Case Study of Energy Efficiency in Asia and Internationally: Some Examples and Food for Thought Peter du Pont, Ph.D. Chief of Party, ECO-Asia Clean Development.

Case Study of Energy Efficiencyin Asia and Internationally:

Some Examples and Food for Thought

Peter du Pont, Ph.D.Chief of Party, ECO-Asia Clean Development and Climate Program

14 May 2009

Presented at:First Mekong Energy and Ecology Training (MEE NET)

Bangkok, Thailand

2

U.S. contributionto offset

emissions of officials flying to

international climate change

meetings

3

What’s Happening?

Chaos or Opportunity?

Disclaimer

• I am not Asian• I do not “represent” Asia• I live in Asia, and have for 17 years• My role is as a consultant and facilitator

Designing, implementing, and monitoring EE programs Lots of failures, a few successes ;-)

• I have been involved with a number or regional and international organizations International Institute for Energy Conservation APEC Energy Standards Information System (www.apec.esis.org) APEC Expert Group on Energy Efficiency & Conservation (

www.egeec.apec.org) International CFL Harmonisation Initiative (www.apec.esis.org/cfl) Efficient Lighting Initiative (ELI) (www.efficientlighting.net) USAID ECO-Asia Clean Development and Climate Program (

www.cleanenergyasia.net)

Objectives of This Talk• Identify key issues related to energy efficiency (EE) in

context of energy policy• Highlight and explain some case studies• Address issue of how much EE costs• Present some questions in a range of topic areas

• Caveats: This presentation discusses experience with in EE in commercial

energy Does not address transportation energy Does not address links between energy and poverty

Topics Covered

• About the ECO-Asia Clean Development and Climate Program

• Overview of energy and carbon scenarios• What drives energy demand and how reliable are demand

forecasts?• Some case studies and examples of Energy Efficiency

policies and programs• How much does Energy Efficiency cost?• Issues, themes and food for thought

About the ECO-Asia Clean Development and Climate

Program

9

ECO-Asia Clean Development and Climate Program Geographic Coverage

ChinaIndiaIndonesiaPhilippinesThailandVietnam

These 6 countries account for 96% of the GDP of Asia’s developing countries

10

USAID-funded review of clean energy priorities in Asia

Objectives• Identify clean energy priorities –

technologies, sectors, and initiatives• Identify opportunities for regional action

Methodology• organized “listening tours” with 220 key

energy stakeholders in the 6 countries• researched and prepared more than 300

profiles on clean energy institutions, policies, programs

• prepared in-depth country reports on the clean energy opportunities in the 6 countries

11

Current26 billion metric tons CO2

203040 billion metric tons CO2

Source: APERC, TERI

INCREASING CO2 EMISSIONS Developing Asia’s CO2 Emissions Will Increase 4-Fold

12

Projected CO2 Emissions by Sector (2002 - 2030)

2002 2030Source: APERC, TERI

ELECTRICITY IS MAJOR SOURCEMore than half of CO2 emissions from power plants

13

Ranking of clean energy options for regional cooperation

14

Implementing Just These Options Can Reduce Future Emissions from Asia’s Developing Economies by 25%

ECO-Asia CDCP: Three sectors + three locations

What Drives Energy Demand and How Reliable are Demand

Forecasts?

What Drives Energy Demand?

• Incomes rise• People buy more stuff• The “force” is basically unstoppable

Increased Saturation of Air ConditionersHelps Drive Demand

Source: APERC 2006

Growth in Personalized Transport Will Fuel Demand for Oil

Growth in Number of Vehicles in Asia (1973-2002)

How Scientific Are Demand Forecasts?• Forecasting is an art, not a science• Forecasters historically have tended to err on the side of

overbuilding• Forecasts to not tend to take into account possible EE

improvements• Cost of over building is rarely analyzed by fiscal agencies

(no penalty for getting “caught”)

Over Time, Demand Forecasts Tend to be High (1)

Actual

Forecast

Actual

Forecast

Over Time, Demand Forecasts Tend to be High (2)

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

45,000

50,000

55,000

1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016

Peak D

em

an

d (

MW

)

Jun-93

Dec-94

Oct-95

Apr-96

Oct-96

Jun-97

Sep-97

Sep-98(RER)

Sep-98(MER)

Sep-98(LER)

Feb-01

Aug-02

Jan-04(LEG)

Jan-04(MEG)

Jan-04(TEG)

ACTUAL

Over Time, Demand Forecasts Tend to be High (3)

Actual

1997 Forecast

Some Case Studies and Examples of Energy Efficiency Policies and Programs

Policy Action on Energy Efficiency Can Clearly Make a Difference (U.S. States vs. Federal)

