Description of main technologies for Energy and RES Services in Bulgaria
December, 2013 Content 1.
Current situation regarding energy efficiency and RES.................................................3
2.
Energy efficiency and RES...........................................................................................5
2.1.
Definition.....................................................................................................5
2.2.
Energy efficiency and its benefits................................................................7
2.3.
Different types of RES and its benefits........................................................7
2.4.
Situation in Europe....................................................................................13
2.5.
Situation in Bulgaria..................................................................................13
2.5.1.
Legislative, financial, contractual and marketing framework..............13
2.5.2.
Existing procurement contracts..........................................................18
2.5.3.
Financial institutions and schemes....................................................19
2.5.4.
Barriers..............................................................................................20
2.5.5.
Technical framework..........................................................................20
2.5.6.
Software tools available.....................................................................27
2.5.7.
Lessons learned.................................................................................28
2.5.8.
References:........................................................................................28
2
Current situation regarding energy efficiency and RES In the European Union there is a need for improving energy end-use efficiency, managing demand for energy, promotion of the production of renewable energy and mitigation of green house gas emissions. Thus, the EU’s climate and energy policy sets three ambitious targets for 2020 in order to address the above mentioned issues. The first target is to decrease greenhouse gases by at least 20% of 1990 levels; The second one to increase use of renewable energy sources to 20% of total energy production; The third one to cut energy consumption by 20% of projected 2020 levels by improving energy efficiency (http://ec.europa.eu/climateaction/docs/climateenergy_summary_en.pdf). In 2006, the European Commission released an Action Plan for Energy Efficiency which outlines the policies and measures that should be implemented in order to achieve the 20% savings potential in the EU annual primary energy consumption by 2020. The Action Plan also proposes ten priority actions to be initiated immediately in order to achieve the estimated savings potential. The priority actions cover all possible areas where energy efficiency could be implemented e.g. appliances, buildings, power generation and distribution, fuel efficiency of cars etc., including also facilitating appropriate financing of energy efficiency investments for small and medium enterprises and Energy Service Companies (ESCO’s). Especially in the area of financing energy efficiency, the Action Plan proposes to identify and remove all barriers related to the operation of ESCos in the Member States and to develop contracting instruments. Also for promoting the use of renewable energy sources the Community released in 2006 the “Renewable Energy Sources roadmap” and in 2008 the “2020 by 2020 Europe’s climate change opportunity”, where in both documents the need to increase the use of RES and reach the target of 20% use of renewable energy sources in gross inland consumption by 2020 is outlined. Energy Efficiency (EE) is one of the priority aspects of the European Energy Policy and one of the global targets of the Europe Union as demonstrated by the 2020 strategy for sustainable and inclusive growth which was adopted by the European 3
Council in June 2010. This policy includes the aim for 20% reduction in primary energy consumption by 2020. As energy related emissions account for almost 80% of total EU greenhouse gas (GHG) emissions, the efficient use of energy can make an important contribution to achieving a low-carbon economy and combating climate change. On 8 March 2011, the EC adopted the Communication "Energy Efficiency Plan 2011" for saving more energy through concrete measures. The set of measures proposed aims at creating substantial benefits for households, businesses and public authorities: it should transform our daily lives and generate financial savings of up to ₏1000 per household every year. It should improve the EU's industrial competitiveness with a potential for the creation of up to 2 million jobs (http://ec.europa.eu/energy/efficiency/action_plan/action_plan_en.htm). On 15 December 2011, the European Commission adopted the Communication "Energy Roadmap 2050". The EU is committed to reducing greenhouse gas emissions to 80-95% below 1990 levels by 2050 in the context of necessary reductions by developed countries as a group. In the Energy Roadmap 2050 the Commission explores the challenges posed by delivering the EU's decarbonisation objective while at the same time ensuring security of energy supply and competitiveness. The Energy Roadmap 2050 is the basis for developing a longterm European framework together with all stakeholders. On 25 October 2012, the EU adopted the Directive 2012/27/EU on energy efficiency. This Directive establishes a common framework of measures for the promotion of energy efficiency within the Union in order to ensure the achievement of the Union’s 2020 20 % headline target on energy efficiency and to pave the way for further energy efficiency improvements beyond that date. It lays down rules designed to remove barriers in the energy market and overcome market failures that impede efficiency in the supply and use of energy, and provides for the establishment of indicative national energy efficiency targets for 2020 (http://ec.europa.eu/energy/efficiency/eed/eed_en.htm). On 20 June 2013, the Commission published a study on "Energy performance certificates in buildings and their impact on transaction prices and rents in selected EU countries". The study shows a positive impact of the Energy Performance Certificate under the Energy Performance of Buildings Directive (Directive 2010/31/EU) on sales and rental prices indicating that better energy efficiency is rewarded in the market. In one of the first studies of its kind to include an analysis of residential markets in Europe, it was found that higher energy ratings result in substantially higher sales or rental values of buildings on average in most of the Member States that were analysed. The study was commissioned to consortium led by BIO INTELLIGENCE SERVICE (http://ec.europa.eu/energy/efficiency/buildings/buildings_en.htm). 4
Approximately 40% of final energy consumption is the buildings account. The process of investing in energy efficiency measures in the different types of buildings can reach substantial energy savings, while supporting economic growth, sustainable development and creating jobs. On the other hand the use of energy efficient equipment and technologies, combined with using of measures connected with renewable energy, are more cost effective way of enhancing the energy supply. Besides the aforementioned documents that describe the general framework of the EU policy there are also the specific Directives which try to regulate some of these issues in practice. The Energy Service Directive – ESD (2006/32/EC) together with the Energy Performance Buildings Directive – EPBD (2002/91/EC) push the market towards energy efficiency projects. Theoretically the implementation of these two Directives should allow the ESCo market to be further developed. Commonly implemented projects by ESCos are energy-efficiency projects but also renewable energy projects. Now with the new Renewable Energy Sources (RES) Directive (2009/28/EC) the market is strongly oriented towards promoting RES not only for electricity production but also for heating and cooling production. On 17 October 2012, the Commission published a proposal to limit global land conversion for biofuel production, and raise the climate benefits of biofuels used in the EU. The use of food-based biofuels to meet the 10% renewable energy target of the Renewable Energy Directive will be limited to 5%. (http://ec.europa.eu/energy/renewables/targets_en.htm).
