Michael Hartner (TU Wien), Rainer Walz and Mathias Pfaff (Fraunhofer ISI) BRISKEE. Behavioural response to investment risks in energy efficiency

Transcription

1 Final BRISKEE Conference and eceee annual policy seminar Wednesday, 29 November 2017, Brussels Results from the techno-economic and macroeconomic modelling Michael Hartner (TU Wien), Rainer Walz and Mathias Pfaff (Fraunhofer ISI) BRISKEE Behavioural response to investment risks in energy efficiency This project has received funding from the European Union s Horizon 2020 research and innovation programme under grant agreement No This presentation only reflects the authors' views and EASME is not responsible for any use that may be made of the information it contains.

2 Meso Level techno economic modelling of household s investment in energy efficiency until 2030 Approach: Analysis of survey results Heating/thermal retrofitting Appliances Implementation and sensitivity analysis on discount rates Model Invert/EE-Lab Model FORECAST Scenario definition and quantification Current policy Intensified measures Actor related measures Results analysis investments and spendings for macro models Seite 2

3 RESULTS FOR HEATING AND THERMAL RETROFITTING Model used: Invert/EE-Lab ( Seite 3

4 What matters for investments in heating systems and thermal refurbishment Technical performance Energy costs Indoor comfort Investment costs Environmental friendliness Financial support measures Increase in property value Recomm. by professionals Recomm. by friends and family Average Likert scale value per country Very important 4 Important 3 Neither important nor unimportant 2 Not very important 1 Played no role higher Average Income of respondents lower Seite 4

5 Heating impact of discount rates on thermal renovation example Belgium Discount rates have a significant impact on modelling results Difference in final energy demand in 2030 is between 5% and 15% between low discounts rates of 2% versus a 20% discount rate scenario Lowering discount rates can significantly increase thermal renovation activities But impact is limited by investment cycles and other policies (e.g. standards) Seite 5

6 Scenarios for heating and cooling in BRISKEE Scenario name 1) Current-policy scenario 2) Intensified-measures 3) Actor-related measures Explanation Policies which have been decided or already implemented. - Renewable Energy Directive - Energy Efficiency Directive, - Directive on Energy Performance of buildings - Ecodesign Directive - National policies (Mure Database National policy approaches are the same but intensified - Higher subsidies for renewable heating systems and retrofitting - Higher standards for thermal performance of buildings Policy measures affecting the discount rate of low income agents - Discount rates of low income agents are reduced to the level of median income - reduction of discount rates between 2% and 5% Seite 6

7 Heating and Cooling Final energy demand for EU28 in 3 scenarios Final energy demand is expected to decrease in all 3 scenarios (17% in Current policy scenario) - reductions of space heating demand Intensified-measures lead to -22% reduction of final energy demand compared to 2012, actor related scenario: -23% Also the share of renewables increase - 34% compared to 32% in intensified-measures scenario (heat pumps and solar thermal), still high shares of natural gas Seite 7

8 Heating and Cooling Investments for EU28 in 3 scenarios Significantly more investments in thermal retrofitting and heating systems when low interest rates are assumed for low income households. (+9% more than in the intensified scenario) Annual expenditures on energy carriers decrease by -18.6% in the intensified vs % in the actor related scenario compared to base year 2012 Seite 8

9 RESULTS FOR APPLIANCES Model used: FORECAST ( Seite 9

10 What matters for investments in appliances according to the BRISKEE survey Seite 10

11 Scenarios for appliances in BRISKEE Scenario name 1) Current-policy scenario 2) Intensified-measures 3) Actor-related measures Explanation Policies which have been decided or already implemented. - Ecodesign Directive - Additional national labelling measures - Adopted for refrigerators,, dishwashers, stoves and lighting individually - Average efficiencies for TV, desktop computers, AC National policy approaches are the same but intensified - Higher minimum standards - Labels are rescaled - More efficient devices are available earlier Policy measures affecting the discount rate of agents - Lower discount rate (from 20% to 2%) - Environmentally concious consumer group introduced - Subsidies for very efficient appliances (important for low income according to survey) Seite 11

12 Appliances - Final energy demand for EU-28 in 3 scenarios 700 Slight increase in final energy demand in current policy scenario Significant decrease in the intensified policy scenario in particular for energy consumption of white goods Actor related measures for low income agents only lead to small effects Final energy demand (TWh) Current Intensified Actor-related Current Intensified Actor-related Current Intensified Actor-related White goods Lighting Cooking ICT New & Others Seite 12

