MIDDLE EAST AND NORTH AFRICA (MENA) | ENERGY AND EXTRACTIVES GLOBAL PRACTICE | THE WORLD BANK GROUP M E N A E N E R G Y S E R I E S | R E P O R T N O , 1 0 5 3 6 0 - M N A Energy-Efficient Air Conditioning: A Case Study of the Maghreb Opportunities for a more efficient market MIDDLE EAST AND NORTH AFRICA ENERGY AND EXTRACTIVES GLOBAL PRACTICE THE WORLD BANK GROUP MIDDLE EAST AND NORTH AFRICA (MENA) | ENERGY AND EXTRACTIVES GLOBAL PRACTICE | THE WORLD BANK GROUP M E N A E N E R G Y S E R I E S | R E P O R T N O . 1 0 5 3 6 0 - M N A Energy-Efficient Air Conditioning: A Case Study of the Maghreb Opportunities for a more efficient market MIDDLE EAST AND NORTH AFRICA ENERGY AND EXTRACTIVES GLOBAL PRACTICE THE WORLD BANK GROUP MIDDLE EAST AND NORTH AFRICA (MENA) ENERGY AND ENVIRONMENT UNIT Energy-Efficient Air Conditioning: A Case Study of the Maghreb Opportunities for a more efficient market M E N A E N E R G Y S E R I E S | R E P O R T N O . 1 0 5 3 6 0 - M N A Ezzedine Khalfallah, Rafik Missaoui, Samira El Khamlichi, Hassen Ben Hassine MIDDLE EAST AND NORTH AFRICA ENERGY AND EXTRACTIVES GLOBAL PRACTICE THE WORLD BANK GROUP Copyright © April 2016 All rights reserved International Bank for Reconstruction and Development/ THE WORLD BANK GROUP 1818 H Street, NW | Washington DC 20433 | United States of America This publication was prepared with the assistance of the European Union, the Energy Sector Management Assistance Program (ESMAP), and the World Bank. The findings, interpretations, and conclusions expressed in this paper are entirely those of the author(s) and should not be attributed in any manner to the World Bank, or its affiliated organizations, or to members of its Board of Executive Directors or the countries they represent, or to the European Union or ESMAP. The World Bank, the European Union, and ESMAP do not guarantee the accuracy of the data included in this publication and accept no responsibility whatsoever for any consequence of their use. The boundaries, colors, denominations, and other information shown on any map in this volume do not imply on the part of the World Bank Group any judgment on the legal status of any territory or the endorsement or acceptance of such boundaries. ESMAP reports are published to communicate the results of ESMAP’s work to the development community. Some sources cited in this report may be informal documents and not readily available. Authors | Ezzedine Khalfallah, Rafik Missaoui, Samira El Khamlichi, Hassen Ben Hassine. Production Photo credits: Hamad Khalfallah, Société Tunisienne de l’électricité et du gaz (STEG), Ezzedine Khalfallah, ©imegastocker (via Thinkstock) Designer: Studio Grafik Typographer: Nova Techset Private Limited, Bengaluru & Chennai, India Production coordinator: Angeline Mani, World Bank. Contents Contents v List of Figures vii List of Tables x Abbreviations and Acronyms xii Foreword xiv Acknowledgments xvi Executive summary xviii 1 | Introduction 1 2 | Energy challenges facing four countries of the Maghreb 3 2.1 Social and economic context 3 2.2 Energy consumption trends 5 2.3 Energy efficiency policies in the Maghreb 7 Challenges facing the region’s electricity sector 2.4  11 3 | Air-conditioning systems: An overview 18 3.1 Operating principles 18 3.2 Classification and energy performance of air conditioners 19 3.3 Reducing the energy consumed by individual air conditioners 22 3.4 Environmental impact of air-conditioning systems 23 4 | Analysis of the region’s air-conditioning market 26 4.1 Methodological approach 26 4.2 Market assessment 28 4.3 Economic characteristics of the market 30 Contents | v 4.4 Energy characteristics of the market 33 4.5 Air conditioner supply 35 4.6 Taxes 39 5 | The air-conditioning market of the Maghreb: A look ahead 43 5.1 Forecasting market developments 44 5.2 Energy impact of air conditioning 50 5.3 Economic impact 55 5.4 Environmental impact 58 5.5 Effect of climate change on the need for air conditioning 61 6 | Government policies and measures 63 6.1 Measures adopted in the countries of the region 63 Main barriers to improving the energy efficiency of air 6.2  conditioning in the Maghreb countries 64 Recommendations—transforming the air-conditioning market 7| in the maghreb: the way forward 68 7.1 Recommended measures 69 7.2 A road map 73 Indicators to measure, report on, and verify the extent of 7.3  the market’s transformation 75 7.4 A task force on air conditioning 78 References and Further reading 83 Appendices 84  nergy certification, testing infrastructure, Appendix A | E and implementation procedures 84  ethodology and approaches of national surveys Appendix B | M 89  ubsidies and electricity rates in four Maghreb countries Appendix C | S 90 vi | Energy-efficient air conditioning: A case study of the Maghreb List of Figures Figure 1: GDP and per capita income in the Maghreb region 4 Figure 2: Trends in primary energy consumption and economic growth in the Maghreb region, 2000–12 5 Figure 3: Breakdown of final energy consumption in the Maghreb, by country and sector, 2013 5 Figure 4: Primary energy consumption and resources in the Maghreb, 2013 6 Figure 5: Energy dependence in the Maghreb, 2000–13 6 Figure 6: Energy subsidies in Morocco and Tunisia, 2012 7 Figure 7: A comparison of primary energy intensities in the Maghreb region and world, 2012 8 Figure 8: Primary energy intensities in the Maghreb, 2000–12 8 Figure 9: Total consumption for energy generation in the Maghreb, by type of fuel, 2013 12 Figure 10: Total energy production in the Maghreb, by type of equipment, 2013 12 Figure 11: Total installed generation capacity in the Maghreb, by type of equipment, 2013 12 Figure 12: Installed electricity capacity, generation, and consumption in the Maghreb, 2013 13 Figure 13: Total final electricity consumption in the Maghreb, by country, 2013 13 Figure 14: Electricity demand and GDP in the Maghreb region, 2000–13 14 Figure 15: Peak annual demand in the Maghreb, by country, 2004–13 14 Figure 16: Forecasted rate of change in peak electricity demand in the Maghreb: 2013, 2019, and 2024 15 Figure 17: Selling price, cost, and deficit of the electricity sector in Tunisia, 2010–12 17 Figure 18: Illustration of the main components of an air conditioner 19 Figure 19: Classification of air conditioners 19 Figure 20: Illustration of air conditioner performance 20 List of Figures | vii Figure 21: A comparison of energy classes for air conditioners in cooling and heating modes under European and Tunisian standards 21 Figure 22: Modification of energy grades for air conditioners in cooling and heating modes 21 Figure 23: Annual energy needs of a building, by type of insulation 22 Figure 24: Analyzing the Maghreb region’s air-conditioning market: A framework 28 Figure 25: Installed stock of air conditioners in three countries of the Maghreb, 2000–13 29 Figure 26: Air-conditioning market in Algeria, Morocco, and Tunisia, 2004–13 29 Figure 27: Sales of air conditioners in the Maghreb, 2013 30 Figure 28: Market distribution of individual air conditioners, by power demand, 2013 33 Figure 29: Air conditioners in Tunisia, by energy class, 2013 34 Figure 30: Air conditioners in Algeria, by energy class, 2010–13 35 Figure 31: Imports and local assembly of air conditioners in Tunisia, 2009–13 36 Figure 32: Flows of informal merchandise trade among Tunisia, Algeria, and Libya 37 Figure 33: Sales of air conditioners on the formal and informal markets in Tunisia, 2009–13 37 Household appliance sales, by type, in Tunisia, 2012 Figure 34: ​ 38 Figure 35: Impact of taxes and duties on the public selling price of an air conditioner in Tunisia 41 Figure 36: AC equipment-to-household ratios and usage rates, by household income, in the United States, 2009 44 Figure 37: Review of household expenditure and air conditioner penetration in the residential sector in Tunisia, 1990–2014 46 Figure 38: Methodology adopted for the identification of individual air conditioners 47 Forecasted penetration rate of air conditioners in the residential Figure 39: ​ sector of three Maghreb countries, 2015–30 49 Figure 40: Anticipated change in the stock of air conditioners in three Maghreb countries, 2015–30 50 Figure 41: Expected electricity consumption for residential air conditioning under the BaU and EE scenarios 52 Figure 42: Expected cumulative final energy savings for individual air conditioners, 2015–30 52 Figure 43: Expected annual primary energy savings for air conditioners under the BaU and EE scenarios, 2015–2030 53 viii | Energy-efficient air conditioning: A case study of the Maghreb Figure 44: Expected cumulative primary energy savings for air conditioners under the EE scenario, 2015–30 54 Figure 45: Installed capacity of air conditioners and percentage of maximum power demand, 2013 54 Figure 46: Expected change in installed capacity under BaU and EE scenarios in the Maghreb, 2015–30 55 Figure 47: Expected cumulative avoided investments in capacity production, 2015–30 56 Figure 48: Expected avoided capacity investment costs per scenario and per new air conditioner installed, 2016–30 56 Figure 49: Average price per kWh (excluding taxes), by consumption block, 2014 57 Figure 50: Expected annual savings on electricity bills per household for three Maghreb countries 58 Figure 51: Expected CO2 emissions from air-conditioning use under BaU and EE scenarios 59 Figure 52: Expected CO2 emissions avoided, 2015–30 59 Figure 53: Refrigerant gas leakage cycle in air conditioners 60 Figure 54: Expected cumulative emissions caused by R22 leakages, 2016–30 61 Figure 55: Impact of global warming on air-conditioning needs around 2030 62 Figure 56: Effects of labeling and technical standards on the electrical appliance market 70 List of Figures | ix List of Tables Table 1: Key economic and energy indicators of the Maghreb, 2013 7 Table 2: Key energy indicators of the Maghreb, 2013 11 Table 3: Planned investments in the electricity sector in Tunisia, 2014–18 16 Table 4: Defining the energy performance of air conditioners 20 Table 5: The global warming and ozone depletion potential of the most common refrigerants 24 Table 6: Timetable for the elimination of HCFCs in the Maghreb, under the Montreal Protocol 24 Table 7: Market shares of the main air conditioner brands in Libya, 2014 32 Table 8: Average price of individual air conditioners in the Maghreb region, 2014 32 Table 9: Sales volumes for individual air conditioners in the Maghreb, 2013 32 Table 10: Cooling power demand for units marketed in the Maghreb 33 Table 11: Key regulations relevant to air conditioners, by country 34 Table 12: Customs duties and taxes on air conditioners in Algeria, 2015 40 Table 13: Duties and taxes on air conditioners in Morocco, 2015 40 Table 14: Duties and taxes on air conditioners in Tunisia, 2015 41 Table 15: Population assumptions for Tunisia, Morocco, and Algeria 47 Table 16: Market share assumptions for residential and tertiary sectors 48 Table 17: Forcasted increase in the number of air conditioners per household 48 Table 18: Average cooling degree days in three Maghreb countries, 2013 and 2014 49 Table 19: Energy efficiency of air conditioners in Tunisia, 2006 and 2013 51 Table 20: Air-conditioning energy efficiency scenarios 51 Table 21: Air-conditioning operation data assumptions 51 Table 22: Assumptions regarding specific consumption and grid losses in three Maghreb countries 53 Table 23: Projected unit costs of electricity plants 56 x | Energy-efficient air conditioning: A case study of the Maghreb Table 24: Electricity rates in Algeria, Morocco, and Tunisia 58 Table 25: Direct CO2 emissions from electricity generation 59 Table 26: Main refrigerants used for individual air conditioners 60 Table 27: Projected leakage factors for refrigerants in individual air conditioners 60 Table 28: Plausible scenarios for temperature increase in the Maghreb countries owing to climate change 62 Table 29: Proposed measures to improve energy efficiency in the air-conditioning sector 64 Table 30: Road map for implementation measures 73 Table 31: MRV indicators of market transformation 76 Table 32: Proposed air conditioning task force: A schedule of activities 80 List of Tables | xi Abbreviations and Acronyms ADEREE  Agence nationale pour le développement des énergies renouvelables et de l’efficacité énergétique (National Agency for Renewable Energy Development and Energy Efficiency), Morocco ANME  Agence nationale pour la maîtrise de l’énergie (National Agency for Energy Conservation), Tunisia APRUE  Agence nationale pour la promotion et la rationalisation de l’utilisation de l’énergie (National Agency for the Promotion and Rationalization of Energy Use), Algeria BaU business as usual BTU British thermal unit (equivalent to 1,055 Joules or 252 calories) BTU/hr British thermal unit per hour CCIS Chamber of Commerce Industry and Services, Morocco CDD cooling degree day CDER  Centre de Développement des Energies Renouvelables (Center for Renewable Energy Development), Morocco CETIME  Centre technique des industries mécaniques et électriques (Technical Center for Electrical and Mechanical Industries), Tunisia CFCs chlorofluorocarbons CIF cost, insurance, and freight CKD completely knocked down CO2 carbon dioxide COMELEC Comité maghrébin de l’électricité (Electricity Committee of the Maghreb) COP coefficient of performance in heating mode DA Algerian dinar DH Moroccan dirham EIA U.S. Energy Information Administration EE energy efficiency EER energy efficiency ratio ESMAP Energy Sector Management Assistance Program FDE Fonds de développement energétique (Energy Development Fund), Morocco FNME Fonds national de maîtrise de l’énergie (National Fund for Energy Conservation), Tunisia FSDRS  Fonds spécial de développement des régions du sud (Special Fund for South Regions Development), Algeria FTE Fonds de transition énergétique (Energy Transition Fund), Tunisia GECoL General Electricity Company of Libya GDP gross domestic product GWh gigawatt-hours GWP global warming potential xii | Energy-efficient air conditioning: A case study of the Maghreb HCFCs hydrochlorofluorocarbons HFCs hydrofluorocarbons IEEE Electronic, electrical, and household appliance industry IEPF  L’Institut de l’énergie et de l’environnement de la Francophonie (The Francophone Institute of Energy and the Environment) IPCC Intergovernmental Panel on Climate Change ktoe thousand tons of oil equivalent kVa kilovolt-ampere kWh kilowatt-hours LD Libyan dinar MEDENER Mediterranean Association of National Agencies for Energy Efficiency and Renewable Energy MEMEE  Ministère de l’Energie, des Mines, de l’Eau et de l’Environnement (Ministry of Energy, Mining, Water, and Environment), Morocco MENA Middle East and North Africa MPD maximum power demand MRV measurement, reporting, and verification mtCO2e million tons of carbon dioxide equivalent mtoe million tons of oil equivalent MW megawatts NEEAP National Energy Efficiency Action Plan NPV net present value ODP ozone depletion potential OECD Organisation for Economic Co-operation and Development OME Observatoire méditerranéen de l’énergie (Mediterranean Energy Observatory) ONEE  Office national de l’électricité et de l’eau (National Electricity and Water Office), Morocco R&D research and development RCREEE Regional Center for Renewable Energy and Energy Efficiency REAoL Renewable Energy Authority of Libya RGHP General Census of Housing and Population SCOP seasonal coefficient of performance SEER seasonal energy efficiency ratio SIE Société d’Investissements Energétiques (Energy Investments Company), Morocco SKD semi knocked down SONELGAZ Société nationale de l’électricité et du gaz (National Electricity and Gas Company), Algeria STEG Société Tunisienne de l’électricité et du gaz (Tunisian Electricity and Gas Company) TCO2 tons of carbon dioxide TD Tunisian dinar toe tons of oil equivalent TWh terawatt-hours VAT value added tax W watt Abbreviations and Acronyms | xiii Foreword The countries of the Maghreb are unevenly endowed option: it is an obligation for all the countries of with energy resources. All, however, are experiencing the region, no matter what their energy situation strong growth in domestic demand for energy, may be. Although some countries have adopted coupled with a heavy dependence on hydrocarbons. regulations that enhance energy efficiency This situation entails increased geopolitical, standards, the steps taken thus far by public socioeconomic, and environmental risks. Given authorities do not appear to be commensurate these risks, the countries of the Maghreb must with the magnitude of the phenomenon and what demonstrate that they are capable of responding to is at stake. rising energy demand while promoting sustainable economic and social development. Beyond any doubt, the penetration of more energy efficient air-conditioners into national markets Over the past two decades, households’ownership would start only if national policies and measures of appliances has increased significantly, reflecting are supportive. However, given the increased improved standards of living and more abundant smuggling of inefficient air conditioners across the supply. This increase has been accompanied by an porous borders of the region, these measures will be explosion in demand for end-use energy, especially ineffective without a regional vision that is translated in the buildings sector. into common measures agreed upon by all the countries concerned. The unprecedented development of the air- conditioning market in the region, with annual growth Against this background, the World Bank has rates in excess of 30 percent, is a clear reflection of carried out this study with financial support from this trend. Above and beyond the impact on primary the European Union and the Energy Sector energy consumption and greenhouse gas emissions, Management Assistance Program (ESMAP). The the growing use of air conditioning is contributing study’s primary aim is to analyze the air-conditioning (by as much as 30 to 70 percent, depending on market in the region; assess its economic, energy, the country) to the significant demand for electricity and environmental impacts; and develop medium- capacity at peak periods. Against the background and long-term scenarios in the context of the of barely profitable power generation, and given the sector’s rapid development. The study proposes difficulties of forecasting and managing peak demand recommendations to guide regional cooperation in for electricity, the magnitude of this development facing the common challenges posed by a rise in is creating new problems for the region’s electricity demand for air conditioning. It is based on dedicated sector, particularly in terms of investment. surveys conducted in four countries, with strong support from these countries’ ministries of energy, To tackle these problems, the introduction of energy conservation agencies, and national electricity energy-efficient air conditioning is no longer an companies. xiv | Energy-efficient air conditioning: A case study of the Maghreb Given the stakes involved, the Mediterranean to discuss and analyze in greater depth the proposed Association of National Agencies for Energy Efficiency recommendations and ensure follow-up action. and Renewable Energy (MEDENER) is well placed to play a facilitative role in this area by supporting We therefore commend this initiative and wish its exchanges, coordination, monitoring, and the implementation every success. promotion of activities related to safeguarding energy efficiency. Mr. Hamdi Harrouch President, Mediterranean Association of National As part of a possible future partnership with the World Agencies for Energy Efficiency and Renewable Bank to promote the findings of this regional study, Energy MEDENER could leverage its mobilizing skills to General Director, National Agency for Energy promote exchanges between regional stakeholders Conservation, Tunisia Foreword | xv Acknowledgments This report on household air conditioning in the •• The national electricity companies: SONELGAZ countries of the Maghreb is the result of close (Algeria), GECoL (Libya), ONEE (Morocco), and collaboration between the World Bank, which STEG (Tunisia); and provided necessary technical assistance, and •• Other governmental institutions in the Maghreb, in various stakeholders, both national and regional, particular CETIME (Tunisia). who kindly agreed to assist in the undertaking of this project. The preparation of this report was supported The team expresses its gratitude to peer reviewers by a grant from the European Union and the Energy and experts from the World Bank Laurent Granier, Sector Management Assistance Program (ESMAP). Karen Bazex, Martina Bosi, and Gael Raballand. The preparation of this report was overseen by Fanny The team also expresses its thanks for the valuable Missfeldt-Ringius, Task Team Leader. The authors of advice received from Charles Cormier, Practice the report are Ezzedine Khalfallah, Rafik Missaoui, Manager for Energy in the Middle East and North Samira El Khamlichi, and Hassen Ben Hassine. Africa (MENA) region; Franck Bousquet, Director of Regional Programs and Partnerships in the MENA The report is based mainly on the findings of national region; Andrea Liverani, MENA Program Leader; and surveys carried out by the following experts and Afef Haddad, Country Program Coordinator for the consulting firms: Sunergia Etudes & Nevolys Consulting MENA region. (Morocco), Mr. Boukhalfa Yaïci (Algeria), the power utility STEG (Tunisia), and Altai Consulting (Libya). We also thank the regional institutions COMELEC, RCREEE, MEDENEC, and MEDENER for the The report could not have been produced without valuable contributions they made, as well as all the very substantial support, assistance, and stakeholders who have assisted or supported this valuable comments provided during the conduct of undertaking, whether directly or indirectly—namely, the national surveys by numerous colleagues and representatives of governments, state institutions, representatives of the following bodies: the private sector, NGOs, and experts in the air- conditioning market. •• The ministries of energy in the four countries studied: Algeria’s Ministry of Energy; Libya’s Lastly, we gratefully acknowledge the financial Ministry of Electricity; Morocco’s Ministry of contribution of the European Commission and the Energy, Mining, Water, and Environment; and Government of Italy through the Multidonor Trust Tunisia’s Ministry of Industry, Energy, and Mining; Fund for Climate Change in the Middle East and •• The national energy conservation agencies: North Africa Region for the preparation of this report APRUE (Algeria), REAoL (Libya), ADEREE and related awareness-raising documents. (Morocco), and ANME (Tunisia); xvi | Energy-efficient air conditioning: A case study of the Maghreb Executive Summary The composition and challenges of the energy per year) reflects rapid growth in energy demand sectors in the Maghreb1 vary by country, as do for nonproductive purposes (mostly residential). domestic energy resources. Algeria and Libya are Buildings account for the largest share of electricity net exporters of energy (with substantial gas and consumption, at approximately 58 percent, of which oil resources, respectively); at the other extreme, 32 percent is for residential buildings and 26 percent Morocco relies on imports to meet all its energy for the tertiary sector. For its part, peak demand requirements. Tunisia’s resources can barely keep for electricity has also increased significantly, at an up with domestic demand, and the country has estimated 6 percent per year over the last decade. become a net importer of energy. Several common This coincides with a rapid increase in the use of challenges characterize the region’s energy situation, air conditioners—amid a growing market for stand- which is affected by a strong increase in demand for alone units, and a rise in maximum temperatures in primary energy (estimated at an average of 4 percent the Mediterranean region in general. Such growth has annually, against a regional average economic entailed increased investment in electricity-generating growth rate of 3.5 percent per year), weak energy plants to meet peak demand—investments that are performance at the macroeconomic level (with an not cost-effective, given the low utilization rates of average primary energy intensity of 0.33 tons of oil those plants at times other than the peak period. equivalent (toe)/1,000 [in 2005 dollars])2 and, finally, government subsidies for conventionel energy While the air-conditioning market expands rapidly in sources, which are weighing increasingly heavily on the region, the implications are poorly understood in government budgets. the absence of regular monitoring and surveys of the existing stock and developments affecting it. In fact, Rising electricity demand poses major apart from a survey of electricity consumption that challenges to all countries in the region, the Tunisian Electricity and Gas Company (Société exacerbated by the increased use of air Tunisienne de l’électricité et du gaz, STEG) has conditioners in buildings. conducted every five years since 1984, no sustained or organized investigation has been carried out in the Demand for electricity has increased considerably region. in the past decade, both in terms of energy inputs and generation, by approximately 5.2 percent and Any energy efficiency policy focusing on air 6 percent, respectively. In addition, the disconnect conditioning requires a solid knowledge of market between demand for electricity and gross domestic parameters and their impact on the electricity sector, product (GDP, which has increased by only 3.5 percent an understanding that has guided the present study. 1  For the purposes of this study, “the Maghreb” is used as shorthand for the four countries where the present analysis was conducted (Algeria, Libya, Morocco, and Tunisia), all of which are located in the Maghreb region. 