Task 2.5: Analysis of the potential market volume for energy services · 2014-08-11 · Task 2.5:...

Task 2.5: Analysis of the potential market volume for energy services

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Change Best: Promoting the development of an energy efficiency service (EES) market – Good practice examples of changes in energy service business, strategies, and supportive policies and measures in the course of the implementation of Directive 2006/32/EC on Energy End-Use Efficiency and Energy Services.

A project supported by the Intelligent Energy Europe Programme of the European Commission (IEE/08/434/SI2.528383).

A main objective of the Directive 2006/32/EC on energy end-use efficiency and energy services

(ESD) is to stimulate the market for energy services and for the delivery of other energy

efficiency improvement measures to final consumers. In order to achieve this objective, the

ESD gives a special role to energy distributors, distribution system operators and retail energy

sales companies. On the other hand, there are different types of "pure" energy service

companies (ESCOs) in the market ready to expand their business in the field of energy

efficiency services (EES).

Against this background, it is important to know, how and to which extent the EES market could

be further developed, what are appropriate business strategies and promising services not only

for “advanced” companies but also for “beginners”, what is a policy framework suitable to

stimulate market development and to overcome existing barriers, and which role energy

companies developing towards sustainable ESCOs could play.

Objectives

The main objectives of ChangeBest are:

to assist energy companies and ESCOs in entering the B2B and B2C market for EES,

to contribute to the development of the EES market as part of the implementation of the

ESD,

to demonstrate good practice in implementing the ESD.

Tasks

In order to achieve the objectives specified, the project work will consist of:

empirical analysis of the EES market and the respective economic and policy

framework in the course of the implementation of the ESD,

exchange of experiences, national workshops and a European conference,

a large bundle of promising EES business cases and strategies implemented in “field

tests”,

communication and dissemination activities, and

induced further action and networking by energy (service) companies.

The analysis of the energy services products and the potential energy services market

volume towards EU Member States is the main objective of this report.

The authors are solely responsible for this publication. It does not represent the opinion of the European Community

and the European Community is not responsible for any use that might be made of data appearing therein. Access to

and use of the contents in this publication is at the user„s own risk. Damage and warranty claims arising from missing

or incorrect data are excluded. The authors bear no responsibility or liability for damage of any kind, also for indirect

or consequential damages resulting from access to or use of this publication.

6 December 2010

Project Partner Country

Wuppertal Institute for Climate, Environment, Energy Germany

e7 Energie Markt Analyse GmbH Austria

SEVEn Czech Republic

ESB - Energy Saving Bureau Estonia

ARMINES France

EDF – Electricity of France France

ASEW - Germany

ULUND - Lund University Sweden

HELESCO S.A. Greece

eERG - Politecnico di Milano - Energy Department Italy

Ekodoma Latvia

ISR – University of Coimbra Portugal

ECN - Energy research Centre of the Netherlands The Netherlands

BSREC - Black Sea Regional Energy Centre Bulgaria

Energy Piano Denmark

REACM - Regional Energy Agency of Central Macedonia Greece

KISE - Krakow Institute for Sustainable Energy Poland

CESYS - Center for Energy Systems Slovakia

IJS - Jozef Stefan Institute – Energy Efficiency Centre Slovenia

ESCAN, S.A. Spain

Project coordinator:

Maike Bunse

Wuppertal Institute for Climate, Environment, and Energy

Döppersberg 19

42103 Wuppertal, Germany

E-mail: [email protected]

Wolfgang Irrek

Ruhr West University of Applied Sciences

Tannenstr. 43

46236 Bottrop, Germany

Email: [email protected]

Author(s):

Bruno Duplessis

Center For Energy and Processes - Armines

60, boulevard Saint-Michel

75272 Paris Cedex 06 – France

E-mail: [email protected]

Table of content

1 Executive summary -------------------------------------------------------------------------------------- 6

2 Introduction ------------------------------------------------------------------------------------------------ 7

3 EES market evaluation: what is the scope ? ---------------------------------------------------- 8

3.1 “Energy efficiency improvement actions” ------------------------------------------------------ 8

3.2 “Energy services” and “energy efficiency services” ----------------------------------------- 8

