WP4 Task 31/01/2014. ENEA, * I-com. File name: Due Date: Authors:

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1 Barriers MED DESIRE Project MEDiterranean DEvelopment of Support schemes for solar Initiatives and Renewable Energies Grant contract number: 199/7 of WP4 Task 4.2 Deliverables: and File name: Due Date: Authors: MED DESIRE_WP4_T 4.2_Policy Analysis_RES&EE_V1.0 31/01/2014 Walter Cariani, Linda Cifolelli, Anna M. Sàlama, * Franco D Amore, *Manuela Mischitelli ENEA, * I-com

2 List of Contents List of Contents Introduction... 3 ENPI CBCMED Programme and MED DESIRE Project A general overview of the energy contestt in the Mediterranean Sea Basin Focus on MED DESIRE Countries EGYPT Main energy indicators Energy prices RES penetration Policy overview LEBANON Main energy indicators Energy prices RES penetration Policy overview National policy for R&D in the energy sector LEBANON Case Studies TUNISIA Main energy indicators Energy prices RES penetration Policy overview ITALY Main energy indicators Energy prices RES penetration Policy overview National policy for R&D in the energy sector ITALY Case studiess SPAIN Main energy indicators Energy prices RES penetration Policy overview National policy for R&D in the energy sector SPAIN Case Studies

3 4. Comparison between MedDESIRE countries MED DESIRE Partner Countries EE and RES policies resuming table MED DESIRE Countries towards a win-win Market Financial Technical R&D Bibliography... energy cooperation: barriers & policy recommendations 64 Policy and institutional framework 71 2

4 1. Introduction The Mediterranean Region represents a geographical entity at the intersection of three different continents, covering a territory of 21 Countries for an extension of about 8,5 million km 2. The population is estimated to be around 465 million 6,7% of global population [source: UN the dataa refers to year 2010]and the GDP is around billion US$ (current prices 2011), with a share of 12% of the world GDP [source: UN]. The contributionn to the global 2011 energy demandd of the Region reached 7% (627 Mtoe in absolute terms) [source: IEA] Within its borders, the Mediterranean Region presents different and non-homogenous political, socio- economic and energy contests. Most of the North Mediterranean Countries are under the political and institutional influence (direct or indirect) of the European Union and present a diffused economic wealth (even if the recent economic crisiss has hit severely some social classes). Demographic and economic indicators trends tend to be relatively stable, reflecting on steady energy demand projections. Security of supply, market integration and liberalization as well as decarbonization of the energy system are the main energy policy drivers. Renewablee and energy efficiency policies are a mainstream in the energy policy of European Countries and robust national incentive schemes have been put in place. Consequently, the diffusion of these technologies in the energy mix is becoming more and more important but incentive costs are negatively reflecting on final energy prices. Energy costs are becoming a central issue for some of the North Mediterranean Countries with special regards to the competitiveness of the industrial sector. On the other hand, and generally speaking, the South Mediterranean Countries are experiencing a period of political changes, sometimes characterized by uncertainty and instability. On average, the income indicators are low and poverty eradication is a priority for some of these Countries. Demographic and economic trends are more dynamic compared to the North Shore of the Mediterranean Sea, dragging along energy consumption projections. This issue is a main concern in the energy policy of many South Mediterraneann Countries, both for energy importers and energy exporters. Access to energy is one of the main issues, and energy subsidies have a strong influence on energy markets. Renewable energy, in particular solar, has a great potential in the area and energy efficiency has a vast space for improvement in many different sectors. Distributed renewable energy is attracting more and more attention as a solution to energy access (in particular in remote areas) while energy efficiency is perceived as a viable solution to the highh increase of energy demand, which is putting pressure on national energy systems (in particula for what concerns the electricity generation, transmission and distribution sector). 3

5 This non homogenous situation sketched above do not hinder the possibility of a stronger energy collaboration between the two Shores of the Mediterranean Sea. On the contrary, this collaboration have to find new paths and approaches in order to create a common energy market, not only for conventional energy commodities, but for energy technologies, services and skills as well. Indeed, energy collaboration between the two Shores of the Mediterranean Sea has been usually seen as the implementation of big infrastructural projects such as energy transport pipelines for gas or, more recently, for renewable electricity transfer. ENPI CBCMED Programme and MED DESIRE Project One of the core policy objectives of ENPI CBC MED Programme, which aims at reinforcing cooperation between the European Union and partner countries regions placed along the shores of the Mediterraneann Sea, is the increase of energy and environmental sustainability at basin level. MED DESIRE project partners (Egypt, Lebanon, Tunisia, Italy, Spain) will work together to address common challenges for the improvement of energy efficiency and the promotion of the use of renewable energy sources. The project intends to investigate a different point of view, that is connected to distributedd renewable energy and energy efficiency collaboration. The present document is part of the activities carried out under Work Package 4 (WP4) of MED DESIREE Project, whose main expected result is to strengthen capacity of the Partner Countries public administrationss and institutions in setting up an adequate legal, regulatory and organizational framework to allow the development, deployment and diffusion of distributed solar energy technologies and the enhancement of energy efficiency. A concise energy profile of each Partner Country, as well as energy policies and incentive mechanisms s currently in force, will be presented, compared and analyzed. The last part of the document is focused on the identification of barriers, the proposal of solutions for overcoming obstacles, providing the common background that will be the base of the co-operative activities that will be carried out in MED DESIRE Project. ITALY SPAIN TUNISIA LEBANON EGYPT MED DESIRE Partner Countries 4

6 2. A general overview of the energy contest in the Mediterranean Sea Basin Energy supply in the Mediterraneann Countries is still dominated by fossil fuels: this is more pronounced in South Mediterranean Countries, where the absence of nuclear power generation is compensated by a largerr use of hydrocarbons and coal. Total Mediterrane ean Countries 2% 8% 11% coal 12% oil gas 27% 4 nuclear hydro wind solar other RES EU Mediterranean Countries 2% 1% 6% 8% 19% 4 24% South Mediterranean Countries 2% 1% 3% 13% 36% 45% TPES mix 2009 (source: OME) Renewable energy resources have a greater share in the energy supply mix in EU-Mediterranean countries, and the gap has experienced an increase in last years, thanks to the effort made in the sector by the European Union. According to OME estimations, the Mediterranean Region can count on 4,6% of the world proved oil reserves (67.3 billion barrels) and 4,7% of the world gas reserves (8, 9 trillion cubic meters): most of the hydrocarbon reserves are located in some of the South Mediterranean Countries, in particular in the South- West, while EU Mediterranean Countries are net importers (see the two graphs below). Generally speaking, though, it can be said that only few Mediterranean Countries are net energy exporters. 5

7 200,00 Net imports [Mtoe] 150,00 100,00 50,00 0,00 50,00 100,00 150,00 (2011 source: I-com on IEA data) Orange countries = MED DESIRE Partners Oil export [thousand barrell/day] Tunisia Morocco Libya Egypt Algeria Gas export [billion cubic meters] Libya Egypt Algeria Oil import [thousand barrell/day] Gas import [billion cubic meters] Spain Italy Spain Italy (source: I-com on ENI data) 6

8 South Mediterranean Countries also enjoy a clearly shown in the map below. considerablee potential for what concerns solar energy, as Average yearly horizontal solar irradiation (source: PVGIS) Average per capita final energy consumptions differ substantially between EU and non-eu Mediterraneann countries, the first being 2,12 toe/capita against 0,82 toe/capita of the second. The difference is even higher if we consider the per capita electricity consumptions (6,14 MWh/capita for EU Mediterranean Countries against 2,06 MWh/capita for non-eu Mediterranean Countries) 2,50 final energy consumption/population [toe/capita] 2,00 1,50 1,00 0,50 0,00 (2011 source: I-com on IEA data) Orange countries = MED DESIRE Partners 7

9 8,00 7,00 6,00 5,00 4,00 3,00 2,00 1,00 0,00 final electricity consumption/population [MWh/capita] (2011 source: I-com on IEA data) Orange countries = MEDDESIRE Partners Also CO 2 emission dataa are non-homogenous between the two shores of the Mediterranean Sea: per capitaa emission of EU Countries are almost double compared to non- EU Countries, while carbon intensity of GDP of non-eu Countries is almost three times that of EU-Countries. This clearly reflect social and economicc structural differences. 10,00 9,00 8,00 7,00 6,00 5,00 4,00 3,00 2,00 1,00 0,00 CO 2 /population [t CO 2 /capita] (2011 source: I-com on IEA data) Orange countries = MED DESIRE Partners 8

10 1,40 1,20 1,00 0,80 0,60 0,40 0,20 0,00 CO 2 /GDP [kg CO 2 /US$ current prices] (2011 source: I-com on IEA data) Orange countries = MED DESIRE Partners The contribution of RES to total primary energy supply in the region is 8,3%. Again, a gap between the two Shores exists: the percentage reach 9,6% in EU Countries and 5,9% in non-eu Countries. 45, 40, 35, 30, 25, 20, 15, 10, 5, 0, Algeria Egypt total renewable energy supply/total primary energy supply Libya Morocco Tunisia Israel Lebanon Syrian Arab Republic Turkey Albania Bosnia and Herzegovina Montenegro Cyprus Croatia France Greece Italy Malta Slovenia Spain Malta Med. Region UE Med. Region noneu Med Region (2011 source: I-Com on IEA data) For what concerns the installed capacity of solar water heating systems (SWH), the South Mediterraneann Country has on average 84 m 2 /1000 inhab., while EU Mediterranean country this indicator is 66 m 2 /10000 inhab. Apart from few cases (see Israel and Greece) the SWH potential seems to be almost completely untapped (as a reference Austria has 566 m 2 /1000 inhab., while Germany 187 m 2 /1000 inhab.). 9

11 SWH installed capacity [m 2 /1000 inhab.] 600,00 500,00 400,00 300,00 200,00 100,00 0,00 Algeria* Egypt* Lybia Morocco Tunisia Israel Lebanon Syria Turkey Albania Bosnia and Herzegovina Montenegro Croatia Cyprus France Greece Italy Malta Slovenia Spain Med. Region EU Med. Region non EU Med. Region (source: I-Com on IEA and OME (*) data) Orange countries = MED DESIRE Partners Electricity price dynamics evidence average higher prices in EU Countries (in the range 0,29 0,17 /kwh for domestic consumers no taxes included), compared to non-eu Countries (see graph below). No homogenous data are available, to ore knowledge, for gas prices. Electricity prices 2013 ($/kwh taxes excluded) 0,5 0,45 0,4 0,35 0,3 0,25 0,2 0,15 0,1 0,05 0 Algeria Egypt Lybia Morocco Tunisia Lebanon Syria Turkey Albania Bosnia and Herzegovina Montenegro Croatia Cyprus France Greece Italy Malta Slovenia Spain Med. Region EU Med. Region non EU Med. Region max. min. (source: I-Com on RECREEE and Eurostat data) From the point of view of energy policies, the Mediterranean Region can be divided into two distinguished d blocks. The first one is clearly represented by EU Mediterranean Countries, whichh is characterized by the strong legislative influence of the European Union. The second one is represented by the non-eu Mediterranean Countries, for which marked country specific energy policies are dominant. 10

