Assessing Investment & Financial flows for Mitigation in the ELECTRICITY Sector UNDP I&FF Methodology Guidebook: Mitigation

Relevance of Electricity Sector  Electricity generation accounts for 15% of total Turkmen national emissions (2004)  68% of generation capacity older than 20yrs  Domestic electricity consumption growing rapidly in line with economic development  Significant expansion of capacity for export

 Define scope & boundaries for the assessment  Define the institutional framework  Specify the time horizon for the analysis: recommended, base year 2005 recommended  Build on existing model & projections for the sector where possible 1. Establish key parameters of the assessment

Subsector electricity generation 1. Establish key parameters of assessment

Define boundaries for the assessment 1. Establish key parameters of assessment SubsectorsData availability Investment (baseline & prior 10 years) Priority in mitigation scenario HighMediumLowRank Fossil-fired generation Total electricity Hydro energy Wind energy Biofuel energy Tidal energy Nuclear energy Transmission & distribution Other renewables Example list of subsectors for screening & prioritization

Define boundaries for the assessment 1. Establish key parameters of assessment Turkmenistan: Scope of Assessment:  Electricity GenerationY  Gas fired power plant  Low carbon alternatives (nuclear, renewables)  Sequestration technologies  Electricity transmission?  Electricity distribution?  Demand side efficiency?  Industry, Transport, Residential/Commercial?

1. Establish key parameters of assessment Select preliminary mitigation options for energy related GHG reduction Currently Commercial Technologies fuel switching from coal to gas nuclear power renewable heat & power (hydropower, solar, wind, geothermal & power (hydropower, solar, wind, geothermal & bioenergy) renewable heat switching from coal to gas Improved supply & distribution efficiency Technologies to become commercial by 2030 Carbon capture & storage (CCS) for gas, biomass & coal & coal- fired electricity advanced nuclear power advanced fired electricity advanced renewable energy, including ocean energy, concentrating renewable energy, including ocean energy, concentrating solar, & solar Photovoltaic (PV)

 Development of simple speadsheets  Use of existing energy models  Sector projectsions/trends  To arrive at an estimate of projected demand & supply in the sector 1. Establish key parameters of assessment Select analytical approach

 National accounts:  System of National Accounts (SNA)  Systems of integrated environmental & economic accounts (SEEA)  Existing sectoral plans  Energy sector/econometric models:  Private sector reports  Other sources: GHG Inventories, National Communications etc. Sources of Data 2. Compile historical I&FF data and other input data for scenarios

 Electricity production by fuel & technology  Electricity consumption by sector & fuel  Inventory of large generation & transmission infrastructure, including commissioning & expected retirement/upgrade timescales  Capital infrastructure investment data  O&M data for key infrastructure  Electricity price & subsidy data  GHG emissions data for electricity sector  Power generation efficiencies  Transmission & distribution losses  National energy resource assessments  Socio-Economic growth forecasts (population/GDP)  National energy forecast models  Forecasts for electricity production  Forecast electricity demand & export  National resource assessments by fuel  Forecast sector investment data  Forecast upgrades for end of life equipment  Forecasts for price support & subsidies  Emissions projections for sector  Cost forecasts for new & emerging technologies Historical Data ( )Forecast Data ( )

 Compile annual IF&FF data at the appropriate level of disagregation (according to the national circumstances):  By investment type i.e.: Switch to renewable energy sources Improved efficiency of electricity production (e.g. gas turbine efficiency)  By investment entity Government Public corporations Private corporations (domestic) Private corporation (foreign) ODA 2. Compile historical I&FF data and other input data for scenarios Data collection, rely on national accounts data

2. Compile historical I&FF data and other input data for scenarios Data collection, rely on national accounts data Examples of I&FF data disaggregation in each sub-sector

 Define the physical basis for the Baseline Scenario  A baseline scenario: description of what is likely to occur in the absence of ADDITIONAL policies to address climate change; expected socioeconomic trends (e.g., population growth & migration, economic growth), technological change (if relevant), & expected business-as- usual investments in the sector. 3. Define Baseline Scenario

3. Define baseline scenario  Characterizing each relevant electricity supply & electricity end-use subsector over the assessment period  Assuming no new climate change policies are implemented  Baseline scenario reflects  Current sectoral & national plans  Expected socioeconomic trends  Expected investments in the subsectors Define baseline scenario

3. Define baseline scenario Define physical basis for the Baseline Scenario  Information should be disaggregated by:  Year (starting 10 years before the assessment’s Base Year)  Source (by corporations & government)  Type (national funds, foreign direct investment, official development assistance)

 Compile annual estimates, disaggregated by investment entity, source, investment flow type, & financial flow type  Calculate the total investment cost in real, unannualized terms over the planning period.  Estimate annual investment costs associated with the new plan  Develop a breakdown of total investments into major categories (e.g., ODA, FDI, domestic funds) 4. Derive I&FF for baseline scenario

Estimate annual I&FF Cumulative investment ( ) Funding entity categorySource of funds (billion 2005 $)(%) HouseholdsDomestic funds Governments Domestic funds (budgetary) Foreign borrowing (loans) Foreign aid (ODA) Corporations Domestic equity Foreign investment Domestic debt Foreign borrowing Government support Foreign aid (ODA) Total Adding costs to baseline scenario

 Mitigation scenario: incorporates measures to reduce GHG emissions  The mitigation scenario should describe expected socioeconomic trends, technological change (if relevant), measures to mitigate GHG emissions, & the expected investments in the sector given implementation of the mitigation measures.  Costing tools & international information sources may help to identify I&FF needs for different mitigation options 5. Define Mitigation scenario