3.3 Activities for energy efficiency improvement ------------------------------------------------10

3.4 ESCOs’ activity or EES market ? --------------------------------------------------------------13

4 Evaluation of potential market open to new EES ---------------------------------------------15

4.1 Evaluation of energy efficiency policy measures -------------------------------------------15

4.2 Evaluation of additional economic energy savings open to EES -----------------------17

4.3 Potential market open to EES – Evaluation by payback times of energy efficiency

actions in the residential and tertiary sectors ----------------------------------------------------------23

5 Conclusion ------------------------------------------------------------------------------------------------31

6 References -------------------------------------------------------------------------------------------------33

Annexe : Final energy prices -------------------------------------------------------------------------------35

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List of tables and figures

Table 1: Additional energy savings potential in 2020 for EU-27 (based on Fraunhofer

Institute et al. 2008 and author‟s own calculations) __________________ 18

Table 2: Yearly EU-27 additional market open to EES until 2020 (range features are

based on LPI and HPI scenarios) ________________________________ 22

Table 3: Data for the technical and economic analysis of energy efficiency measures

in the households sector (EU-27 average value) ____________________ 25

Table 4 : Data for the technical and economic analysis of energy efficiency

measures in the commercial sector (EU-27 average value) ____________ 28

Figure 1: Core content and associated activities of EES products ________________ 11

Figure 2: Value chain building-up by aggregation of the main activities typically

related to EEI measure implementation ___________________________ 12

Figure 3: Inclusion relationship among activities classified as ES, EES and EPC ____ 13

Figure 4 : Additional energy savings potential in EU-27 Industry by 2020 within LPI

scenario – Sharing by industrial branch ___________________________ 19

Figure 5 : Additional energy savings potential in EU-27 Industry by 2020 – Sharing

by end-use _________________________________________________ 20

Figure 6 : Additional energy savings potential in EU-27 Households by 2020 –

Sharing by end-use (Electric appliances excluded) __________________ 21

Figure 7 : Additional energy savings potential in EU-27 Tertiary sector by 2020 –

Sharing by end-use ___________________________________________ 21

Figure 8 : EU-27 cumulated additional energy savings from various EE measures

according to their payback time in the residential sector ______________ 26

Figure 9 : Potential yearly EU-27 market open to EES according to their commitment

duration for the household sector ________________________________ 27

Figure 10 : EU-27 cumulated additional energy savings from various EE measures

according to their payback time in the tertiary sector _________________ 29

Figure 11 : Potential yearly market open to EES according to their commitment

duration for the tertiary sector ___________________________________ 30

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1 Executive summary

Indications about the possible structure of the EES market and the potential national markets

volume may constitute a strategic decision support for new enters into EES market so

contributing to one of the main objectives of ChangeBest, i.e. assisting energy companies

and ESCOs in entering the B2B and B2C market for EES.

We have drawn such a picture by starting from the energy savings value of the technical

measures for energy efficiency improvement whose achievement should constitute the core

activity of EES. In the context of the ChangeBest project only “new” EES are considered:

which implies that the project focus on new EES market segment in the different EU-27

Member States and on new technologies (or currently not much implemented technologies).

Energy savings achieved with the current energy policies or the business as usual trend are

not considered and in the ChangeBest context as for this report new EES will thus address

additional energy savings.

Based on existing studies that refer to the economic potential of energy savings in different

demand sectors – in particularly from the outputs performed by Fraunhofer Institute and al.

and the EcoDesign studies – the additional energy savings amount has been evaluated,

mostly for the residential and tertiary sector which are less investigated than the industry

sector. In a second step, these energy savings potentials have been priced with final

consumers‟ tariffs in order to provide an estimate of the market volume available for future

possible EES.

The picture has been detailed by linking the various additional energy savings potential with

the economic acceptability by the actors, which has been characterised with the expected

EES contract duration. In order to evaluate this possible duration we assume that an EES

contract should allow costs recovery based on the payback time criteria.

