ARMENIA – IMPROVING THE ENERGY EFFICIENCY OF MUNICIPAL HEATING AND HOT WATER SUPPLY Anahit Simonyan 6 October, 2004, Almaty

2 Main objectives: Identify barriers for energy efficiency in municipal heat sector Develop approaches and strategies Leverage additional financial resources Develop full size project proposal PDF-B Project Stage Overview Start date – 1999 Full size project approved GEF Council

3  Lack of strategies, concrete implementation plans and special economic policy for reconstruction of public services  Weak institutional and regulatory framework  Slow progress in opening the market for private investors  Inadequate legal framework for regulating relations of suppliers and consumers.  Lack of incentive mechanisms for producers and consumers to implement energy efficiency and energy conservation means  Low level of organisation of the apartment owners and low solvency of the population  Non favourable conditions for long term investments Main Barriers for Energy Efficiency in DH Identified in PDF-B stage

CHALLENGES: INSTITUTIONAL/SOCIAL Complete privatized housing stock without traditions of ownership responsibility for real estate assets Excessive government involvement in housing services in past which is reversed by complete withdrawal of state from sector management Weak and insufficient level of multi apartment building management institutions and lack of knowledge and skills in economic/financial property management including energy efficiency Social exclusion of poor house owners from access to the heating services 4

CHALLENGES: ECONOMICAL/FINANCIAL Deficient legislative/institutional framework enables application of crediting schemes Short term and high interest rate credits, and strict collateral requirements Absence of competitive market for building maintenance and management services Low affordability of the population and barriers for necessary unanimous decisions on building level Absence of non-subsidy type targeted social assistance schemes 5

6 Partnership GEF/UNDP USAID Heating Strategy of RA adopted in 2002 Government Communities Private Sector WB/IDA Urban Heating Project Other donors

7 To reduce greenhouse gas emissions from the heat and hot water supply system by increasing energy efficiency PROJECT OVERALL OBJECTIVE Full size project approved GEF May Council

8 Partnership Strengthening the house owner associations for heat supply service management Promoting measures aimed at commercialization of district heating services Creating favorable environment for private heat service providers Promoting environmental sustainability approaches in heat supply rehabilitation practices GEF/UNDP Viable bank lending schemes with government provided risk reduction enhancement for energy efficient heating system rehabilitation Creating financial support mechanisms for poor households Support to multi apartment building management bodies WB/IDA Urban Heating Project

9 Environmental, in particular climate changeEnvironmental, in particular climate change Economic developmentEconomic development Institutional strengtheningInstitutional strengthening Private sector developmentPrivate sector development Promotion of advanced energy efficient technology transferPromotion of advanced energy efficient technology transfer Energy efficient approachesEnergy efficient approaches PROJECT IMPLEMENTATION APPROACHES In rehabilitating municipal heat and hot water supply system to consider the following issues:

10 Ministry of Finance and Economy of RAMinistry of Finance and Economy of RA Ministry of Energy of RAMinistry of Energy of RA Ministry of Urban Development of RAMinistry of Urban Development of RA Ministry of Territorial Administration of RAMinistry of Territorial Administration of RA Ministry of Trade and Economic Development of RAMinistry of Trade and Economic Development of RA Ministry of Labour and Social AffairsMinistry of Labour and Social Affairs PARTNERSHIP

11 National Assembly of RANational Assembly of RA Public Services Regulatory CommissionPublic Services Regulatory Commission Local Governing BodiesLocal Governing Bodies Yerevan MunicipalityYerevan Municipality PARTNERSHIP

12 International Organizations World BankWorld Bank US Agency for International DevelopmentUS Agency for International Development European Bank for Reconstruction and DevelopmentEuropean Bank for Reconstruction and Development GTZGTZ KfWKfW UN Industrial Development OrganizationUN Industrial Development Organization PARTNERSHIP

13 Public Organizations National Associaltion for Condominium OwnersNational Associaltion for Condominium Owners Association of Condominium HeadsAssociation of Condominium Heads Society for Protection of Consumers RightsSociety for Protection of Consumers Rights Society of Producers and InterpreneurialsSociety of Producers and Interpreneurials Private Sector Mass Media PARTNERSHIP

14 1. Strengthening the role of local condominiums Improve legal and regulatory frameworkImprove legal and regulatory framework Strengthen capacity of the condominiumsStrengthen capacity of the condominiums PROJECT COMPONENTS

15 2. Supporting the restructuring process and building the capacity of the existing district heating companies Strategy for improving the energy efficiency of the existing DH companiesStrategy for improving the energy efficiency of the existing DH companies Imroved legal and regulatory frameworkImroved legal and regulatory framework A consumption based on metering and biling systemA consumption based on metering and biling system Strengthened capacity of the management and the operationStrengthened capacity of the management and the operation PROJECT COMPONENTS (cont.)

16 3. Supporting the emerging new service providers Improved legal and regulatory frameworkImproved legal and regulatory framework Strengthened capacities to develop “Bankable” investment proposals, to structure financing for the projectsStrengthened capacities to develop “Bankable” investment proposals, to structure financing for the projects A certification system for qualified services and equipment providersA certification system for qualified services and equipment providers PROJECT COMPONENTS (cont.)

17 4. Utilizing the results, experiences and lessons learned A system for monitoring the GHG emission reductions of the proposed pilot/ demonstration projectsA system for monitoring the GHG emission reductions of the proposed pilot/ demonstration projects Norms and enforcement mechanisms for supporting the sustainable use of forest wood for fuelNorms and enforcement mechanisms for supporting the sustainable use of forest wood for fuel Compilation, evaluation and analyses of experience and lessons learnedCompilation, evaluation and analyses of experience and lessons learned Project results, experience and lessons learnt disseminated at the national and regional levelsProject results, experience and lessons learnt disseminated at the national and regional levels PROJECT COMPONENTS (cont.)