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Energy Efficiency in District Heating and Joint Implementation. Mark van Wees CAP SD Energy and Climate Consultants Moscow, 21-23 August 2006. District Heating Market Share. Source: IEA. Energy Efficiency in District Heating. Source: IEA. Performance indicators. - PowerPoint PPT Presentation
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Energy Efficiency in District Heating and Joint Implementation
Mark van WeesCAP SD Energy and Climate Consultants
Moscow, 21-23 August 2006
District Heating Market Share
Source: IEA
Energy Efficiency in District Heating
Source: IEA
Performance indicators
1. Promotion of energy efficiency in district heating systems in the EU Standards and certification
– Regulation of boiler efficiency– Energy audits and certification
Benchmarking– Energy efficiency benchmarking in tariff system– Voluntary programmes
Tax incentives– Investments in energy efficiency
R&D Best practice programmes
– Benchmarking, technical expertise, auditing Financing (by governments)
– Project preparation grants and investment subsidies– Guarantees– Carbon financing
Share of cogeneration
Source: IEA
2. Promotion cogeneration in the EU
Fair market conditions (cost sharing between electricity and heat)
Bonus payments and feed-in tariffs Subsidies/grants for new capacity Tax incentives
– Investments in energy efficiency R&D Best practice programmes
– Benchmarking, technical expertise, auditing Financing
– Project preparation grants and investment subsidies
– Guarantees– Carbon financing (Joint Implementation)
3. Promotion of energy efficiency in end-use of heat (buildings) in EU Metering and control Building energy codes Energy audits and certifications Information campaigns Tax incentives
– Investments in energy efficiency R&D and best practice programmes
– Benchmarking, technical expertise, auditing Financing
– Project preparation grants and investment subsidies
Joint Implementation
ERUs
Project emissions
Baseline emissions
2008 2012
time
Ton
CO
2e/y
r
Examples JI Projects in District Heating (approved and contracted)
Bulgaria (cogeneration)– CHP Portfolio: gasturbine + gasengines ( replacing
heat only boilers)– Extension DH network
Romania (boiler efficiency)– Increase boiler efficiency at coal fired CHP plant
Romania (reduction heat losses)– Replacement secondary distribution network– Replacement heat exchangers in substations
Poland (renewable energy)– Feed-in geothermal energy in district heating
replacing coal-fired
Energy efficiency with the context of district heating
reform
Source: IEA
Carbon Market 2004-2005
0
50100
150200
250300350
400
Mto
n
2004 2005
JI
CDM
ETS
Source: PointCarbon “Carbon 2006”
NEDO
Worldbank
Finland
Belgium
Netherlands
KfW
JCF-JBIC
ECF
Austria
TGF
EBRD
Denmark IFC
Sweden
Standard Bank
Categories of Buyers1. Government: buy for Kyoto compliance / risk
averse / inflexible in transaction / passive approach to project identification / tenders
2. Private sector: buy for compliance EU ETS / some flexibility in transaction / medium risk / direct project-by-project approach in purchasing
3. Banks/funds/traders: buy for trading / can serve different buyers / balancing risk versus profit / flexible transactions and price structures / active approach to project identification
Two typical buyers in Russia Passive buyer:
– Now waits for certainty on JI infrastructure (LoA)– Limited presence in Russia– New proposals in Russia on the shelf or treated with
care– Examples: Belgium, Netherlands
Active buyer:– Invests in new project identification and development– Willing to pursue (conditional) transactions– Strong presence in Russia (agents, existing network)– Examples: EBRD, Denmark, traders
Differences between buyers?
Interest in Russian market Volume to be purchased Preferred/eligible projects Risk profile Price and other transaction terms Flexibility in contract terms Support in project development
– financial, technical, moral Combination with project finance
International Financing Schemes offering project+carbon
financing World Bank (IFC) European Bank for Reconstruction and
Development (EBRD) European Investment Bank (EIB) Nordic Environment Finance Corporation
(NEFCO)
+ Private sector schemes
How to select a buyer? Status of your project (initial idea or fully
developed)? Your capacity in project development?
Required technical and financial support? Small-scale project? Others? Combination with project financing
necessary? Risk profile project and host company? Financial objectives (revenues, price,
upfront payments, etc.)?
Marketing your project
Market research and orientation Shortlist of buyers Non-exclusive initial discussions with
buyers Exclusivity and compensation preparation
costs Preparation documentation (PDD) Negotiations on transaction
Emission Reduction Purchase Agreement
Finding the right buyer
New buyers still arrive Others may change their strategy in
Russia Some may even leave again New mechanisms in the future
Study the market and shop around!
Conclusions
Increasing energy efficiency in district heating is important for economic, social and environmental reasons
Potential JI is substantial and demand is still growing
Decision of the Russian government on JI badly needed
Active involvement of the district heating sector in the national and international debate on JI is very important (e.g. National Program) !