C1. The Price of Energy Paid by Customers

Transcription

1 CROSSCUTTING 1

2 2 C1. The Price of Energy Pid y Customers c Averge retil price of electricity Averge retil price of gs nd oil derivtives Averge retil price of district heting Price of representtive consumption for industril nd residentil users. Price of representtive consumption for industril nd residentil users. Price of representtive consumption for industril nd residentil users. WHY THIS MATTERS TO INVESTORS Higher prices for energy mke investments in energy efficiency more ttrctive, s the py-ck period is shortened. Additionlly, higher retil energy prices typiclly llow energy suppliers to provide higher compenstion for electricity from RE projects (remunertion), mking investment in RE more ttrctive. Ntionl Sttisticl Agencies, Ministries of Energy, World Bnk pulictions d e Affordility of connection Affordility of electricity Connection cost for consumers s percentge of household income. Representtive susistence consumption less thn 5% of household income. While higher prices of energy tend to strengthen investment opportunity in EE nd RE, if the prices chrged to low-income users is prohiitively high, energy ccess is diminished PVT = This indictor is directly relevnt to privte sector decision mking *Should mtch SE4ALL definition of ffordle energy

3 3 C2. Commercil Viility of Utilities (1/2) WHY THIS MATTERS TO INVESTORS Cost-recovery of Trnsmission Compny Cost-recovery of Distriution Compny Determine degree of cost-recovery of trnsmission compny (see slide 7) Determine degree of cost-recovery of distriution compny (see slide 7) When triffs re elow full cost recovery, service providers will need susidy to mke them whole, nd void over-extending the system. This is prticulrly importnt for RE project developers decision to invest in country. If the developer does not trust the finncil sustinility of the off-tker, they re less likely to invest in tht country. Review of trnsmission nd distriution compnies nnul reports c d Technicl Losses Commercil Losses Determine technicl losses, expressed s percentge Determine commercil losses, expressed s percentge These losses lso detriment the ility of the utility to ecome costrecoverle. Survey with utility

4 4 C2. Commercil Viility of Utilities (2/2) EXTENDED Sliding Scle Cost-recovery of Trnsmission Compny Never covers O&M nd fuel costs Covers O&M nd fuel most of the time (except emergencies, droughts) Covers O&M nd fuel ut only prt of cpitl costs (Dep + ROA) Fully covers O&M, fuel nd cpitl costs Sliding Scle Cost-recovery of Distriution Compny Never covers O&M nd fuel costs Covers O&M nd fuel most of the time (except emergencies, droughts) Covers O&M nd fuel ut only prt of cpitl costs (Dep + ROA) Fully covers O&M, fuel nd cpitl costs

5 5 C3. Fossil Fuel Susidies WHY THIS IS IMPORTANT TO INVESTORS Fossil Fuel Susidies Determine fossil fuel susidy in $/unit of energy When fossil fuels re susidized, the degree to which renewle energy cn compete with fossil fuel sources of energy is gretly diminished. Susidizing fossil fuel lso reduces the finncil viility of investments in energy efficiency, s the cost of energy is lower. Energy Architecture Index Cron Tx Determine cron tx in $/unit of energy Cron txes, when complince is strong, hve the opposite effect of fossil fuel susidies, strengthening the mrket for energy efficiency nd renewle energy. Review of progrms of the Ministry of Energy or equivlent

6 RENEWABLE ENERGY 6

7 1. Level of Finncil, Economic nd Fiscl Support for Renewle Energy 7 WHY IS IT IMPORTANT? POTENTIAL DATA Yers of remunertion gurnteed to genertor Determine the numer of yers for which remunertion is ville through PPAs/off-tke greements, finncil incentives or other remunertion sources A long period of gurnteed remunertion increses n investor s certinty tht she will e le to recover her cpitl investment in the RE plnt Review of stndrd PPA greements; survey of relevnt utility stff; survey of trnsction dvisors fmilir with the country Vlue to genertor of renewle energy cpitl cost susidies If offered, estimte the totl vlue of economic, fiscl nd finncil susidies provided y governments for RE cpitl costs Cpitl cost susidies for renewle energy cn mke projects more finncilly ttrctive to privte investors Review of finncil incentive lws nd regultions c Level of remunertion ville to genertor Determine the totl vlue of remunertion tht would e pid per MWh of energy generted through power purchse greements or feedin-triffs, or wholesle mrket prices The level of remunertion ville is n essentil spect of project s finncil viility tht is under government control Review of PPA greements nd FiT contrcts; survey of relevnt trnsmission compny stff

