INCREASING URBAN ENERGY SUPPLY THROUGH ENERGY EFFICIENCY UN Symposium on Sustainable Cities

Cities need energy to grow Cities economic growth is constrained by inadequate electricity supply Brown outs and load shedding are a fact of life in many cities Generators are ubiquitous New energy infrastructure is expensive Urban poor are under- served

Energy efficiency increases energy supply Energy efficiency = boosting energy productivity Lowest cost source of energy; using energy more efficiently, not wasting it Energy demand in developing countries growing at 3.4% annually Energy efficiency could cut energy demand in half to 1.4% per year Would reduce energy demand by 25% by 2025 Time is of the essence: 50% of capital stock (buildings) will be constructed or refurbished in next 20 years Implementing optimal energy efficiency can lock in energy savings for decades

Scope for urban energy efficiency Energy efficient building codes to cover HVAC, lighting and thermal insulation Street lighting, stop lights Sizing of pumps for water and sanitation Green procurement: only energy efficient products Collaborate with private sector ESCOs in energy performance contracts for government buildings Promote energy efficient consumer behavior

Market barriers to energy efficiency Capital costs for EE equipment (HVAC, refrigerators, air conditioners,…) are higher Consumers and builders lack information to make right energy choices Builders do not operate buildings, are concerned with lowering upfront building costs, no incentive to reduce operating costs EE projects often small, need to be aggregated to attract investment Due to energy subsidies, consumers are insulated from true price of energy Tighter credit markets make financing more difficult

Pricing In many countries, consumers pay less than the supply cost of energy IEA argues to reduce fuel subsidies – $250 billion in annual subsidies in developing countries in 2005 Inhibits investment in new energy infrastructure Makes energy efficiency measures uneconomic Alternative – direct cash/credit payments to urban poor for electricity use Case study from Baja California, Mexico

Baja California, Mexico: Credits to urban poor for electricity bills Income from a wind power plant ($2.6 million) made available as credit against electricity bills and energy- efficient appliances for 35,000 impoverished families of Mexicali Priority given to elderly, single mothers, low-income families with children and disabled Save up to 40 percent off electricity bills during summer months Provide monthly cards of credit $$ to urban poor for payment of electricity bills

Energy efficiency standards and labels Energy efficiency standards are regulations that specify the minimum allowable energy performance for appliances, lighting, equipment, even buildings Standards prevent inefficient products from entering the market Provide information to consumers and builders so they can make informed choices Green procurement: government is largest consumer; procurement of only EE products can transform market

Develop energy efficiency building codes Require builders to use only highly efficient HVAC equipment, windows and lighting products Mandate adequate building thermal insulation Mandate optimization of new building energy performance Can yield significant savings in operational costs in terms of energy and money Locks in energy savings for decades

Energy labeling aids Endorsement label: top 20%Information label

Energy efficient refrigerators

LED street lighting Decreasing costs, super high efficiency of LEDs driving new applications Up to 88% savings in electricity costs Delivers 30 lux from 4.5 meters using only 25 watts 60,000 hrs lifetime (5-10 X increase) Uniform light distribution with minimal glare Similar energy savings for LED stoplights

Engage the Private Sector Energy Service Companies (ESCOs) are proliferating around the world Identify potential energy savings Perform feasibility study Conceptualize a project Arrange financing Implement energy efficiency measures Measure energy savings over next few years and guarantee savings under an energy performance contract

ESCO innovative finance Finances energy efficiency projects from energy savings Permits the realization of projects for which $$$ may not otherwise be available Mobilizes private capital Ensures that savings will be realized in a certain time frame World Bank, IFC, Econoler and Nexant supporting ESCO development

Consumer awareness raising Information campaigns can shape public behavior and values toward energy efficiency Utilize the gamut of social media: TV, newspapers, bus stop posters, school posters, workplace guidelines, messages in electricity bills,…

California energy crisis in 2001 Public information campaign Energy crisis due to electricity market distortions Government launched F LEX Y OUR P OWER media campaign Target audience: from CEOs to school children Within 10 months, reduced peak electricity load by 6300 MW of which 40% due to behavior change

Mohan Peck UN consultant Thank you