Co-benefits of Smart and Sustainable Energy District Projects

Transcription

1 University of Padua Department of Management and Engineering DOCTORAL SCHOOL OF MANAGEMENT ENGINEERING & REAL ESTATE ECONOMICS European Academy of Bolzano INSTITUTE FOR RENEWABLE ENERGY Co-benefits of Smart and Sustainable Energy District Projects An overview on economic assessment methodologies Adriano Bisello, Gianluca Grilli, Jessica Balest, Giuseppe Stellin, Marco Ciolli INTERNATIONAL CONFERENCE SMART AND SUSTAINABLE PLANNING FOR CITIES AND REGIONS 2015 Contact detail:

2 The Smart City Projects INTRODUCTION 2

3 The Smart City Projects INTRODUCTION 3

4 The Smart City Projects PROJECTS Temporary endeavour, where a consortium of partners is established to achieve a specific goal in a cooperative way, in contrast with business as usual activities (Kerzner 2013) SMART AND SUSTAINABLE ENERGY DISTRICT PROJECTS (SSEDPs) European international co-funded cooperation projects, applying outstanding energy technologies within urban settlements, involving multiple stakeholders and including the local authority into the consortium (Bisello et al. 2015) INTRODUCTION 4

5 The Co-benefits Concept Recognised by Intergovernmental Panel on Climate Change (IPCC 2007) United States Environmental Protection Agency (US EPA, 2011) International Energy Agency (IEA, 2014) INTRODUCTION 5

6 The Co-benefits Concept Recognised by Intergovernmental Panel on CO-BENEFITS Climate Change (IPCC 2007) The language varies impact, returns, benefit, United value States Environmental but the questions around what sort of difference Protection and Agency (US EPA, how much of a difference we are making are the same. 2011) (Nicholls et al. 2012) International Energy Agency (IEA, 2014) Source: International Energy Agency (2014) INTRODUCTION 6

7 The Cost-Benefits Analysis SSEDP ENERGY SAVINGS ( /kwh) CO 2 REDUCTION ( /Tons) DIRECT DIRECT PRIMARY GOALS COSTS - BENEFITS CO-BENEFITS INDIRECT INDIRECT??? 1. EVALUATION INDICATORS? 2. MONETISATION TECHNIQUES? INTRODUCTION 7

8 The Cost-Benefits Analysis SSEDP CBA is about value, rather than money. Money is simply DIRECT a common unit and as such is a useful and widely accepted way of conveying value ENERGY SAVINGS ( /kwh) DIRECT CO 2 REDUCTION ( /Tons) PRIMARY GOALS (Nicholls et al ) COSTS - BENEFITS INDIRECT PRIMARY GOALS CO-BENEFITS 75% - 350% of energy savings (Ürge-Vorsatz et al. 2014) CO-BENEFITS INDIRECT?? The absence of co impacts (co-benefits? and adverse side effects) 1. EVALUATION is probably INDICATORS the exception? much more than the rule 2. MONETISATION TECHNIQUES? (Ürge-Vorsatz et al. 2014) Source: INTRODUCTION 8

9 Providing an overview on co-benefits economic assessment methodologies SSEDP CO-BENEFITS FRAMEWORK DEMONSTRATION SITE CO-BENEFITS URBAN CO-BENEFITS SSEDP GOALS CO-Benefit 1 CO 2 CO-Benefit 2 Energy Needs CO-Benefit 3 CO-Benefit X HUMAN CAPITAL (Nosvelli 2009; Dagum 2006) AIM 9

10 Providing an overview on co-benefits economic assessment methodologies SSEDP CO-BENEFITS FRAMEWORK DEMONSTRATION SITE CO-BENEFITS URBAN CO-BENEFITS SSEDP GOALS CO-Benefit 1 CO 2 CO-Benefit 2 Energy Needs CO-Benefit 3 CO-Benefit X The knowledge, skills, competencies and attributes embodied in individuals that facilitate the creation of personal, social and economic well-being. (OECD, 2001) HUMAN CAPITAL (Nosvelli 2009; Dagum 2006) AIM 10

11 SSEDPs Database SMART CITY PROJECTS 36 SMART AND SUSTAINABLE ENERGY DISTRICT PROJECTS 22 CONCERTO PROJECTS 14 SMART CITIES AND COMMUNITIES PROJECTS EU FP EU FP EU FP EU FP EU FP act2 crrescendo ECO-city ECOSTILER Energy in Minds! POLYCITY RENAISSANCE SESAC TetraEner Class1 Concerto AL Piano SEMS HOLISTIC REMINING-LOWEX SERVE SS&C (2012): EU-GUGLE R2CITIES ZENN INSMART PLEEC STEEP STEP-UP TRANSFORM CELSIUS PITAGORAS SS&C (2013): CITYFIELD CITY-ZEN SINFONIA READY SORCER STACCATO PIME'S Eco-life SOLUTION GEOCOM Green Solar cities (Bisello et al. 2015) MATERIAL AND METHODS 11

