Energy Efficiency in Cities: An Implementer’s Experience

Laura Van Wie McGroryDirector, International Programs

Alliance to Save Energy

World Bank Energy WeekEnergy Efficiency in Cities

1 April 2009

Alliance to Save EnergyMission: To promote energy efficiency worldwide to achieve a healthier economy, cleaner environment, & greater energy security through policy, education, research, technology deployment, market transformation and communication initiatives.Established 1977; NGO coalition of 150+ prominent business, government, environmental and consumer leaders.Headquartered in Washington, D.C. with operations in Eastern Europe, South Africa, Mexico, India and several states in the U.S. Staff of 50+Chaired by Senator Mark Pryor and James Rogers (CEO, Duke Energy) with strong bi-partisan congressional, corporate & public interest leadership.

Municipal EE Challenges and Opportunities

Water systems - Aging infrastructure Leaky distribution systems- System inefficiencies (pumps, motors)

Municipal infrastructure and operations- Inefficient buildings (housing, government offices, schools)- Lack of energy/water metering- Institutionalized purchasing of energy-inefficient equipment- Inefficient street-lighting

Barriers to Municipal EEInsufficient technical know-how- Technical assistance, training

Lack of political will- Education (LCC, cost-benefit), demonstrations

Lack of public awareness- Public information and education campaigns

Financing- Low cost-no cost measures- Revolving funds, vendor credit, municipal bonds- Performance (savings)-based financing

Efficiency of Water SystemsWATERGY WATERGY makes the best use of two valuable, makes the best use of two valuable, limited resources: water & energylimited resources: water & energy

WHY IS THIS IMPORTANT?WHY IS THIS IMPORTANT?Every liter of water that passes through a system has a significEvery liter of water that passes through a system has a significant ant energy costenergy cost..

Water sector efficiency leaves more funds for crucial and often Water sector efficiency leaves more funds for crucial and often underfundedunderfunded public servicespublic services..

In most developing countries, In most developing countries, 1/3 to1/3 to 1/2 of water produced is lost.1/2 of water produced is lost.

AND ITAND IT’’S COST EFFECTIVES COST EFFECTIVE……Rapid Rapid PaybackPayback:: generally from a few months to 3 yearsgenerally from a few months to 3 yearsHuge Huge SavingsSavings: : at least 20% in energy costs; much higher possibleat least 20% in energy costs; much higher possibleMakes the most of existing Makes the most of existing infrastructureinfrastructure; reduces the need for new; reduces the need for new

RESULTS: RESULTS: 20.8 million kWh and $5.3 million (100 cities)20.8 million kWh and $5.3 million (100 cities)

Cost-Effective InterventionsPumps

Leak ManagementAutomated Controls

Metering & Monitoring

PROBLEM• 80% of water flowing to homes lost through leaking

plumbing fixtures!

• Enough to fill to fill two two OlympicOlympic--size swimmingsize swimmingpools pools every hourevery hour

CASE STUDY: CASE STUDY: EMFULENI, South AfricaEMFULENI, South Africa

TECHNICAL SOLUTION:TECHNICAL SOLUTION: Pressure ManagementPressure Management•• Automated pressure management valves on each supply lineAutomated pressure management valves on each supply line•• Reduced high bulk pressure; further reductions @ nightReduced high bulk pressure; further reductions @ night•• $800,000 construction commissioned Sept 2005$800,000 construction commissioned Sept 2005

FINANCING SOLUTION:FINANCING SOLUTION: Performance ContractingPerformance Contracting•• Water pressure management firm acting as ESCOWater pressure management firm acting as ESCO•• BuildBuild--OperateOperate--TrainTrain--Transfer to municipality after 5 yearsTransfer to municipality after 5 years•• Fees: firm gets 20% of savingsFees: firm gets 20% of savings

ALLIANCE ROLE: ALLIANCE ROLE: Trusted third partyTrusted third partyDeveloped Developed ideaidea and worked with water utility & municipality to and worked with water utility & municipality to

implement itimplement it

Wrote RFPWrote RFP, putting onus on bidders to find funding, putting onus on bidders to find funding

Helped Helped negotiatenegotiate contractcontract

EMFULENI, cont.EMFULENI, cont.

RESULTSRESULTS

•• PaybackPayback period: <3 monthsperiod: <3 months

•• Annual Savings: Annual Savings: CostCost:: US$ 3.8 millionUS$ 3.8 millionWaterWater:: 8 million kiloliters (kL)8 million kiloliters (kL)

a reduction of a reduction of >30%>30%EnergyEnergy:: >14 million kWh>14 million kWh

•• CO2CO2 Reductions: 12,000 tonnes/yearReductions: 12,000 tonnes/year

EMFULENI, cont.EMFULENI, cont.

