EFFICIENCY ASPECTS OF PROJECTS

Dr Zdravko Genchev, architect

EnEffect, Bulgariawww.eneffect.bg

zgenchev@eneffect.bg

Projects for energy efficiency improvement and the use of renewable energy sources

To discuss:

DEFINITIONS

of the efficiency of projects, related to improvement of energy efficiency and the use of renewable energy sources

PROJECT BASELINEinfluence on the efficiency of EE / RES projects

STRATEGIES / EXAMPLES for project implementation under various

circumstances

AIM OF THIS LECTURE

DEFINITIONS

DEFINITIONS

EFFICIENTare projects that lead to positive results

Depending on the types of results achieved we recognize various types of

PROJECT EFFICIENCY:Social impact / Technical improvementsEnvironmental impact / Cost-effectiveness

or combinations of the above

DEFINITIONS

SOCIALLY EFFECTIVEare projects that produce social impact:

- Improvement of the general quality of services provided

- Improvement of hygienic conditions in buildings- Assistance for the most vulnerable strata of the low-income inhabitants to cover increasing energy

bills- Achievement of high aesthetical standards, etc.

DEFINITIONS

SOCIALLY EFFECTIVEprojects that include EE measures and especially the

use of RES sometimes introduce unusual aesthetical solutions that are often debatedThis might be the result of:

- Poor experience and inability to integrate new technical solutions into already established

aesthetical concepts and values- Attempt to introduce new aesthetival principles that

are still unusual for society and thus difficult to accept

DEFINITIONS

TECHNICALLY EFFECTIVE

are projects that achieve technical improvements of buildings, which

generate energy savings and/or decrease O&M costs:

- General improvement of the building structure and building envelope

- Improvement of the technical infrastructure (various types of installations) of buildings

- Improvement of the technical equipment of buildings, incl. various types of appliances in use

DEFINITIONS

ENVIRONMENTALLY EFFECTIVEare projects that have positive

environmental impact:

- Reduction of GHG emissions that have global effect on the environment

- Reduction of emissions that cause local pollution or other threat to the environment

DEFINITIONS

ECONOMICALLY EFFECTIVEare projects that have positive economic impact

(cost-effective projects):

- Reduce energy expenses and O&M costs, thus generating real monetary savings

- Significantly improve the service/comfort at comparable expenses

PROJECT BASELINE

When determining the achieved project results,we usually compare the situation after project

implementation with the overall status before the project

The status before project implementation we callINITIAL STATUS

The initial status is a fixed picture of the situation before project implementation

PROJECT BASELINE

The overall status before project implementation, which we use to compare with the situation after project implementation, is not just a picture of

the state-of-affairs at a given point of time

It is a dynamic description of the development of the initial status (before project implementation) for the time of the entire project duration in case

no project was implemented

We call this descriptionPROJECT BASELINE SCENARIO

PROJECT BASELINE

Expected development of the initial status

without project

2006 2007 2008 2009 Time

Energ

y

Baseline scenario

PROJECT BASELINE

Init

ial st

atu

s

The baseline consists of:Initial statusand Baseline scenario

The Project Baseline Scenario presents how the initial status would be changed in case of keeping

BUSINESS AS USUAL

The difference between the Project Baseline Scenario and the overall situation after project

implementation presents project results and the level of its

effectiveness

PROJECT BASELINE

Expected development

of initial status

2006 2007 2008 2009 Time

Energ

y

Baseline scenario

Expected energy savings

Saved energy

Time2006 2007 2008 2009

Energ

y

PROJECT BASELINE

Init

ial st

atu

s

Init

ial st

atu

s

PROJECT BASELINE

TimeTime

En

erg

yE

nerg

y

20020099200200882002007720020066

Development of initial status (baseline scenario)

Development of initial status (baseline scenario)

Init

ial st

atu

s

Energy consumption

Energy consumption

after project implementation

after project implementation

PROJECT BASELINE

Measurable and non-measurable indicatorscould be used for evaluation of the Project Baseline and

the overall situation after project implementation

Although we often use only economic indicators to describe the Prolect Baseline and the situation after

project implementation, the full descriptions consist of social / technical / environmental / economic

characteristics

PROJECT BASELINE

When forecasting the baseline development we may use:

