2017/82 Supported by K NKONW A A WELDEGDEG E OL N ONTOET E S ESREI R E ISE S F OFRO R P R&A C T HTEH E NEENREGRYG Y ETX ITCREA C T I V E S G L O B A L P R A C T I C E THE BOTTOM LINE Exploiting Synergies between Rooftop Solar PV and The synergies between rooftop solar PV (RPV) and energy Energy Efficiency Investments in the Built Environment efficiency (EE) investments in the built environment include Why is this issue important? maps are now available that use geographic information systems, lower specific transaction solar radiation, and three-dimensional building models to estimate costs, optimized RPV systems, Investments in RPV and EE in buildings are RPV potential. Meanwhile, the emergence of the smart grid, improve- shorter project payback periods both growing, offering an opportunity to create ments in battery storage, and technologies such as electric cars have (compared to RPV-only projects), and exploit synergies between the two improved the convenience of RPV by allowing users to time-shift RPV and, for EE, enhanced project electricity consumption. China’s energy savings between 2006 and 2014 were as large as its visibility. These synergies New business models. Several business models, including entire renewable energy (RE) supply.1 Investments in both RE and EE improve the likelihood of project third-party financing (such as Solar City in the United States), remain integral to the energy policies not only of China, but of many implementation, which in turn so-called super-ESCOs2 (such as India’s Energy Efficiency Services other countries as well. Globally, solar PV generation increased by 50 helps to reduce peak demand, Limited), revolving funds (such as Armenia’s Renewable Resources percent (44 TWh) in 2016; and through energy efficiency, countries increase environmental benefits, and Energy Efficiency Fund), and joint procurement models (such saved the energy equivalent of 450 million tons of oil (or 13 percent improve energy security, and as RealTerm Energy in Ontario) have overcome some of the barriers of their total energy consumption, which is enough to power Japan lower energy bills. Because to the implementation RPV and EE. The business models have been for a year). However, 80 percent of the economic EE potential in the methods of financing and able to lower upfront capital requirements and transaction costs, and buildings remains untapped, and so does an even larger percentage implementing RPV and EE in to simplify procurement. of RPV potential. On average, 70 percent of the electricity demand the built environment are often Conducive policies. Stricter energy performance standards, of urban and residential consumers could be economically met by similar, it is wise to consider particularly for heating and cooling equipment, have contributed combinations of RPV and EE. The percentage varies from 11 percent including an EE component when to the growth of EE investments in the buildings sector. The Energy in parts of China to 97 percent in parts of Africa, depending on investing in an RPV project, and Efficiency Policy Index, which measures energy efficiency policies, generation potential and per capita consumption. vice versa. grew by 7 percent over the past decade (IEA 2016a). Similarly, coun- The current technical and policy environment presents an tries have passed targets, policies, and regulations that support RPV. opportunity to explore synergies between RPV and EE in buildings for For example, India established a goal to achieve 40 GW of installed four broad reasons, described below. RPV capacity by 2022; China established its Building-Integrated Technological progress. The cost of solar modules fell by 80 Pedzi Makumbe is a Photovoltaics (BIPV) program in 2009; and several U.S. states senior energy specialist percent between 2009 and 2015 (IRENA 2016) owing to improve- established RE portfolio standards and net metering policies. The with the Energy Sector ments in technology and increased scales of production. Similarly, Energy Sector Management Assistance Program at the World Bank Management Assistance technology and the scale of production have lowered some of the Program at the World Bank. barriers to the implementation of RPV programs. For example, solar 2 A super-ESCO is an energy service company that (a) is established and majority-owned by the government; (b) serves as an ESCO for the public sector; (c) supports other ESCOs; and (d) 1 This paragraph is based on IEA 2016a, 2016b, 2016c, and 2016d. facilitates access to project financing (Limay 2010). 2 E x p l o i t i n g S y n er g i es bet w ee n R o o f to p S o l a r P V a n d E n er g y E f f i c i e n c y I n vest m e n ts i n t h e B u i lt E n v i r o n m e n t established RISE (Regulatory Indicators for Sustainable Energy, http:// The magnitude of the cost reduction obtained by combining RPV rise.esmap.org/) to assess countries’ policies and regulation for both and EE depends on two things: (a) the quantity of electricity consumed RE and EE, thus facilitating planning. on-site relative to the quantity of electricity produced; and (b) the cost Urbanization and population growth. 2.5 billion more people of each kWh saved relative to the cost of each kWh produced. are expected to move into urban areas by 2050 (United Nations If the quantity of electricity consumed is relatively large, then the The buildings that will 2015). Some of the buildings that will house and serve the growing reduction in cost through EE is commensurately large. If the cost of house and serve the urban population are being built today with a lifetime of 40 to 120 each kWh saved is lower than the cost of each kWh generated, the years (IEA 2016e). It is important to optimize the energy potential reduction in cost of each equivalent kWh is significant as well. The growing urban population of these buildings early to avoid locking in inefficient and polluting cost of each kWh saved depends, of course, on the EE measures are being built today with a decisions that can be reversed only through costly retrofitting. adopted. For example, measures involving the building envelope and lifetime of 40 to 120 years. other structural elements tend to be more expensive than measures It is important to optimize Why should clients pursue the synergies involving lighting or simple cooling. The cost of each kWh generated from RPV depends on several the energy potential of between RPV and EE? factors, such as roof size (RPV in commercial and industrial settings these buildings early to First, because there are important advantages is cheaper than in residential settings, as figure 1 shows), market avoid locking in inefficient to implementing RPV and EE together maturity, regulations, technology used, and strength of the solar and polluting decisions resource. Figure 2 shows