2  In comparison with the average of the Organisation for Economic Co-operation and Development (OECD) countries: 0.13 toe/1,000. xviii | Energy-efficient air conditioning: A case study of the Maghreb The study focuses on residential air conditioning, followed by Libya (28 percent), Tunisia, and Morocco. which by and large composes the largest share of Given these market developments, air conditioner the air-conditioning market in the countries under sales account for a significant volume of regional consideration. The study is based on the results business—in excess of $1 billion in 2013, about 60 of surveys of residential air conditioning in four percent of which was in Algeria alone. Air conditioners Maghreb countries, conducted by the World Bank in with a cooling power of 12,000 BTU/hr are the most cooperation with ministries of energy, power utilities, common, and account for 50 percent5 of sales. and energy conservation agencies (except in the case of Tunisia, where the survey was conducted mainly The air conditioners in use exhibit relatively mediocre by the National Agency for Energy Conservation, energy performance in the absence of adequate or Agence Nationale pour la Maîtrise de l’Energie, regulations and testing of minimum energy ANME).3 The results of the surveys were presented to performance (except in Tunisia). This inefficiency and discussed and validated by national stakeholders has exacerbated the adverse effects of the rapid (with the exception of Libya, owing to its political growth in air conditioning on electricity demand, as situation). The study also benefited from fruitful demonstrated in this study. Even in Tunisia, where exchanges and valuable comments at a regional standards exist and the energy performance of workshop held in Tunis on February 18 and 19, 2015, new units on the market are not allowed to exceed which brought together country representatives of category 3 (on a scale of 1 to 8, from best to worst the main institutions in charge of the energy sector. performing), the performance of the units in use has for the most part deteriorated in recent years The air-conditioning market is undergoing as cheaper, less-efficient products are smuggled rapid expansion, but its energy performance is in from neighboring countries. This parallel market relatively mediocre. is assuming alarming proportions—its share of total sales grew from 15 percent in 2009 to about In the period 2000–13, the number of installed air- 80 percent in 2013. Two factors driving this growth conditioning units in Algeria, Morocco, and Tunisia are the weakening of border controls following the was approximately 9.7 million, of which around 6.6 2011 revolution in Tunisia, and the high taxes on air million were in Algeria, 1.4 million in Morocco, and conditioners sold in the country’s formal market. 1.7 million in Tunisia.4 The number of units grew at a staggering rate over this period—by about 48 percent The regional market is supplied mainly through a year, on average—increasing by a factor of 160. imports, and also by local assembling units in Algeria and Tunisia. Imports of Asian brands, in particular This upward trend was the result of improved from China, account for a growing share of the standards of living. Air conditioners have become market. more widely accessible as prices have fallen (by 10 percent over the past 20 years). Today, the average Jobs directly related to the sector are for the most price of a 12,000 British thermal unit per hour part to be found in assembly plants and installation (BTU/hr) air conditioner ranges from $250 to $575, and maintenance services. It is difficult to estimate the depending on the country. Annual sales exceeded number of these jobs; the work is mainly seasonal, 2.85 million units in 2013 in three of the countries, and one employee may engage in several different with the Algerian market ranking first (49 percent), activities over the course of a year. This seasonal 3  An abbreviated survey was carried out by ANME in Tunisia to supplement the five-year survey that STEG conducts with customers and another STEG survey conducted in 2014 that focused specifically on air conditioning. 4  Information on the total number of air conditioners in use in Libya is not available for the same period. 5  This type of air conditioner has been taken as the representative model for the purpose of the economic analysis in this study. Executive Summary | xix pattern holds for both installation/maintenance is expected to increase from around 12 million services and assembly plants. Surveys conducted units in 2015 to nearly 47 million units in 2030, in Tunisia indicate that the number of jobs directly corresponding to an average annual increase of related to the assembly of residential air conditioners around 10 percent. is around 600, or approximately 20 percent of the household appliance segment. In Algeria, the In a “business as usual” scenario, without any number of such jobs is estimated at around 2,000. change in the energy efficiency of newly installed The installation of residential air conditioners is air conditioners (a 1 percent annual increase in the typically undertaken by self-employed workers who energy efficiency ratio, EER6), the electricity demand rarely possess the required qualifications. Improving resulting from air conditioning would be approximately training in this sector would go far toward improving 42 gigawatts (GW) in 2030. overall operations and performance. In a scenario where energy efficiency improved at a Taxes on air conditioners vary considerably from rate of 3.5 percent per year (close to the current level country to country, a situation that encourages the in Europe), the electricity generation capacity required growth of parallel markets and the disruption of to meet the demand linked to air conditioning (at established channels of distribution. The highest rate peak periods) would be around 34 GW in 2030. This of taxation is in Tunisia, where taxes represent nearly corresponds to an avoided production capacity of 100 percent of the price of imports (cost, insurance, some 8 GW. and freight, CIF), as compared with less than 4 percent in Libya. This, in itself, explains the flow of The energy, economic, and environmental smuggled air conditioners from Libya to Tunisia. impacts of improving the energy efficiency of air conditioners are not negligible and broadly Forecasts for the air-conditioning market reveal justify a proactive public policy in this area. the potential to significantly improve energy efficiency. In terms of energy, the main impacts of the energy efficiency scenario in three countries (Algeria, Looking at overall trends in the air-conditioning Morocco, and Tunisia) are as follows: market of the Maghreb region, the household use of air conditioners is closely correlated to •• Savings of end-use electricity would be climatic conditions (and in particular, to cooling approximately 2.6 terawatt-hours (TWh) in 2025 degree days, CDDs), and household income and 3.4 TWh in 2030. (a link that has been empirically established for •• Savings of accumulated electricity would be several countries of the region). On this basis, the approximately 21.5 TWh over the period 2015– percentage of households to be equipped with 30. air conditioners by 2030 is projected to be about •• Savings of primary energy would total about 92 percent in Tunisia, 85 percent in Algeria, and 901 thousand tons of oil equivalent (ktoe) in 2030 50 percent in Morocco. Taking into account the and 5.6 million tons of oil equivalent (mtoe) over average number of air conditioners per household the period 2015–30. and the share of the nonresidential market, the total number of installed air conditioners in three In economic terms, the anticipated knock-on effects Maghreb countries (Algeria, Morocco, and Tunisia) in the three countries may include the following:   The EER is the relationship between cooling capacity and the electricity required to achieve it. 6 xx | Energy-efficient air conditioning: A case study of the Maghreb •• Gains in the energy bill as a result of savings (particularly for the residential sector) must seek, in primary energy, calculated on the basis of among other things, to balance the economic international fuel prices, could exceed a billion spin-offs of this policy between the government dollars a year by 2030. In cumulative terms, and households through the use of tax and gains in the energy bill could be expected to reach financial incentives. some $5.4 billion (in 2014 dollars) between 2015 and 2030, or around $160 on average for The indirect impacts of air conditioning-focused each air-conditioning unit in use. energy-efficiency policies on the environment •• Avoided public investments in power plants derive from a reduction in electricity consumption would total about $5.8 billion per year (in 2014 resulting in a reduction in carbon dioxide (CO2) dollars) between 2015 and 2030—implying a emissions—a reduction that is estimated for the savings of approximately $3 billion in Algeria, $1.8 three countries at around 2 million tons of carbon billion in Morocco, and $1 billion in Tunisia. The dioxide equivalent (MtCO2e) in 2030 and nearly amount of investment in electricity-generating 12.8 MtCO2e in total over the period 2015–30. capacity avoided would average $170 per air- Meanwhile, the importance of establishing formal conditioning unit in use during the period. arrangements for the recovery of refrigerants (hydrochlorofluorocarbons, HCFCs) must be The social impact of such a policy can be measured noted.8 In the absence of such arrangements, the by the resulting decrease in household electricity direct environmental impacts of leakage and bills. However, given the limited time that residential the release of refrigerants in the atmosphere in the air conditioners are in use (a few hours a day during three countries are estimated to total 28 MtCO2e the hottest periods of the summer), changes in in the period 2016–30, of which 85 percent is due household energy bills are not significant. Savings are to the improper disposal—rather than recycling—of estimated to average no more than $25 annually per refrigerants from retired air conditioners. household in Algeria for an air conditioner installed in 2030, $40 in Morocco, and $68 in Tunisia.7 Compared In spite of the present and future consequences with the difference in price between energy-efficient of inaction, the countries of the region do and less-energy-efficient air conditioners, the small not appear to be undertaking measures savings on electricity do not provide a sufficient commensurate with the challenges at hand. incentive for households to purchase more energy-efficient air conditioners. The purchasing Although the countries have basic regulations decision continues to be dictated by the up-front cost governing the certification and labeling of household and not by the energy efficiency of the air-conditioning appliances, only Tunisia has air conditioner labels that unit—hence the growth of the parallel market, which include environmental information and an operational offers the advantage of the lowest prices. laboratory to test the efficiency of air conditioners. There is no regulation of air conditioners in Libya. The spread of inefficient air conditioners poses a particular challenge for governments, which are Tunisia’s regulations prohibit the sale of units with obliged to make heavy investments in power plants. efficiency levels lower than category 3 (class C). A proactive energy-efficient air-conditioning policy These regulations have, however, become completely The gains are, of course, lower for air conditioners installed before this date, owing to their low efficiency. 7  HCFCs are refrigerants that are harmful to the ozone layer. They also contribute significantly to global warming and are gradually 8  being phased out by the countries that are party to the Montreal Protocol. Executive Summary | xxi ineffective in recent years owing to the expansion companies and energy conservation agencies. The of the parallel market and the lack of government aims of the recommended actions are to: capacity to monitor the market and enforce the regulations. •• Rationalize demand for air conditioning to limit the need for investment in new power plants to There are several barriers to the development of meet peak electricity demand. policies to effectively boost the energy efficiency of air •• Harmonize the region’s national markets for conditioning in the region. These include, in particular: air conditioners by setting comparable standards and tax policies, and effectively monitoring borders •• The absence of regional harmonization of to prevent the development of parallel markets. energy and tax regulations, which, given •• Promote cooperation among the countries the porosity of the region’s borders and the of the region, enabling them to benefit from the smuggling of relatively cheap products, is a experiences of others, and develop joint research factor contributing to the ineffectiveness of and development (R&D) programs in the field of national policies on the energy efficiency of air energy-efficient air conditioning. conditioners. •• Failing border control systems, which The measures suggested for adoption are as follows facilitate  the import of energy-inefficient air (in order of priority): conditioners. •• Weak enforcement of regulations governing •• Regulatory measures aimed at harmonizing the energy efficiency of air conditioners in some energy regulations, testing methods, and tax countries, and inadequate capacity for market policies relating to air conditioners. monitoring. •• Technical measures (including methods and •• A lack of organization among the stakeholders tools) aimed at strengthening the capacity of of the air-conditioning sector in the region, and electricity companies to forecast and manage their weak capacity to organize and protect the electricity demand linked to air conditioning and market. the development of innovative joint programs, •• The inadequate qualifications of the techniciens especially in R&D. installing and servicing air conditioners. •• Institutional measures aimed at establishing an •• A lack of information and awareness among institutional platform for regional cooperation dealers, installers, and consumers. in overseeing and monitoring the market, and strengthening the monitoring of borders to limit Recommendations—the way forward. illegal imports. •• Cross-cutting measures aimed at stepping up Transforming the Maghreb region’s market for information, communication, and awareness- residential air conditioners requires, first and foremost, raising activities targeted to consumers; that energy efficiency measures be taken at the strengthening the capacities of the sector’s national level. However, such measures will remain stakeholders; and improving knowledge of ineffective in the absence of a regional vision jointly the region’s market and supply chains of air agreed upon by the countries concerned. This study’s conditioners through regular targeted surveys. recommendations emerge from discussions at a regional workshop held in Tunis on February 18 and Finally, it is proposed that a working group be 19, 2015, that brought together the main stakeholders established—an air-conditioning task force (groupe de from the four Maghreb countries, including electricity travail climatisation)—to initiate regional cooperation xxii | Energy-efficient air conditioning: A case study of the Maghreb and promote the adoption of common provisions electricity companies, energy conservation agencies, necessary to promote targeted measures on air and professionals from the sector. It is proposed that conditioning in the Maghreb and facilitate their the task force become part of the Mediterranean implementation. The task force members could include Association of National Agencies for Energy Efficiency representatives of ministries responsible for energy, and Renewable Energy (MEDENER) network. Executive Summary | xxiii 1 Introduction Four countries in the Maghreb region of North Africa—Algeria, Libya, Morocco, and Tunisia—are facing the common challenge of a rapid increase in energy demand, in particular for electricity, linked to vision translated into common measures agreed upon by the countries concerned. In order to help the region deal with this common population growth and rising standards of living. Peak problem, the World Bank, in partnership with the demand in these countries has increased in recent European Union and Energy Sector Management years, at an estimated average of 6 percent annually Assistance Program (ESMAP), has conducted between 2004 and 2013. Electricity generation this regional study on the energy efficiency of air capacity has been ramped up significantly each conditioning. Its main objective is to describe the year to cope with this rapid increase in demand. It is characteristics of the air-conditioning sector in the estimated that the Maghreb9 will need to double its region and to analyze its economic, energy, and installed generation capacity by 2020 if it is to keep environmental impacts. The study recommends pace with the rising demand. measures to promote cooperation among the Maghreb countries with respect to common Most of this increased demand for power is related problems, and in particular to facilitate the gradual to air conditioning. The market for air conditioners is harmonization of relevant national policies and growing at a rapid rate, more than 30 percent each measures. year. The study was carried out with the invaluable Several countries have made efforts to manage support of ministries of energy, energy conservation this growing demand, most through regulations agencies, and electricity companies in Algeria, establishing energy efficiency standards for various Libya, Morocco, and Tunisia. These stakeholders types of equipment. However, implementation of made available necessary data and provided these measures on the ground has been limited. expertise and knowledge on their respective The policies and measures adopted thus far appear national contexts. to be inadequate given the challenges at hand. The study is based, among others, on detailed Promoting the energy efficiency of air-conditioning surveys of the air-conditioning market, conducted by systems is clearly a matter for national policies and the World Bank through specialized consulting firms measures. Nevertheless, given a recent increase in the in Algeria, Morocco, and Libya, and by World Bank smuggling of air conditioners (and other appliances) consultants in Tunisia. These surveys have made across porous regional borders, such measures have it possible to draw a picture of the contours of the proven to be ineffective in the absence of a regional current air-conditioning market in these countries and For the purposes of this study, “the Maghreb” is used as shorthand for the four countries where the present analysis was conducted 9  (Algeria, Libya, Morocco, and Tunisia), all of which are located in the region. Introduction | 1 of its characteristics, both economic and technical, This report is divided into six sections that focus on in order to establish a baseline for the market and the following topics: to carry out rigorous supply and demand analyses. (The methodology and approaches that underlie •• Energy challenges facing the Maghreb these surveys are presented in appendix 2 of this •• Overview of air-conditioning systems in the region document.) •• Analysis of the current market •• Outlook on market developments and challenges The study focuses on four countries of the Maghreb, •• Policies, measures, and tools to enhance energy namely Algeria, Morocco, Tunisia, and Libya. efficiency However, given the political situation and the lack of •• Recommendations for transforming the air- information in Libya, the analyses are often confined conditioning market in the Maghreb—a way to three countries: Algeria, Morocco, and Tunisia. forward 2 | Energy-efficient air conditioning: A case study of the Maghreb 2 Energy challenges facing four countries of the Maghreb 2.1  Social and economic context The total population of the four countries increased population, followed by Morocco (37 percent), Tunisia from around 75 million in 2000 to 89 million in 2013 (12 percent), and Libya (7 percent). (at an average annual growth rate of 1.3 percent) and was accompanied by rapid urbanization. Algeria In economic terms, the region has experienced alone accounted for 44 percent of the region’s relatively sustained growth over the past two Energy challenges facing four countries of the Maghreb | 3 decades, though since 2011 this has been slowed constant 2005 dollars), corresponding to an average by political instability in Tunisia and Libya. annual growth rate of 4.3 percent. GDP fell to $260 billion in 2011 and then rebounded to $293.5 billion The region’s gross domestic product (GDP) rose in 2013, although the growth rate of the preceding from $188 billion in 2000 to $287.6 billion in 2010 (in decade was not maintained. Figure 1 | GDP and per capita income in the Maghreb region 350 4,000 Billions of 2005 dollars 288 293 300 260 3,500 250 188 3,372 3,286 200 3,000 3,006 150 2,500 100 2,500 50 0 2,000 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 GDP (in billions of 2005 US dollars) Per capita GDP (in 2005 US dollars) Source: World Bank. These figures conceal significant disparities among •• An expansion of the informal economy in most of countries. For example, GDP in Libya and Algeria the countries, resulting in a significant decrease in is for the most part determined by hydrocarbon government revenue. exports. Thus, while the region is witnessing a decline in its Per capita income, in constant prices, rose from share of the global economy, its economic stability $2,500 in 2000 to around $3,300 in 2013, but again is being undermined by a lack of regional integration there are important national differences. For example, and ongoing geopolitical tensions since the events of despite political instability, per capita income in Libya the “Arab spring”. increased to around $6,100 by 2013, whereas in Morocco it did not exceed $2,600. A 2006 World Bank study estimated that the region’s economic growth had slowed by 2 to 3 Throughout the period, the Maghreb region has faced percentage points a year owing to a lack of regional major social, economic, and political challenges, in economic integration. The risk of economic and particular: social disintegration remains if regional GDP does not increase at least threefold by 2020. Any regional •• Political instability, which inhibits investment and problems in turn would threaten to destabilize the thereby economic growth. entire Sahelo-Saharan region. •• A drop in oil prices, which has had a powerful, adverse effect on exporting countries. 4 | Energy-efficient air conditioning: A case study of the Maghreb 2.2  Energy consumption trends Primary energy consumption was noticeably affected by the political events of 2011, as shown in figure 2. Figure 2 | Trends in primary energy consumption and economic growth in the Maghreb region, 2000–12 170% 100 = index 2000 159% 154% 150% 130% Impact of political instability 110% 100% Trend GDP in 2005 dollars, 2000–2012 Trend consumption of PE 2000–2012 90% 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Sources: IEA and World Bank. Further, starting in 2011, primary energy consumption Algeria accounting for 47 percent and Morocco 25 increased at a rate that far outstripped economic percent. The greatest demand was for transport (45 growth, resulting in a relative decline in the energy percent), followed by buildings (both residential and efficiency of the region’s economy. public) (figure 3). Final energy consumption increased to around 56 million tons of oil equivalent (mtoe) in 2013, with Figure 3 | Breakdown of final energy consumption in the Maghreb, by country and sector, 2013 50 50 45 45 40 40 35 35 30 30 25 25 20 20 15 15 10 10 5 5 0 0 Morocco Tunisia Algeria Libya Buildings Transport Industry Agriculture Sources: Countries’ energy balance sheets. Energy challenges facing four countries of the Maghreb | 5 Primary energy production in the region amounted energy (Morocco and Tunisia). Morocco supplies only to around 205 mtoe in 2013, the largest share of about 6.4 percent of its own energy requirements, which was produced by Algeria, with its substantial whereas Libya has a surplus of more than 600 gas reserves (68 percent), followed by Libya, whose percent of its domestic requirements for primary output is mainly oil (28 percent). energy (figure 4). Of the four countries, two export more energy than they import (Algeria and Libya) and two import more Figure 4 | Primary energy consumption and resources in the Maghreb, 2013 139.6 Algeria 46.6 93 57.3 Libya 8 49.3 1.2 Morocco 18.4 –17.2 6.2 Tunisia 8.7 –2.5 PE resources PE consumption Surplus/deficit Source: Authors’ compilation. The overall trend points to an increase in energy consumption; by 2013, this surplus had declined to consumption. Algeria is a case in point. In 2000, it only two times its own consumption (figure 5). enjoyed a surplus of four times its primary energy Finally, increased demand coupled with increased Figure 5 | Energy dependence in energy prices have placed heavy strain on the the Maghreb, 2000–13 budgetary balances of the countries. Energy is *:2000-2012 heavily subsidized in the region, which poses Tunisia major challenges for public finance and deprives 2013 2000 other key sectors (such as education and health) Morocco of the investment they require to meet rising Libya* demand. Subsidies to the energy sector place a particularly heavy burden on the finances of Algeria importing countries, such as Tunisia and Morocco. In 2012, subsidies totaled about $3.4 billion (5.3 –500% –400% –300% –200% –100% 0% 100% 200% billion Tunisian dinars, TD) in Tunisia and $5.6 – Dependence + dependence (exporter) (importer) billion (48.2 billion Moroccan dirhams, DH) in Source: Authors’ compilation. Morocco. The breakdown of these subsidies is given in figure 6. 6 | Energy-efficient air conditioning: A case study of the Maghreb Figure 6 | Energy subsidies in Morocco and Tunisia, 2012 90% 85% 60% 43% 41% Tunisia Morocco 30% 15% 16% 0% Fuels Electricity Natural Gas Sources: Ministry of Industry of Tunisia and Ministry of Energy, Mining, Water, and Environment of Morocco. Table 1 | Key economic and energy indicators of the Maghreb, 2013 ALGERIA LIBYA MOROCCO TUNISIA MAGHREB Population (millions) 38.9 6.3 33.0 10.9 89.1 GDP (millions $) 127 38 85 43 293 GDP/h ($) 3,265 6,031 2,576 3,945 3,345 Consumption/h (toe) 1.20 1.27 0.56 0.80 0.92 Surplus/deficit (mtoe) +93.0 +49.3 −17.2 −2.5 +122.6 Energy intensity (toe/1,000 0.37 0.46 0.23 0.24 0.33 in $ 2005) Electricity production (GWh) 56,148 37,945 26,829 16,995 137,917 Electricity consumption/h 1,158 2,232 843 1,316 1,145 (kWh) Average electricity charge DA 1.779 LD 0.02 DH 0.9010 TD 0.151 (monetary unit /kWh/month) (T ≤ 500 kWh) (1 block) (T ≤ 100 kWh) (T ≤ 200 kWh) DA 4.179 DH 1.4903 TD 0.350 (T > 500 kWh) (T > 500 kWh) (T > 500 kWh) (2 blocks) (5 blocks) (4 blocks) 2.3  Energy efficiency policies in the Maghreb Primary energy intensity (a ratio of total annual contingent on new policies or improved enforcement. consumption to GDP) is a measure of a country’s The average energy intensity of the four study overall energy efficiency. Comparing the energy countries, at 0.33 toe/1,000 (in 2005 dollars), lags far intensity of countries with more- and less-developed behind the average of the Organisation for Economic energy-efficiency regulations is a useful exercise, Co-operation and Development (OECD) countries, pointing to the magnitude of possible improvements as shown in figure 7. Energy challenges facing four countries of the Maghreb | 7 Figure 7 | A comparison of primary energy intensities in the Maghreb region and world, 2012 0.5 (toe/1000 2005$) 0.4 0.3 0.46 0.2 0.37 0.33 0.24 0.23 0.24 0.1 0.13 0 Libya Algeria Tunisia Morocco Maghreb World OECD Source: IEA. In interpreting these intensities, one must proceed importing countries, where the energy bill constitutes with care, owing to national differences in economic a heavier burden on public expenditure, and structure. In the case of the Maghreb, it can be noted deteriorating in the exporting countries (see figure 8). that these intensities are improving slightly in the two Figure 8 | Primary energy intensities in the Maghreb, 2000–12 0.5 2000 2012 0.46 0.4 toe/1000 2005 dollars 0.44 0.37 0.3 0.34 0.2 0.23 0.24 0.24 0.28 0.1 0 Tunisia Algeria Libya Morocco Source: IEA. National energy efficiency policies represent an strategy with quantitative targets, but there are important step toward improving energy intensity differences in the levels of implementation and the levels. The four countries have already undertaken results achieved. Key policies will be described efforts toward this end, and some are further along briefly below, with a focus on the objectives pursued, than others. Each country has an energy efficiency programs announced, and results achieved. 