Energy Efficiency in Water Pumping and Climate Change Mitigation: Triple Win for the Water Authority of Jordan

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1 Energy Efficiency in Water Pumping and Climate Change Mitigation: Triple Win for the Water Authority of Jordan Dieter Rothenberger 1, Ronald Hagger 2 1 Project Team Leader, Deutsche Gesellschaft fuer Internationale Zusammenarbeit (GIZ), 2 Project Officer, GIZ Contact: D. Rothenberger; dieter.rothenberger@giz.de. Short Abstract (for full papers only omit if extended abstract) The Water Authority of Jordan (WAJ) consumes 15% of Jordan s total electricity production and is hence the largest electricity user in Jordan. Water pumping stations account for a large part of that. Therefore, the project Improvement of Energy Efficiency (IEE) is focusing on reduced energy use in pumping stations and promotes institutional change through the involvement of an Energy Service Company (ESCo). Energy audits in 11 pumping stations identified potential savings of 1 mill. JOD/a and CO2 reductions of t/a. In the first pumping stations the energy efficiency was increased by approx. 30%. For the implementation, the ESCo provides investments and operates the stations for a defined period, leading to a triple win: cost savings shared between WAJ and the private sector, new equipment for WAJ, and a reduction in CO2 emissions. Energy efficiency is a key issue for the WAJ, and the IEE project combines private investments and improved operations via Energy Service Performance Contracts. Keywords: Climate Change Mitigation; Energy Efficiency in Pumping Stations; Energy Performance Contracting; Institutional Innovations; Jordan; Water-Energy-Nexus Introduction The Water Authority of Jordan (WAJ) is the largest electricity consumer in the country, using about 15% of Jordan s entire electricity production. In addition to high costs, this leads to large quantities of greenhouse gas emissions, for Jordan s power supply is based almost exclusively on fossil fuels. The hydraulic conditions imply that the fresh water needs to be lifted 1,400 meters from the Jordan Valley to reach the consumers in the cities. Under these circumstances, one of the main causes of the high levels of electricity consumption is the huge technical inefficiency in the operation of the water pumps, which includes inappropriately sized and operated pumps and some deficiencies in maintenance and repair processes. Project background/ methods The German Federal Ministry for Environment, Nature Conservation and Nuclear Safety (BMU) started in 2008 the International Climate Initiative (ICI) to support approaches aiming to reduce greenhouse gas emissions. The project "Improvement of Energy Efficiency of WAJ in the Middle Governorates (IEE) was the first project worldwide approved by BMU Page 1 of 6

2 within the ICI and is being implemented by the Deutsche Gesellschaft fuer Internationale Zusammenarbeit (GIZ) jointly with the Water Authority of Jordan (WAJ) and the Performance Monitoring Unit (PMU). The project was originally planned for a duration of 27 months, but has been extended by another 2 years for a country-wide roll-out. The IEE is structured in two parts: In part 1, an energy audit was conducted for the major consumers of electricity in the three governorates of Balqa, Madaba and Zarqa. This energy audit consisted of pump performance measurements, and electromechanical investigations. To this end, water flow, pressure and electricity consumption was measured, as was the system performance. Based on the derived factual efficiency, the energy saving potential was calculated, assuming the use of improved technology and better operations, and the required investments were estimated. Based on the audit, technical measures to reduce the energy consumption were developed. In addition, institutional concepts and respective contracts were drafted in order to support the sustainable implementation of the measures, e.g. via direct procurement with maintenance contracts, Micro BOT or energy contracting models all models involve the private sector to a certain extent. The contractual framework therefore provides private sector intervention options specifically developed for the particular needs and requirements of Jordanian water utilities. GIZ promotes a comprehensive optimisation process, which is introduced to support WAJ in the full cycle of pumping station operations within so-called Energy Service Performance Contracting (ESPC) models. ESPC stands for a contract between an Energy Service Company (ESCo) and WAJ aiming at the reduction of energy costs for water pumping. The ESCo provides the funding for the repair and replacement of the pumping equipment, designs and installs the equipment, and takes over operation, maintenance and repair processes for a defined period (see also Figure 1). The remuneration of the ESCo for its services depends on the reduction of specific energy consumption (kwh/m3 pumped) during the contract period, as the cost savings are shared between WAJ and the ESCo, which creates strong incentives for the ESCo to deliver the predicted energy savings. DESIGN, PLANNING INSTALLATION PROJECT IDENTIFICATION, LEGAL FRAMWEWORK ESPC ENERGY SAVING MEASURES OPERATION AND MAINTENANCE Figure 1: Concept of an ESPC Contract FINANCING CONTROLLING The focus is hence to use private sector operational expertise and private finance as far as possible. The shared objective of achieving desired efficiency improvements and the financial viability of the investment opportunity thereby provide the instruments allowing the WAJ to effectively benefit from private sector expertise. In addition to the private sector investments, direct investments for selected stations which are financially not attractive are foreseen from within the project budget. Page 2 of 6

