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EUROPEAN INVESTMENTS IN ENERGY EFFICIENCY
ACEEE Finance Forum
Tom Rowlands-Rees
13 May 2014
1
Source: ACEEE, NAESCO, LBNL, CEE, IAEE, ANEEL, BNDES, KfW, Emmy, ADEME, DECC, OFGEM, GME, GSE, AEEG,
IDAE, EMCA, JAESCO, Bloomberg New Energy Finance.
Note: “C&I” stands for commercial and industrial. Countries included are United States, Canada, Brazil, Germany, France,
United Kingdom, Italy, Spain, China, Japan.
15 May 2014
GLOBAL INVESTMENT IN ENERGY EFFICIENCY THROUGH FORMAL FRAMEWORKS IN SELECTED COUNTRIES ($BN)
0
5
10
15
20
25
30
35
40
45
50
199
01
99
11
99
21
99
31
99
41
99
51
99
61
99
71
99
81
99
92
00
02
00
12
00
22
00
32
00
42
00
52
00
62
00
72
00
82
00
92
01
02
01
12
01
22
01
3e
Japan
China
Spain
Italy
UK
France
Germany
Brazil
Canada
US
$bn
0
5
10
15
20
25
30
35
40
45
50
199
01
99
11
99
21
99
31
99
41
99
51
99
61
99
71
99
81
99
92
00
02
00
12
00
22
00
32
00
42
00
52
00
62
00
72
00
82
00
92
01
02
01
12
01
22
01
3e
Other
Publicbuildings
C&I
Domestic
$bn
Segmented by country Segmented by sector
2
Source: ACEEE, NAESCO, LBNL, CEE, IAEE, ANEEL, BNDES, KfW, Emmy, ADEME, DECC, OFGEM, GME, GSE, AEEG,
IDAE, EMCA, JAESCO, Bloomberg New Energy Finance.
Note: “C&I” stands for commercial and industrial. Countries included are United States, Canada, Brazil, Germany, France,
United Kingdom, Italy, Spain, China, Japan.
15 May 2014
EUROPEAN INVESTMENT IN ENERGY EFFICIENCY THROUGH FORMAL FRAMEWORKS IN SELECTED COUNTRIES ($BN)
$bn $bn
Segmented by country Segmented by sector
0
5
10
15
20
199
01
99
11
99
21993
199
41
99
51
99
61
99
71
99
81
99
92
00
02
00
12
00
22
00
32004
200
52
00
62
00
72
00
82009
201
02
01
12
01
22
01
3e
Other
Publicbuildings
C&I
Domestic
0
5
10
15
20
199
01991
1992
1993
199
41
99
51
99
61
99
71
99
81
99
92
00
02
00
12
00
22
00
32
00
42005
2006
200
72
00
82
00
92
01
02
01
12
01
22
01
3e
Spain
Italy
UK
France
Germany
3
SHARE OF NON-TRANSPORT FINAL ENERGY CONSUMPTION AMONG EU MEMBER STATES, CODED BY ARTICLE 7 COMPLIANCE PLAN
Source: Eurostat, Bloomberg New Energy Finance.
Note: Belgium is represented as three regions, Flanders (BE-F), Wallonia (BE-W) and
Brussels (BE-B).
DE19.6%
FR13.5%
UK11.1%
IT10.6%
ES6.7%PL
6.3%
NL4.8%
SE3.2%
FI2.7%
AT2.5%
CZ2.4%RO
2.3%
BE-F2.2%
HU1.6%
EL1.4%
PT1.4%
DK1.3%
BE-W1.1%
SK1.1%
IE0.9%
BG0.8%
HR0.6%
LT0.4%
SI0.4%
LV0.4%
EE0.3%
BE-B0.2%
LU0.2%
CY0.1%
MT0.0%
Obligation scheme No obligation scheme Plans not published
4
Source: KfW, Deutsche Bundesbank, Bloomberg, Bloomberg New Energy Finance.
Note: “C&I” stands for commercial and industrial.
15 May 2014
GERMANY’S KfW ENERGY EFFICIENCY LOAN PROGRAMS OUTLOOK
$bn
Investment and interest rates Outlook
0
5
10
15
20
25
199
01
99
11
99
21
99
31
99
41
99
51
99
61
99
71
99
81
99
92
00
02
00
12
00
22
00
32
00
42
00
52
00
62
00
72
00
82
00
92
01
02
01
12
01
22
01
3e
Newhomes
Publicbuildings
C&I
Domestic
0
2
4
6
8
10
Interest rate (%) ● The KfW energy efficiency loan programs are
some of the most successful in the world
● Key factors to success include:
˗ Government subsidized interest rates
(annual budget EUR1-2bn)
˗ Combination with KfW building ratings
system
˗ Long track record allows consumer
familiarity
● Current low interest rates allow large volumes
of subsidized loans.