12 The first main pillar of the European energy policy is the implementation of a single integrated market. The legislative iter for the creation of the internal energy market started in 1997 with the First Legislativee Package, aimed at introducing competition in national monopolies and vertically integrated public owned utilities. Since then, two more Legislative Packages were issued - the latest in The second main pillar is environmental sustainability and the concern regarding climate change. The adoption of the Kyoto Protocol (Council Decision 2002/358/EC) started a decarbonization process of the economy which have main impacts on the energy sector. Renewable energy and energy efficiency promotion are the core of this strategy. In 2007, the integrated environmental and energy policy pack was adopted by the European Union, which sets the ambitious targets to reduce, by year 2020, the European GHG emissions of 2 compared to year 1990, to increasee the share of renewablee energies in the energy supply up to 2 and to reduce the energy demand by 2 2. The 2009 RES Directive 3 sets national binding targets for RES with clear implementation trajectories ( National action plans) and verification mechanisms. The Energy Efficiency Directive 4, adopted in late 2012, intends to create a common framework for the sector, setting clear national targets and common mechanisms of implementation. Energy efficiency is also promoted by different sector-specificc Directives (see for example building 5, appliances 6, transport). It is interesting to notice that the European 2020 energy strategy is not only intended to promote environmental sustainability, but security of supply and cost reduction as well 7. The strong policy coherence of the EU-Mediterranean Countries cannot be envisaged in non-eu Mediterranean Countries, even though some regional common features can be identified. Economic growth and social improvement experienced in the last decades caused a raise in energy consumptions. This has stressed national energy systems both for net energy exporter countries and for net energy importers. Universal access to energy and energy poverty eradication are a common issue in most of the non-eu Mediterranean countries. The challengee is twofold: on one side it regards urban areas, on the other it impacts rural and internal territories. From the market structure point of view a general presencee of state owned monopolies can be seen, while strong subsidies alter the market functioning. Another important difference between EU and non-eu Mediterranean Countries, relevant for this paper, lies in the institutional framework of the State. While EU Countries tend to have a consolidated decentralized decision making process, wheree regional and municipal entities actively participate in the governancee of some specific aspects of the public policies, non-eu Mediterranean Countries tend to be highly centralized, and no active participation of local authorities can be detected. This has a clear influence on the promotion of distributed energy models and energy efficiency, which are, by definition, strongly dependent on local conditions and potentials. In spite of this non homogeneous situation, non-eu Mediterranean Countries have started a process of energy policy coordination with different initiatives. We cite the Regional Center for Renewable Energy and Energy Efficiency (RCREEE), which is an independent not-for-profit regional organization which aims to enable and increase the adoption of renewablee energy and energy efficiency practices in the Arab region and involve many Mediterranean Countries. It is also worth to recall the Paving the Way for the Mediterranean Solar Plan (PWMSP) project, funded under the European Neighborhood and Partnership Instrument (ENPI), that assists the Mediterranean Partner Countries to create conditions that are conducive to greater use of sustainable energy based on solar, wind and other renewable energy sources, combined with energy efficiency and savings in the region. Finally, energy cooperation and coordination among Mediterranean Countries have been busted by the institution of the Mediterranean Energy Regulators (MEDREG). 1 Directive 2009/72/EC 13 July 2009 concerning common rules for the internal market in electricity and repealing Directive 2003/54/EC and Directive 2009/73/EC of 13 July 2009 concerning common rules for the internal market in natural gas and repealing Directive 2003/55/ /EC 2 Communication from the Commission, of 10 January 2007, entitled: "Limiting Global Climate Change to 2 degrees Celsius The way ahead for 2020 and beyond" [COM(2007) 2 final 3 Directive 2009/28/EC of 23 April 2009 on the promotion of the use of energy from renewable sourcess and amending and subsequently repealing Directives 2001/77/ /EC and 2003/30/EC 4 Directive 2012/27/EU on energy efficiency, amending Directives 2009/125/EC and 2010/30/EU and repealing Directives 2004/8/EC and 2006/32/EC [OJ L315 p.1] 5 Directive 2010/31/EU of 19 May 2010 on the energy performance of building 6 Directive 2010/30/EU of 19 May 2010 on the indication by labelling and standard product information of the consumption of energy and other resources by energy related products 7 COM(2010) 2020 final Europe 2020 strategy paper 11

13 3. Focus on MED DESIRE Countries EGYPT Main energy indicators Egypt 2011 total primary energy supply reached 77,6 Mtoe, covered for the greatest part (96%) by fossil fuels. The figure has more than doubled in the last twenty years, while the share of carbon-basenatural gas, which grew from the 23% of year 1991 to 54% of year fuels remain almost unchanged: what changed radically is the increase of the share of 54% 2% EGYPT TPES 2011 (77,6 Mtoe) 2% 1% 41% Coal Oil Natural Gas Nuclear Hydro non Hydro FER Biofuels and Waste Heat Focus on EGYPT EGYPT TPES 2001 (45,7 Mtoe) 3% 3% 2% EGYPT TPES 1991 (32,4 Mtoe) 3% 3% 2% 23% 41% 51% 69% Source: I-com on IEA data Egypt is still a net oil and gas exporter, but the increasee of internal independence (see graphs below). demand has depressedd its energy 12

14 ktoe Egypt net import/tpes Source: I-com on IEA data Industry has the highest share in final energy consumptions, while commercial and public services have a very limited impact. Oil and natural gas are the main energy vectors (almost 75% ), while electricity has a share of 22% on final consumptions. Egypt final energy consumption Egypt total final consumption mix by sector (2011) (2011) Coal Industry Oil 1% 2 Transport 22% Natural Gas 3% 29% 3% Residential 5 Biofuels and 22% 24% waste 26% Commercial and Electricity Public services Other Heat Focus on EGYPT Source: I-com on IEA data It is interesting to see into more details the final energy consumptions of the residential and industrial sector. Residential sector final consumptions are dominated by oil and electricity (both with a share of about 4) while gas has a limited penetration (8%). Indeed, in the residential sector, the per capita gas consumptionss in the residential sector is 14 m 3 /capita while annual per capita electricity consumptions is 686 kwh/capita On the other hand, in the industrial sector, the dominant energy vector is natural gas (41%), followed by oil (27%) and electricity (24%) 13

15 Egypt Residential final consumption mix (2011) Coal Oil 42% 43% Natural Gas 8% Biofuels and waste Electricity 7% Heat 5% Egypt Industry final consumption mix (2011) Coal 3% Oil 24% 27% Natural Gas Biofuels and 41% waste Electricity Heat Source: I-com on IEA data Energy prices Domestic electricity tariffs span from 0.01 $/kwh to 0,1 $/kwh (tax excluded) - depending on averagee monthly consumptions. Electricity prices are relatively very cheap, in particular for low consumptions, compared to European ones (the EU27 average tariff for domestic consumers is around 0,18 $/kwh alll taxes excluded). Domestic prices for gas is instead higher compared to European prices: indeedd it is around 3$/m 3 (source: Egypt Ministry of Petroleum), which has to be compared to average EU27 prices of 0,68 $/m 3 (0,88 $/m 3 including al taxes). On the other hand industrial prices are extremely cheap for non-energy intensive activities (0,04 $/m 3 compared to an EU27 price of 0,46 $/m 3 0,59 $/m 3 including all taxes) and relatively cheap for energy intensive activities (0,11 $/m 3, compared to average prices of 0,39 $/m 3 0,444 $/m 3 including all taxes) 8. Energy prices are kept artificially low thanks to intensivee state subsidies, whichh reached in 2011, according to IEA data, a percentage 10,4% of the national GDP (296,5 $/capita). Focus on EGYPT Energy subsidy in Egypt Fuel oil Absolute [G$ $] Relative to final consumptions [$/boe] 9, , ,27 82 gas Absolute [G$ $] Relative to final consumptions [$/m 3 ] 2,15 0,14 2,4 0,15 3,78 0,22 electricity Absolute [G$ $] 2,96 Relative to final consumptions [$/kwh] 0,02 3,81 0,03 5,42 0,04 Source: I-Com on IEA data 8 In this case data is an average of Italian and Spanish prices 14

16 RES penetration RES penetration in the primary energy supply is less than 4%, while the contribution of renewable to the electricity production is 9,5% (dataa refers to 2011). Hydro is the main renewablee energy source for the electric sector, while wind power is becoming more important. Solar PV has still a limited impact. EGYPT Electricity RES production GWh Wind PV Hydro Source: I-Com on IEA data The generation of electricity by renewable sources started in 1999, when the first wind installation becamee operating. In 2010, for the first time, a photovoltaic system was connected at the transmission grid. Nowadays, there are three energy producers in wind and solar technology and six renewable installationss (three wind farms and three solar plants) for a total capacity of 647 MW (the data refers to year 2012). Solar thermal contribution to heat production is very limited. In Egypt, about solar water heating units with a total collector surface of m 2 (560 MWth) - i.e. approximately 10 m 2 /10000 inhab.- are estimated to be in place. Solar collectors are mostly used in new residential developments [source OME 2012]. Solid biomass domestic supply reached TJ in 2011, with 958 TJ net export, 48% directly used in the residential sector, the rest in the industry. No electricity production was detected. Focus on EGYPT Policy overview The development of new and renewable energy resources is among the main taskss of Ministry of Electricity and Energy (MOEE). In 1982, the Egyptian government adopted the first Renewable Energy Strategy which set a target of 5% of annual primary consumptions covered by renewable sources by In 1986, the New and Renewablee Energy Authority (NREA) was established to give a specificc support to In February 2008, the Supreme Council of Energy announced the adoption of a Renewable Energy Development Program, setting an ambitious target of 2 of the electricity produced by renewable sourcess by In detail, the plan foresee 12% electricity production by wind energy with a total capacity of MW; the hydroelectric power and the other sources -mainly solar- will cover 6% and 2% respectively. Government authorities, international financing institutions and private sector will cooperate to achieve this target, according with strict central dispositions. Indeed, NREA will implement new 2375 MW capacity, while the private sector will realize the remaining 4825 MW. Private operators will have to participate to competitivee bids organized by Egyptian Electricity Transmission Company, to realize the installation in specific sitess previously identified by NREA. 15

17 In 2009, a feed-in-tariff scheme (Power Purchase Agreement) was approved to enhance private operatorr participation to competitive tenders, giving investors a contribution for years and governmental grant to all financial obligations. Moreover, they receive green certificates of the emission reduction which they can sell. Recently, in 2012, NREA issued a Solar Plan, according to which, new solar power plants will be installed: it is expected that a new 3500 MW capacity will be added by 2027 ( MW CSP installations and 700 PV systems). The Egyptian authorities continue to maintain a large scale approach: also for the achievement of Solar Program target, and few huge plants are supposed to be realized. However, in 2011 the Supreme Energy Council established a Fund for Development of Power Generation from Renewable Energies (RE Fund). It is expected to provide the resources that the transmission company would need to purchase renewable energy through feed-in tariffs. The law has not yet been approved. Moreover, there are few initiatives dedicated to the renewable distributed generation. Two projects are worth to be mentioned. NREA signed a protocol with the Italian Ministry of Environment to electrify an isolated zone while the Egyptian Ministry of State for Environmental Affairs supports some solar demonstrative project fundedd by European Union to verify if new solar cooling technologies may cover the needs of residential and commercial buildings and agro industry sector. Differently by renewablee sector, there isn t any Agency dedicated to energy efficiency. However, in 2002 the Egyptian Government adopted the National Environmental Action Plan (NEAP) that will be operating until It includes a National Energy Efficiency Strategy: it has a general approach to improve efficiency in power sector and it doesn t provide any detailed measure except for the realization of few demonstrationn program. A solar obligation was introduced in 1987, which called for new residential buildings to consider the use of solar water heaters and include the design for their use and authorizing agencies have to verify the use of solar hot water heaters (Ministerial Decree n. 401/1987). However, the solar obligation is not generally applied or enforced. Recently, in July 2012, Egyptian Cabinet approved a National Energy Efficiency Plan (NEEAP) for the period It set the reduction of 5% of the average last five year electricity consumptions by Among the measures proposed, we can find the extension of the application of labeling and efficiency standards to other and new electrical appliances (previously the labeling system only referred to refrigerators, air conditioners, washing machine, electric water heater and CFLs). Moreover the Government intends to organize information campaign to stimulate savings among residential consumers, continue the substitution of lamps and increase the efficiency in public lighting. In the approved NEEAP, the Government intends to improve the energy savings in governmental buildings. This is the step follow up of Ministerial Decrees for the adoption of energy efficiency code for residential (482/2005), commercial (190/2009) and governmental (433/2010) buildings, realized with the support of UNDP/GEF. Codes are applicable to new buildings and addictions; they set energy efficiency requirements for the building envelope, HVAC, service hot water and electric power. In the codes, the performance standards are different according to the climate zone of reference. In 2009, the Egyptian Green Building Council was established, in order to support investors adopting Building Energy Efficiency Codes. Focus on EGYPT 16