13 Appliances - Investment for EU-28 in 3 scenarios Investments increase in all scenarios, for intensified and actor related scenario more than doubled More appliances are purchased per household compared to base year in particular in currently low income countries More energy efficient appliances are expected to be significantly more expensive also an explanation for less effect of monetary actor related measures Energy expenditures are expected to decrease by -10% compared to the current policy scenario Mio EUR p.a. 250, , , ,000 50,000 0 Investment to appliances Current Intensified Actor-related Seite 13

14 Summary and key findings I It is crucial to include non-monetary decision criteria to model investments in energy efficiency measures and consider the technical lifetime of buildings and heating systems for scenarios on heat demand The meaning and effect of implicit discount rates depend on the implemented decision algorithm which vary substantially across models In total final energy demand of the residential sector is expected to decrease until 2030 for all calculated scenarios. -6% in the intensified and -8% in the actor-related scenario mainly triggered through reductions of space heating demand Shares of renewables in heating and cooling increase significantly in scenarios with lower discount rates. In particular the deployment of solar thermal systems and heat pumps increases. Natural gas still shows high market shares until Policy measures addressing the investment behavior of agents can significantly increase the share of renewable energy carriers in the building stock. Policy costs? Seite 14

15 Summary and key findings II The final energy demand for appliances remains approximately constant. Energy demand for lighting strongly decreases in all scenarios. Energy demand for ICT increases strongly early measures Ecodesign proves to be the most effective instrument for appliances while improved labelling also contributes to more energy conscious purchase behaviour. A programme subsidising the purchase of very efficient white goods appliances for low-income households in all EU member states only leads to minor savings in the model. Highly efficient appliances need to become significantly cheaper to reach a major market uptake. Seite 15

16 Final BRISKEE Conference and eceee annual policy seminar Wednesday, 29 November 2017, Brussels Results from WP 4: Macroeconomic Effects Rainer Walz and Matthias Pfaff, Fraunhofer ISI BRISKEE Behavioural response to investment risks in energy efficiency This project has received funding from the European Union s Horizon 2020 research and innovation programme under grant agreement No This presentation only reflects the authors' views and EASME is not responsible for any use that may be made of the information it contains.

17 Objective of WP 4 and integration into overall modelling approach Micro level Household-level decisionsmaking on energy efficiency Meso level Technology diffusion and energy demand in residential sector Macro level Overall impacts of technology diffusion and demand changes Bottom-up energy models Investments in energy efficiency technologies Energy cost reductions Subsidies Allocation of impulses Net change in investments and intermediate deliveries Net change in consumption Net change in energy efficiency technology exports Macroeconomic modeling Net change in GDP Net change in employment Net change in sectorial composition of economy Seite 17

18 Description of macroeconomic mechanisms Effects resulting from investments (positive impulses) - Increased production and employment in these sectors and upstream sectors - Enhanced chances of domestic producers to increase their technology exports Effects resulting from energy cost reduction (negative impulses) - Reduced production and employment in energy sectors and upstream sectors Effects resulting from compensation of impulse differences - conservative assumption: if investment impulse is higher than cost saving impulse, there is a compensating reduction in consumption Macroeconomic income effects - Changes in production of investment and consumption goods lead to changes in income (inducement of multiplier effects), which also effects further structural changes of the economy Changes in structural composition of economy lead to - changes in overall import - changes in overall labour intensity of an economy structural effects of impulses induced macroeconomic effects Seite 18

19 Impulses on the EU28 level (Million 2005) Seite 19

20 ASTRA EC Model overview and impulses Seite 20

21 Results for the EU28, Relative GDP and employment change 0.18% 0.16% 0.14% 0.12% 0.10% 0.08% 0.06% 0.04% 0.02% 0.00% D2 D3 D2 D3 GDP Employment FTE Seite 21

22 Results for the EU28 Development of GDP and employment 0.50% 0.40% D3 0.30% 0.20% D2 0.10% 0.00% -0.10% D3 D GDP Employment Seite 22

23 Agriculture Energy Metals Minerals Chemicals EU Relative employment changes on sector level Metal_Products Industrial_Machines Computers Electronics Vehicles Food Textiles Paper Plastics Other_Manufacturing Construction Trade Services -0.40% -0.30% -0.20% -0.10% 0.00% 0.10% 0.20% 0.30% 0.40% D2 D3 Seite 23

24 Country level Relative GDP changes AT BE DK ES FI FR UK DE EL IE IT NL PT SE BG CY CZ EE HU LV LT MT PL RO SI SK LU HR EU % -0.20% 0.00% 0.20% 0.40% 0.60% 0.80% 1.00% 1.20% D2 D3 Seite 24

