Costs of alternative measures, costrecovery options and EEOs comparison

Transcription

1 Energy Saving Policies and Energy Efficiency Obligation Scheme Costs of alternative measures, costrecovery options and EEOs comparison 15/11/2016 Vlasis Oikonomou, IEECP, ENSPOL project coordinator

2 Global EEO snapshot 48 operational and 6 planned Source: RAP 2016, Rosenow /24/2016 2

3 Types of policies in the EU for Article 7 Source: Rosenow and Fawcett (2016) 11/24/2016 3

4 General points Alternatives to EEOs Overview of alternative measures in the EU Almost all EU MS countries (apart from 5) have adopted alternative measures to comply with Article 7 requirements. Higher cost measures (e.g. whole house renovation, solid wall insulation) seem to be the main focus of alternative measures proposed in the residential sector, usually in the form of soft loans and grants. Countries relying wholly on EEOs Only one country of the five planning to rely entirely on EEOs has long and successful experience of this policy (Denmark). It may be a risky strategy for the other three. EEOs are a proven and effective route to delivering incentives for proven, low cost, mass-market measures

5 COUNTRY/ Types of Alternative measures Austria Italy France Germany Greece Sweden Spain The Netherlands UK Overview of alternatives Overview of alternative measures in the EU EEOs Financial Energy/CO2 grants& Taxes Loans Fiscal (tax rebate) EE Fund Regulatio Information, Sum (of Vol. Other n & Education & alternativ Agreement measures Standards Training es) (Ν) (2) (5) (1) 8 (Ε) (1) (1) 2 (Ε) (2) (2) (1) (1) (1) 7 (4) (7) (3) (2) 16 (14) (1) (2) (1) 18 (1) 1 (Ν) (1) (6) (1) (2) 10 (2) (8) (4) (3) (4) (10) 30 (Ε) (2) (6) (7) (2) 17 Most countries have decided that alternative policies outside the remit of utilities are necessary (e.g. standards, taxation and support for infrastructure and human systems) to meet energy savings target. In case of multiple alternatives measures, MS have to ensure that, when there are overlaps among measures, no double counting will occur EEO should perhaps address mainly nonsubsidized areas/sectors (large industries, municipalities, transport). 5

6 Cost types of EE policies Program cost: Cost to the public recovered through energy bills Participant cost: Contributions from beneficiaries of the program Transaction cost: Cost to the participants for complying with administration and third parties Administrative cost: Cost to the authorities for running the program Source: Rosenow 2016, ENSPOL 2015

7 Basic issues on alternatives AVOID COMPARISONS BECAUSE: No homogeneous way of costeffectiveness! Different metrics for incentive costs (e.g. per building, per participant, per available fund) Policy combinations make the image blurry 11/24/2016 7

8 General observations In most alternatives there is no ex-post evaluation for real costs Funding costs are usually highly dependent on the scale of each measure and the replication potential of these measures which are difficult to determine In many cases costs for various measures are intertwined, 11/24/2016 8

9 Examples from countries Countries Administrativ Total Total incentive (i.e. state e costs ( ) investment costs ( ) funding) costs ( ) Austria PI1: Refurbishment subsidy schemes N/A N/A 3,27 Bn PI2: Domestic environmental support scheme (UFI) N/A N/A 90 mil. PI3: Energy taxes N/A N/A 4,58 Bn PI4: Federal highway toll N/A N/A 1,1 Bn PI5: Green electricity support N/A N/A 66,8 mil Germany PI1: Support programmes for energy-efficient N/A N/A 1,500 mil. per year construction and renovation PI2: Investment programmes in municipalities and social N/A N/A 200 mil. per year expected facilities PI3: Investment support programmes in companies N/A N/A 3 bil. per year PI4: National Climate Protection Initiative further programmes N/A N/A 120 mil. per year 11/24/2016 9

10 Examples from countries UK PI1: Green Deal household PI5: Smart metering (non-domestic) PI6: Carbon Reduction Commitment Energy Efficiency Scheme PI7: Energy Savings Opportunity Scheme N/A N/A 180 mil. have already been spend 125 mil. will be spent on the Green Deal Home Improvement Fund N/A N/A (central estimate) for the period out of which 50% are counted by the Bristish government towards meeting with Article 7 requirements mil. spent on staff The value of allowances time and IT and other setup surrendered was: costs (2.25 mil. fees 2011/ mil. ; charged to participants, 2012/ mil. ; rest from central 2013/ mil. government), 1.5 mil. for policy design and development costs for the period N/A The most significant N/A elements of the costs of the policy are the capital and hassle costs 875 mil. 11/24/ over the period).

11 Italy Examples from countries PI1: Tax deduction Not available, but below 1% N/A 2014: 2,100 M (0.113 Mtep of the total incentive cost. of savings) 2012: 1,585 M /kwh 2011: 1,820 M /kwh 2010: 2,533 M /kwh 2009: 1,410 M /kwh 2008: 1,925 M /kwh 2007: 799 M /kwh (kwh final consumption) PI2: Thermal account Not available, but high due N/A Heat account (2014) = 1.7 M of scheme to the limited success of the cost( Mtep) scheme so far (estimable Heat account (2015) = 19.1 M of scheme higherthan5%). cost( Mtep) 3.89 M in 2013 around20m attheendofoctober2014. France PI1: Sustainable Low administration costs as 6,8 bn. 1.36bn. development tax credit part of the tax authority functioning (declaration through the tax declaration, direct deduction from tax payment and control 11/24/ through normal tax control)

