Implementing Electricity Load Management: Lessons Learned from Efficient Lighting Programs

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Implementing Electricity Load Management
Lessons Learned from Efficient Lighting Programs

• ESMAP Knowledge Exchange Series
• April 12, 2006
• Ashok Sarkar
• ESMAP, Energy Water Department, World Bank
• asarkar_at_worldbank.org

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Power Crises The Context

• 1.6 billion people do not have access to modern
  energy resources
• Per capita electricity consumption in developing
  countries continues to be low
• Energy and peak shortages prevail resulting in
  high outage costs
• Cost of supply capacity expansion is high and
  limited by capital constraints
• Power delivery infrastructure is weak and
  loss-prone

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Power Inequities
23 industrialized countries consume half of
worlds total lighting energy use
Source NASA website http//antwrp.gsfc.nasa.gov/a
pod/ap001127.html Year 2000
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Strategies for Electricity Load Management

• Broad Objectives
• Utility perspective Reduce shortages or crises
• Consumer perspective Increase reliability,
  reduce costs
• Array of Technology Options Supply-side, TD and
  Demand-side measures (Demand Side Management-DSM)
• Menu of Approaches
• Public policy / Regulatory based Appliance
  minimum energy performance standards and labeling
  systems, industry energy consumption norms,
  mandatory energy audits, utility demand side
  management, information campaigns, etc.
• Market-driven Energy efficiency performance
  contracting through ESCOs, etc.
• Lighting options stand out in many ways Clear
  economics, easy to understand, positive impact on
  the electric utility, Upstream benefits (avoided
  TD losses), visible impact on quality of life
• Many other lighting options exist Fluorescent
  tube lights, LEDs, etc.
• The focus of the presentation is limited to
  Compact Fluorescent Lamps (CFLs) applications

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Lighting A Global Priority
A 230 billion Market

• Global Lighting Electricity Use
• Residential 28
• Service/Commercial 48
• Industry 16
• Street Lighting 8
• Global Lighting Savings Potential
• Savings Potential of total savings
• Residential 40-60 27
• Commercial 25-40 31
• Industrial 15-25 7
• Streetlighting 25-30 6
• Residential 92-99 29
• (Fuel-based)

Source Evan Mills, 2002
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Source Wikepedia website
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The Economics of CFL

• Case of a 15 W CFL replacing 60W incandescent
• Using 20 TD loss, usage of 5 hours/day and 0.5
  power factor (to be on conservative side), the
  savings per CFL at power plant bus bar equals
• Energy 50 kWh/year
• Peak Load 27 W
• At CFL price of 2.75 and life of 8,000 hours
  (4.4 yrs), the cost of savings
• Energy 0.0125 / kWh
• Peak Load 102 / kW
• Emissions reduction/ Carbon Credits (for grid
  emissions factor of 0.9kgCO2e/kWh) would result
  in additional revenues
• _at_ 5/tCO2 CER Price 0.99 per CFL
• _at_10/tCO2 CER Price 1.98 per CFL

Compare! Generation Supply Options 400-1500 / kW
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Efficient Lighting Programs Illustrative Case
Studies and Examples

• Sri Lanka
• India
• Vietnam
• Indonesia
• South Africa
• Ghana
• China

Biax
Globe
Reflector
Spiral
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IFC Efficient Lighting Initiative (ELI)
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Sri Lanka

• CEB Program to address high cost barriers
• 1st Pilot Phase (1995) 600 households
• 2nd Demo Phase (1996) 100,000 CFLs CFL cost of
  US7!!
• 3rd Phase (19998-1999) 600,000 CFLs (through
  loan scheme and direct sales)
• Up to 4 CFLs per customer
• 12 month interest free loan
• Payments through electricity bills or salary
  deductions
• 2 year warranty on lamps from 5 suppliers
• Reduction Impacts 34 MW
• Key Success Factors CEB, Loan, Warranty

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India BELP Program

• BESCOM (Bangalore City) Objective to improve
  reliability, addresses high system losses, reduce
  evening peaks
• Focused on residential customers, both CFLs and
  FTLs
• 1st Demo Phase 300,000 lamps in Bangalore Urban
  District
• 2nd Phase (ongoing) 2.6 million customers
  targeted three lighting suppliers (Philips,
  Osram, Asian Electronics) selected through tender
  to provide lamps with 1 year warranty
• CFL Purchase Options
• Direct Purchase at discounted prices
• Installment Scheme payment through 9 monthly
  installments through electricity bills or salary
  (BESCOM staff)
• Average savings per CFL gt Average installment
• Targeted Reduction 13.5 MW (pilot), 117 MW (2nd
  Phase)
• Key Success Factors BESCOM, Program marketing

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Vietnam

• EVN Objective to address rapid demand growth,
  reduce rural customers power bills
• 1st Phase (2001-2002) Pilot
• 2nd Phase (2004-2007) 1 milion CFLs targeted
• 300,000 CFLs procured in Dec 2004 from Osram
  through international tender process - ELI
  certification), mainly targeted to rural
  residential customers, 4-6 months timeframe
• CFLs price 1.07 with 15-month warranty
• Lamps distributed through Provincial PCs and
  Commune Retailing Groups (200 in Year 1)
• Initially subsidy was to be provided by EVN (33
  in Year 1 to 20 in Year 3)- assuming CFL cost of
  2.50
• Targeted Reduction 120 MW (2nd Phase)
• Key Success Factors Bulk procurement, Low Price