8 2. Revenue Risk Fcing Renewle Energy Projects (1/2) 8 WHY IS IT IMPORTANT? POTENTIAL DATA The price pid for power purchsed is contrctully estlished for the durtion of the power purchse contrct Determine whether or not the remunertion level for energy from renewle energy project is estlished in contrct etween genertor nd the energy off-tker, nd if this is defined for the durtion of the power purchse contrct When remunertion levels re suject to unpredictle chnge (e.g. ecuse they re pegged to fuel prices or system costs without price floors) cretes revenue risk for RE projects Review of stndrd PPAs, Feed-in Triff contrcts; survey of relevnt distriution compny stff; survey of trnsction dvisors fmilir with the country Existence nd type of cost recovery mechnism for renewle energy susidies nd incentives Determine whether nd wht type of cost-recovery mechnism exists for RE susidies/incentives. Triff increses re scored highest, while direct trnsfers of funds from the government to the RE off-tker score lower. If direct trnsfers re in plce to cover the cost of susidies, determine if country hs defulted on one of these in the energy sector in the pst five yers. If so, score it even lower The existence of sound costrecovery mechnism for RE finncil supports indictes tht the government or utility is likely to disurse these supports to n RE project investor, which reduces investors revenue risk. If direct trnsfer of funds from government is in plce, strong trck record of successful direct trnsfers indictes future performnce Review of lws nd regultions governing finncil supports for renewle energy; review of press releses nd news rticles (to evlute trck record); survey of relevnt distriution compny stff; survey of trnsction dvisors fmilir with the country d Avilility of sovereign risk gurntees for renewle energy projects Determine whether or not the government hs provided risk gurntees for t lest 1 renewle energy project in the pst 5 yers Government nd MDB risk gurntees re importnt for RE projects in the developing world. The vilility of sovereign risk gurntees is n indictor of the vilility of MDB risk gurntees Review of press releses nd news rticles; survey of trnsction dvisors fmilir with the country

9 9 2. Revenue Risk for Renewle Energy Projects (2/2) WHY IS IT IMPORTANT? POTENTIAL DATA e Percentge of remunertion for renewle energy tht is from susidy Determine the percentge of totl remunertion for unit of RE production tht is from susidy. Clculte this y determining how much higher the remunertion level is for n RE project thn the country s verge genertion triff If lrge portion of RE project remunertion is from susidies, then projects re more likely to ecome finncilly unvile if the susidies dispper thn if smller portion of project s remunertion comes from susidies Review of lws nd regultions governing finncil supports for renewle energy; review of stndrd PPAs, Feed-in Triff contrcts; survey of trnsction dvisors fmilir with the country f Burden of renewle energy susidies on government udgets Determine the percentge of country s pulic energy udget tht ws comprised of susidies for renewle energy over the pst five yers If this vlue is comprtively high, it will suggest tht this might not e sustinle or efficient level of susidy for the country nd txpyers or rtepyers Review of government udgets; review of lws nd regultions governing renewle energy susidies