a sample of costs from several countries EE complements RPV. EE lowers energy consumption, allowing with different insolation, market maturity, and regulation.3 that can be reversed only RPV systems that are not connected to the grid to power more The World Bank studied proposed RPV and EE investments in through costly retrofitting. equipment with the same system or to reduce system size (that is, to schools in Belo Horizonte and Rio de Janeiro in Brazil. The cost reduc- reduce system cost). Where RPV systems are connected to the grid tion per equivalent kWh for the RPV and EE combination was about and net-metering or feed-in-tariff programs are in place, surplus RPV- 10 percent in Belo Horizonte and 15 percent in Rio de Janeiro. This generated electricity can be sold. Globally, buildings have an energy was partly because Rio de Janeiro is warmer than Belo Horizonte; efficiency potential of 44 percent (IEA 2016a). Thus there is ample hence the higher use of air conditioning in Rio provided more room to reduce the cost of RPV systems or to increase the amount opportunities to lower costs by using more efficient cooling systems. of electricity that can be fed into the grid. Similar studies in the public and commercial sectors in Cairo yielded The rate of return on projects combining RPV and EE a 25 percent cost reduction per equivalent kWh (World Bank 2017). tends to be higher than on RPV-only projects. At an average Finally, when clients invest in EE and RPV, transaction costs cost of about $0.15/kWh, RPV is relatively expensive compared to for both can be reduced if the measures are discussed, planned, EE, which averages $0.03/kWh (figure 1). Because EE investments audited, and implemented together wherever possible. Many EE and are cheaper than RPV investments per equivalent kilowatt hour (that RPV projects are small (compared with large generation, transmis- is, per kWh produced or saved), a basket of RPV and EE investments sion, or distribution projects, for example); hence costs for permits, costs less per kWh than one consisting of RPV alone. This does not technical assessments, audits to determine investment grade, imply, however, that the World Bank or other institutions should only financial feasibility studies, and negotiations with homeowners’ finance EE, since RPV is often needed to supply electricity for on-site associations are comparatively high per kWh saved or generated. consumption, to supplement grid-provided electricity, or to generate Reducing transaction costs by considering both EE and RPV becomes electricity for sale. ever more important. 3 Note that the residential RPV costs are lower in figure 2 (2016 data) than figure 1 (2015 data). 3 E x p l o i t i n g S y n er g i es bet w ee n R o o f to p S o l a r P V a n d E n er g y E f f i c i e n c y I n vest m e n ts i n t h e B u i lt E n v i r o n m e n t Figure 1. Comparison of unsubsidized levelized costs of energy from various sources Solar PV—rooftop residential 184 300 Solar PV—rooftop C&I 109 193 Solar PV—community 78 136 Because EE investments Solar PV—crystalline utility-scale 58 70 are cheaper than RPV Solar PV—thin film utility-scale 50 60 investments per equivalent Solar thermal tower with storage 119 181 kilowatt hour (that is, per Fuel cell 106 167 Microturbine 79 89 kWh produced or saved), Geothermal 82 117 a basket of RPV and EE Biomass 82 110 investments costs less per Wind 32 77 kWh than one consisting of Energy efficiency 50 RPV alone. Diesel reciprocating engine 212 281 Natural gas reciprocating engine 68 101 Gas peaking 165 218 IGCC 96 183 Nuclear 97 136 Coal 65 150 Gas combined cycle 52 78 0 50 100 150 200 250 300 Levelized cost ($/MWh) Source: Lazard (2015). Note: C&I = commercial and industrial; IGCC = integrated gasification combined cycle. RPV enhances the visibility of EE efforts. RPV investments *** tend to attract more exposure than EE investments; hence they can There is a second reason why clients should pursue the synergies help build support for EE. In the public sector, the greater visibility between RPV and EE. Because investments in both face similar can lead to more political support for the investments; in the barriers in the built environment, the measures taken to overcome private sector, it can be used in marketing. In 2015, installed solar those barriers can be applied to both. The barriers are: PV capacity grew by 32 percent (SolarPower Europe 2016), but total Split incentives. RPV and EE both face the problem of split final energy consumption savings grew by just 8 percent (IEA 2016a). incentives (otherwise known as the “principal-agent problem”). The Within the World Bank, the share of EE in the FY2010–16 portfolio building owners responsible for making investment decisions are was $6 billion, compared with $9.6 billion for RE. RPV and EE will both typically not responsible for the electricity bills; hence they have no be stronger if they advance together. incentive to make the investments unless doing so will raise building 4 E x p l o i t i n g S y n er g i es bet w ee n R o o f to p S o l a r P V a n d E n er g y E f f i c i e n c y I n vest m e n ts i n t h e B u i lt E n v i r o n m e n t Figure 2. Levelized cost of electricity from RPV, 2016 350 300 The cost of electricity from 250 RPV varies by country LCOE (2016 US$/MWh) depending on insolation, 200 market maturity, and 150 regulation. 100 50 0 a zil ina e y ia an a sia ica ain d d ) ) ) kw kw kw an ali re nc an an Ind Bra Jap lay Afr Ch Sp Ko str rm Fra erl ail 10 10 10 Ma Th Au itz Ge p. uth (o– (o– o– Re Sw a( So UK ia rni orn ifo llif all Ca n-C US no US Source: IRENA renewable costs database, 2016. values. Currently, most property markets do not support premium by 80 percent. The super-ESCO also managed to attract financing prices for properties containing RPV or EE investments. However, from Germany’s KfW Development Bank, the Asian Development some evidence is beginning to emerge that green buildings do Bank, and the World Bank. EESL recently launched a program that indeed have a higher value, but this trend has not yet been validated uses the bulk-procurement approach to distribute energy efficient broadly. For example, Energy Performance Certificates in the United ceiling fans and air conditioning units. In agriculture, EESL launched Kingdom have a modest impact on property values. an efficient-pump program in which pumps use grid-supplied or solar Need for aggregation. Individual investments in both RPV and energy depending on availability. EE tend to be relatively small and require aggregation to lower trans- Limited access to financing. Commercial banks are reluctant action costs and attract large-scale financiers. Large-scale financiers to lend to RPV and EE because the developers tend to be small have been instrumental in driving