It has been shown that a very accessible market open to EES, which considers energy

efficiency measures with a payback time below 3 years, exists and may represent around

540 M€ per year until 2020 for the residential and tertiary sectors in EU-27. Moreover, this

market may reach 2 400 M€ if the new EES consider energy efficiency measures with a

payback time below 8 years.

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2 Introduction

The aim of the ChangeBest task 2.5 is to draw the potential market volume of energy

efficiency services products in the geographical area covered. Indications about the possible

structure of the EES market and the potential national markets volume may constitute a

strategic decision support for new enters into EES market so contributing to one of the main

objectives of ChangeBest, i.e. assisting energy companies and ESCOs in entering the B2B

and B2C market for EES.

As the definition of “energy services” reported in the ESD appears quite troublesome,

existing and future energy services can recover different realities in the different Member

States. Moreover, at a first sight, the existing definitions and terminology dealing with energy

services or energy efficiency services do not seem to converge. The first objective of this

report is hence the analysis of these different definitions and terminology in order to try to

clarify them and make emerge a clearer classification which is necessary for the definition of

the evaluation framework used in the analysis presented in the remainder of this document.

The second objective of this report is to provide an as accurate as possible evaluation of the

potential market of energy efficiency services. The question is not to evaluate the activities of

existing different EES providers but rather to assess the market volume which can be

generated by future promising EES in different demand sectors. As the range of activities

addressed by EES products could be very large, we have drawn a picture by starting from

the energy savings value from technical measures for energy efficiency improvement whose

achievement should constitute the core activity of EES.

This analysis is based on existing studies that refer to the economic potential of energy

savings in different demand sectors and on technical material provided by the project

partners, in particularly to adjust the general evaluation methodologies and considerations to

the specific features of each Member State‟s context. The various energy savings potentials

have been priced with final consumers‟ tariffs in order to provide an estimate of the market

volume available for future possible activities in the field of EES.

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3 EES market evaluation: what is the scope ?

Evaluating EES market volume presupposes to define which activities may be considered as

EES. The first part of this report tries to draw the content of the EES market (i.e. the activities

which we may have to take into account in our evaluation), which might imply that we will be

lead to exclude some energy efficiency activities from the evaluation field.

The term “energy efficiency service (EES)” commonly refers to a large variety of activities:

e.g. facility operation, maintenance or refurbishment, energy advice, energy audit, financing

of energy efficiency activities,, etc. Furthermore, such activities are typically carried out by an

at least as much large variety of companies: energy companies (suppliers or distribution

network operators), heating and cooling operators, equipments providers or installers, pure

ESCOs,, etc.. In order to carry out this analysis, a clear definition of what is meant by “EES”

and a categorisation of the different EES products will be provided first.

3.1 “Energy efficiency improvement actions”

The Directive 2006/32/EC on energy end-use efficiency and energy services (ESD) and

European standard EN 15900 on Energy Efficiency Services give strictly the same definition

for “energy efficiency improvement” which is supposed to consist in an “increase in energy

efficiency as a result of technological, behavioural, and/or economic changes”. In the same

way, “energy efficiency” is defined in both documents as the “ratio between an output of

performance, service, goods or energy, and an input of energy”.

European EN 15900 standard makes this definition more concrete by giving some

illustrations of energy efficiency improvement actions. These EE improvement actions could

thus address:

the intrinsic performance of buildings or equipments: building insulation, high efficient

boilers, variable speed motors, energy efficient lighting, etc.;

the operation and maintenance of installations : more efficient operation (building

automation, logistic and layout optimization), improved maintenance, continuous

optimization of technical installations operation;

the monitoring of the energy system: implementation of an energy management

system (e.g. compliant with EN 16001 relative to energy management systems);

the users behaviour : training, awareness raising campaigns on energy efficiency

opportunities.

3.2 “Energy services” and “energy efficiency services”

The ESD doesn‟t give strictly a definition for “energy efficiency services”, but a definition for

“Energy service” is given. An energy service is indeed defined as “the physical benefit, utility

or good derived from a combination of energy with energy efficient technology and/or with

action (…) which is delivered on the basis of a contract and in normal circumstances has

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proven to lead to verifiable and measurable or estimable energy efficiency improvement

and/or primary energy savings”.