8 | Energy-efficient air conditioning: A case study of the Maghreb 2.3.1  Tunisia 2.3.2  Algeria Energy conservation is one of the priorities of Since 1985, Algeria has laid the foundations for an Tunisia’s energy policy. Several advances have energy efficiency policy with the establishment of the been made in this respect since the establishment National Agency for the Promotion and Rationalization of the Agence nationale pour la maîtrise de l’énergie of Energy Use (Agence nationale pour la promotion (ANME) in 1985. The ANME has worked to promote et la rationalisation de l’utilisation de l’énergie, a national program to promote energy efficiency and APRUE) and the adoption of a regulatory framework the development of renewable energy sources. It has conducive to energy conservation. Specific action put in place a regulatory framework and a series of programs have been subsequently adopted in the financial and tax incentives and measures. Its work following areas: has evolved over time, as evident in the overall standardization of incentives, and the strategic and •• Insulation of buildings institutional repositioning of key initiatives. •• Use of low-energy light bulbs •• Introduction of energy efficiency in public lighting The Energy Conservation Law of 2004 provided for a •• Promotion of energy efficiency in the industrial regulatory framework conducive to the development sector of major programs such as the regulation of the building envelope of new construction, the energy Nevertheless, the implementation of these programs certification of electric household appliances, has not been consistent with initial plans and efficiency improvements in public lighting, and the objectives, which have been updated periodically. cogeneration of energy, among others. The law reinforced these advances by creating a national To address the rapid growth of energy consumption energy conservation fund (Fonds national de in recent years, the Algerian government adopted a maîtrise de l’énergie, FNME) to support the effective national energy efficiency program in 2011 with the implementation of relevant activities. This is an aim of gradually slowing the growth of energy demand extrabudgetary source of public financing for energy and achieving total energy savings of approximately conservation investments. 63 mtoe by 2030. The savings would be distributed among three sectors with the most significant impact The pursuit of energy efficiency has produced on energy demand: buildings, 30 mtoe; industry, 34 encouraging results, reflected in a substantial mtoe; and transport, 19 mtoe. decrease in primary energy intensity (a reduction of 25 percent between 1990 and 2012) and energy 2.3.3  Morocco savings totaling 6.2 mtoe in the period 2004–12, in particular in the buildings sector (both residential and Reducing energy dependence is a strategic priority public) and industry. for Morocco, given that more than 93 percent of its annual energy consumption is imported. As regards future objectives, a new action plan on efficient energy use has recently been prepared. This In terms of institutions, in 2010 Morocco established the envisages energy savings on the order of 3.5 mtoe National Agency for Renewable Energy Development by 2020 and around 16 mtoe in total over the period and Energy Efficiency (Agence nationale pour le 2014–20. Of this, 51 percent would be in the building développement des énergies renouvelables et de sector, 25 percent in transport, and 24 percent in l’efficacité énergétique, ADEREE), which replaces the industry. former Center for Renewable Energy Development Energy challenges facing four countries of the Maghreb | 9 (CDER). Later, in 2014, the Department of Energy 2.3.4  Libya Efficiency and Renewable Energy was established within the Ministry of Energy, Mining, Water, and Finally, in Libya, an oil-exporting country with an Environment (MEMEE). The mandate of the MEMEE energy surplus of nearly 50 mtoe in 2013, public is to oversee the development and implementation of authorities have realized the value of energy the national energy strategy. Alongside other relevant efficiency relatively recently. The absence of a bodies, the ministry prepares and enforces relevant regulatory framework, transparent governance, and laws and regulations. The national energy strategy clearly expressed political will regarding the topic was launched in 2009, with two main pillars: persists. •• Energy diversification. The strategy seeks to In such a context, the Renewable Energy Authority increase the use of natural gas and to build gas of Libya (REAoL), whose mandate is to develop terminals to increase the share of natural gas in renewable sources of energy, was tasked by its the country’s energy mix to reach 25 percent supervising ministry, the Ministry of Electricity, by 2030. The targets for renewable energy are to draft and submit for government approval a 42 percent of the energy mix by 2020 (or 2,000 National Energy Efficiency Action Plan (NEEAP) for megawatts [MW] of wind energy, 2,000 MW of the near and medium term. The short-term action solar energy, and 2,000 MW of hydropower) and plan (2014–20) includes a number of measures 52 percent by 2030. to reduce electricity consumption, in particular in •• Energy efficiency. The objective is to reduce buildings and the public sector. These measures energy consumption by 12 percent by 2020 and call for the replacement of electric water heaters 15 percent by 2030. with solar water heaters, the increased use of economical fluorescent light bulbs in the residential The activities undertaken since the adoption of sector, the promotion of energy efficiency in public Morocco’s energy efficiency program in 2009 have buildings and public lighting, the conduct of energy produced concrete results. In terms of regulations, for audits of electric power distribution companies, and example, a building code was adopted emphasizing a reduction in commercial losses on the national the energy performance of the building envelope electricity grid. Other measures, such as a building for new construction. This was to be subsequently code and the certification of electrical household expanded to other building components, such appliances, have been proposed as medium-term as energy-using equipment. For the purpose of actions. providing financial support for energy efficiency projects, the Energy Development Fund (Fonds de The short-term objectives are to reduce average Développement Energétique, FDE) and the Energy electricity generation over the next five years, Investments Company (Société d’Investissements estimated at 8.5 percent (or 2,334 gigawatt-hours, Energétiques, SIE) were created. An energy GWh) in 2016 and at 20 percent (or 5,440 GWh) in efficiency strategy for 2030 is being finalized by the 2020. Ministry of Energy and ADEREE, following a General Assembly (États Généraux) that provided a forum for Because of political instability in the country, these a nationwide discussion initiated in 2013. and other relevant efforts are at a standstill. 10 | Energy-efficient air conditioning: A case study of the Maghreb 2.4 Challenges facing the region’s electricity sector Based on data published periodically by national electricity companies, table 2 lists key indicators for the region’s electricity sector. Table 2 | Key energy indicators of the Maghreb, 2013 ALGERIE LIBYE MAROC TUNISIE MAGHREB Installed electricity- 15,098 9,455 6,892 4,274 35,719 generating capacity (MW) Production 56,148 37,945 26,829 16,995 137,917 (GWh/yr) Fuel consumption 13,013 9,747 5,242 3,892 31,894 (ktoe/yr) Electricity 45,050 14,066 28,543 14,350 102,009 consumption (GWh/yr) Consumption of 17,181 5,488 9,309 4,318 36,290 residential sector (GWh/yr) Share of residential 38% 39% 33% 30% 36% Per capita 1,158 2,232 843 1,316 1,145 consumption (kWh/inhab) Actual peak in 2013 10,464 6,520 5,580 3,144 25,708 (MW) Peak period August-13 March-13 July-13 July-13 Summer-13 Rate of average 10.90% 6.30% 6.90% 4.50% 7.90% annual Change in peak (2013/2009) Forecast of trend in 2019 and 2024 Outlook for demand 2019 2024 2019 2024 2019 2024 2019 2024 2019 2024 (2019 and 2024) Production 100,103 154,520 54,124 65,721 46,053 61,920 21,920 27,820 222,200 309,981 (GWh/yr) Peak demand (MW) 19,510 28,382 9,222 11,285 7,696 10,284 4,430 5,510 40,858 55,461 Rate of change in 86% 171% 41% 73% 38% 84% 41% 75% 59% 116% demand compared with 2013 Source: Authors’ compilation of data from national electricity companies. Energy challenges facing four countries of the Maghreb | 11 2.4.1  Electricity production The installed capacity of power plants in the four Maghreb countries totaled 35,719 MW in 2013, with In 2013, total output of electricity in the Maghreb was Algeria accounting for more than 42 percent. The 137,917 GWh, more than 40 percent of which was main equipment used by the region’s power plants produced by Algeria. Conventionel energy sources to generate electricity was gas turbines (39 percent), continued to dominate, with natural gas accounting followed by combined cycle turbines (29 percent) for 73 percent of the total (nearly 100 percent in Algeria and steam-based thermal plants (19 percent), as and Tunisia). The remainder is divided between diesel shown in figure 11. (mainly used in Libya), fuel oil (in Morocco and Libya), and coal (exclusively in Morocco). Figure 11 | Total installed generation capacity in the Maghreb, by type of equipment, 2013 Figure 9 | Total consumption for Renewable energy generation in the Maghreb, 8% by type of fuel, 2013 Coal 6% Diesel 2% 9% 7% Combined cycle Natural gas 29% 11% Diesel Fuel oil Gas turbine 73% 39% Steam-based Coal thermal 16% Sources: Authors’ compilation of data from national electricity companies. Sources: Authors’ compilation of data from national electricity companies. Among generating technologies, combined-cycle turbines rank first (42 percent), followed by gas Coal accounts for only 6 percent of total installed turbines (28 percent) and steam-based thermal plants capacity, while sources of renewable energy, used (16 percent). Coal-fired power plants, in operation only especially in Morocco, account for 8 percent. in Morocco, contribute 9 percent of total electricity produced, while renewable energy accounts for only Based on an analysis of the data for each country, 4 percent, much of which is in Morocco. several observations can be made: Figure 10 | Total energy production •• Libya, which ranks second in installed capacity, in the Maghreb, by type of ranks only third in production. Its electricity- equipment, 2013 generating facilities are not in use amid political 4% instability and problems connected with the 9% 1% Combined cycle operation and maintenance of electricity plants. 42% Steam-based thermal •• Morocco consumes more electricity than it Gas turbine Diesel produces, and imports a large part of its electricity 28% Coal requirements, in particular from Spain. Renewable and other •• Libya suffers in particular from electricity losses in 16% the transport sector, a situation that is exacerbated Source: Authors’ compilation of data from national by the considerable underbilling of the power electricity companies. consumed. 12 | Energy-efficient air conditioning: A case study of the Maghreb Figure 12 | Installed electricity capacity, generation, and consumption in the Maghreb, 2013 50% 40% 30% 43% 42% 41% 20% 30% 28% 26% 20% 19% 10% 14% 12% 12% 13% 0% Algeria Tunisia Libya Morocco Capacity (%) Generation(%) Consumption (%) Sources: Authors’ compilation of data from national electricity companies. 2.4.2  Electricity demand Buildings account for the largest share of electricity consumption, at around 58 percent, of which 32 Electricity consumption percent is for residential use and 26 percent for Final electricity consumption in the four countries public buildings. totaled 102 terawatt-hours (TWh) in 2013; Algeria alone consumed 43 percent of this total (figure 13). With regard to the total population of the region, per capita electricity consumption averages 1,145 kilowatt-hours/year (kWh/yr), with variations from Figure 13 | Total final electricity country to country. Per capita consumption ranges consumption in the Maghreb, by from 843 kWh/yr in Morocco to 2,232 kWh/yr in country, 2013 Libya. 14% For several years the region has experienced strong Algeria 43% growth in electricity demand, with the average rate of Libya increase estimated at about 5.2 percent per year— Morocco 30% as against economic growth of only 3.5 percent per Tunisia year (figure 14). 13% Sources: Authors’ compilation of data from national electricity companies. Energy challenges facing four countries of the Maghreb | 13 Figure 14 | Electricity demand and GDP in the Maghreb region, 2000–13 200% GDP and electricity demand (2000=100%) 193% 180% ear er y %p 5,2 160% GDP in 2005 units r yea 156% Electricity demand per 3,5% 140% Effect of political instability 120% 100% 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Sources: World Bank and national sources. This disconnect between electricity consumption Peak power demand and GDP is explained, in particular, by the fact that The growing demand for electricity is accompanied the increase in electricity demand has been much by an increase in the maximum (peak) power greater among households than in the productive demand, which is rising steadily, becoming difficult sectors, such as industry and services. to predict, and seems to be disconnected from consumption trends. Over the past 10 years, The highest rates of increase in demand have peak demand has increased on average between occurred in Morocco (6.2 percent) and Algeria (5.8 5.1 percent and 7.3 percent annually, depending percent), and the lowest in Libya (2.8 percent) and on the country (figure 15). Tunisia (4.4 percent). Figure 15 | Peak annual demand in the Maghreb, by country, 2004–13 10,000 AAGR = 7.3% 10,464 MW 7,000 6,520 AAGR = 6.8% 5,541 5,580 4,000 3,612 AAGR = 6.4% 3,200 3,144 AAGR = 5.1% 2,008 1,000 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Algeria Libya Morocco Tunisia Source: Authors’ compilation of data from national electricity companies. 14 | Energy-efficient air conditioning: A case study of the Maghreb The increase in demand results in particular from example, in Algeria a peak of around 10.9 GW, rising household incomes and greater access to recorded in August 2014, was in large part due capital goods, particularly electrical appliances. There to a heat wave and the use of air conditioning in has been a structural change in the profile of the load all sectors, particularly households. In Tunisia, curve in recent years, with a transfer of the peak the total installed capacity of the stock of air load from winter to summer and the appearance of conditioners accounts for 84 percent of the peak a daytime peak load that is higher than the evening recorded in July 2013, or 2.5 GW. Similarly, in peak load. This was evident first in Tunisia starting in Morocco, electricity demand in summer is strongly 1996, then in Algeria in 2009. In Morocco, the peak influenced by the temperature and consequent use load still occurs during the winter and in the evening, of air conditioners. but the change in the shape of the load curve suggests that it too will undergo the same changes The forecasts are not very optimistic, and several as in Tunisia and Algeria in the near future. studies forecast that peak demand will continue to rise over the next decade (figure 16). Meanwhile, the effect of rising temperatures on peak demand has been amply demonstrated. For Figure 16 | Forecasted peak electricity demand in the Maghreb: 2013, 2019, and 2024 55.5 60 50 40.9 .2% 40 =7 GW GR 28.4 2013 2019 2024 AA 30 25.7 19.5 20 11.3 10.5 10.3 9.2 7.7 10 6.5 5.5 5.6 4.4 3.1 0 Algeria Libya Morocco Tunisia Region Source: Arab Electricity Union. The rising demand for electricity and the increase in of these findings provides useful lessons for peak demand must be analyzed in both domestic forecasting and planning in countries where this and regional contexts. The following points should trend has not yet begun or is less pronounced. be noted: •• As heat waves have become more frequent and unpredictable and household use of •• The increase in maximum power demand began electrical appliances increases, power utilities in 1997 in Tunisia and later in Algeria. Moreover, are increasingly unable to manage and plan peak demand was displaced from winter to power demand. Power utilities are faced with summer and from evening to daytime. An analysis an increasing risk of failure as the peak air- Energy challenges facing four countries of the Maghreb | 15 conditioning demand coincides with heat waves, In August 2012, the Algerian government announced during which the usage of power plants is very that it would set aside Algerian dinar (DA) 2,000 billion high. The need for air conditioning also impacts ($25.8 billion) between 2012 and 2016 to increase the composition of power plants in the energy mix. electricity production and distribution, and eliminate It is extremely inefficient for power utilities to build power outages and blackouts. The investment power plants for the sole purpose of meeting a program aimed to double electricity production by peak demand that lasts only a few days each year 2016 with the installation of an additional 12,000 MW (during heat waves). The resulting low utilization capacity. rates lead to a worsening of the overall load factor of the operating power plants. In 2009–13, Tunisia mobilized TD 2,400 billion (about •• Electricity companies therefore need to undertake $1.3 billion), and it plans to mobilize about TD 2 billion further studies, focusing in particular on the (about $1 billion) more between 2014 and 2018 to sectoral analysis of load curves. consolidate its electricity production. In addition, investments are being made to improve the transport 2.4.3  The economic challenges of rising and distribution networks (table 3). peak demand Investments in new means of production Rising demand, particularly peak demand, requires electricity companies to make significant investments in new production capacity. Table 3 | Planned investments in the electricity sector in Tunisia, 2014–18 TOTAL 2014 2015 2016 2017 2018 (TD BILLION) Production 504.7 632.4 451.5 220 109.5 1,918 Transport 190 515 186.6 892 Distribution 101.8 99 97 97 97 492 Total 796.5 1,246.4 735.1 317 206.5 3,302 Source: STEG. To meet peak power demand, the Maghreb countries In 2013, gas turbines contributed 39 percent of total must develop new power plant capacity totaling production capacity in the region, but supplied only 13 GW over the next five years—almost 2.6 GW per 28 percent of the electrical energy produced. The year on average—amounting to an annual investment average cost of energy produced by gas turbines of some $2 billion. can be from two to four times the average annual price of electricity produced. Rising cost of energy produced To meet peak demand, the electricity companies in Burden of public subsidies the region are mobilizing flexible means of production, Electrical energy is subsidized, particularly in particularly gas turbines. However, these means of exporting countries where subsidies cover all forms production have yields that are lower than the basic of energy (see appendix C). means of production, which increases their cost per kilowatt-hour produced. 16 | Energy-efficient air conditioning: A case study of the Maghreb Paradoxically, for power companies an increase in subsidies, and thus leads to a fiscal deficit (the deficit demand means an increase in the amount of the in Tunisia is illustrated in figure 17). Figure 17 | Selling price, cost, and deficit of the electricity sector in Tunisia, 2010–12 50 40 30 20 37.0 30.2 25.7 10 17.9 18.4 19.0 0 –7.9 2010 2011 –11.7 2012 –10 –18.0 –20 Average selling price (c$/KWh) Cost (c$/KWh) Deficit (c$/KWh) Sources: Ministry of Industry, Tunisia, Banque Centrale de Tunisie. Notes: $/TD exchange rate: 1.43 (2010); 1.41 (2011); 1.56 (2012). Energy challenges facing four countries of the Maghreb | 17 3 Air-conditioning systems: An overview 3.1  Operating principles An air-conditioning system distributes cooled air in an The key components of an air conditioner consists of enclosed space. Air conditioning involves modifying a compressor, a condenser, an evaporator. A space is the temperature and humidity of the air supply to cooled by eliminating heat gains, which are absorbed make users more comfortable in a space, subject by the refrigerant circulating in the indoor evaporator to heat gains and/or losses and depending on the under pressure from a compressor installed in the product’s use and climatic conditions. outdoor unit. The compressor “compresses” the 18 | Energy-Efficient Air Conditioning: A Case Study of the Maghreb refrigerant, which, owing to the changes in its state, Figure 18 | Illustration of the main can transfer cooling energy in hot weather and components of an air conditioner heating energy in cool weather in the case of reverse cycle air conditioning systems. Outdoor unit Individual air conditioners systems can be configured Evaporator in various ways: •• Combined indoor and outdoor units: Monobloc Condenser Indoor unit air conditioners •• Separated indoor and outdoor units: Split air- Source: ECOCLIM. conditioning systems •• Multiple indoor units separated from a single outdoor unit: Multisplit systems 3.2 Classification and energy performance of air conditioners Air conditioners are generally classified on the basis of several criteria; the most common of these are presented in figure 19. Figure 19 | Classification of air conditioners Heat Category System Operation removal AC1: A C Cooling capacity A Air cooling Split S C Cooling only ≤ 12 kW AC2: Cooling capacity Water cooling Multi-split Reversible between 12 and 45 kW AC3: Cooling capacity between 45 and Monobloc 100 kW Source: Authors’ compilation. Air conditioner performance is subject to regulatory cooling modes must be certified by an independent requirements that specify characteristics and body that subjects the equipment to tests conducted appropriate tests. Performance in the heating and by accredited laboratories. Air-conditioning systems: An overview | 19 Figure 20 | Illustration of air conditioner performance AEP: Absorbed electric power Indoor unit RP: Returned power Outdoor unit (heating or cooling) Coefficient of performance = RP/AEP Source: Authors’ compilation. The main coefficients of energy performance are summarized in table 4. Table 4 | Defining the energy performance of air conditioners PARAMETERS DEFINITION EXPRESSION COMMENTS Energy Energy efficiency Ratio of returned Can be used to identify the energy Efficiency Ratio ratio in cooling cooling energy to classification of the unit in cooling (EER) mode absorbed electrical mode. energy Coefficient of Coefficient of Ratio of returned Can be used to identify the energy Performance performance in heating energy to classification of the unit in heating (COP) heating mode absorbed electrical mode. energy Seasonal Energy Seasonal energy Ratio of annual Since January 2013, a European Efficiency Ratio efficiency ratio in returned cooling directive has defined a new method (SEER) cooling mode energy to annual of calculating the efficiency of air- absorbed electrical conditioning systems for a power energy demand of ≤12 KW. They are called Seasonal Seasonal coefficient Ratio of annual SEER for the seasonal coefficient Coefficient of of performance in returned heating in cooling mode and SCOP for the Performance heating mode energy to annual seasonal coefficient in heating mode. (SCOP) absorbed electrical energy Source: Authors’ compilation. 20 | Energy-Efficient Air Conditioning: A Case Study of the Maghreb Air conditioners are classified from A to G under conditioners in cooling and heating modes and the European standards10 and from 1 to 8 according to correspondence between the European and Tunisian Tunisian standards. The energy classification of air standards are summarized in figure 21. Figure 21 | A comparison of energy classes for air conditioners in cooling and heating modes under European and Tunisian standards A-Cl2 B-Cl3 C-Cl4 D-Cl5 D-Cl6 F-Cl7 A-Cl1 G-Cl8 3,23,38 EER≤2,2 3,38 3,2 3 2,8 2,6 2,4 Declining performance A-Cl2 B-Cl3 C-Cl4 D-Cl5 E-Cl6 F-Cl7 A-Cl1 G-Cl8 3,63,8 COP≤2,4 3,8 3,6 ≤3,4 3,2 2,8 2,6 Declining performance Source: Authors’ compilation. Amid significant technical advances in energy seasonal performance (in contrast to the nominal efficiency, some standards have added new energy- values still used in the Maghreb). The modified efficiency grades; for example, the grades A+++ , European standards for heating and cooling modes A++, and A+ have been used in Europe since 2013. are illustrated in figure 22. These energy-efficiency standards take into account Figure 22 | Modification of energy grades for air conditioners in cooling and heating modes New requirements for cooling mode: A+++ A++ A+ A B C G …. SEER≥8,5 SEER≥6,1 SEER≥5,6 SEER≥5,1 SEER≥4,6 SEER≥4,1 SEER<2,6 New requirements for heating mode: A+++ A++ A+ A B C G …. SCOP≥5,1 SCOP≥4,6 SCOP≥4 SCOP≥3,4 SCOP≥3,1 SCOP≥2,8 SCOP<1,9 Source: Authors’ compilation.   In Morocco and Algeria, labeling standards are in place but are not applied. 