Jan 1, 2014 ... 3. Table 2. Minimum contents of an energy service contract (UNI CEI 11352) . ....
The Italian standard UNI CEI 11352:2010 – which extends the.
OVERVIEW OF THE EPC POTENTIAL AND MARKET
NATIONAL REPORT FOR ITALY WP3 COMBINES PROJECT CENTRAL EUROPE PROGRAMME/4CE499P3
JUNE 2013 MILAN
This document has been prepared within the framework of the CENTRAL EUROPE Programme co-financed by the ERDF.
AUTHORS: Giulio Cattarin Lorenzo Pagliano Andrea Roscetti Politecnico di Milano – gruppo eERG Via Lambruschini 4, 20156 Milano Italy www.polimi.it
ii
DISCLAIMER: The sole responsibility for the content of this guideline lies with the authors. It does not necessarily reflect the opinion of the European Communities. The European Commission is not responsible for any use that may be made of the information contained therein.
iii
CONTENT CONTENT ..........................................................................................................................IV LIST OF FIGURES AND TABLES ..................................................................................VI List of Figures.............................................................................................................................................. vi List of Tables ............................................................................................................................................... vi
ABBREVIATIONS ..........................................................................................................VIII EXECUTIVE SUMMARY .................................................................................................... 1 1. EPC MODELS (TASK 3.1.3)......................................................................................... 2 2. LEGISLATIVE REQUIREMENTS (TASK 3.1.3) ......................................................... 5 3. RESULTS OF THE EPC SURVEY (TASK 4.2.1) ....................................................... 8 4. BARRIERS (TASK 3.1.3) .............................................................................................11 Financial barriers ......................................................................................................................................................... 11 Institutional barriers .................................................................................................................................................... 12 Organizational barriers: ............................................................................................................................................ 13 Communication barriers: .......................................................................................................................................... 14
5. SOLUTIONS (TASK 3.1.3).......................................................................................... 15 Financial solutions ...................................................................................................................................................... 15 Institutional solutions ................................................................................................................................................. 16 Organizational solutions ........................................................................................................................................... 17 Communication solutions: ....................................................................................................................................... 18
6. NATIONAL ENERGY CONSUMPTIONS (TASK 3.1.2) .......................................... 20 6.1
Natural gas consumption ............................................................................................................... 23
6.2
Electricity consumption .................................................................................................................. 24
7. ENERGY EFFICIENCY ACHIEVEMENTS (TASK 3.1.2) ........................................ 26 8. ESTIMATION OF THE ENERGY EFFICIENCY POTENTIAL (TASK 3.1.2) ......... 28 8.1
8.2
8.3
Public sector ..................................................................................................................................... 31 8.1.1
Public buildings .......................................................................................................................................... 31
8.1.2
Social housing sector............................................................................................................................... 33
8.1.3
Street lighting .............................................................................................................................................. 34
8.1.4
Further considerations............................................................................................................................. 35
8.1.5
Interviews with ESCOs – public sector ............................................................................................ 36
Industry sector.................................................................................................................................. 37 8.2.1
Estimations of energy saving potential in industry ...................................................................... 38
8.2.2
Interviews with ESCOs – industry sector ........................................................................................ 41
Tertiary sector ................................................................................................................................... 42
iv
8.4
Residential sector ............................................................................................................................ 44 8.4.1
Energy efficiency interventions in condominiums ........................................................................ 45
8.4.2
Interviews with ESCOs – residential sector ................................................................................... 46
9. ESTIMATION OF THE EPC POTENTIAL (TASK 3.1.3) ......................................... 49 9.1
The ESCO market ............................................................................................................................. 49
9.2
The EPC market potential ............................................................................................................... 50
9.3
10.
9.2.1
Public sector ................................................................................................................................................ 51
9.2.2
Industry .......................................................................................................................................................... 52
9.2.3
Residential sector ...................................................................................................................................... 52
9.2.4
Tertiary sector ............................................................................................................................................. 52
9.2.5
Transport sector ......................................................................................................................................... 52
EPC potential based on EU Data Base on Energy Saving Potentials ..................................... 53 9.3.1
Definition of potentials and methodology (Task 3.1.1) .............................................................. 53
9.3.2
Results ........................................................................................................................................................... 54
CURRENT TRENDS IN THE EPC MARKET (TASK 3.1.5) ............................ 57
10.1 Financing ........................................................................................................................................... 57 10.2 Products and Services .................................................................................................................... 57 10.3 Legislative trends ............................................................................................................................. 58
11.
CONCLUSIONS .................................................................................................... 59
APPENDIX 1. ASSOCIATIONS, ORDERS AND INSTITUTIONS INVOLVED IN ENERGY EFFICIENCY..................................................................................................... 61
v
LIST OF FIGURES AND TABLES List of Figures Figure 1. Customer segments served by ESCOs ................................................................................... 8 Figure 2. Cumulative total annual investments [Mio€] .......................................................................... 9 Figure 3. Energy services offered and relative importance for the ESCO business ....................... 9 Figure 4. Estimation of the EPC market development in 2013-2020 .................................................. 10 Figure 5. Final energy demand by country, EU27, 2007 ..................................................................... 20 Figure 6. Final energy consumptions in 2011 [Mtoe] ........................................................................... 21 Figure 7. Final energy consumptions from 2000 to 2011 [TWh] ........................................................ 22 Figure 8. Final natural gas consumptions by activity sector from 2006 to 2011 [TWh] ................ 23 Figure 9. Final natural gas consumptions by activity sector in 2011 [TWh] ................................... 23 Figure 10. Electricity consumptions in Italy in 2011 [TWh] ................................................................ 24 Figure 11. Energy savings in different activity sectors in 2011. ....................................................... 26 Figure 12. Energy efficiency gains since 2000 ..................................................................................... 27 Figure 13. Technical energy-saving potentials in Italy, by sector ..................................................... 29 Figure 14. Economic potential for electricity savings in 2020 [TWh/y] ............................................ 30 Figure 15. Economic potential for electricity savings by 2020–public sector [TWh/y] .................. 31 Figure 16. Electricity consumption split into different industrial branches [TWh] ........................ 38 Figure 17. LPI - Total energy savings potential in industry - split by branch [TWh/y] .................. 39 Figure 18. Synoptic view of the potential energy savings/production in industry for each technical solution ............................................................................................................................... 41 Figure 19. Economic potential for electricity savings by 2020–tertiary sector [TWh/y]................ 43 Figure 20. Residential buildings allocated by date of construction ................................................. 44 Figure 21. Economic potential for electricity savings by 2020–residential sector [TWh/y] ......... 46 Figure 22. Evolution in the period 2005-2010 of accredited and active companies (left) and distribution on the national territory of active companies (right). ............................................ 49
List of Tables Table 1. Check list for the verification of ESCO capacities .................................................................. 3 Table 2. Minimum contents of an energy service contract (UNI CEI 11352) ..................................... 4 Table 3. Balance of energy in Italy in 2011 [Mtoe]................................................................................. 21 Table 4. Electricity consumptions in Italy in 2010 and 2011 .............................................................. 25 Table 5. Achieved energy savings in 2011 and targets for 2016 ....................................................... 26 Table 6. Technical potential for electricity savings by 2020 [TWh/y] ............................................... 30 Table 7. Schools in Italy ............................................................................................................................ 32 Table 8. Office buildings in Italy .............................................................................................................. 32 Table 9. Energy consumption in schools and office buildings. ........................................................ 32 Table 10. Intervention costs and energy cost reductions [Mio €]: .................................................... 32 Table 11. Public office buildings – expected energy consumption and savings by 2020 ............ 33 Table 12. School buildings – expected energy consumption and savings by 2020 ...................... 33 Table 13. Social housing buildings – expected energy consumption and savings by 2020 ........ 34 Table 14. Expected savings from implementation of street lighting requalification ..................... 35 Table 15. Companies and employees by range of employees and economic sector – 2009. ...... 37 Table 16. Synoptic view of the potential energy savings/production [TWh/y] in industry for each technical solution .............................................................................................................................. 40 Table 17. Electricity consumption in private tertiary sector [TWh] .................................................. 42 Table 18. Complexes of buildings in Italy .............................................................................................. 42 Table 19. Residential buildings in Italy .................................................................................................. 44
vi
Table 20. Summary of technological and economic energy saving potential by sector .............. 47 Table 21. Number of buildings in Italy by type of use and geographical position (x 1000) ........... 51 Table 22: EPC potential in Italy ............................................................................................................. 55 Table 23. Natural gas and electricity prices in Italy (November 2012) ............................................. 56 Table 24: Overview on energy saving potentials, the current EPC market and the EPC potential in 2020 per sector ............................................................................................................. 56
vii
ABBREVIATIONS EE
energy efficiency
ESM
energy saving measures
EOI
expression of interest
EPC
energy performance contracting
ESCO
energy service company
ESC
energy supply contracting
IPMVP
international performance measurement and verification protocol
IRR
internal rate of return
M&V
measurement and verification
NPV
net present value
O&M
operations and maintenance
PBP
payback period
RES
renewable energy sources
RFP
request for proposal
viii
EXECUTIVE SUMMARY The Italian EPC market is still at its first steps and the specific legislation on energy service contracts is rather recent. The Italian standard UNI CEI 11352:2010 – which extends the UNI CEI EN 15900:2010 - has been conceived to qualify the ESCO market and guarantee a proper implementation of EPC projects. The standard defines the general requirements and a check list of requisites for ESCOs that offer energy efficiency services with guaranteed results. The Legislative Decree 115/2008 defines the requirements that energy service contracts must meet. Italy is the fourth most important energy consumer of whole Europe (final energy consumption: ca. 1560 TWh in 2011) and the biggest one of Southern Europe, and it strongly depends from energy importations. Civil sector is responsible for 34% of all energy consumptions, followed by transport sector (32%) and by industry sector (24%). The yearly energy efficiency achievements have been mainly monitored through the White Certificate Scheme (WCS). In 2011 the energy savings within WCS were about 58 TWh, 69% of which were achieved in the residential sector, while industry, transport and tertiary allowed for 17,9%, 9,6% and 3,5% of total savings. Although Italy results up with the other European countries in residential and industry sectors, tertiary and transport sectors urgently need ad-hoc measures in order to reach their energy reduction targets. Several energy efficiency potentials for Italy have been calculated in the last years, which can pose the basis for considerations on the EPC potential. The report by Fraunhofer ISI (2012) estimates that the total saving potential sums up to 46 Mtoe by 2030, corresponding to a 31% reduction compared to the baseline. The residential and transport sectors represent one third each, while the remaining third is covered by industry and tertiary sector. A study conducted by eERG for Greenpeace Italia (2007) analyzes the energy saving potentials by 2020 for electric end-uses in industry, household, tertiary and transport on rail. The economic potential is estimated around 83 TWh/y and the largest shares are attributed to industry (47%) and private tertiary sector (29%). The present report summarizes the main results from previous analysis of energy efficiency potentials, and derives quantitative and qualitative estimations of the EPC potential. The main difficulty when estimating an EPC potential lies in defining the field of applicability of EPC, which strongly depends on the financial support of banks and public institutions, the organizational capacity of creating economically attractive “pools” of private and public subjects, the stability and the quality of the legislative framework, the implementation of information campaigns and so on. Still, it is reasonable assessing that the EPC market will largely benefit from the European and national new regulations and subsidy schemes. The Business As Usual EPC potential 2020 and the Ambitious EPC potential 2020 have been calculated assuming a share of 2% and 10% of the total Economical Energy Saving Potential 2020 as defined by Fraunhofer Institute et al. (2008).