OPTIMISTIC (high)or

PESSIMISTIC (low)or

REALISTIC (medium)Baseline Scenario

PROJECT BASELINE

TimeTime

En

erg

yE

nerg

y

20020099200200882002007720020066

Development

Development fromfrom initia

l status

initial status

Init

ial st

atu

s

High

Medium

Low

The most important component of the initial status and the baseline scenario is energy consumption

Calculated energy consumption is the amount of energy, which would be

consumed by the total installed energy capacity for provision of heating and lighting in compliance with the norms and the typical use of the building

Measured energy consumption is the amount of energy, which has been proven

by measuring the actual consumption of heat and electricity, regardless of the quality of the

services provided

PROJECT BASELINE

Calculated energy consumption may correspond to the measured one, but in some cases it might also be higher or lower

When the calculated energy consumption is

LOWER

than the measured one, it might be the result of water leakage in the heating system, too high

indoor temperatures, insufficient wall insulation, poor maintenance, etc.

PROJECT BASELINE

Typical reason for lower calculated energy consumption in a school building (example of Macedonia)

PROJECT BASELINE

When the measured energy consumption is higher then the calculated one, there is

room for energy efficiency improvements

This is the usual case in most buildings that need energy efficiency improvement

The bigger the differences, the higher the potential for energy efficiency

improvements

PROJECT BASELINE

PROJECT BASELINE

Time

Energ

y c

onsu

mpti

on

2009200820072006

A

CMeasured energy consumption

Calculated energy consumption

When the calculated energy consumption is

HIGHER

than the measured one, it might be an indication that some of the technical systems are turned off (e.g. the ventilation system), the indoor temperature is

too low or the lighting is not sufficient, etc.

In such cases we usually qualify the baseline as

TOO LOW,

which affects negatively the economic characteristics (cost-effectiveness) of EE /

RES projects

PROJECT BASELINE

PROJECT BASELINE

Time

Energ

y c

onsu

mpti

on

2009200820072006

A

C

Measured energy consumption Calculated energy consumption

PROJECT BASELINEPossible reasons for TOO LOW baseline:

• The building owner has turned off or reduced the operation period or the capacity of some in-house

subsystems• The heating system has been turned off in some

sections of the building during the heating season• There has been breakdown in some in-house

subsystems, which have not been repaired or replaced

• The automatic control system and valves are not correctly tuned, so the room temperature is too low

• Some hygienic requirements have not been achieved (low temperature, insufficient lighting

etc.)

In cases of low baseline we may adjust (normalize) the baseline to the level of

the calculated one

THE ADJUSTED BASELINE

is useful when calculating the project’s economic characteristics and

determining the project’s efficiency

The use of adjusted baseline improves the economic characteristics of projects

PROJECT BASELINE

Time

Energ

y c

onsu

mpti

on

2009200820072006

D. Measured energy consumption after project implementation

C. Measured energy consumption before project implementation

A. Calculated energy consumption before project implementation

B. Calculated energy consumption after project implementation

A

C

B

D

Measured (real)baseline scenario

Calculated (adjusted) baseline scenario

Measured energy consumption Calculated energy consumption

PROJECT BASELINE

STRATEGIES / EXAMPLES

Real and adjusted baseline could be used in different practical cases

REAL (CALCULATED) BASELINE

is usually applicable for commercially financed projects (commercial banks, revolving funds,

etc.)

ADJUSTED (CALCULATED) BASELINE

is usually applicable for projects, financed on a grant basis or when parties explicitly agree upon

that

STRATEGIES / EXAMPLES

When the real baseline is lower than the calculated one, the use of adjusted

baseline improves the economic characteristics of EE / RES

projects

The following practical examples show different strategies (approaches) in determining the

baseline scenarios to be used in each specific case

STRATEGIES / EXAMPLES

Street lighting project in the Street lighting project in the city of Gabrovo, Bulgariacity of Gabrovo, Bulgaria

AfterAfterBeforeBefore

Calculated consumption according to Calculated consumption according to the installed capacity (adjusted)the installed capacity (adjusted)