Efficiency of Municipal Infrastructure and OperationsMunicipal Network for Energy Efficiency (MUNEE)

Network of cities carrying out EE projects: Armenia, Albania, Bosnia & Herzegovina, Bulgaria, Czech Republic, Poland, Hungary, FYR Macedonia, Moldova, Montenegro, Russia, Serbia, Ukraine, Romania, Kazakhstan, Latvia, Lithuania.

Strategies: Technical Assistance: Residential/Municipal Energy

Efficiency and HeatingLeader Training and Policy ReformEducation and Awareness CampaignsInnovating Financing

Technical AssistanceResidential and Municipal Energy Efficiency- Energy audits- Energy metering and building level thermal controls- Building envelope improvements, weatherization- Retrofits of heat distribution systems

Energy Savings:- Residential

• Low-cost improvements: 20-30% savings• Building envelope upgrades: 40-60% savings

- Schools: Up to 40% savings from automated controls

Leader Training and Policy Reform

Training Leaders – Workshops on municipal energy management, planning, and conservationTools - Software to monitor energy use; and estimate EE savings potential in municipal buildingsPolicy Reform • Mandatory Metering (20-50% savings in Moldova)• Regulations allowing municipal facilities to keep

savings from EE projects

Education and Awareness Campaigns

Armenia, Moldova, Ukraine, SerbiaTools and activities- Residential EE advice booklets and posters- TV advertisements and documentaries (20% energy

use reductions in Serbia)- Articles in national publications- Radio public service announcements- Energy education workshops in high schools

Education and Awareness Cont’d: Green Schools

USA, India, Ghana, Armenia5-15 schools per districtTeams students, teachers, custodial staff, administrators:- Energy tracking services (watt-meters and other

equipment) and training- School-wide energy awareness (workshops, eco-clubs)- Students apply lessons at home and in communities

Benefits- Avoided energy costs (5-15%); reinvestment in

schools- Student learning and leadership development

Funding: Grants (utilities, foundations), state energy offices, or school districts (performance contracts)

Consumer Education Campaigns (USA)

Super PowersEPA, NYSERDA, AllianceNationwide TV & Radio (ABC, CBS, CNN)Consumer Website

Powerful $avingsDOE & Alliance PartnershipAll Media Outlets

The Power is In Your HandsIndustry, DOE, EPA, AllianceAll Media Outlets, Web & Collateral

Energy Hog DOE, Ad Council, Alliance, StatesAll Media Outlets Web, Collateral Materials

P&G ColdWater CampaignP&G, AllianceAll Media Outlets & Web

Eureka $mart House Energy-Efficiency ChallengeNBC Universal, Industry, DOE, AllianceOn Air, Web–Home Makeover Contest

Innovative Financing

Grants: Used to trigger market forces; gradually phased out to allow for market acceleration

Housing renovation/modernization loansMunicipal funds

Energy efficiency revolving fundsPerformance contracting and third party financing – energy service companies (ESCOs)

Manual for Development of Municipal EE Projects

How to develop municipal EE projects for performance contracting.Targets:

MunicipalitiesEE services providersFinancial institutions

Contains:Step by step guidelinesTemplates (RFPs, PCs, etc)

Released in India in March 2008 but generally applicableJointly released with Bureau of Energy EfficiencyTested in two Indian states; third state pending

Scaling Up: Bundling Municipal Financing

Bundling Municipal EE Projects in Tamil Nadu

Partnership with Tamil Nadu Urban Infrastructure Financial Services Limited (TNUIFSL), CMA, ULBs

Implementing energy efficiency projects in 29 municipalities in water pumping and street lighting

Addressing ESCO Financing Issues in Tamil Nadu

Issues

Availability of finance to ESCOs

Payment guarantee mechanism to ESCOs

ESCO projects in India often falter or fail due to disputes over quantifying energy savings resulting from the project

SolutionsTNUIFSL / TNUDF willing to finance ESCOs

Set up TRA account with electricity bill payment escrowed

Use the International Performance Monitoring and Verification Protocol (IPMVP)

Oversee project progress and provide technical support to develop local capacity

Document IPMVP’s suitability to Indian scenario.

Develop financing tool kit including performance contracting case studies for replication in other cities

Facilitate market transformation

Municipal EE Project in Gujarat

Municipal water and energy efficiency in 159 Urban Local Bodies (ULBs): Water supply and street lightingESCO financing (performance-based contracts) 3-party agreement between GUDC, IL&FS ECOSMART and ECO III projectApplying lessons learned from TN project

Phased Project: Preliminary energy audits in 10 towns Replicated in remaining 149 towns in the next two years.

Savings Potential: 21% annual energy bill (10 pilot ULBs)

Summary: Keys to Success in Municipal EE ProjectsTechnical capacityEnabling policyPublic awarenessFinancing

1850 M Street, NW, Suite 600Washington, D.C. 20036

Phone: 202.857.0666Website: www.ase.org

Laura Van Wie McGroryLVanWie@ase.org

Thank You!

Alliance to Save Energy