down the costs of utility-scale and thus lack collateral. Risk-mitigation and credit-enhancement solar through solar auctions. They could have a similar effect on strategies are an appropriate response. The World Bank established RPV and EE costs. Some super-ESCOs have already succeeded at a facility in India that provides partial credit guarantees to cover a aggregating EE demand. Energy Efficiency Service Limited (EESL) of share of the default risk that financial institutions face in extending India, for example, aggregated EE demand in lighting through bulk loans to eligible EE projects. procurement and managed to lower the cost of LED bulbs in India 5 E x p l o i t i n g S y n er g i es bet w ee n R o o f to p S o l a r P V a n d E n er g y E f f i c i e n c y I n vest m e n ts i n t h e B u i lt E n v i r o n m e n t Table 1. Government incentives for RPV and EE in four countries Germany USA India China RPV EE RPV EE RPV EE RPV EE Direct capital subsidies to lower upfront cost barriers 3 3 3 3 3 3 3 3 PV-specific green electricity schemes that allow customers to purchase PV electricity The similarities between 3 from the utility at a premium price the incentives currently Renewable portfolio standards that require utilities to source some of their electricity 3 3 3 3 3 3 offered for RPV and EE from RE or save a certain percentage of their supply reveal an opportunity to Solar/EE target in the RPS (a mandated requirement that a portion of RPS be met by 3 3 3 3 solar supplies or EE, respectively) offer integrated incentives. Tax policies that permit deduction from taxable income or accelerated depreciation of 3 3 3 3 3 For example, Go Solar costs associated with RPV installation California requires that Net metering/net billing/self-consumption incentives (excess electricity fed into grid; 3 3 3 3 owners receive retail value) beneficiaries of RPV Sustainability requirements on new buildings that can be met by RPV 3 3 3 3 3 3 incentives meet California’s Note: RPV = rooftop solar PV; EE = energy efficiency; RE = renewable energy. building-efficiency standards, as determined How are RPV and EE for buildings typically first conduct an EE audit. The audit must meet or exceed California’s by an EE audit. incentivized by governments? building-efficiency standards. The state encourages beneficiaries to maximize the efficiency of existing systems on the property—like Integrated incentives, exceptional now, insulation, windows, and appliances—before installing solar. may become the norm Based on legislation passed in 2000, Brazil’s Energy Efficiency Program (PROPEE) requires local power-distribution companies to The countries that lead the world in EE and RPV investments have invest 0.5 percent of their net operating revenues to improve EE supportive government policies and institutions, as well as appropri- among the companies’ customers. A part of the law supports RPV ate financing mechanisms. but requires that the sources of generation meet EE standards to Table 1 summarizes RPV and EE incentives provided by the become eligible for RPV funds. governments of India, Germany, China, and the United States. While implying that governments tend to support RPV and EE in a nonin- tegrated way, the table also illustrates the similarities between the How are RPV and EE for buildings typically financed? incentives offered for RPV and EE, revealing an opportunity to offer Models reflect the maturity of markets and integrated incentives. For example, because the four countries offer legal frameworks financing schemes for both RPV and EE, incentives (or requirements) could be designed to promote combinations of the two. In young markets, grants, allocations from the general budget, and There are a few examples of governments that already support special RE or EE funds are common sources of financing. These are for integrating RPV and EE. public funds set aside to finance RPV or EE investments that meet The California Energy Commission and the California Public certain criteria. Investments under this model of financing tend to Utilities Commission operate Go Solar California, the goal of which is be small, and the recipient assumes ownership of the investment to install 3,000 MW of RPV energy systems on homes and businesses and most of the risk associated with it. Examples include Brazil’s in the state. The program requires that beneficiaries of the incentives PROPEE, introduced above, which generates about $150 million for 6 E x p l o i t i n g S y n er g i es bet w ee n R o o f to p S o l a r P V a n d E n er g y E f f i c i e n c y I n vest m e n ts i n t h e B u i lt E n v i r o n m e n t demand-side EE financing each year. Utilities administering PROPEE activity in the country) accounts for about 33 percent of the local funds are often agnostic about whether investments involve RPV or EE market (IEA 2016a). In other developing countries, the third-party EE, provided they meet specified criteria within the guidelines pro- financing model is held back by limited access to debt financing and vided by the national energy regulator. The criteria typically include high consumer risk (limited credit assessment procedures and poor a cost–benefit ratio of less than 0.8 for EE or 1 for RPV; a beneficiary enforceability of agreements) (Sandeep, Jai, and Gireesh 2016). A Brazilian law passed in contribution toward financing the project; and involvement of a Table 2 on the next page compares models of financing RPV 2000 supports RPV but certified engineer in preparing the proposal and supervising project and EE, and notes how each could be used to finance integrated implementation. EE and RPV. requires that the sources When markets and regulatory frameworks develop, the use of of generation meet EE credit lines and commercial loans increases. At this point, credit- Where have RPV and EE been successfully standards to become worthy commercial and industrial customers may be able to obtain integrated? eligible for RPV funds. loans for RPV and EE. In the absence of targeted financial incentives, access to the loans tends to be low, however, owing to the perceived Australia, India, and Brazil offer useful examples performance risk of both RPV and EE. Even in the presence of Australia’s Burder Industries is an agricultural equipment manu- risk-mitigation measures such as guarantees or first-loss facilities, facturer in Victoria, Australia. Facing stiff competition from equipment commercial and industrial consumers may hesitate to incur the large manufacturers in lower-cost countries, the company needed to lower upfront costs of RPV or the high transaction costs associated with EE costs and find ways to retain its competitive edge. One solution was an because neither is part of their core business. Government subsidies, integrated RPV and EE