Danish Experience within Increasing Energy Efficiency – and how it is Organised Søren Dyck-Madsen The Danish Ecological Council
“Energy Efficiency” – Ministry of Economy, Warsaw, 27.11.2012
The Danish Ecological Council
Danish Energy Targets • • • • •
35 % renewables in 2020 50 % electricity from wind in 2020 12 % reduction in 2020 compared to 2006 in Gross energy use 7 % reduction in final energy use in 2020 compared to 2010 40 % domestic reduction in GHG emission in 2020 compared to 1990 - 6 % is going to come from agriculture and transport, but not agreed yet
• 2030 – Phase out of use of coal in Denmark • 2035 – 100 % renewables in electricity and heating sectors • 2050 – 100 % renewables in Danish energy system • The long term goals cannot be reached cost effectively without EE
“Energy Efficiency” – Ministry of Economy, Warsaw, 27.11.2012
The Danish Ecological Council
The Expected Increase in Energy Efficiency in Different Sectors from 2009 until 2050 120 100 80 60 40 20 0 Heating
Appliances
Transport
Industry and agriculture
Source: “Green Energy”, the report of the Danish National Commission on Climate Change Policy
“Energy Efficiency” – Ministry of Economy, Warsaw, 27.11.2012
The Danish Ecological Council
Danish Focus on EE - it is the Cheapest Way Cost of Saving or Producing kWh’s
“Energy Efficiency” – Ministry of Economy, Warsaw, 27.11.2012
The Danish Ecological Council
EE Obligations is a Cost Effective Instrument
Ratio between: Price of energy and Cost of instrument for saving
Source: EA-Analysis, Evaluation in 2009 for The Danish Energy Agency
“Energy Efficiency” – Ministry of Economy, Warsaw, 27.11.2012
The Danish Ecological Council
Energy Efficiency Improves the Competitiveness of the Industry Increase in Output prices if energy prices doubles 14
Poland Energy-price sensitivity , whole Economy
10
Energy -price sensitivity, industry
per cent
12
EU
8 6
Denmark
4 2 0
Source: National Bank of Denmark, 2009
“Energy Efficiency” – Ministry of Economy, Warsaw, 27.11.2012
The Danish Ecological Council
Energy Savings Obligation in Danish Energy Policy
Total energy consumption in Denmark 807 PJ (241TWh) 2015 saving target is around 1,45% of total energy consumption incl. transport “Energy Efficiency” – Ministry of Economy, Warsaw, 27.11.2012
The Danish Ecological Council
Basics on the Danish EE-system • Obligation on DSO – Distribution System Operators • Cost recovery in distribution tariff with benchmarking on Energy Regulator’s website • Newly agreed obligation increases target with 75 % in 2013 / 2014 and 100 % from 2015 to 2020 – but also broadens the savings base • Internal and external audit every second year and evaluation procedure every third year • Compliance: Financial sanctions and the possibility to loose the license to operate as a distribution company
“Energy Efficiency” – Ministry of Economy, Warsaw, 27.11.2012
The Danish Ecological Council
Which Savings can be Included • First year savings only – not cumulative
• Savings in final energy consumption in all sectors • Avoiding losses in grids can be counted – especially district heating (2010) • No efficiency improvement in generation (thermal solar is allowed) • Solutions have to be better than standard to be counted • Simple weighting factor are introduced from 2011 – Reflect lifetime, primary energy, non-ETS • DSO can only count savings where they are direct or indirect involved in the implementation
“Energy Efficiency” – Ministry of Economy, Warsaw, 27.11.2012
The Danish Ecological Council
Why does Denmark do it? • Yesterday we said: “We are selling energy – not saving it?” • We see an increasing bundling of selling energy and delivering energy efficiency services in partnership with installers and others •
Retailers are developing niche markets focusing on: – Energy savings in public buildings – Climate Partnership with a strong CSR element, – ESCO projects and energy performance contracting etc.
• Today we say: “We want to service our customers and to capture of the value in related to energy usage”
“Energy Efficiency” – Ministry of Economy, Warsaw, 27.11.2012
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High costumer satisfaction • Interview with 300 businesses that have received EE-services
Source: Epinion Research, August 2011.
“Energy Efficiency” – Ministry of Economy, Warsaw, 27.11.2012
The Danish Ecological Council
Almost Half of the Savings are in Industry
The Yellow colored bar is savings in industry – by the four obliged energy DSO’s – resulting in the fifth column 2010 results
“Energy Efficiency” – Ministry of Economy, Warsaw, 27.11.2012
The Danish Ecological Council
Energy Efficiency Projects in Industries - a Case from SE Big Blue • NPV = 111,7 mill. DKK (for every 1 DKK invested the owners received 3,89 DKK in return) Heat recovery: Heat consumption is reduced from index 100 to index 82 Savings of 18 GWh a year by improving efficiency of dry ovens
• IRR = 57,46% • Avg. payback time = 1 Year 9 months
• SE Big Blue: Jes Christensen, jbch@se.dk
“Energy Efficiency” – Ministry of Economy, Warsaw, 27.11.2012
The Danish Ecological Council
EE in Buildings • Denmark have high energy taxes for households and public buildings • ESCO’s is only working in some public buildings • We do not see that many savings done in private buildings • Those we see are mainly in the technical systems – and replacement of windows or window glazing • Insulation of roof, walls and floor is rather costly compared to these savings • Maybe more focus on the additional improvements in in comfort and liveability will trigger more energy savings as instrument • Working group on an energy savings strategy in existing buildings has started working – and will report in 2013 “Energy Efficiency” – Ministry of Economy, Warsaw, 27.11.2012
The Danish Ecological Council
Conclusion: Energy Efficiency Obligations has Started the Market for Energy Services in DK • We see an increasing bundling of selling energy and delivering energy efficiency services in partnership with installers and others • The energy efficiency obligation has transformed parts of the retail market • The cost recovery element is crucial in order to remove risks for kick starting the energy service market • Energy efficiency is about innovation in business models, new ways to approach the customer and for job creation • Energy efficiency actually improves competitiveness in industries
“Energy Efficiency” – Ministry of Economy, Warsaw, 27.11.2012
The Danish Ecological Council
Søren Dyck-Madsen The Danish Ecological Council www.ecocouncil.dk Soeren@ecocouncil.dk
“Energy Efficiency” – Ministry of Economy, Warsaw, 27.11.2012
The Danish Ecological Council