18 EGYPT - RES and EE policy overview Issue Description Notes INSTITUTIONAL FRAMEWORK Central administration responsible for RE&EE policy Implementing Agencies for RE&EEE policy Role of Local Authorities in promoting RE&EE Ministry Energy New and Renewable Energy Authority (NREA) None of Electricity and Operates in RE sector LEGAL FRAMEWORK Energy strategy related to RE&EEE development RE&EEE Law RE&EEE targets and obligations Target and obligation degree of enforcement Renewable Energy Development Program adopted in 2008 Solar Plan issued in 2012 National Energy Efficiency Plan for the period approved in 2012 No specific RE&EE laws have been issued 2 of total electricity from RE by % energy savingss by 2015 energy efficiency code for residential, commercial and governmental buildings labels for appliances Very low RE&EE included in general electricity laws Focus on EGYPT TOOLS Support Incentives custom duty exemptions Governmental guarantee Fast licensing process FIT scheme 17

19 LEBANONN Main energy indicators 2011 primary energy supply of Lebanon totaled 36,5 Mtoe and is dominated by oil. The energy mix has not changed significantly in the last 20 years, while figure has more than doubled in the last twenty years, and the absolute value had a step increase between 1991 and 2001 (117%) slowing down in the following decade (+21% between 2001 and 2011). LEBANON TPES (63,5 Mtoe) 2% 3% 1% Coal Oil Natural Gas Nuclear Hydro 94% non Hydro FER Biofuels and Waste Heat TPES 2001 (52,6 Mtoe) TPES 1991 (24,2 Mtoe) 2% 4% 2% 3% 1% 94% 94% Focus on LEBANON Source: I-com on IEA data Lebanon is almost completely dependent on energy imports, the only local energy resources being hydro, and biofuels (see graphs below). 18

20 8000 Lebanon net import/tpes production import export Source: I-com on IEA data Transport is responsiblee of almost half of the final energy consumptionss in Lebanon, followed by residential sector (23%) and Industry (17%). With a share of 58%, oil is the main fuel, while electricity has a share of 35% on final consumptions. Lebanon total final consumption by sector (2011) 6% 23% Source: I-com on IEA data Lebanon Residential final consumption mix (2011) Coal 58% 8% 46% 3 17% 1% 11% Industry Transport Residential Commercial and Public services Other Oil Natural Gas non hydro FER Biofuels and waste Electricity 3% 54% Lebanon total final consumption mix (2011) 35% Lebanon Industry final consumption mix (2011) 4% 58% 26% 2 Coal Oil Natural Gas non hydro FER Biofuels and waste Electricity Electricity is the main energy vector both for residential sector and industry, while natural gas has no contribution. The average electricity consumptions in the residential sector is 1347 kwh/capita. Heat Coal Oil Natural Gas non hydro FER Biofuels and waste Electricity Focus on LEBANON Source: I-Com on IEA data 19

21 Energy prices Domestic electricity tariffs span from 0,023 $/kwh to 0,132 $/kwh (tax excluded) - depending on averagee monthly consumptions. Electricity sector is heavily subsidiess to keep electricity costs stable. Energy subsidy in Lebanon Fuel Electricity Absolute [G$] Relative to final consumptions [$/kwh] 1,5 0,11 1,2 0,08 1,6 0,04 Source: I-Com on Carboun and IEA data RES penetration RES penetration in the primary energy supply is 3.3%, while the contribution of renewable to the electricity production is around 5% (data refers to 2011). Hydro is the only relevant renewable energy source for the electric sector. Lebanon electricity RES production [GWh] Wind 400 PV 300 Hydro Focus on LEBANON Source: I-Com on IEA data Solar thermal collector reached in 2011 a surface of m 2 (909 MWth) - i.e. approximately 102 m 2 /10000 inhab, mostly diffused in residential and commercial buildings. Solid biomass domestic supply reached 5006 TJ in 2011, almost totally used in the residential sector. No electricity production from solid biomass was detected. 20

22 Policy overview As already seen, Lebanon heavily depends on energy import. Its electricity is supplied by Electricité Du Liban (EDL), a state owned Lebanese power utility, and some other small concessions, with a stagnatingg generation capacity of 1,500 MW. This generation capacity lacks behind the total demand that can reach the peak values of around 2,500 MW. The gap between the demand and supply is being handled throughh frequent load shedding covered by private generators. In 2008, the recommendations of the national workshop on integrated planning in the electricity sector included the development of new and renewable energy sources as important components of the electricity sector. Such development could be accomplished by setting a cost-effective and technically- achievable proportion of renewable energies within the government's policies for a sustainable utilization of resources. At the 2009 Copenhagen Climate Summit, Lebanon voluntarily pledgedd to increasee the renewable energy shares to 12% by This voluntary commitment was anchored within the Policy Paper for the Electricity Sector prepared by the Ministry of Energy and Water (MEW) and officially adopted by the Council of Ministers in June 2010: it includes ten strategic initiatives for the improvement of infrastructure, supply and demand systems and the definition of legal framework. Two key initiatives target respectively the Renewablee Energy and the Demand Side Management / Energy Efficiency. The renewable energy initiative includes, among others, the increase of 40 MW in hydropower, the realization of MW of wind farms and the installation of MW of installed capacity in biomass energy. And the energy efficiency initiative aims to save a minimum of 5% of the total demand by 2015 through the adoption of the energy conservation law, the implementation of a national financing mechanism (the National Energy Efficiency and Renewablee Energy Action NEEREA), and the launch of the National Plan for Energy Conservation (later on named National Energy Efficiency Action Plan NEEAP) in addition to concretee and directly-implementable actions and projects such as the diffusion of compact fluorescent lamps (CFLs), solar water heaters and efficient public lighting. Developed by the Lebanese Center for Energy Conservation (LCEC), adopted in August 2010 by MEW and approved in November 2011 by the Lebanese Government, the National Energy Efficiency Action Plan (NEEAP) for Lebanonn summarized all national objectives, programmes and policies in 14 independent but correlated initiatives in the energy efficiency and renewable energy sectors. The Lebanesee NEEAP was prepared in conformance with the Arab EE guideline (based on the EU directive 2006/32/EC on energy end-use efficiency and energy service) and Lebanon was the first Arab country to officially adopt such plan. The LCEC is currently updating the NEEAP while preparing the Renewable Energy Strategy for Lebanon that will include several scenarios in achieving the set target of 12% RE by 2020 and that will also be in accordance with the Arab RE guideline under preparation. The initiatives of the NEEAP are the following: Initiative 1: Towards Banning the Import of Incandescent Lamps to Lebanon Initiative 2: Adoption of the Energy Conservation Law and Institutionalizationn of the Lebanese Center for Energy Conservation (LCEC) as the National Agency for Lebanon Initiative 3: Promotion of Decentralization Power Generation by PV and Wind Applications in the Residential and Commercial Sectors Initiative 4: Solar Water Heaters for Buildings and Institutions Initiative 5: Design and implementation of a national strategy for efficient and economic public streett Lighting in Lebanon Initiative 6: Electricity Generation from Wind Power Initiative 7: Electricity Generation from Solar Energy Initiative 8: Hydro Power for Electricity Generation Initiative 9: Geothermal, Waste to Energy, and Other Technologies Initiative 10: Building Code for Lebanon Initiative 11: Financing Mechanisms and Incentive Initiative 12: Awareness and Capacity Building Initiative 13: Paving the Way for Energy Audit and ESCO Business Initiative 14: Promotion of Energy Efficient Equipment Focus on LEBANON 21

23 Adding to the above, as of July 31 st, 2008, the Lebanese Standards Institutions (LIBNOR), adoptedd voluntary energy efficiency standards for 5 household appliances: Solar Water Heaters, Compact Fluorescent Lamps, Refrigerators, AC split units, Electric/Gas water heaters. The standards for Solar Water Heaters and Compact Fluorescent Lamps were officially adopted as mandatory by the Council of Ministers in September In synchronizationn with the standardization process, the Industrial Research Institutionn (IRI) proceeded with the installation of a testing facility for solar collectors as part of a project financed by the Hellenic Aid, jointly managed by the United Nations Development Programme (UNDP) and the Greek Center for Renewable Energy Sources (CRES) and implemented by the LCEC, and a testing facility for Compact Fluorescent Lamps. Renewable energy and energy efficiency policies were clearly built around the three important pillars of security of supply, environmental sustainability and economic competitiveness. The significant tendency of the policies in meeting all of three of these objectives is very clear. National policy for R&D in the energy sector Lebanon is a country whose economy is based essentially on the tertiary sector where industry plays a marginal role. In fact, most industrial companies are too small to afford research and development (R&D) strategies, especially with the lack of government funding or other private support. The renewable energy and energy efficiency sector does not break the rule when it comes to research and development, thereby, we cannot identify a clear national policy for R&D in this sector. However, individual initiatives were taken in some universities on the level of laboratory research or in form of educational programs preparing for specialtiess in this field. Moreover, LCEC, all along with United Nations Development Programme (UNDP) projects such as CEDRO (Country Energy Efficiency and Renewable Energy Demonstration Project for the Recovery of Lebanon), has taken the role of filling the gap in the R&D field on the national level. Most of the research has been done on the applied side preparing for the development of the renewable energies in Lebanon and for the assessment of national plans. Focus on LEBANON 222

24 LEBANON - RES and EE policy overview Issue Description Notes INSTITUTIONAL FRAMEWORK Central administration responsible for RE&EE policy Implementing Agencies for RE&EEE policy Role of Local Authorities in promoting RE&EE Ministry of Energy and Water Lebanesee Center for Energy Conservation (LCEC) None Operate in sector RE & EE LEGAL FRAMEWORK TOOLS Energy strategy related to RE&EEE development RE&EEE Law RE&EEE targets and obligations Target and obligation degree of enforcement Support Incentives Policy Paper for the Electricity Sector adopted in 2010 No specific RE&EE laws have been issued 12% of electricity and thermal energy produced RE by % energy savingss by 2015 Very low low interest loans CDM RE&EE included in general electricity laws Focus on LEBANON 23

