Energy Efficiency Policy in the EU

- case POLAND

Dr Roman Babut, PhD in civil engineering

The Polish National Energy Conservation Agency (KAPE) Poland

Baku, 11 September 2013

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EU energy efficiency policy

Why energy

efficiency?

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Energy security means …

• For consumers, it means cheap, uninterrupted supply.

• For Europeans, it means gas.

• For Americans, it means oil.

• For Poles, it means hard coal.

• For Japanese, everything but energy efficiency, advanced research, public awareness and … taxes.

• … and for Azeri people … ?

• For producers, it means access to markets and uninterrupted supply.

• For transit states, it means steady stream of revenue.

• For industry, it means a hospitable investment climate.

• For researchers and professionals … good profit for inteligent work.

EU Green Paper 2000

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Why EED in 2011 ?

• For

Source:

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Why EED in 2011 ?

Source:

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Why EED in 2011 ?

• For

Source:

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Source: KAPE

Building Thermo-Modernisation Effects

Technical potential for energy savings

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Building Thermo-Modernisation Effects

Economic investment potential for energy savings

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• The ACT

Communication from the Commission to the European Parliament, the Council, the Economic and Social Committee and the Committee of the Regions of 8 March 2011

– ENERGY EFFICIENCY PLAN 2011

[COM(2011) 109 final – not published in the Official Journal].

The Energy Efficiency Plan 2011

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The Energy Efficiency Plan 2011

• SUMMARY

– The Energy Efficiency Plan 2011 forms part of the European Union’s (EU) 20 % target (aimed at reducing primary energy consumption) and the 2020 Energy strategy. It aims at:

• promoting an economy that respects the planet’s resources;

• implementing a low carbon system;

• improving the EU’s energy independence;

• strengthening security of energy supply.

• In order to meet these objectives, the European Commission proposes to act at different levels.

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• Fostering low energy consumption in the construction sector – The Plan emphasises the necessity to implement the means for reducing

final energy consumption in buildings, as this sector is responsible for almost 40 % of the final energy consumption in Europe. However, it highlights several obstacles such as “split incentives” which hinder improvements in the energy performance of buildings.

– In order to effectively promote low energy consumption in the construction sector, the training of architects, engineers and technicians should be adapted, for example under the “Agenda for new skills and jobs”.

– The Plan also states that Energy Service Companies (ESCOs) may give financial assistance to public authorities to modernise buildings and thus reduce their energy consumption.

The Energy Efficiency Plan 2011

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• Developing competitive European industry – The Commission wishes to encourage new production capacity and

infrastructures to replace old equipment. These new infrastructures must comply with the requirements of the Directive on the emission allowance trading scheme and the Directive on industrial emissions.

– It is also crucial to introduce a scheme for the effective recovery of heat losses from electricity and industrial production, and to valorise cogeneration.

– The Commission also proposes to create instruments which allow financial value to be attributed to energy savings and link profits of utilities (suppliers and distributors) to energy efficiency and not to the volume of energy delivered.

– Lastly, the Plan provides for increased energy efficiency in industry, particularly in European small and medium-sized enterprises (SMEs). Regular energy audits should become mandatory.

The Energy Efficiency Plan 2011

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• Making savings for the consumer – Initially, the Commission proposes to reinforce the approach of the

“Ecodesign” Directive and to define strict standards for heating boilers, water heaters and computers for example.

– Furthermore, consumers’ understanding of the Ecolabel should be improved in order to facilitate the choice of energy-efficient products. Consumers should also have information about their own energy consumption in real time by means of “intelligent” individual meters, as recommended in the Directive establishing the internal market in electricity.

• Improving transport efficiency – The transport sector represents 32 % of final energy consumption.

The Commission intends to define a strategy to improve the efficiency of this sector, for example by introducing traffic management in all modes of transport.