1
1. EPC MODELS (TASK 3.1.3) The Italian EPC market is still at its first steps. However, relevant work has been done so as to prepare a solid ground for the future market development. In particular, the Italian standard UNI CEI 11352:2010 has been conceived to qualify the ESCO market and guarantee a proper implementation of EPC. Other standards relevant for the energy efficiency market are: - EN ISO 50001: “Energy management systems - Requirements with guidance for use” with national version UNI CEI EN ISO 50001:2011 - CEI/UNI 11339: “Energy management - Energy managers - General requirement for qualification” with national version UNI CEI 11339 1 - CEI/TR 11428: “Energy management – Energy audits – General requirements for the energy audit service” with national version UNI CEI/TR 11428 - CEI/EN 16231: “Energy efficiency benchmarking methodology” - UNI CEI EN 16212:2012: “Energy efficiency and savings calculation – Top-down and Bottom-up Methods” Standard UNI CEI 11352:2010 The Italian standard UNI CEI 11352:2010 implements and extends the European Standard UNI CEI EN 15900:2010 2 on Energy Efficiency Services. The standard defines the general requirements and a check list of requisites for ESCOs that offer energy efficiency services with guaranteed results. In particular, it defines the minimum requirements of energy efficiency services and the skills (in the areas of organization, diagnosis, design, management, economic and financial) that an ESCO must have to offer the activities described to their clients. Table 1 reports the check list to verify the capacities of an ESCO. 3 The list can be used both by the client – in order to support the decision-making process needed for the selection of an ESCO - and by the ESCO itself as an instrument of self-diagnosis.
1
In 2012 the certified Energy Managers in Italy were 54 (consult complete list at: www.segem.eu)
2
UNI CEI EN 15900:2010 “Energy efficiency services – definitions and requirements”
The following information has been summarized and/or translated from UNI CEI 11352:2010 by the authors in order to give to foreign readers tools for comparison with similar standards in their country. It is not intended as an official translation of the original standard.
3
2
Table 1. Check list for the verification of ESCO capacities Organization
• • •
• • Diagnosis and design
• • • • • •
Management
• • • • •
Economic and financial capacities
• • •
4
Adoption of a quality management system Presence of a plan for the training and information of internal personnel Presence in the organization chart of the economic-financial area - or among the suppliers - of professionals with adequate capacity/experience in administrative, financial, legal and contractual aspects on contracts with guaranteed results. Presence of a plan for the training and information for clients, aiming at the achievement and the maintenance in time of the expected results. Presence of a contact for the public relations with the clients. Presence in the organization chart of the technical area of a responsible with adequate competence in energy management and in energy market Presence in the organization chart of the technical area of a technician with adequate competence in designing in the intervention fields Presence of procedures for the management and maintenance of instruments and software for the energy evaluation, measurement, verification and monitoring Presence of realized studies and/or projects and/or energy diagnosis Presence of procedures for the management and the verification of activities implemented by third parties if applicable Presence of procedures for the management and the updating of the legislation and the reference standards and the eventual presence of realized projects for the legislative and standard adjustment Presence of a list of internal personnel: number, role, qualification List of suppliers and/or sub-contractors Presence of procedures for the application of – or the interaction with – an energy management system by the clients, according to the standard UNI CEI EN 16001 4 References of realized and/or managed and monitored interventions, works and installations in energy sector List of own technological and instrumental equipment (e.g. machineries, instruments for monitoring etc.) for the implementation and/or management of interventions, works and installations Presence of procedures for the risk evaluation of the energy efficiency service and for the individuation and application of adequate tools for the risk hedging. Presence of a Financial Statement or equivalent declaration and/or presence of references by financial institutions Presence of requests for Third Party Financing (TPF) if the TPF is present among the activities offered by the ESCO
UNI CEI EN 16001 has been replaced by UNI CEI EN ISO 50001:2011
3
Table 2 reports the minimum criteria that characterize an energy service. 5 These criteria aim at improving and simplifying the communication between ESCO and clients, including the contractual aspects. Table 2. Minimum contents of an energy service contract (UNI CEI 11352) Object Definition of modalities of Diagnosis and/or Energy Audit Definition of the reference consumptions (energy baseline)
Definition of adjustment coefficients of reference conditions Definition of the energy efficiency interventions Expected energy savings in terms of primary energy (toe) and relative methodology of estimation or calculation Expected energy savings in terms of Euros and relative methodology of estimation/calculation Guaranteed energy savings in terms of primary energy (toe) Measurement and verification plan
Financing modalities of energy efficiency interventions Price of service Contractual duration Reporting frequency
Notes It contains the criteria used to realize the process of diagnosis and/or energy audit The energy baseline represents the thermal and/or electric energy and/or primary energy calculated/measured in a time period preceding the proposal for energy efficiency interventions and normalized by means of adjustment coefficients. The energy baseline constitutes the base on which energy savings are calculated/measured. Adjustment coefficients are used to normalize the reference conditions with respect to factors and variables that can influence energy consumptions (e.g. climatic conditions, volume, production process, end-use behaviour, etc.) Estimated/calculated value of achievable energy savings as a consequence of the implementation of the energy efficiency service with respect to the reference conditions (energy baseline), with explication of the conversion factors in primary energy used according to the legislation Estimated/calculated value of achievable energy savings as a consequence of the implementation of the energy efficiency service with respect to the reference conditions (energy baseline). Part of the expected savings that is guaranteed in contractual terms and that is to be achieved by means of an appropriate programme of energy saving measures. The programme, aiming at the determination of the achieved energy and economic savings, includes: the measurement instruments, the continuity/periodicity of the measurements, the units of measure and/or the specific indices of energy consumption and/or the fuels. It is necessary to highlight the amount of the eventual cofinancing by the client It contains the modalities of periodic adjustment and the criteria for the share of achieved energy savings. The reporting is the modality by which the ESCO communicates to the client the results of the measurement programme and the achieved energy savings.
The following information has been summarized and/or translated from UNI CEI 11352:2010 by the authors in order to give to foreign readers tools for comparison with similar standards in their country. It is not intended as an official translation of the original standard.