● There is little scope for lower commercial
interest rates, but if interest rates rise it will
not be possible to subsidize the same volume
of loans.
Average commercial lending
rate to German households
European Central Bank rate
5
Source: Ademe, Emmy, Bloomberg New Energy Finance. Note: Information on technology types only available from Q3 2010
15 May 2014
WHITE CERTIFICATES UNDER FRENCH SCHEME, 2008-13
Energy savings by sector Technology types
0
5
10
15
20
25
30
35
40
Q1
200
8
Q2
200
8
Q3
200
8
Q4
200
8
Q1
200
9
Q2
200
9
Q3
200
9
Q4
200
9
Q1
201
0
Q2
201
0
Q3
201
0
Q4
201
0
Q1
201
1
Q2 2
011
Q3
201
1
Q4
201
1
Q1
201
2
Q2
201
2
Q3
201
2
Q4
201
2
Q1
201
3
Q2 2
013
Q3
201
3
Q4
201
3
Other
Industrial
Commercial
Residential
TWh
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Q1
200
8
Q2
200
8
Q3
200
8
Q4
200
8
Q1
200
9
Q2
200
9
Q3
200
9
Q4
200
9
Q1
201
0
Q2
201
0
Q3
201
0
Q4
201
0
Q1
201
1
Q2
201
1
Q3
201
1
Q4
201
1
Q1
201
2
Q2
201
2
Q3
201
2
Q4
201
2
Q1
201
3
Q2
201
3
Q3
201
3
Q4
201
3
Other
Lighting
Appliances
Insulation
Heatingsystems
6
SHARE OF FRENCH ENERGY EFFICIENCY OBLIGATION AMONGST OBLIGATED PARTIES
Source: MEDDE, Datamonitor, Bloomberg New Energy Finance. Note: The
breakdown of the 90TWh target for transport fuel providers was estimated from
the number of service stations operated by each. Note: “Other” comprises around
2,500 companies.
SHARE OF OBLIGATION
EDF41%
GDF18%
TOTAL11%
Intermarché
3%
Carrefour2%
Esso2%
Système U
1%
Leclerc1%
BP1%
Auchan1%
Shell1%
BUTAGAZ S.A.S1%
Others17%
345TWh
Intermarché3%
Outlook
● The French white certificate scheme includes
approximately $4bn of investment per year
● Providing more efficient heating and insulation
to the domestic sector dominates the
program. However this is changing slowly as
more C&I work is being included.
● The large number of consumer-facing
obligated parties and the rules around the
certificates means that it can be a complex
market for ESCOs to move into.
7
UK’S ECO ENERGY COMPANY OBLIGATION
Source: Bloomberg New Energy Finance
Note: Where a dotted line was plotted none of the lots offered were sold
PRICE OF SOLD LOTS AND RESERVE PRICE
OF UNSOLD LOTSOUTLOOK
0
20
40
60
80
100
120
140
160
1 2 3 4 5 6 7 8 9 10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
39
40
41
42
43
44
45
46
47
48
49
50
51
52
53
54
55
56
57
2013 2014
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1
Auction #
Sold lots average price
Unsold lots average reserve price
Unsold lots reserve price range
Sold lots price range
£/tCO2 ● The dominant UK energy efficiency
framework in the UK is ECO which drove
$1.3bn of investment in domestic energy
efficiency in 2013.
● This is a significant decrease on the $2bn
invested into its predecessor CERT in 2012.
● ECO is currently facing considerable
uncertainty due to:
˗ Perceived failure of conjugate Green Deal
scheme
˗ Political arguments over rising energy bills
˗ Oversupply of energy efficiency services
● Renewable Heat Incentive (RHI) is creating
considerable opportunities for ESCOs
providing heating systems.
● The non-domestic market is currently
immature (see next slide).