12 SSEDPs Co-Benefits Database ACTIONS ON STAKEHOLDERS 2 CO-BENEFITS Professional skills developed (11) Users awareness on energy related issues and attitude to rational choices increased (12) PROJECT DESIGN AND MANAGEMENT 2 CO-BENEFITS Innovation in processes and decision making (10) Institutional relationship and networks created (10) BUILDINGS AND INFRASTRUCTURES 15 CO-BENEFITS Better environmental resources management (6) Buildings life cycle costs reduction (3) Changes to local tax revenues (3) Energy services developed (6) Enhancement of neighborhood identity (6) Health and well being increased (11) Increased assets value (3) Innovation in technology development and adoption (10) Local air quality improved (2) Local energy supply chain developed (5) Local job s market stimulated (14) Resilience of energy infrastructures (2) Softer loans conditions (5) Tackling fuel poverty (8) Territorial attractiveness increased (8) (Bisello et al. 2015) MATERIAL AND METHODS 12

13 SSEDPs Co-Benefits Database ACTIONS ON STAKEHOLDERS 2 CO-BENEFITS Professional skills developed (11) Users awareness on energy related issues and attitude to rational choices increased (12) PROJECT DESIGN AND MANAGEMENT 2 CO-BENEFITS Innovation in processes and decision making (10) Institutional relationship and networks created (10) MATERIAL AND METHODS BUILDINGS AND INFRASTRUCTURES 15 CO-BENEFITS Health and well-being increased: the buildings energy refurbishment and the adoption of high-quality Better materials environmental and technologies, resources as management well as design (6) criteria, can allow better indoor thermal comfort and living conditions Buildings life cycle costs reduction (3) Changes to local tax revenues (3) References to SSEDPs: Class1, ECO-city, Energy in Minds!, Act2, STACCATO, SERVE, PLEEC, ZENN, STEP-UP, CiTYFIELD, SINFONIA Energy services developed (6) Enhancement of neighborhood identity (6) Health and well being increased (11) Professional skills development: increased knowledge and know-how on innovative processes and Increased energy assets technologies value (3) can help to face the challenge of an effective intervention on the construction markets Innovation in technology development and adoption (10) Local air quality improved (2) References to SSEDPs: SOLUTIONS, TetraEner, Act2, ECOSTILER, RENAISSANCE, SESAC, Local Green energy Solar supply Cities, chain HOLISTIC, developed R2CITIES, (5) CITyFiED Local job s market stimulated (14) Resilience of energy infrastructures (2) Innovation in processes and Softer decision loans conditions making: participating (5) at a SSEDP promotes exchange of experiences, introduce innovation in processes and Tackling fuel poverty (8) can positively improve the quality and effectiveness of decision making Territorial attractiveness increased (8) (Bisello et al. 2015) References to SSEDPs: Energy in Minds!, RENAISSANCE, Green Solar cities, TetraEner, PLEEC, TRANSFORM, Eco-life, crrescendo, TRANSFORM, READY 13

14 (Mosannenzadeh & Vettorato 2014) MATERIAL AND METHODS 14

15 Key Urban Co-benefits Smart build environment co-benefits Smart natural environment co-benefits Increased assets value Buildings life cycle cost reduction Resilience of energy infrastructures increased Local air quality improved Better environmental resources management Smart economy co-benefits Smart services co-benefits Changes to local tax revenues Health and well-being increased Softer loans conditions Local job s market stimulated Local energy supply chain developed Smart governance co-benefits Smart community co-benefits Tackling fuel poverty Energy services established Innovation in technology development and adoption Innovation in processes and decision making Territorial attractiveness increased Users awareness on energy related issues increased (Mosannenzadeh & Vettorato 2014) Enhancement of neighborhood identity Professional skills developed Institutional relationship and networks created Based on (Bisello et al. 2015) MATERIAL AND METHODS 15

16 Key Urban Co-benefits Smart build environment co-benefits Smart natural environment co-benefits Increased assets value Buildings life cycle cost reduction Resilience of energy infrastructures increased Local air quality improved Better environmental resources management Smart economy co-benefits Smart services co-benefits Changes to local tax revenues Health and well-being increased Softer loans conditions Local job s market stimulated Local energy supply chain developed Energy services established Innovation in technology development and adoption Professional skills developed Smart governance co-benefits Innovation in processes and decision making Territorial attractiveness increased Institutional relationship and networks created Smart community co-benefits Tackling fuel poverty Users awareness on energy related issues increased Enhancement of neighborhood identity Based on (Bisello et al. 2015) MATERIAL AND METHODS 16

