Day 2 Setting up national Energy Efficiency Agencies

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Regional Workshop: National Energy Efficiency Action Plans
Kempinski Hotel, Amman, Jordan
5 - 6 December, 2010

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Day 2 Setting up national Energy Efficiency Agencies

  1. 1. Euro-MediterraneanEnergy Market Integration Project Germany France Lebanon Setting up national Energy Efficiency Agencies Belgium 6 December 2010, Amman, Jordan Albrecht Kaupp, 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. 2. What is the general mandate of the agency ?1. To enforce the mandatory provisions of a national energy efficiency act and to promote and monitor recommendations which are voluntary2. To annually report to the “in charge” authorities the state-of-play of energy efficiency activities and impact to the nation3. To provide advisory service to higher authorities4. To organize recurring annual events ..5. To manage an energy efficiency fund…..6. To conduct energy audits…….. 2
  3. 3. Which consumers are your target ?Covering 70% of the national electricity consumption is fine- All business and industry with more than 30% of energy costs- All residential consumers with more than 12,000 kWh a year- All buildings with more than 600 kVA connected load- All consumers where the power utility is loosing big money- List electricity consumers in % of national consumption “Cement, chlor alkali, steel, aluminum, fertilizer, water utility,irrigation, power plants, ceramic, bricks, etc 3
  4. 4. A real marketing challenge for EE- The “rich” don’t care because they can afford it !- The “poor” don’t care because they also can afford itThe only entities that cannot afford it is a Ministry ofFinance and the society.Egypt US$ 8 Billion subsidy (not lost opportunitycosts), Lebanon US$ 1.5 Billion subsidy, etc ,etc 4
  5. 5. Which specific tasks ?1. Observe and rate the energy auditor market ?2. Promote energy managers ?3. Lobby for an annual government budget for EE ?4. Advise the tariff regulator on EE suitable tariffs ?5. Cooperate with the power utility on DSM6. Design and prepare all EE publications ?7. Empanel energy auditors and empower energy managers 5
  6. 6. Ratings are not legally enforceable but in anycase a highly effective transparency instrument
  7. 7. Public awareness cost versus impact issue“…The honorable chairman of the committee on energy ofthe lower house of Parliament requests the Ministry ofPower to explain the electricity savings achieved by theannual painting contest among 300, 000 school children” 8
  8. 8. Regulator approved FIT tariff (real case) Avoided cost calculation US$Cents/kWhAvoided capital cost due to deferment 4.57Avoided operating cost 2.28Avoided primary energy cost 2.54Proxy plant sum of avoided costs 9.39Marketing costs of utility - 2.80Buying price for kWh (saved) excluding 6.59monitoring and verification costs This project is funded by the European Union 9
  9. 9. Contractual issues with performance contracts There are admittedly many issues with performance contracting and associated monitoring and verification protocols .http://www.energyservicescoalition.org“Everything should be made as simple as possible, but not simpler” (ALBERT EINSTEIN) 10
  10. 10. How to finance the EE- agencyLifeline: Annual recurring costs (staff salary, mobility,infrastructure, acquisition ) paid through interest from anendowment (corpus) fund. This strategy makes theorganization independent of a public budget.Icing on the cake: “Project costs” are paid by public, private,domestic and overseas sponsors. The level either shows howcompetent the organization is or how smart her acquisition 11
  11. 11. Energy Service Company (ESCO)Requires an officially appointed independent rating agency GRADE 1 Very High GRADE 2 High GRADE 3 Good GRADE 4 Below Average GRADE 5 Poor- Single consultant preparing an energy audit and getting paid for tosubmit a report (Full risk of implementation with the client)- Turn key EE implementation (energy audit, report, engineeringdesign of EE measure, financing, implementation and jointmonitoring/quantification of the energy cost savings over 1-5 years) 12
  12. 12. 13
  13. 13. Evaluation criteria for ESCOs-Part 1•Years in the ESCO/energy management business.• Number and nature of energy audits carried out till date.• Client Profile• Number of different industries served.• Order book strength as measured by ratio of current orderbook/previous years turnover.• Number of energy management projects completed.• Certification and quality systems.• Technology tie-ups. 14
  14. 14. Evaluation criteria for ESCOs-Part 2•Patents held by the company.•R&D facilities.•Constitution, ownership structure and parentage.•Management evaluation and quality of organizationalstructure, internal control and systems.•Employee strength in terms of numbers, qualification andexperience.•Number of certified energy auditors.•Maximum number of projects handled at a time. 15
  15. 15. Evaluation criteria for ESCO-Part 3• Annual turnover from the ESCO/energy management business.• Profit margins of the ESCO business.• Overall financial strength as reflected by the capital structureand debt servicing indicators like net cash accruals/total debt• Receivables management.• Financial flexibility arising from access to cash-flows/profitsfrom other business. 16
  16. 16. THE ENDEnergy input 4000 kCal per 8 hour day at 12% conversion efficiency. 17

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