project that it implemented in 2015. The project production or investment tax credits, accelerated depreciation, and was funded by a 50 percent grant from AusIndustry Clean Technology similar measures may be necessary to improve project economics Innovation Fund; the balance came from Burder’s own resources. and attract commercial financing. Burder Industries installed 355 kW of grid-connected RPV that Third-party financing models are growing for both RPV and provides 90 percent of the company’s power, thus reducing operat- EE. Regarding RPV, the developer installs, owns, and operates the ing costs by 70 percent. In the area of EE, Burder installed a new RPV system on the consumer’s property, selling electricity to the 500 kVA substation, implemented a 200 kVAr power factor cor- consumer under a long-term power purchase agreement. Regarding rection, and adopted practices such us charging battery-powered EE, an ESCO installs more-efficient equipment and is typically paid equipment (including lifts) during the day, when solar generation is at from the energy savings. Large developers and large ESCOs are often its highest. The company won the 2015 Clean Energy Council Solar better able to manage the financing and performance risks of such Design and Installation Award for its installation, and the project has arrangements, and they typically have the means to raise capital had a 25 percent internal rate of return. to meet large upfront costs.4 As a result, about 60 percent of RPV India’s National Institute for Transforming India (NITI Aayog) investments in the United States are financed under the third-party is a think tank that provides technical support to the government financing model. ESCOs (through the third-party financing model) of India to formulate long-term policies and programs. NITI Aayog command a good portion of the market for EE in U.S. public buildings, decided to install a 78 kilowatt peak RPV system to: (a) replace the deriving 90 percent of their revenues from government contracts. diesel fuel it used to power its facilities during power outages; (b) In China, about 17 percent of solar installations are small in scale, reduce its peak demand; (c) lower its levelized costs; and (d) qualify implying a smaller role for third-party financing for RPV. China’s for lower tariff brackets. The original intent was to obtain funding for EE-related ESCO industry (which constitutes 55 percent of all ESCO the RPV investment from Solar Energy Corporation of India, hire Azure Power (a private developer) to install the grid-connected system, and 4 ESCOs work in specific contexts. They have worked well in China, United States, and sign a 25-year power purchase agreement with Azure. However, the European Union, but less well in many developing countries. ESCOs with a well-funded parent company tend to do well. government was averse to the involvement of a private developer in 7 E x p l o i t i n g S y n er g i es bet w ee n R o o f to p S o l a r P V a n d E n er g y E f f i c i e n c y I n vest m e n ts i n t h e B u i lt E n v i r o n m e n t Table 2. Comparison of the models for financing RPV and EE Sources of RPV investments Sources of EE investments Opportunities for integrating RPV and EE investments Funding from grants, general budget allocations, and dedicated RE or EE funds The recipient assumes all risks and owns the installed RPV/EE equipment. Both RPV and EE can be financed, provided they meet Less mature markets >>>> given investment criteria—for example, a maximum payback period of In developing countries, the 10 years or a cost–benefit ratio of less than 0.8. In many World Bank client countries, a combined RPV and EE investment is more likely to third-party financing model meet these criteria than is a stand-alone RPV investment. is held back by limited Credit lines, commercial loans access to debt financing Where available, feed-in tariffs or Savings (revenue equivalents) are The ease of measuring electricity generated from RPV lowers the power purchase agreements provide often hard to predict, particularly in perceived performance risk of the combined RPV and EE investment, and high consumer predictable revenues, lowering the developing countries where baseline thereby raising the likelihood of obtaining investment financing. financial risks of projects. consumption changes. To simplify Development of certification standards and standardized tools to risk (limited credit measurement and verification, the EE assess risk may enhance the use of credit lines and commercial loans assessment procedures industry is adopting deemed savings to finance integrated RPV and EE. models in which the energy savings and poor enforceability of attributable to EE measures are agreements). predefined based on a sizable pilot or <<<< More mature markets application. Third-party financing “Pay-as-you save” financing The client purchases electricity from A third party installs and maintains Financial and performance risks are shifted to the developer or ESCO, a developer who installs, owns, and energy-efficient equipment, and and upfront capital requirements from the recipient are minimal. For operates an RPV system under a consumer pays a monthly fee from large investments, the developer and the ESCO are often different power purchase agreement. The the savings realized. The fee is agreed companies. For medium to small-scale investments, the ESCO and electricity can be fed to the grid at a ahead of time. Either the customer developer may be the same company. For example, Amaresco, one of regulated feed-in tariff, where available, or the installer may own the installed the largest ESCOs in the United States, does engineering performance or offset, depending on the local equipment. contracts for both RPV and EE. For example, at the Internal Revenue context. Service building in New Carrollton Maryland, USA, the company installed 867 kWh of RPV, replaced more than 11,000 light fixtures, installed integrated occupancy centers to monitor the digital lighting system, and replaced the HVAC system. Note: ESCO = energy service company; FIT = feed-in tariff. its buildings, and it was not clear that NITI Aayog could sign a power 591 old fans, and improved the power factor of the whole system. purchase agreement because the electricity bill was paid by the Though the project was implemented by an ESCO, NITI Aayog paid for Central Public Works Department within its home ministry. Thus NITI it up front, which allowed the think tank to increase the internal rate of Aayog ended up contracting Tata Solar (under an engineering perfor- return of the investments from 15 percent to 25 percent. mance contract) to install its grid-connected system. The system is Brazil’s FUCAPE is a business school connected to the owned NITI Aayog; it was financed