Support for low emission development in SEE: decarbonisation of the residential sector in Albania Tirana, 26 October 2015 Modelling: Aleksandra Novikova, PhD | IKEM | University of Greifswald Input information from the reports of: Gjergji Simaku | Ministry of Energy and Industry, Albania Zsuzsa Szalay, PhD & Tamas Csoknyai, PhD | Budapest Technical University

Outline Objective Method and boundaries Modelling steps, results and their discussion Demographics Buildings stock turnover Energy consumption and CO2 emissions in the base year, calibration Business-as-usual trends of energy consumption and emissions SLED policy packages Impact of policy packages and associated costs Other possible scenarios and sensitivity analysis

Objective To assist the design of energy efficiency and climate mitigation policies in the residential buildings of Albania with the information on: What are the future trends of energy consumption and CO2 emissions? What are the key influencing factors? What are the priority sector segments for policies? What kind of policy packages and what level of policy efforts are required to make the residential buildings low energy/carbon in the medium/long term future? What are the associated costs? How high are possible energy savings and CO2 emission reduction?

Modelling steps Architects & policy experts Economists & policy experts Step 1: Development of the buildings topology Step 3: Calculation of possible retrofit packages (BAU, standard, ambitious) Step 5: Construction of the buildings stock model Step 6: Construction and calibration of the energy sector balance in Step 7: Calculation of baseline energy consumption and CO2 emissions until 2030 Step 2: Calculation of the present buildings performance Step 8: Formulation of policy packages, evaluation of their impact and associated costs Step 4: Calculation of costs for retrofit packages Bottom-up approach

Model boundaries Only thermal comfort is included into our analysis Space heating, space cooling, and water heating Building categories falling out Vacation buildings (not covered by the EPBD) Retrofit options: energy efficiency and fuel switch No impact of climate change

Modelling tool LEAP is a widely-used software for energy policy analysis and climate change mitigation assessment developed at the Stockholm Environment Institute

Objective To assist the design of energy efficiency and climate mitigation policies in the residential buildings of Montenegro with the information on: What are the future trends of energy consumption and CO2 emissions? What are the key influencing factors? What are the priority sector segments for policies? What kind of policy packages and what level of policy efforts is required to make the residential buildings low energy/carbon in the medium/long term future? What are the associated costs? How high are possible energy savings and CO2 emission reduction?

Population  Until 2015: INSTAT  2015 – 2031: INSTAT projections, medium growth scenario  2031 – 2050: continuation of trends Persons per household  3.9 in 2011 (CENSUS)  3.0 in 2050 (continuation of the trends= The number of inhabited dwellings almost equals the number of households Demographics

Buildings stock evolution

The demolition of the buildings stock is assumed to occur according to the Weibull curve % left = exp (-(t+c)/a)^b, where t- year a - scale factor b - shape factor, assume 2.5 c - location parameter, assume 0 Buildings stock demolition

Buildings stock replacement Estimated mean buildings lifetime in years: apartment buildings/all other buildings  Built before /50  Built during /50  Built during /50  Built during /50  Built during /50  Built after /60 Dwelling construction is estimated as the gap between the demand for dwellings and the remaining dwellings stock Fig. Age category A. Buildings built before 1960

Objective To assist the design of energy efficiency and climate mitigation policies in the residential buildings of Montenegro with the information on: What are the future trends of energy consumption and CO2 emissions? What are the key influencing factors? What are the priority sector segments for policies? What kind of policy packages and what level of policy efforts is required to make the residential buildings low energy/carbon in the medium/long term future? What are the associated costs? How high are possible energy savings and CO2 emission reduction?

Buildings stock replacement The growth in new floor area (2% yr.) is due to  The high demolition rates of old buildings  The growing number of households  The larger floor area of new dwellings !

Changing structure of the floor area by building type

Geographical relocation

Calibration

Calibration of the energy sources used for energy services The efficiency of heating with wood is much lower than the efficiency of heating with electricity-> The share of households using electricity for space heating should be much higher than it is estimated by CENSUS

Calibration for thermal comfort  Floor area heated  Zone A – 50%  Zone B – 60%  Zone C – 80%  Duration of heating  Electricity heating - 8 hours  Wood and LPG heating – 6 hours

Objective To assist the design of energy efficiency and climate mitigation policies in the residential buildings of Albania with the information on: What are the future trends of energy consumption and CO2 emissions? What are the key influencing factors? What are the priority sector segments for policies? What kind of policy packages and what level of policy efforts are required to make the residential buildings low energy/carbon in the medium/long term future? What are the associated costs? What are the associated costs? How high are possible energy savings and CO2 emission reduction?