10 Air-conditioning systems: An overview | 21 3.3 Reducing the energy consumed by individual air conditioners Certified heating and cooling performance constitute energy regulations to reduce the energy consumption an intrinsic property with a significant impact on of buildings by acting on the building envelope and a system’s energy consumption. However, this equipment. By way of illustration, we present the performance also depends on several other, impact on the energy needs of a building located in contextual, factors: climate zone 1 in Tunisia (ZT1: Coastal Zones), using two criteria: •• Energy performance of the building •• Type and size of the air conditioner •• Insulation of the envelope components (walls, •• Installation and operation of the air conditioner roof, and fenestrations) •• Behavior of users •• Number of levels (one floor—G; two floors—G  + 1; three floors—G + 2) 3.3.1 ENERGY PERFORMANCE OF THE BUILDING One finding is that the insulation of the walls, whether solid or glazed, reduces the energy requirements. The energy performance of the building envelope These reductions also depend on the number of (walls, roof, and fenestrations) has a significant levels, which affects the ratio of vertical surfaces impact on a building’s energy needs for heating and (walls and fenestrations) to horizontal surfaces cooling. Countries in the region have established (roof). Figure 23 | Annual energy needs of a building, by type of insulation G 160 G+1 131 No insulation G+2 122 G 156 G+1 127 Wall insulation G+2 118 Level G 140 G+1 121 Roof insulation G+2 115 G 140 G+1 110 Insulation of fenestrations G+2 100 ​Source: ALCOR TYPE AND SIZE OF AIR 3.3.2 ​ ​ secondary concern—if considered at all. Particularly CONDITIONER when the price difference between the various power ratings is minimal, the most powerful unit is selected. A household’s choice of air conditioner is often Some dealers, particularly large national retailers, dictated by the price, with power demand being a guide consumers in their choices using information 22 | Energy-Efficient Air Conditioning: A Case Study of the Maghreb panels that indicate the power demand of the air •• Tightness of the refrigerant circuit conditioner based on the surface or volume of the •• Insulation of the refrigerant piping spaces to be cooled. •• Sun exposure of the outdoor unit The power demand of an air conditioner depends The training and qualification of installers are on several parameters: area and use of the space, important aspects to support the optimal occupancy rate, installation, orientation, etc. For a performance and operation of air conditioners. The given space, the power demand of an air conditioner development of informal networks for the purchase can vary significantly depending on its orientation, and installation of air conditioners undermines the thermal insulation of its envelope, number of efficiency standards—and puts jobs in domestic occupants, etc. production at risk. Clear, accessible information for users might 3.3.4 BEHAVIOR OF USERS encourage them to choose air conditioners that use relatively less power—if it is demonstrated that they The behavior of users is a key factor in the operation can offer the same level of comfort. of air conditioners. Several studies emphasize this factor, particularly the temperatures selected 3.3.3 INSTALLATION AND OPERATION by users. A very low air temperature consumes OF AIR CONDITIONERS more energy and is harmful to users’ health. Several awareness-raising campaigns in Tunisia Air conditioners must be installed by qualified (for example, messages on residential electricity technicians to guarantee optimal operation. The bills) recommend ambient temperatures of around performance of an air conditioner is dependent on 26°C to ensure the comfort of users and to reduce the technical parameters of its installation, such as: any shock resulting from a significant temperature difference between air-conditioned premises and •• Distance between indoor and outdoor units outside air. 3.4 Environmental impact of air-conditioning systems The harmful effects of refrigerants on the environment Indirect emissions, meanwhile, result from the energy need no demonstration. Direct emissions resulting consumed by the equipment. from refrigerant leaks contribute to the destruction of the ozone layer and amplify the greenhouse Refrigerants are classified according to their chemical effect. Refrigerant leaks also have consequences for composition. The two types used most often in energy consumption. When an air conditioner loses individual air conditioners—hydrochlorofluorocarbons a portion of the refrigerant it initially contained, its (HCFCs) and hydrofluorocarbons (HFCs)—are listed performance deteriorates, resulting in greater energy in table 5. consumption. The size of the direct impact depends on the nature of the refrigerant used and the volume Given their ability to destroy the ozone layer, HCFCs of the leaks over the lifetime of the system. The risk of are regulated under the Montreal Protocol and leaks is higher during the operation and maintenance are gradually being phased out.11 They will still be of an air conditioner, explaining the importance of allowed in new equipment in developed countries and need for training in this area. until 2020 and in developing countries until 2030. 11  Chlorofluorocarbons (CFCs) belong to a category for which production and use were first prohibited under the Montreal Protocol. They are no longer used today. Air-conditioning systems: An overview | 23 Table 5 | The global warming and ozone depletion potential of the most common refrigerants GLOBAL WARMING OZONE DEPLETION POTENTIAL (GWP) POTENTIAL (ODP) Hydrochlorofluorocarbons (HCFCs) R-22 (HCFC-22) 1,810 0.05 Hydrofluorocarbons (HFCs) R134a (HFC, pure fluid) 1,430 0 R404A (HFC, blend) 3,900 0 R407C (HFC, blend) 1,800 0 R410A (HFC, blend) 2,100 0 HFC32 (HFC, pure fluid) 675 0 Source: Authors’ compilation. Note: GWP = global warming potential; ODP = ozone depletion potential. GWP is a measure of the participation of a molecule in the greenhouse effect. Its value is calculated in comparison to a reference molecule, carbon dioxide (CO2), for a specific time period (20, 100, 500 years); the GWP of CO2 = 1. ODP is a measure of the participation of a molecule in the degradation of the ozone layer. The value of the indicator is calculated in comparison to a reference molecule, R11 or R12, the ODP of which is 1. Developed countries have marketed alternatives to to HCFCs has been growing—as have concerns HCFCs for many years, replacing them with HFCs, regarding their contribution to global warming. For particularly R-410A. HFCs do not impact the ozone this reason, several developed countries12 favor layer but contribute to global warming, as shown in the use of low-GWP HFCs or more ecological table 5. replacements—particularly hydrocarbons, ammonia, and carbon dioxide (CO2)—that present some safety Following the prohibition of HCFC-22 in a number concerns (toxicity and flammability) depending on of developed countries, the Maghreb markets were the type of application. These refrigerants are more flooded with air-conditioning equipment using R-22 appropriate in central air-conditioning systems than at rock-bottom prices, creating serious problems in stand-alone or individual units, for example, to for the renewal and maintenance of the equipment allow for the better management of safety concerns. stock, and ultimately jeopardizing the commitments made in the context of the Montreal Protocol. The four countries, as parties to the Montreal Protocol, have introduced plans to gradually manage At the same time, at the international level, the the elimination of HCFCs, based on the timetable problem of the increased use of HFCs as alternatives given in table 6. Table 6 | Timetable for the elimination of HCFCs in the Maghreb, under the Montreal Protocol 2013 2015 2020 2025 2030 Freeze (2009–10 Average) (%) Reduction  − 10 Reduction  − 35 Reduction − 67.5 Reduction − 97.5 Remaining 2.5 % to be phased out between 2030 and 2040 Source: Authors’ compilation. In the European Union, for example, the F-Gas Directive took effect from January 1, 2015, and introduced an HFC phase-down from 12  2015 to 2030 by means of a quota system and sectorial bans on high-GWP refrigerants. 24 | Energy-Efficient Air Conditioning: A Case Study of the Maghreb Algeria and Tunisia are the only countries in the It is clear that these efforts to eliminate HCFCs also Maghreb with air conditioner assembly units using offer a unique and timely opportunity for the Maghreb HCFC refrigerants. Their national ozone bureaus countries to address these important issues in a regulate imports by distributing quotas among market holistic manner: energy efficiency, ozone depletion, operators. Efforts have been made to push the industry and climate change. Maximizing the synergies toward the use of non-HCFC alternatives. Pilot projects between these three issues is critical to promote for the conversion of air-conditioning production lines energy efficiency by encouraging the retirement of have been carried out with major participants in this inefficient, low-cost equipment in favor of equipment industry, and others are expected to follow. that is more efficient from a technical and commercial standpoint and uses low-GWP, environmentally The other two countries use HCFCs as refrigerants in friendly refrigerants. air-conditioning and refrigeration equipment. The need for HCFC-22 in the servicing sector of these countries To this end, it is essential to promote coordination is strongly related to imports of air-conditioning among the various departments responsible for equipment using this substance. Given the strong climate and energy efficiency issues so as to identify growth of the air-conditioning market, considerable appropriate replacement technologies for HCFCs efforts should be focused on servicing sector that are sustainable and effective from an energy participants to achieve HCFC elimination targets. standpoint. Air-conditioning systems: An overview | 25 4 Analysis of the region’s air-conditioning market 4.1  Methodological approach NATIONAL SURVEYS 4.1.1 ​ general, have been carried out. There is a consequent dearth of data, particularly in the Maghreb region. Very few surveys and sectoral studies of the market Tunisia is the exception: STEG disseminates data for air conditioners, and for household appliances in on household energy consumption, particularly for 26 | Energy-efficient air conditioning: A case study of the Maghreb air-conditioning equipment, based on surveys it •• Individual air conditioners constitute a “diffuse” conducts every five years. technological sector that encompasses all air- conditioned buildings regardless of economic For the purposes of this regional study, the World sector (hotels, banks, households, etc.). Bank has launched an effort to collect data on and •• Data are distributed among various sources, which analyze the regional market for air conditioners often do not distinguish between individual and in cooperation with the ministries and agencies central air conditioning or include a classification responsible for energy in each of the four countries. by power demand, etc. •• The informal market is beginning to grow in the The methodology and approaches adopted in this region, which skews the statistics and can lead to effort vary by country. Except in Tunisia, where the errors in the absence of reliable sources. work was carried out by STEG and ANME, the World Bank identified specialized consulting firms and Data on air conditioners’ technology, performance independent consultants, supported by the relevant level, formal and informal sector shares, and sectoral public entities. (Additional information is provided in penetration, even if sparse, can be used to identify appendix B of this report.) their environmental and energy impact—and the policies that need to be implemented to reduce this In each of the surveys, the work primarily involved: impact. Collecting such data has been difficult for some countries in the absence of regulations, testing •• Disseminating questionnaires to participants laboratories, and regular surveys. The present study involved in the assembly, importing, and marketing benefits from surveys conducted in Tunisia and other of air conditioners countries, adjusted by the data provided by national •• Contacting organizations involved in the air- energy conservation agencies (APRUE, ADEREE, conditioning market (national energy conservation and REAoL) to formulate hypotheses. There are agencies, customs administrations, certification similarities among the four countries as well as control bodies, etc.) dominant trends, and the modeling tool used in this •• Conducting field visits to shopping centers, study has taken these into account. outlets, and informal markets •• Collecting data and identifying national and DATA SOURCES 4.1.3 ​ international studies with a link to the use of and market for air conditioners At the national level, data was gathered from both institutional and private organizations, such as: DATA PROCESSING 4.1.2 ​ •• Specialized national agencies (ANME, ADEREE, The purpose of the data collection was to identify the APRUE, REAoL) existing and future stock of individual air conditioners •• Ministries responsible for the energy sector in the four countries and to analyze their financial, •• Electricity companies environmental, and energy impact. It should be noted •• Statistics organizations that the information collected was fragmented and at •• Customs administrations times inconsistent, for the following reasons: •• Manufacturers and retailers •• Professional associations •• Very few studies have focused specifically on air •• Consumer associations conditioners (rather than on household appliances in general). Analysis of the region’s air-conditioning market | 27 Data at the international level came from the sources were used to identify key parameters and International Energy Agency, the World Bank, scenarios. research centers, and certification bodies. A FRAMEWORK FOR ANALYSIS 4.1.4 ​ Assessing the impact of air conditioners on overall energy demand requires some macroeconomic Figure 24 presents the categories used to data and projections regarding the mobilization analyze the air-conditioning market of the four of electricity generation capacity. Several data countries. Figure 24 | Analyzing the Maghreb region’s air-conditioning market: A framework Characterization of the air-conditioning stock Individual Centralized Technological Energy Market Sectoral Type: split, Energy classes Formal/informal Households monobloc, etc. Unit power Average Locally manufactured/ demand efficiency Other sectors imported Source: Authors’ compilation. 4.2  Market assessment INSTALLED STOCK 4.2.1 ​ The installed stock in the three countries increased dramatically between 2000 and 2013, with an annual Based on surveys and statistics from various national average growth rate of approximately 48 percent— sources, the installed stock comprised some 9.7 or a 160-fold increase in the stock during the period million air conditioners in Tunisia, Algeria, and (figure 25). Morocco during the period 2000–13. Information was not available for Libya. 28 | Energy-efficient air conditioning: A case study of the Maghreb Figure 25 | Installed stock of air conditioners in three countries of the Maghreb, 2000–13 12,000 9,700 10,000 8,000 1,000 units Morocco Tunisia Algeria 6,000 4,951 4,000 1,254 2,000 143 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Source: Authors’ compilation of data from national surveys. ANNUAL SALES OF AIR 4.2.2 ​ CONDITIONERS Annual sales in Tunisia, Algeria, and Morocco exceeded 2 million units in 2013. The Algerian market ranked first in terms of total sales, followed by Tunisia and Morocco. Figure 26 | Air-conditioning market in Algeria, Morocco, and Tunisia, 2004–13 2,500 Algeria 2,000 Tunisia 1,000 units per year Morocco 1,500 2,048 1,000 500 0 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Sources: Authors’ compilation of data from national surveys. Analysis of the region’s air-conditioning market | 29 Surveys provided some insights on sales in Libya, •• Starting in 2011, the rate of annual sales which stood at around 800,000 units in 2013. Given accelerated significantly in the region. Sales these estimates, total sales in the region in 2013 are doubled from around 1 million units in 2011 to 2 estimated at 2.85 million units. million units in 2013. This acceleration is based in part on the development of an informal market An analysis of sales data yields the following findings: and the increasing porousness of regional borders (amid a lack of security and border controls). •• Algeria has the highest annual sales, with 49 •• A 2011 wage increase in Algeria, combined with percent of the market, followed by Libya with a decline in the prices of household appliances, 28 percent. contributed to the acceleration of purchases of •• Sales in Tunisia and Morocco are similar in terms capital goods, including air conditioners. of annual volumes, but there is greater penetration in Tunisia, where the population is one-third the size of Morocco’s. Figure 27 | Sales of air conditioners in the Maghreb, 2013 60% 3,000 49.2% 50% 2,500 40% 2,000 28.2% 30% 1,500 2,854 20% 1,000 10.5% 12.1% 1,404 10% 500 806 300 344 0% 0 Morocco Tunisia Libya Algeria Region 2013 sales (1,000 units) 2013 sales (%) Sources: Authors’ compilation of data from national surveys.. 4.3  Economic characteristics of the market BRANDS SOLD 4.3.1 ​ the market is supplied almost exclusively by imports of finished products. Air conditioners, like other household appliances, are assembled locally or imported. Algeria and Tunisia Imports from Asian countries, particularly China, import finished products while also assembling air account for growing shares of the market, both in conditioners locally, whereas in Morocco and Libya terms of components and assembled units. This 30 | Energy-efficient air conditioning: A case study of the Maghreb increase has been detrimental to longstanding trade In Morocco, the penetration rate for air conditioning relations between the Maghreb countries and Europe. is higher in the services sector, particularly tourism, than in households. The hotel sector generally Algeria has well-established relations with the major air- Local companies use either their own brands or those conditioning brands (Carrier, Trane, Hitachi, etc.) and of their parts suppliers. Some brands are international installs centralized or individual equipment that have (LG, SAMSUNG, MIDEA, TCL, CONTINENTAL, minimum energy performance guarantee and after- EDISON), while other companies have developed sales service. their house brands (ENIEM, CONDOR, CRISTOR, IRI-SAT, SENTRAX, BYA ELECTRONIC). The main Tunisia participants in the Algerian market are: In Tunisia, a survey of the market for individual air conditioners was carried out by ANME in 2014. •• Assembly The organized market stock consists of more than –– Groupe Benhamadi Antar Trade (CONDOR 30 brands, half of which are assembled locally ELECTRONICS) and the other half imported as finished products. –– Samsung Home Appliances (SAMHA) The main brands on the market are LG, Samsung, –– Entreprise nationale des industries Haier, Midea, Galanz, and Coala. The assembly and d’électroménager (ENIEM) importing subsectors are currently facing serious –– SONARIC problems owing to the development of the informal –– COBRA ELECTRONICS market. –– SODINCO (Haier brand) •• Importing The main operators on the market in Tunisia are: –– ARCODYM MIDEA –– SARL LG ALGÉRIE •• Assembly –– MCC (Al Mansur Commercial Center)/ –– ABS ELECTRONIQUE Panasonic –– ELECTROSTAR –– EL ATHIR SERVICE Morocco –– AFRIVISION SERVICE Like the international markets, the Moroccan market –– SICAD-COALA is supplied essentially by Chinese factories. Several –– DOMOTECH brands are marketed, including some Moroccan brands that come from China. •• Importing –– HEDI BEN AYED According to a 2015 market survey conducted by –– STC the World Bank,13 products are imported by: Libya •• Multinational manufacturers located in Morocco, In Libya, air conditioners are exclusively imported such as LG, Samsung, and Whirlpool in the form of finished products and are marketed •• Exclusive representatives of brands in Morocco on the local market or reexported to neighboring such as Ventec (Carrier) and Umareq (Airwell) countries. Table 7 provides a summary of the main •• Distribution chains with their own brands such as brands and market shares observed in Libya. Marjane (Denwa) and Abroun (Gold vision) •• Companies specializing in air conditioning 13  Market Survey on Air Conditioners in Morocco, World Bank, 2015. Analysis of the region’s air-conditioning market | 31 Table 7 | Market shares of the main air conditioner brands in Libya, 2014 BRAND GENERAL V5 SAX WEEL & CONCORD Market share (%) 57 11 9 Source: Authors’ compilation of data from national surveys. MARKET PRICE 4.3.2 ​ social classes. Sales prices declined by a factor of 10 within the span of 20 years—and even more if The prices of individual air conditioners are strongly prices on the informal market and inflation are taken influenced by characteristics of the domestic market, into account. particularly tax rates and the size of the informal market. Table 8 provides an indication of the average prices for a 12,000 BTU/hr air conditioner. The general price trend is downward, resulting in a product that is widely available and purchased by all Table 8 | Average price of individual air conditioners in the Maghreb region, 2014 COUNTRY ALGERIA MOROCCO LIBYA TUNISIA Average price in local currency DA 36,000 DH 4,500 LD 200 TD 900 Average price in dollars 450 529 250 475 Average official exchange rate $1 = DA 80 $1 = DH 8.5 $1 = LD 1.25 $1 = TD 1.9 in 2014 Source: Authors’ compilation of data from national surveys. TURNOVER 4.3.3 ​ •• The boundary between centralized systems and individual systems is blurred. Market turnover is difficult to estimate owing to the specific characteristics of this sector: Turnover has therefore been estimated on the basis of the following: •• The market includes local assembly and importing subsectors, which both encompass various •• Sales volumes in 2013 (and only in the formal components and packaged units. market) •• The shares of the formal and informal market are •• Figures announced by specialized agencies (when difficult to measure. data are available) Table 9 | Sales volumes for individual air conditioners in the Maghreb, 2013 TURNOVER TURNOVER COUNTRY IN NATIONAL SOURCE COMMENTS IN DOLLARS CURRENCY Morocco DH 1.3 billion GFK firm Algeria DA 50.4 billion $638 million Estimate Average selling price of DA 36,000 Tunisia TD 61 million $38 million Estimate Formal market: 72,000 units sold in 2013 Libya $200 million Estimate Average selling price of $250 Source: Authors’ compilation of data from national surveys. 32 | Energy-efficient air conditioning: A case study of the Maghreb 4.4  Energy characteristics of the market POWER DEMAND 4.4.1 ​ The power demand of individual air conditioners marketed in the region varies widely, as summarized in table 10. Table 10 | Cooling power demand for units marketed in the Maghreb Cooling power 7,000 9,000 12,000 18,000 24,000 36,000 48,000 72,000 demand in BTU/hr Cooling power 2.05 2.64 3.51 5.27 7.03 10.54 14.06 21.08 demand in kW Source: Authors’ compilation of data from national surveys. Figure 28 shows the distribution of units sold in 2013 by cooling power demand. Figure 28 | Market distribution of individual air conditioners, by power demand, 2013 70% 60% Tunisia Algeria Libya 50% 40% 30% 20% 10% 0% 7,000 9,000 12,000 18,000 24,000 > 24,000 Sources: Tunisia: STEG; Libya and Algeria: surveys. Air conditioners with a cooling power demand of ENERGY PERFORMANCE OF 4.4.2 ​ 12,000 BTU/hr are most common. In terms of EQUIPMENT SOLD weighted, average power demand, by volume of sales, this model can be used to characterize the Energy performance is governed by regulations market. in Tunisia, where energy-intensive air conditioners Analysis of the region’s air-conditioning market | 33 may not be sold on the market. Such regulations do not exist in Algeria, Morocco, or Libya. Relevant regulations are summarized in table 11. Table 11 | Key regulations relevant to air conditioners, by country COUNTRY REGULATION PURPOSE Algeria Interministerial order of November 29, 2008 Classification of the energy efficiency of Interministerial order of February 21, 2009 domestic appliances Energy labeling for domestic air conditioners Morocco Moroccan standard NM 14.2.300 (2010) and Energy labeling of electrical products and MEMEE Order 2148-11 (July 2011) making NM household appliances 14.2.300 mandatory Tunisia Order of April 21, 2009 Labeling of individual air conditioners with Order of June 30, 2009 a cooling power demand below 12 kW Order of September 27, 2010 Minimum energy efficiency of individual air Order of December 14, 2010 conditioners with a cooling power demand Order of August 12, 2011 below 12 kW Source: Authors’ compilation of data from national surveys. However, the market in the region, particularly in •• 2011: Elimination of class 5 Tunisia, has been recording a decline in the energy •• 2012: Elimination of class 4 efficiency of the stock of equipment due to insufficient control and verification—and the flooding of the The country’s stock of air conditioners, by energy market with subpar equipment sold in the informal performance class, is depicted in figure 29. sector. The composition of this stock, by energy class, is Figure 29 | Air conditioners in known only for Tunisia and Algeria. Tunisia, by energy class, 2013 5% In Tunisia, where regulations are being undermined 15% by the informal sector, a portion of the stock is Class 1 performing below target values. The average, Class 2 weighted class is between 6 and 5. Several Class 3 years back, Tunisia introduced a timetable for eliminating the most energy-intensive classes, as 80% follows: •• 2009: Labeling requirements Source: ANME. •• 2010: Elimination of classes 8, 7, and 6 34 | Energy-efficient air conditioning: A case study of the Maghreb In Algeria, a survey of importers and manufacturers of certification tests, these data must be used with indicates that most of the installed stock is in class B caution. and class D (see figure 30). However, in the absence Figure 30 | Air conditioners in Algeria, by energy class, 2010–13 50% 40% 30% 41.7% 20% 35.2% 10% 3.2% 11.1% 1.4% 7.4% 0% Class A Class B Class C Class D Class G Other Source: National surveys. 