8
FINANCING FOR UK NON-DOMESTIC ENERGY EFFICIENCY, 2012/13
Source: EEVS-Bloomberg New Energy Finance Energy Efficiency Trends
% of projects
0
10
20
30
40
50
60
70
80
In-house Third-partyfinanced
Supplier-arranged
A combination ofthese
Don't know Other
All consumers
Public sector
SMEs
9
PRICE AND TRADING VOLUME OF ITALIAN TEE CERTIFICATES, 2006-13
Source: Gestore dei Mercati Energetici, AEEG, Bloomberg
New Energy Finance
Note: The orange lines represent key events in the development of the scheme. Prior to
2008 (line 1) distributors were obliged to make at least 50% savings of their own energy-
type. This constraint was lifted in January 2008. In November 2008 (line 2) the possibility of
including Type III certificates in the government tariff contribution was tabled. This was then
confirmed in February 2009 (line 3). Price based on market trading, volume based on
market and bilateral trading.
0
25
50
75
100
125
150
0
50
100
150
200
250
300
J FMAMJ J ASOND J FMAMJ J ASOND J FMAMJ J ASOND J FMAMJ J ASOND J FMAMJ J ASOND J FMAMJ J ASOND J FMAMJ J ASOND J FMAMJ
Type III
Type II
Type I
20112006 2007 2008 2009 2010 2012 2013
Type I price
Type II price
Type III price
1 2 3
Tariff contribution
● Price (EUR/toe) ● Trading volume
(mEUR/month)
10
ESTIMATES OF SHARE OF NEW TEE CERTIFICATES BY EFFICIENCY TYPE, 2008-13
Source: AEEG, GSE, Bloomberg New Energy Finance.Note: Estimates are for the number of new certificates, but it should be noted that measures continue to
generate new certificates up to ten years after their initial implementation.
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Industry (waste-heat to electricity)
Industry(waste heat recycling)
Appliances
Lighting
Insulation
Heating/cooling
H12008
Industry (other)
Other
H2 H12009
H2 H12010
H2 H12011
H2 H12012
H2 H12013
● Proportion of new TEE certificates
11
ITALIAN TEE SCHEME OVERVIEW
Source: AEEG, Bloomberg New Energy Finance. Note: Enel target includes both
electricity and gas distribution arms.
SHARE OF TEE OBLIGATION AMONGST ITALIAN GAS
AND ELECTRICITY DISTRIBUTORS
Enel57%
Società Italiana
per il Gas per Azioni
11%
A2A Reti Gas
S.p.a., Milano
5%
HERA4%
ACEA2%
E.On2%
Enìa2%
Ascopiave1%
Italcogim1%
Linea1%
Napoletana Gas
1%
Arcalgas Progetti
1%
Other12%
OUTLOOK
● The Italian white certificate scheme drives
approximately $1bn of investment per year.
● The market is relatively accessible to ESCOs
due to:
˗ Obligation is on energy distributors, who
are not consumer-facing
˗ A traded market provides a streamlined
route to market for white certificates.
● There has been a large shift from residential
lighting efficiency toward industrial energy
efficiency, which now dominates the scheme.
● As the targets steadily increase the size of
investment is likely to also increase.
● More than half of the obligation is on Enel,
meaning that a change of company policy
could significantly impact the ESCO market.
12
ENERGY EFFICIENCY IN EUROPE
Source: AEEG, Bloomberg New Energy Finance. Note: Enel target includes both
electricity and gas distribution arms.
SHARE OF TEE OBLIGATION AMONGST ITALIAN GAS
AND ELECTRICITY DISTRIBUTORSOUTLOOK
● Germany’s KfW scheme is the most
successful driver for energy efficiency
investment in Europe. However it may be
affected by changes in economic conditions.
● France, UK and Italy all have seemingly
similar programs for energy efficiency,
however in reality they are very diverse.
● About half of the EU has chosen not to
implement obligation schemes, meaning the
market will remain inconsistent.
● Spain’s new obligation scheme has many
similarities with that in France, and is thus a
promising market.
DE19.6%
FR13.5%
UK11.1%
IT10.6%
ES6.7%PL
6.3%
NL4.8%
SE3.2%
FI2.7%
AT2.5%
CZ2.4%RO
2.3%
BE-F2.2%
HU1.6%
EL1.4%
PT1.4%
DK1.3%
BE-W1.1%
SK1.1%
IE0.9%
BG0.8%
HR0.6%
LT0.4%
SI0.4%
LV0.4%
EE0.3%
BE-B0.2%
LU0.2%
CY0.1%
MT0.0%
Obligation scheme No obligation scheme Plans not published
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