Ministry of Energy and Industry, Support for low emission development in South East Europe (SLED): Low-carbon transformation of the Public Building sector My presentation is entitled Low-carbon transformation of the Public building sector in South East Europe. It is based on the selected results of the project on support for low emission development in our region funded by the Austrian Development Agency. From the whole region we selected Albania, Serbia, and Montenegro. Why support for energy efficiency/GHG mitigation in buildings of these countries is important? Gjergji Simaku Director Ministry of Energy and Industry, RES&EE Directory, Albania SLED2 Workshop Tirana, 28 June 2016

Why buildings of Albania, Serbia, and Montenegro? There are many reasons for that: First, in 2015, the building sector was responsible for 38 - 44% of the final energy consumption and 66% - 74% of the electricity consumption The Public buildings contributed the second largest share to these figures. Second, our countries are small. The departments responsible for energy efficiency planning are very small. Third, our living standards are very low as compared to those in the EU. In Albania, usually only one room of a dwelling is heated for a few hours a day. As for Public Building we ask for different comfort maybe higher. Some of Public building have high level of comfort and high energy consumption. SLED2 Workshop Tirana, 28 June 2016

Objective To assist the design of climate mitigation policies in the Public 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 Public 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? and… our aim was not only to supply ready results, but also to increase the capacity of policy-makers and experts to conduct their own assessment. Our project aimed to address these challenges and we aimed to assist the design of climate mitigation policies in out countries 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 Public 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? Furthermore, our aim was not only to supply ready results, but also to increase the capacity of policy-makers and experts to conduct their own assessments after ouw project ends. SLED2 Workshop Tirana, 28 June 2016

Tasks Develop Public building topologies Design a bottom-up simulation model to assess the impact of policy packages SLED2 worked closely with representatives of ministries of energy, environment and other institutions on the design and assumptions of the models. These policy-makers were trained for modelling software. The models with all underlying input data were provided to these stakeholders. Thus, our tasks were First, to develop Public building topologies And second, to design a bottom-up simulation model in LEAP software to assess the impact of policy packages We worked closely with representatives of ministries of energy, environment and other institutions on the design and assumptions of the models. These policy-makers were trained for LEAP. And the models with all underlying input data were provided to these stakeholders to conduct their own assessments later upon their needs. SLED2 Workshop Tirana, 28 June 2016

Energy efficiency legislation and policies with focus on energy efficiency in public buildings The main policy documents and laws governing the activities in the field of EE in Albania include the following: Law no. 124/2015 regarding the energy services (ESD) and Energy Efficiency Directive (EED) Decision No, 38/2003 approving the Energy Buildin Code (recast) draft Decision No, __/2016 approving the Albania Energy Efficiency Agency draft Decision No, __/2016 approving the Energy Audit Regulation for Licensing Draft Law on Transposition and implementation of Directive 2010/31/EC on energy performance on Building. Draft of 2nd and 3rd National Energy Efficiency Action Plans (next NEEAP). The adoption and implementation of NEEAPs was required by ESD (2006/32/EC), and is required, as well, by the EED (2012/27/EU) that repealed the ESD. There are four stages of elaboration foreseen for 2016th: - June 30, 2016 – submission of EPBD for Government Decision and than Parliamentary sessions. - Julay 15, 2016 - submission of NEEAPs; - July 30, 2016 - submission of Energy Audit Regulation for Licensing (required by Law on EE 124/2015) September 30, 2016 - submission of the draft DCM of EEA October 30, 2016 – submission of the DCM of Energy Efficiency Fund establishment

The SLED2 report main output: Albanian minimum energy performances of public buildings Regarding Commission Delegated Regulation (EU) No 244/2012 accompanied by Cost-Optimal Guidelines are setting the framework for calculation of the cost-optimal performance levels and of minimum energy performance requirements for buildings and building elements. The report includes: - The design and installations of the reference building; - The modernization solutions; - The energy performance calculation - The optimal cost calculation.

