The New Structure for PSO Activities in Denmark

- Goals and Overall set-up

Nicolai ZarganisHead of Division

Danish Energy Authority

Seminar19 April 2006Copenhagen

Agenda

IntroductionThe importance of end-use energy efficiencyHistorical and actual measures

The new political frameworkPolitical agreement and action planNew measures

Final Energy Consumption- all sectors except transport

0,0

20,0

40,0

60,0

80,0

100,0

120,0

140,0

160,0

1980

1982

1984

1986

1988

1990

1992

1994

1996

1998

2000

2002

Inde

ks (1

980=

100)

Final energy GDP Intensity

Consumption 3 % lower in 2003 than in 1980

50 % growth in GDP

Effect of End-use Energy Efficiency in Denmark

0

100

200

300

400

500

600

700

800

900

1975 1978 1981 1984 1987 1990 1993 1996 1999

PJ

Without im provem ents in efficiency

Actual consum ptionWithout im provem nets in efficiency by the end users .

End-use energy efficiency

Supply efficiency

All sectors except transport

Energy Efficiency Measures in Denmark

• Energy taxes in households and in the public sector• CO2 taxes on energy used in all sectors• Building codes• Energy labelling of buildings. • Energy labelling of appliances (EU and GEEA). • Minimum efficiency standards. • Agreements on energy efficiency in industries (CO2

package)• The Electricity Saving Trust.• The energy-saving activities carried out by the grid

companies (electricity, natural gas, district heating)• Energy Saving Act• There have been different subsidies schemes

Taxation:

Buildings:

Appliances:

Industry:

General:

Energy prices in household - composition

ElectricityPetrol Oil forheating

ElectricityOil forheating

ElectricyOil for heating

Petrol Petrol0%

20%

40%

60%

80%

100%

Prices excl. taxes Energy and CO2 taxes VAT

1980 1990 2002

Energy for heating of Danish households

Final energy consumption

40

50

60

70

80

90

100

110

120

130

1975 1979 1983 1987 1991 1995 1999

Index

Heated Floor Space

Final energy consumption

Final consumption per m2

Net Heat Demand

40

50

60

70

80

90

100

110

120

130

1975 1979 1983 1987 1991 1995 1999

Index

Heated Floor Space

Net Heat Demand

Net Demand per m2

• Efficiency has increased dramatically since 1975

• Final energy per m2 is still declining – shift in heating systems

• Net heat demand per m2 has been almost stable the last 20 years

Building Codes

0%

20%

40%

60%

80%

100%

BR 1982 BR 1995 BR2005

Energy Intensity in Manufacturing

Final energy manufacturing

0,0

20,0

40,0

60,0

80,0

100,0

120,0

140,0

1975 1979 1983 1987 1991 1995 1999 2003

PJ

0

0,2

0,4

0,6

0,8

1

1,2

PJ/

bill

DK

K

Final energyIntenisty

Decrease in intensity: 1975-2003 1,2% p.a.1994-2003 2,3% p.a.

Energy Intensity in ManufacturingHow can the change in 2003 be explained:

Change in economic activitiesLow growth from 1983-93High growth since

New policy measuresCO2 tax package

• CO2 tax on energy• Voluntary agreement scheme• Subsidy scheme

DSM activities by electricity utilities

DSM by Grid CompaniesElectricity grid/distribution companies has worked with energy efficiency for more than 10 yearsThe activities are based on a running process of annual planning and reportingThe costs are included in the tariffs Energy consulting/audits, campaigns, information, etc.

The new political frameworkfor energy efficiency

The Process

Development of a new plan was decided in a political agreement in March 2004A draft Action Plan was published in December 200410 June 2005 a broad political agreement on future energy conservation efforts The final action plan was published in September 2005

Political Framework

Increasing energy efficiency is supporting:Economic growth and competitivenessSecurity of supplyEnvironmental protection and CO2 reduction

Basic principles:Decentralised implementationPSO-financingCost-efficiencyMarket-based approachFocus on realisation of profitable savings

Energy Saving Potential

The potential is large 30 – 50 % in most sectors and end-uses

A large part of the potential is economic attractiveFor the consumersSocio-economic

It will not be realised by itselfMarket failures and imperfectionsBarriers

There is a need for policies and measuresFocus on cost-effective measures with a big saving potential

Economic Potential from the Action Plan

PotentialSocio-economic up to 2015 24 %

Private-economic - currently

16 %

Private-economic – up to 2015

42 %

Still potential in all sectors and end-usesHalf of the cost-effective potential is in space-heating

Objectives and Targets

The overall goal is to reduce final energy consumption (excluding transport)Actual saving target at 1,7 % per year

Concrete energy savings, which can be documented, corresponding to an average of 7,5 PJ annually during the 2006-2013 periodTransport not included

This target secure a small decrease in final energy consumption.

Projected Development in Energy Consumption

Final energy (ex. transport)

410

420

430

440

450

460

470

480

490

1993

1995

1997

1999

2001

2003

2005

2007

2009

2011

2013

PJ

Statictic

BaU forecast

Annual saving 7,5 PJ

Network and Distribution Companies...

Shall deliver a significant part of the increased savingsInclude electricity, natural gas, district heating and oil companiesThe companies will together get an annual saving target and a large degree of freedom to deliver in the cheapest wayFocus on realisation of savings in the cheapest way

Where will the savings come from?Savings excl. transport Actual Draft Agree-

Annual savings, PJ Action plan ment

Electricity Saving Trust 0,39 0,49

Electricity grid companies 0,78 0,97

Natural gas companies 0,08 0,10

District heating 0,16 0,20

Oil companies

New buildings 0,00 0,70

Existing buildings 0,60 1,82

Public sector 0,00 0,25

Appliances 0,30 0,30

Industry 0,40 0,50

I alt 2,71 5,33 7,5

Note: 1 % = 4,35 PJ

ConclusionStrong political support on energy efficiency Focus on market based initiativesMain measures:

EU initiativesRegulationObligation to grid and distribution companies

Measurement of effect will be important