A worked example for Denmark using the proposed EU Directive rules Senior Adviser Peter Bach Danish Energy Authority EU and eceee expert seminar on measurement and verification in the European Commission’s Proposal for a Directive on Energy Efficiency and Energy Services Brussels, September 21, 2004

My scope  I will try to follow the methodology as it is described in the proposal from the Commission  Will not discuss alternatives  I will focus on some of the unclear points and some of the difficulties  Most of the figures are very rough estimates – not based on evaluations  Not calculated any savings from transport initiatives  Not a formal Danish view

1 % target  The target is 1% per year of the amount of energy distributed and/or sold to final customers (article 4 (2))  Energy consumption in industrial production covered by ETS (and IPPC) are excluded (footnote 16)  I have not excluded electricity consumption in my examples.  Energy used for aviation and foreign bunkers not included (article 3, (a) and (f))  Non-energy use: Not included

Final energy consumption in Denmark

What is the target?  Not just 1% of the total final consumption!  The electricity problem:  Electricity savings shall be multiplied with 2,5 (footnote 64). This is a way to compare electricity with fuels (conversion to primary energy)  To be consistent is it necessary to multiply the electricity consumption with 2,5 in the calculation of the target: Fuel4,0 PJ Electricity 1,15 * 2,5 =2,9 PJ 1 % annual target6,9 PJ  Cumulative target over 6 years: 41,3 PJ

Target for what?  ”The obligation shall be expressed in terms of an amount of energy that should be saved as a result of these energy efficiency measures” (explanatory memorandum)  Bottom-up calculation of effect of measures  requirement to secure cost-effectiveness  Not intensity or absolute consumption  The effect of all kind of measures introduced since 1991 can be included

Effect of measures  Step 1: New annual saving from 2006  Including new savings from measures implemented since 1991  Step 2: Active savings in 2006 from  Effect of realized and still ”living” saving from measures implemented since 1991  Some of the figures are very quick estimates – just an illustration

Example: Building codes  Buildings codes:  from 1985: 100 kWh/m2  from 1995/98: 75 kWh/m2  from 2006: 55kWh/m2  From 2006 (step 1):  5 mio. new m 2 per year  Savings: 5 mio. m 2 * 45 kWh/m 2 = 225 GWh = 810 TJ/year  New buildings 1995/98 – 2005 (step 2):  Savings: 46 mio. m 2 * 25 kWh/m 2 = 1150 GWh = TJ

Example: Utility consulting (part of DSM)  Non commercial advice (audits) to industrial and commercial customers by the grid companies  The advice include estimates of savings, and are reported to the company  The estimated savings are put in a database  One year after: The consultant will contact the company and ask which of the suggestion they have implemented  This is also reported to the database  The effect is the estimated savings of the implemented suggestions

Example: Condensing gas boilers  Subsidy scheme :  increased the market share from 19% to 66% today  baseline: market share 30% today  Annual effect can be calculated from:  increased market share (66% - 30%)  increased efficiency of boilers (10%)  annual sale of gas boilers  average heat consumption/production

Step 1: New annual savings from 2006

Conclusions from step 1  Rough estimates shows that Denmark don’t fulfil the 1% target only with new savings from measures already in force  savings from transport not included  new action plan with new measure  not unrealistic to meet the target only with new saving  The inclusion of building codes and other kind of government regulation are very important  It is possible to calculate or estimate the effect of most measures  if this shall be based on detailed evaluations will it create a lot of work

Problems – new savings (step 1)  Double counting  Elec. companies, Elec. Saving Trust and labelling  evaluation of effect on targets groups – not measures  Free riders  agreement scheme, subsidies, consulting schemes  simple assumptions can be used  Baseline  for some measures is this a very important point  common methodology can be useful  Detail evaluation of net-saving effect is difficult  but simple estimates can be used

Step 2: Still ”living” savings Active savings in 2006 from  In principle the same measures as from 2006  if they have been implemented and in force between 1991 and 2005  Also some measures which are no longer active  some subsidy schemes have run out  Only “still living” savings  it depends on the life-time of the actual savings  they will not all have full effect until 2012  standard figures for life-time can be used

Active savings in 2006 from

Effect of increased taxes on energy  The effect on energy consumption in 2006 of increased taxes on energy since 1991 can also be included  We have tried to calculate this by our forecast model  Effect in 2006:  Electricity: 5,1 PJ (multiplied with 2,5: 12,75)  Other fuels: 13,9 PJ  Total: 19,0 PJ (26,6 PJ) Price elasticityElectricityOther Households-0,15-0,35 Industry and commercial-0,25-0,35

Conclusions from step 2  The effect of measures taken since 1991 – early action or past performance - are very important  but why from 1991?  The problems in relation to measuring the effect are general the same as in step 1 – but bigger!  The inclusion of taxes create special problems  double counting, overlap, etc.  highlight that the life-time of different savings are important  the calculated effect of increased taxes are not all real - the figures are to high (reduced to 1/3 on next slide)  guidelines will be necessary

Illustration of savings and target Step 2: Still living savings - reduced 50 % Taxes 33% Step 1: New savings 1 % target

Final comments  Cost-effectiveness is important  This requires estimations or evaluations of the effect of all main energy saving activities  Member countries would therefore anyway estimate the effect and do evaluations  If this is true the obligations to measurement in the directive will not be a burden – common methodology can be a help