25 1 LEBANON Case Studies The Lebanese Solar Water Heaters Programme Among the many countries that are taking actions to minimize energy consumption and maximizing its efficiency, Lebanon has not fallen behind in introducing the residential solar water heaters market at the household level that is still witnessing a notable increase in the demand. This growth is due to the awareness shared among the population and stakeholders and most importantly to the national financing mechanism and grant subsidies offered by the Ministry of Energy and Water and the Central Bank of Lebanon. Back in 2009, the Ministry of Energy and Water and the United Nations Development Programme signed the contract to launch the project Global Solar Water Heaters Transformationn and Strengthening Initiative financed by the Global Environment Facility. The initiative consists of four levels including the establishment of an environment at the policy and financial levels for the promotion of the solar water heating in Lebanon. The success of the initiative created the national financing mechanismm for solar water heaters which has been approved by the Lebanese government on March With the final target of a solar water heater for every house, this mechanism managed by the Central Bank of Lebanon is providing the households interest-free loans over a 5-year period to be secured by Lebanese commercial banks. In addition, receivers who purchase a system that is in compliance with the standards of the Lebanese authorities can also benefit from the 200$ grants to be discounted from the total cost. This is why, the LCEC has established a national quality control system for the suppliers and installers of solar water heaters in order to ensure the good quality of the products offered, improve the performancee of the companies in this field, and guarantee users satisfaction. However, users that choose any company with no restrictions listed by LCEC will still get the interest-free loan with no 200$ subsidy. The growth of the solar water heaters market supported by the financing mechanism resulted in the installation of 12,197 solar water heaters with an estimated market value of more than 18 million USD in ,557 solar loans applications were submitted and accepted as part of the national financing initiative by the end of 2010 where 48.3% were eligiblee to benefit from the 200$ subsidies. During the year of 2011, the government provided 343,400 USD as subsidiess and has facilitated the monetary value of more than 5 million USD and leading a national market with a size of 18 million USD. With a total installation of 12,197 in 2011, solar water heaters saved a total of 28,292 MWh at the national level with the saving rate of 8.54 kwh per liter while the financing mechanism for solar water heaters which facilitated the installation of 3,557 systems saved around 8,071 MWh. As a result, an economic saving of around 3,754, 687 USD on the consumer level and around 145,254 USD on the EDL in the form of subsidies reduction were made. Moreover, while the lack of electricity is affecting the Lebanese economy negatively, solar water heaters achieved to reduce 19,804,0988 USD in the value of lost loan for Loan Loan with Subsidy Cash Payments Loan Loan with Subsidy Cash Payments Focus on LEBANON Installed systems in 2011 by means of financing Installed collection area in 2011 in square meters by means of financing To improve the national initiative and support the progressive development, further public awareness, improving competences and certification schemes, and strengthening the policy and legislative frameworks play crucial roles in the project s sustainability and in reaching the set target of 1.05 million square meters by year

26 2 The Lebanese Lamp Replacement Programme Developed in August 2010 by the Lebanese Center for Energy Conservation (LCEC), proposed by the Ministry of Energy and Water (MEW) and approved on November 2011 by the Lebanese Government, the National Energy Efficiency Action Plan (NEEAP) for Lebanon has been developed in accordance with the Lebanese Government s targets regarding the energy efficiency and renewable energy, specifically 12% renewable energy by 2020 and 5% energy efficiency by NEEAP covers 14 independent but correlated activities in the energy efficiency and renewable energy sectors ncluding the first initiative, Towards Banning the Import of Incandescent Lamps to Lebanon. This initiative aimed at banning the import of incandescent lamps to Lebanon. In order to achievee the set target, the 3 million compact florescent lamps (CFLs) project was created and supported by MEW s policy paper initiative 6, action step b: Widely spread the use of Compact Fluorescent Lamp starting in 2010, with the aim of banning energy guzzling devices in the future. Upon approval of the initiative, the Lebanese Government committed itself to invest 7 million USD to design and implement the substitution of 3 million incandescent lamps with 3 million CFLs. LCEC has set energy efficiency standards for CFLs in Lebanon which has been adopted as voluntary by LIBNOR and approved as mandatory by the Council of Ministers. On July 2010, the MEW purchased 3 million CFLs and set up the Project Management Unit for the programme consisting of a distribution team of 9 professionals in the field. The programme aiming to be registered under the Clean Development Mechanism was divided into 5 small-scale projects across the Lebanese territories and named the Lebanese CFL Replacement CDM project. The 5 projects weree successfully registered at the United Nations Framework Convention on Climate Change (UNFCCC) in December 2012 with the assistance of EDF Trading. Zone Area covered Number Number of of ICLs households replaced 1 Mount Lebanon 675, ,000 2 North and Bekaaa 715, ,000 3 In and around 475, ,000 Beirut Southern Suburbs 4 In and around 675, ,000 Beirut Central, Northern and Eastern suburbss 5 South Lebanon 485, ,000 Focus on LEBANON The 5 Lebanese CFL Replacement CDM projects The initiative was based on the results of the projects for the replacement of 1,0000 incandescent lamps in the village of Niha in collaboration with Electricité de Zahlé, then the replacement of 90,000 lamps as part of a grant offered by the Greek Government for the reconstruction of South Lebanon post the 2006 war. The Greek Grant project achieved 2 direct savings on the electricity bills and was concluded to be the catalyst and training field for the implementation of the Lebanese CFL Replacement CDM project. The 3 million CFL s were successfully distributed across Lebanon with a 7 of penetration in households in both cities and villages. Among the 1.4 million subscribers, more than 1 million residential subscribers benefited from this plan. According to the CDM calculations, the total savings of electricity throughout the lifetime of the lamps are up to 970 GWh, 181 million USD and 806,000 tons of carbon emissions. In addition, 190 MW power off the grid would result in a decrease of 2 of the power limitation in Lebanon s electricity scheme. 25

27 Regardless of its economic and environmental advantages, CFLs also present some minor limitations when it comes to the use and disposal of mercury content. However, they could be fixed with the appropriate preventative and corrective actions. The LCEC is currently working on the implementation of a collection and recycling plan for the lamps. Finally, the first initiative in the NEEAP also includes the need to initiate a national momentum towards the use of Light Emitting Diode lights (LED) in newly constructed buildings. The investments in LED that benefitted from the NEEREA financing mechanism last year exceeded 5 million USD and the trend is increasing. The approved NEEREA loans in LED Focus on LEBANON 26

28 3 The Lebanese Financing Mechanism: NEEREA The Lebanese government is making huge efforts to increase its share of renewable energy in electricity production and reduce its greenhouse gas emissions (GHG) in the purpose of achieving the overall national objective: to reach 12% of renewable energy by A nationwide goal can t be accomplished without an integrated plan, which is why the intermediate goal of reducing energy demand by 5% by 2015 is a must that should be attained.the low satisfaction of the results of the energy audits studies performed under LCEC energy audit programme by the year 2010 was due to the fact that only 15% of the recommended measuress proposed by energy audits were implemented and the reason behind it was the insufficiency of available funds. For that reason, NEEREA was developed to encourage the implementation of the actions needed for the objectivee and to ensure the sustainability of the energy efficiency and renewable energy sector in Lebanon. National Energy Efficiency and Renewable Energy Action, nationally recognized as NEEREA, is a financing mechanism that supports the implementation of environmental projects including energy efficiency (EE) and renewable energy (RE) by offering loans to eligible and feasible projects. It is a national platform built on the Circular and lately Circular of the Central Bank of Lebanon (BDL) which, in collaboration with the European Union and UNDP, lists the terms and conditions to get the green loans with full risk guarantee. The loan is eligible for new environmental friendly projects or to enhance the conditions of an existing project to becomee environmental friendly. Additionally, the loan is offered at an interest rate of 0.6% for a period that should not exceed 14 years including a grace period of 6 months to 4 years. However, if the amount of the loan exceeds the maximum limit of 1 Million, the loan will be provided at an interest rate of 3% and the repayment of the loan will take place over 5-10 years. Moreover, a grant of 200$ will be offered for solar thermal loans that will be discounted from the total price. NEEREA loans can be accessed through local banks which will be refinanced through the Central Bank and the Ministry of Finance defines the subsidies on interest rates for the different sectors of the economy. Private, existing and newly built facilities can all apply to this loan if and only if the project presented is an environmental friendly one such as energy efficient lighting, motors, heaters, or coolers or is a source of renewable energy such as solar, wind or hydro. Like any other process, NEEREA as well has a specific procedure that must be followed: First, the client appoints an Energy Service Company (ESCO) to perform an energy audit in the facility and provide energy conservation measures. After that, the client choses a commercial bank to which he submits the energy audit report along with the full technical and financial analysis. The loan is then thoroughly studied by the commercial bank and presented to the Central Bank of Lebanon (BDL) for approval on a green loan. This process requires a time of 3 weeks. The client s file is then submitted to LCEC for confirmation and further approval where the technical and financial aspects of the file are examined. Here the time needed is 2 weeks. The report, once studied by LCEC, is re sent to BDL which needs a time of 3 weeks. BDL, in its turn, reviews the analysis and results and sends it back to the commercial bank. Finally, the commercial bank informs the client whether the loan is accepted or rejected which necessitates a period of 4 weeks. If granted, the client has the right to implement the technical propositions recommended by the auditor that can be done either by the ESCO or by the supplier himself. Focus on LEBANON The NEEREA procedure 27

29 Leadership in Energy & Environmental Design (LEED) or equivalent certified systems can benefit from the loans that can cover a certain amount of the overall project cost (instead of only the amount of the energy conservation measures). However, the value of the loan share of the project increasess as the rank of the certification decreases. If the loan the applicant had applied for based on a ranking is not obtained, the client will have to pay a penalty. Loan share to the overall project cost in certified LEED projects The creation, development and implementation of NEEREA would have been unnecessary if it didn t present benefits. The advantages are distributed among 3 beneficiaries: the bank, the user and the national economy. The bank gets more cash by freeing part of the required reserves at the Central Bank, enhances its green vision and promotes corporate social responsibility. The user is provided with a long term soft loan at 1 of market rate and is guaranteed to have high quality technical and financial propositions. On a larger scale, the national economy benefitted from leveraging local investments of more than 100 Million USD until end of 2013 and will leverage more than 330 Million USD in the coming 5 years which is decreasing the burden on the Lebanese institutionss and industries. Most importantly, NEEREA is promoting the renewable energy industry in Lebanon and is creating sustainable jobs. The results till this date are the following: a total of 90 loan applications are presented to the bank with a total of 104 million USD, 89 million USD of which is approved to date. Thesee applications include different sectors with the residential and commercial respectively having the highest percentage (86.7%), industrial and NGOs the lowest (13.3 %). Excluding green building loans, the rest of 6,174, million USD were given for funding renewable energy projects and energy efficiency measures and consequently taking into consideration only these specific loans, NEEREA contributed to an annual saving of around 14.8 GWh and more than 2 million USD as well as reduced carbon emissions by around 12,000 tons. NEEREA has indeed pushed Lebanon s economy towards green energy, however many things are still lacking, preventing NEEREA to give its maximum. Public awareness, public involvement, shared trust and support among all the sectors are the factors needed to lead NEEREA towards sustainability. Focus on LEBANON 28

30 TUNISIA Main energy indicators Tunisia 2011 primary energy supply was 95,0 Mtoe, 85% of which is represented by hydrocarbons. In the last 20 years total primary energy supply increased by a factor of 1,9 while natural gas has increased its importance at oil expenses. 45% 15% TUNISIA TPES 2011 (95,0 Mtoe) 4 Coal Oil Natural Gas Nuclear Hydro non Hydroo FER Biofuels and Waste Heat 39% Source: I-com on IEA data TPES 2001 (77,1 Mtoe) 13% 1% 47% At the beginning of 90s Tunisia was net energy exporter (basically crude oil): nowadays it is an energy net importer due to oil products and natural gas imports. 18% TPES 1991 (49, 0 Mtoe) 13% 1% 68% Focus on TUNISIA production import export % 4% Tunisia net import/tpes Source: I-com on IEA data 29

