Report No. AAA49-7B Status of Energy Efficiency in the Western Bal kans A Stocktaki ng Report June 15, 2010 Sustainable Development Sector Unit Europe and Central Asia Document of the World Bank This document has a restricted distribution and may be used by recipients only in the performance of official duties. Its contents may not otherwise be disclosed without World Bank authorization. ABBREVATIONS AND ACRONYMS ADEME Agency for the Environment and Energy Management (France) AEA Austrian Energy Agency BCM Billion Cubic Metres (of gas) BiH Bosnia and Herzegovina CCGT Combined Cycle Gas Turbine CEEF Commercializing Energy Efficiency Financing CFB Circulating Fluidized Bed CFL Compact Fluorescent Lamps CHP. Combined Heat and Power DH . District Heating EBRD European Bank for Reconstruction and Development EC European Community EE Energy Efficiency EIB European Investment Bank ESCO Energy Service Company ESMAP Energy Sector Management Assistance Program EU European Union EUROSTAT Statistical Office of the European Union FGD Flue Gas Desulfurization GTZ Agency for Technical Cooperation (Germany) GWh Gigawatt-hour HHV Higher Heating Value lEA International Energy Agency KFW Kreditanstalt fuer Wiederaufbau (Germany) Mtoe Million tons of oil equivalent MWh (e or th) Megawatt-hour (electric or thermal) NEEAP National Energy Efficiency Action Plan OCGT Open Cycle Gas Turbine RE Renewable Energy SME Small and Medium Enterprises TA Technical Assistance TFEC Total Final Energy Consumption TPP Thermal Power Plant UNECE United Nations Economic Commission for Europe USAID United States Agency for International Development Contents Executive Summary ................................................................................................... i 1. Introduction ......................................................................................................... 1 2. Overall Trends ................................... ,................................................................ 3 2.1 Institutional Framework and Dissemination Support Scheme ................... 7 2.2 General findings ....................................................................................... 8 2.3 Barriers to energy efficiency in the Western Balkans .............................. 10 3. Residential Sector............................................................................................. 13 3.1 Savings potential in the residential sector ............................................... 13 3.2 Final energy consumption ....................................................................... 14 3.3 Energy intensity ...................................................................................... 15 3.4 Drivers of energy demand ...................................................................... 17 3.5 Benchmark comparison .......................................................................... 19 3.6 Building stock ......................................................................................... 20 4. Public Sector Buildings ...................................................................................... 21 4.1 Savings potential and data availability .................................................... 21 5. Service Sector (public and private) ................................................................... 24 5.1 Savings potential in the service sector .................................................... 24 6. Industry ............................................................................................................. 27 6.1 Savings potential in the manufacturing sector......................................... 27 6.2 Energy intenSity ...................................................................................... 27 7. Transport ..................................................................................................,....... 30 7.1 Savings potential .................................................................................... 30 7.2 Final energy consumption in the transport sector.................................... 32 7.3 Modal split .............................................................................................. 34 7.4 Energy intensity of transport sector......................................................... 35 7.5 Drivers of energy consumption ............................................................... 35 7.6 Comparison with benchmarks ................................................................. 37 8. Energy prices .................................................................................................... 39 9. The Way Forward ............................................................................................. 43 9.1 The Public Sector: taking the lead in EE ................................................ 44 9.2 Cogeneration Potential ........................................................................... 46 9.3 Efficient Wood Stove Programs ............................................................. .49 9.4 Efficient Lighting Programs ..................................................................... 50 9.5 World Bank EE Implementation Experience ........................................... 52 10. Bibliography ....................... ,.........................................................:.................... 55 Annexes ANNEX 1: Institutional Framework 56 ANNEX 2: Checklist of EE Measures for Governments 60 ANNEX 3: Cogeneration Potential in the Western Balkans 61 ANNEX 4: Donors/IFI Programs in Energy Efficiency 79 Figures Figure 1. Total final energy consumption, 2006 vs. 2027 ...................................................... iii Figure 2. Institutional framework by country ........................................................................... v Figure 3. Total Final Energy Consumption in PJ.. ................................................................... 3 Figure 4. Total final energy consumption in 2005 ..................................................................4 Figure 5. Annual growth rate oftotal energy consumption ................................................... ..4 Figure 6. Total energy consumption per capita ...................................................................... 5 Figure 7. Energy intensity of GDP .........................................................................................6 Figure 8. Total Final Energy Consumption Projection to 2027 ............................................... 7 Figure 9. Institutional framework and dissemination support scheme .................................... 8 Figure 10. Institutional framework by country .........................................................................9 Figure 11. Total final energy consumption in the residential sector. ..................................... 14 Figure 12. ReSidential sector energy consumption as % of total final energy consumption .. 14 Figure 13. Energy consumption distribution in private households; Austria as benchmark .. 15 Figure 14: Average final energy consumption per capita in the residential sector ................ 16 Figure 15: Average final energy consumption per household .............................................. 16 Figure 16. Energy consumption of residential sector per m2 of living area ........................... 17 Figure 17. Average living area in private households ........................................................... 18 Figure 18. Average number of persons per household, 2006-2027 ..................................... 19 Figure 19. Energy intensity in private households in Austria, 1980-2006 ............................. 20 Figure 20. Improving specific heat consumption in public hospitals in Serbia ...................... 22 Figure 21. Total final energy consumption in the public and private service sectors (in TJ) .25 Figure 22. Energy consumption for services relative to number of public sector employees . ....................................................................................................................................26 Figure 23. Average energy intensity in the industry sector (2000-2007) ............................... 28 Figure 24. Development of final energy consumption in the transport sector ....................... 32 Figure 25. Development of final energy consumption for transport 2000-05 ........................ 33 Figure 26. Modal split in passenger traffic ........................................................................... 34 Figure 27. Final energy consumption of road transport per passenger kilometer ................. 35 Figure 28. Number of cars per household ............................................................................ 36 Figure 29. Passenger-kilometers in road transport per capita .............................................. 36 Figure 30. Passenger-kilometers in rail transport per capita ................................................ 37 Figure 31. Development of Road Transport in business as usual scenario in Austria .......... 37 Tables Table 1. Benefits arising from Increased Energy Efficiency ................................................... 