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Vietnam CFL Bulk Procurement Program
Source Peter du Pont, Right Light 6 Conference,
May 2005
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Indonesia Potential Targeted CFL Program
REDUCING SUBSIDIES THROUGH CFL GIVE-AWAY
PROGRAMS CURRENT TRADITIONAL MODEL Incremental
kWh Capital and operating costs 5.2
cents/kWh Revenue received 3.0
cents/kWh Cash contribution margin 2.2
cents/kWh (SUBSIDY) STRATEGIC ENERGY EFFICIENCY
THROUGH CFL Capital and operating costs 4.4
cents/kWh Revenue received 3.0
cents/kWh Cash contribution margin 1.4
cents/kWh (SUBSIDY) A NET LOSS (SUBSIDY)
REDUCTION OF 0.8 cents/kWh SOLD
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South Africa

• Eskom Objective to address power shortages and
  reduce rolling black outs
• 1st Phase 300,000 CFLs for free distribution in
  Alexandria (north of Johannesburg)
• 2nd Phase 2.7 million CFLs for low cost housing
  areas
• 3rd Phase (2006) 5 million CFLs (Western Cape
  Town) based on swap-out (through door-to-door
  campaign or at the supermarkets)
• 2.5 million CFLs free distribution (to low income
  consumers)
• 2.5 million to middle- and high-income consumers
  at subsidized retail price of US0.80 (compared
  to normal retail prices of US1.40)
• Targeted Reduction 150 MW (3rd Phase)

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Ghana

• Electricity Company of Ghana (ECG) Objective to
  address power shortages and affordability
• High-quality CFLs (withstands voltage
  fluctuations 190-260 V) by Osram
• Customer purchases up to 4 CFLs per household at
  the price of standard incandescent lamp
• Incandescent lamps returned to ECG are destroyed
• Approximately 4 millions CFLs per year on a
  sustainable basis.
• Estimated Reduction 150 MW per year (_at_ 27 TD
  losses, and 0.5 power factor)
• Proposed as a CDM project 122,000 tCO2e
  annually

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Ghana Efficient Lighting Project
Source CDM PDD for Ghana Efficient Lighting
Project, UNFCCC website
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China Shijiazhuang Green Lighting Project

• Hebei Province DSM center to address power
  shortages by accelerating the penetration of CFls
  in open market
• Follow-up of the China Green Lights Project
  (NDRC, UNDP, GEF)
• High-quality CFLs (ISO 9001 standards, China
  Compulsory Certification, China Energy
  Conservation Certification)
• Mainstreams CDM to increase the CFL penetration
  rate, with additional buyers
• Incandescent lamps returned to Hebei DSM Center
  are destroyed
• Approximately 600,000 CFLs per year on a
  sustainable basis.
• Estimated Reduction 20 MW per year (_at_ 7.5 TD
  losses)
• Proposed as a CDM project 86,000 tCO2e annually

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China Shijiazhuang Green Lighting Project
Source CDM-PDD for Green Lighting in
Shijiazhuang City (China), UNFCCC website
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China Shijiazhuang City (Hebei Province) Green
Lighting Project Project Implementation Scheme

(1) Selection of CFLs Manufacturers Project
Implementer will invite only CFLs manufacturers
which produce CFLs which meet the quality
standards.
(2) Distribution of CDM Exchange Cards to local
residents Project Implementer will distribute CDM
Exchange Cards to local residents either through
residents committees or at streets
(3-1) Selling of qualified CFLs at Hebei DSM
center
(3-2) Selling of qualified CFLs at some retail
shops designated by Hebei DSM center
(4-1) Provision of incentives at Hebei DSM
center In order to receive incentives at Hebei
DSM Center, interested local residents who intend
to purchase CFLs have to bring their living ILs
from home and fill in the CDM exchange cards.
(4-2) Provision of incentives at mobile
clearinghouses In order to receive incentives at
mobile clearinghouses, interested local residents
who intend to purchase CFLs have to bring their
living ILs from home and fill in the CDM exchange
cards. Mobile clearinghouses will move around
housing estates periodically.
(5) Generation of emission reductions by
replacing ordinary ILs with purchased CFLs at
buyers homes CDM cards which contained the
questionnaire will be recovered and analyzed to
calculate the expected emission reductions.
Source CDM-PDD for Green Lighting in
Shijiazhuang City (China), UNFCCC website
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Lessons Learned From CFL-based DSM Programs

• Opportunities
• Cost-effective strategy for peak load management
  and increased reliability of power supply
• Financially viable for service territories with
  commercial losses or subsidies
• Economies of scale ? bulk purchases ? lowered
  costs (Virtuous Cycle)
• Synergies with carbon finance instruments (CDM)
• Challenges
• Managing the program delivery in a sustainable
  manner
• High transaction/ delivery costs (esp. in
  countries with weaker markets and public /
  private sector institutions)
• Measurement and verification (esp. for leveraging
  CDM)
• Good quality (Voltages, induced low power factor,
  harmonics)
• Rebound and Free Rider effects

Efficient lighting technology and cost barriers
are gradually disappearing large-scale program
implementation and delivery remains a
challengebest practice business models could be
replicated
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Our Energy Futurethe Path is Clear...
OR
Electric incandescent lamp converted into a fuel
oil lamp from Ghana marketplace (Source Evan
Mills, 2002 Photo Credit Rick Wilk)
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• THANK YOU
• Ashok Sarkar
• ESMAP, Energy Water Department
• asarkar_at_worldbank.org