31 The residential sector has the highest share in final energy consumption s (3), followed by transport (27%) and industry (26%). Oil is the main fuel (52%), while natural gas, biofuels and electricity have the same share of 16% %. Tunisia total final consumption by sector (2011) Tunisia total final consumption mix (2011) Coal 9% 8% 3 26% 27% Industry Transport Residential Commercial and Public services Other 16% 16% 16% 52% Oil Natural Gas non hydro FER Biofuels and waste Electricity Heat Source: I-com on IEA data Biomass epresents more than halve of the residential final consumptions, followed by oil, while in the industrial sector final consumptionss are dominated by hydrocarbons (43% gas and 35% oil). The averagee electricity consumptionss in the residential sector is 367 kwh/capita, while the per capita gas consumptions is very low (20 m 3 /capita). Tunisia Residential final consumption mix (2011) 16% 52% 22% 1 Coal Oil Natural Gas non hydroo FER Biofuels and waste Electricity 22% Tunisia Industry final consumption mix (2011) 43% 35% Coal Oil Natural Gas non hydro FER Biofuels and waste Electricity Focus on TUNISIA Heat Heat Source: I-Com on IEA data Energy prices Domestic electricity tariffs span from 0,084 $/kwh to 0,1444 $/kwh (tax excluded) - depending on averagee monthly consumptions. According to OME, the majority of energy subsidies are dedicated to LPG (889 M in 2007). 30

32 RES penetration RES penetration in the primary energy supply reaches almost 15% (most of which refers to waste), while the 2011 contribution of RES to electricity production is 1% %. biofuels and Wind PV Hydro Source: I-Com on IEA data Solar thermal collectors reached in 2011 a surface of m 2 (378,2 MWth) - i.e. approximately 51 m 2 /1000 inhab. Solid biomass domestic supply reached TJ in 2011, almost totally used in the residential sector. No electricity production from solid biomass was detected. Policy overview Focus on TUNISIA The mission related to renewable energy development and energy efficiency improvement is shared among the Department of Electricity, Gas and Energy Efficiency and ANME - the National Agency for Energy Conservation, which operate under the control of the Ministry of Industry. The Agency was established in 1985 to promote the development of renewable energies, mainly in electricity production. The electricity is supplied for 87% by STEG, a state-owned company which holds the monopoly of transmission, distribution and wholesale and retail electricity market. Among its plants, in 2011, we could find a wind farm of 55 MW and some hydroelectric power stations which had a cumulated installed capacity of 62 MW. In STEG production program, that defines a development path until 2016, there is no reference to any increase of the renewable plants capacity. The remaining 13% of the electricity consumptions is produced by independent power producers, self-producers and operators who have concessions, granted under the hydrocarbon code. Independent power producers are required to use natural gas as primary sources, according to public concessions and Power Purchase Agreement. Self-producers, instead, can supply electricity from fossil fuels or renewable sources. Since 2009, the Tunisian Government has allowed them to produce electricity by renewable sources, to sell STEG a maximum of 3 of electricity generated and to utilize the national grid to transport it, by paying a right of use. The auto-consumer have to pay also the costss of the connection and those of the improvement of the grid. The purchase price is the same price paid by consumers. 31

33 In 2005, Tunisia adopted a National Energy Program for the period Subsequently, Governmental Authorities established a National Fund for Energy Management (FNME) to finance energy efficiency projects and renewablee energy development. In 2008, the Government approved a general Strategy, by setting ambitious targets on renewable and efficiency energy matters to be achieved by In detail, policy makers expected that renewable energy would supply 13% of primary energy consumptions. Wind, hydro and biomass energy would contribute respectively for 6,1% %, 0,7% and 4,3%; solar water heater would supply the remaining 1,9% through the installation of m 2 of solar collectors. In 2009, a decreee defined incentive system: it provided subsidiess to facilitate solar water heaters installation in residential, industrial and tertiary sectors. The increase of wind capacity has been yet connected to large-scalee approach. The target of four-year plan includes also the realization of a pilot project for the installation of maximum 2 MW of PV plants for the residential sector and 1 MW for the public sector, administrative buildings, hospitals, schools and universities. The goal will be achieved through favorable financial conditions. It is also challenging the renewable application in agriculture and rural area. Moreover, in 2010, the Government adopted a Solar Plan with the objective of 16% of the total electricity power capacity supplied by renewable energies plants by It promotes the realization of 40 initiatives, financed by private and public sources: in detail, it supports solar technologies in thermal and electricall applications (17 projects), wind systems (3), energy efficiency operations (7 projects), implementationn activities (7 actions) and other projects (7 programs). Among these initiative, PROSOL is very interesting to our study: it is a financial mechanism which gives incentive and banking grants to support the installation of solar water heaters in the residential sector, hotels and some collective and commercial buildings. Other projects concern the diffusion of solar cooling and drying technologies and the promotion of distributed generation PV plants: it expects the installation of 15 MW of solar roof panels and PV water pumping systems. However there are also programs affecting the constructionn of large-scale CSP plants. Since 2000, Tunisia Government has showed an interest for energy efficiency. The ANME adopted a strategic plan to improve energy savings in different sectors; it includes specific actions to define a legall framework, to grant tax and financial incentives for energy efficiency operations, to establish training and formation courses and to support R&D and demonstrativee projects. In the recent four-year program for energy conservation ( ), authorities announced a 2 reduction in the energy consumptions by 2011 (2 Mtep). It provides actions in many fields: it requires a more efficient coordination between producers and national grid operators; it promotes the use of solar energy for water heating in commercial buildings and sets energy efficiency standards for the construction of new residential buildings; it supports lamps substitution and information campaign to raise consumer awareness. Focus on TUNISIA 32

34 TUNISIA - RES and EE policy overview Issue Description Notes INSTITUTIONAL FRAMEWORK Central administration responsible for RE&EE policy Implementing Agencies for RE&EEE policy Role of Local Authorities in promoting RE&EE Ministry of Industry National Agency for Energy Conservation (ANME) None Operates sector in RE & EE Energy strategy related to RE&EEE development Solar Plan adopted in 2010 Four yeaprogram for Energy Conservation adoption ( ) LEGAL FRAMEWORK TOOLS RE&EEE Law RE&EEE targets and obligations Target and obligation degree of enforcement Support Incentives No specific RE&EE laws have been issued 16% of total power generation capacity from RE by 2016 (4 by 2030) 24% primary energy savings by 2016 (4 by 2030) Good fiscal and custom duty exemptions financial schemess (PROSOL) RE&EE included in general electricity laws Focus on TUNISIA 333

35 ITALY Main energy indicators In 2011 primary energy supply reached 167,4 Mtoe, 83% based on carbon fuels: compared to 10 year before, the datum is 2,7% lower. The time series also shows a net increase of natural gas (which partially substitute oil), a clear increase of non-hydro RES and a constant 2% import of electricity (due to the absencee of nuclear energy in the electricity generation). ITALY TPES 2011 (167,4 Mtoe) 2% 4% 6% 2% 1 38% 38% TPES 2001 (172,1 Mtoe) 2% 3% 1% 2% 8% 34% 5 Coal Oil Natural Gas Nuclear Hydro non Hydro FER Biofuels and Waste Electricity Heat 2% TPES 1991 (150,2 Mtoe) 2% 1%2% 28% 56% 9% Focus on ITALY Source: I-com on IEA data Energy import dominate the supply of energy; the dependence on import is becoming more and more severee in recent years. 34

36 Transport has the highest share in final energy consumptions (3), followed by the residential sector (25%) and industry (23%). Oil is the main fuel (42%), while natural gas and electricity have a share of respectively 28% and 21%. ktoe Italy net import/tpes Source: I-com on IEA data Italy final energy consumption by sector (2011) Industry 1 12% 23% Transport 25% 3 Residential Commercial and Public services Other 4% Italy total final consumption mix (2011) Coal 3% 2% Oil 21% Natural Gas 42% FER 28% Biofuels and waste Electricity Heat Focus on ITALY Source: I-com on IEA data Natural gas is by far the main energy vector for the Italian residential (58%), followed by electricity (19%) Electricity and natural gas also dominate energy consumptions of industry, with 38% and 32% respectively The average electricity consumptions in the residential sector is 963 kwh/capita, while the per capita gas consumptions is 342 m 3 /capita. 35

37 11% Italy Residential final consumptionn mix (2011) Coal 2% 1 Oil 19% Natural Gas FER 58% Biofuels and waste Electricity Heat Italy Industry final consumption mix (2011) Coal 8% 8% Oil 12% Natural Gas 38% FER 32% Biofuels and waste Electricity 2% Heat Source: I-Com on IEA data Energy prices Domestic electricity tariffs span from 0,177 $/ /kwh to 0,268 $/kwh (tax excluded), while gas prices for domestic consumers is 0,075 $/kwh (0,802 $/m 3 ). No updated information on fossil fuel subsidies are available for Italy to our knowledge. RES incentives, which are transferred to consumers in electricity bill, willl reach 12 billion and remain high for decades Focus on ITALY Photovoltaic Other RES feed in tariff Other RES incentives Regulatory RES certificates purchase Source: Italian Ministry for Economic Development and AEEEG (data are in million euros)

38 RES penetration RES penetration in the primary energy supply reaches almost 12% in 2012, while the 2011 contribution of RES to electricity production is 29% Source: I-Com on IEA data GWh ITALY Electricity RES production geothermal waste biofuels Wind PV Hydro Solar thermal collectors reached in 2011 a surface of almost m 2 (2.094,5 MWth) - i.e.. approximately 49 m 2 /1000 inhab. Solid biomass domestic supply reached TJ in 2011, 24% of import origin; 2523 GWh of grosss electric production from primary solid biomass was registered. Policy overview Italy has started to promote the generation of energy from renewable sources since early 90. The referencee documents are the Law n. 9/1991, which introduced the possibility of producing energy from renewablee sources through a simplified permitting procedures, Law 10/ /91, which obliged regional governments to draft energy plans based on the promotion of renewables and the CIP6/92 regulation which established the first fixed feed-in tariffs for RES (this latest instrument has attracted criticisms since it incentivized also non- renewable plants). This first legislative initiatives were useful in setting new rules for the electricity sector, starting the,liberalization process in the generation segment. Another important milestone is the Legislative Decree 79/999 derived from the first EU Legislative Package which introduced the liberalization of the Italian electricity market and encouraged electricity production from renewable sources by establishing the priority on grid access for renewable electricity, as well as a renewable energy quota system (green certificates). This green certificate mechanism required power producers and importers to produce a certain percentage of electricity from renewable sources, starting from 2% and gradually increasing. Green certificates were to be used to fulfill this obligation. Producers and importers could also fulfill their renewable quota obligation by purchasing certificates from third parties. The certificates were tradedd on a parallel market independent of the electricity market. The Green certificatee system, on which several different legislative interventions occurred, was tailored on utility scale plants, in particular wind and biomass. In 2003, the European Directive 2001/77 for the promotion of electricity from RES was adoptedd (Legislativee Decree 387/03), setting a national target for the contribution of renewable to the electricity production to 17%. Focus on ITALY 37