2 Table 2. Energy saving potentials in the residential sector................................................... 13 Table 3. Energy savings in public buildings in Serbia .......................................................... 22 Table 4. Energy savings potential in the public and private service sector ........................... 24 Table 5. Energy saving potentials in the manufacturing sector ............................................ 27 Table 6. Energy saving potentials in the tran~port sector..................................................... 30 Table 7.2005 Final transport sector energy consumption and share of TFEC ..................... 34 Table 8. Average gross electricity tariffs in cent per kWh ................................................... 39 Boxes Box 1. Serbia Energy Efficiency Project... ............................................................................46 Box 2. Energy efficiency investments for the poor ...............................................................46 Box 3. Efficient Wood Stoves in Kosovo .............................................................................. 50 Acknowledgements This study takes stock of the status of energy efficiency in the Western Balkans. It was pre- pared by a World Bank team comprising Peter Johansen (team leader), Hinderikus Busz and Ana Plecas (consultants). External consultants included the Austrian Energy Agency (lead consultant), Besim Islami (covering Albania), Semin Petrovic (covering Bosnia and Herze- govina), James Myers (covering Kosovo), Rubin Taleski (covering FYR Macedonia), and Nenad Pavlovic (covering Montenegro and Serbia), Aleksandar Kovacevic and Stratos Ta- voulareas (covering cogeneration issues). The team wishes to thank Jane Ebinger and Jas Singh of the World Bank for peer-reviewing the draft of this study and providing insightful comments that helped improve the final version of the report. . In addition to doing their own research, the consultants made extensive use of existing data from the most recent reports on energy efficiency in the Western Balkans available, notably those prepared under the aegis of USAID and the World Bank. Throughout the study, close coordination was maintained with other donors and stakeholders such as the European Com- mission (EC), European Bank for Reconstruction and Development (EBRO), European In- vestment Bank (EIB), Kreditanstalt fuer Wiederaufbau (KfW), the Energy Efficiency Task Force of the Energy Community, and the United States Agency for International Develop- ment (USAID). This ensured that our work was complementary and transparent, and mini- mized duplication of efforts. The study was undertaken with significant financial support from ESMAP. Executive Summary Across the Western Balkan region, countries exhibit relatively high levels of energy intensity, a high energy savings potential among energy end-users, and heavy dependence on imported hydrocarbons. Energy markets would benefit from enhanced demand-side efforts and integrated energy efficiency measures across all sectors. Since most energy infrastructure was built during the 1960s and 1970s, inadequately maintained since the 1990s, and reaching the end of its useful lifespan, now is a crucial time to consider the way forward in the energy sector. The signing of the Energy Community Treaty in 2003 marked the beginning of systematic energy sector libera- lization among Western Balkan countries, allowing them to deal with widespread energy sector problems that included, on the demand side, low energy tariffs, lack of payment discipline and, hence, little incentive for energy users to invest in energy efficiency measures. Demand for energy will significantly increase in almost every sector over the coming decades. Although the energy efficiency (EE) of demand-side devices will also rise as technologies im- prove, these future increases in efficiency could be further leveraged: if remedial policy meas- ures were introduced, additional average energy savings of 10-15 percent of current projections could be realized. Building each component of the strong enabling environment required for increased EE across the Western Balkan countries will need cooperation among decision makers at mUltiple govern- ment levels, and capital investment by stakeholders to support projects that use energy more rationally. Investors are attracted to opportunities where a strong national government role and clear regulatory structures help dismantle barriers, establish clear conditions and standards, provide technical information, and facilitate funding for EE technologies. This study examines the status of the enabling environment for demand-side EE across the .Western Balkans, eva- luates developments in each country, and offers recommendations on the way forward. Main Findings Lack of reliable energy data. The most striking finding is that reliable energy consumption data are close to nonexistent in most countries throughout the region. This has profound implications. First, it is virtually impossible to calculate estimates for EE potential by country or sector, or to establish EE priorities. Second, since most countries lack even the most basic data, including reliable energy balances and sectoral EE indicators, they are unable to prepare high-quality National Energy Efficiency Action Plans (NEEAPs) with monitorable and realistic interim tar- gets, as required by the European Union, to reduce energy consumption by 9.0 percent by 2016. 1 Each country must prepare a NEEAP every three years during 2009-16, but most countries lack data. Therefore, immediate priorities for all countries include an energy data collection frame- 1 Directive 2006/32IEC of the European Parliament and the Council on energy end-use efficiency and energy services (ESD) requires Members States to prepare three National Energy Efficiency Action Plans for the period 2008- 2016 and report them to the European Commission. The aim is for all Member States to achieve an energy savings target of 9.0 percent of their average final inland energy consumption during 2001-2005 by the end of 2016 (recently updated to 2018). As members of the Energy Community, Western Balkan countries have the same obligations. work, confonning to EUROSTAT reporting requirements, to facilitate data comparability among EU member countries and accession candidates and infonn policy making. High energy savings potentiaL Annual energy expenditures could decrease by up to US$3.4 billion across Western Balkan countries if they could realize their estimated energy savings potential through lowering overall annual energy consumption by about 7.0 million tons of oil equivalent by 2020 (at US$6Slbarrel).2 That potential could be realized through EE measures in all end-use sectors, although it should be noted that end-use sectors like transport and residential, are particularly hard to deal with. Estimates of the energy savings potential by 2020, compared to a baseline, are shown below; they range widely by sector and country due to country differences and above all, scarcity of reliable data. Sector 0/0 Energy Savings Potential Transport 10 Residential 10-35 Public 35-40 Service 10-30 Industrial 5-25 Increased energy use in all countries and sectors. Uncertainty surrounds future energy con- sumption scenarios by country and sector due to lack of reliable data and clear trends, resulting from the breakup of the former Yugoslavia. However what is certain is that, if no measures are taken to improve EE, energy consumption will increase dramatically in the decades ahead. Base- line projections for the SEE region show annual growth of more than 3.0 percent in energy con- sumption through 2027 (Figure 1). The most rapid growth is expected in the commercial sector (140 percent), followed by the industrial sector (100 percent) and the residential sector (60 per- cent); even with increased EE in demand devices such as household appliances, energy con- sumption in the region would increase by at least 2.0 percent per year through 20273· 2 Based on lEA data for forecast energy consumption by 2020 in the six countries and using the mid-range of the energy savings potential for each sector 3 Source: International Resources Group, Finalreporl of the Regional Energy Demand Planning Project - Future Energy Scenarios in South East Europe and the Potentialfor Energy Efficiency, USAID/IRG, 2008 ii Figure 1. Total final energy consumption, 2006 VS. 2027 600 l 500 400 PJ 300 200 100 0 Albania BiH Kosovo FYR Serbia. Macedonia Montenegro Source: USAID 2008. Note that the category "transport & other" is not Included. Multiple barriers to energy efficiency. Relatively low energy prices, cross-subsidies, lack of individual meters or heat cost allocators for heat consumption, and high levels of non-payment, are major barriers to EE in most countries. Other significant barriers include gaps in the institu- tional, legal and regulatory frameworks; lack of EE training programs for professionals such as architects, building contractors, and energy auditors; high initial investment costs