Energy Access & Affordability: Residential households of
ARMENIA
“energy tariffs and prices; social safety net measures/programs; poverty characteristics, energy use and housing; poverty risks of increased energy bills.”
Astghine PasoyanProgram Manager
Armenia – Municipal Network for Energy Efficiency
Summary Slide Housing: policy, status, social issues, cross cutting Heat and Electricity: Costs and Tariffs ASE Work in this Sector: Energy Efficiency Primary Barriers: Residential Energy Efficiency Addressing Barriers:- Technical-Economic, Institutional, Information,
Financing Considerations & - Policy and Legal Reform
Ongoing Research: Energy Efficiency & Urban Utility Affordability Study
Armenia: Housing PolicyLegislation:
2002 National Assembly of Armenia adopted the Law on Management of Multi-apartment Buildings and new Law on Condominiums;
The Civil Code; Government Decision N1625, 2002 on Mandatory Norms
on Maintenance and Conservation of the Common Shared Property in Multi-apartment Buildings.
Building Management Bodies (condominiums) Registered:
In 2005, total of ~830 registered, 40-45% active
Status of Armenia’s Housing Sector
Common Problems & Issues:
Poor condition of common spaces (roofs, staircases, entrances and basements)
Absence of centralized heating Low awareness and consciousness by residents of building
conservation needs and opportunities
Empty apartments
Aging building stock
Radically different levels of affluence among households
Social Features of Population: Poverty Reduction Strategy Program (PRSP)
YearYear Poverty LevelPoverty Level Extreme PovertyExtreme Poverty
1999 56.0 % no data
2001 50.9 % 16.0 %
Projected by PRSP
2005 41.0 % 14.2 %
2010 29.1 % 10.6 %
2015 19.7 % 4.1 %
Social Features of Population: Alliance Survey Findings
Out of 363 respondents - social condition of the residents surveyed in multi-apartment buildings in 4 cities of Armenia (Yerevan, Hrazdan, Charentsavan and Sevan):
49% of those surveyed were identified as poor based on their expenditure levels, presence of pensioners, and other indicators;
83% of the respondent families spent about 50% of their family income on food;
37% of respondents spent 50% or more on utility services; 45% of respondents have financial debts, and 98% have borrowed for
basic survival needs; 20% of the respondents have family poverty benefit as a sole source of
income; and 18.7% of the surveyed families were receiving some kind of social
benefits, and only two of those families had employed members.
Cross Cutting Issues - HealthIllnessDuring the winter of 2004-2005, about 71% of urban multi-apartment households experienced illnesses due to under heated dwellings- over 14 % of population had colds of various origins; - over 60 % had influenza, etc.
Indicators2002 survey found that fuel combustion smoke exposure related health problems, such as upper respiratory diseases, headaches, sore eyes, swelling of extremities and blood circulation problems, are especially pronounced among poor households.- 3,467 annual life years are lost per 100,000 children under five- 120 life years lost per 100,000 women, due to indoor urban smoke exposure.
Other Cross Cutting Issues Safety: Deaths, injuries and damage to buildings caused by gas and
CO poisonings, fires and explosions (in 2003-4 heating season at least 50 fatal cases registered).
Education: Due to the lack of appropriate heating, many schools either do not function during the winter months (idle time in urban schools in 2004 was 1 month) or classes are held in cold (8oC) or polluted classrooms.
Environmental: The extensive use of wood for heating purposes contributes significantly to deforestation and has detrimental health implications particularly for the young and the old.
Social: During the winter months, up to 50% of family expenditures are used for heating purposes.
Correlation Between Illness & Heat Availability
30.2 25.5 28.344.1
34.225 25.7
69.8 74.5 71.755.9
65.875 74.3
There are nochildren
There arechildren
Bathroom isnot heated
Bathroom isheated
Apartment isheated fully
Apartment isheated
partially
Apartment isnot heated
There are sick people There are no sick people
Source: WB household survey 2005
NCategory of Benefit in Recipient Households
Average annual income (USD)*
1 Family 329
2 Child 413
3 Disability 459
4 Orphans 177
5 War victims 324
6 War veterans 527
7 Unemployed -
8 Religious groups 169
9 Public groups -
Average Income of Families Receiving Social Benefits
Heating expenditures in a multi-apartment building (AMD)
Number of rooms in
apartment
Without centralized heating
Withcentralized
heating
Potential monthly
savings from weatheri-zation*
Electric heating
Wood
1-room 16,000 - 10,000 3,500
2-room 22,000 18,000 15,000 4,000
3-room 26,500 24,000 20,000 4,500
4-room 28,500 - 25,000 5,000* Based on experience from demonstration projects
Anticipated Price Changes On April 10, 2006, the gas price will be raised:
- from 59,000AMD to 90,000AMD for under 1,000 m3 consumers (from $56 to $110)
- from $79.1 to $146.51 for consumers of over 10,000 m3
The rise in gas price in Armenia will cause at least 3 AMD increase in the price for electric power (Current day-time el. tariff is 25AMD, night-time –15AMD)- Armenia’s TPPs generate only 25% of energy generated in the
country, - Hrazdan thermal-power plant (TPP) has applied to the
Commission for revising the current prices for electric power,- The current day-time price for electric energy for Armenia’s
population is AMD 25, and the night-time price is AMD 15, - Hrazdan TPP already applied for a tariff raise from 11.37 AMD
to 21.36 AMD per 1 KW/h, Yerevan TPP and Electric Networks to follow
Other Factors Affecting Price
Growing demand for energy carriers- Armenia’s demand for electric power increases by