4.5  Air conditioner supply LEGAL IMPORTS 4.5.1 ​ (Algeria also imports assembled air conditioners, but the quantity of imports is declining amid an The volume of imports among air conditioners in increasingly available and affordable local supply.) the four countries varies. Libya and Morocco are importing countries. Algeria imports components for In Tunisia, imports of air conditioners are declining assembly, and assembly factories benefit from tax because of taxes on imports and a growing informal advantages aimed at promoting local integration. market. Local production, meanwhile, is slowing. Analysis of the region’s air-conditioning market | 35 Figure 31 | Imports and local assembly of air conditioners in Tunisia, 2009–13 11,000 2013 61,000 Local assembly Imports 12,000 2012 65,000 15,000 2011 118,000 10,000 2010 130,000 9,000 2009 127,000 Source: ANME. THE INFORMAL MARKET 4.5.2 ​ lesser extent, are seeing informal cross-border trade with Algeria. Smuggling has long been prevalent in the border regions of the Maghreb countries, where populations Air conditioners are being increasingly smuggled otherwise divided by borders are connected by from Tunisia to Libya in the south (particularly the Ben historical and family ties. Taxes on consumer products Gardane region)14 and to Algeria in the northwest and are not harmonized in the region, and goods tend center west (particularly in the Kasserine region). An to move from areas with higher taxes to those with ANME survey indicates that the share of the parallel lower (see figure 32). market is growing steadily in Tunisia, and was close to 80 percent in 2013 (figure 33). In Morocco, The informal market for household appliances is smuggling is seen mainly in the east, particularly in flourishing amid political instability and weak border the city of Oujda.15 controls. Tunisia in particular, and Morocco to a   Estimating Informal Trade across Tunisia’s Land Borders, World Bank, December 2013. 14 Le phénomène de contrebande dans la région orientale [Smuggling in the eastern region], Oujda Chamber of Commerce Industry and 15  Services (CCIS). 36 | Energy-efficient air conditioning: A case study of the Maghreb Figure 32 | Flows of informal merchandise trade among Tunisia, Algeria, and Libya Air conditioners Northwest Tunisia Algeria Air conditioners Libya Southwest Libya-Tunisia Algeria-Tunisia Air conditioners Air conditioners Fuel Food products Textiles Fuel Household appliances and electronics Construction materials Tires Household appliances and electronics Food products Tobacco Tunisia-Libya Tunisia-Algeria Pharmaceutical products and cosmetics Food products Food products Figure 33 | Sales of air conditioners on the formal and informal markets in Tunisia, 2009–13 2013 72,000 264,935 2012 77,000 242,262 2011 133,000 102,950 2010 140,000 54,877 Formal market 2009 136,000 23,995 Informal market Source: ANME. Analysis of the region’s air-conditioning market | 37 The case of Algeria LOCAL INTEGRATION 4.5.3 ​ In Algeria the assembly of household appliances, The assembly of air conditioners is part of the including air conditioners, is governed by Executive household appliance industry. It is subdivided into Decree No. 2000-74 of April 2, 2000, which two assembly subsectors, based on the integration distinguishes two categories of assembly based on rate: the content of the imported “kits”, the extent to which they are broken down into their component parts, the •• SKD (semi knocked down): The components are level of investment in production equipment, and the imported as semifinished products, and assembly expected level of employment: takes place locally. •• CKD (completely knocked down): The •• Kits intended for assembly industries (semifinished components are imported in parts that are products) assembled locally, and some components •• CKD kits (parts) (packaging, for example) may be produced locally. The assembly of split air-conditioning systems based Local integration rates vary considerably by product on CKD kits has grown considerably since 2010 owing to the lack of appropriate regulations. As owing to the tax benefits available to operators in a general rule, customs duties and taxes are this assembly subsector. The integration rate ranges significantly lower for CKD imports than they are for between 15 percent and 50 percent. It involves the SKD imports. The selling price of a CKD product will manufacture of some sheet metal and plastic parts thus be lower owing to the lower customs duties and intended mainly for outdoor units. local labor costs. Household appliance sales, by type, in Tunisia, 2012 Figure 34 | ​ 140,000 40% 120,000 30% 100,000 25.1% 22.5% 21.2% 80,000 20% 15.4% 15.9% 60,000 40,000 10% 118,455 106,050 100,050 20,000 72,500 75,000 0 0% Washing Refrigerators Air conditioners Televisions Stoves machines Sales (D thousand) Product share (%) Source : Electrostar, Tunisia. 38 | Energy-efficient air conditioning: A case study of the Maghreb The case of Tunisia number of jobs in the air-conditioning subsector Tunisia’s household appliance industry consists of ranges between 500 and 600. Nationally, the IEEE 32 companies, two of which are involved only in sector comprises approximately 13  percent of all exports.16 The industry is facing difficulties owing jobs in manufacturing industries. The household to the development of the informal market and the appliance subsector represents only 4  percent of fact that it exports little and is focused on the local jobs in the sector and its contribution to investment market. is under 9 percent. Air conditioners represented a small portion of sector A business survey in Algeria estimates the number sales in 2012, and the exponential growth of the of permanent jobs at about 2,000. In most cases, informal market for air conditioners will likely make it the assembly line for air conditioners is flexible and difficult to reverse this trend in the short term. can also be used to assemble other household appliances (refrigerators, washing machines, stoves). Even lacking reliable data, it can still be estimated As a result, the line operates all year and jobs are that the assembly sector has a 40 percent integration guaranteed. rate in Tunisia. INSTALLATION SERVICES 4.5.5 ​ EMPLOYMENT IN THE SECTOR 4.5.4 ​ Depending on the sector and how contracts are Data on employment in the air-conditioning sector awarded, air conditioners are installed by either are difficult to discern amid the following factors: qualified or unqualified technicians. For contracts in the services sector (hotels, hospitals, banks, etc.), •• The figures available are for the household installation is handled by qualified businesses in appliance sector as a whole, which is itself accordance with specific technical requirements. a subsector of the electronic, electrical, and household appliance industry (IEEE). In the residential sector, installation may be handled •• Jobs in the sector are not broken down by type of by large national retailers, specialized outlets, or activity and are sometimes combined with those independent installers. As prices have declined in commercial distribution and sales networks. and the informal market has expanded, household •• The sector, particularly in Algeria, employs installation has become very inexpensive or even free hundreds of seasonal workers, who join of charge. permanent workers from February to August of each year. Where handled by unqualified technicians, installation may not meet professional standards, with important In Tunisia, according to the Agency for the Promotion implications for energy efficiency. Improper installation of Industry and Innovation, the household appliance increases the risk of leaks and reduces the product industry employs more than 3,000 workers. The lifespan. 4.6 Taxes Imports of air conditioners, whether in parts or in contribute to the proliferation of the parallel market kits, are subject to numerous customs duties and and undermine the formal assembly and importing taxes that vary by country. These variations in turn industries. 16  Monograph on IEEE in Tunisia, Investment Promotions Agency of Tunisia, 2014. Analysis of the region’s air-conditioning market | 39 This section presents the customs duties and taxes to local assemblers and promotes a high degree of applicable in Tunisia, Morocco, and Algeria. Libya local integration. applies flat fees to containers in ports in the form of a “port services” tax on all declared common Relevant customs duties and taxes are summarized consumer goods. in table 12. ALGERIA 4.6.1 ​ Algeria’s customs regulations are very favorable to CKD imports, which gives a competitive advantage Table 12 | Customs duties and taxes on air conditioners in Algeria, 2015 TARIFF CUSTOMS VAT HEADING SUBHEADING TITLE SUBHEADING DUTIES (%) (%) Air-conditioning machines 84151010 Kits intended for the 30 17 and equipment assembly industries 84151020 CKD kits 5 17 84151090 Other 30 17 Source: www.douane.gov.dz. MOROCCO 4.6.2 ​ significantly reduce the price discrepancies between the formal and informal markets. Morocco applies lower duties and taxes, which favor imports of assembled air conditioners and Table 13 | Duties and taxes on air conditioners in Morocco, 2015 STANDARDIZED CODE PRODUCT DESCRIPTION IMPORT DUTY UNIT 8415.10 0010 Wall or split-system air-conditioning 2.5 u units with compressor VAT = 14% Source: www.douane.gov.ma. TUNISIA 4.6.3 ​ Imports of air conditioners into Tunisia are subject to numerous duties and taxes, as summarized in table 14. 40 | Energy-efficient air conditioning: A case study of the Maghreb Table 14 | Duties and taxes on air conditioners in Tunisia, 2015 ENERGY INCOME TAX CUSTOMS CUSTOMS CONSUMPTION VAT CONSERVATION ADVANCE DUTY (%) SERVICE FEE TAX (%) (%) TAX PAYMENT (%) 30 3 10 10 TD/1,000 BTU/hr 10 18 Source: www.douane.gov.tn. The Energy Conservation Tax totals TD 10 for a added tax (VAT), which represents an advantage that power demand of 1,000 BTU/hr and constitutes the varies depending on the brand, power demand, and main source of financing for the FNME, which has technology. been called the Energy Transition Fund (Fonds de transition énergétique, FTE) since 2014. Figure 35 illustrates the impact of duties and taxes on the price of an air conditioner imported legally in In the local assembly industry, businesses are compliance with the energy classification regulations subject to import quotas and enjoy tax benefits. They adopted by Tunisia. are subject to only a customs service fee or value- Figure 35 | Impact of taxes and duties on the public selling price of an air conditioner in Tunisia Public selling price (PSP) (in D, all taxes included) PSP decline (% of PSP, all taxes included) 1,200 40% 38.8% 1,000 30.8% 30% 800 % 55 24.5% +156 % +2 600 18.4% 20% 400 10% 1,019.25 200 831.75 769.3 705.2 624.2 400 0 0% C.i.f. price PSP PSP without PSP without PSP without PSP without DD (DD+DC) (DD+DC+AIR) (DD+DC+ AIR+0.5 TME) Source: STEG, ANME. Note: The example is based on the following assumptions. Cooling power demand = 12,000 BTU/hr; CIF (cost, insurance and freight) value = TD 400; importing margin = 5 percent; retail margin = 5 percent. The public selling price was simulated with a VAT of 22.5 percent for the final consumer. This rate was reduced to 18 percent by a recent tax reform. The various simulations of the impact of a reduction in taxes on the selling price are illustrated: estimated selling price with all duties and taxes; selling price without customs duties; selling price without customs duties and the consumption tax; selling price without customs duties, consumption tax, and advance tax payment; selling price without customs duties, consumption tax, advance tax payment, and a 50 percent reduction in energy conservation tax. Analysis of the region’s air-conditioning market | 41 The tax burden of the final price partly explains the LIBYA 4.6.4 ​ development of the informal market. It is clear that taxes increase the sales price of air conditioners on It was not possible to collect reliable data on customs the formal market—that is, those that are subject to duties and regulations in effect in Libya. However, controls and in compliance with energy-efficiency existing sources provide useful information, particularly standards and regulatory tests. for common consumer goods. In Libya customs duties on merchandise imports were abolished on August 1, A reduction in duties and taxes would help reduce 2005, and replaced by a so-called “port services” tax the selling price and bring down the price variance of 4 percent that applies to all products, including air between the formal and informal markets. conditioners, with 85 items being exempted. 42 | Energy-efficient air conditioning: A case study of the Maghreb 5 The air-conditioning market of the Maghreb: A look ahead The penetration of air conditioners across various Air conditioning thus poses complex problems: sectors has created new challenges for national operators and public finances. Electricity is •• A correlation between peak consumption and the subsidized in the four countries, and any additional increase/decrease of temperatures and/or humidity demand further increases the deficits of national •• Extreme volatility of peak demand, which is electricity companies. The situation is paradoxical for no longer directly correlated with changes in economic operators, which see their deficits increase consumption (in an example of “uncoupling”) as demand grows. Moreover, installed capacity can and becomes difficult to predict owing to its no longer readily meet peak demand. dependence on climate peaks Chapter 5 | The air-conditioning market of the Maghreb: A look ahead | 43 •• High risk of failures at power plants The challenges created by the growth in the air- •• Impact on the composition of power generation conditioning market are becoming critical and must be installations taken into account to reduce its impact on the economy •• Significant deterioration of the load factor as a whole. This situation is particularly worrisome in that the market is far from being saturated. 5.1  Forecasting market developments The aim of this section is to predict medium- and long- •• The number of air conditioners per household, term changes in the region’s stock of air conditioners itself related to the size of residences so as to be able to measure effects on the electricity sector and, more broadly, environmental, energy, and Studies show that in developed countries, the economic impacts. penetration rates of air conditioners in the residential sector17 are close to saturation. Sales are largely Methodological approach 5.1.1 ​ driven by replacements, increases in the number of households, and increases in the number of air Market drivers conditioners per household. To conduct this forecasting exercise, it was first essential to identify relevant market drivers. The stock In the United States, for example, the country with of household air conditioners appears to depend on the highest air-conditioning penetration rate (an the following factors: equipment-to-household ratio of close to 90 percent), statistics clearly show the link between ownership •• Climate change and use of air conditioners, on the one hand, and •• Household income household income, on the other (as illustrated in •• Demographic trends and their impact on the figure 36). number of residences Figure 36 | AC equipment-to-household ratios and usage rates, by household income, in the United States, 2009 100% 30% 25% 80% 20% 60% 18% 17% 15% 40% 14% 13% 13% 11% 10% 10% 10% 9% 20% 5% 76% 77% 81% 84% 84% 87% 90% 87% 83% 0% 0% Below poverty I($’000)<20 20≤R(k$)<40 40≤R(k$)<60 60≤R(k$)<80 80≤R(k$)<100 100≤R(k$)<120 120≤R(k$) Total line Air conditioner used No air conditioner Source: EIA, 2009.   The share of households with air conditioners out of the total number of households. 17 44 | Energy-efficient air conditioning: A case study of the Maghreb In developing countries the stock of equipment and Clearly, these two parameters are not the only sales are dominated by price dynamics and the determinants of air-conditioning penetration in the strong correlation between household income and residential sector, but they provide a good approach purchases of air conditioners. validated by the statistics collected and analyzed for a large number of countries. Air conditioner penetration rates were similar in Algeria and Tunisia in 2008, at 13.8 percent for Algeria (2008 –– The “climate maximum” parameter, which to RGHP)18 and around 13.2 percent for Tunisia (STEG). some extent represents the market saturation level (in terms of penetration rates), regardless of Several studies19 that compile data on the air- the household income level, is expressed as a conditioning market in various countries show a function of the number of CDDs20 in the following direct relationship between the penetration rate for equation: air conditioners in the residential sector and two key parameters: household income and climatic Climate maximum = 1 − c * exp( − d * CDD) conditions. The penetration rate is thus linked to these two –– Availability on the basis of income is expressed parameters, expressed as follows: by the following equation: –– Air-conditioning rate = purchasing power 1 (income) ×  climate maximum (cooling degree Availability = 1 + a * exp(b* income) days, CDDs) where: –– Purchasing power is the impact of the capacity of households to purchase an air-conditioning The model is then calibrated for each country to system (which is dependent on household determine the constants a, b, c, and d based on income) on the penetration rate for air historical data on the equipment-to-household ratio conditioners. for air conditioners. –– Climate maximum (based on CDDs) is the impact of climate conditions in CDDs on the penetration By way of verification, in figure 37 we present the rate for air conditioners to reach the saturation correlation that exists between the equipping of level. Tunisian households with air conditioners and their expenditures. 18  General Population and Housing Census. 19 Michael A. McNeil, Virginie E. Letschert, “Future Air Conditioning Energy Consumption in Developing Countries and What Can Be Done about it: The Potential of Efficiency in the Residential Sector” Maximilian Auffhammer, “Cooling China: The Weather Dependence of Air Conditioner Adoption.” 20 CDD: This ratio is defined as the product of the difference in the average daily temperature between a base temperature and the outside temperature, times the number of days in the cooling season. Chapter 5 | The air-conditioning market of the Maghreb: A look ahead | 45 Figure 37 | Review of household expenditure and air conditioner penetration in the residential sector in Tunisia, 1990–2014 13,000 40% Expenditure ($/household) Penetration rate (%) 12,000 35% 11,000 30% 10,000 25% 9,000 20% 8,000 15% 7,000 10% 6,000 5% 5,000 0% 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 Source: BM and STEG. In addition to the studies conducted at the international units with a power demand of 12,000 BTU/hr are level, STEG and ANME (Tunisia) have conducted most used (STEG 2013). studies and surveys of the air-conditioning market in •• The vast majority of residential customers select Tunisia, which offer sound bases for projections and their air conditioners without seeking advice from estimates of the increase in the stock of equipment. an expert in the field. The following data and trends can be identified: •• Individual air conditioners are present in all sectors, but are gradually becoming concentrated •• In the Tunisian residential sector, each customer in the residential sector. Based on data for Tunisia, has on average 1.4 air conditioners as compared it appears that the nonresidential use of individual to 3.3 air conditioners in the government sector air conditioners is declining. Hotels and corporate (STEG 2013)—an indication of the difference in offices are increasingly installing central air equipment ratios between the residential sector conditioning systems. and office buildings. •• The market saturation outlook varies considerably Forecasting the stock of air conditioners from one country to another. Bearing in mind the key parameters for the •• Penetration is significantly higher in urban areas. In development of the air-conditioning market and Morocco, for example, 93 percent of households the assumptions adopted, the procedure used to with air conditioners reside in urban areas. forecast the stock of air conditioners is summarized •• Out of a total stock of low- and medium-voltage in figure 38. air conditioners used in the residential sector, 46 | Energy-efficient air conditioning: A case study of the Maghreb Figure 38 | Methodology adopted for the identification of individual air conditioners Empirical approach mentioned above, linking the household equipment ratio with income and the number of cooling degree days Socioeconomic projections, Climatic conditions: Calculation 2015–30 of cooling degree days Trends for population Trends for household and the number income of households Assessment of penetration rates for individual air conditioners in the residential sector, 2015–30 Assumptions regarding residential Assumptions regarding the average and nonresidential shares, number of air conditioners 2015–30 per household Calculation of the stock of individual air conditioners installed in all sectors, 2015–30 Key assumptions used to calculate 5.1.2 ​ the stock of air conditioners Population and number of households Based on the population censuses for each country, and growth projections, the assumptions made are given in table 15. Table 15 | Population assumptions for Tunisia, Morocco, and Algeria YEAR COUNTRY PARAMETERS 2015 2020 2030 Algeria Population (thousand) 39,500 41,376 45,400 Households (thousand) 7,248 7,957 9,659 Morocco Population (thousand) 33,636 35,361 38,175 Households (thousand) 7,282 8,158 10,102 Tunisia Population (thousand) 11,106 11,693 12,250 Households (thousand) 2,776 3,118 3,854 Source: National population censuses and associated projections. Chapter 5 | The air-conditioning market of the Maghreb: A look ahead | 47 Residential and nonresidential shares years, whereas in Algeria, the penetration rate is only Individual air conditioners used in all sectors, both 13.8 percent (2008 RGPH) in the residential sector. residential and nonresidential, with split-type unit accounting for the largest share in the residential In Morocco, despite the high rate of penetration of sector. Much of the services sector, meanwhile, uses centralized air conditioning, particularly in the tourism centralized air conditioning. This has implications for sector, the market for individual air conditioners national market shares. For example, the tourism grew significantly between 2009 and 2011, then sector, which is more likely to adopt centralized stagnated somewhat from 2012 to 2014. The market air conditioning, is more developed in Tunisia and for individual air conditioners in Morocco is estimated Morocco than in Algeria. at 1.4 million units for the residential and services sectors, with a low equipment-to-household ratio In Tunisia, the residential share stood at around (9.2  percent nationally and 12.9  percent in urban 80 percent in 2013 and has been increasing more areas). See table 16 for estimates made despite data rapidly than the share in other sectors in recent constraints. Table 16 | Market share assumptions for residential and tertiary sectors YEARS COUNTRY SECTORAL DISTRIBUTION 2015 2020 2030 Tunisia Residential share (%) 80.6 81.6 83.6  Nonresidential share (%) 19.4 18.4 16.4  Algeria Residential share (%) 51 53 66  Nonresidential share (%) 49 43 34  Morocco Residential share (%) 40 46 56  Nonresidential share (%) 60 54 44  Source: Authors’ compilation of data from national surveys. Number of air conditioners per household Table 17 presents the assumptions considered for The number of air conditioners per household is an this ratio through 2030. important parameter in identifying the stock of air conditioners. In Tunisia, each household in 2013 Table 17 | Forcasted increase in the owned 1.4 air conditioners on average, a ratio that is number of air conditioners per house- hold higher than that identified in previous studies. NUMBER OF AIR CONDITIONERS COUNTRY We have adopted a slightly higher ratio in Algeria, PER HOUSEHOLD which saw a significant increase in imports of air 2015 2020 2030 conditioners in 2011 and 2012,21 mainly owing to an Tunisia 1.48 1.63 1.93 increase in household incomes. In Morocco, this ratio Algeria 1.62 1.72 1.92 is lower. Morocco 1.23 1.38 1.68 Source: Authors’ compilation of data from national surveys.   CNIS: Algerian National Customs Statistics and Computing Center. 21 48 | Energy-efficient air conditioning: A case study of the Maghreb Number of cooling degree days 5.1.3  Estimate of the stock of air To calculate the number of CDDs, we looked at conditioners in the residential sector meteorological data for 2013 and 2014 for cities with an identified meteorological station, as well as Penetration rate for air conditioners in the the population distribution in the country. Table 18 residential sector presents the number of CDDs for three countries. Based on the methodology adopted to identify the residential stock of air conditioners, which is Table 18 | Average cooling degree dependent on income and climate conditions, the days in three Maghreb countries, 2013 and 2014 penetration rates are shown in figure 39. COUNTRY CDDS Algeria 1,037 Morocco 1,035 Tunisia 1,433 Source: Authors’ compilation of data from national surveys. ​ orecasted penetration rate of air conditioners in the residential Figure 39 | F sector of three Maghreb countries, 2015–30 100% 91.5% 80% 84.5% 60% 49% 40.3% Tunisia Algeria Morocco 40% 37.2% 20% 9.3% 0% 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 Source: Authors’ compilation of data from national surveys. It appears that by 2030, the market for air air conditioners is calculated using the number conditioners in Tunisia and Algeria will be saturated of households and the average number of air and more mature, and will consequently be driven by conditioners per household. replacements and, to a lesser extent, increases in the number of air conditioners per household. Then, based on assumptions for the market distribution of individual air conditioners between Total stock of air conditioners in 5.1.4  the residential and nonresidential sectors, the total the residential sector stock of individual air conditioners for all sectors is calculated, as shown in figure 40. Based on the penetration rate for air conditioners in the residential sector, the stock of residential Chapter 5 | The air-conditioning market of the Maghreb: A look ahead | 49 Figure 40 | Anticipated change in the stock of air conditioners in three Maghreb countries, 2015–30 50,000 14,661 40,000 Morocco 1,000 units Algeria 30,000 Tunisia 46,562 23,757 20,000 10,000 12,652 8,144 0 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 Source: Authors’ compilation of data from national surveys. The cumulative stock increases from 12.6 million corresponding to an average annual growth rate of units in 2015 to around 46.5 million units in 2030, around 10 percent. 