for EE tech- nologies; a lack of financial, technical, and administrative incentives to introduce EE improve- ments; and a lack of consumer information and awareness in most sectors. Energy price adjustments are needed. The Energy Community Treaty requires liberalization of network fuels and all countries have formally liberalized their electricity sectors and unbundled vertically integrated electricity providers. However, energy prices in the Western Balkans are in almost all cases too low and residential consumers are being cross-subsidized by large industri- al/commercial consumers; relatively high commercial losses (theft and non-payment of bills) further complicate the picture. Apart from their negative effect on energy efficiency invest- ments, tariff distortions also cause costly distortions in energy infrastructure investments that countries have to live with for decades to come. Tariff levels for each consumer category should be gradually increased to the levels implied by the Energy Community Treaty's antic- ipated full market opening by 2015. At the same time, Governments should introduce support schemes for the neediest segments of the population. As an intermediate step towards both of these objectives, regulatory authorities could consider introducing block tariff systems where they do not already exist. So far, only Serbia is a significant natural gas consumer; natural gas markets in Bosnia Herzegovina and FYR Macedonia are small; Albania, Montenegro and Koso- vo are not gasified. iii Capacity building is needed. In all countries the institutional framework for EE requires substan- tial improvement. Successful institutional frameworks provide an enabling environment for EE through discrete but interlocking elements that must function together to ensure implementation. The latter is critical: without implementation and effective enforcement of codes and standards little will be achieved. Capacity building at all levels is needed urgently throughout government and industry. Governments need an EE "change agent" to coordinate among government entities and ensure compatibility and synergy among all elements of the institutional frameworks and policies. In every country reviewed for this study, the institutional framework for energy savings exhibits shortcomings that impede implementation of EE. Of course, the situation differs by country: Bosnia has the most work to do on its institutional framework, followed in ascending order by Kosovo, FYR Macedonia, Montenegro, Albania and Serbia (Figure 2). This ranking also corresponds with the relative strength of demonstrated interest in EE and existing invest- ment levels in those countries. iv Figure 2. Institutional framework by country Policy framework Supporting Structure Incentives Good quality Medium aualitv GlLowaualitv · None existing Source: AEA Energy Efficiency Potential by Sector. Residential sector (10-35 percent). The residential sector share of final energy consumption varies by country. On average, 65 percent of residential energy goes to space and water heating, and the rest to appliances, cooking, and lighting. In the Western Balkans, energy consumption per capita and per household is now significantly lower than in the EU15 or the EU27; most Western Balkan households own far fewer appliances, have smaller houses and larger families, and do not heat all of the rooms in their houses (e.g., in Kosovo, on average, only 40 percent of the surface area of a home is heated). However in the coming decades, as economies expand and v incomes rise, households will trend toward European averages, substantially raising energy consumption and expenditures, which can be mitigated by increased EE measures. There will also be increased demand for summer cooling as temperatures rise due to climate change. The most critical measures for the residential sector include the following: (i) develop an accu- rate database on building stock (size, age, installed heating systems, etc.); and (ii) introduce and enforce modern building codes based on the European Building Directive to replace out-of-date existing building codes. For example, Montenegro's building code requirements should include chimneys so space heating can use fuels other than electricity. Public sector buildings (35-40 percent). In some countries, health and education sector buildings account for up to two-thirds of national energy consumption, yet official data were scarce and scattered on building surface and volumes, energy consumed, number of beds, number of stu- dents, and so forth, despite significant efforts to obtain such data. This reflects three main con- straints in the sector to realizing energy savings: first, energy data gathering systems are poor; second, for public institutions, energy consumption sometimes still represents a soft budget constraint; and third, these institutions have little incentive to save energy since existing regula- tions prevent them from reallocating savings to other areas of their operations. In Bulgaria, Croa- tia, and Serbia, ongoing public sector EE projects yielded energy savings of about 40 percent; schools and hospitals realized the most savings from installing new roof insulation, energy effi- cient windows and doors. Serbia's Energy Efficiency Project, supported by the World Bank, yielded average energy savings of 35 percent in hospitals and 44 percent in schools, plus signifi- cantly increased comfort levels. Public and private services sector (10-30 percent). Separate data on energy consumption for these two sub sectors are nonexistent in four countries and unreliable in the other two. Imple- menting systems for collecting standardized consumption and output data on, for example, ener- gy consumed per m2, per student, or per hospital bed, is essential to detennining the highest EE priorities within each subsector. Industry sector (5-25 percent). Data on energy intensity in specialized industrial sectors are available only for Serbia and Albania. In most countries, industrial sector energy consumption is expected to increase as industries are privatized and economies expand relative to now, when many industries are donnant or barely operational and most equipment is obsolete and poorly maintained. When production eventually ramps up, energy consumption could spike due to energy-inefficient equipment, especially if industries can access energy at preferential tariffs. Transport sector (10 percent). Transport sector energy consumption could triple over the next 35 years if the economic development of Western Balkan countries mirrors that of the EU. Transport has major potential for energy savings compared to a business-as-usual scenario, despite the likelihood of dramatic future increases in total consumption. Recently, the share of road transport for passengers and goods has grown rapidly primarily due to rising vehicle owner- ship, boosted by somewhat inefficient and uncomfortable public transport. The average age of the vehicle fleet is about 15 years, amplifying transport sector energy intensity. However, this is likely to decline as incomes rise and the vehicle fleet becomes gradually more energy efficient. On the other hand, improved EE will be more than offset by the growing number of cars per household -and the projected increase in passenger-kilometers, even with strong EE measures vi such as mandatory vehicle inspection, strict emission limits, and tax relief or reduced registration fees for low~emissions vehicles. It should also be noted that rising temperatures due to climate change can reduce the efficiency of vehicles, turbines,etc. Recommendations Improvements in energy efficiency are important in their own right, in order to reduce expendi- tures on energy, enhance the competitiveness of the regional economies, and create new em~ ployment opportunities in technologically more advanced sectors. Beyond that, and critically, EE reduces the greenhouse gas emissions that cause climate change compared to the business as usual scenario and makes it easier for countries to meet their renewables targets as part of their commitments to the EU. Therefore, EE is a triple-win proposition and scaling up the very mod- est EE measures and investments that have taken place so far in the Western Balkans is crucial. That will require, inter alia, the following: · Improve data collection. Effective policies require sound energy sector data, based on EUROST AT guidelines. Reliable statistical data are essential to understand the current situation and monitor energy policy effectiveness; this study found that data collection systems must be improved in all countries. Governments should select and fund a minis- terial department or EE agency as the responsible authority to improve data collection and management, and to implement comprehensive EE policies. · Adopt robust energy efficiency action plans. Action plans should be aligned with EU Energy Services Directive requirements, be coordinated among ministries, and include time-bound, monitorable measures and responsibilities. · Adopt acquis communautaire requirements. Besides the Energy Services Directive the countries in the Western Balkans should also actively transpose and implement the other requirements of EU legislation, notably in relation to buildings and space heating. This will also help smooth the way towards eventual EU accession. · Monitor energy efficiency measures. The Energy Services Directive requires Energy Community Treaty signatories to assign an entity for overall control and responsibility to oversee action plan implementation. This agency (which could be the same as the one re- ferred to under data collection) should have a political mandate, report directly to parlia- ment and the respective ministry and be adequately staffed and trained. · Adopt exemplary role of public sector. In Western Balkan countries, the public sector should be an EE model, focusing on ministries, hospitals, schools, universities, military and police, municipal buildings, among others, by including EE criteria to procure prod- ucts and technologies, and adopt stringent EE standards for public buildings. · Eliminate energy price distortions. Energy tariffs are a politically sensitive issue every- where in the region. However, low tariff levels and cross-subsidies distort energy mar- kets, encourage waste, and impede market entrance of ESCOs and EE technologies. 