Capacity Building for GHG Emissions Reduction through Energy Efficiency in Romania

1
Capacity Building for GHG Emissions Reduction
through Energy Efficiency in Romania

• Energy Efficiency
• and
• Low-Income Customers

Mark Velody UNDP/GEF Energy Efficiency Financing
Team Tel. [phone], energie_at_undp.ro USAID/USEA
Plenty Event Bucharest, September 9th 2005
UNOPS Project Office Str. Washington
nr.45 Bucuresti, Romania www.energie.undp.ro
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Capacity Building for GHG Emissions Reduction
through Energy Efficiency in Romania

• I will wear three hats today

3
Capacity Building for GHG Emissions Reduction
through Energy Efficiency in Romania

• I will wear three hats today
• 1. My new UNDP/GEF hat 2004-2005
• - Leading the UNDP/GEF Energy Efficiency
  Financing Team in
• Romania

4
Capacity Building for GHG Emissions Reduction
through Energy Efficiency in Romania

• I will wear three hats today
• 1. My new UNDP/GEF hat 2004-2005
• - Leading the UNDP/GEF Energy Efficiency
  Financing Team in
• Romania
• 2. My old USAID hat 2002-2003
• - Leading the USAID Regional Review of
  Social Safety Net
• Approaches in support of Energy Sector
  Reform

5
Capacity Building for GHG Emissions Reduction
through Energy Efficiency in Romania

• I will wear three hats today
• 1. My new UNDP/GEF hat 2004-2005
• - Leading the UNDP/GEF Energy Efficiency
  Financing Team in
• Romania
• 2. My old USAID hat 2002-2003
• - Leading the USAID Regional Review of
  Social Safety Net
• Approaches in support of Energy Sector
  Reform
• 3. My own hat
• - Ideas for debate the need to
  overcome the financing barrier, and
• an innovative way of leveraging
  financing for rehabilitation of
• apartment buildings.

6
Capacity Building for GHG Emissions Reduction
through Energy Efficiency in Romania

• So lets begin
• 1. My new UNDP/GEF hat 2004-2005
• - Leading the UNDP/GEF Energy Efficiency
  Financing Team in
• Romania

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Capacity Building for GHG Emissions Reduction
through Energy Efficiency in Romania

• UNDP/GEF helps turn energy efficiency ideas into
  investments
• Technical Assistance (T.A.)
• - Technical, financial advice and deal-building
• - Feasibiltity Studies by specialist consultants
• - Help with finding a commercial
  financier
• Direct Contributions (D.C.)
• - Grants of up to 20 of an investment (closing)
• - Beneficiaries selected together
  with Governmental partner ARCE

T.A. is available for both Private Sector
and Public Sector applicants D.C. was for
Public Sector projects only, up to a limit of
50,000. This facility now is almost fully
subscribed.
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Capacity Building for GHG Emissions Reduction
through Energy Efficiency in Romania

• How does UNDP/GEF select projects to help?
• Here is the basic deal
• If -
• UNDP/GEF funds a Feasibility Study
• (and if the results of the study are
  positive)
• Then -
• Project Developer will carry out the
  EE project
• Financier will make investment funds
  available

9
Capacity Building for GHG Emissions Reduction
through Energy Efficiency in Romania

• We have helped leverage over 10 million of
  investments so far
• Public Sector Main financing source
• Panaci/kindergarten 21,000 Governmental
  financing
• Tg Jiu/controls 132,143 Grant financing
• Radauti/meters 170,000 Bank financing
  (BCR)
• Cluj/controls 187,000 Municipal financing
• Tarnaveni/buildings 400,000 Bank financing
  (BCR)
• Sighisoara/schools 300,000 Municipal
  financing
• Alba Iulia/schools 620,000 Municipal
  financing
• Iasi/district heating 1,300,000 FREE (World
  Bank/GEF)
• Vatra Dornei/Water (250,000)
  3,200,000 EIB, EU PHARE, Government
• Private sector
• Nord Simex/wood 100,000 Bank Financing
  (BRD)
• Ulerom/sunflower 600,000 FREE (World
  Bank/GEF)
• Iridex/waste 1,377,500 Leasing (Piraeus)
• Sicomed/CHP 2,000,000 RAEF/RIEEC/SE-GES

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Capacity Building for GHG Emissions Reduction
through Energy Efficiency in Romania

