Energy savings obligation in the EU

Transcription

1 Energy savings obligation in the EU Bruno Lapillonne, Vice president, Enerdata Workshop on Savings obligations, public buildings targets and the promotion of CHP-Best practices in MS and cost of implementation 17 October 2011 European Parliament Based on the work carried out within the IEA-DSM Task XXI Standardisation of Energy Savings Calculation with the support of ADEME, France, as well as on a WEC study on white certificates and updates prepared by Eoin Lees

2 What is an energy savings obligation? An energy saving obligation means that energy suppliers have an obligation to save a certain volume of energy in customers premises. The energy savings are validated through the emission of energy savings certificates (called white certificates) by a special body Obliged utilities can either make all the required savings or purchase part of the required certificates on the market (trading of white certificates) In general, apart from large projects, the savings are not measured but defined ex-ante for standardised actions ( deemed savings ) The characteristics of a white certificate scheme depends on several factors that explain differences among countries and changes over time for a country: o Who are the obliged parties? And in the case of trading, who can participate in the trading? o The volume of the targets and its mode of expression o What are the eligible energy saving measures? 2

3 Outline 1. Overview of energy savings obligations schemes 2. Effectiveness of implemented measures 3. Best practices 4. Recommendations

4 Countries with Energy Efficiency Obligations in the EU (2011) Country Starting date Comment UK (Great Britain)* EEC EEC CERT EEC (Energy efficiency Commitment ) followed by CERT (Carbon Emissions Reduction Target) 50% of the obligations with low income households Belgium Since 2008 Flanders France Since 2006 Two periods of 3 years Part of the obligation should be made with low income consumers Italy Since 2005 Annual target increasing over time Ireland Voluntary Denmark Since 2006 Poland Planned for 2013 Under preparation (training of certified auditors and preparation of tendering procedures) Slovenia Planned for 2012 *Initial scheme introduced in long experience ; these schemes only apply to Great Britain (i.e. excluding Northern Ireland that has a similar obligation). 4

5 Obliged parties & eligible consumers Country Obligated Distributors Eligible Consumers UK-GB electricity & gas Residential only BE-Flanders electricity Residential, industry except ETS, services France Obliged parties : Usually electricity and gas utilities; district heating (France, Denmark & Poland) Distributors of motor fuels in France Eligible consumers: Only households in UK ; ~ 60% mandated for households in Flanders Transport sector included in France ETS generally excluded Energy producers, and distributors included in Poland (mainly for district heating) electricity, gas, heating oil, LPG & heat (phase 1) + gasoline & diesel distributors (phase 2) Italy electricity & gas All All except ETS Ireland electricity, gas, oil, solid fuel All except transport Denmark electricity, gas & heat All except transport+ heat distribution since 2010 Poland electricity, gas & heat End-use consumers (80% of obligation), generators (10% ), transmission & distribution (10%) 5

6 National targets in Energy Efficiency Obligations Country Saving target Target Discount Belgium Annual primary energy 2.6 TWh/year (2009) (+30% increase since 2008) No France Italy UK-GB Volume of savings of the obligation generally fixed by government Targets are either expressed in lifetime savings or annual savings and in different units (TWh final or primary, Mtoe, MtCO2 difficult to compare easily the targets and to appreciate their size. Savings discounted in some countries to account for the decrease of the economic value of the certificate and the gradual decrease of the savings over time. Targets have been increased over time (x by 6 in France; by 2 in UK) Lifetime final energy (up to 20 years for insulation) Cumulative primary energy (over 5-8 yrs) Lifetime final energy Lifetime CO TWh over 3 years (phase 1) 345 TWh over 3 years (x by 6 compared to phase 1) (~ 1.8% of eligible consumption) Annual target increasing from 4.3 Mtoe in 2010 (23 TWh) to 6 Mtoe in 2012 ( 32 TWh) 62 TWh over 4 years ( ) 293 MtCO2 ( ) (x by 2 compared to EEC2)* Yes (4%) No Yes (3.5%) Denmark Lifetime final energy 1.7 TWh/year (2009) Yes Ireland final energy 200GWh in 2011 and 375 GWh in 2012 & 2013 No Poland final energy 2 to 2.2 Mtoe/year (~24 TWh) in 2016 No * extension from 185 MtCO2 over to end of

7 Outline 1. Overview of energy savings obligations schemes 2. Effectiveness of implemented measures 3. Best practices 4. Recommendations

8 Effectiveness of energy saving obligations: what results? All obligations have been met but the targets were often easy to reach (e.g. +60% in France over ; +40% in UK for EEC1; +25% in Italy over ; +14% in Denmark over ). Difficult to really assess the reality of savings as certificates based on deemed savings* and not on real savings (to alleviate the monitoring cost) All energy saving s obligation schemes have been slow to start but are now working well The targets have been increasing over time and are becoming more ambitious; the initial targets were on purpose low to leave time to market actors to get familiar with the schemes Trading limited except in Italy (about 35-40% of total volumes of certificates traded) as companies were able to meet their obligations (see annex) * The energy savings are evaluated ex-ante for standard operations/equipment 8