5
4
2. LEGISLATIVE REQUIREMENTS (TASK 3.1.3) Brief summary of Italian legislation on energy efficiency in buildings The first law on energy performance of buildings 6 was introduced in 1976 as a consequence of the energy crisis in 1973 and the strong increase in oil price. The law addresses only the heating demand both posing limits to the installed heating power and by indicating measures for the thermal insulation of the building envelope. The following Law n.10/1991 and the implementing regulations DPR 412/93 and DPR 551/99 extend the requirements by introducing the effect of internal gains and solar gains and by indicating thresholds for the efficiency of the heating system. In Law n.10/91 heat losses are evaluated in detail, with respect to the building (transmission and ventilation losses) and to the heating system (production, distribution, regulation and emission losses). DPR 412/93 indicates the climatic zone as a function of degrees/day, introduces a classification of buildings and lower thresholds for the global performance of the system. In response to the European Directive 2002/91/EC several legislative decrees were implemented, such as the D.Lgs. 192/05, the D.Lgs. 311/06, the D.P.R. 59/09 and the D.M. 26/6/2009. These decrees establish the calculation methodologies and the minimum requirements for the building and heating system performance as concerns the heating demand and the demand for domestic how water. The D.M. 26/6/2009 defines the “Attestato di Certificazione Energetica” (energy performance certificate) which is an informative document that must be drawn up by a third party (“certificatore energetico”). 7 The specific legislation on energy service contracts is rather recent. The “contratto servizio energia” (energy service contract) model was firstly introduced by DPR n. 412, 26/8/1993. It was here defined as the contractual act that disciplines the supply of goods and service which are necessary to keep comfort conditions in the target building (according to laws addressing rational energy use, security and environmental protection), allowing at the same time for improvements in transformation and use of energy. A much more detailed description of “contratto servizio energia” has been provided by the Legislative Decree 115/2008, which will now be reported in detail due to its relevance for the present study. 8 Legislative Decree 115/2008 “Implementation of Directive 2006/32/EC on energy enduse efficiency and energy services and repeal of Directive 93/76/EEC” The Legislative Decree 115/2008 defines the requirements that energy service contracts must meet. In particular, a distinction is made between the contratto servizio energia 9 and the contratto servizio energia plus, where the latter one is correspondent to an EPC. 10
6 Legge ordinaria del Parlamento n° 373/76 – Norme per il contenimento del consumo energetico per usi termici negli edifici. 7 The legislative decree Dlsg. 192/2005 had already established the “Attestato di Qualificazione Energetica”, which did not require to be drawn up by a third party.
The following information has been summarized and/or translated from D.Lgs. 115/2008 by the authors in order to give to foreign readers tools for comparison with similar laws in their country. It is not intended as an official translation of the original decree.
8
“Servizio Energia” is described in article 1, paragraph 1, letter p), of the presidential decree DPR 26.08.1993, no. 412 9
5
The following list summarizes the requirements for the two contractual forms: Requirements and performance of a contratto servizio energia: • •
• • • • • • • •
• • • •
presence of an energy performance certificate (“Attestato di Certificazione Energetica”) for the target building. In case of multi-family buildings, the certificate must address also the single residential units; determination of the primary energy demand for the winter and/or summer energy consumptions and/or for the production of sanitary hot water and/or for other eventual services indicated in the contract, expressed in kWh/m2year or kWh/m3year, conforming to the current local legislation; explicit indication of the interventions for reducing the energy consumption, improving the energy performance of the building and its systems or introducing RES, each evaluated in terms of cost-effectiveness; contractual revenue based on objective parameters which are independent from the actual energy and electricity consumption, to be paid by means of a periodic fee; purchase, transformation and use of the fuels and grid supplies necessary to feed the process of production of the heat-transfer fluid and the delivery of thermal energy to the building; preventive indication of specific magnitudes that quantify each of the services provided, to be used as references in the analysis phase; determination of the actual degree days for location, as a reference for seasonal adjustments of the annual consumption of thermal energy to demonstrate the effective improvement of energy efficiency; measurement and het metering in thermal power stations, or only measurement in the case of individual installations, of the total thermal energy used by each of the users served by the system, with suitable equipment compliant with current legislation; an indication of the total amount of the heat that can be supplied during the heating/cooling season (divided for each of the services provided); the periodic reporting by the supplier of the energy service contract of the thermal energy used by the users served by the installation; such reporting must be done according to criteria and schedule agreed with the customer (at least annually) in terms of Watt-hour or multiple; prior indication that the facilities are in compliance with the law or alternatively an indication of any actions required for the retrofitting of the same systems, and an indication of how the burden is distributed between the parties; implementation by the provider of the contract of the interventions necessary to ensure the operation and maintenance of the systems, in compliance with applicable regulations; term of the contract, at the end of which the plants are delivered to the customer in compliance with the regulations and in working order, and only subject to normal wear and tear; a statement that, at the end of the contract, all the goods and materials supplied or installed to improve the energy performance of the building and equipment, except for
According to 2012/27/EU, “energy performance contracting means a contractual arrangement between the beneficiary and the provider of an energy efficiency improvement measure, verified and monitored during the whole term of the contract, where investments (work, supply or service) in that measure are paid for in relation to a contractually agreed level of energy efficiency improvement or other agreed energy performance criterion, such as financial savings.”
10
6
• • • •
any data processing systems of the supplier of the contract, will remain property of the client; individuation by the client, in the case of a public body, of a technical counterpart in charge of monitoring the work state and the correct execution of the tasks under the contract; liability of the supplier of the contract to maintain the accuracy and reliability of all measurement equipment eventually installed; precise annotation of the operations performed on the system and the amount of thermal energy annually supplied; delivery of relevant and adequate technical and administrative documentation, also for other operations performed on the building or on other plants.
Further requirements and performance of a contratto servizio energia plus •
• • •
reduction in the primary energy for winter heating by at least 10% compared to the corresponding index shown in the energy performance certificate (“Attestato di Certificazione Energetica”) for the first contract stipulation, through the implementation of structural energy upgrading of plant or the building envelope aimed at improving the process of transformation and use of energy; update of energy performance certificates reduction in the primary energy for winter heating by at least 5% compared to the corresponding index shown in the energy performance certificate for contract renewals after the first installation, where technically possible, of thermoregulation systems or devices for the automatic control of the temperature in individual rooms, suitable to prevent overheating resulting from additional internal or external heat gains.
Access to incentives The contratto servizio energia plus is considered as a leasing contract as regards the access to incentives for the optimal management and the improvement of energy performance. Duration The contratto servizio energia and the contratto servizio energia plus must have a contractual duration between 1 and 10 years. However, the maximum duration of 10 years can be exceeded in case of loans from TPF (where the third party is neither the service supplier nor the client), in case of new and/or additional services and activities or in case of full reconstruction of facilities and/or construction of new facilities and/or interventions on the building envelope for more than 50% of its surface. Energy audits ESCOs certified according to UNI CEI 11352 refer to UNI CEI/TR 11428:2011 when performing energy audits.
7
3. RESULTS OF THE EPC SURVEY (TASK 4.2.1) A total number of 13 ESCOs were interviewed, ten of which filled in the questionnaire. Most of the questionnaires were filled in during phone calls or face-to-face meetings, so to make sure that all questions were clearly understood. In addition, non-structured interviews with experts and professionals working in public sector (such as representatives from Lombardy and Piedmont regions, from local energy agencies etc) were carried out. The support of national observatories on ESCO market such as FIRE Italia or national ESCO associations such as Federesco helped to reach a broad view of the current national situation. In this section the results from the EPC survey are presented. Some questions were answered only by some ESCOs due to their limited knowledge on the topic. All activity sectors are addressed by the interviewed ESCOs (Figure 1), even though with large differences in market volumes. The cumulative total annual investments of interviewed ESCOs is around 70 Mio€ (Figure 2). The largest bulk is given by interventions in industry sector, while residential sector accounts for 23%.
Residential housing Schools 3 3 14% 14% Tertiary sector 5 24%
Hospitals 2 9% Other public organisations 2 10%
Industry 6 29% Figure 1. Customer segments served by ESCOs
8
Schools 2,25 3%
Tertiary sector 1,525 2%
Hospitals Other public 0,775 organisations 1% 2,4 3%
Residential 15,7 23%
Industry 47,25 68%
Figure 2. Cumulative total annual investments [Mio€] The energy services offered and relative importance for the ESCO business are reported in Figure 3. EPC and technology-specific EPC result core products in only one case each, but they are still considered relevant in three other cases. 100% 90%
1
1
80% 70%
1
1 2
1 3
60%
2 3
is a core product
2
50%
2 1
40% 30%
10%
is not offered 2
3
1 2 1
1
0% EPC
medium relevance is hardly relevant
3
20%
is relevant
Technology-specific EPC
ESC
Financing Contracting
O&M
Figure 3. Energy services offered and relative importance for the ESCO business
9
It is rather hard to estimate the current EPC market volume, especially due to the confusion in terminology that is still present in the EE market. Some small ESCO representatives claim that large “non pure” ESCOs propose contracts that include only a minor part of revenues which is variable with achieved energy savings, while the large majority of revenues comes from energy supply. Based on the interviews conducted within the project framework, we estimate an EPC market volume between 80 and 100 Mio€/year. Correlation between energy price and energy efficiency market development The energy prices will play a key-role in the energy efficiency (and in particular in the EPC) market, being strictly correlated to the economic savings generated by ESM and to the consequent payback period of interventions. An ESCO representative claimed that if the economic crisis attenuates, the attention paid to energy cost cutting may decrease, with a consequent shrinkage of energy efficiency market. According to the interviewed ESCO representatives, in the next years the EPC market is expected to grow especially in the public sector, in industry and to a lesser extent in tertiary and residential sector (Figure 4). 100% 90%
70%
2
2
80% 4
3
60%
3
3
3 1
1
>10% 0 to 10%
50% 2
40% 2
30% 20%
2
2
1 1
1
1
Schools
Hospitals
Other public organisations
1
1
1
Tertiary sector (trade, services)
Residential housing
0% in general
Industry
Figure 4. Estimation of the EPC market development in 2013-2020
10
0 0 to - 10%
4
3
10%
1
< - 10 %
4. BARRIERS (TASK 3.1.3) The collected information and the interviews carried out with ESCOs, representatives of Regions, Municipalities and national associations (such as FIRE) highlighted several financial, institutional, organizational and communication barriers which are claimed to obstacle the development of energy efficiency market. They are here described in order to help decision-makers identify the area of interventions 11.