3 Project results and impacts Electricity accounts for a major share in the operation costs of the WAJ - in the analysed governorates between 25-35%. All over Jordan, WAJ spends more than 70 Mio. Euro annually on electricity these figures show the financial implications of efficiency improvements. The energy audits revealed an estimated electricity saving potential of approx. 25% of the electricity consumed in the analysed pumping stations. Main reasons for the low efficiency were the use of wrongly designed and low-cost equipment, mainly since cost optimisation was focusing on lowest procurement costs instead of lowest lifecycle costs (LCC). An LCC approach for pumping equipment would favor procurement of higher quality equipment, since over the whole life cycle, operation (including electricity), maintenance and repair costs account for more than 90% of the total costs, while procurement cost is only approx. 10%. Beside the negligence of LCC, also the operational approach was deficient. Due to the limited water resources available in Jordan, the operations focus is to maximise the water pumped, not on lowest possible cost for pumping. Because of a lack of automation and regular maintenance, this results in too high electricity and hence operational costs and frequent pump changes. Finally, in the whole process starting from pump design/ selection to operations, maintenance and repair, a large number of divisions and actors are involved. The fragmented organisational structure reduces the effectiveness of an overall optimisation process when it comes to electricity consumption. The energy audit of the IEE project identified a cost reduction potential for the WAJ by almost 1 Mio. Euro per year, and the CO2 emissions of the country by approx tons only in the 11 selected pumping stations, as Table 1 shows. Pumping Station Zarqa Desal Plant Pot. saving (%) Pot. saving (Euro/a) Payback period (years) Reduced CO 2 (t/a) 65 18, Hallabat 19 32, Azraq , ,344 Khaw , ,103 Yazedieh 17 40, Azraq Spring 27 18, Share a , ,747 Naqab Al Daboor 10 10, Madaba , ,007 Wala 4 22, Lib 13 70, ,172 Grand Totals 935,000 15,579 Table 1: Results of Energy Audit (GIZ 2009) The saving potential could partially be reaped by installing new, more efficient pumps and equipment. But, in order to have a sustainable improvement as mentioned above, the procurement of new pumps alone will not be sufficient. Therefore, a focus on LCC for the procurement as well as a change in the organisational processes is required. On the institutional level, as highlighted above, ESPC was seen as an important pillar for sustainability. Therefore, the IEE project Page 3 of 6

