Energy Efficiency: The Danish Case Ulrich Bang, Director of International and EU Affairs

1
Energy Efficiency The Danish Case Ulrich Bang,
Director of International and EU Affairs
2
Agenda
3
My main points

• Energy Savings obligations schemes is the most
  cost effective element in the energy efficiency
  strategies in several EU countries
• We have succeeded in expanding the business
  opportunity for Danish energy companies
• Obligation schemes are designed in different ways
  to support the national energy policy objectives
  (fuel poverty, transport, energy savings outside
  ETS etc.)

4
Point of departure
5
Point of departure

• Energy Efficiency is here to stay! European
  countries will increase energy efficiency
  continuously up to 2050
• Energy efficiency has a high value for the
  costumer
• Energy efficiency is a complex product
• Strategic choice We in the energy industry can
  be part of the solution or leave the market to
  others

6
Cost effectiveness
Source Danish Energy Agency, 2009
7
Background Regulatory setup in Denmark

• DSOs as been engaged in energy efficiency since
  the early 1990.
• Voluntary agreement between authorities and DSOs
  but implemented in Danish legislation
• The agreements involves 4 sectors Electricity,
  district heating, gas and oil and runs from 2010
  2020
• Cost recovery secured approved by the regulator
• The most important initiative in the Danish
  Energy Efficiency policy

8
Why do we do it?

• Directly or via bundled services and
  brandingIf we didnt do it, others would

9
The Danish obligation scheme
10
Energy savings obligations is basically a market
for energy savings
11
Demand side The obligation

• Obligation on all distribution companies
• Obligation according to amount of distributed
  energy
• Target to reduce gross energy consumption
• 2 in 2011
• 4 in 2020
• Translated to end-use consumption
• 10.3 PJ/Yr Approx 1.5 of final energy
  consumption
• 6.1 PJ/yr from energy companies
• Full cost recovery scheme with benchmark of
  economic performance

12
Demand side The obligation
Annual savings target
PJ
13
Demand side The obligation

• Evaluation procedure every third year
• Internal surveillance according to Directive
  2009/72/EF of 13. July 2009
• Internal and external audit every other year
• Penalty is the possibility to loose your license
  to operate as a distribution company
• Public benchmarking on Danish Energy Regulatory
  Authority homepage
• Effect Comparison of distribution companies
  against each other

14
The Product
A Negawatt is

• Final energy
• First year savings not cumulative.
• Simple weighting factor are introduced from 2011
• Reflect lifetime, primary energy, non-ETS
• DSO can only count savings where they are direct
  or indirect involved in the implementation
• Involvement can be advice, energy audit,
  subsidies, etc.
• Agreements whole way from DSO to consumer before
  savings are implemented

15
The Product
A Negawatt is

• Final energy consumption in all sectors except
  transport
• All end-uses, also ETS
• Include local PVs and thermal solar
• Loses in grids especial district heating pipes
  (2010)
• No efficiency improvement in generation
• But thermal solar plants are allowed (2010)
• Adjusted standardized deemed savings
• Control and verification to ensure a priory
  involvement

16
Measurement of savings
A Negawatt is

• Deemed Savings Catalogue
• Average saving are calculated for standard
  activities
• Primarily used in households
• Specific calculation engineering methods
• Used for all big project
• Especially industries, public sector etc.
• Behavioral change, information and market
  transformation have (almost) disappeared from 2010

17
Verification of savings
A Negawatt is

• The utilities are responsible for verification,
  documentation and reporting
• External and internal audit and quality control
  are required
• Danish Energy Authority will do special control
  of the documentation etc. on an annual basis
• Documentation must be available
• Simple and cost-effective model

18
The Negawatt market
Regulated as other markets

• No realisation or commercial activities in
  distribution companies (EU regulation)
• Ensuring a well functioning market with strong
  competition and as many market players as
  possible
• The core necessaries in order to facilitate a
  competitive market are
• All energy carriers are included
• All end users are included
• All legal methods are possible

19
The Negawatt market
The role of the DSO

• The distribution companies are not allowed to do
  very much by themselves
• Regulated monopoly companies
• Have to involve an actor
• Can be another company in the same group
• But is very often a private engineering company
  or a craftsmen, installers etc.
• There can be several links from the utility to
  the consumers

20
Regulatory setup Monopoly and market
Oil. District Heating. Electricity 540
Distribution companies
Danish Energy Association
Target (816 GWh savings for eDSO 1.7 TWh for all
DSOs)
69 distribution companies
Monopoly
Market
40 Energy service Companies
Other Actors, builders, Energy perf. contractors,
3.3 M customers 2.8M households 0.5M business
21
(No Transcript)
22
Key economic figures

• The economics of the scheme is outside the
  general regulation
• The utilities are full covered.
• Expected cost pr kWh saved 0.5 DKK
• 6,1 PJ 800 mio. DKK / year
• Where does the money go?

Within the group
External contractors
Subsidies directly to end user
23
Results
Results
24
Results
25
Cost effectiveness
Source Danish Energy Agency, 2009
26
Costs and benefits

• Energy Company cost 150 mio. Euro (with cost
  recovery)
• Households pays approx. 16 Euro per
  household/year through electricity bill and heat
  bill (6 Euro/year for electricity alone)
• The more a costumer use the more he pay
• Costumer investment 600 mill. Euros
• Costumers saves 2 bill. in lifetime of the
  savings (15 years)
• Pay back time Industry 2 years all other
  sectors 7 years/average

27
My main points

• Energy Savings obligations schemes is the most
  cost effective element in the energy efficiency
  strategies in several EU countries
• We have succeeded in expanding the business
  opportunity for Danish energy companies
• Obligation schemes are designed in different ways
  to support the national energy policy objectives
  (fuel poverty, transport, energy savings outside
  ETS etc.)

28
Ulrich Bang

• Danish Energy Association
• Director of International and EU Affairs
• www.danishenergyassociation.com