Financial barriers -
-
-
Long pay-back periods, especially for interventions on the building envelope. As reported in a study by Fraunhofer ISI (2012): “Up to now the topic of efficiency has been underrepresented on the political agenda despite the cost-effectiveness of most of the technologies involved whose implementation is often hindered due to their up-front investment costs.” 12 Considering the current low energy prices and high investment costs involved in comprehensive requalification, energy savings often cannot repay the investments within a reasonable contractual duration: in many cases the owner has to pay an additional fee to the ESCO. Delays in payments especially from public administrations, who sometimes pay only after 180/240 days. 13 It can be difficult or impossible for small ESCOs to remain financially exposed for long time spans. Financial weakness of small ESCOs, which can hardly access to bank loans. Banks typically require ESCOs to contribute to the investment with a 10-20% of risk capital. Scarce economic attractiveness of small projects. It is difficult for small private or public subjects to afford the transaction costs of an ESM. In addition, large ESCOs usually consider only projects with initial investments over 100 k€ ÷200 k€, where optimization strategies and scale effects are applicable. Difficult access to bank loans Financial institution still do not apply proper economic instruments to express their position on EE projects. Banks are bound to the classical collaterals (capital stock, mortgages, sureties etc.) and still do not accept the cash flows generated by energy savings as main collaterals, adopting a precautionary behaviour against the risk of fraud or insolvency. In other words “An investment class is substantially missing 14” In addition, banks may prefer to finance RES projects compared to EE projects. While the first ones guarantee a cash flow even when the client company is not working due to a lack of orders (e.g electricity production by means of PV panels is not dependent on the energy demand fluctuations of the production processes), energy savings depend on the actual consumptions and the quality of ESM implementation (from design to O&M)
An overview of barriers encountered by ESCOs is given in ENEA - UTEE (2012) “Rapporto annuale efficienza energetica 2011”, pag. 76
11
12
Fraunhofer ISI (June 2012) Policy Report – Contribution of Energy Efficiency Measures to Climate Protection within the European Union until 2050 13
AGESI (2012): “Strategia Energetica Nazionale: per un’energia più competitiva e sostenibile”
14
From an interview with Daniele Forni (FIRE)
11
-
Quoting the European Directive 2012/27/EU 15 (pag. 8), the barriers to the use of EPC and other TPF arrangements “include accounting rules and practices that prevent capital investments and annual financial savings resulting from energy efficiency improvement measures from being adequately reflected in the accounts for the whole life of the investment”. Companies’ focus on the core business. A report by the Energy and Strategy Group16 found that energy savings have been rarely considered the main driver for implementing new investments (10%). Companies may be reluctant to outsource the process optimization and the facility management which may negatively interfere with the core business (or even imply a temporary halt to the production), and energy price may need to increase even more to represent a relevant percent of the companies’ costs.
Institutional barriers -
-
-
Complexity of bureaucratic procedures (e.g. authorizations, connection to the grid) Interviews with ESCOs reported that projects implementing district heating and geothermal heat pumps receive authorizations years after their presentation. For this reason municipalities and privates usually apply for simple technologies, instead of choosing the most effectives ones in terms of energy savings. European tenders are usually considered too complex to be accessed by small ESCOs. Legislative instability which creates a diffuse reluctance in applying for long-term projects (e.g. installations of condensing boilers are preferred to geothermal heat pumps, which require longer bureaucratic procedures and may need several modifications consequent to the amendments in regulations) A critical point of national programmes consists also in the possible interactions between different subsidy schemes, which have sometimes created uncertainties and confusion among the professionals 17. Incentives are sometimes bound to the direct beneficiaries (i.e. SMEs and citizens), in this case the intervention of an ESCO in the financial aspects of the contracts 18 is severely limited. Limit of 10 years for EPC (Legislative Decree 115/2008); over this threshold the contract becomes a concession Scarce diffusion of ESCO certification. Potential clients tend to distrust ESCOs for two main reasons: the calculation of the energy-consumption baseline is considered subject to the ESCO’s discretion and the boundary dividing ESCO’s and client’s risks is not clearly marked. In other words “The trap is hidden between the contractual lines” 19 A confusion in terminology may have increased the general disbelieve in ESCOs. The first ambiguity is generated by the expressions “accredited ESCOs” vs. “certified ESCOs”. The first expression indicates “companies operating in the sector of energy services” which have successfully applied for at least one project in the WCS, while the second one indicates that the ESCO has been certified according to UNI CEI 11352. This distinction is still not clear in the customers’ minds.
15
At present date no national implementation of 2012/27/EU is available.
16
See www.energystrategy.it
See “Certificati Bianchi e Titoli di Efficienza Energetica: l’AEEG traccia un resoconto e un prospetto per il futuro” by Marcella Pavan (AEEG), Gestione Energia 1/2011, ISSN 1972-697X
17
18
From interviews with regional representatives of Valle d’Aosta and Piedmont.
19
From an interview with Andrea Mutti (Finlombarda)
12
-
-
-
In addition, in the industrial world ESCOs are informally divided into “ESCO with iron” and “ESCOs without iron”, where the first ones indicate companies that have internal resources responsible for all stages of EPC (including installation, management and maintenance), while the second ones need to outsource the “physical” aspects of EPC. It may be recommendable to officially distinguish these two broad categories of ESCO. Little financial autonomy of public subjects. It has been often reported 20 that even when municipalities could afford investments in ESM, the constraints acted by the Stability Pact prevented them from doing so. In some cases, small municipalities had to renounce to grants covering 80% of eligible costs due to the strict control over their financial budgets. Short-term thinking by public institutions. There are several reasons for this wide-spread behaviour. First, public establishments are aware of the legislative instability and want to avoid long and tortuous bureaucratic procedures. Second, authorities want achievements to be visible within their mandate (while long-term investments would provide their benefits in the following mandate, when the opposition may be in power). Third, there is a general tendency to look for “easy money” (such as grants), while more long and complex projects are considered too risky. Another case of “short-term thinking” is that of building administrators, whose mandate is generally shorter (2-3 years) than the pay-back period required by global interventions (5-7 years). Consip contractual conditions. Consip S.p.A. 21 is a public stock company owned by Italy’s Ministry of the Economy and Finance (MEF), whose mission is that of managing and developing the Ministry’s information systems, providing technological, organizational and process know-how. The company also manages the Program for the Rationalization of Public Purchases. An ESCO representative claimed that Consip contractual conditions for ESM in public structures are too standardized and too challenging, so that ESCOs are tempted to cheat on their public clients (e.g. at the moment of the definition of the energy baseline) taking advantage of their greater knowledge on EE.
Organizational barriers: -
Lack of a common, standardized MVP. Additional problems are represented by the costs due to the MV interventions and the lack of reliable data on energy consumption and metering equipment in SMEs. 22 Lack of common correction coefficients, taking into account eventual climatic variations, changes in occupants’ behaviours etc. “split incentive” barrier (also referred to as “principal/agent” problem), occurring especially in social housing sector, where occupants may profit from reduced energy bills. Social Housing Operators (SHO) generally cannot raise rents to balance their investments for ESM, nor they can charge an additional service for EE, even when the overall bill after refurbishment is lower than before. SHO can recoup 100% of energy savings from tenants only if all tenants give their agreement. 23
From interviews with Valentina Sachero (Lombardy), Andrea Mutti (Finlombarda) and other public institutions representatives 20
21
Consip S.p.A.: www.eng.consip.it
22 The latter issue is reported in IEE - (Ex)BESS project– Expanding the Benchmarking and Energy management Schemes in SMEs to more Member States and candidate countries (2009) 23
See IEE-FRESH project: www.fresh-projects.eu
13
Communication barriers: -
-
Lack of legal and technical knowledge on EPC from public administrations. This represents a major difficulty for small municipalities, which cannot afford the costs of external consultancy when preparing tenders. Scarcity of data on actual energy consumption in public and private sectors.. Poor/inaccurate information for small consumers. Partially as a consequence of the previous point, also citizens and associations are totally ignorant about the potential economic benefits that can result from an EPC and still perceive as intangible the incomes generated by ESM. The increasing awareness of energy issues still needs time to develop, as “Ms. Maria still cannot read the bill” “Moral hazard”, which lies in the information asymmetry between user and supplier. Potential customers may be diffident to engage with an ESCO right due to the company’s clearer vision of the potential economic benefits.
-
Scarce available information on finished projects. Companies are often “jealous” of their energy consumption data, and ESM detailed plans are usually considered business secrets. This makes it more difficult for ESCOs to make a cost-benefit comparison of EPC vs. Energy Supply Contracts.
-
Lack of a Life Cycle Assessment (LCA) approach. SMEs usually consider the sole initial cost of a machinery, without considering energy consumption and maintenance costs. In other words, “The Negawatt hour still doesn’t exist”. 24 Considering that energy bills reach up 5÷6% of a SME’s turnover, a cost-benefit analysis using a LCA approach can have an appreciable effect on spending retrenchment.
24
“Negawatt hour” can be defined as the “Megawatt hour” not consumed thanks to ESM.
