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

1. Energy Efficiency Policy Assessment
Case studies from the region
Regional Workshop:
National Energy Efficiency Action Plans
Amman, 5-6 December, 2010
Amel BIDA Ashraf Kraidy
Regional Center for Renewable Energy and Energy Efficiency
www.rcreee.org

2. Policy Assessment Perspectives
Cost-benefit analyses of the impacts of policies and measures for EE
improvement and energy saving can be conducted from different
perspectives:
• perspective of society or economy, with or without consideration
of external costs
• perspective of the state (government)
• perspective of the actors implementing energy efficiency activities
(e.g. Energy companies, energy agencies)
• perspective of the end-users, differentiated between beneficiaries
of the measures and end-users who do not make use of the
measures.
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3. Evaluation Methodology
• Evidence Based Policy Making:
1. Alternative forms of intervention
2. Base-case
3. Impacts
4. Consultation
5. Compliance
6. Indicators
7. Economic Cost benefit analysis
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4. Case Study 1:
Evaluation of Standards and Labels Program
for Refrigerators in Syria
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5. Assumptions of the study
• 3.8 million households in Syria with 100% penetration
of refrigerators (approximately true)
• 1% growth per year in the refrigerator stock per year
• 1% growth in the size and consumption of the
average appliance
• Lifetime of 15 years for appliances and that the age
profile is flat so that 1/15 of the stock is replaced
every year
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6. Engineering Parameters for Baseline
Refrigerators and Efficiency Improvements
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7. Residential electricity tariff
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8. Optimal Design by Tariff Level
At 12 Usc/kWh the optimal design at a discount rate
of 15% is level 5, which gives a saving of about 24%
with respect to the base case
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9. Study Results
• Impacts over the country are a reduction by 51
GWh per year of electricity use and 40,000
tonnes of CO2.
• After 15 years the annual impact would be
some 750 GWh, roughly corresponding to a
100 MW power plant..
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10. Case Study 2:
The Evaluation of the Jordan Renewable
Energy and Energy Efficiency Fund
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11. The Evaluation of the Jordan Renewable Energy and
Energy Efficiency Fund
• The fund have been established through the renewable
energy and energy efficiency law no.3 for the year 2010
• In this case study we therefore focus in this instance on
the energy efficiency tasks of the Fund.
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12. Economic Cost Benefit Assessment
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13. Economic Cost Benefit Assessment
EE Investment subsidy program
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14. Results of cost-benefit Analysis
Government Budget Impact
Government Impact without CERs Revenue
Pay-Back Period Years 4.5
Net Present Value Million $ 5.32
IRR % 19
Government Impact with CERs Revenue
Pay-Back Period Years 3.2
Net Present Value Million $ 12.18
IRR % 29
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15. Case Study 3:
Mandatory Audits in Tunisia
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16. Most frequent measures
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17. Mandatory Audits in Tunisia
 Industry : all consumers using more than 800 toe / year
Decree
 for other sectors : 500 toe / year
The size of the consumer.
- 100 000TND for establishments consuming less than 4000
toe/year,
- 200 000 TND for a threshold of 4000 toe/year,
- 250 000 TND for still larger consumers
The scope of the audit must cover
· A description of the establishment and its principle characteristics that pertain to
energy use,
· An evaluation of the energy performance,
· An evaluation of the management system for energy efficiency,
· Recommendations to improve performance, accompanied by economic evaluation,
· An action program
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18. Economic cost-benefit assessment.
- the national economy (standard economic analysis)
- the Government budget,
- the investor (standard financial analysis)
Data Base for the Case Study
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19. Assumptions
- total investment volume of 1 million EURO
- Energy saving : 600 toe
- Total economic value of energy saving : 250 000 Euros (600 toe*600$)
Avoided subsidy payment : 50 000 Euros
- Energy subsidies : 20%
Total market value of energy saving : 200 000Euros
financial
incentives
available only in the framework of a contract between the
organization and the ANME and only after the investment has
been made
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20. Data project
Total investment : 1080 000 Euro
- Inv : 1000 000
- Audit cost : 40 000
- feasibility study: 40 000
The investors are reimbursed :
- 70% (audit and feasibility study costs)
256 000 Euro
- 20% (investment costs)
The net investment costs : 824 000 Euros
Economic Value of energy saving : 250 000 Euros (600 toe*600$)
Subsidies on fuel : 20%  the Government subsidies amount to 50 000 Euro.
