Euro-MediterraneanEnergy Market Integration Project  Germany  France  Lebanon                                             ...
Support for the enhanced integration and      the improved security of the   Euro-Mediterranean energy marketThis project ...
www.medemip.euMED-EMIP supported theintegration of all colors ofenergy resources in theregion such as solar, wind,hydro, c...
Why are we promoting EE anyway ?                         My answer is very simple          “To balance demand and supply f...
How to buy and build a conventional             500 MegaWatt power plant (EPC or IPP)- Select technology and size in MW fo...
How to buy and built a                           500 NEGAWatt power plant ? The same way as a 500 MegaWatt power plant wit...
kWh metering and billing comparison    MegaWatt power plant                 NEGAWatt power plantUS$ 60                    ...
Major lesson learned• The most challenging part for operators and ownersof a NEGAWatt power plant and the buyers of thekWh...
How to calculate generation costs MegaWatt power plant                            NEGAWatt power plant                    ...
Regulator approved tariff (real case)                  Objective: Defer new 400 MW block in 2016                     Avoid...
Power Plant Budget and Planning Consideration                             Approved Additions               Planned additio...
Lessons learned so far since 1972- Offering one tariff for all types of electricity savingmeasures may result in overpayin...
Several advantages such as…..- A complete vision and strategy is implemented and not onlyfragmented single activities- Inc...
Many rebate strategies• Eligible Efficiency: Air conditioners, heat recovery, duct/air  sealing, building insulation,• App...
The concept of tendering and implementing a costeffective NEGAWatt power plant as part of anintegrated resource planning e...
THANK YOUThis project is fundedby the European Union                         16
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Day 2 Try NEGAWATT Power Plants

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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 Try NEGAWATT Power Plants

  1. 1. Euro-MediterraneanEnergy Market Integration Project Germany France Lebanon Try NEGAWATT Power Plants Belgium 6 December, Amman Dr. 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. Support for the enhanced integration and the improved security of the Euro-Mediterranean energy marketThis project is fundedby the European Union
  3. 3. www.medemip.euMED-EMIP supported theintegration of all colors ofenergy resources in theregion such as solar, wind,hydro, coal, oil shale, gasand energy efficiency. This project is funded by the European Union 3
  4. 4. Why are we promoting EE anyway ? My answer is very simple “To balance demand and supply for electricity and at the same time improve the financial benefit of the electricity supplier and electricity consumer”This project is fundedby the European Union 4
  5. 5. How to buy and build a conventional 500 MegaWatt power plant (EPC or IPP)- Select technology and size in MW for the “job to be done”- Select the fuel based on availability + suitability for the plant- Have a buyer for the electricity- Get all the permits to build the power plant- Tender the power plant as an EPC or ask IPPs for offers- Calculate levelized generation costs “at the margin”- Negotiate financial closure at favorable WACC (EPC or IPP)- Negotiate the impact on tariffs with a regulator, if any This project is funded by the European Union 5
  6. 6. How to buy and built a 500 NEGAWatt power plant ? The same way as a 500 MegaWatt power plant withadditional challenges as follows:- The party that tenders offers a tariff for kWh (saved)- The party preparing an offer has to also propose a realisticand cost effective way of measuring kWh (saved)- A NEGAWatt power plant is owned and operated bythousands of small and big investors- “Building” the 500 NEGAWatt power plant and operationmust be as reliable and on time as adding a new 500MegaWatt power plant capacity. This project is funded by the European Union 6
  7. 7. kWh metering and billing comparison MegaWatt power plant NEGAWatt power plantUS$ 60 Methodology to ! estimate kWh saved Sell 1 million MWh(s) for US$ 50 Million This project is funded 350 kWh Planned for 2015 by the European Union 7
  8. 8. Major lesson learned• The most challenging part for operators and ownersof a NEGAWatt power plant and the buyers of thekWh(saved) is to agree on the monitoring andverification of the quantity of kWh(saved) since thereare no “meters” as in conventional power plants.• All strategies such as “deemed savings” orcumbersome but more precise CDM methodologieshad been tested in the past. This project is funded by the European Union 8
  9. 9. How to calculate generation costs MegaWatt power plant NEGAWatt power plant Plant load factor Plant load factor WACC Interest rate Capital investment Net investment Fuel costs / kWh No fuel costs but savings  Ci /(1  d ) 25 iCost of kWh ( g or s)  i 0  kWhi /(1  d ) 25 i i 0 Same algorithm applies for both power plants This project is funded by the European Union 9
  10. 10. Regulator approved tariff (real case) Objective: Defer new 400 MW block in 2016 Avoided cost structure 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 10
  11. 11. Power Plant Budget and Planning Consideration Approved Additions Planned additionsYear Location Unit type Fuel type MW Unit type Fuel type MW GT NG 1261 Center-East2010 NG 120 CSP South (Hybrid) Solar 302011 - - -2012 NGCC NG 2400 West2012 NGCC NG 2400 East2013 GT NG 400 East2014 NGCC NG 800 Center NGCC NG 800 East2015 Part of budget goes to DSM GT NG 400 WestThis project is fundedby the European Union 11
  12. 12. Lessons learned so far since 1972- Offering one tariff for all types of electricity savingmeasures may result in overpaying or underpaying forkWh(saved ) depending on the project- In the USA the over 2000 rebate systems underDSM are one form of equipment specific feed-in-tariffwhere the rebate is calculated by “deemed” kWh*tariffsavings and paid upfront in one lump sum- Verification procedures for kWh saved are too highfor many EE measures." Deemed savings arepreferred. This project is funded by the European Union 12
  13. 13. Several advantages such as…..- A complete vision and strategy is implemented and not onlyfragmented single activities- Increased efforts go into the verification and “measuring” ofthe energy cost savings- The risks of not reaching the savings is on the consultantside- The strategy is attractive for larger and real ESCOs- All involved are forced to calculate and debate the real costsof a kWh(generated) and “many” kWh(saved) options This project is funded by the European Union 13
  14. 14. Many rebate strategies• Eligible Efficiency: Air conditioners, heat recovery, duct/air sealing, building insulation,• Applicable Sectors: Residential• Incentive Amount: HE central air conditioner $ 550 HE room air conditioner replacement $ 150 Central air conditioner maintenance $ 55 Duct leak repair up to $ 375 Heat recovery unit: $155 Reflective roof coating: $ 70 Insulation: $ 1.5 per sqm up to $ 375 Refrigerator buy back+ recycling: up to $ 75Equipment requirement: EnergyStar or some other labelInstallation requirement: All work done by state licensed co. This project is funded by the European Union 14
  15. 15. The concept of tendering and implementing a costeffective NEGAWatt power plant as part of anintegrated resource planning exercise, whichregulators should demand, and each power utilityshould follow, is about the only strategy to involvepower utilities for their own financial benefit into anational energy efficiency action plan. Let us try it more often ! This project is funded by the European Union 15
  16. 16. THANK YOUThis project is fundedby the European Union 16

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