Regional Workshop: National Energy Efficiency Action Plans Kempinski Hotel, Amman, Jordan 5 - 6 December, 2010

1. Euro-Mediterranean
Energy Market Integration Project
Germany
France
Lebanon
Try NEGAWATT Power Plants
Belgium
6 December, Amman
Dr. Albrecht Kaupp, Team Leader
“The contents of this publication are the sole responsibility of
the author and can in no way be taken to reflect the views of the
European Union”.
This project is funded
by the European Union
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2. Support for the enhanced integration and
the improved security of the
Euro-Mediterranean energy market
This project is funded
by the European Union

3. www.medemip.eu
MED-EMIP supported the
integration of all colors of
energy resources in the
region such as solar, wind,
hydro, coal, oil shale, gas
and energy efficiency.
This project is funded
by the European Union
3

4. Why are we promoting EE anyway ?
My answer is very simple
“To balance demand and supply for
electricity and at the same time improve
the financial benefit of the electricity
supplier and electricity consumer”
This project is funded
by the European Union
4

5. How to buy and build a conventional
500 MegaWatt power plant (EPC or IPP)
- Select technology and size in MW for the “job to be done”
- Select the fuel based on availability + suitability for the plant
- Have a buyer for the electricity
- Get all the permits to build the power plant
- Tender the power plant as an EPC or ask IPPs for offers
- Calculate levelized generation costs “at the margin”
- Negotiate financial closure at favorable WACC (EPC or IPP)
- Negotiate the impact on tariffs with a regulator, if any
This project is funded
by the European Union
5

6. How to buy and built a
500 NEGAWatt power plant ?
The same way as a 500 MegaWatt power plant with
additional challenges as follows:
- The party that tenders offers a tariff for kWh (saved)
- The party preparing an offer has to also propose a realistic
and cost effective way of measuring kWh (saved)
- A NEGAWatt power plant is owned and operated by
thousands of small and big investors
- “Building” the 500 NEGAWatt power plant and operation
must be as reliable and on time as adding a new 500
MegaWatt power plant capacity.
This project is funded
by the European Union
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7. kWh metering and billing comparison
MegaWatt power plant NEGAWatt power plant
US$ 60 Methodology to !
estimate kWh saved
Sell 1 million MWh(s)
for US$ 50 Million
This project is funded
350 kWh Planned for 2015
by the European Union
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8. Major lesson learned
• The most challenging part for operators and owners
of a NEGAWatt power plant and the buyers of the
kWh(saved) is to agree on the monitoring and
verification of the quantity of kWh(saved) since there
are no “meters” as in conventional power plants.
• All strategies such as “deemed savings” or
cumbersome but more precise CDM methodologies
had been tested in the past.
This project is funded
by the European Union
8

9. How to calculate generation costs
MegaWatt power plant NEGAWatt power plant
Plant load factor Plant load factor
WACC Interest rate
Capital investment Net investment
Fuel costs / kWh No fuel costs but savings
 Ci /(1  d )
25
i
Cost of kWh ( g or s)  i 0
 kWhi /(1  d )
25
i
i 0
Same algorithm applies for both power plants
This project is funded
by the European Union
9

10. Regulator approved tariff (real case)
Objective: Defer new 400 MW block in 2016
Avoided cost structure US$Cents/kWh
Avoided capital cost due to deferment 4.57
Avoided operating cost 2.28
Avoided primary energy cost 2.54
Proxy plant sum of avoided costs 9.39
Marketing costs of utility - 2.80
Buying price for kWh (saved) excluding 6.59
monitoring and verification costs
This project is funded
by the European Union
10

11. Power Plant Budget and Planning Consideration
Approved Additions Planned additions
Year Location
Unit type Fuel type MW Unit type Fuel type MW
GT NG 1261 Center-East
2010 NG 120
CSP
South
(Hybrid)
Solar 30
2011 - - -
2012 NGCC NG 2400 West
2012 NGCC NG 2400 East
2013 GT NG 400 East
2014 NGCC NG 800 Center
NGCC NG 800 East
2015
Part of budget goes to DSM
GT NG 400 West
This project is funded
by the European Union
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12. Lessons learned so far since 1972
- Offering one tariff for all types of electricity saving
measures may result in overpaying or underpaying for
kWh(saved ) depending on the project
- In the USA the over 2000 rebate systems under
DSM are one form of equipment specific feed-in-tariff
where the rebate is calculated by “deemed” kWh*tariff
savings and paid upfront in one lump sum
- Verification procedures for kWh saved are too high
for many EE measures." Deemed savings are
preferred.
This project is funded
by the European Union
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13. Several advantages such as…..
- A complete vision and strategy is implemented and not only
fragmented single activities
- Increased efforts go into the verification and “measuring” of
the energy cost savings
- The risks of not reaching the savings is on the consultant
side
- The strategy is attractive for larger and real ESCOs
- All involved are forced to calculate and debate the real costs
of a kWh(generated) and “many” kWh(saved) options
This project is funded
by the European Union
13

14. Many rebate strategies
• Eligible Efficiency: Air conditioners, heat recovery, duct/air
sealing, building insulation,
• Applicable Sectors: Residential
• Incentive Amount: HE central air conditioner $ 550
HE room air conditioner replacement $ 150
Central air conditioner maintenance $ 55
Duct leak repair up to $ 375
Heat recovery unit: $155
Reflective roof coating: $ 70
Insulation: $ 1.5 per sqm up to $ 375
Refrigerator buy back+ recycling: up to $ 75
Equipment requirement: EnergyStar or some other label
Installation requirement: All work done by state licensed co.
This project is funded
by the European Union
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15. The concept of tendering and implementing a cost
effective NEGAWatt power plant as part of an
integrated resource planning exercise, which
regulators should demand, and each power utility
should follow, is about the only strategy to involve
power utilities for their own financial benefit into a
national energy efficiency action plan.
Let us try it more often !
This project is funded
by the European Union
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16. THANK YOU
This project is funded
by the European Union
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