The Energy Efficiency Plan 2011

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• Widening the scope of the national framework

– Member States have implemented national plans to meet the target of reducing EU primary energy consumption by 20 %. However, the Commission suggests widening the scope of these plans to cover all stages of the energy chain and better exploit potential energy savings.

• Context

– In November 2008, the Commission published the Communication “Energy efficiency: delivering the 20 % target” recommending a reduction of 20 %, by 2020, of primary energy consumption. It transpired that this target would be difficult to achieve if the EU did not exploit the considerable potential of energy savings in sectors such as buildings and transport. This Plan therefore proposes new overarching guidelines for energy efficiency taking account of current parameters.

The Energy Efficiency Plan 2011

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EE CAPACITY BUILDING

THROUGH INTERNATIONAL

COOPERATION AND

EU PROGRAMMES

ENERGY EFFICIENCY PLAN – A PHILOSOPHY

The Energy Efficiency Plan 2011

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ENERGY ROADMAP 2050

What Energy Roadmap 2050 is:

Energy Roadmap 2050 is a general framework that provides a practical, independent and objective analysis of different scenarios to achive sustainable economy in Europe, especially concerning economically aceptable, environmentally friendly and secure energy supply.

ROADMAP 2050

• Current 2020 strategy is proven achieveable

• General guidelines for future growth is needed

• Analysis of several various scenarios shows that in 2050 perspective costs of the switch into sustainability do not differ from sticking to current system

KEY ELEMENTS FOR THE ROADMAP:

• Completion of current 2020 strategy

• Sense of urgency and feasibility of the solutions

• No compromise on safety and energy security

• Common consistent policy and cooperation of all Member States in a form of precise short, medium and long term objectives between 2020 and 2050

EXPECTED RESULTS:

• Decarbonisation of economy with greenhouse gases emission reduction at 80 to 95%

• Reduction of primary energy demand

• Clean, competitive and secure energy supply

• Sustain Europe’s innovative industry competitiveness and job creation

• Simple energy bill control solutions

PRIORITIES OF THE ROADMAP 2050:

• Achieving an energy efficient Europe

• Building a truly integrated energy market

• Empowering consumers and achieving the highest level of safety and security

• Extending Europe’s leadership in energy technology and innovation

• Strengthening the external dimension of the EU energy policy

POLAND: CASE STUDY

ENERGY EFFICIENCY

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POLAND:

BASIC ECONOMIC & ENERGY FACTS

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Polish energy sector and industry in 1989:

- NO ENERGY LAW

• FULLY REGULATED MARKET

- COAL PRODUCTION – c 180 MT

- 90% of heat energy and 99% electricity produced from coal

- energy intensity of Polish industry = 4,5 x European Standards at the time

Polish energy sector and industry 2012:

- COAL PRODUCTION – c. 90 MT

- diversified primary energy sources in 60% heat and 75% electricity – cleaner coal technologies

- energy intensity of Polish industry = ok. 1,7 x EU standards i 3,5 x Japanese standards

POLAND IN THE PERIOD OF POLITICAL & ECONOMIC TRANSITION

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0

0.1

0.2

0.3

0.4

0.5

0.6

1990 1993 1997 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

Electricity - Households, euro00/kWh

Gas - Households, euro00/m3

GALLOPING ENERGY PRICES AND SOCIAL SECURITY

1989 - POLAND’S energy sector proud of coal mining and „standing on the hard coal”

Source: GUS 2012 (Main Statistical Office, Warsaw)

KAPE

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DYNAMICS OF THE KEY MACROECONOMIC INDICATORS (2000=100)

80

100

120

140

160

180

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

GDP Cumulated value in industry Individual consumption

Source: GUS 2012 (Main Statistical Office, Warsaw)

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PRIMARY AND FINAL ENERGY CONSUMPTION 2000-2010

40

50

60

70

80

90

100

110

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Mto

e

Primary energy consumption Final energy consumption #REF!