14
5. SOLUTIONS (TASK 3.1.3) The future development of EPC market depends on financial, institutional and organizational issues which long for simple and reproducible solutions. Basing on previous studies and opinions gathered through interviews with public and private subjects, several possible solutions are here suggested, such as the creation of revolving and guarantee funds, information and education campaigns, simplification of the regulations and a more stringent certification process of ESCOs. Solutions that can be implemented in order to overcome the abovementioned barriers are:
Financial solutions -
-
-
25
creation of revolving funds Revolving funds with national or supranational guarantees are probably one of the most effective tools to stimulate energy efficiency investments and EPC market development as they allow banks to finance also smaller projects with longer contract terms. Loans could be related to performance indices, following a meritocratic logic. 25 This would also enhance competition in the EES market, leveling up small pure ESCOs and large non pure ESCOs. Access to financial resources would no longer prevent small pure ESCOs from working with large EE projects and would foster a competition based on skills, competences and experience rather than financial strength. NB: Some experts believe that the revolving fund should be accessed only by certified ESCOs, following a “rights and obligations” logic. In this way, opportunistic behaviours observed in the areas of wind power and PV should be avoided. Experts and ESCO professionals 26 agree on considering revolving funds a more valuable financial tool compared to grants, which easily create conditions for speculation and “dope the market”. Grants can still be useful in the case of small interventions in SMEs. creation of guarantee funds A guarantee fund could protect financial institutions and/or ESCOs from delays in payments, from the insolvency of the clients or from the relocation of productive facilities (with consequent drop of energy demand in the facilities subject to the EPC). Although insolvency is a rare event, it can be very harmful for small ESCOs, and discourage small companies from entering the EPC market. The guarantee fund could address in particular interventions with medium to long payback periods (> 6-7 years) Co-financing by the customer, when the ESCO alone cannot afford the financial risk of the project. This would enable small ESCOs to work on more projects at the same time, and minimize the technical risk by focusing the internal resources on technical aspects. However, it has been claimed that customers “look for an ESCO just to access to a bank”. This indicates that the participation of customers in the financial risk may be difficult to realize. Two ESCO representatives reported that sometimes customers prefer to fully finance the ESM in order to maintain the property of the installations, while in other cases clients do not want to be financially involved and “distracted” from their core business. From interviews with ESCOs and from ENEA (2011) – Quaderno – L’efficienza energetica nel settore civile
Opinions collected during interviews with Daniele Forni (FIRE), Andrea Mutti (Finlombarda) and Ettore Piantoni (Heat and Power SpA); see also “Soluzioni regolatorie per le barriere non-economiche alla diffusione dell’efficienza energetica in Italia nell’uso dell’elettricità” FIRE – 2011, available at http://www.fire-italia.it; Changebest (2009) Task2.1: “National report on the energy efficiency service business in Italy”
26
15
-
Economic savings as a function of energy price volatility. Increasing energy prices can reduce unexpectedly the pay-back period (e.g. for interventions on the building envelope), while protecting the energy supplier from sudden changes in the energy market. Management of a large portfolio of ESM, comprehending both short-term (substitution of heaters and fixtures) and long-term (building envelope insulation) interventions. This could help overcome the logic focused only on the most profitable contracts Energy taxation: The internalization of external costs is needed to take into account damage incurred by the use of energy carriers 27 Incentives based on socio-economic parameters 28. The subsidy programmes could also take into account social issues, distributing incentives according to geographical area, economic sectors and economic categories of beneficiaries. Tax credits could help families with medium-low incomes or small companies. This proposal is in line with the “20-20-20 Energy and Climate” guidelines, where it is suggested that the revenues coming from the auctioning process of Emission Trading Scheme should be partially committed to help “the less well-off to invest in energy efficiency”. 29
Institutional solutions -
-
-
Simplification of regulations, preparation of standards and guide lines for the preparation of calls for tender. 30 This process needs a close and continuous support of technical/economical institutions (e.g. ENEA, FIRE, CTI, RSE etc.) who should be addressed for preliminary analysis of market potential and policy impact on the market. A example on the national level is the Legislative Decree n. 115/2008, which defines energy service contracts (Contratto Servizio Energia and Contratto Servizio Energia Plus, where the second one corresponds to an EPC) Enhancement of ESCO certification on EU level. The ESCO market needs qualification in order to gain trust from financial institutions and offer more effective and clear proposals for potential customers. The standard EN 15900 and the Italian standard UNI CEI 11352 started a process that needs to achieve a deeper and broader level of awareness of ESCOs’ rights and obligations. At present date, only 28 ESCOs obtained the certification in accordance with the requirements in UNI CEI 11352 31. The certification process should be at the same time stringent and inexpensive, in order to permit the entry of small virtuous ESCOs. Enhancement of EPC model via WCS 32 . The valorisation of EPC model could be fostered by the WCS, by using higher coefficients for integrated actions performed by an EPC, and lower coefficients for single-technology interventions. This would reward longterm actions and an optimal management of the facilities for the whole duration of the contract.
27
Ecofys (2012): “The benefits of Energy efficiency – Why wait?”
28
This proposal can be found in ENEA - UTEE (2012) “Rapporto annuale efficienza energetica 2011” , pag. 103
Commission of the European Community (2008) “Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions” – 20 20 by 2020 – Europe’s climate change opportunity. 29
30
Confindustria: Proposte di Confindustria per il Piano Straordinario di Efficienza Energetica 2010
31
See http://www.fire-italia.it/
32
AGESI (2012): “Strategia Energetica Nazionale: per un’energia più competitive e sostenibile”
16
-
-
-
Public-Private Partnerships (PPPs), which are characterized by relatively long and reliable relationships, the facilitated integration of public funds and private resources and the distribution of risks between the two partners. This mixed model can help overcoming the financial barriers encountered in the process of energy efficiency improvement. Furthermore, the public party can take responsibility for the aggregation of demand in the local territory (most likely municipal or regional) while the private party would be in charge of managing the ESM. 33 In the last years, many PPPs have started to administer public services such as waste management or water and energy distribution. ESM can thus fall within the areas of intervention of PPPs and generate relevant benefits for public establishments. Financial autonomy of public administrations for investments in ESM (side channel which is not subjected to the constraints of the Stability Pact) Promotion of standardized energy audits (e.g. according to UNI TR 11428 and EN 16247). The new European Directive 2012/27/EU 34 requires that large companies (annual turnover >49Mio€ and more than 250 employees) carry out energy audits every four years. SMEs are excluded from these obligations. It is worth saying that a well-done energy audit behalves the effort of an eventual contractual procedure, since it highlights the most profitable interventions to be implemented and the approximate costs and revenues. Binding targets for multinational companies. Some experts consider that a deep and rapid renovation of the existing industry and building stock can be reached only through obligations and binding targets on energy consumption, which should be first applied to multinational companies (in particular, energy intensive users) due to their impact and their financial strength. A “softer” measure would be applying rewards for large companies implementing ESM after the mandatory energy audit.
Organizational solutions -
-
-
Creation of simple economic tools. All market stakeholders, starting from financial institutions, need to receive clear indications and simple tools in order to quantify potential cash flows (in terms of avoided costs) resulting from energy savings and decide whether an EPC results economically sound or not. The cost-effectiveness analysis depends on various factors, such as climate, local labour costs, initial level of energy performance, energy inflation. The partnership with a bank could actually help ESCOs to study the client’s current and forecasted financial situation and the potential market developments. Adoption of a common MV protocol (such as IPMVP or IEEFP). The MV tools must be a trade-off between costs and accuracy. The transnational project PERMANENT 35 - implemented within the Intelligent Energy Europe framework – addressed the diffused disbelief in energy savings by developing and testing an integrated MV protocol, educating energy end users, financiers and energy services suppliers on performance risk measurement and management techniques and by creating trained instructors on the realized MV protocol. Support to local authorities in the preparation of action plans and tenders. The project PARIDE (Teramo) shows how a multi-governance model can reach capillary diffusion on
33
Changebest (2009) Task 2.1: National Report on the Energy Efficiency Service Business in Italy.
34
At present date no national implementation of 2012/27/EU is available.
35
http://www.permanent-project.eu
17
-
-
-
the territory, mobilizing knowledge and organization skills from the trans-national level down to small hamlets. Another useful tool for local authorities would be the legal assistance of a consultancy for the eventual management of disputes with the EPC provider. Creation of scale effects, e.g. by pooling together neighbor municipalities so to reach a “critical mass” which creates an economic interest in companies and financial institutions. The project PARIDE (Teramo) is a clear example of such a strategy. The decision-makers planning the evolution of urban areas in a “smart city” approach must customize EPC model so to apply it to pooled, small-sized realities. creation of Third Party Financing Operators playing a role as skill assemblers: their responsibility would be to assess the feasibility for an EPC, structure the financing and bear the risk of the contract, whose operational components would be outsourced to the relevant stakeholders: construction companies, operators etc. This would lower the expenses associated with the creation of consortium and project vehicles and facilitate the entrance of SMEs to EPC subcontracting markets 36 as regards the “split incentive” barrier in social housing sector, FRESH project has identified different solutions, such as the recoupment of energy savings from tenants even without the official agreement of all tenants, the payment of a comprehensive total fee for rent and energy charges (thus enabling the SHO to transfer energy costs to rents after an energy retrofitting), the contractual connection of energy bills (and thus energy savings) with price volatility.