This definition is quite abstract but introduces the notions of “contracting” and “energy

efficiency improvement”. Moreover, the notions of “proof” and “measurement and

verification”, imply the existence of performance evaluation criteria. In that sense, the ESD

definition ties with the EN 15900 standard of CEN/CLC Task Force 189 for “energy efficiency

service”, which is presented as an “agreed task or tasks designed to lead to an energy

efficiency improvement and other agreed performance criteria”.

The ESD seems to be more restrictive than the EN 15900 standard because the verification

and the measure or the estimation of the improvement is required by the text. However, the

evidences of the energy efficiency improvement are not specifically required at each time in

each contract. The formulation “has proven (...) in normal circumstances” is sufficiently

undefined to let us consider a lot of activities as energy services: usual maintenance

contracts or metering activities could also enter in this category.

In fact, compared to the ESD, the EN 15900 standard sets more restrictive requirements for

activities that can be called “EES”. These requirements focus on the measurement and

verification procedure of the energy efficiency improvement. So, according to the part 4 of

CEN/CLC proposal, an EES shall:

“be based on collected data related to energy consumption”;

“include energy audit as well as identification, selection and implementation of actions

and verification [of energy efficiency improvement]”.

Moreover “a documented description of the proposed or agreed framework for the actions

and the follow-up procedure shall be provided”. Finally, the measurement and verification

procedure shall be leaded “over a contractually period of time through contractually agreed

methods”.

The EN 15900 standard imposes thus a series of specific requirements in the EES definition

whereas the ESD definition includes some generally required characteristics. For example

the verification of the energy efficiency improvement is well described and strictly required in

the standard definition. In the framework of an EES, the verification procedures “shall

include, as a minimum, the following steps:

definition of the baseline with its related adjustments factors;

definition of procedures (including contractually agreed calculation or estimation

methods) that will ensure valid comparisons of energy consumption;

development and implementation of the measurement and verification plan for the

assessment of the energy efficiency improvement achieved;

reporting to the customers at agreed intervals. The reports shall include details of

implemented actions, achieved energy efficiency improvement and if applicable

comparison with contractually agreed levels.”

Finally, in the EN 15900 standard an energy efficiency service is defined as the minimal

combination of:

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an energy audit,

an energy efficiency improvement measure,

a measurement and verification plan.

One can note that an “energy efficiency improvement measure” is more a notion related to

the end to be achieved than a notion related to means needed to achieve this end, as

opposed to the supply of an audit or the implementation of a M&V plan. The definition of “EE

improvement measure” from the ESD goes in the same way and highlights more the final aim

(i.e. the “EE improvement”) than the means to reach it: with “EE improvement measure” the

ESD refers to “all actions that normally lead to a verifiable and measurable or estimable

energy efficiency improvement”.

From this point of view, a possible EES classification could be built by considering the

various targets of the EE improvement measures instead of the means (the activities) for EE

improvement and could be based on the distinction among the following EE improvement

action types:

improvement of building envelope;

improvement of equipments energy efficiency;

improvement of installations operation;

improvement of installations maintenance;

improvement of energy monitoring;

improvement of energy related behaviours.

One can thus note that this classification do not lead us to define the activities included in the

EES, whereas a market analysis requires more focus on the activities. This is why we have

now to enter in the merit of the EES possible content and to try to identify, as far as possible,

the possible activities whereby energy efficiency improvement targets can be addressed.

3.3 Activities for energy efficiency improvement

As mentioned above, an EE improvement measure can cover different aspects and the

following activities can be regarded as typically related to EES product provision:

the supply and installation of highly energy-efficient materials and equipments;

the realisation of facilities optimised operation and maintenance;

the improvement of the existing SME energy performances;

the training and awareness raising of consumers or operators on energy efficiency.

But several other types of services, as financing or energy supply, could be added to these

typical EES products and delivered as an aggregated package of services without causing

that these products violate the definition of EES. The services activities have thus the

property of being “aggregatable”: several services can be gathered together and aggregated

to build up a new service. New energy services and energy efficiency services as other types

of services can be built in such a way.