10 3. Trnsprency of Susidies for Renewle Energy Projects Whether the totl mount of susidy for renewle energy is specified in lws or policies Durtion of susidies for renewle energy is specified Determine whether or not the totl mount of susidy tht will e ville for renewle energy is specified in lw or policy Determine if the time when susidies for renewle energy will end is specified in lw or policy WHY IS IT IMPORTANT? Investors must hve certinty out how much susidy is ville in totl nd when the susidy might end efore investing in project whose finncil viility is contingent on susidy 10 POTENTIAL DATA d c How often nd when remunertion rtes nd incentives for RE cn e modified y government is specified in lws, policies or regultions Whether the mount of djustment tht cn e mde to remunertion rtes nd incentives for renewle energy y government is identified in lws or regultions Determine whether or not the times when renewle energy susidy levels cn e modified re specified in lws nd regultions Determine whether or not the extent to which government cn djust remunertion rtes nd incentives levels for renewle energy is specified in lws nd regultions If the times when nd extent to which the government cn lter remunertion rtes nd incentives for renewle energy re clerly specified, then investors cn more dequtely mesure the risk tht susidies will e eliminted or chnged unexpectedly Review of lws nd regultions governing susidies for renewle energy, review of Stndrdized Power Purchse Agreements nd surveys with utility stff

11 4. Qulity of Trnsmission Frmework for Renewle Energy Projects Which entities py for ech spect of trnsmission interconnection for RE re defined in lws, regultions or rules The cost of trnsmission usge for renewle energy is defined Determine whether or not the lws, regultions or pulished rules governing renewle energy project interconnection define who pys for 1) the enling fcilities (susttion) 2) the trnsmission line to connect the plnt to the grid nd 3) necessry grid upgrdes Determine whether or not the cost of trnsmission usge for renewle energy id defined in lws, regultions or pulished rules WHY IS IT IMPORTANT? Trnsprency into who will py for different spects of trnsmission interconnection nd how much genertors will e required to py for trnsmission llows investors to understnd this efore mking n investment, thus reducing their risk. 11 POTENTIAL DATA Review of lws, regultions nd pulished rules on trnsmission interconnection, surveys of utility stff c Trnsmission pricing for renewle energy is sed on trnsmission expnsion pln Determine whether or not ) trnsmission expnsion pln exists nd ) whether or not trnsmission pricing for renewle energy is sed on the trnsmission expnsion pln Linking trnsmission pricing to trnsmission expnsion pln is est prctice for minimizing trnsmission costs for genertors s well s trnsmission providers. Review of lws, regultions, pulished rules on trnsmission pricing, s well s trnsmission expnsion pln documents, nd surveys of utility stff d Rules exist tht define how renewle energy sources will e operted on the power grid Determine whether or not the power grid opertor hs estlished specific rules governing how renewle energy sources should e operted on the power grid The existence of rules tht govern how RE resources will e operted on the power grid suggests tht country hs tken steps to prepre for integrting RE. This suggests tht the trnsmission opertor is less likely to e unle to tke power from the genertor. Review of lws, regultions nd rules for trnsmission system opertion, surveys of utility stff

12 5. Aility of Power System to Integrte Intermittent Renewle Energy Sources 12 WHY IS IT IMPORTANT? POTENTIAL DATA Qulity of electricity supply (frequency of outges) Determine the qulity of electricity supply within country y reviewing existing indictors tht evlute this Frequent outges suggest n unstle grid, which suggests tht integrtion of vrile renewle energy sources will e difficult, nd increses the risk tht the system will not e le to ccept energy from renewle energy project World Economic Forum Glol Energy Architecture Index Qulity of Electricity Supply Indictor Diversity of electricity supply Determine the diversity of electricity genertion sources used to supply electricity within the country y reviewing existing indictors tht evlute this A more diverse electricity genertion portfolio suggests tht country s power system will e etter le to integrte vrile renewle energy genertion, nd reduces the risk tht the system will not e le to ccept energy from renewle energy project Energy Sustinility Index Diversity of Electricity Genertion Indictor