4 developed the institutional concepts necessary and created a flexible, incentivesbased ESPC-framework for the implementation of ESPC projects in Jordan, with classic ESPCs, contracting concepts focusing mainly on operation services, or practically fully ODA financed measures in pumping stations with a private sector service element improving mainly the sustainability of the ODA investment. The Pilot Project a cooperation between GIZ, WILO and WAJ The implementation of the measures via ESPCs increases the energy efficiency and reduces operating costs with no up-front cost and limited risk for the facility owner. ESPC is known widely in Europe, less so in the Middle East and even less in the Middle East water sectors. Since pumping stations are a key element in Jordan s technical water supply infrastructure and vital for the provision of reliable services, there are obviously also psychological and other barriers to overcome, and there are decisionmakers to convince. Therefore, it was important to establish a test case to demonstrate how an Energy Contracting model for a pumping station in Jordan could be implemented. It was decided that such a test case should minimize the risk for WAJ and the private sector, hence this pilot project is a Public Private Partnership approach jointly financed by GIZ and a German pump producer, WILO (as the ESCo). In order to achieve the targeted performance improvements, the ESCo has been given the authority and responsibility to implement the necessary changes. Under the agreement WILO is required to develop an energy saving concept considering all aspects of importance from technology to pumping station operations including specifications for the required pumps and other equipment like automation devices for remote control or training for the seconded staff. The installation of the new highly efficient WILO pumps took place in March 2010, and the results of the improved technology linked with better operations are impressive, as Table 2 shows. The results of the pilot project show that, taking into consideration the additional water pumped with the more efficient and effective new pumps, the annual savings equal approx. 110,000 JOD. CO2 emissions have been reduced by more than 30% or t/a. Based on these very encouraging results, WAJ is highly interested to repeat the success story of the pilot project with a proper ESPC, and hence is currently floating a tender for an ESPC for Khaw pumping station, which has considerable saving potential (see Table 1 above). Water pumped in m 3 Addition. water in m 3 Electricity consumed (kwh) Efficiency improved (%) April 276,000 44, , May 207,000 10, , June 216,000 (11,000) 241, July 244,000 22, , Aug 244,000 23, , Sept 180,000 (8000) 203, Oct 210,162 17, ,625 6 Nov 194,707 30, ,838 6 Dec 187,170 36, , Jan 204,296 61, , Feb 236,527 31, , Mar 231,679 19, , Page 4 of 6

5 Apr 209,121 (22,839) 252, May 236,527 38, , June 183,333 (43,347) 216, Table 2: Results of the Pilot Project For other pumping stations, the required investments are relatively high compared with the potential savings, so that fully private investment would mean a very high risk exposure with long-pay-back periods. Therefore, some investments are done from within the IEE project budget. For the pumping station at the Zarqa Desalination Plant, the installation of new pumps and the introduction of automation resulted in a reduction in energy consumption of more than 60%, equaling annual savings of approx JOD and CO2 emission reduction of approx. 300 t/a. Discussion and Conclusion The IEE project combines demand-side energy improvements with an institutional innovation in the Jordanian water sector. The implementation of measures is based on the ESPC model, by which a triple win situation is created: firstly cost savings to be shared between WAJ and the private sector, secondly the availability of new infrastructure at no cost for WAJ, and thirdly a reduction in greenhouse gas emissions. The fact that electricity accounts for a major share in the operation costs of the WAJ highlights the importance for cost recovery. However, improved energy efficiency does not only reduce costs, hence makes cost recovery more likely. It also shows the dedication of WAJ to optimise operational processes and hence avoid unnecessary financial burden to their customers, hence making discussions about tariffs to cover costs more acceptable for the public. The results from the implementation of measures at a pilot pumping station confirm an increase in average energy efficiency of more than 30%, which translates into a cost reduction of approx JOD per year, very low maintenance efforts for the enhanced equipment and an overall reduction of pumping station downtime. Improved cost recovery through energy efficiency is a key issue for the WAJ. ESPC is seen as a promising way since there are no up-front cost and limited risk for WAJ. Within the innovative IEE project, the feasibility to combine private investments and operations has been proven. The IEE project is one cornerstone for the process of the Jordanian economy to become more energy efficient and reduce the burden on the already over-stretched electricity production sector. This project, which has a beacon effect far beyond Jordan, shows that taking care of the environment can also have economic advantages and is an example for a sustainable solution the German Government supports in all its cooperation activities with the Hashemite Kingdom of Jordan. Acknowledgements The project "Improvement of Energy Efficiency of WAJ in the Middle Governorates (IEE) was developed within the German-Jordanian Steering Committee on Energy Efficiency, Renewable Energy, Water and Waste. This Steering Committee brings together experts from the German Federal Ministry for Environment, Nature Conservation and Nuclear Safety (BMU) and the Jordanian Ministry of Environment. The next phase of the project will be closely coordinated with an investment project of Page 5 of 6

6 KfW Development Bank, which provides a soft loan to upgrade pumping stations and well-fields all over Jordan. References GTZ (2009): Assessment of pump efficiency, pump operation and energy saving potential. Energy Audit Report prepared by Dorsch International Consultants for 11 pumping stations in the Middle Governorates in Jordan. Disclosures No disclosures. Page 6 of 6