39 In 2005, Italy introduced a Feed-in five different FITs programs have been introduced and tariff classess have been progressively reduced. During the time, policy makers have tended to incentivize small PV installations, in order to increase the self-energy consumption. The last FIT program set a limit to the cumulated annual costs of the incentivizing system (6,7 billion euro): this threshold was exceeded in mid Since then, new PV installations don t have received any premiumm tariff. Tariff (FIT) system to incentivize the electricity produced by PV installations. Since then, In 2011 Italy transposed the European Directive 2009/28/ /EC for the promotion of RES by adopting the Legislative Decree n. 28 which set a 17% national target for renewable energy contribution to gross final energy consumptions by From 2013 the quota system has been replaced by a feed-in system, based, under certain technology-based threshold, on a tendering procedure. The 2011 Decree set a goal of MW of renewable capacity installed by In 2012, the Italian Government introduced the so called Conto Termico (FIT for thermal energy), an incentive mechanism to support energy efficiency projects in public administration buildings and installationss of thermal renewable energy systems. The annual spending is limited by two different caps for public and private subjects. Apart from Central-Governmental legislation, Regional and Local Authorities have an active role in promoting renewable energy deployment. Their competencies in energy matters span from energy and environment planning to permitting. They also manage the European structural funds economicc resources, delivered in order to co-financstrategic axe of the European regional development Funds in the last programming cycle ( ). With regard to the energy efficiency, Italy is committed to achieve an overall energy saving of 9% %, in respect of the reference scenario for final consumptionss by In the Energy Efficiency Action Plan presented to the European Commission in 2011, Italy announced the adoption of different initiatives to achievee this local projects. Efficient use of energy and natural resources has been indeed one of the target. In 2005, Italy introduced a general legal framework for the setting of minimumm standardss for energy consumptions in building and building energy audit and certification (according to general principles of EC 2002/91/EC Directive). In 2009, Italy completed the implementation of this directive, by setting specificc operative guidelines. Since 2007, the government has promoted energy efficiency projects in residential buildings, through tax deductions. In year 2004 a White Certificates mechanism has been introduced: electrical energy and natural gas distributors are obliged to realize energy efficiency operations to achieve annually a certified energy saving amount. They can either realize it directly or buy the certificate of energy savings. In 2012, obligations were raised and sector of intervention extended. Energy efficiency represents one of the most important energy topic of Regional Governments. In their environmental programs, energy plan and ordinary legislative acts, local authorities often set targets and adopt measures to promote energy savings. For example, in 2010, Lombardia Region adopted a specificc plan to improve energy efficiency, including 70 actions. It provided initiatives in public lighting, sustainable mobility, installation of solar thermal and PV plants in building sector. Trentino Alto Adige and Valle d Aosta, instead, have introduced different incentive mechanisms in order to promote energy saving in residential buildings, the installation of self-consume thermal and electric renewable energy plants, and the renewal of industrial facilities. Lazio approved a specific code of environmentally friendly architecture: it provides that in new and restructured buildings electric and thermal renewable energy plants must be installed in order to increase the self-consumptions. In promoting distributed RES and energy efficiency in the building sector a major role is played by Municipalities. Indeed one of the most powerful instrumentt to impose high energy standards and promote innovation in the construction sector is represented by building codes. In Italy, according to the National Observatory on Building Codes (ONRE promoted by CRESMEE and Legambiente) almost municipalities have modified the existing building codes to introduce new criteria for buildings, introducing more stringent energy performance. The increase in the number of Municipality that adopt such new codes has increased consistently in the last 5 years. Focus on ITALY 38

40 National policy for R&D in the energy sector For what concern R&D and innovation policy, the situation has to be evaluated at two levels: one at national level and one at European level. At national level, R&D expenditure and human resources underperform if compared to the average of EU (respectively 1,25% of GDP and 4,3/1000 inhabitants, compared with the average EU of 1,9% and 6,6/1000 inhabitants). Also from a planning point of view the situation has to be improved: the National Research Program (the national framework planning instrument for R&D) has a short time horizon and was adopted four year after the previous Program expired. Despite this difficulties, national R&D presents different excellences at international level. Energy can be considered as one of the sector wheree the national innovationn system has better performances. Indeed, the presence of important national public and private research centers, big energy companies as well as numerous innovative SMEs help the system to generate important activities in the energy sector. Financial resourcess are found not only in the general budget for the promotion of R&D activities, but also from the so called Ricerca di Sistema, a special fund aimed at financing R& &D and innovative applications in the electricity sector. The resources for this fund (221 M for the period ) come from a fee included in the electricity tariff, under the supervision of the Regulatory Authority for Electricity and Gas. The programme has assigned available financial resources for the three following priority areas: 1) Management and Development of the National Electric System : 81 M ; Electricity Production and Environment Protection: 90 M ; Optimisation and Saving of Electricity in End Use Sector: 50 M. Important resources for the promotion of R&D activities in the energy sector are also available thanks to the European Structural Funds managed at regional level. European funds are the second pillar of the Italian R&D policy. Indeed the European Union adopted an important support program for R&D activities. The VII Framework Programme (VII FP - ) made available 50 billion euros for the period , while the new instrument for the period , Horizon ( has a total budget of 80 billion euros. The VII FP had a specific budget line for financing transnational cooperation in the energy and transport sector. More than 2 billion euros have been invested in this sector. Italy had a good performance in participating in the VIII FP calls, both for public institutions and for private enterprises Another interesting instrument made available thanks to VII FP is epresented by the calls specifically dedicated to support R&D activities of SMEs. Among the different sectors eligible, energy attracted many proposals. Focus on ITALY 39

41 ITALY - RES and EE policy overview LEGAL INSTITUTIONAL FRAMEWORK FRAMEWORK Issue Central administrationn responsible for RE&EE policy Implementing Agencies for RE&EE policy Role of Local Authorities in promoting RE&EE Energy strategy related to RE&EE development RE&EE Law RE&EE targets and obligations Target and obligation degree of enforcement Ministry of Economic Development; Ministry for Environment, Land and Sea National Agency for new technologies, energy and sustainable economic development (ENEA) GSE, state-owned company which promotes and supports renewable energy sourcess Very important Very high Description National energy Strategy adopted in 2013 National Renewable Energy Action Plan issued in 2010 National Energy Efficiency Action Plan issued in Legislative Decree 3/3/2011 n. 28 (adoption of Directive 2009/28/CE on RE) Decree 28 December 2011 on thermal RE Legislative Decree 29/03/2010 n. 56 (modification of previous legislation on energy efficiency of adoption of the Directivee 2006/32/CE) Specific legislation for energy efficiency in building and appliances (in adoption of specific EU Directives Regional legislation on RE & EE 17% share of RE in gross final energy consumptionss by ,6% gross final consumptions at 2016 Notes Share competences on RE & EE policy Operate in sector territorial planning permitting management of European Structural Funds Binding targets RE & EE Focus on ITALY TOOLS Support Incentives dispatching priority for RE net metering VAT reduction FIT fiscal deduction for RE and EE in residential building FIT for thermal RE White certificates 40

42 ITALY Case studies 1 The Energy Manager Hereinafter we will summarize an examplee of a best practice about a measure for energy efficiency improvement implemented in Italy, but having basic characteristics that make it suitable to be replicated in MPCs. Before going into details, it is important to underline the reasons why EEI measuress should be designed and implemented also in a context where highly subsidized energy prices are in force. Currently, this condition is existing in most MENA countries with the consequence to create a low incentivising system for energy efficiency, if not worse to encourage wasteful behaviour and seriously to weaken the cost- of the effectiveness of energy efficiency measures. With specific reference to MPCs, reasons to promote EEE and RE are linked with the achievement following objectives: Increasing energy accessibility and fightingg poverty. Poverty is a serious problem in many Southern Mediterranean countries and there is an urgent need for vigorous new policies to increase energy accessibility to remote and rural areas to mitigate energy and human poverty 9. Obtaining significant economicc benefits for participating end-users and transferring on the community the benefits from lower energy consumption. Energy efficiency and renewable energy offer the possibility to decrease the monthly energy bill of low-income families and to reduce the State annual budget for subsidizing energy. Satisfy increasing energy demand and reduce air pollution in cities The MENA region, like almost everywhere in the world, faces huge energy and environmental challenges which will require massive investments and a complete transformation of existing energy systems. More energy will be needed, but with lower, or even zero, emissions. Higher prices for many fuels are likely and subsidy reform will become increasingly unavoidable. A way to balance these requirements needs to be found, to be able to provide affordable, clean energy for all while also keeping the lights on, and indeed, continuing to bring light to those without. Energy efficiency is one of the critical aspects of meeting the energy challenge, The partial substitution of carbon-based energy by renewable energies is another. The mandatory appointment of the energy manager in Italy The Italian National Energy Plan in 1982, with the promulgation of the Law 308/1982, imposed to large industrial consumers the obligation to nominate a person Responsible for the Rational Use of Energy (usually referred as Energy Manager). Over the years this technical expert has played a decisivee role in energy-intensive enterprises. Nine years later, in the frame work of Law N. 9 and the Law N. 10 of 9 January 1991, concerning the implementation of the new National Energy Plan, many advanced requirements were set up to promote energy efficiency and renewable energy sources. Namely, article 19 of Law 10/ /1991: extended the mandatory appointment of the energy manager to large energy consumers operating also in the civil and transport sectors; better defined the role of this figure and introduced fines on those companies and authorities failing to comply with this compulsory requirement. Focus on ITALY The role and functionn of the Energy Manager The basic provision of article 19 of Law N. 10/1991 is the appointment of an Energy Manager in each company having an annual consumption higher than a threshold indicated by the Law itself. The introductionn of Energy Managers represents a cost-effective measuree for demand side management, bringing benefits for end-users and for the sustainable development and security of supply of the Country. 9 About 21.4% of the Arab region, mostly in rural areas, have no access to electricity; a further 20.3% are severely undersupplied, both in rural and poor urban areas. Almost one-fifth of the Arab population rely on non-commercial fuels to meet their daily energy needs, particularly in the LDCs. More than 29. of the Arab population (90 million people) are on income below 2 US$/person/day, and have no or limited access to modern energy services. 41

43 The main aim of this instrument is to guarantee that companies, with a relevant primary energy consumption, have an expert who deals with the analysis of energy flows, promotes energy efficiency measures and support the top management and the policy makers (in the Public Administration) to pursue a sustainable development. The threshold is set at toe/year for all subjects operating in the industrial sector and in toe/year for, civil and tertiary sectors (including public administration). The appointed Energy Manager can be an employee of the company subject to the obligation or an external consultant. The second approach is particularly suitable for medium size companies and for small Local Authorities, which don t reach an energy bill capable to justify the hiring of dedicated employee. Main tasks of the Energy Managers are: arrangement of energy balances; identification of actions, interventions and procedures necessary to ensure the promotion of the rational use of energy; technical- measures include cogeneration systems, heat recovery, heating and cooling plant enhancements, building shell insulation, efficient lighting systems, other high scale interventions, etc. economic assessment of energy saving interventions; communicatio n and reporting. Energy efficiency The Energy Manager Programme has a sectors: well defined and broad target group since it addresses all Public sector (municipalities, ministries, other public administrations) Industrial sector (mediumm and large enterprises, power producers, utilities, etc. ) Transport sector (goods and public transport, airports, large train stations, etc.) Commercial and service sector (shopping malls, warehouses, banks, hotels, sport centres, ESCOs, etc) Agriculture sector (large farms) The role of energy manager is recognised worldwide. Italy has introduced a mandatory approach which can enhance the competitiveness of the companies either at domestic and international level. It has to be stressed that one of the main advantages of such an approach is the creation of a national network, which could be easily extended to a wider scale, useful for spreading best practices and sharing experiences with other Energy Managers. Market failures to overcome The main market failures are related to: - the fact that many public and civil users have not appointed an energy manager; - the inadequatee hierarchical position of some Energy Managers in their companies; - the difficulties to convince top managers and policy makers in adopting the proposed measures. Focus on ITALY The regulations introduced by the Legislative Decree 192/2005, which gives to the Energy Managers operating in the public sector the additional task to check and approve the energy efficiency certifications for new and renovated public buildings has helped to overcome the problem mentioned at the first bullet. Among success factors we would mention: Excluding cases in whichh the appointment of the energy manager has been done only as a purely formal exercise to comply with legislation, it can be reasonably assumed that companies and public authorities appointing their own energy managers do that because they are really convinced of the usefulness of devoting one of their employee activities to energy management. Consistency over time of the number of appointed energy managers shows that the program has been generally judged positively by companies. Failure factors Several organisations from the public and commercial sectors do not comply with the requirement of appointing an energy manager. Among reasons for failure, often related to the typical barriers that energy managers face, we can mention: energy issues are far away from the core business of the companies; top management are often scarcely aware of economic benefits coming from energy saving investments; lack of capability for Energy Manager to speak non-technical languages with the people who take the decisions about investments; lack or insufficient economic and financial resources; unfavourable rules for Energy Manager budget allocation. 42