Source: GUS 2012 (Main Statistical Office, Warsaw)

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STRUCTURE OF THE FINAL ENERGY CONSUMPTION BY CARRIERS

7%16%

13%

14%

23%

29%

9%

16%

11%14%

19%

31%

ELECTRICITY

ELECTRICITY

HEAT

HEAT

OTHER

OTHER

GAS

COAL

GAS

COAL

LIQUID FUELS

LIQUID FUELS

2000

2010

Source: GUS 2012 (Main Statistical Office, Warsaw)

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Source: GUS 2012 (Main Statistical Office, Warsaw)

INDUSTRY TRANSPORT

HOUSEHOLDS

AGRICULTURE TERTIARY

STRUCTURE OF THE FINAL ENERGY CONSUMPTION BY SECTORS 2000 AND 2010

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Building Energy Auditing and Thermomodernisation Act Act on supporting thermo-modernizations and renovations from the 21st of November 2008 Minister of Infrastructure regulation on the detailed range and form of energy audits and elements of renovation audits, audit card designs, as well as the algorithm of evaluating the financial feasibility of a thermo-modernization investment for the 17th of March 2009.

POLICY AND LEGAL ENERGY EFFICIENCY FRAMEWORK

Building Energy Characteristic: Regulation on the methodology of calculating the energy characteristic of a

building and residential premise or building segment constituting an independent service/technical segment and the manner of preparation and standards of their energy characteristic. (Dz. U. nr 201, poz. 1240), 2008

PN-EN ISO 13790:2009 Standard. Energy performance of buildings – Calculating heat and cooling energy use

Energy Auditing related to industry: ACT ON ENERGY EFFICIENCY from the 15 April 2011 (Dz. U. Nr 94, poz. 551). Minister of Economy Regulation On the detailed range and code of conducting an energy efficiency audit, energy audit card design and methods of calculating energy savings.

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ENERGY EFFICIENCY ROADMAP 1994-2013

CATEGORY Policy paper, law, directives, measures, projects Support

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ENERGY POLICY

New energy policy approach ERG

ENERGY LAW 1997 MoE

IN-DEPTH EE REVIEW Energy Charter Secretariat

PHARE "SUSTAINABLE ENERGY POLICY" EU / GERMANY / DENMARK

1st NATIONAL ENERGY EFFICIENCY ACTION PLAN MoE

ENERGY EFFICIENCY ACT 2011 MoE

2nd NATIONAL ENERGY EFFICIENCY PLAN 2012 MoE

EE INDUSTRY

EE MASTER PLAN FOR INDUSTRY JICA

ENERGY TECHNOLOGY CONSERVATION CENTRE JICA Preparatory phase P-J Project phase PL Project phase

PSO JI - INDUSTRIAL INVESTMENT SENTER

FACTORY ENERGY CONSULTANT TRAINING SIDA

DISTRICT HEATING NEW DH TECHNOLOGIES SENTER

BENCHMARKING SCHEME FOR DH DEA

EE BUILDINGS

BUILDING ENERGY CONSULTANCY SCHEME DEA

THERMOMODERNIZATION ACT 2008 Min.Constr.

Regulation on the methodology of calculating the energy characteristic Min.Constr.

EE FINANCING Training on EE finacing and ESCO

UK Know How Fund

SCORE - Revolving Fund facility NOVEM

MUNICIPAL PLANNING TRAINING TO MUNICIPAL DECISSIONMAKERS DEA

SCORE - PILOT REGION RADOM NOVEM

NATIONAL PUBLIC

FINANCING SCHEMES

THERMODERNISATION FUND BGK

NFOśiGW EE PRIORITY SCHEMES NFEP&WM

"WHITE CERTIFICATES" STOCK

R&D 5th,6th, 7th RESEARCH FRAMEWORK PROGRAMMES EU

AWARRENESS FEMOPET, SAVE II, ALTENER, INTELIGENT ENERGY ……. EU

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BUILDING INSTIUTIONAL, PROFESSIONAL

