RCREEE Continues Supporting the Implementation of the Arab EE Guideline 23 November 2011

1. Euro-Mediterranean
Energy Market Integration Project
Germany
France
Lebanon
Five Cost Effectiveness Tests for
Belgium NEEAP Winners and Losers
Khartoum, 22 November 2011
Dr. Albrecht Kaupp
MED-EMIP Team Leader
“The contents of this publication are the sole responsibility of the author and
can in no way be taken to reflect the views of the European Union”.
This project is funded
by the European Union
1

2. Utilities may ask Utilities may be
regulator for rate interested to invest
increase because of themselves in
NEEAP activities NEEAP activities
Why Tests ?
To avoid over To identify looser
subsidizing and winners and
financially attractive find a way to
NEEAP activities
This project is funded
by the European Union
compensate looser

3. The benefit/cost B/F ratio =3 means
ratio from five the benefits are
different points of three times higher
view than the costs
What is
tested ?
The tests had been They are standard
applied to over since 1980 for
2000 programs regulators
This project is funded
by the European Union

4. Participant Test (15)
Administrator Test (10)
Rate Payer Impact (0.9)
Total Resource Test (2)
Society Test (15)
This project is funded
by the European Union

5. Over 2000 DSM programs
were tested, designed and
implemented based on two
manuals
This project is funded
by the European Union

6. Next Steps under NEEAP
NEEAP Decision maker
NAPEE decides
Plan A Perform the
five tests
Plan B
Select a
NEEAP
project
Incentives ? To whom ? How much?
This project is funded
by the European Union

7. Wrong type of
Subsidies too high
subsidies
Paying for the same
“kWh saved” twice !
Subsidies as poor
Subsidies as an easy
substitute for the
way to show results
“stick”
This project is funded
by the European Union

8. What is an electricity consumer ?
“Power Station Use” is a
nonpaying consumer of
electricity with no billing
address and therefore a
target for energy efficiency

9. What is an electricity consumer ?
“Distribution System”
is a nonpaying consumer
with no billing address
and therefore a DSM
candidate. This one
consumes for sure 15%
electricity called technical
losses.

10. What is an electricity consumer ?
“Transmission System” is
a nonpaying consumer with
no billing address and
therefore a DSM candidate.

11. What is an electricity consumer ?
All other technologies
converting electricity
into other forms of
useful energy

12. The first objective of NEEAP
• An activity under NEEAP should let some electricity consumers
make more profit and reduce the electricity bill . However negative
effects on power generation, transmission or distribution companies
are also likely.
The objective of an energy regulatory authority
• A NEEAP should cost effectively balance investments for power
capacity expansion and power system improvements versus energy
demand reduction of consumers.
This project is funded
by the European Union

13. Diverging objectives of three stakeholder groups
•Reduce energy subsidies
Authorities •Keep tariffs low for consumers
•Balance supply and demand
•Reduce energy bill
•Minimize investment costs
Consumers • Resist lifestyle changes to
reduce energy consumption
•Flatten load curve
•Shift loads and increase sales
Utilities •Manage DSM for better control
and financial benefit
This project is funded
by the European Union

14. The load shaping options considered
under NEEAPs
1 2 3
4 5 6
This project is funded
by the European Union
14

15. •Shaping load curves
1972 •Flattening the load curve
•EE declared as a source of energy
2000 •Regulators demand EE and DSM
•Selling EE becomes a profitable business
2006 •EE Service provider market increases
This project is funded
by the European Union

16. The NEEAP market development
Trading “energy saved”
required to set a price
The California five cost
effectiveness tests
methodology was born
Energy efficiency traders
entered the market
This project is funded
by the European Union

17. Today’s NEEAP situation
• Regulator asks for integrated resource plan
• IRP public hearings and approval
• National experts prepare NEEAP strategy
• National energy efficiency action plan budget
resources provided
• Certified energy auditors identify projects
• Financially strong EE service providers
implement and provide financing.
This project is funded
by the European Union

18. This project is funded
by the European Union

19. This project is funded
by the European Union

20. Calculate B/C
List all costs
List all benefits
List all avoided costs
Which load shaping options ?

21. This project is funded
by the European Union

22. PCT sample for CFL campaign
Costs = € 3 Benefits = € 6.7
Tariff 3.3 17.4
€C/kWh €C/kWh
Costs 3 3
Benefits 6.71 31.81
B/C 2.24 10.61
NPV 3.71 28.81
This project is funded
by the European Union

23. Administrator Test
NEPCO as programme administrator: The PACT yields
almost the same result as the TRC test if we assume that
the cost of incentives are the free distribution of 1 Million
CFL to standard consumers by NEPCO. In this case the
B/C ratio will be 36.052/3.574 = 10.1. It is still a very high
B/C due to the large avoided energy related HFO costs.
This project is funded
by the European Union

24. Reduce
B/F>1
incentives
B/F>10
Do more
marketing
Borderline
BB/F ≈ 1
case
B/F Increase B/F>1
incentives
B/F<0.8
Redesign
Do not Look for
B/F<0.5
implement other option
This project is funded
by the European Union

25. THE END
3x8h shifts per day, one person x 4,000 kCal =12,000 kCal x 14% eff/860 = 2 kWh/day
electrical output . Food input 24 Big Mac (EUR 50) or 1.3 liter good Olive oil(EUR 5).
Resulting energy costs range of EUR 25 to EUR 2.5 per kWh excluding runners
minimum daily wage, depreciation of legs over 20 years plus repair and maintenance !
This project is funded
by the European Union
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