65356535

Possible policy targetPossible policy target16171617 According to the installed capacityAccording to the installed capacity

620The same level of utilizationThe same level of utilization

2463 Real (measured) consumptionReal (measured) consumption

Time

En

erg

y

STRATEGIES / EXAMPLES

STRATEGIES / EXAMPLESBefore ESPC During ESPC After ESPC

Energy+ O&M

Energy+ O&M

Energy+ O&M

Savings

SavingsESCO & Financial Debt

service

Cas

h flo

w (

$)

Source: Satish Kumar, PhD, scientist, LBNL, USA, Technical coordinator of PIMVP

Reflection of baseline scenarios in cases of energy saving performance contacts (ESPC)

En

erg

y +

O&

M

Cost

Savin

gs

STRATEGIES / EXAMPLES

SCHOOLS IN MOLDOVA

Telecommunication College

Before project implementation the amount of heat received was significantly below the necessary

quantity

Main benefits after project implementation:

- Improvement of the heat distribution inside the building

- Improved in-door comfort and reduced sickness rates

Almost no energy savings registered

Source: ASE, Moldova

STRATEGIES / EXAMPLES

SCHOOLS IN MOLDOVA

School 95

Before project implementation the school received more heat than necessary

Main benefits after project implementation:

- Reduced heat consumption to about 50% for a standard year by the application of night setback

algorithm

- Improved heat distribution inside the building and in-door comfort

Significant energy savings

Source: ASE, Moldova

STRATEGIES / EXAMPLES

SCHOOLS IN MOLDOVA

School 83

Before project implementation the school received heat close to the necessary

Expected benefits:

- Even heat distribution inside the building

- Constant in-door comfort

- Easier maintenance of the heating system

In this particular case the savings have a greater level of confidence than in the previous two cases

Source: ASE, Moldova

STRATEGIES / EXAMPLES

SCHOOL BUILDING PROJECT IN KIEV (WB)

The baseline much below the norms. The WB advised to use the adjusted baseline that

corresponds to the norm

As a result:

Calculated savings of 26%

Sufficient real savings to repay the ~$20M loan from the WB over a 5-year term

The project is looked upon as a model to implement in other Ukrainian cities Source: Battelle, USA

STRATEGIES / EXAMPLES

BUILDING IN BULGARIA

Education complex in Kazanlak

Low baseline – average in-door temperature about 10o C

Used adjusted baseline that corresponds to the norm

As a result:

(for various sets of ES measures)- Calculated savings of 35-57%

- IRR: 13 – 48 % / Simple payback: 2,3 – 5,8 years- Improved in-door climate- Reduced GHG emissions

Source: EnEffect

STRATEGIES / EXAMPLES

BUILDING IN BULGARIA

Kindergarten in Gradina

Low baseline – part of premises not heated

Used adjusted baseline that corresponds to the norm

As a result:- Significant energy savings expected

- Insufficient real financial savings due to the low baseline

- Improved in-door climate- Reduced GHG emissions Source: EnEffect

STRATEGIES / EXAMPLES

SOME OTHER LESSONS LEARNED

Cream skimming

From the standpoint of private cost-bearing, using strictly commercial finance, cream

skimming projects are viable, however those with a longer-payback/lower-ROI (return on

investment) might become marginal

Source: Battelle, USA

STRATEGIES / EXAMPLES

SOME OTHER LESSONS LEARNED

Social impact

If the entire social cost is included (subsidies - direct to consumers and indirect ones on fuels), the loan

can be easily repaid over a short term.

The problem here has always been how to mobilize the myriad of state and local government

organizations to recognize this factor - if that could be done, repaying these loans would be

easy as a snap. Source: Battelle, USA

APPRECIATIONS

This lecture was prepared with the kind assistance of:

- Experts from the Center for Energy Efficiency EnEffect (Bulgaria), ENSI International (Norway) and Battelle / PNNL (Pacific Northwest National

Laboratories), USA

- Experts from Bosnia and Herzegovina, Moldova, and Macedonia

Publications of scientists of the LBNL (Lawrence Berekley National Laboratory) and the ASE

(Alliance to Save Energy) of USA are also quoted