Results: building topologies Albanian topology Building designation Education Kindergarten Schools Higher education Libraries Theatres, cinemas museums Health Hospitals Health centre Nursery Small health centre Drug stores, labs Social centres Commerce Small commercial shops Supermarkets Tourism Hotel, motels Chalets, holiday villages, camping sites Mail offices, financial services Mail offices in cities Mail offices in villages Banks and insurance companies Small services companies Public administration City halls Town halls Head-offices of national public administration Methodology is based on TABULA/EPISCOPE Categorization Type Climate Performance - scenarios Current BAU Improvement 1 Improvement 2 Costs Capital + installation Cost effective As a result of our project, we analyzed the Public building stock in Serbia, Montenegro, and Albania and prepared building topologies relying on the methodology and experience of the European TABULA/EPISCOPE project. The slide presents our topology for Albania. As you can see, we classified buildings and counted them according to their construction period and type. We also calculated their performance in three climate zones. Further, we calculated their performance in case of renovation, which usually happens in the business-as-usual case, as well as in cases of standard and ambitious retrofits. The standard retrofit would improve building performance to that according to the forthcoming Albanian building code. The ambitious retrofit corresponds to nearly zero energy/carbon performance. For each of retrofit packages we calculated associated costs.

Calibration for thermal comfort Albania: calibration for thermal comfort – based on SLED1 private buildings Calibration for thermal comfort Floor area heated Zone A – 50% Zone B – 60% Zone C – 80% Duration of space heating Electricity heating - 8 hours Wood and LPG heating – 6 hours Floor area cooled 60% Duration of space cooling 12 hours The figure compares the energy balance of Albania in 2010-2013 and the calculated energy consumption of thermal energy uses with and without calibration to partial heating/cooling and the duration of heating/cooling. The non-calibrated energy consumption (energy demand if households would heat the whole floor area during the whole day) is more than twice higher than the calibrated (actual) energy consumption. This gap represents an important message. As the welfare of Albanian people will grow in the future, households will wish to heat larger floor areas for longer period of time. This is why, it is important to reduce the demand for energy through retrofitting existing buildings, to ensure high energy performance of new buildings, and to install advanced technical systems as soon as possible in order to avoid the growing of energy demand due to rising living standards. Models which do not make calibration overestimate energy savings and its cost-effectiveness that provides misleading information for households and policy-makers.

Results: building topology analysis ALBANIA: Building Category PUBLIC BUILDING Area by category (m2) Total area of public building (m2) Area of state owned buildings (m2) By the total of building stock By the total of public stock Comercial, services 5.70% 21.39% 3,436,900 -   Offices 2.32% 8.69% 1,397,200 856,030 Education 10.58% 39.71% 6,382,300 5,014,069 Hotels and restaurants 5.29% 19.85% 3,190,200 Health Facilities 1.49% 5.59% 897,900 758,630 Sports 0.26% 1.59% 256,000 Other 1.01% 3.17% 510,000 Total non-residential 26.64% 100% 16,070,500 Total public 8,933,400 6,628,729 Non resiential Total stock 60,322,000 Even though standard and ambitious retrofits assume higher thermal comfort in terms of floor area heated and duration of heating, energy demand could be reduced significantly in both cases. Energy demand could be reduced in case of standard and ambitious retrofits even though these retrofits assume higher thermal comfort.

Moderate scenario New buildings comply with the building codes recently adopted or to be adopted these codes correspond to the characteristics of the measures of the “standard” improvement. Existing buildings will be retrofitted by 2030 in Albania to the standard level and will get financial support for that. Grants will be provided to cover eligible costs for: Low income regions in large buildings : 90% of the retrofitted during 2018 - 2030 declining to 10% of them by the target year Low interest loans should be provided to cover eligible costs for: In order to understand the level of efforts, which the countries have to apply to decarbonize their Public building stock, we modeled three scenarios. In the business-as-usual scenario, new buildings are built according to the practices taking place in 2001-2011, i.e. in line with the building code introduced in 2003 . The only difference is that the share of living area heated and the duration of heating is higher than in the past, namely the same as in the business-as-usual improvement. The moderate scenario models the decarbonisation by 2050 in Albania and by 2070 in Serbia and Montenegro. According to this scenario, new buildings will be built according to the buildings codes recently adopted (Monte, Serbia) or to be adopted (in 2016 for Albania) In order to ensure the retrofit of the entire existing buildings stock, all buildings remaining until 2050 will be retrofitted at least once to the level of standard improvement. To ensure the implementation of these retrofits, the countries introduce financial incentives. For the majority of households in detached and semi-detached houses the introduction of low-interest loans is relevant. For households, which live in such houses and which are considered low income, we suggest the introduction of grants (10%). We assume that at present there are only 10% of the households in row houses and multi-Public apartment buildings, which are able to overcome organizational barriers and obtain low interest loans for building retrofit. We assumed that the rest of households in these buildings are eligible to obtain grants. As the market cumulates the experience of providing loans for the retrofits in multi-Public buildings, the share of households, which will be able to obtain the loans will grow to 90% by the end of modelling period. For the rest of the households, which are considered low income, the government will continue to provide grants.