5. Define mitigation scenario Category of Mitigation Measure Energy Supply MeasuresEnergy End-Use Measures Reduce Combustion Emissions Reduce Fugitive Emissions Reduce Combustion Emissions Reduce Energy Demand Improve efficiency of energy use Efficiency improvements in energy supply processes Efficiency improvements in energy end-use technologies Energy conservation measures Reduce emissions per unit of energy production or use Switch to lower carbon fuels Switch to alternative energy sources Reduce fugitive losses (including recovery & use) Energy Sector Mitigation Measures

5. Define mitigation scenario Two approaches to define Mitigation Scenario  Approach #1: assume an end point for electricity supply emissions  E.g. setting a target in 2030 for accumulated emissions from the electricity sector, favouring alternative sources  Approach #2: assume a set of technologies for electricity supply:  E.g. Review national potential for energy policy that articulate a set of technological options, such as renewable energy, & other carbon-reducing options to meet future energy demand.

 Compile annual estimates, disaggregated by investment entity, source, investment flow type, & financial flow type  Estimate annual investment costs associated with the alternative management plan  Calculate the total investment cost in real, unannualized terms over the planning period  Develop a breakdown of total investments into major categories (e.g., ODA, FDI, domestic funds) 6. Derive I&FF for Mitigation Scenario

6. Derive I&FF for mitigation scenario Project I&FF associated with the Mitigation Scenario Adding costs to mitigation scenario Cumulative infrastructure ( ) Unit cost Facility/Technology Wind energy plant(# units)(2005 $/unit) Energy efficient light bulbs (# pieces)(2005 $/piece) …(# …)(2005 $/…) Total

Projecting investments 6. Derive I&FF for mitigation scenario Adding costs to mitigation scenario Cumulative investment ( ) Funding entity category Source of funds(billion 2005 $)(%) Households Equity & debt Governments Domestic funds (budgetary) Foreign borrowing (loans) Foreign aid (ODA) Corporations Domestic equity Foreign investment Domestic debt Foreign borrowing Government support Foreign aid (ODA) Total

 Subtract the baseline annual I&FF, by entity & source, from the mitigation annual I&FF, by entity & source  Subtraction of the Baseline Scenario from the Mitigation Scenario  Sum incremental amounts over all years, by entity & source 7. Estimate changes in annual I&FF needed to implement adaptation

[ Subtract the baseline annual I&FF from the mitigation annual I&FF 7. Estimate changes in annual I&FF needed to implement mitigation  For each chosen electricity mitigation option, the analysis should identify the incremental investment (total dollars) by source (domestic funds, ODA, FDI etc.) up through 2030 to support the respective electricity management option

[ Summarizing incremental investments 7. Estimate changes in annual I&FF needed to implement mitigation Investment (billion 2005 $) Cumulative ( )Incremental Funding entity category Source of fundsBaseline scenario Mitigation Scenario Households Equity & debtBaseline valueMitigation value Mitigation minus Baseline value Governments Domestic funds (budgetary) Foreign borrowing (loans) ……… Foreign aid (ODA) ……… Corporations Domestic equity …..… Foreign investment ……… Domestic debt ……… Foreign borrowing ……… Government support ……… Foreign aid (ODA) ……… Total Sum (Baseline) Sum (Mitigation) Sum (Mitigation minus Baseline) REGIONAL CENTRE: PLEASE INSERT COUNRTY FIGURES FOR THE COUNTRY

 Determine policy instruments & measures to encourage changes in I&FF  Identify the entities that are responsible for the significant incremental changes in I&FF  Determine the predominant sources of their funds, particularly important to distinguish between public & private sources of finance 8. Evaluate policy implications

Assess policy options and summarize the projected I&FF for the key sector 8. Evaluate policy implications Policy options Policy objectives Economic instrumentsRegulatory instruments Policy processes Voluntary agreements Information & strategic planning Technological RD&D & deployment Energy efficiency Higher energy taxes Lower energy subsidies Power plant GHG taxes Fiscal incentives Tradable emissions permits Power plant minimum efficient standards Best available technologies prescriptions Voluntary commitments to improve power plant efficiency Information & education campaigns Cleaner power generation from fossil fuels Energy source switching GHG taxes Tradable emissions permits Fiscal incentives Power plant fuel portfolio standards Voluntary commitments to fuel portfolio changes Information & education campaigns Increased power generation from renewable, nuclear & hydrogen Renewable energy Capital grants Feed-in tariffs Quota obligation & permit trading GHG taxes Tradable emissions permits Targets Supportive transmission tariffs & transmission access Voluntary agreements to install renewable energy capacity Information & education campaigns Green electricity validation Increased power generation from renewable energy sources

 For more information on synthesizing results, documentation & the completion of the report, please refer to the Reporting Guidelines 9. Synthesize results and complete report

Q&A CLARIFICATIONS ? ? ? ? ? ? ? ? ?

Additional Information Possible models and methods NameDeveloperPlatform Metho- dology Cost (US$)/ Licensing Web Site/ Contact Description CO2DBIIASA,WindowsDatabaseFree C.ATWWW.IIASA.A sa.ac.at Database of CO2 emitting energy technologies ENERGY COSTING TOOL UNDPExcelAccountingFree RGMINORU.TA ORG Estimates the amounts & types of energy investments required to meet the Millennium Development Goals ENPEP Argonne National WindowsVarious Depends on modules used & type of institution. L.GOV Suite of Models for Integrated Energy/Environment Analysis HOMER National Renewable Energy Windows Optimizati on Free omer Design of off- & on-grid electrification options LEAP Stockholm Environment Institute Windows Physical Accounting, Simulation Free to qualified users from developing countries. YCOMMUNITY. -US.OR Integrated Energy/Environment Analysis …………………