44 The options to overcome the above mentioned issues include: implementing mass media campaigns to create/increase a deeper awareness about energy issue ; training Energy Manager in order to provide them with adequate technical, financial and communicating skills and tools; promoting the creation of ESCOs capable to offer services which include third party financing and energy performance contracting; establishing incentivising systems for the Energy Manager linked with quality of their performances (e.g. to remunerate the Energy Managers with part of the economic savings arising from the energy projects and measures they have proposed and implemented). Energy Manager changing role Today energy managers in their job have to face several additional issues arising from relevant changes in the boundary conditions, such as the energy markets liberalization, the decentralization of administrative and political functions and tasks, the diffusion of third party financing and ESCOs, the evolution of energy efficient technologies, the trend of fossil fuels price. This ever changing environment requires a consistent training in orderr to keep up to date. Energy Managers in fact are horizontal professionals that should be able to: monitor hourly and disaggregate energy consumption (market liberalization helps); analyze energy flows (EMAS can support it); find out and promote energy efficient behaviours and customs; verify O&M procedures (building automation, remotee monitoring); carry out feasibility studies with respect energy saving investments; evaluate from a technical and economic point of view proposals from ESCOs and other operators; optimize the management of electricity and gas contracts. All the above means that they have to addd to the technical capabilities, the knowledge and some skills related to environmental, financial and communicating aspects. Focus on ITALY 43

45 2 Tavoli di Lavoro Multi-stakeholder Working Groups for improving Energy Efficiency in Existing Buildings Aims of common engagement Tavoli di Lavoro 4E is a consultation mechanism launched in April 2011, in parallel to the EU funded REQUEST Project, aimed at creating synergy between key stakeholders in the building sector and improving the demand-supply relationship for effective low-carbon renovation. Main objectives of the mechanism are: The consultation mechanism Improve the offer-side by defining tools and standardss for quality in the supply chain Stimulate the demand side by collecting relevant information and informing owners and userss Accelerate the coherent implementation of current legislative measures and develop insight for new ones by submitting shared proposalss to the central government Multi-stakeholder Working Groups activities ENEA, the Italian National Agency for New Technologies, Energy and Sustainable Economic Development supporting the Ministry of Economic Development, coordinates the mechanism and animates the debate - minimising conflicts and driving participants towards shared solutions - within 4 multi-stakeholder Working Groups (WGs): Certification of enterprisess and products Education /Qualification of trades and professionals Contracts Information/Promotion Engagement of key stakeholders, developers, contractors, designers, policy makers, certification bodies and experts associations, is periodically ensured through thematic meetings, constant networking activities and remote working. The Ministry of Economic Development is regularly involved and informed by ENEA. Discussions also take cue from national and international best practices and from outcomes of high level expert forums. i The Tavoli di Lavoro 4E approach assumes that stakeholders involvement will enable to develop more realistic and effective policies as well as increase the cost- difficulties and effectiveness of their implementation, by anticipating problems. Multi-stakeholder Working Groups Composition and Themes Certification Energy Performance Certification as a tool for implementing and monitoring low carbon renovation Shared knowledge basis on cost effectiveness of renovationn measures for different target groups Sustainability certification of buildings Education/Qualification Qualification and accreditation schemes for professionals and trades Supply actors cooperative work Contracts Qualification/Certification schemes for ESCOs Replicable contract models (EPC) for the public sector Information/Promotion A Hub for a step-by-stepp assisted effective renovation with the participation of key Stakeholders. Develop specifications and validate information for Energy Efficiency in Buildings Focus on ITALY 444

46 Resultss Main results of the Working Groups are position papers, shared proposals to the central government and clustering for Energy Efficiency targets achievement. Tavoli di Lavoro 4E have already produced and submitted to the Ministry of Economic Development: PROPOSAL 55% Plus Consensus around an improved financial scheme for energy renovation (September 2011) POSITION PAPER ON ENERGY PERFORMANCE CERTIFICATION A shared vision for the Italian transposition of the EPBD Recast (June 2012) Both proposals, conceived to impact the ongoing legislative processes, are intended to promote major renovation and stimulate combined minor refurbishment measures at the same time. They are also focused on the role of EPC recommendations to facilitate monitoring and evaluation by responsible authorities. PROPOSAL 55% Plus Demonstrable effectiveness and compliance of incentivized measures Feasible economic, energy and social impact assessment and comparison to NEEAP targets Minimum cost for the State Encourage higher effectiveness and fulfil improvement potential POSITION PAPER ON ENERGY PERFORMANCE CERTIFICATION Improving Energy Performance Certificate 1. Update the EPC layout and contentt 2. Integration of estimated consumption indicators 3. Quality and details of EPC recommendations 4. Remote web based information system to assure further and more detailed/customised information Integrating regulations and legislative instruments 5. Mandatory EPC (energy performance certificate) before and after renovation when accessing/grantingg public incentives 6. Mandatory light energy audit and/ /or visit in order to issue trustable EPC and recommendations 7. Developing a monitoring system for retrofit and consumption savings 8. A harmonised EPC based system for defining and assessing energy performance policies 9. Fostering certification of the overall buildings rather than individual building units in multifamily buildings (condominiums) 10. A communication campaign for promoting certification and step by assistance for renovation Focus on ITALY 45

47 Some numbers Participants 34 national associationss and federations in the energy and building sector (almost 150 representative entities): ACER, AESS Modena, AGESI, AIPE, AIRU, ANCE, ANDIL, ANIT, ANPE, ASSITES, ASSOLTERM, ASSOTERMICA, ASSOVETRO, BROSS/REDAIS, CESARCH, CESTECC, ClimAbita, CNA, CNAPPC, CNI, CNPI, CONSIP, EUESCO, FEDERCASA, FINCO, FIRE, GBC Italia, GSE, ICIE, ICMQ, RENAEL, SUSDEF, UNCSAAL, UNICEDIL Participants websites listed on: liaising with participants and the Italian Ministry of 4e.aspx Meetings 16 meetings (6 plenary, 10 thematic WG meetings and continuous Sustainable Development Events 4 national conferences organised and more than 20 events attended Press More than 50 web and print articles Lesson learned From the Tavoli di Lavoro 4E experience so far, awareness has been gained on the opportunities offered by bringing together different stakeholders to rouse acceptability and insight. The role of ENEA as National Energy Agency in learning from best practices, spreading and sharing them among potential key implementers is appreciated: By the Ministry of Economic Development, for integration in new regulatory instruments for Energy Performance of Buildings By participants, as a good way to elevate the knowledge level and stir opportunities for market development Enthusiastic stakeholders participation and interest from policy makers call for permanent networking activities around the Energy Performance of Existing Buildings in Italy. The stakeholder working groups, currently comprising 34 national associations and federations, is gaining new adhesions and promises for a longer life perspective. Many participants have recently committed themselves to carry out joint activities with ENEA on: Setting up a shared knowledge basis on cost-effectiveness of measures (in progress) Making significant informationn available for assisting different target groups towards renovation Clearing the ground for replicable best practices by coaching local case studies. Focus on ITALY Thematic Working Group meetings at ENEA headquarters 46

48 SPAIN Main energy indicators Spain 2011 TPES was 125,6 Mtoe, almost unchanged compared to % of 2011 TPES is represented by carbon fuels. Nuclear has an important share with 12%. Natural gas an renewable energies has grown against oil and coal. SPAIN TPES 2011 (125,6 Mtoe) 2% 4% 12% 6% 1 Coal Oil Natural Gas 23% 43% Nuclear Hydro non Hydro FER Biofuels and Waste Heat TPES 2001 (125,0 Mtoe) 3% 1% 3% 13% 15% 13% 52% 6% TPES 1991 (93,4 Mtoe) 3% 4% 16% 21% 5 Focus on SPAIN Source: I-com on IEA data The combined effect of increase of energy demand and decline of national production raised energy dependencee (the 2011 ratio between net imports and TPES is 84%) 47

49 ktoe Spain net import/tpes Source: I-com on IEA data Transport has the highest share in final energy consumptions (36%), followed by industry (23%) and the residential sector (18%). Oil is the main fuel (52%), while electricity is the second most important energy vector (23%). Spain final energy consumption by Spain total final consumptionn mix sector (2011) (2011) Industry Coal 2% Oil 12% Transport 11% 23% Natural Gas 23% 18% 36% 6% Residential 52% FER 17% Biofuels and Commercial and waste Public services Electricity Other Heat Source: I-com on IEA data Electricity dominates the residential final consumptions (39%), followed by natural gas (26%). Natural gas and electricity also dominate energy consumptions of industry, with 38% and 3 respectively. The averagee electricity consumptionss in the residential sector is 1608 kwh/capita, while the per capita gas consumptionss is 98 m 3 /capita. Focus on SPAIN 48

50 SPAIN Residential final consumption mix (2011) Coal SPAIN Industry final consumption mix (2011) 1% Oil 5% 18% Natural Gas 39% 3 21% FER 26% 15% Biofuels and 6% 38% waste Electricity 1% Heat Coal Oil Natural Gas FER Biofuels and waste Electricity Heat Source: I-Com on IEA data Energy prices Domestic electricity tariffs span from 0,187 $/ /kwh to 0,367 $/kwh (tax excluded), while gas prices for domestic consumers is 0,072 $/kwh (0,777$/m 3 ). No updated information on energy subsidies are available for Spain to our knowledge. RES penetration In 2011 almost 29% of the produced electricity derived from RES, mainly wind and hydro. There is also a non-negligible contribution of PV and CSP. GWh Electricity RES production solar thermal Wind PV Hydro Focus on SPAIN Source: I-Com on IEA dataa In 2011 solar thermal collectors reached a surface of almost m 2 (1.914,9 MW th ) - i.e.. approximately 59 m 2 /1000 inhab. Solid biomass domestic supply reached TJ in 2011 (all national production), whit 2935 GWh of grosss electric production. 49

