The Italian White Certificates System: Measurement and Verification Protocols Marcella Pavan

Autorità per l’energia elettrica e il gas

EU and eceee Expert Seminar on Measurement and Verification in the European Commission’s Proposal for a Directive on Energy Efficiency and Energy ServicesBruxelles, 21 September 2004

The Italian White Certificates System: Measurement and Verification ProtocolsMarcella PavanHead - Energy Efficiency Policy DivisionItalian Regulatory Authority for Electricity and Gas (*)

(*) This is not an official document of the Italian Regulatory Authority for Electricity and Gas


Mandatory quantitative energy efficiency targets: national annual (first commitment period: 2005-2009) primary energy savings (toe);

Obliged actors: electricity and gas distributors >100.000 customers at 31.12.2001

Target sectors:

all energy end-use sectors (plus intermediate uses in the gas sector) but at least 50% via a reduction of electricity and gas end-uses

The Italian frameworkThe Italian frameworkThe targets

YearElectricity distributors Gas distributors

2005 0,1 0,12006 0,2 0,22007 0,4 0,42008 0,8 0,72009 1,6 1,3

Target (Mtoe/yr)


The Italian frameworkThe Italian frameworkEligible projects

Compliance with targets via the implementation of energy saving projectsprojects

Eligible projects: illustrative list: 14 classes of projects with more than 35 sub-classes projects implemented from 2001 to 2004 subject to the approval by the Regulatory Authority for Electricity and Gas

(AEEG)

Projects can be implemented: by distributors, directly or via controlled companies by energy service companies (ESCO)

The certification of the energy savings produced by each project is made via the issuing of White Certificates that can be traded:

in a specific market through bilateral contracts


The Italian frameworkThe Italian frameworkEconomic regulation

Cost-recovery possible via electricity and gas rates: on the basis of criteria established by the Regulator (AEEG)

Sanctions for non compliance:

“proportional and in any case greater than the investment needed to compensate the non-compliance”

established and applied by the Regulator


The Italian frameworkThe Italian framework and M&V and M&V

Measurement and Verification is the keyMeasurement and Verification is the key for an effective tradable certificates mechanism applied to

the promotion of energy efficiency in end-use sectors

the underlying technical problems are closer to those related to the issuing of (Co2 eq) Emission Credits rather than to those related to

the issuing of Green Certificates for the promotion of renewable generation:

you can not measure the energy savings/(CO2 eq.) emission reductions generated at the meter


The Italian frameworkThe Italian framework and M&V - 2 and M&V - 2

Technical issues

baseline setting: what technology (behaviour) we assume is substituted for with the implementation of the project (cf. following 2 slides)

treatment of free-riders: do we take into account savings that would have been achieved by project participants even in the absence of the project? If we do: how?

impact of different delivery mechanisms (e.g. direct delivery vs use of discount bonus)

treatment of free-drivers: do we take into account – and, if yes, how – positive impacts on non-participants who heard about the project thus changing their consumption behaviours in a more energy efficient direction? And what about extensive positive impacts on participants?

rebound effect: (is there anyone?) Do we take into account it? How do we measure it?


A

B

B’

C

C’

B

Natural change (B – C)

Net project impact (C – C’)

Total gross project impact (B – C’)

Additionality

t t’

energy consumption


Baseline setting

Some of the options:

average installed technology

average sold technology

average technology offered on the shelves

technology that meets mandatory standards

BAT

Energy Savings

+

-


The Italian frameworkThe Italian framework and M&V - 3 and M&V - 3

Technical issues (cont):

project technical lifetime

persistence of savings over time: the savings produced during the first year of operation gradually reduce over time (cf. following slide)

Market Transformation projects e.g. information campaigns, training programs: we include them in the eligibility list? How do we measure and verify the savings produced?

documentation requirements

accreditation requirements for Certifiers


Time persistence of energy savings

Annual additional and cumulative energy savings (Electricity 2004)

0

0,2

0,4

0,6

0,8

1

1,2

1,4

1,6

1,8

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

tep

/an

no

risparmi addizionali5°annorisparmi addizionali4°annorisparmi addizionali3°annorisparmi addizionali2°annorisparmi addizionali1°annorisparmi cumulati


Trade-offs and guiding criteriaTrade-offs and guiding criteria

Trade-off: accuracy and economic efficiency

Our guiding criterion: balance between robustness and reliability of savings vs simplicity

Two alternative impact evaluation approaches:

ex-ante e.g. deemed saving values

ex-post i.e.direct measurement


3 types of M&V approaches:

1) deemed savings (no on-field measurement)

2) engineering estimates (partial measurement) project/valuation complexity

3) energy monitoring plans (subject to pre-approval)

Conventional life-time (up to 8 years) for energy savings produced, regardless of the type of energy conservation measure (ECM)

Only additional savings i.e. over and above spontaneous market trends and/or legislative requirements

M&V procedures: AEEG’s approachM&V procedures: AEEG’s approach


Main Characteristics:• simplified energy savings calculation• limited reporting documentation to be provided• simplified control and certification procedures

Suitable for projects for which expected savings and reasonably well understood and direct measurement would therefore be not cost-effective

e.g: CFL, m2 of insulated wall, small PV plants, high-efficiency boilers

For each type of project a specific amount of saved energy is defined ex-ante for each installed unit (toe/unit/year)

Default factors for: free-riding (net-to-gross ratio), delivery mechanism and persistence

Threshold = 25 toe/year

Deemed savingsDeemed savings


Example: substitution of 1 lamp with a CFL

deemed savings = 14.6 10-3 toe/CFL/year

=> threshold: 1712 CFLs.

main assumptions:

power difference (W) between incandescent lamps and CFL

place of installation (in which room)

number of working hours in one year

(weighted average)

Deemed savings - 2Deemed savings - 2


Main Characteristics:

• relatively simplified energy savings calculation• reduced reporting documentation to be provided• simplified control and certification procedures

Suitable for projects whose saving impact is quite well understood but varies depending on a limited number of identifiable parameters (e.g. number of working hours).