5.2  Energy impact of air conditioning The environmental and energy impact is based on •• To characterize the stock, several studies refer scenarios that use the efficiency of the existing stock to a “proxy” air conditioner that represents the as a reference value, and forecast its development average stock in terms of power demand and through 2030. efficiency. •• In the absence of testing laboratories to certify the International studies22 refer to weighted average efficiency of air conditioners (with the exception of energy efficiency ratios (EERs) in heating and cooling the laboratory in Tunisia), and given the “circulation” modes to assess the impact of policies implemented of air conditioners between countries in the region to improve the efficiency of the stock and reduce via formal and informal channels, it is assumed the impact of individual and/or centralized air that efficiency levels are similar across the region. conditioning. A number of assumptions have been adopted to construct the scenarios: Based on the surveys conducted by ANME on individual air conditioners in 2006 and by STEG in •• The energy efficiency of air conditioners will 2013, the weighted average EERs were calculated in continue to improve throughout the world, but at 2006 and 2013 for a “proxy” individual air conditioner different rates (because, regardless of the policies with a unit power demand of 12,000 BTU/hr. The implemented, technology improves). data are summarized in table 19. 22   Cooling Benchmarking Study, CLASP, June 2012; Residential Air Conditioners, 4E Benchmarking Document, IEA, February 2011. 50 | Energy-efficient air conditioning: A case study of the Maghreb Table 19 | Energy efficiency of air conditioners in Tunisia, 2006 and 2013 SURVEY YEAR 2006 2013 Average energy efficiency ratio (EER) 2.46 (a) 2.64 (b) Average annual growth rate (AAGR) 1% Change in EER 2.64 (2013) 3.1 (2030) Source: (a) ANME; (b) STEG. The scenarios adopted are summarized in table 20. Table 20 | Air-conditioning energy efficiency scenarios AVERAGE AVERAGE SCENARIO NAME AAGR COMMENTS EER IN 2015 EER IN 2030 Business as usual 2.69 3.13 1% The energy efficiency of the stock in (BaU) scenario Tunisia ranges around class 6 owing in particular to the informal market. In this scenario, the energy efficiency in 2015 is estimated as class 5. EE scenario 2.69 3.9 2.5% Scenario close to the current state of the European stock. Source: Authors’ compilation of data from national surveys. The development of the air-conditioning market STEG surveys provide some information on the in the Maghreb region has a significant impact on energy consumed by an individual air conditioner, the electricity sector: technical, economic, and and this is confirmed by other studies23 (350 hours of environmental. operation in cooling mode per year). 5.2.1  Impact on consumption The STEG estimates for low-voltage customers are summarized in table 21. Calculating the energy consumed by air conditioners requires knowing the average time that they operate in cooling mode. Table 21 | Air-conditioning operation data assumptions OTHER WEIGHTED RESIDENTIAL INDUSTRIAL GOVERNMENT COMMERCIAL SERVICES AVERAGE Average number of 1.4 1.6 3.3 2 2.1 1.6 air conditioners Average number of 63 73 44 72 71 65 days of operation Average number of 4.8 6.3 3.7 5.8 5 5 Values hours of operation adopted Source: Authors’ compilation of data from national surveys.   Anette Michel, Eric Bush, Jürg Nipkow, Conrad U. Brunner, Hu Bo, Energy Efficient Room Air Conditioners—Best Available Technology 23 (BAT). Chapter 5 | The air-conditioning market of the Maghreb: A look ahead | 51 Final electricity savings annual final energy savings in the business as usual Given the assumptions adopted (stock per country, (BaU) and energy efficiency (EE) scenarios are energy class, and operating time), the cumulative presented in figure 41. Figure 41 | Expected electricity consumption for residential air conditioning under the BaU and EE scenarios 21,000 17,008 17,000 GWh 3.4 TWh 13,672 2.6 TWh 13,000 13,634 11,094 9,000 BaU scenario EE scenario 5,000 2015 2017 2019 2021 2023 2025 2027 2029 Source: Authors’ compilation of data from national surveys. The final electrical energy savings increase from 2.6 total 21.5 TWh for the three countries as shown in TWh/year in 2025 to 3.4 TWh/year in 2030. The figure 42. cumulative savings during the period 2015–30 would Figure 42 | Expected cumulative final energy savings for individual air conditioners, 2015–30 3,865 20,000 15,000 5,324 Tunisia Morocco Algeria GWh 10,000 12,269 5,000 0 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 Source: Authors’ compilation of data from national surveys. 52 | Energy-efficient air conditioning: A case study of the Maghreb Primary energy savings •• Morocco is an exception to this rule, since imports To calculate the primary energy savings, assumptions of electricity from Spain are significant during this were adopted regarding the specific energy period of the year. consumption of the electricity generation stock. •• Account was taken of the current power generation mix, without developing scenarios on These assumptions are based on the following changes to this mix. considerations: In addition to this information, average losses by •• The specific consumption rates used, where data the power grid in each country were estimated on are available, is that of the electricity generation the basis of the annual reports of national electricity stock from June to September, when air companies. These data are summarized in table 22. conditioners are operated in cooling mode and the recourse to gas turbines is intensive. Table 22 | Assumptions regarding specific consumption and grid losses in three Maghreb countries SPECIFIC CONSUMPTION BY AVERAGE ELECTRICITY TRANSPORT AND COUNTRY ELECTRICITY GENERATION (TOE/GWH) DISTRIBUTION LOSSES (%) Algeria 240 18 Morocco 195 13.6 Tunisia 235 12 Source: Authors’ compilation of data from national electricity companies. The savings in 2030 are expected to total 901 ktoe for the three countries, as shown in figure 43. Figure 43 | Expected annual primary energy savings for air conditioners under the BaU and EE scenarios, 2015–2030 4,545 4,400 901 ktoe 3,400 3,644 ktoe/year 2,400 Annual PE consumption, BaU scenario Annual PE consumption, EE scenario 1,400 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 Source: Authors’ compilation of data from national surveys. Chapter 5 | The air-conditioning market of the Maghreb: A look ahead | 53 Cumulative primary energy savings during the period for Algeria owing to the size of its stock of air 2015–30 are estimated at around 5.6 mtoe for the conditioners. three countries. The greatest savings are forecasted Figure 44 | Expected cumulative primary energy savings for air conditioners under the EE scenario, 2015–30 7,000 6,000 1,032 5,000 Tunisia Morocco Algeria 1,204 4,000 ktoe 3,000 2,000 3,591 1,000 0 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 Source: Authors’ compilation of data from national surveys. Impact on maximum power 5.2.2  It should be noted that the installed capacity of demand individual air conditioners operating during peak periods is significantly lower than the contribution of In light of the projections described above and overall the whole stock to maximum power demand (MPD). increase in residential air conditioners, it is possible All air conditioners cannot in fact be on at the same to estimate the installed capacity for residential air time: there will always be some that are not in use conditioning in three countries (excluding Libya) in (see figure 45). 2013. Installed capacity is capped at 95 percent of all air-conditioning units (5 percent represents units either not in use or at the end of their useful life). Figure 45 | Installed capacity of air conditioners and percentage of maximum power demand, 2013 12,000 100% 10,000 77% 80% 69% 8,000 60% 6,000 MW 10,464 40% 4,000 8,095 31% 5,580 20% 2,000 3,144 1,732 2,156 0 0% Algeria Morocco Tunisia Installed capacity (MW) MPD (MW) Share of MPD (%) Source: Authors’ compilation of data from national surveys. 54 | Energy-efficient air conditioning: A case study of the Maghreb Although electricity consumption in air conditioning Peak demand is described as “diversified,” since not remains relatively low compared to other uses, all units are in use at the same time. The diversity especially in the residential sector, during heat factors at the hottest times of the year can vary waves the use of air conditioning generates peak between 60 percent and 80 percent. The latter figure load problems that are difficult to predict and was used to assess the impact of air conditioning on manage. In 2013, air conditioning was estimated peak load and the reduction in load if a policy were to be 40 percent of the peak load in Algeria, which adopted to upgrade the stock of air conditioners over is far from negligible. Energy consumption by the period 2015–30. If an energy efficiency scenario individual air conditioners must be added to that of were indeed implemented, by 2030 installed capacity central air-conditioning in the various sectors of the would fall by 8 GW, that is, almost twice the total economy. installed capacity in Tunisia. Figure 46 | Expected change in installed capacity under BaU and EE scenarios in the Maghreb, 2015–30 45 42 40 8 GW GW 35 34 30 25 20 BaU Scenario 15 EE Scenario 10 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 Source: Authors’ compilation of data from national surveys. 2030 5.3 ​Economic impact The economic impact of energy efficiency applied to Avoided investment in capacity 5.3.1 ​ air-conditioning use would be in a number of areas: Based on average investment costs per technology, •• Avoided investment in new power plants as summarized in table 23, an average unit cost •• Reduction in consumer bills of $0.7 million/MW has been adopted. This figure •• Reduction in national energy bills was chosen because most of the new power plants •• Impact on the magnitude of public subsidies to built to cope with peak load will be industrial gas the electricity sector turbines. The first two areas of impact are described in detail below. Chapter 5 | The air-conditioning market of the Maghreb: A look ahead | 55 Table 23 | Projected unit costs of electricity plants TECHNOLOGY GAS TURBINE STEAM TURBINE COMBINED CYCLE Investment in millions dollars/MW 0.5–0.75 0.75–0.9 1–1.25 Source: Authors’ compilation. In light of expected savings and improved figure 47 shows expected savings in millions of performance in the current stock of air conditioners, dollars (2014). Figure 47 | Expected cumulative avoided investments in capacity production, 2015–30 7,000 6,000 1,017 5,000 Tunisia Morocco Algeria Millions US $ 2015 1,831 4,000 3,000 2,000 2,966 1,000 0 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 Source: Authors’ compilation of data from national surveys. To illustrate the magnitude of the costs avoided if improved, figure 48 shows the capacity production the energy efficiency of individual air conditioners is costs avoided per new unit installed. Figure 48 | Expected avoided capacity investment costs per scenario and per new air conditioner installed, 2016–30 800 700 662 US $2014/Air conditioner 600 634 562 585 500 503 520 400 405 286 300 200 234 180 100 131 100 0 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 Investment per new air conditioner Investment per new air conditioner Gains per new air conditioner (BaU scenario) (EE scenario) Source: Authors’ compilation of data from national surveys. 56 | Energy-efficient air conditioning: A case study of the Maghreb Each new air conditioner installed will entail significant but not greatly, since electricity is heavily subsidized investment in electricity production capacity, in the region. Indeed, individual air conditioning in the whether the unit is energy efficient or not. However, region is characterized by: implementing the energy efficiency scenario will ease the burden on public finances. –– Intermittent operation (around 350 hours per year) –– Subsidized prices, which reduce the cost of Starting with savings per unit of around $100 in electricity for households 2016, it is possible to achieve average savings of approximately $234 (in 2014 figures) in 2030. To analyze the impact of energy efficiency improvements on consumer bills, we examined the These figures show the extent of the economic price scales for electricity in each country. Since benefits to be gained by upgrading the regional charges in Algeria and Libya are based on purchasing stock of air conditioners. Governments are in fact power parity, electricity is generously subsidized the primary beneficiaries; air conditioning represents in those countries. In Morocco and Tunisia, while such a small share of overall household budgets charges are higher, they are still subsidized and do that there is no incentive for households either to not reflect real production costs. purchase more energy-efficient units or to keep energy consumption low. 5.3.2  Impact on consumers Improving the energy efficiency of the stock of air conditioners would reduce household energy bills, Figure 49 | Average price per kWh (excluding taxes), by consumption block, 2014 0.500 0.465 0.400 0.357 Algeria Morocco Tunisia Libya $ppp 2013/KWh 0.300 0.262 0.216 0.244 0.200 0.201 0.121 0.100 0.052 0.029 0.000 0-50 51-100 101-125 126-150 151-200 201-250 251-300 301-350 351-400 401-500 >500 Source: BM, STEG, ONEE, GECOL, SONELGAZ. Chapter 5 | The air-conditioning market of the Maghreb: A look ahead | 57 To simulate the financial impact on consumer bills, our calculations are based on the assumptions listed in table 24. Table 24 | Electricity rates in Algeria, Morocco, and Tunisia PRICE PER KWH AVERAGE ANNUAL CONSUMPTION BLOCK INCLUDING ALL TAXES 2015 GROWTH RATE (MONTHLY) (IN NATIONAL CURRENCY) Algeria DA/kWh 3.2 Morocco DH/kWh 1.2 7% 200–250 kWh/month Tunisia TD/kWh 0.19 Source: Authors’ compilation of data from national surveys. Figure 50 shows savings on annual household bills. Figure 50 | Expected annual savings on electricity bills per household for three Maghreb countries 80 70 60 68.2 US $ 2014 Algeria Morocco Tunisia 50 38.9 40 30 16.7 0.15-0.66 20 24.5 10 6.5 0 4.8 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 Source: Authors’ compilation of data from national surveys. Set against the price of air conditioners, which is are faced with the challenge posed by the huge stagnating, the financial savings on household bills increase in the use of air conditioning and must are not sufficient to encourage investment in more therefore commit considerable funds toward investing energy-efficient units. Hence, it is governments that in additional electricity generation capacity. 5.4  Environmental impact CO2 emissions avoided 5.4.1 ​ Based on reports submitted by national power companies and specialized agencies (ANME, Reducing the consumption of electricity by air APRUE, and ADEREE), table 25 shows emission conditioners leads to curbing CO2 emissions from factors for the electricity sectors in three Maghreb electricity generation. The level of CO2 emissions is countries. determined by the electricity generation mix. 58 | Energy-efficient air conditioning: A case study of the Maghreb Table 25 | Direct CO2 emissions from electricity generation COUNTRY ALGERIA MOROCCO TUNISIA Average emissions factor for electricity generation (TCO2/GWh) 600 695 550 Source: IEA 2012. The cumulative annual emissions avoided in Algeria, Morocco, and Tunisia are shown in figures 51 and 52. Figure 51 | Expected CO2 emissions from air-conditioning use under BaU and EE scenarios 11,000 2 10,565 ~2.1 MTeCO 9,000 8,469 kTeCO2 /yr 7,000 5,000 BaU scenario EE scenario 3,000 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 Source: Authors’ compilation of data from national surveys. Figure 52 | Expected CO2 emissions avoided, 2015–30 14,000 2,126 12,000 10,000 3,700 kTeCO2 8,000 Tunisia Morocco Algeria 6,000 4,000 7,361 2,000 0 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 Source: Authors’ compilation of data from national surveys. Chapter 5 | The air-conditioning market of the Maghreb: A look ahead | 59 Refrigerant gas leakage 5.4.2 ​ In calculating the environmental impact of air- conditioning use, the impact of refrigerants, which Such leakages can occur at four stages in the life of have an effect on the ozone layer and global warming, an airconditioner, as shown figure 53. was taken into account. There are two refrigerants widely used for individual Figure 53 | Refrigerant gas leakage air conditioners (table 26). cycle in air conditioners Production Greenhouse gas emission Charge Recovery Operation End of life Source: Authors’ compilation of data from national surveys. Table 26 | Main refrigerants used for individual air conditioners GLOBAL WARMING REFRIGERANT CATEGORY EXTENT OF USE POTENTIAL (GWP) R22 HCFC 1,810 Very widely used in developing countries R410A HFC 1,924 Increasingly used in developing countries Source: Authors’ compilation of data from national surveys. Two points should be noted in relation to the Maghreb: Recently published research24 provides extremely valuable data on greenhouse gas emissions in the •• R22 is the refrigerant that is preponderantly used air-conditioning sector. The values in table 27 are in the Maghreb. used to calculate the quantity of emissions caused •• There is no organized system in place for collecting by leakage over the life span of an air conditioner. and disposing of refrigerants when air conditioners have reached the end of their useful life. Table 27 | Projected leakage factors for refrigerants in individual air conditioners PARAMETER DEFINITION QUANTITY UNIT M Quantity of refrigerant per kW of cooling power 0.323 Kg/kW b Rate of loss while charging air conditioner with 1.63 % refrigerant c Rate of loss during operation of air conditioner 0.3 % r Rate of collection/disposal of old air conditioners 0 % a Average life of an air conditioner 15 years Source: Surveys of households, manufacturers, and service companies.   Z. Linjia, Z. Weihua, Y. Zengwei, “Reduction of Potential Greenhouse Gas Emissions of Room Air-Conditioner Refrigerants: A Life 24 Cycle Carbon Footprint Analysis.” 60 | Energy-efficient air conditioning: A case study of the Maghreb This study looks only at emissions caused by leaks When we examine annual end-of-life (EOL) emissions, that occur while charging the refrigerant and during the results (shown in yellow in figure 54) highlight the operation of air-conditioning units whose average life urgent need to initiate a policy for the collection and span is estimated to be 15 years. We assume the use disposal of R22 (used in 95 percent of the stock of R22 in 95 percent of the stock of air conditioners between 2000 and 2015), which will pose much in 2015, with this figure falling to 80 percent by 2030. more serious environmental problems than the leaks occurring during the life span of the air conditioners if The problem of collection/disposal of refrigerants no organized disposal plan is put in place. from old units is also a serious one and affects the refrigeration/air-conditioning sector in its entirety. Figure 54 | Expected cumulative emissions caused by R22 leakages, 2016–30 32,000 28,000 24,000 R22 EOL emissions in k TeCO2-eq 20,000 absence of collection/ disposal plan 16,000 24.7 MTeCO2eq 12,000 8,000 4,000 3.2 MTeCO2eq 0 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 R22 emission during charging R22 Emissions during operation R22 EOL emissions of air conditioner of air conditioners Source: Authors’ compilation of data from national surveys. 5.5 Effect of climate change on the need for air conditioning The impact of air-conditioning use will increase in in temperatures will have repercussions on energy parallel with the proliferation of buildings equipped with demand and supply, and will pose challenges to air conditioners and, in the long run, with the increase nations’ ability to satisfy new needs and to generate in temperatures in the region owing to global warming. and deliver energy reliably and safely. Because of the The Mediterranean region, and more particularly the rise in temperatures, there will be reduced need for Maghreb, is one of the “Hot Spots” identified by the heating and increased need for air conditioning. Intergovernmental panel on Climate Change (IPCC). The impact of global warming on the region has Several international studies have stressed the link been estimated using various scenarios. The between a projected rise in global temperatures most plausible, selected for this study, are listed and the need for heating and cooling. The increase in table 28. Chapter 5 | The air-conditioning market of the Maghreb: A look ahead | 61 Table 28 | Plausible scenarios for temperature increase in the Maghreb countries owing to climate change COUNTRY ALGERIA MOROCCO TUNISIA Average 1°C 1.1°C 0.8 °C temperature Source: Climate Change in Source: Environment Source: HadCM3-A2 increase in Algeria: Vulnerability and and Climate Change in Model (A2 scenario) for 2030 Strategy of Mitigation and Morocco—Diagnosis and Tunisia, G12 study on Adaptation. Future Prospects: Konrad- the vulnerability of the Authors: F. Sahnounea, M. Adenauer-Stiftung, 2012. agricultural sector in 2005. Belhamel, M. Zelmatb, and Authors: Ellinor Zeino- R. Kerbachic. Mahmalat and Abdelhadi Bennis. The parameter most commonly used to quantify the needs, which are proportionate to the CDDs. The need for air conditioning is CDDs. A rise in outside impact on the CDDs of a rise in temperature around temperature will contribute to increased cooling the year 2030 (baseline: 18°C) is shown in figure 55. Figure 55 | Impact of global warming on air-conditioning needs around 2030 1,600 20% °C. day (Baseline = 18°C) 15.9% 1,200 15% 14.2% 800 10% 8.4% 400 5% 1,037 1,053 1,433 0 0% 1 2 3 Average CDD (2013-2014) Increase in CDD (%) Source: Authors’ compilation of data from national surveys. 62 | Energy-efficient air conditioning: A case study of the Maghreb 6 Government policies and measures 6.1 Measures adopted in the countries of the region The measures discussed here have an effect both These measures target the air-conditioning sector on energy supply and demand, consisting of cross- either directly—via standards, certification, and cutting regulatory measures or energy efficiency testing—or indirectly, via energy efficiency programs programs on the demand side, and of the rollout of or the rollout of renewable energies. renewable energies on the supply side. Government policies and measures | 63 Table 29 | Proposed measures to improve energy efficiency in the air-conditioning sector Target of the Description of the Country Impact Remarks measure measure Algeria Morocco Tunisia Labeling √ √ √ Labeling of air conditioners and household appliances in the three countries Minimum X →  X →  √ Ban on sales of air performance conditioners beyond a requirements specific performance class Reduction Testing and X →  X →  √ Performance testing of energy measurements laboratories for air demand conditioners with a capacity of ≤12 kW in Tunisia Thermal regulation √ √ √ Thermal regulation of of buildings new buildings in the three countries Specific program X →  X √ PROM-ISOL program for existing in Tunisia: subsidies for buildings insulation of roofs in new and existing buildings Rollout of √ √ √ Design of programs and renewable setting of targets to Diversification energies incorporate renewables into of energy the energy mix supply Specific programs X X →  √ PROSOL-ELEC: subsidies for solar roofs and central units Indirect Direct Impact Impact Source: Authors’ compilation of data from national surveys. 6.2 Main barriers to improving the energy efficiency of air conditioning in the Maghreb countries There are several barriers of various types, operating •• Inadequacy of tariffs as an instrument to incentivize at various levels, that are blocking the establishment the use of more energy efficient appliances of a proactive policy to move the energy market •• Lack of regulatory harmonization among countries toward greater efficiency and to minimize its adverse of the region energy, economic, and environmental impact. These •• Institutional and organizational weaknesses barriers are linked to a number of factors such as: 64 | Energy-efficient air conditioning: A case study of the Maghreb •• Inadequate capacity of the various links in the companies should charge their customers subject chain comprising the air-conditioning sector to some variation in each country. Electricity prices •• Lack of information to and communication with are least subsidized in Morocco, followed by Tunisia; consumers Algeria and Libya (which are major hydrocarbon producers) are heavily subsidized, especially in the 6.2.1 INADEQUACY OF TARIFFS AS residential sector. AN INSTRUMENT It is generally accepted that electricity pricing is an In the four countries, electricity prices are subsidized effective tool for encouraging consumers to be and do not reflect the real prices that national power more economical in their use of electricity and to opt for more energy-efficient appliances. However, this rule does not appear to be entirely borne out Box 1: Consumer and state trade- in the case of individual air conditioners used in offs: The case of Tunisia households in the Maghreb, since air-conditioning use is so infrequent (approximately 350 hours/year). Projections Air conditioners are typically switched on for a few –– Price of a class 7; 1,200 BTU air conditioner hours each day during the hottest time of the year. on the parallel market: approx. TD 450 Annual consumption remains low and its impact on –– Price of a class 2; 1,200 BTU air conditioner household expenditure is slight, and this would be on the official market: approx. TD 850 the case even if electricity prices reflected reality. –– Annual electricity savings due to switch Hence, the choice of air conditioner tends to be from class 7 to class 2 air conditioner: 188 dictated by the initial purchase price rather than kWh/year the cost of consumption spread over time. This is –– Capacity gain from the switch: approx. 