13 6. Ese of Siting nd Permitting Renewle Energy Project 13 WHY IS IT IMPORTANT? POTENTIAL DATA Time nd no. of procedures to get environmentl permits for n RE project Time nd no. of procedures to get lnd use permits for n RE project c Time nd no. of procedures to get resource use permits for n RE project Evlute the numer of dys nd the numer of procedures necessry to otin ll environmentl, lnd use, resource use permits nd to negotite n off-tke greement. Conduct this nlysis for stndrd set of renewle energy technologies of different sizes Simple nd fst dministrtive processes for permitting nd siting renewle energy projects re often cited s the most importnt sic requirements of successful enling environment for renewle energy project development Survey of federl, stte nd locl environmentl nd site permitting stff; survey of utilities; survey of renewle energy trnsction dvisors fmilir with country d Time nd no. of procedures to negotite n off-tke greement for n RE project

14 14 ENERGY ACCESS INDICATORS

15 15 1. Qulity of electrifiction pln/strtegy (1/2) INDICATOR WHY THIS IS IMPORTANT Ntionl vision for electrifiction Existence of ntionl vision or nnounced gol for the country Timefrme for Electrifiction Pln c Electrifiction Pln Includes oth Grid nd Off-grid Plnning Determine the timefrme of the ntionl, rurl nd slum electrifiction pln/strtegy. Electrifiction plns/strtegies with longer timefrmes will score higher Determine whether or not there oth grid nd off-grid spects of the electrifiction pln. Long-term, integrted electrifiction plnning cn result in more efficiently plnned power grid. Review of electrifiction pln/strtegy documents d Cost-of-service Study is Updted Regulrly Yer of lst cost-of-service study. Countries with more recently updted studies will score higher. Cost-of-service studies help gencies use resources efficiently. More regulrly updted cost of service studies llow for more ccurte plnning.

16 16 1. Qulity of electrifiction pln/strtegy (2/2) INDICATOR WHY THIS IS IMPORTANT TO INVESTORS e Presence of ring fenced finncing for electrifiction pln Determine whether or not the implementer hs its own operting udget, nd specific udget for CAPEX required for rurl electrifiction. Ring-fenced finncing helps to protect implementing gencies from politicl chnge. Review of electrifiction pln/strtegy documents

17 17 2. Affordility of Grid Access Provided y Ntionl or Regionl Utility WHY THIS IS IMPORTANT TO INVESTORS Cpitl susidies exist for cost of grid connection Determine whether cpitl susidy exists for: Utility to provide min line to villge Customer for lst portion of connection. Connecting rurl customers is often not in the finncil interest of service providers, prticulrly when these customers re on lifeline triff. Susidies for connecting these customers decreses enles service providers to connect these users. Survey with utility Susidies for grid connection re output-sed Countries rted on scle sed on how mny of the following criteri re met: 1. Susidies re disursed once connection is confirmed 2. Susidies re delivered once connection is confirmed nd relile power hs een ville for set period (e.g. one week) In order to encourge connection, t lest some of the susidy mount should e disursed only fter connection is mde. In order to encourge service providers to ctully provide energy over tht connection, prt of the susidy should e disursed only fter power supply hs een confirmed. Survey with utility c Presence of IT pltform for effective delivery of susidies Determine whether there is there n IT system in plce for trcking triff delivery. When triff susidies re not trcked through some form of IT system, they re often used inefficiently.

18 18 3. Qulity of Regultion for Off-grid RE Developers (1/2) WHY THIS IS IMPORTANT TO INVESTORS Lws in plce to llow mini-grids to operte Determine whether lws re in plce explicitly llowing mini-grids to function nd outlining their rights. When off-grid SPP s re supported through regultion nd legl rights, it decreses the risk tht these systems will e oselete once the primry grid expnds ccess to their regions. It lso increses the sfety of these systems. Numer of procedures to permit mini-grid Determine the procedures necessry for RE developer to uild nd operte mini-grid. Generlly speking, independent power producers would prefer s little interction with government s possile. However, regultion is necessry for sfety stndrds nd triff levels, nd cn promote future comptiility with the grid. Lrge response times nd dministrtive costs cn however impede investment in off-grid SPP, thus regultory processes should e stremlined nd efficient. Survey with off-grid SPP s operting minigrids

