energy efficiency investment pathways for ireland - emrah durusut, element energy

Element Energy Ltd

Energy Efficiency Investment Pathways for Ireland

Unlocking the Energy Efficiency Opportunity

Emrah Durusut

10th June 2015

2

Introduction to Element Energy

• Element Energy is a specialist energy consultancy, with an excellent reputation for rigorous and insightful analysis across a wide range of low carbon energy sectors

• These include: the built environment, low carbon vehicles, energy systems, energy networks, renewable energy systems, hydrogen and carbon capture and storage

• We consult on both technical and strategic issues – we believe our technical and engineering understanding of the real-world challenges support our strategic work

Energy technologies

modelling

Consumers behaviour modelling

Strategic market analysis

Energy networks modelling

Commercialisation strategies

Advanced geographic modelling

Techno-economic studies

Policy recommendations

Project management

Project financing

Source: Element Energy

3 Source: Element Energy

Process Key data and tools

We have examined the potential for energy efficiency improvements across all major energy-consuming sectors in Ireland


National building and vehicle bottom-up stock modelling


• Extensive survey of commercial buildings • BER, ND-BER, NCM databases • SEAI and CSO data




Technical and economic energy savings potential



• Element Energy and SEAI energy models • Performance and costs of measures • Fuel price forecasts


6

We have modelled 78 energy efficiency measures across the economy and found huge opportunity for energy savings

Energy efficiency cost curve for Ireland

35

-300

5

-200

300

0

400

200

100

-100

25 30 20 15 10

Lifetime cost of savings (€/MWh)

Primary energy saving potential (TWh)

Public utilities

Public buildings Transport

Residential

Commercial buildings Industry


7

For the commercial, public and residential buildings sectors, and for the industry sector, we have constructed ‘energy efficiency packages’

Energy efficiency cost curves for packages

Commercial buildings

Public buildings

Residential

Industry

-50

-100

-150

12.0 6.0

50

0

Deep Medium Shallow


6.0

50

0

-50

-100

-150

12.0


Deep Medium Shallow

0

-100

-50

-150

50

12.0 6.0


Shallow Medium Deep

-150

0

12.0

50

6.0 -50

-100

Shallow


Deep Medium

Primary energy

saving potential

in 2020 (TWh)

Primary energy

saving potential

in 2020 (TWh)

Primary energy

saving potential

in 2020 (TWh)

Primary energy

saving potential

in 2020 (TWh)




Consumer decision-making and “Investment pathways in Ireland” model





• Survey of consumer behaviour in the commercial sector

• Previous consumer behaviour surveys carried out in Ireland and the UK


10

A variety of interventions are applied in the “Investment pathways in Ireland” model at different stages of the decision-making process

Co

nsu

me

r d

eci

sio

n-m

akin

g p

roce

ss

Energy efficiency measures Interventions applied at each step

Apply decision frequency

Segment consumer population by awareness and engagement based on survey data

• Information campaign • Active promotion of ESCOs/ suppliers • Mandatory audits

Calculate costs and savings

Uptake based on payback time, repayment period (EPC), or utility (PAYS)

• Direct financial support • Tax incentives (e.g. ACA) • Loan/Soft loan • Pay-As-You-Save (PAYS) • Energy Performance Contract (EPC) • Regulation for minimum product

efficiency

Apply consumer budget limit


11

Example: Decision frequencies for uptake of energy efficiency packages in the commercial buildings and residential sectors

3

6

5

6

8

6

7

7

8

10

9

10

11

11

12

Office

Warehouse

and storage

Retail

Hotel

Restaurant/

public house

DeepShallow Medium

Small company decision-making frequency (yrs) Large company decision-making frequency (yrs)

3

6

5

6

5

4

7

8

9

8

6

10

11

11

13


3

6

5

6

8

6

7

7

8

10

9

10

11

11

12

Office

Warehouse

and storage

Retail

Hotel

Restaurant/

public house

DeepShallow Medium


3

6

5

6

5

4

7

8

9

8

6

10

11

11

13

Commercial sector: Large companies Residential sector

6

9

15

Decision-making frequency (years)

3

6

5

6

8

6

7

7

8

10

9

10

11

11

12

Office

Warehouse

and storage

Retail

Hotel

Restaurant/

public house

DeepShallow Medium


3

6

5

6

5

4

7

8

9

8

6

10

11

11

13

Decision-making frequency (years)

12

Key policy interventions in Ireland


Sector Key policy interventions

Primary energy

savings (TWh)

2013-2020

Commercial

buildings

• Direct financial support

• Regulation for minimum boiler and lighting efficiency

• Mandatory audit for large companies

• Active promotion of Energy Service Companies

0.6

0.4

0.5

0.3

Public buildings,

transport and

utilities

• Mandatory energy audit for large companies

• Active promotion of Energy Service Companies

• Behavioural change through training of staff as part of EPCs

0.3

0.1

0.6

Residential • Direct financial support

• Residential financing schemes with lower interest rates

• Behavioural change (through smart meter rollout, targeted

information as part of PAYS uptake)

1.3

0.4

0.5

Industry • Active promotion of Energy Service Companies

• Mandatory energy audit for all industrial companies

1.3

0.5

Road transport

(excl. public

transport

• Private cars - EU regulation

• Private cars - VRT re-balancing

• Eco-driving

• Modal shift

2.7

0.8

0.8

1.5




Economy-wide scenarios meeting the 2020 target







• Investment pathways in Ireland model • NEEAP III estimates for savings already

achieved





Economy-wide scenarios meeting the 2020 target

Exchequer perspective and wider benefits







• Investment pathways in Ireland model • NEEAP III estimates for savings already

achieved

• Investment pathways in Ireland model • Cambridge Econometrics’ E3ME model


16

Government support for the energy efficiency programmes could be self-financing (€2013m, discounted, 5%)


Programme support Scenario 1 Scenario 2 Scenario 3

Administration costs -40 -40 -40

Information campaign -60 -60 -60

Direct grant support -800 -630 -500

Tax revenue foregone

Excise duty on fuel -1,450 -1,450 -1,450

Carbon tax -520 -530 -510

Increased (net) tax revenue

Corporation tax 810 810 800

VAT 310 320 290

Social security 260 270 250

Income tax 470 480 440

Energy savings in government

Cost of measures -700 -700 -700

Value of energy savings 2,680 2,680 2,680

Net cumulative impact 970 1,150 1,210

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All scenarios meeting the 2020 target are cost-effective for the consumer, bring savings to the Exchequer and have wider macro-economic benefits


Scenario 1 Scenario 2 Scenario 3

Total investments in energy efficiency

(discounted, 10%, €2013bn, 2013-2020) 3.3 3.2 3.1

Total lifetime savings

(discounted, 10%, €2013bn) 11.3 11.3 11.2

NPV of investments

(discounted, 10%, €2013bn) 8.0 8.0 8.2

Total cost to the Exchequer

(discounted, 5%, €2013bn) -1.0 -1.1 -1.2

GDP impact in 2030

(% difference from base) 0.2% 0.2% 0.2%

Employment ('000) 2.0 1.9 1.9

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Policy recommendations for Ireland


REGULATION

FINANCING RESIDENTIAL RETROFIT

ENERGY SUPPLIER OBLIGATION

DIRECT FINANCIAL SUPPORT

ACTIVE PROMOTION OF ESCOs

ACHIEVING BEHAVIOURAL CHANGE

Element Energy Ltd

Thank you for your attention

If you have questions, please contact:

Emrah Durusut [email protected]

mailto:[email protected]



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