4-5%, annually
- Industrial gas demand is increasing 10% annually
- Armenia may consume up to 2.5-2.7bln cubic meters of gas yearly in the future
ASE Work in this Sector: Energy Efficiency is Key
Improve utility efficiency for residential and municipal consumers Promote building energy efficiency in low-income housing Conduct a household surveys on household (HH) heating needs and
low-income household assistance preferences for heating rehabilitation investments
Hold a workshops and focus group discussions with stakeholders to reveal preferences on low-income household assistance schemes for heating rehabilitation investments
Propose a mechanism for providing grants to low-income Build consumer capacity for improved efficiency of energy use Leverage municipal funding for EE investments in vulnerable HHs Consequently, bring down investment and operating costs and loan
burden on all households
Primary Barriers for Residential Energy Efficiency
Financial barriers: Existing loan terms are not applicable for EE projects due to high
commercial interests rates and short repayment periods Commercial financing is not available for EE projects Low bill collection/payment rate affects the cost-effectiveness of
EE projects.Legal, regulatory, institutional, and political barriers: Absence of targeted heating social assistance schemes for low-
income Fragmented/chaotic municipal efforts to subsidize or co-finance
heating projects Lack of appropriate price formation policies for the communal
services e.g. electricity, drinking water and sewage service, garbage removal, etc.
Monopoly of energy suppliers.
Barriers (continued)Consumer barriers: Insufficient metering which leads to lack of
awareness of energy cost and usage Lack of control over energy usage for some
consumers.Information barriers: Lack of trust in mass media Information on EE options is unavailable Lack of information on “success” stories available to
public.
Technical-Economic Considerations
Techno-economic benefits of energy efficiency are obvious: both on supply and demand-side- Need to define the product, the benefit, the recipient
and the responsible party A variety of experiences and diverse models
available throughout the region Need to be accumulated and shared through
networks of experts/organizations - a lot to be shared!- no single model fits all!
Institutional Issues Enforce market mechanisms to provide
opportunity to housing owners/renters to choose utility service providers
Eliminate subsidies and calibrate utility tariffs so as not to worsen payment discipline. Combine with targeted social assistance
Utilize the power of partnerships: Municipalities and public groups (NGOs), public/private, ESCOs, etc.
Strengthen the role of the home OWNERS and RECIPIENTS of utility services
Information Barriers & Recommendations
Low awareness of the population on:- low cost energy efficiency measures - available financing mechanisms for EE measures and housing
renovation projects
Recommendation: - Organize support, training and information flow and advisory
services assisting the residents on (1) legal, (2) economic, (3) financial, and (4) technical issues, and (5) best practices of project design, investment and business planning, fund-raising, energy- and project management, operation and repayment.
- Strengthen the capacity of the housing sector parties to participate in the housing market
- Encourage adequate media coverage of above issues
Financing Mechanisms Grants (phase out to allow for market acceleration, and use just to trigger the
market forces) Housing renovation/modernization loans
- ASE works on micro building energy efficiency loan mechanism in Armenia Municipal funds (linked to municipal official awareness of benefits of such
investments Energy efficiency revolving funds Social/subsidy funds State Housing Development, Repair and Maintenance funds Mortgage lending Credits from commercial banks Leasing Vendor credits Guarantee funds Carbon finance Funds of construction companies, etc.
While targeting EE Assistance to Vulnerable Households
Policy Recommendations to Address Legal Gaps
Fill legal gaps in ownership, management and assignment of responsibilities in multi-apartment housing, utility services and building maintenance entities
Legislative, technical-normative developments needed to:Updated technical building codesBuilding energy passportizationAppliance standards and labelling to affect property marketEnergy auditing procedures and licensingEnergy services
Legal framework allowing borrowing by housing associations and housing maintenance companies
Legal framework enforcing liabilities and minimizing risks for loan residential EE and housing renovation loan repayment
Innovative Policy Design and Reform
Law on Energy Saving and Renewable Energy Design State Energy Efficiency and Renewable
Energy Fund Development of EE Ordinances Elaboration of National Energy Efficiency
Program
Energy Efficiency & Urban Utility Affordability Study
Seeking to answer similar questions in the region Assess impact that reforms and restructuring in essential utility
services will have on the affordability of heat, electricity, water & wastewater.
Present the policy case for energy efficiency vs. traditional approaches
Identify policy, legal, institutional, commercial, and other impediments to using energy efficiency to provide an energy social safety net among vulnerable households.
Link the Energy Community for Southeast Europe and energy efficiency
Reach a broad audience: Governments, NGOs, development banks and financiers
Document utility affordability problems and residential efficiency experiences
For More Information
Astghine PasoyanAlliance to Save Energy
[email protected] www.ase.org
www.munee.org