25 Country level Relative employment changes AT BE DK ES FI FR UK DE EL IE IT NL PT SE BG CY CZ EE HU LV LT MT PL RO SI SK LU HR EU % -0.09% -0.06% -0.03% 0.00% 0.03% 0.06% 0.09% 0.12% D2 D3 Seite 25

26 Interpretation Positive effects are robust: results show lower limit of positive effects - conservative assumption with regard to Keynesian effects (impulse compensation) - positive effects of investment continue after 2030, negative effects of compensation occur before 2030: consumption compensation will turn positive effects on GDP stronger than on employment - increased energy efficiency triggers sectors related to manufacturing - impulse compensation also reduces consumption related to service sectors - labour intensity in service sector higher than in manufacturing country differences can be explained by - different structure of impulses for country - different structural composition of the economy - differences in labour intensity and import intensities of value chains Seite 26

27 Outlook research: enhancing analysis by feedbacks between micro and macro level spillover from changing IDR to overall macroeconomic consumption behaviour? feedback from macroeconomic effects to environmental behaviour? Source: Fraunhofer ISI, adapted from Bamberg&Möser 2007 and Klöckner 2013 Seite 27

28 THANKS FOR YOUR ATTENTION! - QUESTIONS AND DISCUSSION FOR MORE INFORMATION PLEASE VISIT OUR WEBSITE WP2 DELIVERABLES ON MICRO-LEVEL + SURVEY WP3 DELIVERABLES ON MESO-LEVEL MODELLING WP4 DELIVERABLES ON MACRO-LEVEL MODELLING WP5 DELIVERABLES ON POLICY RECOMMENDATIONS Seite 28

29 Seite 29 For more information please check our website

30 Impulses from energy models Impulses Investment and exports in energy efficient heating technologies and insulation Investment in energy efficient appliances Reduced energy expenditures due to heating technologies and insulation Reduced energy expenditures due to efficient appliances Consumption changes due to changes in disposable income Subsidies Model variable/sector affected Investment sectors, constructions electronics and computing equipment energy sector energy sector Consumption (final goods and service sectors) Consumption, government expenditures Seite 30

31 EU as lead supplier on world market Success factors for lead supplier position - demand advantage (EU = D2, D3 scenario) - transfer and export advantage (EU = positive RXA) - technological advantage (EU = positive RPA) - system advantage - regulatory advantage (EU = D2, D3 scenario) Source: Fraunhofer ISI Seite 31

32 Geographical focus: EU-28 Survey in 8 countries 75% of EU energy consumption France Italy Germany Poland 76% of EU population Romania Spain Sweden UK Seite 32

33 Micro level Energy efficiency technology adoption in households Multi-country household survey on effects of time & risk preferences on EET adoption Micro-econometric analysis Meso level Energy efficiency policy and household investment behavior Integration of empirical findings into models for residential buildings (Invert/EE-Lab), appliances (FORECAST) Macro level Macro economic effects of energy policy Translation of results from energy modelling into input to macroeconomic modelling (ASTRA) Seite 33

34 WP3 Energy demand modelling - Intro Scope: Temporal scope: Annual energy demand projections until 2030 Sectoral scope: Energy demand for residential buildings (Invert/EE- Lab) and residential appliances (FORECAST) Geographic scope: EU 28 (at the level of individual member states) Economic perspective: Energy costs and investments. Supply and efficiency options: Heating systems, appliances, investments in thermal refurbishment, energy carriers Seite 34

35 Energy uses in FORECAST-Residential Large appliances (white goods): refrigerators, freezers, washing machines, dryers, dishwashers Information and Communication Technologies ICT: televisions, desktop computers, computer screens, routers, laptop computers, set-top boxes Lighting Cooking New & Others: energy using devices not covered in the previous points, including small appliances, such as tablet computers, toasters and phones Seite 35

36 Overview FORECAST-Residential Policy Ecodesign Financial Incentives Labelling Behavioural parameters (t=t 0,, t n ) Access to information Computational capacity Economic parameters (t=t 0,, t n ) Energy cost Investment cost Market discount rate Behavioural discount rate Technological parameters (t=t 0,, t n ) Lifetime Operation power Operation time Stand-by time Stand-by power Ownership rate Energy demand by scenario Population Investment Decision Market share per efficiency level Accessible options Seite 36

37 Heating and Cooling in the residential sector - INVERT/EE-Lab - Building stock model based on annual heating and cooling demand calculations for aggregated (>1000 building segments per country) - Development of thermal condition of buildings and of heating systems is based on a nested logit approach main drivers are cost related but additional parameters influence the decisions in the model (e.g. importance of comfort, factor for sustainability, information awareness) - Decision makers are implemented as agents (e.g. Owner occupier, housing association, low income owner) and distributed over the building stock in the model. - Each agent can be associated with a distinct discount rate (e.g. low income have higher discount rates in the initial set up of the model). We have to be careful when comparing this discount rate with references in the literature because we add other factors which are often summarized in the discount rate Seite 37