Energy efficiency and RES Definition Energy efficiency: Encompasses all changes that result in a reduction in the energy used for a given energy service (heating, lighting, cooling est.) or level of activity. This reduction in the energy consumption is not necessarily associated to technical changes, since it can also result from a better organization and management or improved economic efficiency in the sector (e.g. overall gains of productivity). This definition of energy efficiency is provided by the World Energy Council (WEC) (http://www.worldenergy.org/wec-geis). Energy audit: A systematic procedure to obtain adequate knowledge of the existing energy consumption profile of a building or group of buildings, of an industrial operation and/or installation or of a private or public service, identify and quantify cost effective energy savings opportunities, and report the findings. 5
Energy Service Company (ESCo) like structure: is a professional business, offering consumers through a wide range of energy services, the opportunity to reduce their energy consumption and the related costs. This wide range of energy services may include energy analysis and audits, energy management, project design and implementation, maintenance and operation, power generation and energy supply, monitoring and evaluation, facility and risk management. ESCos are also described in the Energy Service Directive (ESD) (2006/32/EC) together with energy performance contracting (EPC) and third party financing (TPF), as the main instruments and mechanisms available that can be used by Member States in order to achieve energy efficiency and reach the overall national indicative energy savings target of 9% (for the ninth year of application of this Directive). The definitions used in the ESD for ESCo, EPC and TPF are given below: Combined description of Energy Service Company (ESCo): a natural or legal person that delivers energy services and/or other energy efficiency improvement measures in a user's facility or premises, and accepts some degree of financial risk in so doing. The payment for the services delivered is based (either wholly or in part) on the achievement of energy efficiency improvements and on the meeting of the other agreed performance criteria. ESCOs provides the following services: Consulting engineering; General contracting; Energy analysis; Project management; Project financing; Training; Performance guarantees; Energy measurement; Sustainable energy savings; Risk management. Energy Performance Contracting (EPC): a contractual arrangement between the beneficiary and the provider (normally an ESCo) of an energy efficiency improvement measure, where investments in that measure are paid for in relation to a contractually agreed level of energy efficiency improvement.
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Third-Party Financing (TPF): a contractual arrangement involving a third party — in addition to the energy supplier and the beneficiary of the energy efficiency improvement measure — that provides the capital for that measure and charges the beneficiary a fee equivalent to a part of the energy savings achieved as a result of the energy efficiency improvement measure. That third party may or may not be an ESCo.
Energy efficiency and its benefits Across the EU countries in past few years, the governments prepared many mechanisms to promote improvements on the energy efficiency and renewable energy for citizen homes and public buildings. The main energy efficiency benefits for different energy users are as follows: Energy cost reduction; Control over energy spending; Job creation; State savings; Air pollution and GHG reduction; Improved performance using renewable energies; Increased quality of life and reduction in health hazards.
Different types of RES and its benefits One of the main advantages to use renewable energy is that it can be continually used over a long period of time and therefore sustainable. Renewable energy installations in general require less maintenance and operational cost than traditional facilities energy sources. Even more importantly, RES produces little or no waste products such as carbon dioxide or other chemical and mechanical pollutants, so it has a minimal impact on the environment. Renewable energy projects can also bring economic benefits to many regional areas, as most projects are located away from large urban centres and suburbs of the capital cities. These economic benefits may be from the increased use of local services to the different sectors of the EU economy and in the public sector as well. The primary production of renewable energy within the EU-27 in 2010 was 166.6 million tonnes of oil equivalent (toe) . This amounts to a 20.1 % share of total primary energy production from all sources. The quantity of renewable energy 7
produced within the EU-27 increased overall by 72.4 % between 2000 and 2010, equivalent to an average increase of 5.6 % per annum.