For each type of project a specific evaluation algorithm is defined, with pre-defined values for some parameters while other parameters have to be measured case by case

Threshold: - 50 toe/year for ESCOs and small distributors - 100 toe/year for big distributors

Engineering estimatesEngineering estimates


Main Characteristics:• direct measurement of energy usage (cf. following slide)• pre-approval of the methodological proposal• extended documentation to be provided for ex-post validation and

certification• extended control and certification procedures

Applied to projects whose energy performance crucially depends on variables and parameters that change from case to case and is therefore less predictable

Methodological M&V proposal to be developed according to pre-determined criteria and format

Threshold: - 100 toe/year for ESCOs and small distributors - 200 toe/year for big distributors

comparable/coherent with IPMVP (with stricter rules)

Energy Monitoring PlansEnergy Monitoring Plans


baseline

BeforeECMs

Energy saved (toe)

metering (kWh, m3 )

Monitoring plans

Application of ECMstime

Energy consumption

Threshold

Energy Monitoring Plans - 2Energy Monitoring Plans - 2


The Proposal and the Italian framework: The Proposal and the Italian framework: anything useful? - 1anything useful? - 1

MEASUREPROJECTS

PROGRAMME

HORIZONTAL MEASURE

DIRECTIVE PROPOSAL ITALIAN FRAMEWORK

TYPE OF ACTIVITY


TYPE OF VALUATION

MEASUREMENT

•Distribution Bills•Energy products Sales Data

•Equipment/Appliances Sales Data•End-Use Load Data

DEEMED SAVINGS(Ex-ante values)

ESTIMATES

•Enhanced: Inspection•Simple: Non Inspection

DIRECTIVE PROPOSAL ITALIAN FRAMEWORK

ENGINEERING ESTIMATES(Pre-defined criteria and methologies)

DIRECT MEASUREMENT

The Proposal and the Italian framework: The Proposal and the Italian framework: anything useful? - 2anything useful? - 2


1. EU Proposal for a Directive much wider in scope compared to the Italian White Certificates framework (both policies/horizontal measures and projects/programs and measures)

2. The Italian WC framework is project-based and does not include policy measures

3. The Italian WC framework includes financing mechanism via tariffs asks for a rather accurate M&V of ‘actual’ savings

4. The Directive will have to be implemented in different Member States M&V guidelines will have to be flexible and adaptable to country-specific features

Guidelines for M&V within the Directive (Annex IV) can not be too detailed and burdensome

1. But we do need some common/homogeneous rules on common methodological issues (e.g. baseline, lifetime, persistence) that will be applied on a country-by country basis

ConclusionsConclusions


7. To this respect the Italian M&V approach could be one useful reference to integrate the guidelines for M&V of energy saving projects/measures reported in Annex IV

8. In particular the deemed savings and the engineering methods, properly adapted to national circumstances, can be transferred to other national contexts.

Conclusions - 2Conclusions - 2


APPENDIX


1) Compact Fluorescent Lamp

2) Replacement of electric water heaters with gas water heaters (residential)

3) Replacement of gas water heaters with more efficient gas water heaters (residential)

4) Installation of efficient (i.e. 4 stars) gas water heater (residential)

5) Double glazing (residential, offices, commercial, hospitals, schools)

6) Wall insulation (residential, offices, commercial, hospitals, schools)

7) Small PV plants (residential, offices, commercial, hospitals, schools)

8) Thermal solar for water heating

9) White goods: fridges, frizers, dishwashers, whashing machines

10) Low-flow showers’ water taps

11) Low-flow water taps

17) 18)

14)

Deemed savings (1) Deemed savings (1) Developed so far


12) High efficiency electric motors (industrial uses)

13) Heat pumps

14) Light-flow regulators (pubblic lighting)

15) Na lamps (pubblic lighting, substitution of HG lamps)

16) Inverter application on hydraulic systems (small)

17) Air conditioning (residential sector)

18) High efficient (4 stars) boilers for condominium

…and others to come

Deemed savings (2) Deemed savings (2) Developed so far


1) Energy recovery from natural gas de-compression

2) Inverter application on hydraulic systems (big)

3) CHP

4) District Heating

…and others to come

Engineering estimatesEngineering estimates Developed so far


Supportive documentationSupportive documentation

In English:

Pavan, M. - What’s up in Italy? Market liberalisation, tariff regulation and incentives to promote energy efficiency in end-use sectors. In Proceedings of the 2002 ACEEE Summer Study on Energy Efficiency in Buildings, August 2002

Pavan, M. - Tradable White Certificates: new instruments to promote energy efficiency and reliability of supply in a liberalised market context, Metering, Billing and CRM/CIS Europe 2003 (slide presentation)

In Italian:

www.autorita.energia.it


ContactsContacts

Marcella Pavan

[email protected]

tel +39 02 65565263-313

fax + 39 02 65565230

The Italian White Certificates System: Measurement and Verification Protocols Marcella Pavan

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