the market value of the fuel savings are 200 000 Euro
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21. Result of the program and investment appraisal
Investor level
Assessment criteria Economy Gov.Bud Investment Program RoE
Pay-back period 5.3 6.4 5.6 5 1.2
Return on invest/equity 13% 10% 12% 15% 92%
Net present value 155 529 -1655 -204 463 -116 319 321 104
Economy  The audit program is highly beneficial for Tunisia.
The IRR = 13% > the assumed threshold for the economic assessment of 10%.
Government budget  The audit program is quite non beneficial The NPV < 0
- Project assessment: IRR = 12% < the investors' required (20%)
Investor level  - Program sponsored: IRR = 15% < 20% threshold of the investors
- Return on equity: IRR = 92% > 20%
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22. Case Study 4:
Energy Efficiency Obligation in Egypt
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23. Energy Efficiency Obligation in Egypt
Electricity law in Article 55:
Owners of transmission and distribution licenses have to carry out projects or
programs in energy efficiency, especially in:
• Management of demand for electric power
• Improvement of the electric power utilization efficiency
• Promotion of equipment used for renewable energy
• Raising consumer awareness with respect to power utilization efficiency
Discount rate : 10%
General Data for Exchange rate: 7.8 Egypt Pound /Euro
the Analysis Split program/ total cost : 50%
Assumption
That network operators are obliged to demonstrate cumulative annual
energy savings equal to 160 GWh per year.
The utility implements a program to induce the consumers to use certain types
of equipment and will be responsible for 50 % of the total cost for the EE
measures.
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24. Perspective of the whole country:
- Cost for a new gas fired power station (CCGT unit)
- Total cost for the energy efficiency measure
the unit costs are lower
than the marginal cost
of electricity supply
all measures are cost
efficient.
IRR 17%
NPV 3.3 million
Euro
the average cost for the EE measures is 0.024 Euro/kWh
the marginal cost of electricity supply is 0.050 Euro/kWh.
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25. Perspective of the Utility
- Cost for a new gas fired power station (CCGT unit)
- Total 50% cost for the EE measure, which have to paid by the utility
The utility
- has probably little or no
interest in applying its
obligation to consumers
on high tariffs,
- may gain financially
from targeting
consumers on low tariffs.
the quantity "Supply Cost - Lost Revenue“ :
- is large for the consumers on low tariffs. It exceeds by a comfortable
margin the cost of the measures.
- is not true in the case of the consumers on higher tariffs.
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26. Perspective of the electricity user (residential sector):
- Tariff according to the consumption class
- Total 50% cost for the EE measure, which have to paid by the utility
all of the EE measures are
cost efficient for the
electricity user for the two
tariff levels considered.
Only the solar water heater
is not cost efficient for the
lower tariff.
IRR (low tariff) 6%
IRR (High tariff) 61%
NPV (million Euro) 14.23
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27. Outcome
Once the economic feasibility of EE measures is
proven, it is necessary to develop and appropriate
incentive scheme (tariffs and grants) so that for
each party (user &utility) there will be a gain in
implementing the EE program.
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28. Subsidy grants worldwide
Subsidies by type of equipment
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29. Conclusion
Energy audit :
the real impact can be achieved only if the EE investors will have
access to loans to finance their identified investments.
EE obligation :
Once the economic feasibility of EE measures is proven
- The utility should focus its efforts as far as practical on consumers enjoying
concessionary tariffs, where its lost revenue is least.
-It is necessary to develop and appropriate incentive scheme (tariffs and
grants), so that for each party (user &utility) there will be a gain in implementing
the EE program.
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30. Thank you for your attention.
Regional Centre for Renewable Energy and Energy Efficiency
Nasr City, Cairo, Egypt
Tel. +2 02 241 54 691
Fax +2 02 241 54 661
info@rcreee.org
www.rcreee.org
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