Communication solutions: -
-
Information and education campaigns which can spread knowledge among companies, public administrations, associations and citizens, and can boost the participation of the building occupants in the daily management of the building performance. These campaigns could be managed by large public institutions, chambers of commerce, freelancers and universities, and concern useful criteria for technological choices, clarifications on the frequently changing legislation, quality guarantees on products and processes. 37 Experts also underline the need for a common ground where ESCOs, financial institutes and potential clients (public administrations, private citizens, companies, associations etc.) can discuss on ESM, so that concepts as “saved energy” will gain their due consistency and value just as “produced energy”. As regards SMEs, the European project (Ex)Bess 38 highlights that: “SMEs are triggered by energy efficiency in relation to cost reduction and by the possibility to benchmark. Consequently, promotion of energy efficiency aiming at management of SMEs needs business like terminology (in terms of Euros, sales profitability and internal rate of interest).” Further on: “SMEs are best approached for EE by known, close and familiar institutions” Creation of a “best practice” database, where publicly available information on EPC experiences can be shared and become a source of inspiration for the next contracts. Documentation of pilot projects and model contracts from different EU countries should be
36
See IEE-FRESH projects in social housing sector: www.fresh-projects.eu
37
ENEA (2011) – Quaderno – L’efficienza energetica nel settore civile, pag. 11.
(Ex)BESS – Expanding the Benchmarking and Energy management Schemes in SMEs to more Member States and candidate countries (2009) 38
18
-
translated and adapted to the local framework conditions. Intensive networking with other public administrations will foster the exchange of already available know-how. 39, 40 Deeper analysis of the mature ESCO market in USA, which can provide useful inspiration for the developing European market41.
Changebest project (2009) “Overall analysis and documentation of ChangeBest field tests of new energy efficiency services developed and introduced into the market in 6 EU Member States”
39
40
ENEA (2011) – Quaderno – L’efficienza energetica nel settore civile
41
Changebest (2009) Task 2.1: National Report on the Energy Efficiency Service Business in Italy.
19
6. NATIONAL ENERGY CONSUMPTIONS (TASK 3.1.2)
Italy results to be a major energy consumer (Figure 5). According to Fraunhofer (2012) 42 “Italy reported a final energy demand of 130 Mtoe in 2007 [...] Compared to the total final energy demand of the European Union, Italy accounts for a share of 11%. It is the fourth most important energy consumer of whole Europe and the biggest one of Southern Europe (including Spain and Greece, excluding Turkey).”
Figure 5. Final energy demand by country, EU27, 2007 43 The final energy demand of 184 Mtoe has been covered for 82% by fossil fuels (oil: 38%, natural gas: 35%, coal and other solid fuels: 9%), and for the remaining part by RES and importation of electrical energy (13% and 5% respectively) (Table 3). The strong dependence from energy importations poses a serious problem on security of energy supplies. The final energy consumptions by sector are represented in Figure 6. Civil sector is responsible for 34% of all energy consumptions, followed by transport sector (32%) and by industry sector (24%). Agriculture has a minimum impact, with a share of 2%, while non-energy use (e.g. production of plastic from oil, lubrication, dry cleaning, degreasing etc.) represent 6,9% and bunkering 3%.
42
Fraunhofer ISI (March 2012), “Concrete Paths of the European Union to the 2°C Scenario: Achieving the Climate Protection Targets of the EU by 2050 through Structural Change, Energy Savings and Energy Efficiency Technologies” Accompanying scientific report – Contribution of energy efficiency measures to climate protection within the European union until 2050 43
Fraunhofer ISI (March 2012), op cit., page 178
20
Table 3. Balance of energy in Italy in 2011 [Mtoe] 44
1. Production 2. Imports 3. Exports 4. Changes in energy stocks 5. Gross internal demand (1+2+3+4)
Solid Natural gas Oil RES Electricity Total 0,7 6,9 5,3 22,6 0,0 35,5 15,5 57,6 89,9 2,2 10,5 175,7 0,2 0,1 26,7 0,2 0,4 27,6 - -0,6 -0,6 0,6 -0,6 0,0 16,6 63,8 69,2 24,6 10,1 184,2
6. Consumption and losses in energy sector 7. Transformation in electrical energy
-0,3 -11,8
-1,5 -23,1
4,5 4,4 0,0 0,0 0,1
39,2 12,7 0,7 25,2 0,1 0,4
-
-
8. Total final consumption (5+6+7) Industry transport civil agriculture non-energy use bunkering
agriculture 3,0 2%
-
non-energy use 6,9 5%
-5,5 0,0 -3,3 -19,7 60,4 4,8 39,5 4,0 2,2 6,4 3,4
4,9 0,3 1,3 3,2 0,1 0,0
-
bunkering 3,4 3% Industry 32,7 24%
civil 46,5 34% transport 42,5 32%
Figure 6. Final energy consumptions in 2011 [Mtoe] 45
44
Elaboration from: Ministery for the Economic Development – Bilancio energetico nazionale 2011
45
Elaboration from: Ministery for the Economic Development – Bilancio energetico nazionale 2011
21
-42,0 -49,3 57,9 0,0 26,0 134,9 10,5 32,7 0,9 42,5 14,0 46,5 0,5 3,0 6,9 3,4
Figure 7 presents the final energy consumptions in Italy from 2000 to 2011 (including solid fuels, natural gas and oil products, electricity, RES). The effect of the economic turndown is evident in the industry sector, where a decrease from 477 (in 2006) to 372 TWh (in 2011) can be observed (Figure 7). In the same years, however, the consumptions for civil uses slightly increased, while the consumptions in transport, agriculture and bunkering sectors maintained rather stable. TWh
TWh 600
1750
500
1700 Total final uses
400
1650
Civil uses * Transport
300
1600
Industry Non-energetic uses
200
1550
Agriculture Bunkering
100
1500
0
1450 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 **
Figure 7. Final energy consumptions from 2000 to 2011 [TWh] 46
46
Data from ISTAT (2012) *Civil uses include residential sector, tertiary (trade and service) and public sector; ** Data from 2011 are provisional
22
6.1 Natural gas consumption In 2011 the total natural gas consumption was 80,6 Mio m3, corresponding to 846 TWh (conversion: 1 m3 of natural gas = 10,5 kWh 47). Figure 8 presents the final natural gas consumptions by activity sector from 2006 to 2011. The total final natural gas consumption and the consumption attributed to the different activity sectors reported yearly variations, with a slight decreasing trend of electricity generation. TWh
TWh 300
950
250
900
200
850
150
800
100
750
50
700
0
Total Residential Trade and service Industry Electricity generation Self-consumption
650 2006
2007
2008
2009
2010
2011
Figure 8. Final natural gas consumptions by activity sector from 2006 to 2011 [TWh] 48 Figure 9 reports the final natural gas consumptions by activity sector in 2011. Both industry and residential sectors contributed for 25% of the total, while tertiary accounted for 8%. Electricity generation required 26% of the total natural gas consumption, and self-consumption contributed for 16%. self-consumption Residential 132 177 16% 21% Electricity generation 224 Industry 26% 211 25%
Residential MFB 34 4% Trade and service 69 8%
Figure 9. Final natural gas consumptions by activity sector in 2011 [TWh] 49
47
www.eni.com
48
Elaboration from AEEG (2012) http://www.autorita.energia.it/it
23
6.2 Electricity consumption Figure 9 reports the final electricity consumptions by activity sector in 2011. Industry sector is responsible for 45% of all electricity consumptions, followed by private tertiary sector (25%) and by residential sector (22%). Public tertiary sector has a share of 6%, while agriculture has a minimum impact (2%). AGRICULTURE 5,9 2%
RESIDENTIAL 70,1 22% TERTIARY Public services 20,3 6%
INDUSTRY 140,0 45% TERTIARY Private services 77,4 25%
Figure 10. Electricity consumptions in Italy in 2011 [TWh] Table 1 (next page) reports the electricity consumptions in 2010 and 2011 split by activity sector and relative branches.
49
Elaboration from AEEG (2012) http://www.autorita.energia.it/it
24
Table 4. Electricity consumptions in Italy in 2010 and 2011 50
Type of activity
2010 [TWh]
AGRICULTURE INDUSTRY Basic manifacturing Iron metallurgy Non-ferrous metals Chemical Building materials Paper industry Non-basic manufacturing Food Textiles, garments and footwear Mechanics Transport Plastic and rubber machining Wood and furniture Other manufacturing Construction Energy and water Extraction of fuels Refining and coking Electricity and Gas Aqueducts TERTIARY Private services Transport Communication Trade Hotels, restaurants and bars Credit and insurance Other private services Public services Public administration Street lighting Other public services RESIDENTIAL TOTAL
50
2011 [TWh] 5,6 138,4 61,3 18,7 4,6 15,5 12,7 9,8 58,6 12,8 6,3 21,3 3,8 8,8 3,9 1,7 1,8 16,8 0,4 6,0 4,1 6,2 96,3 75,8 10,7 4,2 24,1 12,4 2,6 21,8 20,5 4,6 6,4 9,5 69,6 309,9
var [%] 5,9 140,0 62,3 20,6 4,6 15,1 12,3 9,6 57,9 12,6 6,1 21,6 3,6 8,4 3,6 1,9 1,6 18,2 0,4 6,1 5,5 6,3 97,7 77,4 10,7 4,2 23,9 12,5 2,5 23,6 20,3 4,7 6,2 9,4 70,1 313,8
Terna S.p.A. - Rete Elettrica Nazionale (2011). Terna is the Italian electricity transmission system operator.