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The main benefits of RES using in the environmental and economic aspects are following: Producing sustainable energy that not generated GHG emissions from fossil fuels and can decreased some types of air pollution; Establishing very good economic growth and jobs in many sectors of the economy; Diversifying energy supply and reducing dependence on imported fuels. In general the different types of RES are given in the Table below. Type of RES
Energy Use
Technology/Equipment Small Hydro Plant with
Application
Benefits/Challenges
Hydro energy
Electricity
Geothermal energy
Heating, cooling
Heat pumps
Residential municipality industrial facilities
facilities, Generation of ecological energy for buildings, heating and cooling. CHG emissions reductions.
Solar thermal energy
Heating
Solar collectors
Residential municipality industrial facilities
facilities, Generation of ecological energy for buildings, heating. CHG emissions reductions.
Solar electrical energy
Electricity
PV modules
Middle and large scale Generation and selling of electricity. CHG projects, residential facilities, emissions reductions municipality buildings, industrial facilities
Wind energy
Electricity
Wind turbines
Middle and large scale Generation and selling of electricity. CHG projects, utility services emissions reductions
Turbines
Small scale projects, utility Generation and selling of electricity. CHG services emissions reductions.
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Solid biomass
Electricity, heating, cooling
CHP/boilers/stoves/burners Middle and large scale Generation and selling of electricity and projects, residential facilities, thermal energy. CHG emissions municipality buildings, reductions industrial facilities generation
Biogas
Electricity, heating, cooling
CHP
Middle and large scale Generation and selling of electricity and projects, residential facilities, thermal energy. CHG emissions municipality buildings, reductions industrial facilities
Landfill gas
Electricity, heating, cooling
CHP
Middle and large scale Generation and selling of electricity and projects, residential facilities, thermal energy. CHG emissions municipality buildings, reductions industrial facilities
bio Electricity, heating, cooling
CHP
Middle and large scale Generation and selling of electricity and projects, residential facilities, thermal energy. CHG emissions municipality buildings, reductions industrial facilities
Liquid fuels
Table 1: Different types of RES
Among renewable energies, the most important source in the EU-27 was biomass and waste, accounting for just over two thirds (67.6 %) of primary renewables production in 2010 (see Table 1). Hydropower was the other main contributor to the renewable energy mix (18.9 % of the total). Although its level of production remains relatively low, there was a particularly rapid expansion in the output of wind energy, which accounted for 7.7 % of the EU27’s renewable energy produced in 2010.
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In 2011, the installed wind power capacity in the EU are totalled 93,957MW enough to supply 6.3% of the EU's electricity. 9,616 MW of wind power was installed in 2011 alone, representing 21.4% of new power capacity. The EU wind industry has had an average annual growth of 15.6% over the last 17 years (19952011). In 2011 the EU’s solar electricity production is evaluated as ca 44.8 TWh in 2011 with 51.4 GW installed capacity, up 98% on 2010. In 2011 in the EU new installations were 21.5 GW. The solar power share in 2011 was around 3.6% in Italy, 3.1% in Germany and 2.6% in Spain. EuroObserver expects the total installation to reach at least 120 GW in 2020. The national strategies are equivalent to 84 GW solar capacity in 2020 which may underestimate the actual development taking place. For example, according to AGEE-Stat (the Ministry of Environment’s Working Group on Renewable Energy Statistics), Germany connected solar capacity 7.5 GWp in 2011, twice the 3.5 GWp target. EU accounted for 74% of all newly connected capacity in 2011. According to Photon International magazine the worldwide solar cell production capacity was 12.5 GW in 2009 and 37 GW in 2011. In 2012, production capacities are set to rise to 69 GW, same as the total installed capacity worldwide at the end of 2011. In 2008, hydro power delivered the largest share of total renewable electricity (60 %), followed by wind energy (21 %) and biomass (17 %). Small contributions came from geothermal energy (1 %) and solar energy (1 %). However, the increase in renewable production in the 2000s was mainly due to installations of additional wind turbines and solar energy systems. The International Geothermal Association (IGA) has reported that 10,715 MW of geothermal power in 24 countries is online, which is expected to generate 67,246 GWh of electricity in 2010. This represents a 20% increase in online capacity since 2005. IGA projects growth to 18,500 MW by 2015, due to the projects presently under consideration, often in areas previously assumed to have little exploitable resource.
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Table 2: Primary production of renewable energy for Year 2000 and Year 2010
The EU seeks to have a 20 % share of its final energy consumption from renewable sources by 2020; this target is broken down between the Member States with national action plans designed to plot a pathway for the development of renewable energies in each Member State. Figure 1 shows the latest data available for the share of renewable energies in gross final energy consumption and the indicative targets that have been set for each country for 2020. The share of renewable energy in gross final energy consumption stood at 12.5 % in the EU-27 in 2010.
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Figure 1: Share of renewable energy in gross final energy consumption for Year 2010 and Year 2020, in (%).