• and work-in-progress could leverage another 21
  million
• Bucharest Sicomed Pharmaceuticals CHP (TA)
• Bucharest Isovolta - improve steam generation
  system (TA)
• Barlad CHP for Rulmenti bearings factory (TA)
• Orastie Public lighting modernisation -
  feasibility study (TA, DC)
• VictoriaImplementing EE measures at City Hall
  (TA, DC)
• Victoria, Brasov Secondary steam to power for
  Viromet (TA)
• Tulcea Replacement of pumps for a district
  heating system (TA, DC)
• Satu Mare Heating systems at two schools (TA,
  DC)
• Ploiesti Timken - CHP for bearings plant (TA)
• Adjud CHP or steam turbine Vrancart (TA)
• Valea lui Mihai public lighting (TA, DC)
• Salonta public lighting (TA, DC)
• Matex compressors and steam generation at a
  textiles factory

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Capacity Building for GHG Emissions Reduction
through Energy Efficiency in Romania

• Some of our work involves low-income households
  and social institutions
• Panaci DC for windows and doors for the
  kindergarten
• Targu Jiu - DC for HCA/TRV bundles for social
  apartments
• Cluj - DC for HCA/TRV bundles for all
  low-income households in Mansadur
• - (The District Heating Utility financed
  the other households)
• Tarnaveni, Sighisoara and Alba Iulia
• - all involved TA (Feasibility Studies) and
  DC for energy efficiency investments
• in schools
• But the main focus of our project is to lower
  greenhouse gas emissions we are an
  environmental project, not a social project.

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Capacity Building for GHG Emissions Reduction
through Energy Efficiency in Romania

• Key Message from UNDP/GEF
• If your energy efficiency investment idea is
• Technically robust and
• Financially viable
• We can help to make it happen!

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Capacity Building for GHG Emissions Reduction
through Energy Efficiency in Romania

• Please visit
• www.energie.undp.ro
• to apply for support for your energy efficiency
  investment idea
• (or pick up a brochure from me today)

14
Capacity Building for GHG Emissions Reduction
through Energy Efficiency in Romania

• I will wear three hats today
• 1. My new UNDP/GEF hat 2004-2005
• - Leading the UNDP/GEF Energy Efficiency
  Financing Team in
• Romania
• 2. My old USAID hat 2002-2003
• - Leading the USAID Regional Review of
  Social Safety Net
• Approaches in support of Energy Sector
  Reform

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Capacity Building for GHG Emissions Reduction
through Energy Efficiency in Romania

• The USAID Regional Review of Social Safety Net
  Approaches in Support of Energy Sector Reform
  studied five countries and generated six reports
• Energy Reform and Social Protection in Romania
  (Velody)
• .. .. ..
  .. .. Armenia (Velody)
• .. .. ..
  .. .. Kazakhstan (Velody)
• .. .. ..
  .. .. Bulgaria (Philips)
• .. .. ..
  .. .. Hungary (Cain)
• Synthesis report (Velody/Cain/Philips)
• These reports are far too detailed to present
  today

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Capacity Building for GHG Emissions Reduction
through Energy Efficiency in Romania

• So, to provide a flavour of the content of the
  USAID reports, here is a digest of the
  Recommendations for Romania on
• Subsidies and Assistance Payments
• Energy Efficiency and
• Tariffs
• The front cover of all the reports note that
  the findings, conclusions and recommendations are
  those of its authors and do not necessarily
  reflect USAIDs views and/or policies.

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Capacity Building for GHG Emissions Reduction
through Energy Efficiency in Romania

• Subsidies and Assistance Payments
  Recommendations
• Consider
• reimbursing the cost of operating social
  tariffs to Electrica and Distrigaz
• raising natural gas prices to market levels
• defining Heat Assistance by expenditure where
  heating is not controllable
• making payment of íntretenere a condition
  of receiving Heat Assistance
• removing the option to receive Heating
  Assistance payments in cash
• avoid creating new can but wont pay
  customers
• remove microwave oven ownership from social
  assistance eligibility rules

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Capacity Building for GHG Emissions Reduction
through Energy Efficiency in Romania

• Energy Efficiency Recommendations
• Consider
• creating a formal government policy on
  low-income energy issues
• energy efficiency/weatherization programme
  for social institutions
• a national low-income metering and
  weatherization programme.
• a weatherization programme for rural
  households
• metering heat and hot water for buildings and
  individual apartments
• fundamental reform of district heating
• - Phase 1 re-establish the payment
  culture
• - Phase 2 raise prices
• - Phase 3 grow