51 Policy overview In 1990, the Spanish Government adopted a Law for Energy Conservation. In 2000, national authorities approved a Development Plan of Renewable Energies in Spain providing a support to the diffusion of wind, mini hydro, solar and biomass technologies for the electric and thermal generation. In 2005, Spain launched a second plan which set targets to achieve by 2010: in detail, it expected that the primary energy consumptions would be supplied for 12% by renewable sources and the production of electricity would be covered by renewable for 29,4% at least and the biofuels would contribute to 5,75% of the consumptions in transport sector. It provided feed-idiffusion of photovoltaic collectors in buildings. tariffs, tax incentives and public subsidies from local and central agencies to support the In 2011, Spain approved the third Plan for Renewable energies ( ), by drawing development path in order to reach the European targets. It expect also 38,1% of electricity production supplied by renewablee sources, an increase of the contribute of renewable energy (from in 2011 to ktep by 2020) to gross final consumptions in heating and cooling sector. In the National Renewable Energy Action Plan presented to European Commission (2010), Spain indicates different policy to adopt: the development of a renewablee heat incentive system (ICAREN) for thermal renewable energies, the inclusion of renewablee thermal energies and heating networks in building energy certification systems, the creation of a registry called "Renewable Thermal Installations and other Renewablee Energies not subject to the special Renewable Energy Regime, the drafting of an implementing legislation for multi-annual plans to harness energy from products, by-products or waste from forestry and agriculture and foster restocking for energy purposes. In the last 20 years, Spanish authorities have adopted different measures in order to achieve these targets: in 1998, the first FIT system was introduced, and subsequently modified in 2007, 2009 and Until 2012, the amount and the time length of the remuneration system vary by type of technology (25 years for PV installations, 15 for biomass) and size of plants power. In 2012 incentives were temporarily cancelled. Since 2013, instead, the owners of installations must sell electricity at regulated tariff, or freely on the energy market, without receiving any premium. In 2011, Government regulated the connection of small power plants to the electricity grid, by optimizing the administrative, contractual, economic and technical conditions. The regulation has allowed small businessess and the domestic sector to access small scale electricity generation and self-consume the energy produced. Moreover, there were financial assistance (low-interest subsidies, deductions, grants and loans) for some renewable technologies, but since 2011 they have been revoked for all types of solar and biomasss installations. At regional level, governments of the Autonomous Communities have competences in territorial planning, energy and mining schemes and environmental issues relating with their territorial scope. Most of them, have planned different measure to promote the use of renewable energies in public building. Andalusia and Catalonia have better performed. For example, Andalusia has introduced different incentive mechanisms to promote the distributed energy power generation projects with renewable energy for enterprisee technology parks and industrial districts, the diffusion of thermal applications for the need of individuals and communities, the installation of photovoltaic solar energy in isolated areas. Many local governments have enacted ordinances concerning the use of solar and thermal energy in building. Moreover, autonomous communities have different approaches to treatt and publish the register of companies authorized to realizee thermal installations in buildings. Nine of them, for example, publish the list on their web page. In the energy efficiency sector, Spain has adopted different measuress in order to support the diffusion of electric cars, the energy saving labeling standards. In 2011, Spain government approved the Plan of the improvement of energy savings: it promotes the empowerment of rail transport for transport of goods, the optimization of air corridors and the reduction of rail ticket to incentive the use of public transport. Regardingg the building sector, the Government dedicates a specific credit channel to ESCO companies, in order to facilitate the energy efficiency operations and promote the use of biomass for heat. The Plan provides the renewal of public lighting and the introduction of smart grids. During 2012, different programs have been implemented to achievee the Plan goals: a subsidy mechanism to promote the purchase of efficient vehicles in tourism and commercial sectors, the establishment of legal framework for the diffusion of electric charge points and an economicc incentive to electric and hybrid vehicles. An Investment Fund for the diversification and saving of the energy has been established to finance urban projects of energy efficiency operated by ESCO or other private enterprises. Moreover, in 2013, a national decree introduced higher requirements on Focus on SPAIN 50

52 the energy performance of cooling and heating applications for residential buildings (as defined in 2010/31/UE) and it introduced the obligation of periodical inspections to validate the energy performance. The implementation of these targets needs the cooperation between Central and Autonomous Governments, mainly in training and communication strategiess to sensitize consumer. Andalusia, moreover, has adoptedd specific incentive systems to promote the respect of energy certificate equirements by existing buildings, the diffusion of smart meters, the utilization of ICT technologies to allow energy savings, the renewal and substitution of inefficient electric appliances and industrial facilities. National policy for R&D in the energy sector The politics of science, technology and innovation of Spain, as well as the definitionn of actions of promotion and coordination of the scientific and technical research, attributed to the State by virtue of Article of the Spanish Constitution of 1978, are developed according to Law 14/2011, of 1 June, of Science, Technology and Innovation, of 1 June 2011, through the State Plan of Scientific and Technical Research and the State Plan of Innovation. The SPANISH STRATEGY OF SCIENCE AND TECHNOLOGY AND INNOVATION is developedd and financed through the State Plans of Science and Technology, reported favourably by the Council of Scientific, Technological and Innovation Policy at its meeting on 10 December 2012 and by the Advisory Council of Science, Technology and Innovation at its meeting on 28 December Innovation in the energy sector is one of the priority CHALLENGES of this Plan, being the basic pillar to achieve a sustainable generation and an environmentally friendly energy distribution, which is economically affordable and socially aceptable, allowing a sustainable, competitive and secure energy supply that enables an adequatee economic growth and social well-being. The specificc objective of this CHALLENGE is to promote the transition towards an energy system that allows MW of solar roof panels and PV water pumping systems. However there are also programs affecting the reducing dependence on fossil fuels in a scenario which considers, simultaneously, the shortage of thesee fuels, the growth of global demand and the impact thereof on the environment. The R+D+i energy activities that are priority for Spain refer to critical aspects: (a) sustainability to actively fight against climate change, reducing greenhouse gas emissions and favouring the development of capturing and geological storage of CO2 and energy sources -wind, solar, bioenergy, marine, geothermal, hydrogen and nuclear energy- and energy efficiency; (b) competitiveness, to improve the effeciency of the Spainsh and European network through the development of the internal energy market; (c) security of supply, to better coordinate national energy supply and demand in an international context, and (d) social and technological push towards lower energy consumption patterns. Focus on SPAIN The scientific-technical and business priorities proposed for the period are mainly in the following areas: I. SOLAR ENERGY SOLAR THERMAL ELECTRICITY, PHOTOVOLTA AIC AND THERMAL : (i) study and incorporation of new components linked to the hybridisation for energy production; (ii) development and incorporation of new materials; (iii) performance, duration and costs in the production of solar photovoltaic energy and development of advanced processes of manufacturing components; (iv) implementation of new solar thermal energy applications integrationn in buildings, decontamination, water desalination, etc-; (v) development of systems and technologies of energy storage industrial and residential-, and (vi) management and integration of renewable energy into conventional networks. II. WIND ENERGY: (i) development of components and turbines; (ii) network integration; (iii) adjustment of wind turbines/generators to the extreme conditions of the marine environment; (iv) construction materials for structures platforms- and support of wind generators in deep waters; (v) techniques of transport, maintenance, operation of wind platforms, and (vi) characterisation of locations including geotechnical and environmental studies physical and chemical and biodiveristy -fauna, species-, etc. 51

53 III. BIOENERGY: (i) production of terrestrial or marine biomass for applications in industrial processes and energy production; (ii) fuel production systems and conversion technologies for the sustainable production and supply of solid, liquid and gaseous biomasss fuels; (iii) biofuels of high added value, and (iv) production, storage and distribution of biofuels. IV.TREATMENT OF RESIDUES WITH ENERGY PURPOSES: (i) treatment of solid urban waste and residues from water treatment systems and recycling plants, and (ii) study and develoment of gas treatmentt technologies. V. HYDROGEN AND FUEL CELLS: i) H2 production; (ii) research and development of hydrogen technologies and fuel cells; (iii) H2 storage and distribution, and (iv) portable and stationary uses of hydrogen. VI. MARINE ENERGY: wave energy waves- and tidal energy tides-, gradient of salinity. VII. GEOTHERMAL ENERGY: (i) study of geothermal resources of high, medium and low temperature and (ii) processes and techniques for the exploration and evaluation of geothermal energy. VIII. SUSTAINABLE NUCLEAR ENERGY: (i) reactors, safety, prevention and design of new fuels; (ii) support for the management of used fuels and high level waste; (iii) reduction of residues through separation and transmutation techniques and (iv) treatmentt and management of residues of low and averagee activity. IX. REDUCTION, CAPTURE AND STORAGE OF CO2: (i) reduction of CO2 emissions; (ii) technologies to capture CO2; (iii) materials to capture CO2 including materials of renewable origin biocarbons-; (iv) conversion and use of CO2 in new products or materials; (iv) evaluation of locations for CO2 storage; (v) technological viability of the stable and safe storage conditions and (vi) CO2 storage in sea beds - acidification of seas and oceans-. X. SMART ELECTRICITY GRIDS: support of the incorporation of technological developments both in software as well as in hardware, and in the application of new materials and the promotion of information and communication systems, forecasting and optimization systems, power electronics, materials and sensorss and integration of resources and active distribution. Given the transversal nature of energy with regard to the areas of scientific technical knowledge that are affected and that consider the materials, construction, telecommunications to humanities and social sciences, the actions that are articulated through the corresponding actions of the STATE PLAN willl consider the promotion of international leadership of the existing capacities in techniques of construction, development, introduction and application of new materials and systems aimed at improving energy efficiency. Focus on SPAIN 52

54 SPAIN - RES and EE policy overview Issue Description Notes LEGAL TOOLS FRAMEWORK INSTITUTIONAL FRAMEWORK Central administration responsible for RE&EE policy Implementing Agencies for RE&EEE policy Role of Local Authorities in promoting RE&EE Energy strategy related to RE&EEE development RE&EEE Law RE&EEE targets and obligations Target and obligation degree of enforcement Support Incentives Ministry of Industry, Tourism and Trade Ministry of Housing (for building sector) Institute for Energy Diversification and Saving (IDEA) Very important National Renewable Energy Action Plan issued in 2010 National Energy Efficiency Action Plan issued in share of RE in gross final energy consumptions by % gross final consumptions at 2016 Very high Operates in sector RE & EE territorial planning permitting; management of European Structural Funds Focus on SPAIN 53

55 1 SPAIN Case Studies Financing and incentive scheme in Andalusia Andalusia began legislating on renewable energies and efficiency in the early 1990s, on a grants concession approach, by fostering subsidies concessions to the promotion of domestic thermal solar energy under Prosol programme. This subsidies scheme was recognized among other Spanish regions as a model to foster RES development in a region. Some regions adopted the idea in the frame of benchmarking. The Prosol programme was extended in the following years to other energy project categories as every renewable source, rural electrification and oil-to-gas shifting under different programmes. Incentives program for sustainable energy development in Andalusia To help in the simplification of grants and subsidies concession, all financing programmes, weree unified in 2005 to a unique Incentives programme. Currently, the Incentives program for sustainable energy development in Andalusia counts on 480 Mio. funding for the period The main beneficiaries of this incentives scheme are citizens, companies, public institutions and non lucrative entities, AImed at subsidising investments that allow the energetic improvement in the consumption and generation of energy in any sector. More than 93,000 energy saving and efficiency projects with an incentive higher than 300 million euros have been subsidised. The investment associated with these projects exceeds 2 thousand million euros. The Andalusian regional scheme for financial incentives and subsidies to RES facilities was the first one established in Spain as a regional initiative. There are evidences of major success of supporting RES in Andalusia. For instance, Andalusia is the leading region in Spain on low temperature thermal solar surface, technology that was subsidised since 1993 without interruption, summing up to more than installed sq meters. Andalusia is also the regional world leader of Concentrated Solar Power Plants (thermoelectric solar power plants) with more than MW installed. First CSP plants in Andalusia, as PS10 by Abengoa company, or Gemasolar by SENER company, were granted by the Incentives programme for sustainable energy development in Andalusia. Focus on SPAIN PS10 CSP power plant (10 MW) at the Solucar Solar Platform Complex near Seville, Andalusia Gemasolar CSPplant (17 MW) near Seville, Andalusia Five working lines are considered in the Incentives program: Renewablee energy facilities Projects in which using natural renewable resources like wind, solar radiation or biomass, energy is generated as heat or electricity. Energy use facilities Projects that improve energy efficiency at industrial production or in the use of energy, by using residual heat or cogeneration. 54