from NITI Aayog’s own resources University of Sao Paulo. The university set a goal to use renewable and a 30 percent subsidy from Solar Energy Corporation of India. The energy for all of its energy needs. The decision was driven by system is expected to pay for itself in 7–8 years. the need to lower costs after a 30 percent increase in electricity With respect to EE, NITI Aayog hired EESL to retrofit 37 air condi- prices—and to distinguish the school in the market. The project was tioning units, deployed 328 microprocessors alongside its energy man- launched in 2015 and financed through loans from Espirito Santo agement system, replaced 2,176 lighting points with LEDs, replaced State Development Bank (Banco de Desenvolvimento do Espírito 8 E x p l o i t i n g S y n er g i es bet w ee n R o o f to p S o l a r P V a n d E n er g y E f f i c i e n c y I n vest m e n ts i n t h e B u i lt E n v i r o n m e n t Santo, BANDES). Feasibility studies pointed to meeting 70 percent of capacity is in the commercial sector, and 24 percent in the industrial the school’s energy needs with RPV and 30 percent with EE. FUCAPE sector, according to Eurostat energy statistics. installed 380 kW of solar panels on roofs covering buildings and There are simple tools for estimating RPV and EE potential. Cities parking lots. All electricity is consumed by the school, since there is such as New York, San Francisco, Boston, and Paris have developed no FIT program in Brazil. FUCAPE is in a hot part of Brazil, so cooling detailed solar maps that citizens can use to estimate their RPV poten- RPV potential is highest and lighting account for most of its energy use. The EE measures tial. At a global scale, such detailed maps do not exist, but there are in medium to small cities, focused on switching to more efficient air conditioning and LED several resources that can help estimate RPV potential. For example, lighting. The investment also included the capture of rainwater. The the Global Solar Atlas (http://globalsolaratlas.info) allows teams to which have more roof project’s payback period is seven years. estimate solar PV potential anywhere around the globe. In energy space per capita. RPV and efficiency, there are rules of thumb and simple tools that teams can EE synergies will be most How can the World Bank help clients realize the use to estimate the EE potential of particular buildings. For example, significant in medium to replacing lighting with more efficient LEDs generally cuts energy use synergies between RPV and EE in buildings? by 40 to 60 percent, depending on the technology being replaced. small cities with high EE Clients invest in RPV and EE in buildings across The American Society of Heating, Refrigerating and Air-Conditioning potential. the globe. Some simple guidance can help them Engineers (ASHRAE) provides simple guidelines that can help teams begin to explore synergies conduct EE audits. Other tools, such as IFC’s Excellence in Design for Greater Efficiencies (EDGE, https://www.edgebuildings.com/), can help In the residential sector, the IEA superimposed data on roof space users estimate EE potential at the building level. ESMAP’s TRACE 2.0 per capita with insolation data from the U.S. National Aeronautics can help clients estimate EE potential at the city level. and Space Administration (https://eosweb.larc.nasa.gov/sse/), ESMAP also provides resources to help teams realize the concluding that 40 percent of the global RPV potential is in cities with synergies between RPV and EE. Clients and their World Bank teams populations under 100,000, and 25 percent in cities with populations are encouraged to contact ESMAP for more information. Finance is larger than 1.6 million (IEA 2016d). Thus, given a certain amount of available under various RE and EE windows, and RE/EE experts can insolation, the RPV potential is highest in medium to small cities, provide technical assistance. which have more roof space per capita. With the respect to EE, the potential largely depends on energy consumption and the technol- References ogies in use. The higher the energy consumption and the older the IEA (International Energy Agency). 2016a. Energy Efficiency Market technology, the higher the EE potential. Putting these two together, Report 2016. Paris: OECD/IEA. RPV and EE synergies will be most significant in medium to small ———. 2016b. Medium-Term Renewable Energy Market Report 2016. cities with high EE potential. Paris: OECD/IEA. In the commercial, industrial, and public sector, where facilities ———. 2016c. 2016c. World Energy Outlook 2016. Paris: OECD/IEA. afford large amounts of roof space and peak consumption occurs ———. 2016d. Rooftop Solar PV Potential 2016 (annex H). during the day, when RPV generation is high, the synergies between Paris: OECD/IEA. https://www.iea.org/media/etp/etp2016/ RPV and EE are plentiful. The match between consumption and AnnexHRooftopsolarPVpotential_web.pdf. production minimizes the need for energy storage, which keeps ———. 2016e. Buildings Program. Paris: OECD/IEA. costs low. Using Germany as an example, 26 percent of installed RPV ———. 2016f. “Snapshot of Global PV Markets 2016.” Paris: OECD/ IEA. 9 E x p l o i t i n g S y n er g i es bet w ee n R o o f to p S o l a r P V a n d E n er g y E f f i c i e n c y I n vest m e n ts i n t h e B u i lt E n v i r o n m e n t IRENA (International Renewable Energy Agency). 2016. Solar PV in SolarPower Europe. 2016. Global Market Outlook for Solar Power MAKE FURTHER Africa, Costs and Markets. Abu Dhabi. 2016–2020. Brussels. CONNECTIONS Lazard. 2015. “Lazard’s Levelized Cost of Energy Analysis, United Nations. 2015. World Urbanization Prospects—The 2014 2015.” https://www.lazard.com/media/2390/lazards-level- Revision. New York. Live Wire 2014/11. ized-cost-of-energy-analysis-90.pdf. World Bank. 2017. “Energy Efficiency and Rooftop Solar PV “Designing Credit Lines Limaye, Dilip. 2010. http://www.asiaesco.org/pdf/presentation/2-2. Opportunities in Cairo and Alexandria.” Energy Sector Management for Energy Efficiency,” pdf. Assistance Program, Washington, DC. by Ashok Sarkar, Jonathan Sandeep, Gupta, Sharda Jai, and Shrimali Gireesh. 2016. “The Drivers Sinton, and Joeri de Wit. and Challenges of Third Party Financing for Rooftop Solar Power The author would like to thank ESMAP’s management, particularly Rohit Khanna, for their support, and the following World Bank colleagues for their in India.” Climate Policy Initiative, India. Live Wire 2016/54. “Fostering comments and input: Aditya Lukas, Amit Jain, Ashok Sarkar, Christian Mahler, Schlomann, Barbara, Clemens Rohde, and Marc Ringel. 