Designing and Implementing Large Scale Energy Efficient Lighting

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					Designing and Implementing
     Large Scale Energy
Efficient Lighting programs

                  W ld B k E      i
                  World Bank Experience


     Presented at Asia Clean Energy Forum
                    Manila
                      17
                June 17, 2009


 The views expressed in this paper/presentation are the views of the author and do not necessarily reflect the
 views or policies of the Asian Development Bank (ADB), or its Board of Governors, or the governments they
 represent. ADB does not guarantee the accuracy of the data included in this paper and accepts no
 responsibility for any consequence of their use. Terminology used may not necessarily be consistent with
 ADB official terms.

                                                    Page 1                                                   The World Bank
     Presentation Outline

     energy-
Why energy-efficient lighting?
Program design approaches and issues
Bulk procurement
Market-
Market-based approaches
Key elements of program design and
implementation
Role of Carbon Finance
Lessons l
L              d
         learned
Development of the CFL Toolkit


                   Page 2
                                       The World Bank
    Energy-
Why Energy-Efficient Lighting?




              Page 3

                             The World Bank
  y Energy-
         y
Why Energy-Efficient Lighting?
 Lighting:
 •    Represents 19% of all energy use
 •       j d       i    d     i d    l i         i
      Major domestic end use in developing countries
 •    Large contributor to system peak loads
 •    Inefficient

         Benefits of Energy Efficient Lighting
                 Energy savings, reduced bills, mitigation of
     Customer
                 impacts of higher tariffs

                 Peak load reduction, reduced capital
      Utility
                 needs, reduced cost of supplying electricity
                                deficits,
                 Reduced fiscal deficits reduced public
 Government
                 expenditures, improved energy security
                 reduction in local pollution and in GHG
 Environment
                 emissions

                                Page 4
                                                            The World Bank
 Contribution of Lighting to Peak Load
               Sri Lanka
                 End Use                                 % kWh                    % System kWh                                % System Peak
               Lighting                                  42.3%                        10.5%                                       22.8%
               TV                                        14.9%                         3.7%                                        6.6%
               Fan (Ventilation)                         14.9%                          3.7%                                       2.9%
               Refrigeration                             10.7%                          2.7%                                       1.4%

300

250          Lighting (Total)                   Fan

             Electric Cooking                   TV
200
             Refrigerator                       Misc (Base)
150          Air Conditioners                   Storage Heater

100

 50

  0
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   Efficient Lighting Projects
1995-1998 ELI - Poland, Mexico, Argentina,
Czech Republic, Hungary,
2002-2005 (GEF, ELI) - Latvia, Peru,
Philippines, South Africa
1995-2007 (WB) - Sri Lanka, Vietnam, Uganda,
Rwanda
               Timor-Leste, Senegal Morocco,
Current (WB) - Timor Leste Senegal, Morocco
Uruguay, Argentina, Pakistan, Bangladesh,
Mexico, Mali, Ethiopia, Guatemala, Burundi
Current (other) - India, Indonesia, South Africa,
Mauritius, Ghana, China, Madagascar,
Philippines

                       Page 6
                                             The World Bank
   Program Design
Approaches and Issues




          Page 7

                        The World Bank
    Program Design Approaches

      Objectives             Design Approach          Example

M itigate short-term peak   Bulk procurement and
                                                        Uganda
     supply shortage          free distribution

 Reduce imacts of high      Bulk procuremnent and
                                                       Vietnam
     load growth                     sale
 Utility Demand-Side
                                                    North American
M anagement (DSM ) and             Rebates
                                                        Utilities
reduced customer bills
Reduce revenue loss and
                               "Branding" and
 capital needs for new                              India (BESCOM )
                                 promotion
       capacity

 M arket transformation         Based on CDM
                                                      India (BEE)
  and GHG reduction             requirements