532 particularly the case where households have little watts (W). disposable income and where there is a flourishing –– Cost per kW of installed capacity: TD parallel market offering air conditioners for extremely 1,500/kW low prices. –– Electricity rates: approx. TD 0.230/kW, i.e., approx. C$14 (corresponding to the consumption bracket between 300 and Energy-efficient air conditioners offer different 500 kWh/month). incentives to governments and to consumers. Energy Outcomes efficiency is not particularly lucrative for consumers, but it is extremely profitable to governments in light of –– Savings on investment in electricity- generating capacity: TD 798 the avoided investment costs in peak load electricity generation, as shown in the Tunisian example (box 1). –– Net present value (NPV) of savings to the consumer: TD 390 Trade-off mechanisms could therefore be devised to –– NPV of savings to the State including savings on fuel subsidies and avoided share the expected gains between the government investment costs for capacity generation and consumers to create a win-win situation through to cope with peak load: TD 995 the use of more energy-efficient air conditioners. These –– Payback period for consumers switching mechanisms could take the form of tax incentives for from one air conditioner to a more energy- energy-efficient air conditioners, or of direct subsidies efficient one: 10 years to facilitate their purchase. From the political point of –– Payback period for the government if it view, the second option would be more difficult to pays the difference between the two types implement, since it would imply direct costs to the of air conditioners: 4 years budget as well as the establishment of sophisticated organizational and financial mechanisms, which Government policies and measures | 65 would be expensive to manage. Moreover, there is 6.2.3 INSTITUTIONAL AND a risk that energy consumption could escalate out of ORGANIZATIONAL control if consumers were further encouraged to buy WEAKNESSES air conditioners. The first option would therefore be more appropriate, since promoting energy-efficient Many traders, particularly informal importers, are air conditioners would reduce the scope of the active on the air-conditioning market to the detriment parallel market by reducing the price differential. of quality. These informal importers are encouraged by the inadequate controls on quality and quantity 6.2.2 REGULATORY HARMONIZATION at the borders. Once on the market, there are few BETWEEN THE COUNTRIES OF checks at points of sale to verify either performance THE REGION or consumer guarantees. The main challenge to improving energy efficiency of Moreover, the main actors in the sector are often too air conditioners is a lack of a harmonized regulatory poorly organized to be able to structure the market framework in the Maghreb countries, specifically in and raise overall standards. In many countries two areas. and regions, groups consisting of professional organizations, importers, and even power Regulation of air conditioners from an energy companies are set up to protect the market and to standpoint confer on key aspects of the sector (computation Existing regulations on the energy efficiency of air codes, specifications, certification of installers, tax conditioners are not harmonized with respect to adjustments, etc.). Such groups play a vital role in reference standards, testing procedures, or scope advising, training, and supporting authorities when of application. The example of Tunisia, where the the latter are called upon to take decisions on parallel market in goods from neighboring countries regulatory measures and incentive mechanisms. holds sway, clearly demonstrates the repercussions of this lack of harmonization on the energy 6.2.4 INADEQUATE CAPACITY AT performance of the national air-conditioning market. ALL LEVELS OF THE AIR- It should also be noted that the regulations are CONDITIONING SECTOR either of recent vintage or are not enforced, and that the authorities have neither adopted the necessary Capacity building is necessary for all levels of the air- implementing measures nor the corresponding conditioning sector, namely: enforcement rules. •• Customs authorities Taxation •• Importers and manufacturers Disparities in the various taxes and other charges •• Technical and administrative departments on air conditioners have created significant price responsible for oversight, monitoring, and differentials. Given falling prices (a trend exacerbated management of programs by imports from Asia), price differentials owing to •• Installers and techniciens taxation, and the unrestricted movement of goods •• Training centers and other similar establishments across the region, the informal market is flourishing to an alarming degree. This development is to the To ensure a better grasp of technical specifications, detriment of certified, high-quality goods. computation tools, and installation methods, there 66 | Energy-efficient air conditioning: A case study of the Maghreb is need for training and capacity building, which will and is heavily dependent on consumer choice and evolve in parallel with the needs of users, technology advice from retailers. advances, and compliance with regulatory provisions. A lack of information and awareness on the part of 6.2.5 INFORMATION AND both sector actors and users results in inefficient COMMUNICATION decisions. The consequences (over-sized units, poor energy performance, etc.) are further aggravated by The use of air conditioners takes many and varied the lack of actual product warrantees and by poor forms, is subject to few if any technical prescriptions, after-sales service (where it exists at all). Government policies and measures | 67 7 Recommendations— transforming the air-conditioning market in the Maghreb: the way forward The challenges posed by increased air-conditioning require measures to be adopted at the national level. use in the Maghreb countries have an impact far However, the effectiveness of such measures will beyond the air-conditioning market per se. Certain be limited in the absence of a regional vision, given obstacles affect many sectors, and the challenges concrete form by joint concerted action on the part are largely of a regional rather than a national nature. of the Maghreb countries based on an ambitious but The shift toward greater energy efficiency does realistic road map. 68 | Energy-Efficient Air Conditioning: A Case Study of the Maghreb The major objectives underpinning our recommendations •• To promote cooperation among the countries are as follows: of the region so that experience can be pooled and joint R&D programs focusing on energy •• To rationalize energy demand for air conditioning efficiency in the air-conditioning sector can be by optimizing energy use and improving the quality established. of service to consumers, so as to limit the need to invest in new electricity generation capacity in the To achieve these objectives, the Maghreb countries face of a higher peak load due to this demand. should design programs and adopt measures at •• To standardize the air conditioner market across the national level, but within a framework of regional the region in the long term by harmonizing cooperation, to exploit synergies among the countries energy performance, energy certification, and (shared infrastructure, exchange of expertise, etc.). environmental certification standards; tax policies; In the long run, this should allow them to harmonize and border controls so as to avoid the emergence national regulations on energy performance and of parallel markets and limit their negative effects on taxation of air conditioners and thus avoid the adverse the energy quality of air conditioners offered for sale. effects of parallel markets. 7.1 Recommended measures 7.1.1 REGULATORY MEASURES The recommended measures emerged mainly from a regional workshop on energy efficiency in the air- The recommended regulatory measures are as conditioning sector held in Tunis on February 18 and follows: 19, 2015, under the auspices of the Tunisian Ministry of Industry, Energy, and Mining, and with the support 1. Accelerate the process of drafting and of STEG, ANME, and the Centre technique des implementing regulations on air conditioners industries mécaniques et électriques (CETIME). The in those countries in the region where such workshop participants included electricity companies, regulations do not yet exist. More specifically: energy conservation agencies, and the World Bank, –– Establish and implement an energy in partnership with the European Union and ESMAP, classification and labeling system for air and the Regional Center for Renewable Energy and conditioners and introduce a requirement Energy Efficiency (RCREEE) (the main bodies involved to display information on energy in the sector in the four Maghreb countries). It goes performance. without saying that these recommendations should –– Introduce minimum performance standards be seen as a first step in the direction of cooperation for air conditioners offered for sale based on among the Maghreb countries in this area. Further a rolling calendar of increasingly stringent work needs to be done in the form of more in-depth requirements. joint analysis and discussion. The combination of these two measures should progressively push the market in the The actions to be undertaken cover regulatory, direction of increased energy efficiency as shown in institutional, technical, and cross-cutting measures figure 56. pertaining to communication and capacity building. Recommendations—transforming the air-conditioning market in the Maghreb: the way forward | 69 Figure 56 | Effects of labeling and technical standards on the electrical appliance market After Demand stimulation: Market shares labeling, financial Before incentives Technological Minimum energy innovation (R&D) performance threshold Most energy-efficient Least energy-efficient appliances appliances Source: La Francophonie—Institute for Energy and the Environment (IEEF). 2. Move progressively toward unified regulations for 5. Progressively harmonize taxation policies for air all the countries of the region by means of gradual conditioners across the region so as to avoid harmonization of technical standards and testing massive, unrestricted influx of the least-energy- methods based on best international practices, efficient air conditioners from one country to particularly as applied in the European Union, another. which has a long experience with communal directives in this field. 7.1.2 TECHNICAL MEASURES 3. Put in place the supporting instruments necessary Recommended technical measures include: for enforcement of laws on certification and standardization of appliances, such as: 6. Providing electricity companies in the region with •• Effective oversight procedures to monitor the necessary simulation tools and methods implementation of the regulations in each to enable better forecasting and management country. of the technical and economic impact of air •• Establishment of testing and inspection conditioning on the energy sector. laboratories. 7. In the medium and long term, increasing the •• Provision of consumer advice and use of more effective alternative air-conditioning awareness-raising services, mainly by the technologies, such as district cooling networks, energy conservation agencies and electricity air conditioning using natural gas, cold storage, companies, to assist consumers in the choice heat pumps, solar air conditioning, etc. of air conditioners. 8. Developing technical energy efficiency solutions 4. Establish taxation policies that promote energy for buildings to reduce air-conditioning needs. efficiency in the air-conditioning sector across This implies both thermal regulation measures the region. for new and existing buildings through thermal 70 | Energy-Efficient Air Conditioning: A Case Study of the Maghreb rehabilitation programs (roof insulation, envelope infrastructure (for example, the laboratory in insulation, etc.). Tunisia). 9. Developing appropriate alternative responses –– Harmonization of regulations on air conditioners. to satisfy peak demand generated by the –– Cooperation among electricity companies huge expansion in air-conditioning use, such on methods and approaches to forecasting as promoting the use of photovoltaic solar and managing electricity demand and the roofs, where maximum electricity production impact of air conditioning on peak demand. coincides with peak demand for air conditioning. –– Promotion of joint R&D programs in the field The experience of Tunisia with the Prosol-Elec of energy efficiency in the air-conditioning financing mechanism could be a model in this sector, possibly even across the entire area. In the medium and long term, it would also household appliance sector. be useful to explore solutions such as smart grids –– Exchange of experience, expertise, and for the management of air-conditioning demand. information about the development of 10. Promoting R&D in the region to harness national air-conditioning markets. technological innovation in support of developing MEDENER could host this mechanism. energy efficiency. R&D projects should be given priority by regional cooperation programs to 14. Reinforce customs inspections to stem the optimize resources and exploit synergies among adverse effects of porous borders and prevent research and university laboratories, not only the countries of the region from being overrun by within the Maghreb but also within the context of parallel markets in air conditioners that are often a broader Euro-Mediterranean vision. of poor quality. 11. Establishing technical assistance programs for 15. In the short term, establish a task force (Air local air conditioner manufacturing and assembly Conditioning Task Force: TFC) supported by companies in the region,25 to provide support international donors to work on joint issues as they retool to comply with the new energy and urgent measures that need to be taken efficiency requirements for air conditioners. collectively in the region. The role of the TFC would be to examine the feasibility of projects, 7.1.3 INSTITUTIONAL MEASURES rank them in order of priority, and launch effective implementation of the road map 12. Establishing and managing databases on the by making practical proposals to decision air-conditioning market in each country, in makers. The mission statement for this task cooperation with manufacturers, suppliers, and force and its schedule of activities will be distributors, thus constituting a monitoring system presented later. to track key indicators relevant to air conditioning. 13. Establishing an institutional mechanism for 7.1.4 CROSS-CUTTING MEASURES regional cooperation in areas that are key to energy efficiency in the air-conditioning sector, 16. Reinforce training programs for all the trades/ specifically: professions in the region involved in the air- –– Harmonization of norms, standards, and conditioning value chain: designers, technicians, methods for testing air conditioners. business people, and installers. –– Mutual recognition of testing laboratories and 17. Establish qualification/labeling systems for possibly even joint management of existing installers working in the region.   Particularly in Algeria and Tunisia where there is already significant local capacity. 25 Recommendations—transforming the air-conditioning market in the Maghreb: the way forward | 71 18. Carry out an in-depth study of the parallel market 21. Intensify efforts to provide information to, for air conditioners in the region and analyze the communicate with, and raise awareness among impact of taxation policies (charges and customs the various stakeholders, and in particular the duties) on the market. general public, about the importance of choosing 19. Improve knowledge of the air-conditioning energy-efficient air conditioners. Well-targeted markets and sectors in the region by means of campaigns should be organized at the national specific regular surveys. level using tried-and-tested communication tools 20. Establish a system for carrying out periodic and messages. household surveys on electrical appliance use along the lines of the STEG 5-yearly surveys initiated in 1984. 72 | Energy-Efficient Air Conditioning: A Case Study of the Maghreb 7.2  A road map Table 30 | Road map for implementation measures SHORT TERM MEDIUM TERM LONG TERM MEASURES 2016–20 2021–25 2026–30 Regulatory measures 1 Accelerate establishment and implementation of regulations on air conditioners in those countries in the region where they do not yet exist 2 Move progressively toward unified regulations for all the countries of the region via gradual harmonization of technical standards and testing methods 3 Put in place the supporting instruments necessary for enforcement of laws on certification and standardization of appliances 4 Establish taxation policies that promote energy efficiency in the air-conditioning sector across the region 5 Progressively harmonize taxation policies for air conditioners across the region Technical measures 6 Provide electricity companies in the region with the necessary simulation tools and methods to enable better management and forecasting of the technical and economic impact of air conditioning on the energy sector 7 Increase the use of more effective alternative air-conditioning technologies, such as district cooling networks, air conditioning using natural gas, cold storage, etc. 8 Develop technical solutions for energy-efficient buildings enabling air conditioner use to be limited from the very outset 9 Develop appropriate alternative responses to satisfy peak demand generated by the massive expansion of air- conditioning use, such as promoting the use of photovoltaic roofs, peak demand management, etc. 10 Promote R&D in the countries of the region so that technological innovation can contribute to energy efficiency 11 Establish technical assistance programs for local air conditioner manufacturing and assembly plants in the region (Continued) Recommendations—transforming the air-conditioning market in the Maghreb: the way forward | 73 Table 30 | Continued SHORT TERM MEDIUM TERM LONG TERM MEASURES 2016–20 2021–25 2026–30 Institutional measures 12 Establish and manage databases on air conditioning to act as monitoring systems tracking key indicators with respect to the sector 13 Establish an institutional mechanism for cooperation between the countries of the region in areas which are key to energy efficiency in the air-conditioning sector 14 Reinforce customs inspections to stem the adverse effects of porous borders and prevent the countries of the region from being invaded by parallel air conditioner markets 15 Establish a task force supported by international donors to work on joint issues and urgent measures that need to be taken collectively Cross-cutting measures 16 Reinforce training programs for all the trades/professions involved in the air- conditioning value chain 74 | Energy-Efficient Air Conditioning: A Case Study of the Maghreb 17 Establish qualification/labeling systems for installers working in the region 18 Carry out an in-depth study of the parallel markets for air conditioners in the region and analyze the impact of taxation policies on the market 19 Improve knowledge of the air-conditioning markets and sectors in the region by means of specific regular surveys 20 Establish a system for carrying out periodic household surveys on electrical appliance use along the lines of the STEG 5-yearly surveys initiated in 1984 21 Intensify efforts to provide information to, communicate with, and raise awareness among the various stakeholders, and in particular the general public, about the importance of choosing energy-efficient air conditioners Measure to be implemented at national level Measure to be implemented at regional level Source: Authors’ compilation of data from national surveys and regional workshop. 7.3 Indicators to measure, report on, and verify the extent of the market’s transformation The process of implementation and monitoring •• Level 1: Activity indicators requires a set of indicators and feedback procedures •• Level 2: Outcome indicators related to activities (reporting). Reports must present and analyze these •• Level 3: Effect and transformation indicators indicators, describe observed trends, and identify areas of success or failure. The aim of the process Transformation Structural outcomes Strategy indicators is to ensure that targets are met, with a focus on Long term effectiveness (compliance with objectives), efficiency (proper use of financial resources and a proper Operational Outcome balance between outcomes and resources deployed), outcomes indicators Action plan and the degree of impact on the targeted areas. Short term Activity The key objective of the action plan/program will be Action programs indicators to ensure that the stock of air conditioners is energy efficient. Performance should be measurable and To track the process of transformation, we propose verifiable and must correspond to specific targets to measurable and verifiable indicators, specific to each be met within a specified time frame. country, which form the basis of any measurement/ reporting/verification (MRV) process. The conceptual framework proposed for implementation and monitoring is an aggregate logical framework. The time frame, resources, and organizational As  shown in the illustration below, this structure methods are determined by each country in comprises three categories of variables corresponding consultation with national partners and public to three strategic decision-making levels and three time authorities. frames: Recommendations—transforming the air-conditioning market in the Maghreb: the way forward | 75 Table 31 | MRV indicators of market transformation MEASURABLE BODY ACTIVITIES DEFINITION UNIT FREQUENCY SOURCES INDICATORS RESPONSIBLE Descriptive study of Size of stock Volume of individual Total volume of sales Ministries Every 4 years Surveys current stock (formal air conditioner sales market) via formal channels Size of stock Volume of individual Total volume of sales Ministries Every 4 years Surveys (informal air conditioner sales market) via informal channels Determination Performance Average weighted kW cooling/ Ministries Every 2 years EC, SA, of energy of stock energy performance in kW electricity CUS performance (formal cooling mode (formal market) market) 76 | Energy-Efficient Air Conditioning: A Case Study of the Maghreb Performance Average weighted kW cooling/ Ministries Every 2 years EC, SA, of stock energy performance kW electricity CUS (informal in cooling mode market) (informal market) Capacity building Training of Training of installers, No. of installers/yr SA Every year SA, PO stakeholders designers, and retailers No. of designers/yr No. of retailers/yr Sales people/yr Table 31 | Continued MEASURABLE BODY ACTIVITIES DEFINITION UNIT FREQUENCY SOURCES INDICATORS RESPONSIBLE Awareness raising No. of No. of media • No. of media MT, SA Every year Stake- and communication campaigns campaigns (TV, campaigns holders and events internet, etc.) and • No. of other events (seminars, campaigns conferences, other events) DIRECT MEASURABLE DEFINITION UNIT BODY FREQUENCY SOURCES OUTCOMES/ INDICATORS RESPONSIBLE EFFECTS Improvement in Average Average performance kW cooling/ Ministries, TCB Every 4 years TCB energy performance performance in cooling mode kW electricity of existing stock of existing weighted by cooling stock capacity of stock of air conditioners EFFECTS OF MEASURABLE DEFINITION UNIT BODY FREQUENCY SOURCES TRANSFORMATION INDICATORS RESPONSIBLE Transformation of Rate of Ratio of average % Ministries Every 4 years TCB, CUS, energy performance achievement weighted performance SA, EC of existing stock of target of current stock to energy target performance performance Source: Authors’ compilation of data from national surveys and regional workshop. TCB: Testing and Certification Body; CUS: Customs; EC: Electricity Company, SA: Specialised agency, PO: Professional organisation. Recommendations—transforming the air-conditioning market in the Maghreb: the way forward | 77 7.4 A task force on air conditioning 7.4.1 OBJECTIVES AND MISSION 7.4.2 ORGANIZATION AND STATEMENT FOR A RESOURCES TASK FORCE ON AIR CONDITIONING For each country, the TFC shall be composed of representatives of the ministry responsible for It is proposed that a task force be established for energy, the national electricity company, an energy the Maghreb (Air Conditioning Task Force, or TFC) conservation agency, and the business sector. with the aim of supporting regional cooperation to limit the adverse effects of the rapid expansion of the If the purpose of the task force is to be achieved, air-conditioning market. it is vital that all representatives be fully committed and motivated and that they participate consistently The main responsibilities of the TFC shall be as in the work of the group. follows: It is proposed that the TFC be attached to MEDENER. •• To evaluate developments on the air-conditioning The TFC may be assisted on an ad hoc basis market across the region from the standpoint by experts, for example, in technical, economic, of energy and economic aspects, prospects financial, regulatory, and institutional matters. for future development, and the technical and MEDENER will be able to provide technical and economic impact on the electricity sector. financial support within the framework of the Euro- •• To identify and prioritize measures to be taken Mediterranean Platform for Renewable Energy and collectively by four Maghreb countries26 to Energy Efficiency, which is coordinated by the Union promote energy efficiency in the individual air- for the Mediterranean in partnership with RCREEE conditioning sector. and the Mediterranean Energy Observatory (OME). •• On the basis of these measures, to formulate a 7.4.3 ACTIVITIES, DELIVERABLES, regional directive to be submitted to the decision AND PLANNING makers in the four countries. •• To make detailed proposals for institutional, The final purpose of the TFC is to draft a regional regulatory, and financial mechanisms for the directive comprising the following elements: implementation of the provisions of the directive.   Until the situation in Libya is stable, the participating countries would be Algeria, Tunisia, and Morocco. 