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So, around a core containing the activities triptych “audit + EE action implementation + M&V

plan” (see Figure 1), a very wide variety of energy efficiency services could be created by

adding associated activities like:

support to project owners;

engineering studies;

financing;

EE action implementation management

Business relationship management.

Other types of activities like efficient equipment supply or energy supply could be also

integrated into an EES.

Figure 1: Core content and associated activities of EES products

These associated activities do not constitute mandatory elements of and EES and cannot be

considered alone as energy efficiency improvement actions, although they deeply contribute

either to the EE measure implementation or to the consolidation of EE improvement.

Furthermore, this aggregative characteristic implies that an EES may be supplied by several

providers each one contributing to the implementation of an EE improvement measure by

adding associated activities from their core business. In other words, the value chain phases

of EES (see WP2.1) may be split among several providers, as shown by the figure 2 where

the activities representing the core content of an EES are sketched together with the other

activities constituting the value chain of energy efficiency improvement measures.

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Figure 2: Value chain building-up by aggregation of the main activities typically related to EEI measure

implementation

Finally, the ESD defines Energy Performance Contracting as “a contractual arrangement

between the beneficiary and the provider (…) of an energy improvement measure, where

investments in that measure are paid for in relation to a contractually agreed level of energy

efficiency improvement.” This definition wants to refer to a specific form of EES: EPC must

be considered as a subgroup of EES characterised by the definition of the contractual

arrangements for EEI measure implementation. Indeed EPC are remunerated by the energy

savings value: this implies the existence of an appropriate methodology, which is able to

evaluate and to monetize the energy savings. Such a methodology is initiated by an audit

and implemented by a M&V plan based on on-field measurements and real data gathering.

In conclusion, activities classified as energy services (ES), energy efficiency services (EES)

and energy performance contracts (EPC) can be put in a relation of inclusion as indicated in

Figure 3:

energy services (ES) : all activities leading to an EE improvement, which is proven in

“normal circumstances”;

energy efficiency services (EES) : an ES which includes an audit, implementation of

EE improvements measures and a M&V plan;

energy performance contracting (EPC): an EES which is paid for through energy

savings valuation.

Implementation

of measure

M&V plan

Audit

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Figure 3: Inclusion relationship among activities classified as ES, EES and EPC

3.4 ESCOs’ activity or EES market ?

As we mentioned previously, energy and energy efficiency services may assume different

forms by aggregating several services. Listing and counting all associated activities would

lead us to an evaluation of energy services market. On the other hand most of the existing

studies on this subject, evaluated the energy services market mostly trough the market of

ESCOs.

So, Bertoldi et al. (2007) evaluated ESCOs activities volume in Europe between 5 to

10 billion Euros. But from one study to another figures differ widely mostly because of the

uncertainty of these kinds of estimates and the differences in the evaluation methodologies

used. For instance, Ürge-Vorsatz et al. (2007) gives some indications about the German

ESCO market by counting the overall value of ESCO projects which have been realized in

one given year: in this way, German ESCO‟s activity in 2001 has been evaluated

150 million USD by accounting ESCOs‟ projects value. In the same way, Geissler et

al. (2006) evaluates German EPC activity in 2006 at 750 million Euros. Otherwise this activity

is estimated around 350 million Euros per annum (in the public sector alone) by considering

the value of the energy savings.

The difference between these evaluations comes first from the differences in the

methodologies used (investments vs savings value) but also refers to the distinction between

ESCOs‟ activity and the activity resulting from EES or EPC supply. Indeed, the

characterization of ESCO differs from one country to another: in several countries ESCOs do

not provide only EES but also renewable energies projects like CHP or photovoltaic

installations, which are more capital intensive projects than EES or EPC projects and thus

make the turnover of these firms growing fast.

In the same way associated activities like engineering studies or equipments supply do not

always deal with energy efficiency improvement measure and it seems tricky to distinguish

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the activities which address EE improvement measure and those which do not. Finally, EES

are not provided only by „pure‟ ESCO but also by energy providers or equipment installers,

which can appear as ESCO although their EES or EPC supply is only a fringe activity (see

Bertoldi et al. 2007).