Situation in Europe The EU has set out plans for a new energy strategy based on a more secure, sustainable and low-carbon economy. Aside from combating climate change through a reduction in greenhouse gas emissions, the use of renewable energy sources is likely to result in more secure energy supplies, greater diversity in energy supply, less air pollution, as well as the possibility for job creation in environmental and renewable energy sectors. Energy efficiency is at the heart of the EU’s Europe 2020 Strategy for smart, sustainable and inclusive growth and of the transition to a resource efficient economy. According to EU Commission the EU needs to act now (2011) to get on track to achieve its target while the EU is on course to achieve only half of the 20% objective. The combined effects of full implementation of the measures will generate financial savings of up to € 1 000 per household annually; improve Europe’s industrial competitiveness; create up to 2 million jobs; and reduce annual greenhouse gas emissions by 740 million tons
Situation in Bulgaria Legislative, financial, marketing framework
contractual
and
Energy efficiency (EE) has been among the Government priorities in the last 8-10 years, while renewable energy sources (RES) and ESCO’s have become a priority only since January 2007, when Bulgaria joined the EU. The current Energy Strategy 13
of Bulgaria gives high priority to EE, but not to RES and ESCO’s. The new Energy Strategy of Bulgaria, expected to be adopted by the Parliament in the next couple of months, gives high priority to both energy efficiency and renewable energy. The Government has adopted the following programmes on the development of EE and RES: -
National Long-term Programme for Promotion of Renewable Energy 20052015;
-
National Long-term Programme for Energy Efficiency till 2015;
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First National Action plan for Energy Efficiency 2008-2010;
-
National Short-term Programme for Energy Efficiency;
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Biomass Action Plan;
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National Action Plan for energy from renewable sources by 2020.
Unfortunately, the implementation of these programmes (judging from the previous experience) is quite poor. A Law on Energy Efficiency was adopted in 2004. The Law regulates mainly EE in buildings in relation to the Buildings Directive (EPBD). The Energy strategy is worked out by the Ministry of Economy, Energy and Tourism and approved by the Council of Ministers in accordance with Art. 4, Paragraph 2, Point 1 of the Energy law. The Energy Strategy is a fundamental document of the national energy policy that is approved by the Council of Ministers and passed by the National Assembly of the Republic of Bulgaria. The present National Energy Strategy till 2020 reflects the political vision of the Government of European Development of Bulgaria pursuant to the up-to-date European energy policy framework and the global trends in the development of energy technologies. The main priorities in the Energy Strategy can be summarized in the following five directions: -
To guarantee the security of energy supply;
-
To attain the targets for renewable energy;
-
To increase the energy efficiency;
-
To develop a competitive energy market and policy for the purpose of meeting the energy needs;
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To protect the interests of the consumers.
These priorities also determine the Government’s vision for development of the energy in the coming years, namely: 14
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Maintaining of a safe, stable and reliable energy system;
-
The energy sector remains a leading branch of the Bulgarian economy withdefinite orientation to foreign trade;
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Focus on clean and low-emission energy – nuclear and from renewable sources;
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Balance between quantity, quality and prices of the electric power produced fromrenewable sources, nuclear energy, coal and natural gas;
-
Transparent, efficient and highly professional management of the energy companies.
The renewable energy sources (RES) sector in Bulgaria has undergone rapid development in the past few years. Renewable energy share in gross electricity consumption reached 7.3% in 2008. Large-scale hydro power is currently the main source of renewable energy, however; investment in wind, solar and biomass has increased steadily. International players, green energy arms of the international utility companies and private equity (PE) green energy funds have started to play an important role in the market. As an EU-Member State, Bulgaria has committed to reach certain levels of energy generated by RES, including 16% share of RES and 10% share of biofuels in the gross electricity consumption by 2020. In 2007 Bulgaria introduced new feed in tariff for Renewable Electricity. The State Energy and Water Regulatory Commission has assumed the commitment to purchase alternative energy at a higher tariff and for the duration of 12 years. Suppliers refusing to accept renewably-produced electricity would be fined up to 500 000 EUR in response to renewable power producers' reports of difficulty in grid connection. Bulgaria’s RES electricity share in gross electricity consumption increased from 7% in 1997 to 8.38 % in 2007. Large-scale hydro power is currently the main source of RES electricity. A Law on RES, Alternative Fuels and Biofuels was adopted in 2010 and it satisfactorily regulates RES-electricity and biofuels, but it does not provide any stimuli to RES-heating and solar energy especially for residential and public sectors. The missing legislation promoting RES-heating is the main problem related to RES promotion in the country. The most likely reason for ignoring RES-heating is the lack of strict EU requirements (i.e. Directives) in this regard. Regarding the new legislation and as mentioned in the above table, there is fixed period of 25 years for buying electricity, produced by solar and geothermal installations and 15 years fixed period for buying electricity, produced by other RES. 15
Generally, the competition on the Bulgarian ESCo’c market is chaotic. The ESCo’s business models implementation have serious competition in comparisons with natural gas, electricity and heavy fuel oil project for hot water production by reason of the absence of National policy . For the purpose of encouraging the use of ESCO’s services in the design, supply, and installation, it is recommended to develop a model of a standard contract for provision of such type of services. That is in conformity with Art. 9, it. 2 of the Directive on Energy End- Use Efficiency and Energy Services. The requirements to the energy providers of the same Directive are expected to boost the demand for ESCO’s services related to increased energy efficiency. The Government of Bulgaria (and perhaps the rest of the EU Member States) shall implement the following measures: -
Develop standards for biomass fuels (there are no such at the moment).