'Fuel poverty' is better addressed by governments through targeted support to low-income households. vii · Incentives of all kinds are needed. These should be both of the demand-pull as well as the supply-push variety. Examples of important demand-pull incentives are introducing codes and standards, creating end-user awareness, and making concessionary financing available. These three are separately listed below. Supply side measures involve actions such as providing tax incentives and financing for enterprises, easing import restrictions and duties on importing energy efficient equipment, training of auditors, architects and contractors, etc. · Introduce and enforce modern building codes and EE standards for appliances and equipment. Building codes should be based on the European Building Directive, while appliance and other equipment standards should seek to introduce EU standards as well. Sustained public information campaigns and national level control mechanisms should be implemented. · Create energy efficiency funds. Many EE measures require investments with a payback period that is longer than many consumers find acceptable. EE funds could provide sub- sidies for implementing EE investments, shortening the payback periods, and help pro- vide access to below-market rate financing where necessary. · Launch targeted information campaigns. Such campaigns would raise awareness of the benefits of EE among consumers. Also, training programs should be set up for architects, energy auditors, manufacturers/suppliers, contractors, etc. Surveys should be conducted to determine what incentives would need to be provided to effectuate behavioral change, particularly among residential consumers, to make them save energy, Move ahead with investments. While improved energy data systems are important, much can and should be done immediately even in the absence of better data. First, the public sector can take the lead in introducing EE demand-side measures in all public buildings, facilities, and rolling stock. Second, countries can take advantage of major supply-side opportunities to save energy, notably by introducing cogeneration of power and heat. International experience shows that serious EE programs frequently trigger development of reliable energy data systems because they have a powerful demonstration effect, thus creating a virtuous circle of better data systems, increased energy efficiency measures, and so on. viii 1. Introduction 1. The Western Balkan region is characterized by relatively high consumption of energy per unit of GDP, high energy savings potential among energy end-users, and heavy dependence on hydrocarbons imported from outside the region. All energy markets in the region would benefit from enhanced demand-side efforts and energy efficiency measures across all sectors (lEA 2008). Most Western Balkan energy infrastructure was built during the 1960s and 1970s and inadequately maintained starting in the 1990s. Under the Energy Community Treaty of 2003, all countries began to liberalize their energy sector to deal with both supply-side as well as demand- side measures in the provision and use of energy. 2. Energy demand is expected to rise considerably in the coming decades, according to a 2008 USAID-funded study, which notes that in Southeast European countries, including Bulga- ria and Romania, demand will likely increase by more than three percent per annum through 2027.4 The most rapid growth is expected in the commercial sector (140 percent), followed by the industrial sector (100 percent) and the residential sector (60 percent). However, even with increased EE in demand devices such as household appliances, energy consumption in the region would increase by at least 2.0 percent per year through 2027'. 3. The USAID study also points out that in the future, demand device efficiencies will in- crease due to technological and economic progress, independent of policy measures. Neverthe- less, average overall regional final energy consumption will rise almost 2.0 percent annually through 2027 (USAID 2008, 46).6 Total final energy demand in Western Balkan countries would increase from around 750 PJ in 2005 (lEA 2008) to around 1250 PJ (USAID 2008, 51). 4. However, if remedial policy measures were introduced, additional average energy savings of 10-15 percent of current projections could be realized (USAID 2008, 61). Achieving greater energy efficiency requires many individual decision makers to invest capital in projects to use energy more rationally. A strong government role and clear regulatory structures can reassure investors in EE by removing barriers, establishing clear conditions and standards, supplying critical information, and facilitating funding for new technologies. Western Balkan countries have substantial work ahead of them to improve energy efficiency and achieve energy savings. 5. Improving EE requires investments and funding but measures to increase EE also yield positive economic value through lower energy bills, reduced energy imports, increased employ- ment and more competitive economies (Table 1). 4 The assumption is that without policies or incentives, more efficient demand devices will be unavailable during the planning horizon, primarily due to higher initial costs that deter purchases, despite lifecycle costs that are frequently lower (USAID 2008, 59). ! Source: International Resources Group, Final report of the Regional Energy Demand Plannmg Project - Future Energy Scenarios in South East Europe and the Potentialfor Energy Efficiency, USAIDIIRG, 2008 6 "The most significant growth occurs in the industrial and commercial sectors (90 percent and 88 percent, respectively) followed by the agricul- tural sector (50 percent). The residential sector is second largest overall but grows relatively slowly (15 percent) and the limited transportation sector remains essentially constant" over the 27 year planning horizon (USAID 2008, 46). 1 Table 1. Benefits arising from Increased Energy Efficiency Improvement Benefit Range (by 2027) Total discounted energy system cost 1.5-2.0% (3.78-6.06 billion) over planning horizon . savings Change in undiscounted annual costs Power plant investment Decrease of 0.2 - 15% (5 455 million) Demand-side investment Increase of 14 - 28% ( 1.59 - 3.16 billion) Decrease of 13 - 16% ( 3.43/3.36/4.04 billion) i Fuel expenditure ! Annual energy savings 9 - 18% (417 -793 PJ) ! I Annual electricity savings 6-11%(17 33 GWb) Reduced imports 16 -17% (309 - 343 PJ) i Decreased energy intensity 9.4-18% Source: USAID (2008. 36) 6. This study's time horizon is 2020, though its findings and recommendations have relev- ance well beyond this timeframe. Energy savings refer to a baseline development, meaning that less energy will be consumed when compared to a business-as-usual scenario without additional energy efficiency measures;7 the European Union has set itself a 20 percent reduction target. 8 Despite energy savings measures, total final energy consumption likely is almost certain to rise among Western Balkan countries. 9 7 Hence, an energy saving potential in 2020 of 20 percent does not mean 20 percent less energy consumed than in 2009. 8 See the Council Conclusion from March 2007 (European Council Action Plan 2007-2009). The Council "stresses the need to increase energy efficiency in the EU so as to achieve the objective of saving 20 percent of the EU's energy consumption compared to projections for 2020, as estimated by the Commission in its Green Paper on Energy Efficiency (... )." 9 Western Balkan countries' figures are compared with European Union and Austria benchmarks. Figures for the EU-27include all member states; figures for the EU-IO include only new member states ill Central and Eastem Europe. 