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

19

60

19

62

19

64

19

66

19

68

19

70

19

72

19

74

19

76

19

78

19

80

19

82

19

84

19

86

19

88

19

90

19

92

19

94

19

96

19

98

20

00

KW

h

12,000

8,000

7,000

California

U.S.

kWh

Total Electricity Use, per capita, 1960 – 2001

DSM on Appliances and Equipment is Greatest Source of Savings (Australia)

20.20.20.40.60.8

1.2

3.5

5.6

7.9

0

5

10

15

20

25

ApplianceMEPS

GreenhouseChallenge +

GES

EnergyEfficiencyStandards

for Buildings

GGAP MEEOA AustralianGovernmentOperations

LocalGreenhouse

Action

EEBP Total

An

nu

al A

bate

men

t (M

t C

O2-e

) in

2010

Abatement through Year 2010 from Australia’s Energy Efficiency Programs(Source: Australian Greenhouse Office)

Australia Example:Domestic Refrigerators, 1980 - 2006

0

200

400

600

800

1000

1200

1400

MEPS 2005 full impact

Initial MEPS introduced in 1999

Labelling introduced in 1986

kWh/year

Source: AGO

Refrigerator use has fallen by more than 60%

U.S. Refrigerator Energy Use vs. Time, with Real Price Changes.

U.S. Example:Domestic Refrigerators, 1947 - 2004

(Source: Goldstein, NRDC 2005)

Refrigerator use has fallen by more than 2/3 since 1973, while volume has increased and price has decreased

Korean Example (Standards and Labeling):Substantial Gains Can be Made Quickly

100

58

100

46

100

62

40

50

60

70

80

90

100

110

1993 Market Ave. 2000 Market Ave.

No

rmal

ized

Ele

ctri

city

Use

Refrig-Freezers(42% improvement)

Air Conditioners(54% improvement)

Fluorescent Lamps(38% improvement)

Change in Average Market Efficiency of Korean Appliances, 1993 – 2000

(Source: Sun-Keun Lee, 2001)

CASE STUDY ON INFORMATION:

APEC Energy Standards Information System

www.apec-esis.org

Objectives of APEC-ESIS

1. Established with APEC funding in 20022. Serves as clearinghouse for data and documents that specify

aspects of energy efficiency, including: Test protocols Energy performance information and labeling Energy performance categories and minimum requirements Minimum energy performance requirements Other energy performance requirements

3. Facilitate and stimulate harmonization through the Standards Notification Procedure

4. Promote international cooperation (esp. within APEC) and reduce barriers to trade in energy-efficient products

View of Database from ESIS Home Page

View of a Country Page

Current Status of ESIS

• Broadening Participation in APEC-ESIS. 38 Economy contacts participating from 17 of the 21 APEC

economies.• Sponsorship with CLASP for Global Database.

CLASP sponsored expansion of APEC ESIS database Development of Global Standards and Labeling Database

launched in August 2005 Expanded from 21 APEC economies to include 54 economies

worldwide More than 1,700 standards maintained.

• REEEP funding to expand ESIS to WESIS World Energy Standards Information System

CASE STUDY ON FINANCE:Thailand Energy Efficiency Revolving Fund

• EE Revolving Fund launched in January 2003. • Objective: stimulate financial sector involvement in EE

projects and to simplify project evaluation and financing procedures.

• Fund provides capital at 0% interest to Thai banks• Banks can on-lend at 4%• Projects vetted by DEDE to ensure they are EE or RE

projects

Key Results from Phase 1 of the EE Revolving Fund

2,0003,559

10,505

22,183

0

5,000

10,000

15,000

20,000

25,000

Appro

ved b

y DEDE

Inve

stm

ent

Savin

g Res

ult in

7 Y

ears

Lifetim

e Sav

ing

THB million

~ US$ 57m ~ US$ 103m

~ US$ 300m

~ US$ 630m

EE Savings by Measure in Phase 1 EE Revolving Fund

10,795

8,035

1,871

1,088

822

625

440

246

26

23

15,161

02,0

004,0

006,0

008,0

00

10,00

0

12,00

0

14,00

0

16,00

0

Renewable Energy

Cogeneration

High Efficiency Equipment

Process Improvements

Air Conditioning

Boilers

Energy Management and Controls

Improvement of Machinery

Insulation

Electrical System

Lighting

Annual Savings (US$ thousand/year)

Total EE cost savings = US$ 39 million/year

Phase 2 Launched in March 2006THB 2,000 million11 banks participating

Impact of EE Revolving Fund on Commercial Lending

2,000 2,0001,600

10,000

-

2,000

4,000

6,000

8,000

10,000

12,000

Phase 1 Phase 2

TH

B m

illi

on

Leverage ratio increased from 0.8 to 5

DEDE loansBank's

own loans

How Much Does EE Cost?