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Capacity Building for GHG Emissions Reduction
through Energy Efficiency in Romania

• Tariffs Recommendations
• Consider
• win-win day-night electricity tariffs
• removing vacation/weekend homes from the
  social tariff for electricity
• offering payment collection contracts to
  Owners Associations
• relocating electricity meters outside the
  apartments
• making independent regulatory authorities
  more independent
• an independent review of energy regulation
  (as there are five regulators)
• raising the unit price of district heating
• regulating district heating tariff mechanisms
  centrally
• strengthening regulatory data collection,
  analysis and publication

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Capacity Building for GHG Emissions Reduction
through Energy Efficiency in Romania

• To download the USAID reports, please visit
• www.dec.org
• and search for Velody

21
Capacity Building for GHG Emissions Reduction
through Energy Efficiency in Romania

• I will wear three hats today
• 1. My new UNDP/GEF hat 2004-2005
• - Leading the UNDP/GEF Energy Efficiency
  Financing Team in
• Romania
• 2. My old USAID hat 2002-2003
• - Leading the USAID Regional Review of
  Social Safety Net
• Approaches in support of Energy Sector
  Reform
• 3. My own hat
• - Ideas for debate the need to
  overcome the financing barrier, and
• an innovative way of leveraging
  financing for rehabilitation of
• apartment buildings.

22
Capacity Building for GHG Emissions Reduction
through Energy Efficiency in Romania

• Successful low-income energy assistance
  programmes require two key elements
• Collecting money effectively
• - Political commitment to the programme
• - Empowered institutions
• Spending money wisely
• - Talented, well-informed programme designers
• - Experienced, empowered administrators
• I will look at these issues in reverse order

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Capacity Building for GHG Emissions Reduction
through Energy Efficiency in Romania

• Spending money wisely Romania is good at this!
• Talented, well-informed programme designers?
• - Talented certainly!
• - Well-informed yes! This event is one of
  several international activities to transfer
  know-how in the fields of low-income energy
  consumers and energy efficiency.
• Experienced, empowered administrators?
• - Experienced yes! - cupoane and other
  successful, well managed
• programmes.
• - Empowered partially! If programme rules are
  set centrally (e.g. by government decision),
  municipalities often do not have flexibility to
  adapt programmes to suit local conditions.

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Capacity Building for GHG Emissions Reduction
through Energy Efficiency in Romania

• Collecting money effectively the most difficult
  part for Romania!
• Romania does not enjoy a large range of funding
  sources, such as those that AJ described when
  presenting US sources of funding.
• - Central government limited funds, uncertain
  political commitment
• - Local government very limited funds
• - Churches/charities no tradition of
  this type of funding in Romania
• - Utility mergers privatization too
  recent, no experience of squeezing - Utility
  regulators do not get involved in low-income
  issues (yet)
• - Utility goodwill very limited
  tradition of voluntary programmes
• - Utility fund yes (social tariff is a
  residential cross-subsidy) but
• - Utility fund the Special Fund for
  Energy Sector was closed down
• - Other funds Environment Fund
  difficult to access

25
Capacity Building for GHG Emissions Reduction
through Energy Efficiency in Romania

• Idea make low-income households energy
  efficiency champions
• The problem
• Low-income households stop communal
  investment initiatives
• Proposed solution
• A targeted low-income subsidy to pay
  the low-income households share of
• communal investments. The subsidy is
  only paid if investments take place.
• Why this could work
• Rather than preventing investment,
  low-income households could become
• champions of energy efficiency
  persuading the neighbours to invest, as all
• share the benefits, but low-income
  households avoid the costs.
• Impact for the Government
• An intelligent subsidy as every 1
  invested by Government in low-income
• households leverages several of
  investment by wealthier households.
• QUESTION FOR DEBATE WOULD THIS IDEA WORK IN
  ROMANIA?

26
Capacity Building for GHG Emissions Reduction
through Energy Efficiency in Romania

• Energy Efficiency
• and
• Low-Income Customers

Mark Velody UNDP/GEF Energy Efficiency Financing
Team Tel. [phone], energie_at_undp.ro USAID/USEA
Plenty Event Bucharest, September 9th 2005
UNOPS Project Office Str. Washington
nr.45 Bucuresti, Romania www.energie.undp.ro