2 2. Overall Trends 7. An overview of energy intensities among Western Balkan economies was arrived at using aggregate data from Albania, Bosnia-Herzegovina, FYR Macedonia, and for the combination of Kosovo, Montenegro and Serbia. This section assesses some fundamental trends, although avail- able International Enetgy Agency (lEA) data vary significantly from data provided by the local consultants. Final energy consumption is increasing 8. Since 2000, total final energy consumption has been increasing constantly in all Western Balkan countries (Figure 3). Due to FYR Macedonia's volatile political situation, energy con- sumption declined in 2001, but has begun to rise again. Figure 3. Total Final Energy Consumption in PJ r-----f----.lr-------:~----- ..- FYR Macedonia - Serbia, Montenegro 1995 19!;l6 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 Source: Enerdata 9. Figure 4 shows total final energy consumption for 2005, according to the International Energy Agency (lEA 2008). In 2005, total final energy consumption of Western Balkan coun- tries was around 750 Pl. 3 Figure 4. Total final energy consumption in 2005 450 400 350 300 250 200 150 100 50 o BiH Kosovo FYR Macedoma Montenegro SerbIa Source: lEA 2008 Energy consumption is volatile 10. Energy consumption in the region was highly volatile due to the events that accompanied the breakup of the former Yugoslavia, though in the case of Albania volatility was caused by the hydrological cycle. Total energy consumption annual growth rates changed by up to 60 percent during the 1990s, so it is difficult to establish reliable scenarios on energy consumption devel- opment. Figure 5. Annual growth rate of total energy consumption 40 % 2003 2004 2005 2006 Albania -40 Bosnia-Herzegovina FYR Macedonia -60 Serbia, Montenegro -80 Source: ENERDATA 4 Growing energy consumption per capita 11. Increases in energy consumption per capita in the Western Balkans are stronger than those of the EU, primarily because energy-consuming goods and services are increasingly being used in the region. Energy consumption per capita is higher in the former Yugoslav republics than in Albania (Figure 6). . Figure 6. Total energy consumption per capita 30.000 20.000 -Albania Bosnia-Herzegovina 15.000 FYR Macedonia Serbia, Montenegro 10.000 5.000 o 19931994 1995 19961997 1998 199920002001 200220032004 2005 2006 Source: ENERDATA Development of total energy intensity remains stable 12. According to 2008 lEA data on energy intensity (Mtoe in US$ at year-2000 prices and exchange rates), the energy intensity in most countries has remained steady since 2000, except for Serbia and Montenegro (Figure 7). 5 Figure 7. Energy intensity of GOP In USO 4,50 4,00 3,50 3,00 III Albania IIIBiH 2,50 III FYR Macedonia 2,00 III Serbia, Montenegro 1,50 1.00 0,50 0,00 1990 1993 1995 1997 2000 2003 2005 Source: lEA 2008 Total final energy consumption will increase by around 70 percent until 2027 13. According to scenarios from the Regional Energy Demand Planning Project (USAID 2008) developed by the International Resources Group, total final energy demand (excluding "transportation and others") will increase by around 70 percent during 2006-27 (Fig. 8). Howev- er, their figures for total final energy consumption differ from those in the lEA report (2008). JO 10 For example, figures for final energy demand in Serbian agriculture (Figure G-23) and other sectors do not appear to correspond with the respective shares in total final energy consumption presented in Figure G-2. Moreover, figure G-19 does not correspond with the sectoral figures (Figure G-2O--G-23) 6 Figure 8. Total Final Energy Consumption Projection to 2027 600 500 400 PJ 300 200 100 0 Albania BiH Koso\lo FYR Mace- Serbia, donia Source· USAID 2008. Note that the category ·~ran.port & other" is nollncluded. 2.1 Institutional Framework and Dissemination Support Scheme 14. The institutional framework comprises all elements of an enabling environment to im- plement, support and diffuse innovative energy efficiency services and teclmologies; these ele- ments are often interlocking. As an extreme but realistic example, a proposed support scheme for efficient biomass boilers will be successful only if biomass boiler experts are available to plan and install the boilers. Central to the process is an Energy Institute and/or Agency to pro- vide governments with the data to formulate policies, and to be the "change agent" or "cham- pion" to help implement policy and establish and operate the dissemination support scheme for EE services and teclmologies until they are fully integrated in the energy market. The principal elements of an institutional framework and dissemination support scheme are shown in Figure 9. A typical institutional framework would comprise the following elements: Legal and regulatory framework. This comprises laws and regulations governing energy efficiency, clearly specified responsibilities in the public administration, policy goals and energy efficiency targets, an energy efficiency strategy that includes roadmaps and con- crete action plans, and supporting policy tools. They should facilitate expansion of mar- ket-based energy savings approaches and private sector participation such as through En- ergy Services Companies (ESCOs). 2. Supporting structures. This could be an energy institute, a regulatory authority, and an implementing agency with sufficient sources of funding at its disposal, plus institutional staff expertise to develop strategies and assist in implementing, where appropriate, en- forcing action plans. 7 3. Implementation. This includes availability of quality hardware and software, experts to install the hardware and software at the site of the final consumer, and quality-assurance processes. Training of auditors, architects and contractors is an important component of implementation arrangements. 4. Incentives. Incentives to overcome resistance to adopting innovations in the EE market include funding for energy efficiency services (such as energy auditors and energy ser- vices companies) and technologies, codes and standards, tax incentives, voluntary agree- ments, and eventually sanctions for non-implementation, as appropriate. 5. Public information. EE technologies cannot succeed without consumer awareness and acceptance, which requires a public information strategy that is thorough and integrated at every step of implementation, including a consumer feedback loop. Figure 9. Institutional framework and dissemination support scheme Legal framework, Goals and Action plans, policy Polley Framework res ponsibililes strategies lools r-------I ,-------, : Energy Inslitute I I I Energy Regulatory I Supportive I Structures .... ------_. Authority ,------- .... I I Implementing Implementation Agency J Cost-aspects (support schemes, Technologies. hard- Expert training, Incentives and banks; , .. ), f--tio ~ and software, awareness raiSing Know-how enforcement, quality control sanctions ! ! Implementation at consumer (user}-side Information 2.2 General findings 15. The process of improving the institutional framework for EE in the Western Balkans gained momentum after the Energy Community Treaty became effective, particularly through work within the Task Force on Energy Efficiency of the Energy Community Secretariat. A 2008 USAID-financed report provides an overview of the legal and regulatory framework, main poli- cies, and programs. OUf study provides supplementary and updated assessments on the institu- tional framework. 16. Each country has a different institutional framework but no single administration has a fully satisfactory institutional environment with regard to all principal elements (Figure 10), as described below. 8 Figure 10. Institutional framework by country Policy framework Supporting Structure Incentives Good quality edium quality [i::kow quality · None existing Source: AEA 9 Common features of institutional frameworks in Western Balkans countries. · EE legislation from the EU must be transposed into national legislation and/or imple~ mented fully in all countries; technical assistance for this process should be channelled through EE agencies, which generally require more specialist staff. · Policies to encourage establishment and growth of EE businesses are generally lacking (e.g., ESCOs, skilled installers, energy advisors, 'green' architects, energy auditors, etc). " · Energy consumers-households, municipalities,enterprises--Iack information about the potential benefits of EE measures and technologies. · Few energy consumers have the financial and technical capability to identify, plan, and implement EE measures, but technical assistance is either not available or scarce. · To implement consumer~level EE measures, all countries need to improve: (i) supply of EE experts, EE equipment/materials, and quality control; (ii) consumer incentive schemes to adopt EE technology, including technical and financial support; (iii) public information capacity in the implementing agency to manage ongoing consumer information needs re- lated to energy efficiency. · Capacity building is urgently needed in every country. Albania and Serbia are rated highest on most of these aspects among the six countries. However, a good framework is only the beginning and needs to be accompanied by strong implementation and enforcement. The delivery of EE results is driven by the ability of public agencies to organ- ize, transform and develop new markets for EE goods and services and for private actors to adopt state~of-the art EE technologies and practices. Weak institutions can undermine otherwise well- designed government policy frameworks and initiatives, so it is in every country's interest to strengthen their EE institutions. More detail on the institutional framework in each country is provided in Annex 1. 