17 Litterature Review Air quality References: (Bell et al. 2008; Chau, Hui, and Tse 2008; Chau, Tse, and Chung 2010; Joyce, Bo Hansen, and Naess-Schmidt 2013; Williams et al. 2012; Won Kim, Phipps, and Anselin 2003) GHG Mitigation + Energy Efficiency Assets value (Buildings) References: (Bonifaci and Copiello 2015; Deng, Li, and Quigley 2012; Eichholtz, Kok, and Quigley 2010; Fuerst and McAllister 2009; Hoffman and Henn 2008; Johnson Controls 2011; Popescu et al. 2012), Energy infrastructures / Tax revenues / Jobs and Investments / Common indicators on well-being + Project performances References: (OECD 2011), (EU 2013), (Di Nucci and Spitzbart 2010) (Lützkendorf et al. 2013b) Human Capital References: (Borgatti 1998; Franceschetti, Pisani, and Di Napoli 2015; Jones, Malesios, and Botetzagias 2009; Krishna and Shrader 2000) (Dagum 2006) (Nosvelli 2009). RESULTS 17

18 Overview on Assessment Methodologies Smart City component Smart natural environment Co-Benefit Techniques for monetisation Existing markets MV / SP Revealed Stated preferences preferences COI HP TC CV CE Local air quality improved V T T Better environmental resources management V T S S Smart services Health and well-being increased V T S Smart community Smart governance Tackling fuel poverty Users awareness on energy related issues increased T HC T S S S Enhancement of neighbourhood identity S S Innovation in processes and decision making Territorial attractiveness increased T V Institutional relationship and networks created S S S V = Estimated values reported by reference literature T = Techniques or approaches assumed by reference literature S = Techniques or approaches suggested by the authors by analogy to reference literature RESULTS 18

19 Overview on Assessment Methodologies Smart City component Smart economy Smart build environment Co-Benefit Positive changes to local taxes revenue Softer loans conditions Stimulation of local job s market Local energy supply chain development Energy services establishment Innovation in technology development and adoption Professional skills development Techniques for monetisation Existing markets MV / SP Increased assets value V V T T V S S S Revealed Stated preferences preferences COI HP TC CV CE Buildings life cycle costs reduction T S S Resilience of energy infrastructures increased S HC S V = Estimated values reported by reference literature T = Techniques or approaches assumed by reference literature S = Techniques or approaches suggested by the authors by analogy to reference literature RESULTS 19

20 Detailed information An example Evaluation indicators Number of households with improved and certified energy performances RESULTS Monetization techniques or approaches CS: Hedonic Price model (share of price premium) Direct market value Reference literature Economics of green buildings has been widely analyzed by Eichholtz, Kok, and Quigley (2010). A recent review on US green buildings market analysis reports an increased resale value from 5.8% to 35% and increased rental rates from 2% to 17%, coupled with an higher occupancy rates from 2% to 18% (Johnson Controls 2011). Bonifaci and Copiello (2015), studying the Italian residential market, found that there is a positive gap between building price premium and the achievable monetary savings given by reduced energy consumption. In the upper class A the incidence of capitalized savings on average market value, with reference to worst class G is 13,3%, where the market price premium is 21.9%. Di Nucci and Spitzbart (2010) define the increase in real estate and flats values as appropriate indicator for CONCERTO projects, while EU (2013) suggest to consider the number of households with improved energy consumption classification. Strengths / Shortcomings Energy performances of buildings are certified, therefore energy costs predictable. Building s sustainable certification contributes to rent premiums according to Fuerst and McAllister (2009). Nevertheless, consumers appreciation has high variability in different territorial context and countries (Bonifaci and Copiello 2015; Johnson Controls 2011; Popescu et al. 2012). 20

21 What we did? DEFINED A CBA APPROACH Starting point Smart & Sustainable Energy District Projects (SSEDPs) database Key urban co-benefits from SSEDPs (19) = (15) + (2) + (2) Step One Step Two Co-benefits literature review Taxonomy of generally applicable techniques Evaluation Indicators and monetization techniques V = (6); T = (5); S = (8) An overview on economic assessment methodologies Step Three Single co-benefit description Strengths / Shortcomings Relative contribution (value or percentage) SUMMARY AND DISCUSSION 21

22 To conclude thank you! CBA applied to SSEDPs must translate welfare changes into money, because this is a tool to make explicit and ease the debate, and not because the final aim is to monetize everything. Monetisation techniques are available. They should be applied to hard measures as well as to soft measures implemented. Intangible assets are the less well known and monetised The main 4 concerns come from: Quality and reliability of the input data; Double counting and overlapping; Effort of scientific investigation; Assessment scale definition. Monetizing co-benefits could be a promising strategy for: evaluating the total impact of comparable projects, such SSEDPs demonstrate in a robust way that other more local and quickly immediate co-benefits are grasping Linking the co-benefits debate with the different smart city dimensions is crucial to effectively assess the sectorial contribution to urban development Further investigation is needed on the cost side (direct and indirect) to complete the CBA CONCLUSIONS & FURTHER INVESTIGATION adriano.bisello@eurac.edu 22