25
5,3 1,2 1,6 10,5 1,2 -2,9 -3,2 -1,7 -1,2 -1,3 -4,3 1,2 -3,8 -3,9 -7,9 16 -6,4 8,5 -13,3 1,4 33,3 0,7 1,5 2,1 0,5 -1,2 -0,8 0,2 -2,8 8,5 -0,9 2 -2,6 -1,2 0,8 1,3
7. ENERGY EFFICIENCY ACHIEVEMENTS (TASK 3.1.2)
Table 5 shows the yearly energy savings achieved in 2011 within White Certificate Scheme vs. the targets of 2016. The last column highlights that tertiary and transport sectors urgently need adhoc measures in order to reach their energy reduction targets. Table 5. Achieved energy savings in 2011 and targets for 2016 51
sector
Energy savings
Energy savings
in 2011
2016 targets
[TWh/year]
[TWh/year]
Residential
Percent of 2016 targets [%]
40,1
60,0
67
Tertiary
2,0
24,6
8
Industry
10,1
20,1
50
5,4
21,8
25
57,6
126,5
46
Transport Total
In 2011 the residential sector provided 69% of all energy savings, while industry, transport and tertiary allowed for 17,9%, 9,6% and 3,5% of total savings 52 (Figure 11). 3% 10% household industry
18%
transport 69%
tertiary
Figure 11. Energy savings in different activity sectors in 2011.
51
Data from ENEA - UTEE (2012) “Rapporto annuale efficienza energetica 2011” , pag. 59
52
Ibidem, pag. 60
26
The ODEX indicators provided by Odyssee-MURE project reflect the energy efficiency gains in Italy from 2000 (Figure 12). For each sector, the ODEX index is calculated as a weighted average of sub-sectoral indices of energy efficiency progress. The sub-sectoral indices are calculated from variations of unit consumption indicators, measured in physical units and selected so as to provide the best “proxy” of energy efficiency progress, from a policy evaluation viewpoint (e.g. for households the indicators are: large electrical appliances (kWh/year/appliance), heating (koe/m2), water heating and cooking (tep/dwelling)). The sectoral index is calculated by aggregation of sub-sectoral indices on the basis of the relative weight of sub-sectors in the sector’s energy consumption. 53 Tertiary sector is excluded because of lack of reliable data. Although Italy results up with the other European countries in residential and industry sectors, transport sector is still far from reaching its energy efficiency targets. This is probably due to the average car size and horsepower and the share of diesel. 54 An additional cause lies in the intensive road freight transport, which is less efficient than rail and water freight traffic. %
% 13 12 11 10 9 8 7 6 5 4 3 2 1 0
17 16 15 14 13 12 11 10 9 8 7 6 5 4 3 2 1 0
Italy EU 27
Italy EU 27
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Overall (residential, industry, transport)
Residential %
% 14 13 12 11 10 9 8 7 6 5 4 3 2 1 0
10 Italy
9
Italy
EU 27
8
EU 27
7 6 5 4 3 2 1 0
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Industry
Figure 12. Energy efficiency gains since 2000
55
Transport
53
Enerdata (2010): Definition of ODEX indicators in ODYSSEE data base
54
Enerdata (2010): Energy Efficiency Trends in the EU – Lessons from the ODYSSEE MURE project
55
Odyssee Database on Energy Indicators (www.odyssee-indicators.org)
27
8. ESTIMATION OF THE ENERGY EFFICIENCY POTENTIAL (TASK 3.1.2) Several energy efficiency potentials for Italy have been calculated in the last years, either following a top-down or a bottom-up approach. This section will present a selection of the available studies, which can pose the basis for further considerations on the EPC potential. A report by Fraunhofer Institute (2012) 56 – supporting the preparation of proposals for an EU Energy Roadmap 2050 - analysed the Final Energy Demand (FED) of EU 27 Member States and estimated the potential savings by sector of intervention. The evaluation was based on the bottom-up MURE simulation tool, using as data sources Eurostat, Odyssee, PRIMES 2007 (with later adjustments due to the economic crisis, using PRIMES 2009 scenario) and numerous technical information for end-uses. The study takes a conservative approach since it considers that energy efficiency is usually not a driver for investment cycles. Additional dynamic factors have been taken into account, such as the competition over time between different technologies and the learning and scale effects which lead to a cost decrease of energy efficient technologies over time. An overview of potentials in Germany, France, Italy, Spain and Poland has been drawn. The technical energy-saving potential in Italy divided by sector is represented in Figure 13. It was estimated that “the overall saving potential of Italy sums up to 46 Mtoe by 2030, which translates to a 31% reduction compared to the baseline, reducing the FED from 146 Mtoe to 100 Mtoe. The household as well as the transport sector represent one third each, while the remaining third is covered by industry and tertiary sector. Compared to the pre-crises level of 2007 (131 Mtoe), the reduced FED will be 24 % lower.”
56
Frunhofer ISI (March 2012) “Concrete Paths of the European Union to the 2°C Scenario: Achieving the Climate Protection Targets of the EU by 2050 through Structural Change, Energy Savings and Energy Efficiency Technologies” Accompanying scientific report – Contribution of energy efficiency measures to climate protection within the European union until 2050
28
Figure 13. Technical energy-saving potentials in Italy, by sector 57 The household sector presents a strong energy-saving potential. In the household sector, a further increase in energy demand up to 36 Mtoe is assumed [...], which is mainly related to rising cooling demand. Thus the energy saving potential of 16 Mtoe by 2030 leads to a 44% reduction compared to the baseline and to a 20% reduction compared to the 2008 level (26 Mtoe). Two thirds of the saving potential (10,6 Mtoe) result from efficiency improvements in existing buildings (comprising insulation, heating systems). Another 12% are linked to the construction of energy efficient new buildings and the installation of efficient sanitary hot water supply, respectively. The remaining share arises from efficiency improvements in electric appliances, mainly lighting, TVs, refrigerators and desktops. About the industry sector, it is reported that “The exploitation of the technical saving potential of nearly 9 Mtoe would diminish the 2030 FED by 19%. Slightly more than one third of all savings are related to efficient heat generation. Another third results from efficient electric cross-cutting technologies (particularly e-drive system optimization measures, accounting for 3 Mtoe) and the last quarter arises from process-specific technologies, essentially from refineries and the iron and steel industry.” According to PRIMES 58, the FED of the tertiary sector will further increase. The relative saving potential in the tertiary sector is comparable to the transport sector, leading to a 32% FED decrease in comparison with the baseline by 2030. In absolute figures, the actual saving potential is quite smaller, accounting for 6 Mtoe. 4,4 Mtoe result from building related efficiency measures (building envelope, heating, cooling) of existing (3,9) and new dwellings (0,5 Mtoe). The remaining share is on the one hand linked to efficiency improvements in air-conditioning, fans and commercial refrigeration and on the other hand to office lighting. Finally, the transport sector would represent a large share of the total EE potential: “The realization of the saving potential of 15 Mtoe would reduce the FED by 32% to 31 Mtoe by 2030. 9 Mtoe are resulting from savings in passenger transport […]. Efficiency improvements in air traffic account for 1,7 Mtoe and in motorcycles for 0,5 Mtoe. The latter is a singularity of the Italian transport sector compared to other European countries.”
57
FRAUNHOFER ISI (March 2012), op cit., page 187
58
PRIMES/GAINS 2009
29
In 2007, a study conducted by eERG for Greenpeace Italia 59 analyzed the energy saving potentials by 2020 for electric end-uses in industry, household, tertiary and transport on rail. Conservative hypothesis are taken into account: the calculations consider only appliances with well-known energy demands 60; the Technical Potential (TP) is based on existing technologies and their costs in 2006; the electricity cost is assumed to be decreasing with time. Baseline consumptions refer to data from 1999 to 2005. The following definitions have been adopted: - Technical Potential: energy saving potential under the scenario of a capillary diffusion of the most efficient technologies available, without limits on the economic convenience - Potential by 2020: estimated fraction of the TP that can be reached my means of a series of programmes and policies - Economic potential: energy savings achievable by the capillary diffusion of the most efficient available technologies, considering a minimum cost criteria which considers both initial investment costs and operation costs (e.g. maintenance and energy consumption). Table 6. Technical potential for electricity savings by 2020 [TWh/y] Sector Lighting Electric motors Appliances Other Total
Total
Residential
45,4 39,4 7,5
4,5 1,1 7,5
Tertiary (private) 20,7 10,7 0,0
10,7 103,0
0,0 13,1
5,9 37,2
Tertiary (public)
Industry 4,7 1,0 0,0
15,5 26,6 0,0
1,6 7,3
3,2 45,3
The main economic potential lies in industry sector (47%) and private tertiary (29%). The specific interventions that present highest energy savings are discussed in the relative sections. Tertiary - Public service Residential 11% 13% Tertiary Commercial service 29%
Industry 47%
Figure 14. Economic potential for electricity savings in 2020 [TWh/y] 61
59
Greenpeace (2007) “La rivoluzione dell’efficienza”
Building envelope improvement, passive cooling technologies and HVAC optimization have not been addressed due to a scarcity of available data.