Source: The World Bank (1993)

2.12.6

4.04.9 5.0 5.1 5.2 5.5

8.2

-

2.0

4.0

6.0

8.0

10.0

DSM Hydro fromLaos

Gascombined

cycle

Lignite withFGD

Low-sulphurcoal w/o

FGD

Low-sulphur fuel

oil w/oFGD

LNG Low-sulphur

coal withFGD

Nuclear

Type of Power Plant

Co

st

of

En

erg

y (

US

ce

nts

/kW

H)

World Bank Study of Fuel Options in Thailand

DSM vs. Cost of New Supply in Thailand (ACTUAL)

Cost of Peak Power in Thailand

63

950

0

200

400

600

800

1000

1200

DSM New Coal Power Plant

Cos

t of P

eak

(US

$/P

eak

kW)

Cost of Supplying Energy in Thailand

1.3

5.0

-

1.0

2.0

3.0

4.0

5.0

6.0

DSM New Coal Power Plant

Co

st o

f Su

pp

lyin

g E

ne

rgy

(US

ce

nts

/kW

H)

Source: Electricity Generating Authority of Thailand (2001)

World Bank Study of EE/DSM Potential in Relation to the Nam-Theun 2 Hydropower Project

• Carried out in 2005• Assess whether NT2 power (about 1,000 MW, 5,500

GWh/annum) is required by the Thai system by the projected commissioning date of 2010

• Assess the achievable potential for Thailand’s initiatives at promoting EE and DSM when NT2 is proposed to come on line

Achievable DSM/EE Potential in 2011

1,499

537423

-

500

1,000

1,500

2,000

Industrial Commercial Residential

End-Use Sector

Red

uct

ion

in E

ner

gy

and

Pea

k (M

W)

Total potential of 2,459 MW

Commercial Costs of DSM/EE and NT2 Resources

0.92

2.3

0

0.5

1

1.5

2

2.5

DSM/Energy Efficiency NT2 Electricity

Energy Resource

Co

st

of

De

liv

ere

d E

ne

rgy

(T

HB

/kW

h)

DSM/EE is 40% of the cost of NT2

Why Is It So Difficult to Mainstream EE?

End UsersIndustrial, Commercial

GovernmentDEDP, EGAT, NEPO

Finance

ESCOs

Bankers

Finance

Finance

ServicesConsultants

ACs, RCs

Services

Trade AlliesSuppliers, Service Providers Services

Equipment

Policies

Policies

Policies

Policies

Issues, Themes, and Food for Thought

List of Issues

• Why are DSM (demand side management) and EE separate in many countries?

• Institutional Issues• Information and coordination• Climate change

Why are DSM and EE Separate?

• Why are DSM and Energy Efficiency Separate?

•How does DSM related to Energy Standards & Labeling

DSM Energy Standards & Labeling

?

DSM Energy Efficiency & Conservation

•Is it possible to have a more Integrated Model?

Energy Conservation:Efficiency, DSM, Standards & Labeling

??

??

Institutional Issues (1)

• QUESTION: How can you get the government commitment to allocate and train human resources to get the job done?

• Benchmarking of DSM in some Asian countries

Country Year Est’d

Location No. Staff

Comments

Thailand 1994 Utility 150 1,300 MW savings to date

Funded through tariff

Sri Lanka 1999 Utility 15 Start-up funding from World Bank

Vietnam 2001 Utility 4.5 120 MW target by 2007

Part-time staff in Power Companies

Malaysia 2001 Energy Commission

8 Start-up funding from Danida

No long-term finding

Institutional Issues (2)

• Korea and Mexico have set up national agencies which direct implementation of EE KEMCO in Korea CONAE in Mexico

• This brings a coherence to EE policy and programs• What does it take to seed and enable self-sustaining

energy efficiency agencies within a country?

QUESTION: How Can We Set Carbon and Energy Use Targets that Are Equitable?

???

???

???

Myth: Western Consultants are Needed to Help Advise Asian Governments on How to Implement EE

• Sure, there is a lot of great experience in Europe and the U.S.

• But there is also a lot of great experience• 2 Examples:

Energy labeling in Thailand Air conditioners in Australia and East Asia

• QUESTION: How can we systematize sharing of information and EE best

practices between countries in Asia?

Myth: CDM is a Mechanism that will Help Stimulate Investments in EE in Developing Countries

• Less than 95% of registered CDM projects are for EE• Transaction costs are way too high• QUESTION

Programmatic CDM may be an answer, but how quickly will it happen?

Thank you!!

For more information:

[email protected]