                                  Page 8
                                                             The World Bank
  What is Bulk Procurement?
                                   energy-
Procurement of a large quantity of energy-
efficient appliances or equipment by the utility
or government and distribution of such
equipment to customers.
  P             is      ll     d     d   i
• Procurement i generally conducted using a
  competitive bidding process
• Buyer defines technical specifications to meet energy
   ffi i        l
  efficiency goals
• Target customers defined by utility or government
• Customers may be charged for the
  equipment/appliance or may receive them at no cost
• Distribution may be done by utility or by contractors



                         Page 9
                                                  The World Bank
Advantages of Bulk Procurement

 Large price reductions possible
 Significant load reductions
 Quick response
 Q lit       t l
 Quality control
 Ease of distribution and installation
           g    g
 Better targeting of customers
 Simplifies acquisition of Carbon credits using CDM
 Large effects on market stimulation
 Large net benefits to utilities, customers and
 society



                       Page 10
                                              The World Bank
  Examples of Cost Reduction from
        Bulk Procurement

                           Procurement    M arket     Bulk
    Program         Year
                               Size        Price      Price

Vietnam - Phase 1   2004    300,000
                            300 000      $2.50-3.00
                                         $2 50-3 00   $1 07
                                                      $1.07

Vietnam - Phase 2   2005    700,000      $2.00-2.50   $0.98


     Uganda         2006    800,000      $2.00-5.00   $1.10


   Philippines      2009    5,000,000 $2.00-4.00      $1.07



                            Page 11
                                                       The World Bank
Limitations of Bulk Procurement

   y
May limit the number of p         p    g
                           participating
manufacturers or suppliers
Difficult to have many lamp size options
Requires major effort on the part of the utility
or government
Does not enhance existing market and
distribution channels
Utility distribution and installation or sale may
be less efficient than private sector



                       Page 12
                                             The World Bank
  Rebate or Coupon Program

             p
         Example - Sri Lanka
Coupons distributed to customers to purchase
CFLs
Loan (12 month interest free) with customer
payments through utility bills
Subsidy to cover import taxes and duties
Utility endorsement
Multiple suppliers selected to participate
Lamps sold through existing retail channels
Advertising and marketing campaign


                     Page 13
                                         The World Bank
     Branding and Promotion
    Example – Bangalore Electricity Supply
         Company (BESCOM) I di
         C         (BESCOM), India
Branding program in cooperation
with suppliers
Participating suppliers (3) selected
based on technical quality, retail
price discount, and distribution
channels
Cooperative marketing and
promotion
Sales through existing retail
channels
Optional utility financing through
electricity bills


                           Page 14
                                             The World Bank
Program Design and
  Implementation




        Page 15

                     The World Bank
  Program Design Issues
Key Objectives
Target customers
T    t     t
Maturity of existing CFL market
Use of bulk procurement
Free distribution vs. cost recovery
CFL quality
Marketing and promotion
Market impacts and sustainability
CFL Testing
CDM and carbon financing
Recycling

                  Page 16
                                      The World Bank
Major Steps in Program Design
 Understanding market conditions
 Defining key program parameters
 Conducting baseline survey
 Defining technical specifications
 Developing procurement and distribution
 approach
 Identifying financing and cost recovery
 approach
 Creating customer awareness
 Assuring product quality
 Designing monitoring and evaluation plan

                    Page 17
                                        The World Bank
  Program Implementation
Management and administrative framework
Procurement
Distribution
Replacement of incandescents
Documentation of participants
Marketing and promotion
Product testing and quality assurance
Processing of cost recovery payments
Managing carbon finance requirements



                  Page 18
                                     The World Bank
Economics of CFL
E     i    f