2.3 Barriers to energy efficiency in the Western Balkans 17. Since EE is a cross-cutting issue covering several policy areas, competencies and tech- nologies, barriers exist in all principal elements of the institutional framework: · Legal and regulatory frameworks are inadequate. A clear legal and regulatory frame- work is a prerequisite for EE investments. All countries (except BiH) now have a basic EE legal framework or are developing one, but more progress needs to be made on the ef- fective implementation of these frameworks. · Incentives of all kinds are lacking. These should be both of the demand-pull as well as the supply-push variety. Examples of important demand-pull incentives are introducing codes and standards, creating end-user awareness, and making concessionary financing available. Supply side measures involve actions such as providing tax incentives and fi- nancing for enterprises, easing import restrictions and duties on importing energy effi- cient equipment, training of auditors, architects and contractors, etc. Incentives can help 10 to overcome barriers to entering the market, for example, through special programs offer- ing financial or technical support, or temporary exemptions from standard administrative procedures. As an example of the latter, in Kosovo public sector laws and regulations prevent hospitals, schools and other public buildings to benefit directly from energy sav- ings (owner-user dilemma). Suspending this regulation for a defined period of time could provide a window of opportunity for public sector buildings to adopt EE technology. · Training and know-how are scarce. Despite good education systems, professional skills, knowledge, and expertise for technology distribution are scarce. Few architects, engineers, plumbers, and installers have the technical skills or knowledge to exploit en- ergy savings potential and training is unavailable; EE training is not included in most course curriculums. Also, without adequate systems and skills to reliably measure and verify energy savings. EE measures will not be implemented on a large enough scale. · High investment costs for energy efficiency technology. New technology costs are high; most new technologies confront this barrier, but in countries facing energy poverty, the shortage of capital and the lure of more lucrative investments deter consumers. Loans to implement EE measures can be difficult to obtain and carry high interest rates. Financial institutions typically consider EE investments high risk compared to traditional asset- based financing, especially where investments cannot be easily repossessed, such as in home insulation investments. · Modern building codes and EEstandards for appliances and equipment should be in- troduced and enforced. Such building codes should be based on the European Building Directive, while appliance and other equipment standards should seek to meet EU stan- dards as well. Sustained public information campaigns and national level control mechan- isms should be implemented. · Energy efficiency funds should be created. Many EE measures require investments with a payback period that is longer than many consumers find acceptable. EE funds could provide subsidies for implementing EE investments, shortening the payback periods, and help provide access to below-market rate financing where necessary. · Targeted information campaigns should be launched to raise awareness of the benefits of EE among consumers. Consumers at all levels lack information to support EE behav- iour changes. For example, consumers often lack meters or heat cost allocators for district heating and billing information (all forms of energy) that would make them aware of their patterns of energy consumption. Asa result, they have no idea how their consumption compares to that of their peers, how their consumption could be reduced, or what the benefits of reduced consumption are. · Energy prices are low and cross-subsidir.ed, while non-payment is a significant issue. Energy tariffs are low and cross-subsidized in all countries except Albania; this does not encourage energy efficiency investments, especially since the upfront cost of these in- vestments is often quite high, because it does not help save consumers the full cost of en- ergy avoided. In cases where consumers steal or otherwise don't pay for their energy 11 consumption, strong incentives to undertake energy efficiency measures are lacking, ex- cept as a by-product of measures to enhance comfort in buildings. 12 3. Residential Sector 3.1 Savings potential in the residential sector 18. Across Western Balkans countries, the residential building sector has a potential for energy savings of between 10-35 percent. Table 2 provides an overview. Table 2. Energy saving potentials in the residential sector Country Savings potential of total final I Source energy consumption (%) ! Albania 30-35 under ambitious policy Besim Islami, local consultant scenario BiH 20 with modest investment; up to Semin Petrovic, local consultant 60 with ambitious investment 11 Kosovo 10-30 World Bank - Kosovo Heat Market Study (2007) 12 FYR Macedonia 10 Energy Efficiency Strategy of the Repub- lic of Macedonia, USAJD, March 2010 Montenegro 10 due to high sector inertia Energy Efficiency Strategy of Montenegro (2000); Study of energy saving potential, more rational energy consumption and fuel replacement in Montenegro (Electric- · al Faculty, Podgorica, 2000) Serbia 17 Energy Development Strategy until 2015, Parliament of Serbia, May 2005 Source: AEA, local consuHants 11 Applying readily available insulation materials and double·glazed windows can reduce individual household energy consumption for space heating by as much as 35 percent. Nation-wide, this would amount to potential energy savings of 500-600 GWh/year, about IS percent of total present demand. An additional 30-40 GWh/year could be saved in water heating applications through insulating jackets, low· flow heads and timers. Implementing these measures assumes substantial improvement to electricity billing and collection rates. (World Bank 2007). JZ The energy savings potential is presented as a percentage ofan average tOlal final energy consumption during 2002-2006 (USAID 2010) 13 3.2 Final energy consumption 19. Figure 11 shows total final energy consumption in the residential sector in absolute terms, using the most recent year for which data were available in each country. Figure 11. Total final energy consumption In the residential sector 140.000 120.000 100.000 80.000 TJ 60.000 40000 20.000 0 Albania (2007) BiH (2005) Kosovo (2008) FYR Macedonia Montenegro Serbia (2005) (2006) (2004) Source: Austrian Energy Agency. Local Consultants 20. The ratio of residential sector final energy consumption to total final energy consumption varies among countries-highest in Bosnia-Herzegovina and Kosovo; lowest in Albania and Montenegro (Figure 12). There are several factors that account for this, among them the size of the industrial sector in a country, energy supply constraints, etc. Figure 12. Residential sector energy consumption as % of total final energy consumption 14 40% 35% 30% 25% 30% 15% 10% 5% 0% Albanla 61H Source: Austrian Energy Agency, Local Consultants , 21. In the residential sector, up to 88 percent of final energy is used for heating space and water, although figures vary widely among countries. (Figure 13). The 2008 Kosovo figures were supplied by USAID, but the share of lighting within total final energy consumption in the residential sector seems unusually high. Figure 13. Energy consumption distribut,ion in private households; Austria as benchmark Austria" · Serbia · Montenegro W.I··················-===:.c==·=·~·~·. FYR Macedonia' Kosovo BiH ··············C=r=r=r=-_ IJ Albania ~--~----------~----~--~------.