38 Heating and Cooling in the residential sector - INVERT/EE-Lab t=t t=t 2 1 t n t=t 0 Building stock database Building stock database (t=t 0, dynamic input for t 1 t n ) Technology databases Space heating techn. DHW technologies Heat distr. systems Shading systems Ventilation systems Building shell components Technology combinations Database: Refurbishment bundles Simulation results Adopted building stock database Kernel Energy module Quasi-steady-state energy balance approach Service lifetime module Weibull distribution Investment-decision module Nested logit model Diffusion restrictions Logistic growth model Building usage and user behavior Climate data Exogenously defined scenario-specific datasets Growth of building stock Diffusion restrictions Policies Options for thermal renov. and SH-technol. Energy prices and cost-resource-potentialcurves Preferences for heating systems, traditions, inertia,... Installation of heating, refurbishment options, DHW systems (#, kw, m²) Renovation of buildings (number, m², ) Energy demand and consumption CO2-emissions Investments, policy program and running costs Data flow within simulation Calibration on an individual level Calibration on a global level #16 Seite 38

39 Technological scope: Different purchase price categories Low cost lighting Medium cost White goods High cost Thermal retrofit and heating Seite 39

40 Heating and Cooling Energy carrier mix in EU 28 in 3 scenarios Intensified measures also lead to higher shares of renewables Share of fossil fuels decreases to less than 50% - strong reductions of fuel oil and coal, still high shares of natural gas Lower discount rates of low income agents significantly increases the shares of renewables to 34% compared to 32% compared to intensified-measures scenario Strong increase of solar thermal and heat pumps Heat pumps vs. Direct electric heating Seite 40

41 Heating and Cooling the role of discount rates - Discount rates (r) influence the value of future cash flow in investment appraisals - High impact on thermal renovation investment decision because of long lifetime of measures (>20 years and up to more than 50 years) - Also high impact on investments in heating systems. High discount rates make investments in efficient and renewable heating technologies less likely - Example: Heat pumps versus direct electric heating NP C heating system =I+ n=1 N Q p_electrici NP V renovation = I+ n=1 N (Q old (1+r) n Q new ) p_heat/ (1+r) n Seite 41

42 Appliances - Energy costs in the EU , , ,000 Mio EUR p.a. 100,000 80,000 60,000 40,000 20, Current Intensified Actor-related Seite 42

43 Scenarios for heating and cooling in - INVERT/EE-Lab Scenario name Current-policy scenario Intensified-measures scenario New actor-related measures scenario Explanation The Current-policy scenario considers targets and measures concerning RES-H/C and energy efficiency which have been decided or already implemented. On the European level, the relevant policy implications are particularly set by the Renewable Energy Directive, the Energy Efficiency Directive, the Directive on Energy Performance of buildings, and the Ecodesign Directive. The intensified measures scenario assumes that the policies which are implemented currently are intensified; however, the policy approaches remain the same. For example, a country that currently relies on minimum efficiency standards would continue to use this approach; however, the standards would be defined in a more ambitious way. Monetary subsidies for thermal renovation and renewable heating systems are increased in all member states The new actor-related measures scenario assumes that energy efficiency policy is complemented by new policy measures affecting the discount rate of low income agents. The discount rates of low income agents are reduced to the level of median income building occupants reduction of discount rates between 2% and 5% depending on initial assumptions in member states Seite 43

44 Scenarios for heating and cooling in - INVERT/EE-Lab Scenario name Current-policy scenario Intensified-measures scenario New actor-related measures scenario Explanation The Current-policy scenario considers targets and measures concerning RES-H/C and energy efficiency which have been decided or already implemented. On the European level, the relevant policy implications are particularly set by the Renewable Energy Directive, the Energy Efficiency Directive, the Directive on Energy Performance of buildings, and the Ecodesign Directive. The intensified measures scenario assumes that the policies which are implemented currently are intensified; however, the policy approaches remain the same. For example, a country that currently relies on minimum efficiency standards would continue to use this approach; however, the standards would be defined in a more ambitious way. Monetary subsidies for thermal renovation and renewable heating systems are increased in all member states The new actor-related measures scenario assumes that energy efficiency policy is complemented by new policy measures affecting the discount rate of low income agents. The discount rates of low income agents are reduced to the level of median income building occupants reduction of discount rates between 2% and 5% depending on initial assumptions in member states Seite 44