-
Develop standards and quality labels for biomass utilization technologies.
-
Better education on biomass fuel production, biomass energy utilization technologies, and heat pumps, through inclusion of these subjects in the curriculum of students in relevant subjects in State Universities.
-
Set higher requirements for the heating/cooling technologies (in terms of energy efficiency and renewable energy utilization) in new buildings and the refurbished ones, in relation to EC Buildings Directive.
-
Introduce more sustainable forestry practices and limit the biomass fuel outside EU, so that the wood fuel price remains predictable and competitive.
Bulgarian government incentives have been among the key drivers of investor interest in the renewable energy market. Predictable regulatory environment, investment incentives and tariffs guaranteed over a longer period of time have been instrumental for both project developers and investors, as they significantly reduce the main market entry barrier – high costs. According to the Bulgarian Renewable and Alternative Energy Sources Act, electricity suppliers are obliged to purchase at preferential prices all renewable electricity from producers, with exception of electricity for own use, electricity for which the producer has contracts to trade at freely negotiated prices, and electricity with which the producer trades on the balancing market. Electricity suppliers are obliged to purchase the renewable electricity at preferential prices, with the exception of electricity generated from hydro-power plants with capacity exceeding 10 MW. Mandatory purchase of electricity at preferential prices will be applied until the planned system of issuing and trading Green Certificates comes into force. 16
The mandatory purchase of energy from renewable energy sources is effected through power purchase agreements with a term of 25 years for electricity generated from geothermal and solar energy, and 15 years for electricity generated by hydro-power plants with capacity of up to 10 MW, as well as for electricity generated from other renewable sources. The terms of mandatory purchase is starting as follows: For existing producers of electricity generated from renewable energy sources, with the exception of hydro power plants with installed capacity exceeding 10 MW – upon re-negotiation, but not later than 31 March 2009; For new producers of electricity generated from renewable energy sources, with the exception of hydro power plants with installed capacity exceeding 10 MW – from the start of the generation from renewable energy sources, but not later than 31 December 2015. Not later than 31 December 2011, the Minister of Economy and Energy will prepare and submit for approval to the Council of Ministers a bill on the market mechanisms for encouraging generation of electricity and heating power from renewable energy sources, which may not necessarily be applicable to producers of energy from renewable energy sources benefiting from the above mechanisms. The State Commission on Energy and Water Regulation (SEWRC) is determining the preferential prices for sale of electricity generated from renewable or alternative energy sources, except for electricity generated by hydro-power plants with installed capacity exceeding 10 MW each year no later than 31 March. The preferential price of electricity generated from renewable energy sources is set at at 80% of the average sale price for public utilities or end suppliers for the preceding calendar year plus a margin determined by the SEWRC depending to the type of primary energy source. The margin referred for the next calendar year may not be less than 95 % of the margin for the current year. The transmission company and/or distribution companies are obliged to connect with priority all facilities for generation of electricity from renewable and alternative energy sources. The State Energy and Water Regulatory Committee (SEWRC) issues to the producers “certificates of origin” for the energy generated from renewable energy sources. The State Energy and Water Regulatory Commission is accepting the validity of certificates of origin issued by competent authorities in other EU member states based on the principles of reciprocity. On the grounds of the certificate of origin, the SEWRC is issuing to the producers of energy from renewable energy sources a "green certificate". 17
According to the Bulgarian Renewable and Alternative Energy Sources Act, the provisions of the Investment Promotion Act will apply to all investment projects for construction, expansion or rehabilitation of facilities for generation of electricity and heat power from renewable and alternative energy sources, as well as the related infrastructure – public or municipal property.
Existing procurement contracts The procurement contracts are an instrument which allows entities to significantly mitigate the up-front cost of EE and RES projects. ESCOs business are commercial entities which assume the design and implementation of the entire energy efficiency and renewable projects for a customer.
The existing ESCo’s business models in Bulgaria. I. Energy Performance Contracting (EPC) It is a contract scheme between three partners: -
ESCo;
-
Customer;
-
Financial Institution - Bank.
