Support for low emission development in SEE: decarbonisation of the residential sector in Serbia Modelling: Aleksandra Novikova, PhD | IKEM | University of Greifswald Input information from the reports of: Prof. Milica Jovanović Popović, Ignjatović Dušan, Bojana Stankovic | University of Belgrade Zsuzsa Szalay, PhD & Tamas Csoknyai, PhD | Budapest Technical University Belgrade, 3 December 2015

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 Serbia 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?

Architects & policy experts Economists & policy experts Modelling steps Bottom-up approach Architects & policy experts Economists & policy experts Step 1: Development of the buildings topology Step 5: Construction of the buildings stock model Step 2: Calculation of the present buildings performance Step 6: Construction and calibration of the energy sector balance in 2013-2014 Step 3: Calculation of possible retrofit packages (BAU, standard, ambitious) Step 7: Calculation of baseline energy consumption and CO2 emissions until 2030 Step 4: Calculation of costs for retrofit packages Step 8: Formulation of policy packages, evaluation of their impact and associated costs

Only thermal comfort is included into our analysis 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 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?

Demographics Population Persons per household 2015 - 2041: Serbian Stat. Office. 2014. Population projections of the Republic of Serbia 2011-2014 2041 – 2070: the continuation of the 2036-2041 trend Persons per household 2.9 in 2011 (Serbian Stat. Office) 2.6 in 2030, 2.3 in 2050, 2.0 in 2070 ( 2.0 in 2050 in Europe, European Commission (2011). WETO-T) The number of inhabited dwellings almost equals the number of households European Commission. 2011. World and European Energy and Environment Transition Outlook (WETO-T). Bertrand Château and Domenico Rossetti di Valdalbero (Eds.)

Buildings stock evolution

Buildings stock dynamics in Serbia during 2002 - 2011

Buildings stock demolition 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 Only inhabited buildings were analyzed Calculated and assumed mean buildings lifetime, years calculated assumed A. Built ...1945 75 100 B. Built 1946...1960 80 100 C. Built 1961…1970 65 80 D. Built 1971...1980 75 80 E. Built 1981…1990 65 80 F. Built 1991...2015 100 F. Built after 2016 100 Dwelling construction is estimated as the gap between the demand for dwellings and the remaining dwellings stock Take the lifetime from Serbia? The same buildings categories

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 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?

Buildings stock replacement The growth in new floor area of ca. 1.5% due to The demolition rates of old buildings (+) The growing number of households (+) A bit more more large buildings, where floor area per dwelling is smaller than that in small houses (-) The larger floor area of new dwellings (+)

Changing structure of the floor area by building type

Calibration

Calibration: energy source breakdown and consumption levels Fuels Balance, all energy uses Appliances, lighting and cooking (25% of FEC) Balance, thermal energy uses Non-calibrated calculated final energy consumption for thermal uses Calculated final energy consumption for thermal uses Overestimate of the calculation % vs the balance Electricity 14.15 8.52 5.63 27.4 6.4 14% Natural Gas 2.25 22.7 2.1 -7% LPG 0.86 5.1 0.8 -10% Coal Lignite 3.01 14.7 2.8 Wood 9.43 40.4 23.1 145% Heat 4.38 8.6 4.2 -4% Total 34.08   25.56 118.9 39.4 41% Stat office of Serbia, not CENSUS

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 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?

Reference scenario Business-as-usual development Each building is retrofitted at least once during its lifetime, i.e. in average once per 45 years or the BAU retrofit rate is 2.2% If several retrofits happen, only the first one is considered, this is why the model shall not be used for the analysis to the long-term Business-as-usual retrofit 20% reduction of energy demand for space heating No fuel switch Higher thermal comfort The share of floor area heated increase from 50% to 60% No other policies than the acting buildings code (2011) are in place

Reference: Final energy consumption by energy source

Reference: final energy consumption by building age New: 20% of the floor are in 2030 , but consume 12% of FEC

Only for orientation and setting priorities Baseline: Final energy consumption by building type From the long-term perspective, the key categories for policy making are new buildings and those built after 1961 Only for orientation and setting priorities

Reference: Final energy consumption by building type The priority segment: small buildings

Reference: Final energy consumption by end-use Space heating will remain to be the largest energy end-use Shall we increase the correction factors for cooling in BAU?

Reference: direction and indirect CO2 emissions

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 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 moderate scenario: transformation by 2070 Policies: regulatory, financial incentives, market based, information. Regulatory the most effective costs effective Increase in the level of comfort, heating Larger floor area heated (70%) Larger floor area cooled (40%)

SLED ambitious scenario: transformation by 2050 Policies: regulatory, financial incentives, market based, information. Regulatory the most effective costs effective Increase in the level of comfort, heating Larger floor area heated (80%) Larger floor area cooled (50%)

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 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 Moderate Scenario

Final energy consumption by energy source 16%

Final energy savings by energy source

Electricity savings 39%

Final energy savings by building age category

Final energy savings by building type

Avoided CO2 emissions 30%

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 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 Energy prices Discount rate 4% Market loan rate 10% Subsidized loan rate to 0% Loan term 10 years Energy prices

Affected floor area by building retrofits

Investment costs Total investments Incremental investments 74 – 219/m2 depending on building type and age Incremental investments ~47% of the total investments

Incremental investment (SLED – BAU) GDP Albania = 13 billion USD

Incremental investment (SLED – BAU) GDP Albania = 13 billion USD

Eligible costs borrowed by private actors through loans

Costs of loans for the government Add the costs of loans for the households

Costs of the grants for the government (eligible share)

Saved energy costs

Cost effectiveness Annualized investment cost 2.87 EUR/m2 vs saved energy costs 3.73EUR/m2 assuming the discount rate 4% Increasing the discount rate higher than 6% makes the investment not profitable The incremental investments until 2030 are EUR 4.47 billion (not discounted), saved energy costs reach EUR 476 million and will last for many years ahead

SLED Ambitious Scenario

FEC by energy source 26%

SLED Ambitious: Low carbon buildings in 2050, retrofit rate 2% 19%

Cost effectiveness Annualized investment cost 4.2 EUR/m2 vs saved energy costs 2.7 EUR/m2 assuming the discount rate 4% The incremental investments until 2030 are EUR 12 billion (not discounted), saved energy costs reach EUR 557million and will last for many years ahead

Other scenarios and sensitivity analysis

aleksandra.novikova@ikem-online.de