2016. “Energy the Development of ESCO Jari Vayrynen, Jas Singh, Martin Schroeder, Luiz Maurer, Martina Bosi, Oliver Efficiency Policies in the German Energy Transition.” ACEEE Knight, and Zuzana Dobrotkova. The author also would like to thank, for their Markets for Energy Efficiency,” Summer Study on Energy Efficiency in Buildings contributions of data and ideas, Suarabh Kumar (EESL), Pablo Ralon (IRENA), by Kathrin Hofer, Dilip Limaye, and Michael Taylor (IRENA). and Jas Singh. Live Wire 2016/55. “Designing Effective National Programs to Improve Industrial Energy Efficiency,” by Feng Liu and Robert Tromop. Live Wire 2017/72. “What Drives the Price of Solar Photovoltaic Electricity in Developing Countries?” by Zuzana Dobrotkova, Pierre Audinet, and Gevorg Sargsyan.  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Once a year, the Energy and Extractives Global Practice takes stock of all notes that appeared, reviewing their quality and identifying priority areas to be covered in the following year’s pipeline. Please visit our Live Wire web page for updates: http://www.worldbank.org/energy/livewire e Pa c i f i c 2014/28 ainable energy for all in easT asia and Th 1 Tracking Progress Toward Providing susT TIVES GLOBAL PRACTICE A KNOWLEDGE NOTE SERIES FOR THE ENERGY & EXTRAC THE BOTTOM LINE Tracking Progress Toward Providing Sustainable Energy where does the region stand on the quest for sustainable for All in East Asia and the Pacific 2014/29 and cenTral asia energy for all? in 2010, eaP easTern euroPe sT ainable en ergy for all in databases—technical measures. This note is based on that frame- g su v i d i n had an electrification rate of Why is this important? ess Toward Pro work (World Bank 2014). SE4ALL will publish an updated version of 1 Tracking Progr 95 percent, and 52 percent of the population had access Tracking regional trends is critical to monitoring the GTF in 2015. to nonsolid fuel for cooking. the progress of the Sustainable Energy for All The primary indicators and data sources that the GTF uses to track progress toward the three SE4ALL goals are summarized below. consumption of renewable (SE4ALL) initiative C T I V E S G L O B A L P R A C T I C E ENERGY & EXTRA • Energy access. Access to modern energy services is measured T E S E R I E S F O R T H EIn declaring 2012 the “International Year of Sustainable Energy for energy decreased overall A KNO W L E D G E N Oand 2010, though by the percentage of the population with an electricity between 1990 All,” the UN General Assembly established three objectives to be connection and the percentage of the population with access Energy modern forms grew rapidly. d Providing Sustainable accomplished by 2030: to ensure universal access to modern energy energy intensity levels are high to nonsolid fuels.2 These data are collected using household Tracking Progress Towar services,1 to double the 2010 share of renewable energy in the global surveys and reported in the World Bank’s Global Electrification but declining rapidly. overall THE BOTTOM LINE energy mix, and to double the global rate of improvement in energy e and Central Asia trends are positive, but bold Database and the World Health Organization’s Household Energy for All in Eastern Europ efficiency relative to the period 1990–2010 (SE4ALL 2012). stand policy measures will be required where does the region setting Database. The SE4ALL objectives are global, with individual countries on that frame- on the quest for sustainable to sustain progress. is based share of renewable energy in the their own national targets databases— technical in a measures. way that is Thisconsistent with the overall of • Renewable energy. The note version energy for all? The region SE4ALL will publish an updated their ability energy mix is measured by the percentage of total final energy to Why is this important ? spirit of the work initiative. (World Bank Because2014). countries differ greatly in has near-universal access consumption that is derived from renewable energy resources. of trends is critical to monitoring to pursue thetheGTF in 2015. three objectives, some will make more rapid progress GTF uses to Data used to calculate this indicator are obtained from energy electricity, and 93 percent Tracking regional othersindicators primary will excel and data sources that elsewhere, depending on their the while the population has access le Energy for All in one areaThe goals are summarized below. balances published by the International Energy Agency and the the progress of the Sustainab respective track starting progress pointstowardand the three SE4ALL comparative advantages as well as on services is measured to nonsolid fuel for cooking. access. Accessthat they modern to are able to energy marshal. United Nations. despite relatively abundant (SE4ALL) initiative the resources and support Energy with an electricity connection Elisa Portale is an l Year of Sustainable Energy for To sustain percentage of by the momentum forthe the population achievement of the SE4ALL 2• Energy efficiency. The rate of improvement of energy efficiency hydropower, the share In declaring 2012 the “Internationa energy economist in with access to nonsolid fuels. three global objectives objectives, andathe means of charting percentage of the population global progress to 2030 is needed. is approximated by the compound annual growth rate (CAGR) of renewables in energy All,” the UN General Assembly established the Energy Sector surveys and reported access to modern universalAssistance The World TheseBank and data are the collected International using household Energy Agency led a consor- of energy intensity, where energy intensity is the ratio of total consumption has remained to be accomplished by 2030: to ensure Management Database and the World of theenergy intium of 15 renewable international in the World Bank’s Global agencies toElectrification establish the SE4ALL Global primary energy consumption to gross domestic product (GDP) energy the 2010 share of Program (ESMAP) relatively low. very high energy services, to double Database. measured in purchasing power parity (PPP) terms. Data used to 1 t ’s Household provides Energy a system for regular World Bank’s Energy the global rate of improvemen and Extractives Tracking Framework Health (GTF), which Organization in the energy intensity levels have come and to double the global energy mix, Global Practice. (SE4ALL 2012). based on energy. of renewable The sharepractical, rigorous—yet energy given available calculate energy intensity are obtained from energy balances to the period 1990–2010 global reporting, Renewable down rapidly. The big questions in energy efficiency relative setting by the percentage of total final energy consumption published by the International Energy Agency and the United evolve Joeri withde Wit is an countries individual mix is measured Data used to are how renewables will The SE4ALL objectives are global, economist in with the overall from renewable energy when every