       Page 19

                   The World Bank
Illustrative Benefits of CFL Program
      Assumptions                           Results
Program:1,000,000 lamps        Customer Savings: 65.7 kWh/yr
CFL wattage:15 watts                         $9.85/yr
                               Bill Savings: $
Incand. Replaced: 60 watts     Peak Savings/Lamp: 43.2 watts
Average Usage: 4 hours/day     Utility peak savings: 43.6 MW
Coincidence Factor: 0.85
  i id                 5       Annual Energy Saved: 78 GWH
Leakage Factor: 5%             Avoided Capacity Cost: $65.4 M
T&D Losses: 20%                Annualized Cap. Cost: $9.8 M/yr
CFL Power Factor: 50%          Fuel Cost Savings: $7.8 M/yr
CFL Rated Life: 10,000 Hr.     Cap + Energy Cost Saved:
GHG Savings/MWH: 0.8 Tons        • Annual: $17.6M
                                 • Lifetime: $120M
Capacity Costs: $1,500/kW
                               CFL Program Cost: $2 M
Fuel Cost: 10c/kWh
                               GHG Reduction: 62,415 Tons/yr
Energy Tariff: 15c/kWh
                               Lifetime GHG: 427,500 Tons


                             Page 20
                                                       The World Bank
Role of Carbon Finance




          Page 21

                         The World Bank
Carbon Financing of CFL Programs
Carbon benefits of CFL can be very substantial
In the economic analysis example, the carbon
savings of $0.43 per ton can provide revenues
of about $5 per CFL (@$12 per ton)
                                  survey,
CDM projects impose substantial survey
analysis and verification requirements
Only one CFL programs has been registered for
CDM d             l       h d l i li
      due to complex methodological issues
UNFCCC has approved simplified methodology
(         ) p          y
(AMS II.J) sponsored by The World Bank
                                    CDM-
India is embarking upon a national CDM-based
CFL initiative – Philippines and Vietnam may
also implement similar programs

                     Page 22
                                          The World Bank
L       Learned
Lessons L     d




       Page 23

                  The World Bank
Illustrative Examples of Peak Load
         Reduction Benefits

               No. of CFLs   Reported Peak
  Country
                Installed    Load Reduction
  Vietnam        , ,
                1,000,000       33 MW
  Uganda         800,000        30 MW
  Sri L k
  S i Lanka      600,000
                 600 000        34 MW
South Africa    2,700,000       90 MW
 India-BELP      300,000        11 MW


                   Page 24
                                        The World Bank
            Lessons Learned
Experience from prior program can be very
         (    g
valuable (being documented in the World Bank
ESMAP CFL Toolkit)
Program designs need to be carefully
customized for local conditions
Bulk procurement:
• Substantially reduces per unit costs
  Provides quick results i t
• P   id     i k                   f    k load
                      lt in terms of peak l d
  reductions
• Assures quality through technical specifications
• Can be effective in stimulating markets
• May negatively impact existing retail channels
                          long-
• May create issues with long-term sustainability


                         Page 25
                                                     The World Bank
                (         )
Lessons Learned (continued)
Branding or coupon programs may be more
              mature
suitable for “mature” markets and can help
strengthen existing market channels
CFL programs can have a significant
beneficial impact on market transformation
Marketing and promotion are key elements of
the programs
Carbon finance can significantly improve
program benefits but imposes many
requirements on program design and
implementation


                   Page 26
                                       The World Bank
Th      Toolkit
The CFL T lkit




       Page 27

                  The World Bank
 The World Bank/ESMAP CFL Toolkit
Objectives
               y               y p          (design, financing
  Review and synthesize the key operational (    g ,          g
  and implementation) elements, including those related to CDM
  and carbon finance based on the past project experience of the
  Bank and other organizations.
Structure
   User-         web-
   User-friendly web-based format, which can be used by Bank
   TTLs and other users in the client countries, for more
   efficiently and effectively designing and implementing of such
   programs.
Initial Focus
  D     i ti   f th k
  Description of the key implementation/operational
                         i  l    t ti /        ti l
  aspects of CFL based programs primarily for the
  residential/small-
  residential/small-commercial markets.


                                Page 28
                                                            The World Bank
CFL Toolkit – Major Sections

Home Page
About the Toolkit
CFL Technology
Designing and Implementing a CFL Program
Key Issues with CFLs
Case Studies of CFL Programs
Tools and Resources




                  Page 29
                                     The World Bank
    Thank you

      Dilip R. Limaye
Consultant, The World Bank
  dlimaye@attglobal.net
  dli            l b l



            Page 30

                             The World Bank