9 Effectiveness of measures : what impact? Development of a market of energy services and new business for some utilities Impact on the diffusion of energy saving equipment...but also explained by additional measures : The schemes are not operating alone but are just one component of the policy: most of the equipment and operations benefit from various financial or fiscal incentives (e.g. France) The scheme acts as an accelerator of decisions that households or other consumers are always hesitant to undertake; utilities contribute also to inform consumers about actions they can do and about the existence of these incentives The impact of the schemes, but also of the other incentives, are significant, in terms of economic impacts: induced investments (around 4bn estimated in France over *), employment, reduced imports (balance of payment) and lower expenditures for consumers *including the full cost of the equipment or actions and not only the additional cost 9

10 Effectiveness of measures The savings have been obtained mainly in the household sector (~ 90% in France, ~ 80% in Italy, ~ 40% in Denmark) Mainly actions with low investment cost or taking advantages of existing financial incentives : simple insulation (about ¾ of savings with cavity wall insulation in UK), CFL (about ¾ of savings in Italy), heating appliances (efficient boilers) (about 2/3 in France and Denmark) Residential Energy Savings by End-use Ita Fra Dk 2008 GB % 20% 40% 60% 80% 100% Insulation Lighting Heating Appliances Other Source: Eoin Lees 10

11 Effectiveness of energy saving obligations: Average cost per unit saved: not easy to compare as it refers to different costs: total, cost for consumers, cost for companies What costs? Investment cost of measures/equipment (energy companies, consumers, landlords, installers etc.): usually shared cost : Cost of the energy saved 2 to 3 times lower than the price of electricity & gas saved for household sector on average for France, Italy and UK (see Annex) Cost for energy companies : ~18% of direct costs in UK; 5% in France Auditing & verifying of energy savings (cost of control ): <1% of energy supplier costs according to estimates in UK Government cost to set targets and standardise energy savings (???) (low) Who pays? Cost shared by consumers, companies and public budget (incentives) France : 70% of the cost paid by consumers, 5% by companies and 15% by public budget; Cost for companies may be passed to end customers in liberalised markets; for regulated consumers, the costs may be passed to the regulated tariff (planned by most laws but not effective as long as cost are low for companies) 11

12 Outline 1. Overview of energy savings obligations schemes 2. Effectiveness of implemented measures 3. Best practices 4. Recommendations

13 Best practices Clearly the UK with its long experience and improvement of the scheme over time is among the best practices. In particular, the obligation to get half of the saving obligation with low income households can be considered as a good practice, as these households do not take advantage of usual financial incentive schemes and have a strong constraint for the upfront cost. Finally its combination with a financial scheme (the Green Deal as planned from 2013 with the new obligation ( Energy Company Obligation- ECO) will enable to tap more expensive investments The integration of all energy sources, including motor fuels enlarge the scope of the obligations, such as in France The extension to district heating including distribution of heat is interesting for countries with large district heating network. 13

14 Outline 1. Overview of energy savings obligations schemes 2. Effectiveness of implemented measures 3. Best practices 4. Recommendations

15 Recommendations The benefit of such schemes is to structure the ESCO s market and to increase the quality of services and equipment (through certification), which requires time. The schemes are very diverse in terms of mode of expression of the targets (lifetime, cumulated, annual, primary/final energy) and in the calculation of the standardised savings (assumptions, baselines used) there is a need of harmonization to better share the results of the evaluation made in each country in terms of amount of savings, cost of energy saved, price of certificates (for the moment the few existing comparisons need a lot of calculations and assumptions and are very time consuming). The energy savings targets have to be adapted to each country, depending on the saving potential. 15

16 Recommendations (cont d) Overall obligation targets could be shared with consumers and not all imposed to suppliers to limit transactions cost and price increase Energy efficiency obligations could be restricted to some sectors (e.g. households and small consumers) and for other sectors targets could be given to consumers This the case of Bulgaria or India that give individual targets by consumer (for designated large consumers) that are dependant on the actual efficiency of the consumers (based on the results of audits) The assessment of energy savings, the control and validation of certificates should be kept simple. 16

17 Thank you for your attention! Contact: Bruno Lapillonne Vice President

18 Outline Annex

19 Energy Efficiency Obligations in the EU: trading of white certificates Trading of certificates mainly effective in Italy Country Penalty Trading Volume of trading Price of certificates Belgium 10 /MWh No France 20 /MWh Yes less than 4% of certificates Italy Yes 35-40% of total certificates UK Limited 32 cents/kwh cumac which is well below the penalty price of 2 cents/kwh. 10 cents/kwh ( ) Poland yes Yes 19

20 Energy savings obligation in France: the saving target For the first period, the target of 54 TWh cumac means that on average companies had to get about 4.1 TWh/year of annual savings (i.e. non cumulated)* or about 0.4% of the eligible consumption; the effective savings were much higher (85 TWh cumac) and equivalent to 0.8% of the eligible consumption For the second period, the target of 345 TWhcumac is equivalent to about 26.5 TWh/year of annual savings or about 1.8% of the eligible consumption The prolongation of the scheme with the same 3 years target (345 TWh cumac) until 2020 would save 4 and 6% of the eligible consumption *Average life time of 17 years for the actions which implies a coefficient of 13 years with a 4% discount rate Source: Enerdata estimates 20

21 Cost of energy saved Country Cost of energy saved Annual cost for companies (2008) (M )* France 0.4 cents/kwh cumac (Phase 1) (i.e. 20% of the fine)* (source ADEME) 180 Italy 1.9 c /kwh ( )** 190 UK 1.6 c /kwh ( ) (3.6% of energy bills)** 900 Denmark 0.45 cents/kwh saved ** 25 * Source: ADEME **Source: Eoin Lees 21