resources. person on the planet has access Nations. picks up a way energy that is consistent 1 The universal derived that isaccess goal will be achieved balances published when energy demand in from energy their own national targets through electricity, clean cooking fuels, clean heating fuels, rates the Bank’s Energy and countries differ greatly in their ability calculate this indicator are obtained to modern energy services provided productive use and community services. The term “modern solutions” cookingNations. again and whether recent spirit of the initiative. Because Extractives Global rapid progress and energy for Energy Agency and the United liquefied petroleum gas), 2 Solid fuels are defined to include both traditional biomass (wood, charcoal, agricultural will make more by the refers to solutions International that involve electricity or gaseous fuels (including is pellets and briquettes), and of decline in energy intensity some t of those of efficiency energy and forest residues, dung, and so on), processed biomass (such as to pursue the three objectives, Practice. depending on their or solid/liquid fuels paired with Energy efficiency. The rate stoves exhibiting of overall improvemen emissions rates at or near other solid fuels (such as coal and lignite). will excel elsewhere, rate (CAGR) of energy will continue. in one area while others liquefied petroleum gas (www.sustainableenergyforall.org). annual growth as well as on approximated by the compound and comparative advantages is the ratio of total primary energy respective starting points marshal. where energy intensity that they are able to intensity, measured in purchas- the resources and support domestic product (GDP) for the achievement of the SE4ALL consumption to gross calculate energy intensity Elisa Portale is an To sustain momentum terms. Data used to charting global progress to 2030 is needed. ing power parity (PPP) the International energy economist in objectives, a means of balances published by the Energy Sector International Energy Agency led a consor- are obtained from energy The World Bank and the SE4ALL Global Energy Agency and the United Nations. Management Assistance agencies to establish the the GTF to provide a regional and tium of 15 international for regular This note uses data from Program (ESMAP) of the which provides a system for Eastern Tracking Framework (GTF), the three pillars of SE4ALL World Bank’s Energy and Extractives on rigorous—yet practical, given available country perspective on Global Practice. global reporting, based has access Joeri de Wit is an will be achieved when every person on the planet The universal access goal heating fuels, clean cooking fuels, clean energy economist in 1 agricultural provided through electricity, biomass (wood, charcoal, to modern energy services The term “modern cooking solutions” to include both traditional and briquettes), and Solid fuels are defined the Bank’s Energy and use and community services. biomass (such as pellets 2 and energy for productive petroleum gas), and so on), processed fuels (including liquefied and forest residues, dung, involve electricity or gaseous at or near those of Extractives Global refers to solutions that overall emissions rates other solid fuels (such as coal and lignite). with stoves exhibiting Practice. or solid/liquid fuels paired (www.sustainableenergyforall.org). liquefied petroleum gas  Contribute to If you can’t spare the time to contribute to Live Wire, but have an idea for a topic, or case we should cover, let us know! Do you have something to say? We welcome your ideas through any of the following Say it in Live Wire! channels: Via the Communities of Those working on the front lines of energy and extractives development in emerging economies Practice in which you are have a wealth of technical knowledge and case experience to share with their colleagues but active seldom have the time to write for publication. By participating in the Energy Live Wire offers prospective authors a support system to make sharing your knowledge as easy as and Extractives Global possible: Practice’s annual Live Wire • Trained writers among our staff will be assigned upon request to draft Live Wire stories with series review meeting staff active in operations. • A professional series editor ensures that the writing is punchy and accessible. By communicating directly • A professional graphic designer assures that the final product looks great—a feather in your cap! with the team (contact Morgan Bazilian, mbazilian@ Live Wire aims to raise the profile of operational staff wherever they are based; those with worldbank.org) hands-on knowledge to share. That’s your payoff! It’s a chance to model good “knowledge citizenship” and participate in the ongoing change process at the Bank, uroPe and cenT ral asia 2014/29 all in easTern e ble energy for v i d i n g s u s Ta i n a where knowledge management is becoming everybody’s business. ess Toward Pro 1 Tracking Progr TICE IVES GLOBAL PRAC ENERGY & EXTRACT E SERIES FOR THE A KNOWLEDGE NOT rgy Providing Sustainable Ene Tracking Progress Toward Or 2014/5 1 U n d e r s ta n d i n g C O 2 emissiOns frOm the glObal energy seCt THE BOTTOM LINE ern Euro pe and Cen tral Asia where does the region stand ble for All in East based on that frame- on the quest for sustaina measures. This note is databases—technical updated version of energy for all? The region SE4ALL will publish an has near-universal access to WhyD is this important? ERGY PRACTICE work (World Bank 2014). E G E N O T E S E R I E S F O R T H E E N to of A K N O W L is critical monitoring the GTF in 2015. that the GTF uses to electricity, and 93 percent Tracking regional trends for All The primary indicators and data sources below. goals are summarized the population has access the progres s of the Sustainable Energy progress toward the three SE4ALL Understanding CO Emissions from the Global Energy Sector nonsolid fuel for cooking. track is measured to modern energy services THE BOTTOM LINE to Your Name Here t (SE4ALL) initiativ e Energy access. Access connection despite relatively abundan 2 population with an electricity the share “Internat ional Year of Sustainable Energy for by the percentage of the access to nonsolid fuels.2 hydropow the energy sector contributes er, In declaring 2012 the the population with objectives and the percentage of of renewables in energy established three global and reported about 40 percent of global All,” the UN General Assembly access to modern using household surveys Why is this issue important? 