& BUSINES-ORIENTED CAPACITY

through

INTERNATIONAL COOPERATION AND EU PROGRAMMES

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Parliament

Ministries: Ministry of Industry and Trade / Energy / Economy

Ministry of Environment

Ministry of Spatial Planning and Construction

Ministry of Transportation / Infrastructure

Ministry of Finance

Ministry of Justice

Governmental offices: Energy Regulatory Authority

Office for Protection of Competition and Consumers

National Fund for Enviromental Protection and Water Managemnt (NFOŚiGW)

Municipal offices (environmental protection and architecture units)

Bank of the National Economy (BGK)

The Polish National Energy Conservation Agency (mixed legal position)

• Advice to ministries, intermediary body

ENERGY EFFICIENCY KEY STAKEHOLDERS

– responsibilities and actions

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The Polish National Energy Conservation Agency (mixed functions) • Advice to ministries

• Cooperation with key actors of thermo-modernisation movement

Supporting EE&RES institutions (regional and local level) Regional Energy Conservation Agencies

Energy & environmental ngo-s

Supporting institutions (national level) Technical universities

Institutes of the Polish Academy of Sciences

Central Research&Development branch institutes

Branch chamber of commerce (industry)

Professional’s associations (civil and HVAC engineers, architects)

Building owners: Public buildings

Private buildings

Housing cooperatives

Market: - Building materials producers

- EE equipment producers

- Wholesalers

- Construction and building companies

ENERGY EFFICIENCY KEY STAKEHOLDERS

– responsibilities and actions

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INSTITUTIONAL CAPACITY BUILDING SUPPORT:

Bilateral aid and co-operation programmes (Energy Restructuring Group,..)

EU policies, regulations and implementation programmes

Energy Charter Secretariat in-depth review

International Energy Agency energy outlook

Regional energy activities (BASREC)

International financial institution’s studies (WB, EBRD, …)

Transfer:

- governmental polices

- energy efficiency supporting schemes

- standards, regulations and legislation

- EE leading country specific experiences, best practices

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BUSINESS ORIENTED ACTIVITIES:

• Monetizing EE initiatives

• Commercial undertakings

• Business and new services development

• Development of energy efficiency product market

• New EE banking products

• ESCO-type activities

KNOWLEDGE TRANSFER: • International and EU best practices and expertise

• EE technologies

• Know-how

• Networking experts

• New job opportunities

• Competitive procedures

R&D OPPORTUNITIES

• Access to EU and international programmes

• Formulation of national EE programmes

NATIONAL EE CAPACITY BUILDING THROUGH INTERNATIONAL COOPERATION AND EU PROGRAMMES

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THE LAW ON SUPPORT FOR BUILDING

THERMO-MODERNIZATION INVESTMENTS

(THERMOMODERNISATION ACT)

AND THE THERMOMODERNISATION FUND

21 NOVEMBER 1998

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THERMO-MODERNISATION OF BUILDINGS: concept, necessity and tasks

Task: ... to dress existing .... aprox. 12,0 mln flats

- 4,5 mln single family buildings

- 350.000 multifamily buildings

New constructions:

- 70.000 new flats/year

Missing in Poland:

- 1,5-2,0 mln flats

Secure energy supply !!!

Minimize social cost of energy prices increase !!!!!