26 78 | Energy-Efficient Air Conditioning: A Case Study of the Maghreb •• Norms, standards, and testing methods for conditioning market in the countries of the region individual air conditioners and about the impact of these developments on •• Regulations on labeling and minimum performance the electricity sector for air conditioners to be revised and upgraded •• Cooperation in the fields of innovation and R&D over time •• Taxation of air conditioners These elements are merely indicative and will have •• Procedures and rules for monitoring compliance to be closely examined and updated by the TFC as with the regulations soon as it begins work. •• Measures to combat parallel markets and border controls Interim deliverables should also be specified for •• Capacity building for market participants, measures the task force and should be presented regularly in to improve their skills, and the establishment of a meetings and larger regional workshops. system to certify the qualifications of installers •• Cooperation and pooling of expertise and See table 32 for an illustrative schedule of activities. information about developments in the air- Recommendations—transforming the air-conditioning market in the Maghreb: the way forward | 79 Table 32 | Proposed air conditioning task force: A schedule of activities N° ACTIVITIES DELIVERABLES M1 M2 M3 M4 M5 M6 M7 M8 M9 M10 M11 M12 M13 M14 M15 M16 M17 M18 M19 M20 M21 M22 M23 M24 1 Establishment Program of of the group activities and and definition operating of its mode of procedures operation and program of activities 2 Workshop to launch the TFC 3 Assessment Report of the of the market, features of the prospects market in air for its future conditioners development and impacts on the electricity 80 | Energy-Efficient Air Conditioning: A Case Study of the Maghreb sector 4 Workshop to present the outcomes of activity 3 5 Development of Plan for the a regional plan harmonization to harmonize of testing the norms, standards and standards, methods and methods for testing air conditioners in the region (Continued) Table 32 | Continued N° ACTIVITIES DELIVERABLES M1 M2 M3 M4 M5 M6 M7 M8 M9 M10 M11 M12 M13 M14 M15 M16 M17 M18 M19 M20 M21 M22 M23 M24 6 Workshop to present the outcomes of activity 5 7 Development Report on the of a plan to harmonization harmonize of regulations regulations and and tax policies tax policies on and joint air conditioners measures to in the region combat parallel 8 Proposal of markets concrete measures to combat parallel markets and monitor borders 9 Workshop to present the outcomes of activities 7 and 8 (Continued) Recommendations—transforming the air-conditioning market in the Maghreb: the way forward | 81 Table 32 | Continued N° ACTIVITIES DELIVERABLES M1 M2 M3 M4 M5 M6 M7 M8 M9 M10 M11 M12 M13 M14 M15 M16 M17 M18 M19 M20 M21 M22 M23 M24 l0 Joint Report on arrangements capacity for building building capacities and improving the qualifications of market operators 11 The Report on development of the system an institutional of regional arrangement cooperation for cooperation among the countries of the region in the key areas of energy efficiency of air conditioners 82 | Energy-Efficient Air Conditioning: A Case Study of the Maghreb (monitoring of markets, R&D, exchange of know-how, etc.) 12 Workshop to present the outcomes of activities 10 and 11 13 Development of Maghreb a directive for directive the Maghreb on energy on the energy efficiency in air efficiency of air conditioning conditioners 14 Final workshop to present the directive References and Further reading World Bank. Estimating Informal Trade across support of Alcor, ANME, ADEREE, APRUE, and Tunisia’s Land Borders. December 2013. ALMEE. Monograph of IEEEs in Tunisia 2014, Investment Cooling Benchmarking Study, CLASP, June 2012. Promotions Agency of Tunisia. Residential Air Conditioners, 4E Benchmarking Michael A. McNeil, Virginie E. Letschert: Future Air Document, IEA, February 2011. Conditioning Energy Consumption in Developing F. Sahnounea, M. Belhamel, M. Zelmatb, R. Kerbachic: Countries and What Can Be Done About It: Climate Change in Algeria: Vulnerability and The Potential of Efficiency in the Residential Strategy of Mitigation and Adaptation. Sector. Ellinor Zeino-Mahmalat, Abdelhadi Bennis: Maximilian Auffhammer: Cooling China: The Weather Environment and Climate Change in Morocco— Dependence of Air Conditioner Adoption. Diagnosis and Future Prospects, Konrad- Maximilian Auhammer, Erin T. Mansur: Measuring Adenauer-Stiftung, 2012. Climatic Impacts on Energy Consumption: A Anette Michel, Eric Bush, Jürg Nipkow, Conrad U. Review of the Empirical Literature. Brunner, Hu Bo: Energy Efficient Room Air Dr. Amol Phadke, Dr. Nikit Abhyankar, Dr. Nihar Conditioners—Best Available Technology (BAT). Shah: Avoiding 100 New Power Plants by Z. Linjia, Z. Weihua, Y. Zengwei: Reduction of Increasing Efficiency of Room Air Conditioners in Potential Greenhouse Gas Emissions of Room India: Opportunities and Challenges. Lawrence Air-Conditioner Refrigerants: A Life Cycle Carbon Berkeley National Laboratory, Berkeley, USA. Footprint Analysis. Robert Smith, Ke Meng, Zhaoyang Dong, Surveys Conducted among Residential Clients: Robert Simpson: Demand Response: A Strategy STEG 1984, 1989, 1994, 1999, 2004, 2009, to Address Residential Air-Conditioning Peak and 2014. Load in Australia. Survey on the Use of Air Conditioning in the M. Izquierdo, A. Moreno-Rodríguez, A. González- Residential Sector of Tunisia, STEG, 2015. Gil, N. García-Hernando: Air Conditioning in Market Survey of Air Conditioners to Be Used in the the Region of Madrid, Spain: An Approach to Residential Sector of Algeria, Boukhalfa Yaïci, Electricity Consumption, Economics and CO2 World Bank, 2014. Emissions. Market Survey on Air Conditioners in Morocco, Farouk Mhamdi, Mouhamed Ould Mahmoud, Mériem Sunergia Etudes, Nevolys, World Bank, 2015. Jäıdane, Jomaa Souissi: Air-Conditioning Effect Characteristics of the Market Of Air Conditioning Estimation for Mid-Term Forecasts of Tunisian Systems in Morocco, Radouan Yessouf, Electricity Consumption. department head, energy efficiency in the Michael A. McNeil, Virginie E. Letschert: Modeling construction industry—ADEREE Morocco, Tunis, Diffusion of Electrical Appliances in the Residential February 18, 2015. Sector, Environmental Energy Technologies Air Conditioning Demand Side Household Survey in Division, August 2010. Libya, Altai consulting, World Bank, 2015. Energy Efficiency Trends in Mediterranean Countries, Commodity Markets Outlook, World Bank Quarterly July 2013, Report prepared by Enerdata with the Report, April 2015. References and Further reading | 83 Appendices  nergy certification, testing Appendix A | E infrastructure, and implementation procedures CERTIFICATION AND LABELING 1. ​ market together with an analysis of the current and OF AIR-CONDITIONING UNITS projected levels of supply and demand. It also involves the establishment of the appropriate framework and The certification and labeling of air-conditioning units resources necessary from an institutional, regulatory, are energy-saving measures, involving the following: and operational standpoint. – Classifying air-conditioning units to be placed – At the institutional level, each of the main actors on the market (units imported or manufactured involved in the process should be designated locally), according to their energy performance. and made aware of their role in the process. – Displaying on a label, specifically designed for – At the regulatory level, the relevant legal the purpose, the energy efficiency classification instruments should be promulgated and their of the unit for the benefit of the customer. observance monitored. – Making it obligatory for all manufacturers, – At the operational level, there should be importers, or retailers to affix energy labels on air oversight of the certification process to ensure conditioners and carry out the necessary testing that it is operating efficiently and especially that for energy efficiency. the market is being effectively monitored. At the – Monitoring the labeling of air-conditioning units same time, the necessary groundwork must be on the market and banning the sale of units laid to guarantee the success of the process by: whose energy consumption exceeds the limits making local manufacturers aware of the new established by the rules. market requirements; setting up testing and – Providing guidance to consumers and making certification laboratories; training and building them aware of the need to purchase highly the technical capacity of the operators and energy-efficient units. entities responsible for monitoring and oversight; conducting communication, awareness-raising, In the process of certification, the first requirement and information programs for the benefit of is an in-depth knowledge of the technical as well as consumers, etc. the economic characteristics of the air-conditioning 84 | Energy-efficient air conditioning: A case study of the Maghreb 2. ​Testing infrastructure The infrastructure for testing the energy efficiency of The main laboratory tests pertain to: air conditioners consists of a laboratory with a double- chamber calorimeter, where tests are conducted in •• Name and label two modes (cooling and heating) and in accordance •• Measurement of cooling power with various standards of reference. The calorimeter •• Measurement of heating power is made up of two cells for the indoor and outdoor •• Measurement of energy consumption units, as well as a compensation chamber. •• Energy classification The energy efficiency of individual air conditioners There are various models of air-conditioning units to may be verified against national or international be tested: cool split systems, heating/cooling split standards such as the EN 14511 European Norm (for systems, multisplit systems, monobloc units, and air-conditioning units, groups of liquid coolers and console-type air conditioners. For units operating heat pumps with compressors, with electric motors with a dual heating and cooling mode, tests should for heating or cooling) or the European Community be carried out separately for each mode. Directive 2002/31/EC. Testing conditions differ for cooling and heating This type of test should be carried out by a duly modes and are summarized as follows: authorized independent laboratory with national and international accreditation. INTERNAL HEAT EXCHANGER EXTERNAL HEAT EXCHANGER MODE TEMP. DRY TEMP. HUMID TEMP. DRY TEMP. HUMID Cool (Split) 27°C 19°C 35°C 24°C Hot (Split) 20°C 15°C max 7°C 6°C The energy efficiency classification of air conditioners the coefficient of performance (COP) (heating energy/ is determined by the results of tests, which provide absorbed electrical energy) for the heating mode, as the energy efficiency rating (EER) (cooling power/ per the following table: absorbed electrical energy) for the cooling mode and ENERGY EFFICIENCY COOLING MODE HEATING MODE CLASSIFICATION EUROPEAN EER COP A 3.38 3.2 3.8 3.6 B 3.2 ≥EER >3.0 3.6 ≥COP >3.4 C 3.0 ≥EER >2.8 3.4 ≥COP >3.2 D 2.8 ≥EER >2.6 3.2 ≥COP >2.8 E 2.6 ≥EER >2.4 2.8 ≥COP >2.6 F 2.4 ≥EER >2.2 2.6 ≥COP >2.4 G 2.2 ≥EER 2.4 ≥COP Appendices | 85 Measures and procedures for monitoring 3. ​ implementation of the regulations Gaps have often been identified in programs for •• The ministry of commerce measuring energy efficiency, whether in terms of the •• Manufacturers, importers, and distributors of air controls in place or in arrangements for monitoring and conditioners evaluation. These shortcomings have undermined •• Federations and trade unions representing the air- efforts to ensure energy efficiency, making it difficult to conditioning industry prove the effectiveness of the measures undertaken •• Consumers’ rights organizations and especially difficult to prove the savings that could •• The accreditation body result from their implementation. Energy certification programs for household appliances in general and At the level of regulation, the certification of air- air-conditioning units in particular are no exception to conditioning units is governed by a series of regulatory this phenomenon. instruments that are promulgated and published in the country’s official gazette. The success of the program to certify the energy efficiency of air-conditioning units will depend, among •• First, a law that includes certification among energy other factors, on a rigorous system of monitoring efficiency measures should be promulgated. Such and control consisting of very clear measures and a law should stipulate that all manufacturers, procedures for implementing the regulations. importers, or retailers of household appliances and equipment must guarantee that their This should begin at the institutional level, where there equipment bear a label with information on the are various stakeholders and professionals involved in real levels of energy consumption. The conditions the certification of air-conditioning units (the national and modalities for applying the provisions of this energy efficiency agency, the national electricity law, as well as information on energy consumption company, manufacturers, distributors, installation levels and the modalities for labeling the technicians, performance testing laboratories, climate appliances, should be stipulated in the provisions engineering consultants, etc.). The ministry of energy pertaining to the labeling of electrical appliances. should appoint a lead agency and coordinator for The law should prohibit the sale of any material, this project, normally the national agency in charge of household appliance, or equipment whose energy energy efficiency. Other departments and institutions consumption exceeds the limit established in the should collaborate with the project to provide support provisions of the law. in monitoring the market (the ministry of commerce), •• In addition, a series of implementing regulations monitoring imports (ministry of finance or customs), for this law, referring specifically to air conditioners, performance verification (the accredited laboratory), should be promulgated and should stipulate the etc. The main actors are: following: –– The means of calculating energy efficiency •• The ministry of energy levels of the appliances •• The national energy efficiency agency –– The energy efficiency classifications, according •• Electricity companies to their energy inputs •• The accredited laboratory –– The obligation to conduct energy efficiency •• The institute for standardization tests on air-conditioning units 86 | Energy-efficient air conditioning: A case study of the Maghreb –– The labeling template and the information to In parallel with these control measures, a rigorous be placed on these appliances monitoring system should be put in place and should take the form of a measurement, reporting, and According to previously established timetables, verification (MRV) mechanism, which will serve as and beginning with the least efficient units, these a tool to monitor the implementation of measures regulations should provide for a progressive phasing to mobilize investments, quantify energy savings, out of those air-conditioning units that are less and analyze results. This MRV system should be energy efficient. In this way, and through these rules, implemented within the national energy efficiency the air-conditioning market will, in time, only be agency and should consist of a number of different made up of highly energy-efficient units (for example, activities: ongoing monitoring of parameters, periodic classes A and B). This naturally presupposes reporting, and internal and external verification of effective monitoring and control of the formal market, results. The MRV will also center around three vital essentially for labeling, as well as the informal market, components: an overall MRV indication component which is continuously expanding in the countries. for decision makers providing quantitative monitoring indicators; a more detailed component targeting the Monitoring the energy efficiency of air conditioners program of certification as a whole and intended should normally be carried out in an accredited for the various stakeholders in the process; and an laboratory, in accordance with standards governing even more detailed component for departments and testing conditions, the experimental conditions to be regions, as well as for the various program activities. observed, and the features to be included in the test report. With regard to the implementation and monitoring of the measures, Tunisia is the only country that has To be classified, air conditioners must be tested for thus far made significant progress in implementing energy efficiency according to the country’s rules on measures to certify the energy efficiency of air labeling. Manufacturers and importers are obliged conditioners, using a system that has been in place to carry out testing on each appliance model in the since the mid-1980s. It has conducted market relevant laboratory. surveys; put in place the institutional, regulatory, and operational framework for the system; conducted If modifications made to an air-conditioning unit are communication, awareness-raising, and information liable to affect its energy consumption level, the campaigns targeted at consumers; and updated manufacturers or importers must repeat the previous local manufacturers on the new requirements of tests, following the same procedures. They should the market. Tunisia has also set up laboratories also review their classification to comply with those for certification tests and conducted training and stipulated in the regulations. technical capacity-building programs for operators and monitoring agencies, among other initiatives. Before an air conditioner model is placed on the market, manufacturers and importers must submit The success of Tunisia’s certification program rests on a copy of the laboratory test reports to the national its organizational structure, which, in turn, is centered energy efficiency agency, along with draft labels and on the monitoring of the energy efficiency of air fact sheets. The agency will verify the information conditioners, through tests conducted at the Centre contained in these documents and if the information technique des industries mécaniques et électriques is consistent with the results of the laboratory (CETIME). Since 2008, the center has been equipped reports, it will authorize the sale of the air conditioner with a testing laboratory, at the cost of $1 million in question. from the state budget. The annual operating cost of Appendices | 87 the laboratory is approximately TD 50,000 (for staff, importers defray this cost. The testing procedure is electricity, maintenance, calibration, etc.), and the described in the diagram below and involves five main number of appliances tested annually varies between actors: assemblers/importers, CETIME, the Agence 40 and 50, with a peak period in the months of April nationale pour la maîtrise de l’énergie (ANME), the and May. The cost of testing an air conditioner is TD Ministry of Commerce, and the points of sale that 2,000 for a cooling device and TD 3,000 for a mixed comprise the market in air conditioners. cooling and heating device. The assemblers and Procedures for tesƟng and monitoring the energy efficiency of air condiƟoners Assemblers/ Air condiƟoner models importers Test reports TesƟng laboratories Markets for air condiƟoners Ministry of commerce 1. Assemblers/importers submit models of air- 6. The assembler/importer puts the approved air- conditioning units to CETIME for testing. conditioning models on the market. 2. Tests carried out by CETIME on models 7. The Ministry of Commerce selects samples of air submitted by assemblers/importers. conditioners from the market. 3. CETIME presents test reports to assemblers/ 8. The Ministry of Commerce verifies with CETIME importers. the classification of the samples selected. 4. Assemblers/importers submit test reports and labels to ANME. 5. ANME approves the documentation submitted by assemblers/importers and affixes a classification to the label). 88 | Energy-efficient air conditioning: A case study of the Maghreb  ethodology and approaches Appendix B | M of national surveys The methodology and approaches used in the surveys the World Bank employed the services of specialized conducted in the region vary from country to country. bureaus and independent consultants, with support Apart from Tunisia, where the survey was carried out from relevant state institutions. by two state institutions (STEG and ANME), for the other three countries (Algeria, Libya, and Morocco), The table below details the approach by country: ENTITIES RESPONSIBLE FOR STUDIES, TYPES OF ANALYSES AND SURVEY TARGET COUNTRY SURVEYS, AND SURVEYS GROUPS SUPPORT STRUCTURES Algeria • Independent National Market survey of air conditioners 21 market operators: Consultant (Boukhalfa for Algeria’s residential sector, – 14 assemblers Yaïci) based on the following main – 5 importers • Support: APRUE and sectors: – 2 distributors Ministry of Energy – Regulatory – Industrial – Energy – Environmental Morocco • Consulting firms Market survey of air conditioners • Residential sector: (Sunergia Etudes and for residential and tertiary 3,000 households Nevolys Consulting) centers in Morocco, based on: across six climatic • Support: Steering – An institutional analysis zones Committee (ADEREE, – A quantitative survey for • Tertiary sector: 69 ONEE, Ministry of assessing the air-conditioning hotels, 76 businesses Energy) market and restaurants Tunisia • STEG and ANME Market survey of individual air • STEG survey: 2,400 • Support: World Bank conditioners in Tunisia, based on: medium- and low- Consultant – A STEG survey conducted voltage customers among its residential and • ANME survey: commercial clients eight operators (six – An ANME survey conducted manufacturers and two among its market operators importers) Libya • Consulting firm (Altai Survey of demand for air Residential sector: 1,075 Consulting) conditioners in Libya’s residential households in 22 different • Support: REAoL and sector conducted using the CATI administrative districts of Ministry of Electricity (Computer Assisted Telephone the country Interview) method Appendices | 89  ubsidies and electricity rates in four Appendix C | S Maghreb countries THE CASE OF TUNISIA price of TD 0.133/kWh). In view of the complexity of this issue, the Government of Tunisia has since In Tunisia, energy products (petroleum products, 2014 undertaken a number of measures and natural gas, and electricity) have largely been initiatives in an attempt to reduce the subsidy to subsidized, especially during a period when the this sector. These measures include the alignment price of oil exceeded $110/barrel. In 2013, the of domestic prices with prices on the international amount paid directly by the Public Treasury for market for highly energy-intensive industries and subsidizing the energy sector was TD 3.7 billion the revision of the electricity price structure, by (or 14 percent of the state budget), compared to consumption block. The total subsidy was further TD 550 million in 2010. This significant increase is reduced in 2015, due to plunging crude oil prices. explained by the growth in the imports of energy This has helped considerably to ease the pressure products purchased on the international market at on the state budget. international prices, far exceeding domestic prices that are still managed by the state. The other factor The rate schedule includes three consumption blocks contributing to the size of the energy subsidy is for meters of 1 and 2 kilovolt-ampere (kVa) and four the parity of the Tunisian dinar with the U.S. dollar, consumption blocks for meters above 2kVa. the main exchange currency for energy products. Electricity subsidies account for 45 percent of For meters of 1 and 2 kVa, the price per kWh varies the overall bill, with 98 percent of electricity being from TD 0.075 for the block below 50 kWh/month to generated from natural gas purchased for the most TD 0.140 for the block between 100 and 200 kWh/ part at the international market price. As a result, month. since the cost of fuel amounts to 77 percent of the cost per kilowatt-hours (kWh), the subsidy for kWh For meters of more than 2kVA, prices vary between sold was TD 0.126 in 2013 (equivalent to an average TD 0.150 for the block below 200 kWh/month and cost price of TD 0.259/kWh and an average selling TD 0.350 for the block above 500 kWh/month. The case of Algeria Energy products in Algeria are also highly subsidized, state, which is the sole owner of SONELGAZ, opted especially electricity, for which current rates have to give preference to financial stabilization rather than been in effect since December 2005. Rates for increasing electricity rates. households are broken down into two blocks: DA 1,799/kWh for an annual consumption of up to 500 Based on the provisions of the 2008 Budget Law, kWh and a rate of DA 4,179/kWh for consumption the state took the decision to reduce electricity rates exceeding that amount. by tapping into the Special Development Fund of the Southern Region (Fonds spécial de développement Since December 2005, there has been no increase des régions du sud, FSDRS), established to assist in the rates, despite numerous requests by the low- and medium-voltage customers, such as SONELGAZ Group and its distribution companies, householders and farmers. In 2011, these rates were which are struggling to balance their books. The extended to companies. 90 | Energy-efficient air conditioning: A case study of the Maghreb By financing 50 percent of the electricity bills of low- while paying the same rates as before. The favorable and medium-voltage customers in the southern electricity rates led to an increase in the use of air wilayas and Hauts Plateaux, in 2012 the state allocated conditioners. almost DA 6.9 million to reduce the electricity bill in those regions. Taking advantage of the fall in energy prices on the international markets and starting in 2016, the state The 10-year freeze on electricity rates and the proposes to periodically revise the rate upwards to reduction of rates in the southern region led to a steep attract more investment into the sector and improve spike in the demand for electricity, since households the generation and distribution of electricity. were able to double the amount of energy consumed The case of Libya Libya’s electricity sector is also heavily subsidized. billion ($6 billion). For the residential sector alone, the In 2012, the price of electricity was fixed at a single subsidy was LD 3.3 billion (or $2.7 billion). block of LD 20/kWh (or 1.6 US cents). With an excess per capita consumption of up to 2,232 kWh Added to this is the fact that after the revolution, (compared to an average consumption of 1,184 for the collection of payment for electricity services the Maghreb), the level of the subsidy assessed at was completely disrupted, leading to significant the local price of fuel was more than LD 678 million commercial losses. In fact, in the absence of clear ($550 million). Calculated against international prices, procedures for the collection of bill payments, only 10 subsidization of this sector amounted to LD 7.4 percent of customers have paid their bills. The case of Morocco Morocco has the lowest subsidies on energy products Morocco applies a progressive rate system based on of all the four countries. Energy consumption rates consumption levels. The rate structure consists of five are almost on par with international prices and their levels, with the price per kWh ranging from DH 0.9010 gradual increase over time has caused consumers to for the consumption block below 100 kWh/month to take energy-saving measures. DH 1.4903 for the block above 500 kWh/month. Appendices | 91 MIDDLE EAST AND NORTH AFRICA ENERGY AND EXTRACTIVES GLOBAL PRACTICE THE WORLD BANK GROUP MENA ENERGY SERIES | REPORT NO, 105360-MNA http://www.worldbank.org/en/region/mena | www.esmap.org