19 19 3. Qulity of Regultion for Off-grid RE Developers (2/2) WHY THIS IS IMPORTANT c Anticiptory regultion for connecting minigrids to lrger grid Determine qulity of the existing process for incorporting mini-grids into the lrger grid. Scled sed on the presence of: 1. Sfety, reliility, nd voltge nd frequency stndrds for mini-grids mde pulicly ville 2. Mechnism to protect regulted minigrids ginst exproprition (e.g. uyouts, termintion pyments, minigrid conversion) For investors in mini-grids, there is lwys the thret tht the grid will expnd to their region, nd usurp their usiness. However, if mini-grid investors uild their mini-grid with the sme specifictions s the grid, it cn more esily e integrted if the grid expnds to their region. Regultion cn ply role in protecting RE developers nd the mini-grids they operte from osolescence when the grid expnds to their region. Investors will e more likely to invest in minigrids if this risk is mitigted through cler regultions for pproprition nd nticiptory stndrds. Survey with off-grid RE developers operting mini-grids d Approprite triff regultion for offgrid RE Developers Determine whether there is light hnded triff regultion for off-grid RE developers which llows them to: 1. Chrge triffs tht my exceed the ntionl triff level 2. Cross-susidize their retil triffs (usully y chrging usinesses more thn households). 3. Enter power sles contrcts with usinesses without requiring prior regultory pprovl of contrct terms. Mini-grids in isolted res with poor customers often cnnot ern sufficient revenues when they re eing pid lifeline triffs. To ensure revenue is high enough tht SPP s cn recover their costs in isolted res, it is often necessry to initilly use lighterhnded regultion, with ckstops s mini-grids ecome more estlished.

20 20 4. Qulity of Support for Off-grid RE Developers WHY THIS IS IMPORTANT TO INVESTORS Dedicted Source of Funding for RE mini-grid susidies Determine whether there is defined source of funding with cler revenue strem for RE mini-grid susidies. Funding for susidies must e sustinle in order to ttrct investment in off-grid RE developers to expnd ccess to new customers. Susidies for Connecting Users to Mini-grids re Output-sed Determine whether susidies re disursed ginst milestones. These milestones cn include: 1. Confirmtion of connection 2. Confirmtion of relile power fter some period of time (e.g. 1 month) Ensuring tht susidies re outputsed cn increse efficiency of susidies t providing qulity connections Survey with off-grid RE developers operting mini-grids c Existence of mechnism to encourge lowest susidy per new connection Lest-cost or lest-grnt idding for concession res. Without mechnisms in plce to encourge low-costs for new connections, susidies my e used inefficiently.

21 21 5. Qulity of Support for Off-grid Lighting nd Home Solr Systems INDICATOR WHY THIS IS IMPORTANT Customs duty c exemption for solr lighting products nd solr home systems Susidies in plce for solr lighting products? Determine whether there is customs duty exemption for solr lighting products nd home systems. Determine whether the price in which they re sold in the mrket is the sme price for which the government uys them Solr home systems nd lighting products offer quick nd ffordle mens of ringing sic electricity supply to new customers. Governments cn remove rriers to the entry of these products to the mrket y providing customs duty exemptions nd susidies for low-income customers. Review of customs/duty exemptions. Survey with solr home system nd lighting distriuters in ech country. c Asence of susidies for kerosene fuel Determine whether susidies re in plce for kerosene fuel Kerosene susidies re often deterrent for households to move from kerosene to solr lighting solutions Review of existing government susidy progrms for fuels.