Illustration from a brochure of the Danish Ministry of Housing and Urban

Development,1988

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THERMO-MODERNISATION OF BUILDINGS

OWNERSHIP STRUCTURE OF DWELLINGS IN POLAND

Source: GUS 2005 (Main Statistical Office, Warsaw)

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BUILDINGS & ENERGY Technical and economic potential

The national thermo-modernisation “MOVEMENT”

Technical potential, TP: 75 %

Economic potential: 30-90% * TP

Overall potential: 20-40 % TP

Investment opportunities:

- about 2,7 mln flats consuming over 300 kWh/(m2 * year)

- SPBT 3-7 years

(ilustration: SAVE II Project, KAPE)

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buildings & energy THERMO-MODERNISATION FUND

Basic assumptions:

• Credit based on commercial conditions (interest rate 6 - 8 %, negotiated)

• thermal - modernisation premium – repayment by the Bank of National Economy

25 % of credit utilised for completion of the thermo-modernisation investment

by investor

• The credit granted for completion thermo-modernisation project

cannot exceed 80 % of the total cost

• Repayment period can not exceed 10 years;

• Repayment of the credit has to be possible from energy cost savings

• Fulfilling the requirements concerning minimum level of energy consumption

reductions

THERMOMODERNISATION ACT

after ammendment in 2001

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INVESTOR

Preparatory phase

ENERGY AUDITOR

energy audit report technical advise

energy audit order

COMMERCIAL BANK (22)

Commercial credit request

(energy audit report, own financial means - 20%)

Thermo-modernisation premium request

(energy audit report, thermo-premium application)

• regular bank’s procedures • verification of the client’s financial credibility • preparation of the commercial credit contract (draft) • preparation of the application for thermo-modernisation premium

THERMO-MODERNISATION FUND

Thermo-awareness

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INVESTOR IMP

LEM

ENTA

TIO

N P

HA

SE

Authorised verification entity

(KAPE, + 3 consultancy

companies) energy audit report approval / rejection

energy audit report verification

COMMERCIAL BANK

investment technical project technical approvals

• the credit contract signed • thermo-modernisation credit line active

THERMO-MODERNISATION FUND

BANK OF THE NATIONAL ECONOMY

(operator of the Fund)

• elligibility of the investor verified

• approval of the proposed investment • thermo-modernisation premium promise letter issued

BUILDING CONTRACTOR realization of building works invoicing the crediting bank

• payments from the credit

work contract

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INVESTOR

FINANCIAL PHASE

COMMERCIAL BANK

BANK OF THE NATIONAL ECONOMY

• transfer of the thermo- premium

BUILDING CONTRACTOR building works completed final invoice and a statement on completion of the works

credit repayment, max. 10 years

• confirmation by the bank’s inspector

• reduction of the credit by 25%

• info and premium transfer request

• final payment

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Source: KAPE

THERMOMODERNISATION ACT

Financial effects N

om

ina

l th

erm

o-i

nve

stm

en

t c

ost,

10

0 k

eu

ro

20%

80%

th

erm

o-c

red

it, 8

0 k

eu

ro

? %

in

itia

l c

ost

of

cre

dit

, ?

ke

uro

25%

pre

miu

m

, 2

0

keu

ro

60K EUR

? %

Commercial

credit to be

repaid in max.

10 years from

energy cost savings

Bank formalities, approval of energy audit and issuance of the thermo-premium promise letter, appr. 15 days

Building works

Transfer of

the thermo- premium

Credit repayment

F

ina

l vo

lum

e t

he

rmo

-c

red

it, 6

0 k

eu

ro

th

erm

o-c

red

it, 8

0 k

eu

ro

60K EUR

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THERMOMODERNISATION FUND

0

500

1000

1500

2000

2500

0

200

400

600

800

1 000

1 200

1999 2000 2001 2002 2003 2004 2005*

nu

mb

er

of ap

pli

cati

on

s

To

tal in

vestm

en

t vo

lum

e [

mln

PL

N]

[Implementation year]

Implementation of ivestments under the Building Thermo-modernisation Act Statistics 1999-2004 with a prognosis for 2005

Total volume of thermo-investments

Volume of commercial thermo-credits granted

Total volume of paid premiums from the state budget

Number of approved thermo-investment project applicationsSource: KAPE

Amendment of the Act 21.06.2001

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Source: KAPE

THERMOMODERNISATION ACT

- implementation

Projection of the state budget reserves for investments and granted premiums (1999-2004) in million PLN (1 Euro ≈ 4,0 PLN)

51,14

30

3,9

27

60

4

55

85

13

77

110

31,7

85

44,7

0

20

40

60

80

100

120

1999 2000 2001 2002 2003 2004

state budget

allocation

(declared)

volume of

thermo-

premiums

granted

non-realised

investments

?