60
61
Data from Greenpeace (2007) “La rivoluzione dell’efficienza” and from eERG – Politecnico di Milano
30
8.1 Public sector The public sector is the first target for EPC, since it has two concordant goals: the first is regulating and facilitating the access to subsidies schemes and the second is improving the energy performance of its own structures according to the national and international energy saving targets. Public bodies can thus give the example to companies and citizens on the path of a sustainable development. The following sections will focus on potentials for public buildings and public street lighting. Further considerations derived from interviews with ESCOs will be reported. The analysis conducted by eERG (2007)62 offers a first comprehensive glance on the electricity potential by 2020 in public sector (Figure 15). It must be kept in mind that the study did not consider ventilation/air conditioning potential due to a scarcity of available data. Under this assumption, indoor and outdoor lighting play the most relevant roles, contributing with 43% and 29% to the total potential, respectively. Relevant contributions come from Information and Communication Technologies (ICT), office machineries, motors and refrigeration systems. Motor / drivers 0,9 10%
ICT / office machinery 1,1 12%
Public Lighting 2,6 29%
Refrigerator 0,5 6% Lighting 3,8 43%
Figure 15. Economic potential for electricity savings by 2020–public sector [TWh/y]
8.1.1 Public buildings The data availability on public buildings is strongly dependent on the use destination 63. A study by RSE-ENEA (2009) based on CRESME data and addressing schools and office buildings is here reported. Only buildings totally belonging to public administrations have been considered. Structures such as universities, hospitals and jails have been excluded from the study for their non-homogeneity in use and heating system characteristics. School sector present a relatively abundant amount of data. Table 7 reports the number of schools in three geographical macro-regions, with the specification of buildings constructed before and after the first law on energy performance in buildings (Law n. 373/1976). The schools built before 1976 (and never refurbished) are therefore an ideal target for ESM, since their energy demand can exceed 250 kWh/m2 year. 62
Data from Greenpeace (2007) “La rivoluzione dell’efficienza” and from eERG – Politecnico di Milano
Data derived from RSE-ENEA (2009): “Indagine sui consumi degli edifici pubblici (direzionale e scuole) e potenzialità degli interventi di efficienza energetica” 63
31
Table 7. Schools in Italy North 11400 5600 17000
Ante Law n. 373/1976 Post Law n. 373/1976 Total
Centre 6400 3100 9500
South 11000 5500 16500
Total
28800 14200 43000
The available data on office buildings are reported in Table 8. The total floor area is above 23 million m2. It is remarkable that 50% of the total surface area is concentrated in the biggest 16 provinces, while 14% of buildings are located in Rome, Turin, Naples and Milan. Table 8. Office buildings in Italy number 9550 2025 508 247 129 128 993 13580
Public administration Education Health R&D Energy and water Real estate and construction Other Total
Floor area [m2] 16.811.119 2.594.456 2.285.834 491.701 100.312 189.469 955.683 23.428.574
The estimated total final consumptions for schools and office buildings are summarized in Table 9. Schools represent the major contribution of the total consumption (81%), and electricity consumption has a much larger share in office buildings (84%) than in schools (15%). Table 9. Energy consumption in schools and office buildings.
Schools Offices Total
Thermal energy [TWh] 12,6 1,9 14,5
Electrical energy – HVAC [TWh] 0,6
Electrical energy – illumination [TWh] 1,9 1,0 3,5
Total [TWh] 14,5 3,5 18
The study simulated comprehensive interventions on 35% of schools and office buildings, deriving the intervention costs and energy cost reductions (Table 10). The annual thermal and electric energy savings would be 18% and 23% respectively. Table 10. Intervention costs and energy cost reductions [Mio €]: Schools Intervention costs Cost reductions [Mio €/y]
Offices
Total
6.486
1.757
8.243
328
91
419
A later study by ENEA (2011) 64 estimated the potential for energy efficiency interventions in public offices by 2020. The eligible stock of buildings was 80% of the total number, (i.e. 11000 buildings), while the remaining 20% has been assumed non cost-effective or subject to particular architectural constraints. Table 11 shows the expected energy consumption after the interventions and the percent energy reductions.
64
ENEA (2011) – Quaderno – L’efficienza energetica nel settore civile, pag. 8-9
32
Table 11. Public office buildings – expected energy consumption and savings by 2020 n=11.000
Actual consumption [TWh]
Heat Lighting Other electricity Total
3,8 0,8 3,0 7,7
Post-intervention consumption [TWh] 2,6 0,5 2,6 5,6
Total savings by 2020 [TWh]
% of savings on total consumption
1,4 0,2 0,2 1,9
17,5% 3,3% 2,4% 23,3%
As regards school sector, ENEA estimates that 57% of school buildings (30000 of a total of 53000) should be refurbished by 2020 (Table 12). Table 12. School buildings – expected energy consumption and savings by 2020 n=30.000 Heat Electricity Total
Actual consumption [TWh] 12,2 1,4 13,6
Post-intervention consumption [TWh] 7,9 0,8 8,7
Total savings by 2020 [TWh] 4,3 0,2 4,5
% of savings on total consumption 31,3% 1,4% 33,4%
The scenario presented in the latter study is probably too optimistic, since refurbishing 80% of public offices and social housing structures and 57% of schools would require a massive mobilization of funds. Even if ESM may not be the major driver for requalification, the following point is to be considered. When analyzing the cost-benefits of ESM interventions, it is good to keep in mind that energy requalification usually accompanies the comprehensive refurbishment necessary due to building obsolescence. This fact drastically contributes to reduce the extra-cost of ESM and to shorten the payback period. It is finally essential to mention that ESM are strongly connected to improvements in indoor climate, which in return causes higher performance of building occupants. In fact, several studies have investigated the negative effect of thermal discomfort on labour productivity. 65,66 Even considering their simplified approach, it is reasonable to think that the presented studies can be adopted in a national strategy for the development of EPC market. The 35% ratio of schools and office buildings assumed in ENEA (2009) could represent the eligible stock for EPC, representing the buildings with the highest margins of energy savings.
8.1.2 Social housing sector Social housing sector is estimated to include about 90.000 buildings 67 , and it is considered a relevant target group due to the general poor building performance, with energy consumption exceeding 240 kWh/m2 year in the colder climatic zones.
Niemela R, Hannula M, Rautio S, Reijula K & Railio J. The effect of air temperature on labour productivity in call centres – a case study. Energy and Buildings 34 (2002), 759-764.
65
Kosonen R & Tan F. Assessment of productivity loss in air-conditioned buildings using PMV index. Energy and Buildings 36 (2004), 987-993.
66
67
ENEA (2011) – Quaderno – L’efficienza energetica nel settore civile, pag. 8-9
33
Social Housing Operators (SHOs) are public bodies usually owned by provinces. They manage a housing stock which is mostly owned by municipalities, who allocate the dwellings and define the investment policies. SHOs therefore have little decision power on the maintenance and refurbishment of the housing stock. Rents are based on the income of households and do not reflect the real cost of housing. The European cooperation project FRESH – supported by the IEE programme- addressed the development and promotion of EPC to finance comprehensive refurbishment operations in the social housing sector. It is reported 68 that Social Housing Operators “are the only institutional players specialized on housing management [...]. They have a much better decision-making capacity than condominiums, even though they may be limited by financial resources and local governance problems. They manage in the long term (30-50 years) the housing they build, which is an incentive to reduce future O&M costs. […] Through a limited number of SHOs, it is possible to reach quickly a very large number of dwellings. The replication potential for energy retrofitting is therefore quite high if the financial mechanisms are appropriate.” According to ENEA (2011) 69, 80% of the buildings shall be eligible of ESM, with energy savings summarized in Table 13. Table 13. Social housing buildings – expected energy consumption and savings by 2020 n=70.000 Heat Electricity Total
Actual consumption [TWh] 11,9 0,2 12,1
Post-intervention consumption [TWh] 7,1 0,2 7,3
Total savings by 2020 [TWh] 4,8 0,0 4,8
% of savings on total consumption 39,5% 0,3% 39,7%
8.1.3 Street lighting Public street lighting contributes for 31% (6,2 TWh/year) of all electricity consumption in public tertiary 70, and often represents the main part (up to 70%) of electricity bills of small municipalities. For this reason, in 2010 ENEA started the project “Lumière” for promoting efficient street lighting and energy management in Italian municipalities. At present date 256 municipalities have joined the project. A software has been implemented in order to estimate economic savings and C02 reductions resulting from ESM in street lighting. The collection of data on 111 municipalities permitted to estimate current energy and maintenance costs, potential interventions costs (including the creation of an action plan and the requalification of the existing system) and expected savings and C02 reductions. The calculated results are reported in Table 14.
FRESH (2011): Energy retrofitting of Social Housing through Energy Performance Contracts. A feedback from the FRESH project: France, Italy, United Kingdom and Bulgaria.
68
69
ENEA (2011) – Quaderno – L’efficienza energetica nel settore civile, pag. 8-9
70
Terna S.p.A. - Rete Elettrica Nazionale (2011).
34
Table 14. Expected savings from implementation of street lighting requalification 71
years 10 8
IRR (20 years) % 8 11
NPV (20 years) k€ 1699 16286
4354
7
12
22355
61
11257
1929
6
16
12783
63
81902
10835
-
-
53123
-
municipalities
Current costs
Total investment
Yearly savings
Payback period
#