22 22 6. Getting New Connection INDICATOR WHY THIS IS IMPORTANT Cost nd numer of procedures to get new connection Mesure the numer of procedures nd dys necessry for rurl residentil customer to get new connection from the customer s perspective Administrtive hurdles cn prevent customers from getting connections Survey of service providers; survey of customers Numer of procedures for getting finncing for customer connections Mesure the numer of procedures nd dys necessry for rurl residentil customer to get finncing for new connection (whether from utility or from third prty lender) Administrtive hurdles cn prevent customers from getting finncing for new connections Survey of service providers; survey of customers

23 23 ENERGY EFFICIENCY INDICATORS

24 24 Sectors Addressed y BEE Energy Efficiency Indictors Buildings Industry Equipment Trnsporttion Residentil Energy consuming industry (e.g. fctories) Industril nd commercil equipment Pulic X Commercil Energy supply industry (e.g. utilities) Applinces Privte X Pulic Energy supply genertion

25 25 1. Price Signls (1/2) POSSIBLE MEASUREMENT WHY THIS IS IMPORTANT TO INVESTORS Price of Energy to End-user s Consumption Increses Scled sed on propensity of inclining lock rtes. See following slide. Some utilities use triff structures in which energy prices re lower for higher levels of consumption. For lrge energy users this cn crete incentives for greter energy consumption, nd disincentives for energy efficiency. Review of lws nd regultions governing energy pricing t the retil level. Review of pricing locks nd criteri for price levels. Economic Efficiency of Enduser Price Susidies Scled sed on criteri for end-user price susidies Providing low price for energy for low-income popultions is necessry in mny countries. However, in some countries, the criteri for pying the lowest rcket of energy prices is not strict enough to exclude portions of the popultion tht re not lowincome. Review of incomes/cpit nd percentge of popultion living t poverty level. Survey with utility to determine the portion of popultion tht pys the lowest price rcket for energy.

26 26 1. Price Signls (2/2) POSSIBLE MEASUREMENT EXTENDED Scle Price of Energy to End-user s Consumption Increses Declining lock rtes exist, re supported y existing regultion nd represent >5% of utility s revenues Declining lock rtes exist under exceptionl circumstnces, nd represent <5% of utility s revenues Declining lock rtes do not exist, for ny customer ctegory Economic Efficiency of Enduser Price Susidies Scle End-user price susidies exist for ll residentil customers including more thn 150kWh/month) End-user price susidies only exist for low-income customers (including more thn 150kWh/month) End-user price susidies exist for ll customers less thn 150kWh/month End-uiser susidies exist only for lowincome customers using less thn 10 kwh/month

27 27 2. Utility Incentive Alignment (1/2) INDICATOR POSSIBLE MEASUREMENT WHY THIS IS IMPORTANT TO INVESTORS Linkge etween revenues nd profits Finncil incentives for utilities to exceed complince requirements Scled sed on qulity of mechnism in plce for utilities to not lose profits from investment in demnd side energy efficiency (see following slide). Scled sed on qulity of qulity of incentive mechnism (see following slide). When utility s revenues re sed on sle of energy, utilities lose revenue s demnd side energy efficiency increses. However, when mechnism is in plce to prevent these profit losses from demnd side EE, utilities my decide to invest in demnd side EE.* When there is dded incentive, such s shring of svings with utilities nd customers, utilities will e more likely to meet nd exceed EE mndtes. When it is in their interest, utilities re in n excellent position to drive demnd side energy efficiency. Review of lws nd regultions governing utilities. Review of revenue regultion for utilities. *Vl R. Jensen, Aligning Utility Incentives with Investment in Energy Efficiency. *Vl R. Jensen, Aligning Utility Incentives with Investment in Energy Efficiency. **World Bnk Uzekistn Energy/Power Sector Issues Note, 2012

28 28 3. Svings Mndtes for Energy Suppliers WHY THIS IS IMPORTANT TO INVESTORS Binding svings oligtions over time Utilities tie M&V dt ck into resource pln Determine whether energy suppliers hve inding svings oligtions with penlties in plce if oligtions re not met. Determine whether M&V dt on demnd side energy efficiency is required to e used in energy suppliers resource pln to meet projected demnd t lest cost. Binding energy svings oligtions uild confidence in the usiness community with regrd to the longevity of progrms nd incentives for energy efficiency. Rigor in M&V is essentil oth to trck progress ginst mndtes, s well s to ly groundwork for stndrd offer systems, which cn further grow the mrket for EE mterils nd services. Review of energy policy. Review of lws nd regultion governing energy suppliers. c Stndrd offers/white certifictes in plce for utilities to uy "energy svings" Determine whether there re stndrd offers in plce for utilities to uy energy svings implemented y third prties or pek lod reduction. When M&V dt is used in utility investment decisions, investments in oth demnd nd supply side EE cn e weighed ppropritely ginst investments in supply. M&V = Mesurement nd Verifiction