The Customer is obliged to pay the project costs as typically, it borrows from a third party, which most often is a bank or a leasing company and due to the energy savings guaranteed by the ESCo, repays the cost of the borrowed capital. The ESCo undertakes a responsibility for ensuring a minimum energy savings achieving and if a certain minimum turns out to be exceeded by the Customer, and then the former compensates the latter for the surplus margin effect. In case the opposite happens, i.e., the Customer reaches extra economies in comparison with the initially stipulated, and then it pays to the ESCo the sum of the shortage margin. Thus, the ESCo takes on the risks related to the project fulfillment instead of the Customer. But the funding institution evaluates the credit risk with the Customer. This kind of Contract is suitable for Customers, which have better opportunities to borrow than the ESCo. II. Energy Contracting These Contracts have two parties: -
ESCo
-
Customer 18
The ESCo funds the project completion and the customer repays it by means of monthly installments, which include also the cost of the consumed energy. This energy is measured through a certified gauge. Once the purchasing price is repaid, the customer becomes owner of the contracted equipment. III. Public-private partnership (PPP) These Contracts have two parties: -
ESCo;
-
Municipality
First of all both ESCo and municipality are signed contract for the PPP. The municipality participates with your own contribution for guarantee of the land of thermal plant construction. The ESCo invests all costs (excluding costs for land) for the project implementation. The municipality buildings pay on monthly base the consumed energy. IV. Payment schemes: 1.
The thermal energy paid by the energy users (customers) in the objects for 1 kWh supplied thermal energy is by 30% lower, compared to the average price of 1 kWh day tariffs of the electricity by low voltage, according to the current bulletin of the electricity distribution companies in Bulgaria.
2. The thermal energy paid by the customers in the objects for 1 kWh supplied thermal energy is by 30% lower, compared to the price of 1 kWh of the light fuel oil, according to the current bulletin of the Bulgarian petroleum company Lucoil Jsc.
Financial institutions and schemes Preliminary identification of appropriate financial institutions. Related financial schemes usually adopted and requirements (conditions, guarantees etc) from the financial institutions. The most popular financial institutions are commercial banks. The related financial scheme is debt financing to the ESCo borrower. The main conditions are as follows: -
The project to be eligible (according to the bank). For example EBRD facility in Bulgaria through BEERECL – Bulgarian energy efficiency and renewable energy credit line. The BEERECL has requirement for the projects eligibility.
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Grant component which the borrower will get from EBRD - 20% of the total project costs to be include in the loan disbursement after the project completion. The received Grant shall be used for repayment of the loan and will be taken as own equity in the project
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Minimize of project risk.
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Small scale project financing with the total loan value of 2 mln. EUR.
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Loan maturity – up to 7 years from the signing of the financial documents
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Pledge in the amount of 150% from the project loan.
Barriers Identifications of the reasons for the weak development of ESCo operations up to now as well as the remaining barriers. -
Access to the capital;
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Weak awareness and experience;
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M&V issues - problems
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Conflict with the conventional procurement process;
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Complex legal and contractual terms;
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Conflict in the public sector between ESCo’s and conventional fuels suppliers.
Technical framework a) Quality and monitoring Energy Services Companies managed measurement and verification activities typically apply to small scale energy service contract projects. The ESCO’s and participant will often enter into contractual agreements that include expected energy savings, how savings are measured, who is responsible for near term and long-term project management, and compensation procedures. These projects may have long development and construction cycles. ESCO’s personnel may spend a considerable amount of time on an individual site before and after ECM installation to ensure that expected outcomes have a high likelihood of success. Projects in which the ESCO’s has primary responsibility for measurement and verification often represent no more than a few score of participants per year, depending on the utility program size.
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The M&V – energy savings standard is one crucial factor to develop EMC. M&V standard determines the specific energy savings of both participated parties in EMC. For the implementation of the energy management contract, it is prerequisite to create EU M&V standard. This M&V standard can achieve the following benefits: -
Clearly knowing to the net amount of the energy saving and energy costs;
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Guaranteeing and keeping operational performance of the improvement equipment maintenance;
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Enhancing the reliability of ESCo’s guarantee to the energy savings;
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The customers can appropriately appraise the improvement benefits when it is unable to make the guarantee for ESCo’s.
b) Biomass technology In Bulgaria different technology focuses on renewable energy (solar, biomass, hybrid) is used. Preliminary investigations of some aspects such as biomass and solar technologies that are most suitable for ESCos plants, suitability of the solar and biomass techniques adapted to ESCos plants, simple plant remote monitoring and control techniques, available guides for operation and maintenance etc. b.1) Boilers for heating and hot water Boilers are used to turn the energy originating from a combustion process to usable heat and/or power. If electrical power is required, the boiler will produce steam (or an organic vapour if the working fluid is not water) which will undergo a thermodynamic cycle and power a turbine coupled to a generator. If only heat is required, steam (organic vapour) generation is not necessary and hot water production will be sufficient. This is the case when it comes to small-scale heating. Two main boiler technologies are currently available on the market: watertube and firetube boilers. In watertube boilers, the water is heated by circulating in tubes around which the hot combustion gases flow. In firetube boilers, the hot combustion gases flow through tubes immersed in a tank filled (or partly filled if steam generation is required) with water. Very large boilers with high ratings usually involve high water temperatures and pressures. Given these operating conditions, watertube designs are more convenient since only the water tubes should be designed to withstand such high pressures and temperatures. At lower power, firetubes designs are usually cheaper. If the output of the boiler does not exceed 20 MW and the pressure 20 bars which is the case for this feasibility study, a firetube boiler is the most adapted technology.
