits 6.71 31.81 B/C 2.24 10.61 NPV 3.71 28.81 This project is funded by the European Union
  • 23. Administrator TestNEPCO as programme administrator: The PACT yieldsalmost the same result as the TRC test if we assume thatthe cost of incentives are the free distribution of 1 MillionCFL to standard consumers by NEPCO. In this case theB/C ratio will be 36.052/3.574 = 10.1. It is still a very highB/C due to the large avoided energy related HFO costs. This project is funded by the European Union
  • 24. Reduce B/F>1 incentives B/F>10 Do more marketing Borderline BB/F ≈ 1 case B/F Increase B/F>1 incentives B/F<0.8 Redesign Do not Look for B/F<0.5 implement other optionThis project is fundedby the European Union
  • 25. THE END3x8h shifts per day, one person x 4,000 kCal =12,000 kCal x 14% eff/860 = 2 kWh/dayelectrical output . Food input 24 Big Mac (EUR 50) or 1.3 liter good Olive oil(EUR 5).Resulting energy costs range of EUR 25 to EUR 2.5 per kWh excluding runnersminimum daily wage, depreciation of legs over 20 years plus repair and maintenance ! This project is funded by the European Union 25

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