29 29 4. Svings Mndtes for Energy Consumers WHY THIS IS IMPORTANT TO INVESTORS c Binding svings oligtion over time for government uildings Binding svings oligtion over time for lrge users (3MW +) Asence of rolling lckouts Determine whether pulic entities hve inding energy svings oligtions with penlties in plce if oligtions re not met. Determine whether enchmrking is required for pulic uildings to trck energy svings nd consumption. Determine whether lrge commercil nd industril users hve inding svings oligtions with penlties in plce if oligtions re not met. If there hs een n energy crisis in the lst yer, or power rtioning hs een implemented, determine whether rolling lckouts were used to reduce demnd. Svings mndtes pplied directly to consumers, prticulrly those tht cn e held ccountle vi penlties (lrge users nd government entities) cn encourge investment in energy efficiency improvements. These mndtes re most effective when mtched with strong procurement processes for the pulic sector, nd ssistnce to commercil nd industril users with how to chieve energy svings. When power rtioning is necessry, curtiling demnd through mechnisms such s strong price signls is more effective form of reducing demnd thn rolling lckouts. These mechnisms cn lso led to longer term energy efficiency of consumers Review of energy policy governing svings oligtions for pulic uildings nd existing EE progrms for commercil uildings. Review of history of lckouts. M&V = Mesurement nd Verifiction

30 30 5. EE Procurement in the Pulic Sector (1/2) EE tken into ccount in the specifiction/wr d of mterils nd services Scled sed on qulity of pulic procurement of EE mterils nd services. 1. A voluntry EE product procurement process is in plce 2. A mndtory EE product procurement process in plce 3. A product specifiction process in plce (lels, ctlogues, lest lifecycle cost, EE preferences, qulifying product dtse) WHY THIS IS IMPORTANT TO INVESTORS The pulic sector often represents the single lrgest purchser of energy in country.* When pulic entities re permitted nd/or required to procure energy efficient products, mrkets for energy efficient products re more likely to flourish. Review of lws nd regultions governing pulic procurement of products. Allownce of svings retention for EE cpitl expenditures Determine whether udgeting lw hs provision for pulic entities to retin energy svings to py ck lons tken for energy efficiency improvements. Allowing pulic entities to retin energy svings cretes n incentive for pulic entities to procure energy efficient products. This ttriute of udgeting lw lso mkes it possile for pulic entities to engge in energy performnce contrcts, using energy svings to py-off finncing for energy efficiency retrofits. Review of pulic udgeting lw *Pulic Procurement of Energy Efficiency Services: Lessons from Interntionl Experience. Directions in Development. Energy nd Mining. Wshington, D.C: World Bnk : ESMAP/Energy Sector Mngement Assistnce Progrm, 2010.

31 31 5. EE Procurement in the Pulic Sector (2/2) WHY THIS IS IMPORTANT TO INVESTORS c Allownce of multi-yer energy efficiency contrcts Determine whether pulic entities cn engge in multi-yer contrcts for energy performnce contrcts Pulic udgets re usully renewed nnully, mking it difficult for pulic entities to engge in multi-yer contrcts. Energy performnce contrcts (EPC s), in which retined svings re used to finnce cpitl for energy efficiency improvements, typiclly require multi-yer contrcts. Review of udgeting lw for pulic entities nd provisions for multi-yer contrcts nd EPC s *Pulic Procurement of Energy Efficiency Services: Lessons from Interntionl Experience. Directions in Development. Energy nd Mining. Wshington, D.C: World Bnk : ESMAP/Energy Sector Mngement Assistnce Progrm, 2010.