Amendment of the Act 21.06.2001

* SPBT - 7 years

* premium after repayment of credit

* SPBT - 10 years

* 25% premium before repayment of credit

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Source: KAPE

THERMOMODERNISATION ACT -cont.

Average Energy Savings calculated in the approved Energy Audits

23 2224

29

33

0

5

10

15

20

25

30

35

1999 2000 2001 2002 2003 2004

Average energy

efficiency of

building thermo-

investments, %

.

.

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Source: Bank BGK, KAPE

Thermo-modernisation Fund, 1998-2013 Number of approved applications (energy audit, bank loan)

0

0.2

0.4

0.6

0.8

1

1.2

0

500

1000

1500

2000

2500

3000

3500

4000

4500

Number of approved applications (energy audits,bank loan) - appr. 25.000 investment projects, in total

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Building Thermomodernisation Act and Fund, 1998-2013 Thermo-modernisation premium, 25% subsidy, mln. PLN

0

50

100

150

200

250

300

Thermomodernisation premium, 25% subsidy (mln. PLN) - total: 1,266 bln PLN

Source: Bank BGK, Dane liczbowe Funduszu Termomodernizacji i Remontów, 2012

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Energy use in households per m2Zużycie energii w

gospodarstwach domowych na m2

Source: EFFICIENCY OF ENERGY USE 1999-2009;. Main Statistical Office, Warsaw, Book: 2011

0

5

10

15

20

25

30

35

40 kg

oe

/m2

total energy use heating standard for new buildings

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ENERGY CONSULTANCY SCHEMES

BUILDING SECTOR & INDUSTRY

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Danish Energy Agency, DEA

Ministry of Spatial Planning and Construction R.P.

• IMPLEMENTING INSTITUTIONS:

Danish Institute of Technology, DTI, Tastruup

Polish National Energy Conservation Agency, KAPE

• PROJECT TITLE:

„ENERGY CONSULTANCY SCHEME FOR BUILDINGS”, 1995-1998 • PROJECT RESULTS AND IMPACT:

- 12 participants nominated by KAPE on training in Denmark

„train a branch leader trainer”

- 72 hours traning curriculum developed by the branch leaders (Nov. 1995)

- 60 trainers from all Poland (Dec. 1995)

- Building Energy Consultancy Secetariat established in KAPE

- a national wide training activities, 1996-2013

- ca. 4500 professionals trained on voluntary basis (architects, construction,

electrical and HVAC engineers, 1996-2013

• PROJECT SUSTAINABILITY:

- Association of the Polish Energy Building Auditors (ca. 1500 members)

ENERGY CONSULTANCY SCHEME

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Source: KAPE

SECRETARIAT FOR BUILDING ENERGY AUDITORS KAPE

(established 1996, assistance of the Danish Technological Institute )

MAIN TASKS OF THE SECRETARIAT:

• Information centre for the building thermo-modernisation

• Monitoring of energy efficiency investments

• Promotion of the energy audit standard

• Handbooks and information materials

• Calculating software (information and monitoring)

• Information for investors about energy auditors

• Running a national training scheme for building auditors

• Energy auditors authorisation scheme (1000 +)

• Organising a database of auditors (3500 +)

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THE POLISH NATIONAL ENERGY CONSERVATION AGENCY

KAPE S.A.

THE LEADER OF ENERGY EFFICIENCY National award 2013

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Dr Roman Babut

E-mail: rbabut@kape.gov.pl

The Polish National Energy Conservation Agency

www.kape.gov.pl

Thank You for the Attention !!!

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