EU and eceee Expert Seminar on Measurement and Verification in the European Commissions Proposal for

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EU and eceee Expert Seminar on Measurement and
Verification in the European Commissions
Proposal for a Directive on Energy Efficiency and
Energy ServicesBruxelles, 21 September 2004

• The Italian White Certificates System
  Measurement and Verification Protocols
• Marcella Pavan
• Head - Energy Efficiency Policy Division
• Italian Regulatory Authority for Electricity and
  Gas ()

() This is not an official document of the
Italian Regulatory Authority for Electricity and
Gas
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The Italian frameworkThe targets

• Mandatory quantitative energy efficiency targets
  
• national
• annual (first commitment period 2005-2009)
• primary energy savings (toe)
• Obliged actors
• electricity and gas distributors gt100.000
  customers at 31.12.2001
• Target sectors
• all energy end-use sectors (plus intermediate
  uses in the gas sector)
• but at least 50 via a reduction of electricity
  and gas end-uses

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The Italian frameworkEligible projects

• Compliance with targets via the implementation of
  energy saving projects
• Eligible projects
• illustrative list 14 classes of projects with
  more than 35 sub-classes
• projects implemented from 2001 to 2004 subject to
  the approval by the Regulatory Authority for
  Electricity and Gas (AEEG)
• Projects can be implemented
• by distributors, directly or via controlled
  companies
• by energy service companies (ESCO)
• The certification of the energy savings produced
  by each project is made via the issuing of White
  Certificates that can be traded
• in a specific market
• through bilateral contracts

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The Italian frameworkEconomic regulation

• Cost-recovery possible via electricity and gas
  rates
• on the basis of criteria established by the
  Regulator (AEEG)
• Sanctions for non compliance
• proportional and in any case greater than the
  investment needed to compensate the
  non-compliance
• established and applied by the Regulator

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The Italian framework and MV

• Measurement and Verification is the key for an
  effective tradable certificates mechanism applied
  to the promotion of energy efficiency in end-use
  sectors
• the underlying technical problems are closer to
  those related to the issuing of (Co2 eq) Emission
  Credits rather than to those related to the
  issuing of Green Certificates for the promotion
  of renewable generation
• you can not measure the energy savings/(CO2 eq.)
  emission reductions generated at the meter

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The Italian framework and MV - 2

• Technical issues
• baseline setting what technology (behaviour) we
  assume is substituted for with the implementation
  of the project (cf. following 2 slides)
• treatment of free-riders do we take into account
  savings that would have been achieved by project
  participants even in the absence of the project?
  If we do how?
• impact of different delivery mechanisms (e.g.
  direct delivery vs use of discount bonus)
• treatment of free-drivers do we take into
  account and, if yes, how positive impacts on
  non-participants who heard about the project thus
  changing their consumption behaviours in a more
  energy efficient direction? And what about
  extensive positive impacts on participants?
• rebound effect (is there anyone?) Do we take
  into account it? How do we measure it?

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Additionality
energy consumption
A
B
B
Natural change (B C)
B
Total gross project impact (B C)
C
Net project impact (C C)
C
t
t
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Baseline setting

• Some of the options
• average installed technology
• average sold technology
• average technology offered on the shelves
• technology that meets mandatory standards
• BAT

Energy Savings
-
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The Italian framework and MV - 3

• Technical issues (cont)
• project technical lifetime
• persistence of savings over time the savings
  produced during the first year of operation
  gradually reduce over time (cf. following slide)
• Market Transformation projects e.g. information
  campaigns, training programs we include them in
  the eligibility list? How do we measure and
  verify the savings produced?
• documentation requirements
• accreditation requirements for Certifiers

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Time persistence of energy savings
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Trade-offs and guiding criteria

• Trade-off accuracy and economic efficiency
• Our guiding criterion balance between robustness
  and reliability of savings vs simplicity
• Two alternative impact evaluation approaches
• ex-ante e.g. deemed saving values
• ex-post i.e.direct measurement

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MV procedures AEEGs approach

• 3 types of MV approaches
• 1) deemed savings (no on-field measurement)
• 2) engineering estimates (partial measurement)
  project/valuation complexity
• 3) energy monitoring plans (subject to
  pre-approval)
• Conventional life-time (up to 8 years) for energy
  savings produced, regardless of the type of
  energy conservation measure (ECM)
• Only additional savings i.e. over and above
  spontaneous market trends and/or legislative
  requirements

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Deemed savings

• Main Characteristics
• simplified energy savings calculation
• limited reporting documentation to be provided
• simplified control and certification procedures
• Suitable for projects for which expected savings
  and reasonably well understood and direct
  measurement would therefore be not cost-effective
  
• ? e.g CFL, m2 of insulated wall, small PV
  plants, high-efficiency boilers
• For each type of project a specific amount of
  saved energy is defined ex-ante for each
  installed unit (toe/unit/year)
• Default factors for free-riding (net-to-gross
  ratio), delivery mechanism and persistence
• Threshold 25 toe/year

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Deemed savings - 2

• Example substitution of 1 lamp with a CFL
• deemed savings 14.6 10-3 toe/CFL/year
• gt threshold 1712 CFLs.
• main assumptions
• power difference (W) between incandescent lamps
  and CFL
• place of installation (in which room)
• number of working hours in one year
• (weighted average)