----~----~--~----~ 0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 60,0% 70.0% 80.0% 90,0% 100,0% flI!I Space heating and Cooling · Water heating 0 Cooking D Appliances · Lighting Comment In Austna. "water heating" is ,"eluded in "space heeting and cooling." FYR Macedon,a only distinguishes between "space haating," "weill{ heating" and "appliances." Source: Austrian Energy Agency, Local Consultants, 3.3 Energy intensity 22. Western Balkans countries' residential energy consumption per capita is much lower than in the EU-27 or the EU-lO (Figure 14). An average Austrian consumes more than 9,000 kWh per year, which is high even by EU standards; an average Serbian consumes half of that and an 15 average Albanian only 17 percent or about 1,600 kWh. In the case of Albania and Kosovo, this is clearly a reflection of supply constraints and thus not necessarily of true demand for energy. Figure 14: Average final energy consumption per capita in the residential sector 9,000 8,000 7,000 6,000 f 5,000 4,000 3.000 2,000 1,000 0 :/'1> ~ Source Local Consultants & Enerdata; Data IS the average for the yeatSl 2004-2008 Without 23. The average final energy consumption per household yields similar results (Figure 15). Since households tend to be larger in countries such as Kosovo and Albania than households in Serbia and Montenegro, energy consumption per household there is higher relative to European benchmarks than per capita consumption. Figure 15: Average final energy consumption per household 25,000 20,000 i 15,000 f 10,000 5.000 o Source, Looal COnsultants'" Enerd.ta; Data IS the a'loerage for the pend 2002~200a without climate corrections 24. Residential energy consumption per m2 of private household living areas is higher in Austria and in the EU-27 than it is in Western Balkans countries (Figure 16). This seems counte- rintuitive, since Austria's building stock quality is higher than that of the Western Balkans. However, energy consumption figures represent building space heating and cooling plus domes- 16 tic appliances and cooking. Studies have shown that energy consumption rises as incomes rise, since more rooms are being heated or cooled to a comfortable level. Rising temperatures due to climate change will also add to the demand for space cooling. Figure 16. Energy consumption of residential sector per m 2 of living area 250 200 150 i 100 50 0 ,.0 / #' /' // / rI~ 1,1 \J. ~ ~<:' ~t?- ~ Source: local Consultants: Data was taken from the year of the last a;ailable data. The figura for Koso,"" was taken Itom II sample deli.ad for II Wo~d Bank sponsored Heat Mal150 percent) stoves throughout the region will increase wood available for biomass CHPs, moderate fuel wood demand fluctuations that affect wood prices, and strengthen the economic rationale for improved forest man- agement and further reforestation. Implementation of the pilot projects should start in parallel with these actions. Preparing feasibility studies, concept documents, and so forth for pilot projects noted in this report is a first practical step. These studies will involve local stakeholders and create a knowledge base that can be disseminated in similar projects. This process, and project implementation, will also provide impetus to address issues listed above. 74 Attachment I: CHP Projects in Western Balkans ~"PrOj.Qt 8oe"'A~ M!!iRZEDOVINI'. Natn. PrIority a.~Th.I'M" OUtput (MW) OVtput tMwth) Projtot c.$or'ptloo - P,.Umln.,y Pf'o".qt Conflgu:r-'1on --R.qu.r.d '"~$'tm.nt {$tniliIOn} WllUnvn··· and _Imy to oarry out.PN>J-ot . . . . . at ... acttn. . . . Ilnl ..... ......... p. -. a..... 'VOCHP , ,.... '6. ....., ....., ,. U ... Op.neyeJeg_ 1 x (Zx GT+~G+n._ ~~bility stud. . aIrcNIcty ......t atribution rwtw (IJ'k un/htly to t:. __ = 1 CHPpkM t--t tur~ utilulUonfrClm .t()f~} p ..... cc:GT 0:::0"*".*_1: «ltd 0f>«'I tyc" oornc.,x MIlly COMalldl«lr dOng · nc.rCQl'1f'MllCted ~. 01"10' source elf ~ .tart. provldtng tn. hoNtfor tM wh<»e city pilotf"t . . "... "'uka CHCI .68 -= n..t .....""" 2 Opow1cy. . . . 3)1f (2)1f GT'" t-flSG + 16. TPP/c. . at:~1 3 207 "49 turbilw v..t. htIat utlIk~ w/t-t~&pII .t~) 1 . (3x «691V11."ohn+69 23. ....., ...." 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Ace · · · to W . .,_ Mat; ~· ·t...-n extractIOn fromttw~_ w/tte.t puI't"p&o- .ngirM; driving ~.or.nd MM}+245t.N\o\» Fbw_ co ~ to-.gr. . and eooper" """'.... gaonerlltton eoydlt Sa.". of ~jy"""t y~ <:If lign_ ----... ~. .~Mat TravnlkC" 2 27 11 8iopow .... 3: DH CI-P 1J(27~"""1MW1:) 0 ........m _Ium FOANft n~ plan o.taled Fea.ibililty Study -- plant n..ed. to tJ.~~.-.d ....I...dor Cf.P Qadl.lt .. CHP · PI,... 6' 27 33 11 .- Biopaw .... .- B~_3OHa-p a OH CH=' 3 x (27 MfIIIIt ... '11 MII\IIt) 1)( (27""""'" 11 MIfIA) 0 0 _ ..... _!Um .....""" For. .t~J)IIan 1=:',"-- . . For_1~pian ~~""~and o.taIIad F __ biIty Study DMIlIiKI ~1biIIty Study I KoftJloC'" L"k.av1tO 0 ' " - 2 ... 54 S .. 22 22 .- BiopcM''' 3 OH Cf-F Btopow., 3 DH c.t-F .- 2x(27MM1t+11MM) ;2)( (2 7 M\NIao+111\JftM) 0 0 ......." '"'- M-dum Low -'"" For. .t~pIIIn n..- to boa d.Y~ WId _ --... For...t ~ pIIIn ~toba~Wl .. g · · 6 .. {3 '" {(69MV'11m+a. 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Pc!>;II!."'.V-.c: ......tlna W · · l . h ... , u1!1~.tk>" x ~3,. «ea~ .. e.9 tilgh uiV"- A.eo..", iow · ·t. h · ·(: F_· · lbmty .tUdy "-ploce . t......... ,.troteUO"1 ..o.-nthe po-..- pt."t _ , h ...t pv~ & g.. 1UIV\It) .. 2.4 ~ 1u'IVIoIt}} ,..,...-.;tll \0 .O. . . . . .nd v_n.. ra11on QYQ" & ...... a1 .quN ....n~ ....oru,..,.. of .f"IO~ drlvln~ CQopat ..te IIgnK.. and ....h .. ""..,.,:.o_ .... V ......r.tk>,.., I ;:=.:~::;.:: 'fr.t.n'k CHP ....- I _m ~ "'. '3 oH CHP" Ie :>i(2-7" +'i-'-Ju1V'II't) OH cQn'lpAi"iY',mdv ~bitHy Sjw"dy, biCl"nIIi.lO"fu.i In. P"'JaOtwru~.Hf:O;:fiTlritllHonon. 01 moll. piant log_tic. 1'13 boe 'IIlddr· · ·...,. I"r'Jo..1ty 'o~ P'ClIIlJt.d eru.. 1M U"'I. eo,","try QOn1p1'oIth.n_"'e .ppllcetlan of fuel _ ood ..... e i .,1 ::·t~t1'k»ent .to" ..... _aod b",,",",- · · u · · w ·· t.. """.t utillz.UCfl 1 .. (3.1t ((6_9 II.AVYrn '" eo 9 2.,"'lo4 Hlgn l-oIIgh .... ce. . . . ta _ ... tkiI...,.·· f~ pl_,' 1 tooaI.nc. to tM ac:tdf· · ·od aIOpo.....;;---a 00 3 .. (27-.vrvv.+l1MV\tt) 01 F HiI~h 01 F · · tbllity 15tudY. 010. . . . . 1\,0.1 pl...... ,I.tlc .. to be ..dd · · · ·ed ""-.ndi,..CMP -.X (:iii 7 ~ .... 11'"M\Nij MaJdanp... CHP iopow","r 3~-cMP 3"" (2 Of MINot ... 11 "-"'AIt) ....., ....," fW·· ibwtysKldy:-bklri..... fv.' CYfi'"..ntIy bour .... oc;>.' !Slgnff~i"ilmprtaru1.1 CCM"Iv.r.IoO'" Of .wl.Ong 1>iliiiO~bTo~ · · CHPt¢ Ok:l!ns. tlr.a boll..... 1 · ( 3 " «3 Sol ~ "39~1 "":a. a I\,IIII\Jtll :.::_1 Wlth ...... t .. , ··· t ~:::::: ~hnlcaf drl ..... &. haattng p>ent L--. _ cln:a.... tlrl pump. - - " - - - - - - ' - - - ~-~~~ ~ 76 Project Name Priority Bectric Thermal Prolect Description Preliminary Project Required WIllingness and Project Istue. Noxt Steps Note. Output Output Configuration Investment ability to carry Readin.". (MWj ~MWthl (Smililonl out projeet SERSA Zajeu,CHP 1 8.1 33 Biopow er 3 OH CH' 3x (2.7MMo + 11 MM) 0 Hgh Hgh C Rlsibity Study; biomess fuel Currently bums coal Signlicaln irrjlrovermnt plant logistics to be addressed poIential Vaq· ..,CHP 2 8.1 33 Biopow.r 3 OH CH' 3x(2.1 MMo+ 11 MM) 0 lOW low ( plant l be addr..sed VrbasCHP 3 54 22 Biopower 3 OH CH' 2 x (21to.MM + 11 MM) 0 lOW low ( plant Kikind. CHP 3 81 33 Biopow er 3 OH CHP 3 x (2.7 M\M! + 11 MM) 0 low Low 0 plant Nogolin CHP 3 54 22 Biopower 3 OH CHP h (2.7 to.MM + 11 MM) 0 Hgh Hgh o Fesibity Study; biomes. fuel plant logistics ID be addressed 0 0 a ( a 0 0 SomborCHP 3 8.1 33 Biopower 3 [)Ii CH' 3 x (2.7 M\M! + 11 t.MA) 0 Medium Medium a Fesibity Study; _ s fuel plant logistics to be _ s e d Novi pazar CHP 3 5.4 22 Biopow er 3 OH CH' 2 x (2.7 MMI + 11 MM) 0 Hgh Hgh u Fesibity Study; biomes. fuel plant logistics ID be addressed V,anje CHP 1 54 22 Biopower 3 OH CH' 2x (2.7 to.MM + lll11M1t) 0 Hgh Hgh o Fesiblity Study; biomes. fuel Large wood IlumillJre ilduslry. Could support plant logistics to be addressed CH' project. Gornjl M lIanOYK 3 2.7 11 Biopower 3 OH CH' 1 x (2.7 MMI + 11 t.MA) 0 low Low 0 CHP plant Nova Varos CHP 1 2.7 11 Biopower 3 OH CH' 1 x (2.1 MMo + 11 t.MA) 0 Hgh Hgh o Fesiblity Study; biomes$ fuel plant logistics to be addressed Bljina Basta CHP 1 2.7 11 Biopower 3 OH CH' 1 x (2.1 to.MM + 11 MMI 0 Hgh Hgh o Fesibity Study: _ s l u e l Replace coal_s: substanlialenvironrrental plant logistic. ID be addressed in1>foyement I 1 x (2.7 to.MM + 11 t.MA) 0 Hgh Hgh o Fe.1>iIty Study: bioITBss luel plant logistics ID be addressed - - . - --- 77 Attachment 2: Open Cycle and Combined Cycle Gas Turbines Open Cycle Gas Turbine (OCGT) plant bum natural gas in the gas turbine to generate elec~ tricity · a single cycle. High temperature exhaust gas is then channeled into a heat recovery boiler to produce hot water for district heating and heat storage. It is typically a light - aero derivative - gas turbine with an electricity generation fuel efficiency of over 40 percent. It starts quickly and needs only minutes to ramp up to full load. There is sharp decline of effi- ciency when running at less than full load. Typically, an OCGT plant works as a system-wide peaking facility. Therefore, to use OCGT to supply district heat, heat storage is needed in the plant to capture waste heat when the turbines are running during the relatively brief peaking period and then to release heat as required to the district heating system. This is a low capital cost and technically simple solution. OCGT requires high gas pressure at intake. A number of these plants operate in Russia but without proper management and heat storage facilities. Combined Cycle Gas Turbine (CCGT) plant bum natural gas in the gas turbine and generate electricity. The turbine is a heavy duty gas turbine with a lower efficiency (20-30 percent) then the OCGT turbine but suitable for continuous operation. The exhaust temperature of the gas is, therefore, much higher than that of an aero-derivative turbine and is able to produce steam in a separate heat recovery boiler. The steam then goes into a steam turbine where it produces additional electricity. The most modern CCGT design consists of a gas turbine, steam turbine and one generator on a single shaft, so total fuel efficiency is in the range of 56-60 percent. A relatively small volume of waste heat is available for district heating from the plant's cooling system and exhaust, but it is base load. Therefore, use of such waste heat requires heat storage on the side of the district heating system to modulate heat delivery and meet peak demand. 