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b.2) ESCO’s plants and appropriate technology The biomass boiler plant uses wood chips as a fuel. The wood chips are stored in a separate warehouse, located next to the biomass boiler. The wood chips are fed automatically from the warehouse to the boiler hopper by a screw conveyor with different length. From the boiler hopper the biomass is transported in the boiler chamber by an internal screw. The combustion of wood chips takes place in the burning chamber. The generated hot water is fed into insulated heat accumulator. The boiler is equipped with a primary combustion air system, dimensioned for a full cauterization in the primary combustion. For combustion of the flue gases a secondary combustion air system is foreseen. On the display of the control panel it is possible to read the current boiler output, load and all other relevant parameters. The control panel is fitted with PLC control. The system consists of a temperature sensor and flow meter in the forward flow pipe from the boiler, temperature sensor in the return flow pipe to the boiler, O2-probe (as an option) in the flue gas channel, frequency converter for the feeding screw gear motor, frequency converters for motors on all combustion air fans, frequency converter for the flue gas fan and the required programming in the control panel. The system works in the following way: the desired forward flow temperature is pre-set on the control panel. If the actual forward flow temperature is lower than the pre-set value, the fuel supply and the amount of combustion air are automatically regulated upwards. If the actual forward flow temperature is higher than the pre-set value, the fuel supply and the amount of combustion air are automatically regulated downwards. The dampers and frequency regulators receive a signal from the control panel about the optimum settings allowing the adjustment to take place automatically. The fuel supply is automatically adjusted using the frequency regulated gear motor, which receives a signal from the control panel for the optimum speed of the transport screw. The primary side is supplied with circulation pumps, fittings and a heat accumulator. The hot water by the heat accumulator with a temperature of 75о С is transported to the distributing water collector by means of circulating pump. The heating units in the rooms are supplied with hot water from the distributing water collector. A returned water collector collects the water used by the heating units that has a temperature of 60о С. The water is fed from the returned collector into the water heating boiler by means of a circulating pump. All facilities of the boiler station are equipped with control and safety valves as well as with control, measuring and automated devices. b.3) ESCO’s plants – energy cabin The biomass energy boiler and the auxiliary process equipment are situated in a 20-foot metal container – energy cabin with thermal insulation. The hot water boiler is compact one, made of steel, with cast iron burner and panel with control devices, and is equipped with an automated fuel feeding device for wood chips or wood pellets and fire safety system. A system for automated regulation of the heat supply is also implemented. New thermal insulation of the water pipe network will be 22
installed. An additional pipe connecting the energy cabin with the existing pipe network of the internal heating installation of the building will be built. Furthermore, a chimney for the separation of the exhausted gases will be constructed.
Completed solar installation for generation of hot water for everyday necessities on the roof of energy cabin will be constructed. The system has automatic regulation and control for parallel work with the biomass boiler. ESCO’s shall be encouraged to promote more actively this technology. It is recommended to develop for them a model of a standard contract for provision of such type of services. The Directive on Energy End- Use Efficiency and Energy Services gives strong incentives to energy providers to contract ESCO’s to implement appropriate technologies. These incentives are reiterated in the Energy Efficiency Directive which repeals the Energy services Directive. c) Wind Technology. In the last few years a lot of wind projects were implemented in Bulgaria. The large wind farms consist of hundreds of individual wind turbines which are connected to the electric power transmission network. Offshore wind is steadier and stronger than on land, and offshore farms have less visual impact, but construction and maintenance costs are considerably higher. Small onshore wind farms provide electricity to isolated locations. Utility companies increasingly buy surplus electricity produced by small domestic wind turbines The map on Figure 2 shows installed wind energy capacity in Bulgaria as of September, 2012 at municipality level. It constitutes only an approximation.
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Figure 2: Wind projects in Bulgaria1
d) Heat pumps A heat pump is a device that transfers heat energy from a heat source to a heat sink against a temperature gradient. Heat pumps are designed to move thermal energy opposite the direction of spontaneous heat flow. A heat pump uses some amount of external high-grade energy to accomplish the desired transfer of thermal energy from heat source to heat sink. While compressor-driven air conditioners and freezers are familiar examples of heat pumps, the term "heat pump" is more general and applies to HVAC devices used for space heating or space cooling. When a heat pump is used for heating, it employs the same basic refrigeration-type cycle used by an air conditioner or a refrigerator but in the opposite direction, releasing heat into the conditioned space rather than the surrounding environment. In this use, heat pumps generally draw heat from the cooler external air or from the ground
e) Solar thermal technology Solar thermal energy (STE) is a technology for harnessing solar energy for thermal energy (heat). Solar thermal collectors are classified by the United States Energy Information Administration as low-, medium-, or high-temperature collectors. Lowtemperature collectors are flat plates generally used to heat swimming pools.