Ambitious scenario New buildings Additionally to the assumptions of the moderate scenario: after 2018: comply with the building codes to be introduced in that year; these codes correspond to the characteristics of the measures of the “ambitious” improvement; before 2018: are eligible for low-interest loans to cover eligible costs, if their performance achieve that according to the 2018 building code Existing buildings will be retrofitted by 2030 in all countries and will get financial support for that (the same structure as in the moderate scenario) until 2022, will have to comply with the standard improvement after 2023, will have to comply with the ambitious improvement The ambitious scenario models the decarbonisation by 2050 in all countries. According to it: The countries will introduce a new stricter building code in 2023 Before 2023, buildings are eligible for low-interest loans, if their performance achieve that according to the 2023 building code The structure of the financial incentives is similar, with one note that to obtain them, buildings have to comply with the standard improvement until 2022 and after 2023 they have to comply with ambitious imporvement

Results: LEAP model applied for residential building Albania (SLED1) The slide shows how the Albania model prepared in LEAP looks like

Results: In Albania, both moderate and ambitious policy scenarios may deliver significant energy savings . Ambicious scenario (improvement 2) only on Kindergarden Dormitories and Hospitals, the rest Improvement 1only. Sector priorities for policy-making and decisions to be taken on Next NEEAP 2-3. In Albania, it is important to ensure that public building built after 1991 will be retrofitted it is important to retrofit the building stock constructed in 1971 – 1990 For the country it makes sense to focus on energy savings in small buildings like kindergardens and creches and large buildings at Hospitales and Dormitories Space heating/cooling is the largest energy use for energy savings. From scenario modeling, we concluded that In all three countries, both moderate and ambitious policy scenarios may deliver significant energy savings But sector priorities for policy-making are different for each country. For instance in Albania, it is important to ensure that buildings built after 1991 will be retrofitted while in Serbia and Montenegro, it is important to retrofit the building stock constructed in 1971 – 1990 For all countries the largest energy savings are associated with retrofitting and construction of small buildings (single family houses)

Results: The investment required are high: Need to couple thermal efficiency improvement of existing buildings with their BAU renovation The investments into all scenarios are cost-effective or on the border of cost- effectiveness. Saved energy costs are higher than annualized investment costs as a whole on the country level, but not for all building categories in all climate zones. It is important to calculate other benefits additionally to saved energy costs The realization of the scenarios requires a careful design and massive provision of financial products for the Public energy efficiency as well as the introduction and enforcement of building codes. We also concluded that the investment required are very high in all three countries. This is why, it is important to couple thermal efficiency improvement of existing buildings with their BAU renovation. It also makes sense to use other “windows of opportunities” where retrofits could be demanded for instance at the point of dwelling sale. The investments into all scenarios except for the Serbian ambitious scenario are cost-effective or on the border of cost-effectiveness. However, saved energy costs are higher than annualized investment costs as a whole on the country level, but not for all building categories in all climate zones. This is why, it is very important to calculate other benefits (health, higher productivity, comfort, etc) additionally to saved energy costs. The realization of the scenarios requires a careful design and massive provision of financial products for the Public energy efficiency as well as the introduction and enforcement of building codes.

Thank you/FALEMINDERIT Information inquiries: Aleksandra Novikova: Aleksandra.Novikova@ikem.de Gjergji Simaku: Gjergji.Simaku@energjia.gov.al Zsuzsa Szalay: drZsuzsaSzalay@gmail.com Tamás Csoknyai: CsoknyaiTamas@gmail.com Thank you for your attention and if you have any questions please do not hesitate to contact us at the following emails.