78 ANNEX 4: DonorsnFI Programs in Energy Efficiency Regional Programs EBRD has established the Western Balkans Sustainable Energy Direct Financing Facility of 63 million, comprising up to 50 million in loan funds plus up to 13 million for technical assistance and incentive payments. The Facility will use debt financing for sustainable energy projects such as industrial energy efficiency and small renewable energy projects for local enterprises. Individual loans will range from 1.0 to 6.0 million, and countries included are Albania, Bosnia Herzegovina, Croatia, and FYR Macedonia, Montenegro and Serbia. EBRD also established recently a Western Balkans Sustainable Energy Credit Line Facility, a 60 million credit line to finance smaller energy efficiency and renewable energy projects for SMEs via participating banks. GTZ is implementing an Open Regional Fund for Energy Efficiency, a 3.0 million grant for EE improvements. KfWIEIBIEC plus private donors are each contributing 20 million to establish a new 80 million Energy Efficiency Fund using mezzanine financing and equity investing. Market research and evaluation are underway to determine Fund structure and design, which could be credit lines to banks or to ESCOs, and/or equity investments. South Eastern European coun- tries and sectors to be covered are being selected. UNECE is implementing the "Financing Energy Efficiency Investments for Climate Change Mitigation" project, under which a PPP investment fund called "Eastern Europe Energy Efficiency Fund" will be established. Fund capital commitments will be about 250 million. This Euro-denominated fund offers mezzanine and equity financing for EEIRE projects or companies developing, manufacturing, distributing or installing EEIRE equipment or services in target countries. The minimum investment is 10 million and the Fund will operate in twelve SEE, CEE, and EE countries, including Albania, BiH, FYR Macedonia and Serbia. An estimated is 30 million may be available for these Western Balkan countries. Country-specific programs Albania. KfW has a 'Promotion ofREIEE Facility'; the total program cost is about 9.0 million, com~ prising 2.0 million for TA, 3.5 million for EE investments, and 3.5 million for RE in~ vestments. Bosnia and Herzegovina. EC allocated 1O million in grants for energy efficiency, renewa- ble energy, and technical assistance as part of their EU IPA Program in Bosnia. IFC launched a program for residential sector EE improvements called 'Loans for Warmer Houses.' The first tranche of 15 million has been spent and IFC is conducting an impact assessment. Local partners were EKI Microcredit Foundation and Raiffeisen Bank. 79 Kosovo. EC gave an 2.0 million grant to Government for public sector energy efficiency im- provements. The program comprises three components: EE improvements in five public buildings for 1.2 million; Energy Auditor Training for O.5 million; and a Public Aware- ness Campaign for O.3 million. GTZ and the Association of Municipalities of Kosovo are co-financing a program of about 1.5 million for EE modernization of municipal service buildings such as schools and hos- pitals. KfVV is implementing a 30 million lending program in Kosovo, 'Energy efficiency meas- ures for small enterprises and households to promote climate and environmental protec- tion'. The credit line is offered in partnership with ProCredit Bank and Raiffeisen Bank; both are receiving technical assistance in the form of staff training to administer these loans to SMEs and households. FYR Macedonia. Government of Austria is executing the Energy Efficiency in Buildings Program for 2.3 million, comprising three components: "Mitigating climate change through improving EE in buildings" for O.35 million; "Enabling the environment for introduction of EE in build- ings in RoM" for J. 725 million; and "EE construction with emphasis on facade technolo w gy" for O.222 million. Swiss Cooperation Office has a 7.6 million grant program, "Efficient Energy Distribu- tion," for replacing and supplying condenser batteries, installing energy meters, providing assistance for EE measures, and eliminating PCB-contaminated equipment in the ESM electricity distribution and supply company. SIDA extended a grant of 2.0 million for an "AgroEnergy" project to promote EE and utilization of RE resources in rural FYR Macedonia. USAID runs the Development Credit Authority Facility for EE Projects in Municipalities, a US$ J0 million guarantee facility; local partners are Unibanka and NLB Leasing. World Bank is implementing the GEF Sustainable Energy Project. This US$5.5 million grant has three components: (i) providing technical assistance for market transformation; (ii) developing an ESCO to implement third party financing for EE projects; and (iii) es- tablishing a financing facility to support EE and RE investments. Montenegro. GTZ is providing technical assistance to the Ministry of Economic Development's EE Unit. for 1.5 million. KfW has an EE credit line for 3.0 million that targets SMEs. Government of Spain granted 1.O million for an EE retrofit Feasibility Study for the Podgorica Clinical Center. World Bank is implementing the Montenegro Energy Efficiency (MEE) Project, with a US$9.4 million loan; the Project focuses on financing EE retrofits in public sector build- 80 ings, including heating systems, insulation, and thennostatic valves and offers technical assistance for project implementation. Serbia. IFC established a US$15 million credit line to finance EE improvements and small renewa- ble energy projects; the local partner is ProCredit bank and the credit line targets SMEs. The first tranche has been disbursed and IFC is doing an impact assessment. KfW runs the Energy Efficiency Facility, a 45 million credit line to commercial banks, for SME loans. KfW also has extended a 32 million Joan to Government for District Heating Rehabilitation, both suppJy- and demand-side improvements. World Bank is implementing the Serbia Energy Efficiency Project with loans totaling US$49 million to rehabilitate the hea~ supply system and other energy efficiency improve- ments in the Clinical Center of Belgrade, the Clinical Center of Nis, as well as EE improve- ments in public buildings, mainly schools and hospitals. Summary Table A summary table of the IFl/donor EE programs in the Western Balkans is attached. 81 An Overview of EE programs in the Western Balkan countries I ! Min Min : Target Country Project name IFIIDonor Instrument EUR USD EE RE TA Sector Comments budget EUR 50 mIn for loans, 11 ,W. Balkans Sustainable Direct Financing Facility I Regional EBRD loans 61.0 X X X Industry, small RE mIn for technical funds W. Balkans Sustainable Energy Credit Line Regional Facility EBRD credit line 50.0 X X ISMEs Participating banks ~ .... mezzanine EIB+KfW+EC+private donors I Regional IEnergy Efficiency Fund EIB & equity SO.O each providing 20 million ~nal OpE!l1~egional Fund for EE GTZ grant 3.0 X IN/A ._. r--'- Ico~;;tries), excluding Serbia and i Kosovo; 30 min est. for W. Regional 1---.... ---- IE. Europe Energy Efficiency Fund UNECE ... _ . . . . .- loan/equity 30.0 X X IndlSMEs .. ~~- .. Balkans _ ... .- Total 224.0 1---..... _. .- Albania Promotion of RE/EE Facility KfW guarantees 9.0 X X X SMEs Commercial banks ----- .. ~~- .. Total 9.0 ------- Bosnia EU IPA 2007 funds EC grant 10.0 X X X Bosnia Loans for warmer households IFC loan 15.0 X Residential Total 10.0 15.0 .. _ .... - ---- ------- EE measure in 5 public buildings (1.2m1n); Energy Auditors training(O.5mln); I I Kosovo _ .. Public Awareness campaign (0.3mln) EC grant I 2.0 X X Public sector Co-financing with Association of EE modernization of municipal service Kosovo iGTZ grant 1.5 X Municipal buildings Municipalities of Kosovo E E measures for small enterprises and !households to promote climate and Kosovo _ .. environmental protection KfW loan - r" 30.0 ..._... .. _ X ISMEs, Residential Local enterprises . - .... _ ... .. - Total 33.5 ! -------- guarantee I Macedonia Development Credit Authority facility for EE ------- ------- - USAID .. facility I i 10 X Municipalities Macedonia AgruEnergy SIDA grant 2.0 X Agriculture f-.. ------- Swiss Cooperation ! Macedonia Efficient Energy distribution Office grant 7.6 X I 82 ~nlry. lnstu..m...t.IEUR lEE. I REI TIl j- "I .~ __ Austrian Cm.ist:softllroeproj<:cts; Mao.>doni.IEE · ""aA', ,""~.,.. 1'1'''''''''''''''' Isran! 2.3 X )(r~li.".".2llO'J.:.~1.~ I"". ""st.IM'''' Energy Proje