12 Netherlands Green Funds A total of 137 mln. EUR in2011, and167 mln. EUR in N/A 4.5 Billion E (from green banks Blok voor Blok Revolving funds EUR 400 million subsidy for housing corporations Energy Investment Allowance Long term agreement on energy efficiency in ETS companies (MEE) Long Examples 2010 from countries The national government has committed 15 mln. EUR and 2,5 mln. EUR thus far to facilitate the blokfor-blok process (support platform, some process funding,etc.). 11/24/2016 term Executive costs of the scheme (operated by RVO) N/A 12 agreements N/A andgreenfundsin2013) per project, in total5,75mil. N/A N/A 185 mil. from government funds, 225 mil. cofinance from banks for owner/occupiers N/A max. 400 mil. / max. available amount available amount per household per household An estimated 3,5 mln EUR per annum to run this Total CAPEX in scheme. For the period this comes to an administrative costs of 0,27 EUR per GJ primary period was energy saved. mln EUR. NL Agency (now RVO) reported costs of 19,5 mln. N/A EUR for the period, while MEE companies (aggregate estimate) spend 1,5 mln EUR in period. amounted up to 15,3 mln. EUR per annum 111 mil (2014) and 160 mil. (2013)

13 Policy mix Taxes complement other policies (even if not mentioned under Article 7 notifications) EEOs are effectively subsidies (to users) Subsidies and loans of different types are unlikely to be complementary Information programmes complement other instruments Standards and norms underpin other policies

14 Specificity of policy instruments

15 Combinations of policies

16 Conclusions from mixes Purchase subsidies are used a lot and combined with other policies Regulations are combined with other instrument types The same applies to voluntary agreements Standards and norms are set at EU level and therefore do not appear Taxation is not used in most countries Article 7 design does not encourage policies that mainly support early stage innovation The overall policy mix is more than just Article 7 policies it also includes EU level policies Effectiveness is not the only criterion Taxation, in particular, is limited by political acceptability Subsidies, including EEOs, are used more

17 Complementarities/overlaps Policy type Summary of Interaction with other policies Energy Efficiency Obligations Overlapping with tax rebates, grants, loans and on-bill finance. Neutral or complementary with other policies. Grants Loans on-bill finance tax rebates Regulations voluntary agreements energy or CO2 taxes standards and norms Overlapping with EEOs, tax rebates, loans and on-bill finance. Neutral or complementary with other policies. Overlapping with EEOs, grants, tax rebates and on-bill finance. Neutral or complementary with other policies. Overlapping with EEOs, grants, loans and on-bill finance. Neutral or complementary with other policies. Overlapping with EEOs, grants, loans and on-bill finance. Neutral or complementary with other policies. Neutral or complementary with all policies except voluntary agreements Neutral or complementary with all policies except EEO and regulations. Always complementary Always complementary energy labelling schemes Information, advice, billing feedback, smart metering Always complementary Always complementary

18 Factors for costs Savings potential and autonomous rate Energy market structure and role of ESCOs Technology list for deemed savings to be realistic and not exclusive Time frame for implementation (roughly 2 years for setting up legal arrangements) Target group determines costs (e.g. fuel poverty?)

19 Program costs EEOs vs auctions Note: not corrected for different discount rates used Sources: Rosenow (2016), ACEEE (2014, 2015); RAP (2016)

20 Efficiency On costs majority of savings will originate from low cost energy measures in the residential sector, no retrofitting Opening the scope (as for instance Industry for Denmark, or fuel suppliers in France) can help achieving a more ambitious objective introducing tools and incentives to support third party financing, among which there is the guaranteed fund introduced in the transposition of the EED directive Address fuel poverty via the EEF

21 Cost Recovery For obligated energy providers in competitive energy markets, there are two possible cost recovery paths: Option 1: the costs of meeting energy savings targets are treated as a cost of doing business and energy providers adjust their prices to recover these costs; or Option 2: the costs of meeting energy savings targets are either funded by the government through direct budgetary appropriations, or price surcharges are imposed on regulated wires and pipes energy providers.

22 Cost recovery Country Belgium Cost recovery Regulator approves cost recovery through tariffs Canada/Ontario Collected from all ratepayers based on energy use or contribution to peak demand China Denmark France Italy US Minesotta US New York US Texas City utility surcharge, revenue from differential electricity prices, and other funding sources Cost recovery through tariffs Cost recovery through tariffs is possible but has yet to be allowed Fixed contribution to cost recovery through a tariff contribution; transport measures not eligible for cost recovery Energy efficiency cost-recovery charge determined in rate cases System benefits charges, and funding from carbon market Obligated utilities recover program costs through base rates or cost recovery tariffs

23 Cost recovery option parameters obligated party (suppliers and/or distributors), obligation on all or selected energy carriers, openness of the market (expressed in number of companies) and expectations for newcomers, links of the EEO scheme to either funding mechanism (such as a certificate market) or other tools (such as subsidies, tenders and others), and availability of low cost energy saving options.

24 Administrative costs Low compared to program costs Country Administrative Costs (% of overall programme costs) UK 0.2% Denmark 0.3% France 0.4% Italy 1.4% Source: RAP (2016)

25 Cost of EEO schemes Figures out of early evaluation (capital and administrative costs).. France: 0.4 Eurocent / kwh Denmark: 0.45 Eurocent / kwh Italy: 1.7 Eurocent / kwh UK: 0.7 Eurocent / kwh (Lees 2012, Rosenow and Galvin 2013) BELOW energy price so highly cost effective!

26 Article 7 EED platform

27 Energy Saving Policies and Energy Efficiency Obligation Scheme For further information, please contact us Institute for European Energy and Climate Policy, The Hague Tel: Thank you for your attendance