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http://bgwea.org.server14.host.bg/English/Installed_Wind_in_Bulgaria_EN.html
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Medium-temperature collectors are also usually flat plates but are used for heating water or air for residential and commercial use. Systems for utilizing low-temperature solar thermal energy include means for heat collection; usually heat storage, either short-term or interseasonal; and distribution within a structure or a district heating network. In some cases more than one of these functions is inherent to a single feature of the system (e.g. some kinds of solar collectors also store heat). Some systems are passive; others are active (requiring other external energy to function). f) PV technology Photovoltaics (PV) is a method of generating electrical power by converting solar radiation into direct current electricity using semiconductors that exhibit the photovoltaic effect. Photovoltaic power generation employs solar panels composed of a number of solar cells containing a photovoltaic material. Materials presently used for photovoltaics include monocrystalline silicon, polycrystalline silicon, amorphous silicon, cadmium telluride, and copper indium gallium selenide/sulfide. Due to the increased demand for renewable energy sources, the manufacturing of solar cells and photovoltaic arrays has advanced considerably in recent years. Photovoltaic power generation employs solar panels composed of a number of solar cells containing a photovoltaic material. Materials presently used for photovoltaics include monocrystalline silicon, polycrystalline silicon, amorphous silicon, cadmium telluride, and copper indium gallium selenide/sulfide. Copper solar cables connect modules (module cable), arrays (array cable), and sub-fields. Because of the growing demand for renewable energy sources, the manufacturing of solar cells and photovoltaic arrays has advanced considerably in recent years. Cells require protection from the environment and are usually packaged tightly behind a glass sheet. When more power is required than a single cell can deliver, cells are electrically connected together to form photovoltaic modules, or solar panels. A single module is enough to power an emergency telephone, but for a house or a power plant the modules must be arranged in multiples as arrays.
Photovoltaic power capacity is measured as maximum power output under standardized test conditions in "Wp" (Watts peak). The actual power output at a particular point in time may be less than or greater than this standardized, or "rated," value, depending on geographical location, time of day, weather conditions, and other factors.[16] Solar photovoltaic array capacity factors are typically under 25%, which is lower than many other industrial sources of electricity.
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g) Hydropower technology Hydropower or water power is power derived from the energy of falling water and running water, which may be harnessed for useful purposes. Since ancient times, hydropower has been used for irrigation and the operation of various mechanical devices, such as watermills, sawmills, textile mills, dock cranes, domestic lifts, power houses and paint making. Water's power is manifested in hydrology, by the forces of water on the riverbed and banks of a river. When a river is in flood, it is at its most powerful, and moves the greatest amount of sediment. In Bulgaria the small hydro is the development of hydroelectric power on a scale serving a small community or industrial plant. The definition of a small hydro project varies but a generating capacity of up to 10 megawatts (MW) is generally accepted as the upper limit of what can be termed small hydro. Many companies offer standardized turbine generator packages in the approximate size range of 200 kW to 10 MW. These "water to wire" packages simplify the planning and development of the site since one vendor looks after most of the equipment supply. Since non-recurring engineering costs are minimized and development cost is spread over multiple units, the cost of such systems is improved. h) Building Energy Management System In Bulgaria some buildings and enterprises use Building Management System (BMS). This BMS solution is a computer-based control system installed in buildings that controls and monitors the building’s mechanical and electrical equipment such as ventilation, lighting, power systems, heating systems, cool and hot water supply, fire systems, and security systems. A Building Management System consists of software and hardware; the software program, usually configured in a hierarchical manner, can be proprietary, using such protocols as C-bus, Profibus, and so on. Vendors are also producing BMSs that integrate using Internet protocols and open standards such as DeviceNet, SOAP, XML, BACnet, LonWorks and Modbus. i) Lighting RGBE Factoryment of old insufficient lighting with new high efficient lighting in the buildings outdoor lighting and in the street lighting is energy savings measure with proved effect and environmental impact. Indoor lighting is usually accomplished using light fixtures, and is a key part of interior design. Lighting can also be an intrinsic component of landscape projects. 26
Occupancy sensors to allow operation for whenever someone is within the area being scanned can control lighting. When motion can no longer be detected, the lights shut off. Passive infrared sensors react to changes in heat, such as the pattern created by a moving person. The control must have an unobstructed view of the building area being scanned. Doors, partitions, stairways, etc. will block motion detection and reduce its effectiveness. Street Lights are used to light roadways and walkways at night. Some manufacturers are designing LED and photovoltaic luminaries to provide an energyefficient alternative to traditional street light fixtures. j) Combined heat and power (CHP) Combined heat and power (CHP) is the use of a heat engine or power station to simultaneously generate electricity and useful heat. Cogeneration is a thermodynamically efficient use of fuel like natural gas, thermal oil and biomass and biogas. In separate production of electricity, some energy must be discarded as waste heat, but in cogeneration this thermal energy is put to use. All thermal power plants emit heat during electricity generation, which can be released into the natural environment through cooling towers, flue gas, or by other means. The supply of high-temperature heat first drives a gas or steam turbine-powered generator and the resulting low-temperature waste heat is then used for water or space heating as described in cogeneration. CHP is most efficient when heat can be used on-site or very close to it. Overall efficiency is reduced when the heat must be transported over longer distances. This requires heavily insulated pipes, which are expensive and inefficient; whereas electricity can be transmitted along a comparatively simple wire, and over much longer distances for the same energy loss.
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