Business-as-usual scenario The buildings retrofit rate is 10% of the old stock/yr. Only the first happening retrofit is considered, this is why the model shall not be used for the analysis to the long-term Business-as-usual retrofit Replacement of windows, 20% energy demand reduction Installation of heat pump, COP % of households are heated More air-conditioning – heat pumps are used for both heating and cooling No other policies than the acting buildings code (2003) are in place The increase in the lefel of comfort Longer duration of heating – 16 hours Larger floor area heated (Zone A – 75%, Zone B – 80%, Zone C – 100%) Higher water consumption

BAU: Final energy consumption by energy source Total: the decrease by 27% between (3%/yr.) Electricity demand will grow in spite of high efficiency of heat pumps, which are much better than direct heaters, wood and LPG stoves FEC – final energy consumption Electricity, growth 3%/yr

Baseline: Final energy consumption by buildings age categories 22% 20% 23% 15% 4%

Baseline: Final energy consumption by building type From the long-term perspective, it makes sense to retrofit buildings built after 2001 (1991) Only for orientation and setting priorities

Baseline: Final energy consumption by building type The priority segments are 1) detached houses and 2) apartment buildings

Baseline: Final energy consumption by climate zone The shares of climate zones A and B are increasing

Baseline: Final energy consumption by end-use Space heating will remain to be the largest energy end-use

Baseline: direction and indirect CO2 emissions Cooking

Objective To assist the design of energy efficiency and climate mitigation policies in the residential buildings of Albania with the information on: What are the future trends of energy consumption and CO2 emissions? What are the key influencing factors? What are the priority sector segments for policies? What kind of policy packages and what level of policy efforts are required to make the residential buildings low energy/carbon in the medium/long term future? What are the associated costs? Which energy savings and emission reductions are possible?

Policy packages Objective: low energy and carbon stock in the medium/long term

Objective To assist the design of energy efficiency and climate mitigation policies in the residential buildings of Albania with the information on: What are the future trends of energy consumption and CO2 emissions? What are the key influencing factors? What are the priority sector segments for policies? What kind of policy packages and what level of policy efforts are required to make the residential buildings low energy/carbon in the medium/long term future? What are the associated costs? Which energy savings and emission reductions are possible?

SLED scenarios Increase in the lefel of comfort Longer duration of heating (18 hours) Larger floor area heated (100% floor area heated)

SLED Moderate/Ambitious: Low energy stock in % Final energy consumption

SLED Moderate: Final energy savings by energy source

SLED Moderate: electricity savings 90%

SLED Moderate: Final energy savings by building age category

SLED Moderate: Final energy savings by building type

SLED Moderate: Final energy savings by climate zone

SLED Moderate: Final energy savings by end-use

SLED Moderate: final energy consumption per m2

SLED Moderate: Avoided CO2 emissions

Objective To assist the design of energy efficiency and climate mitigation policies in the residential buildings of Albania with the information on: What are the future trends of energy consumption and CO2 emissions? What are the key influencing factors? What are the priority sector segments for policies? What kind of policy packages and what level of policy efforts are required to make the residential buildings low energy/carbon in the medium/long term future? What are the associated costs? Which energy savings and emission reductions are possible?

Assumptions Financial analysis Discount rate 10% (could very from 1% to 15%) Market loan rate 15% Subsidized loan rate to 0% Loan term 10 years Energy prices Electricity EUR/kWh growth rates - 6%/yr. in , 3%/yr. in , and 1% in LPG 0.45 EUR/liter = EUR/kWh Growth rates 1.5%/yr. (World Bank) Wood 35.5 EUR/m3 = EUR/kWh Growth rates 1.5%/yr. (as LPG)

Assumptions on BAU costs BAU costs EUR 50/m2 for detached and semi-detached buildings EUR 45/m2 for row houses EUR 40/m2 for apartment buildings BAU costs include the costs of general buildings renovation no insulation new plastering in/out, floor tiles, new windows and doors (mediocre quality), a mono split system (heating and cooling), and painting

Affected floor area: new buildings

Affected floor area, retrofit of existing buildings

Incremental cost per m2

Incremental investment (SLED – BAU)

Saved energy costs

Profitable investment Annualized investment cost 8 EUR/m2 vs saved energy costs 32 EUR/m2 (discount rate 10%, lifetime 20 years) Investment until 2030 are 4,5 billion EUR (not discounted), saved energy costs are ca. 645 million EUR and will last for many years ahead

Costs of the grants (for the government)

Loans: costs for the government – “buy-down” rate

Costs of the building codes (for households)

SLED Moderate (2050): EU retrofit rate 2%/yr., FEC 22%

SLED Moderate (2050): EU retrofit rate 2%/yr., electricity 45%

SLED Moderate (2050): EU retrofit rate 2%/yr.: Final energy savings by building age category

SLED Moderate (2050): EU retrofit rate 2%/yr.

Affected floor area: new buildings

Affected floor area, retrofit of existing buildings

Incremental cost per m2

Incremental investment (SLED – BAU)

Costs of the grants (for the government)

Loans: costs for the government – “buy-down” rate

Costs of the building codes (for households)

Saved energy costs

Profitable investment Annualized investment cost 8 EUR/m2 vs saved energy costs 25 EUR/m2 (discount rate 10%, lifetime 20 years) Investment until 2030 are 2,5 billion EUR (not discounted), saved energy costs are ca. 1,7 billion EUR and will last for many years ahead

Other scenarios and sensitivity analysis