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Engineering estimates

• Main Characteristics
• relatively simplified energy savings calculation
• reduced reporting documentation to be provided
• simplified control and certification procedures
• Suitable for projects whose saving impact is
  quite well understood but varies depending on a
  limited number of identifiable parameters (e.g.
  number of working hours).
• For each type of project a specific evaluation
  algorithm is defined, with pre-defined values for
  some parameters while other parameters have to be
  measured case by case
• Threshold - 50 toe/year for ESCOs and small
  distributors
• - 100 toe/year for big distributors

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Energy Monitoring Plans

• Main Characteristics
• direct measurement of energy usage (cf. following
  slide)
• pre-approval of the methodological proposal
• extended documentation to be provided for ex-post
  validation and certification
• extended control and certification procedures
• Applied to projects whose energy performance
  crucially depends on variables and parameters
  that change from case to case and is therefore
  less predictable
• Methodological MV proposal to be developed
  according to pre-determined criteria and format
• Threshold - 100 toe/year for ESCOs and small
  distributors
• - 200 toe/year for
  big distributors
• comparable/coherent with IPMVP (with stricter
  rules)

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Energy Monitoring Plans - 2
Energy consumption
baseline
Monitoring plans
Energy saved (toe)
metering (kWh, m3)
Threshold
time
Application of ECMs
BeforeECMs
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The Proposal and the Italian framework anything
useful? - 1
TYPE OF ACTIVITY
DIRECTIVE PROPOSAL
ITALIAN FRAMEWORK
PROJECTS
MEASURE
PROGRAMME
HORIZONTAL MEASURE
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The Proposal and the Italian framework anything
useful? - 2
TYPE OF VALUATION
DIRECTIVE PROPOSAL
ITALIAN FRAMEWORK

• MEASUREMENT
• Distribution Bills
• Energy products Sales Data
• Equipment/Appliances Sales Data
• End-Use Load Data

DIRECT MEASUREMENT

• ESTIMATES
• Enhanced Inspection
• Simple Non Inspection

ENGINEERING ESTIMATES (Pre-defined criteria and
methologies)
DEEMED SAVINGS (Ex-ante values)
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Conclusions

• EU Proposal for a Directive much wider in scope
  compared to the Italian White Certificates
  framework (both policies/horizontal measures and
  projects/programs and measures)
• The Italian WC framework is project-based and
  does not include policy measures
• The Italian WC framework includes financing
  mechanism via tariffs ? asks for a rather
  accurate MV of actual savings
• The Directive will have to be implemented in
  different Member States ? MV guidelines will
  have to be flexible and adaptable to
  country-specific features
• ? Guidelines for MV within the Directive (Annex
  IV) can not be too detailed and burdensome
• But we do need some common/homogeneous rules on
  common methodological issues (e.g. baseline,
  lifetime, persistence) that will be applied on a
  country-by country basis

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Conclusions - 2

• To this respect the Italian MV approach could be
  one useful reference to integrate the guidelines
  for MV of energy saving projects/measures
  reported in Annex IV
• In particular the deemed savings and the
  engineering methods, properly adapted to national
  circumstances, can be transferred to other
  national contexts.

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• APPENDIX

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Deemed savings (1) Developed so far

• Compact Fluorescent Lamp
• Replacement of electric water heaters with gas
  water heaters (residential)
• Replacement of gas water heaters with more
  efficient gas water heaters (residential)
• Installation of efficient (i.e. 4 stars) gas
  water heater (residential)
• Double glazing (residential, offices, commercial,
  hospitals, schools)
• Wall insulation (residential, offices,
  commercial, hospitals, schools)
• Small PV plants (residential, offices,
  commercial, hospitals, schools)
• Thermal solar for water heating
• White goods fridges, frizers, dishwashers,
  whashing machines
• Low-flow showers water taps
• Low-flow water taps
• 17) 18)
• 14)

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Deemed savings (2) Developed so far

• High efficiency electric motors (industrial uses)
• Heat pumps
• Light-flow regulators (pubblic lighting)
• Na lamps (pubblic lighting, substitution of HG
  lamps)
• Inverter application on hydraulic systems (small)
• Air conditioning (residential sector)
• High efficient (4 stars) boilers for condominium
• and others to come

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Engineering estimates Developed so far

• Energy recovery from natural gas de-compression
• Inverter application on hydraulic systems (big)
• CHP
• District Heating
• and others to come

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Supportive documentation

• In English
• Pavan, M. - Whats up in Italy? Market
  liberalisation, tariff regulation and incentives
  to promote energy efficiency in end-use sectors.
  In Proceedings of the 2002 ACEEE Summer Study on
  Energy Efficiency in Buildings, August 2002
• Pavan, M. - Tradable White Certificates new
  instruments to promote energy efficiency and
  reliability of supply in a liberalised market
  context, Metering, Billing and CRM/CIS Europe
  2003 (slide presentation)
• In Italian
• www.autorita.energia.it

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Contacts

• Marcella Pavan
• mpavan_at_autorita.energia.it
• tel [phone]
• fax [phone]