2030: to ensure universal These data are collected and the World Become an author has remained emissions of CO2. three- consumption to be accomplished by in in the World Bank’s Global Electrification Database high energy double the 2010 knowledge share of renewable energy of the Database. relatively low. very Mitigating climate change energy requires services, to 1 quarters of those emissions ent Household Energy rate of improvem global Figure 1. CO2 emissions Health Organiza Figure tion’s 2. energy-related CO2 energy come from six major intensity levels have come energy mix, and to double the share of renewable energy in the of CO s2 emissions sources the global 0 (SE4ALL 2012). Renewab le energy. The question to the period 1990–201 by sector emissions by country consumption down rapidly. The big economies. although coal-fired in energy efficiency relative setting d by the percenta ge of total final energy of Live Wire and countries global, with individual mix is measure lics evolve les will opportunities to cut emissions of greenhouse aregases used to plants account for just are how renewab Identifying The SE4ALL objectives le energy resources. Data 0.5% picks up understanding of the main sources ofin those a way that is consistent with emis- the overall that is derived from renewab balances published 40 percent of world energy when energy demand requires a clear their own national targets in their ability other this indicator are obtained from energy 80 percent of differ greatly residential calculate production, they were again and whether Carbonrates sions.recent dioxide (CO2) accounts for more than spirit of the initiative. Because countries 6% sectors other Mics Agency and the United Nations. will make more rapid progress by the International Energy china 10% 15% intensity gas emissions globally, 1 primarily from the burning s, some efficiency is contribute to your responsible for more than of decline in energy total greenhouse to pursue the three objective on their other Hics . The rate of improvement of energy energy sector—defined toexcel elsewhere, depending include Energy efficiency 30% growth rate (CAGR) of energy will continue. of fossil fuels (IFCC 2007). The will 8% in one area while others by the compound annual energy 70 percent of energy-sector as well as on 41% approxim and heat generation—contributed and compara tive advantages 41 ated Japan 4% energy the ratio of total primary industry emissions in 2010. despite fuels consumed for electricity respective starting points 20% russia energy intensity is of global CO emissions in 2010 (figure 1). Energy-related that they are able to marshal. intensity, where measure d in purchas- improvements in some percent 2 the resources and support 7% usa product (GDP) gross domestic practice and career! an at the point of combustion make up the m bulk for the such of achievem ent of the SE4ALL other consumption to india 19% calculate energy intensity countries, the global CO2 CO Elisa 2 emissions Portale is To sustain momentu transport road 7% eu terms. Data used to andin are generated by the burning of fossil is needed. global progress to 2030 6% transport fuels, industrial ing power parity (PPP) the International economist objectives, a means of charting balances published by emissions 11% emission factor for energy energy 16% EnergyandSector nonrenewable municipal waste to generate nal Energy Agency led electricity Internatio a consor- are obtained from energy The World Bank and the the waste, generation has hardly changed United Nations. ent Assistance venting and leakage to establish the emissions SE4ALL Global Energy Agency and the sector at the point and over the last 20 years. and heat. Black carbon and methane Managem tium of 15 international agencies Notes: Energy-related CO2 emissions are CO2 emissions from the energy from the GTF to provide a regional of the for regular This note usesanddata domestic provides a system bunkers, Program (ESMAP) presented in this note. of combustion. Other Transport includes international marine aviation for Eastern are not included in the analysis and Extractives Tracking Framework (GTF), which given aviation and available navigation, Other Sectors rail and pipeline transport; perspect include ive on the three pillars of SE4ALL commercial/public World Bank’s Energy on rigorous—yet practical, country and heat genera- global reporting, based services, agriculture/forestry, fishing, energy industries other than electricity Global Practice. not specified elsewhere; Energy = fuels consumed for electricity and Where do emissions come from? tion, and other emissions as has in the opening paragraph. HIC, MIC, and LIC refer to high-, middle-, access Joeri de Wit is an will be achieved when on the planet heat generation, every person defined The universal access goal of countries heating fuels, energy economistare Emissions concentrated in 1 in a handful to modern energy services provided through electricity, fuels, clean and low-income clean cooking countries. cooking solutions” to include both traditional biomass (wood, charcoal, agricultural The term “modern Source: IEA 2012a. Solid fuels are defined and briquettes), and the Bank’s Energy and use and community services. biomass (such as pellets 2 and come primarily from burning and energy coal for productive that involve electricity or gaseous fuels (including liquefied petroleum gas), near those of and forest residues, dung, and so on), processed Vivien Foster is sector Extractives Global refers to solutions overall emissions rates at or other solid fuels (such as coal and lignite). with stoves exhibiting or solid/liquid fuels paired emissions closely manager for the Sus- The geographical pattern of energy-related CO Practice. gas 2(www.sustainableenergy forall.org). liquefied petroleum middle-income countries, and only 0.5 percent by all low-income tainable Energy Depart- mirrors the distribution of energy consumption (figure 2). In 2010, ment at the World Bank countries put together. almost half of all such emissions were associated with the two (vfoster@worldbank.org). Coal is, by far, the largest source of energy-related CO2 emissions largest global energy consumers, and more than three-quarters globally, accounting for more than 70 percent of the total (figure 3). Daron Bedrosyan were associated with the top six emitting countries. Of the remaining works for London This reflects both the widespread use of coal to generate electrical energy-related CO2 emissions, about 8 percent were contributed Economics in Toronto. power, as well as the exceptionally high CO2 intensity of coal-fired by other high-income countries, another 15 percent by other Previously, he was an power (figure 4). Per unit of energy produced, coal emits significantly energy analyst with the more CO emissions than oil and more than twice as much as natural 2 World Bank’s Energy Practice. Gas Inventory 1 United Nations Framework Convention on Climate Change, Greenhouse 0.php gas. Data—Comparisons By Gas (database). http://unfccc.int/ghg_data/items/380