Finally, Goldman et al. (2002) proposes an evaluation of US ESCO industry based on the

declared (on a voluntary basis) revenues of ESCO‟s projects. The availability of this

consistent database allowed them to evaluate US ESCO industry activity between 1 800 and

2 100 million USD, whereas energy performance contracting volume is ranged between

900 and 1 200 million USD, that is to say that EPC represents one half of ESCOs‟ activities.

Unfortunately such homogeneous data do not exist for EU-27.

In order to provide some strategic and useful indications to EES suppliers we propose rather

to focus on the economic potential of energy savings that may be reached by the energy

efficiency improvement measures carried out by EES. The proposal of ChangeBest project is

thus to price the economic potential of energy savings with the available final customers‟

tariff index: in this way, the potential market volume for energy efficiency services in different

demand sectors may be identified, since energy services products will mostly cover

economic energy savings potentials. In the following of this document we hence refer to “a

market open to energy efficiency services”, which is assumed to be the market generated if

the identified economic energy saving potential were delivered by supplying EES.

Finally note that whatever the implemented methodology and the according results (whether

the results presented in this part coming from the literature or our own results presented in

the following parts of this report), energy savings reached by EES have to be considered as

additional energy savings by comparison to a business-as-usual scenario. Indeed, energy

efficiency improvement measures are already realised without the support of EES because

they are cost-efficient and comply with the market conditions of the various end-users. These

running energy savings are not supposed to be a target1 for EES which will be implemented

only if the economic conditions for an energy efficiency measures are not suitable and need

to be supported by energy performance contracting for instance.

1 Note that these existing running energy savings may be targeted by EES but without any added

value: energy savings and associated valuation have to be considered as “low hanging fruits” and as a

windfall for EES providers. We thus exclude this opportunities from our analysis.

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4 Evaluation of potential market open to new EES

4.1 Evaluation of energy efficiency policy measures

Different studies aimed to quantify the consequences of more or less ambitious energy

efficiency policy measures trough prospective models (PRIMES for instance) based on data

from existing policy measures, as it can found in MURE or ODYSSEE projects. According to

the energy services Directive (ESD), energy services support has to be considered by

Member States as one of the energy efficiency policy measures which may give substantial

energy efficiency improvement. In this part we propose to evaluate EES potential market as

the value generated by the additional2 energy savings in the coming years: we assume that

this value results from an additional diffusion of efficient technologies associated to

refurbishment actions within the existing stock thanks to the development and the diffusion of

EES products.

MURE database and ODYSSEE indicators have been exploited for the realisation of the

“Study on the Energy Savings Potential in EU Member States, Candidates Countries and

EEA Countries” led by the Fraunhofer Institute in 2008. This study explores the energy

consumptions and economic energy potentials by 2020 trough a harmonised methodology

applied to all Members states and Candidates countries for the residential, industry and

tertiary energy end-use sectors.

All data are available on an on-line database (www.eepotential.eu) which allows us to extract

the energy consumption and energy savings potential of given end-use sectors in a

harmonised way between EU-27 countries. In the framework of our analysis we focused on

the promising sector for EES which have been identified in the task 2.1 of this project (see

Labanca (2010)). Transport sector is thus excluded as well as electric appliances in

households (like TV, refrigerators, washing machines, lighting, etc.) and tertiary sector (like

computers, servers, IT appliances).

Finally we considered the following end-use sectors probably containing potentials for EES

implementation. We assume that the potential market open to EES is located in existing

stocks and is constituted by additional energy savings potential by comparison to the

autonomous scenario in which energy savings are already being realised. As far as the data

are available we thus attempt to consider the following end-use sectors:

Industry3:

o Heat generation;

o Electrical appliances (pumps, fans, compressors, etc.) ;

o Industrial processes (ovens, blast furnaces, etc.)

2 Additional energy savings have to be understood as savings generated by new policy measures: that

means that energy savings generated by early measures (i.e. measures implemented before the ESD

implementation) are not considered in this evaluation.

3 Potential for Industry only refers to potentials tackled by the Energy Services Directive: potentials

covered by the EU-ETS are so excluded from this analysis.

http://www.eepotential.eu/

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Residential45:

o Heating;

o Water heating;

Tertiary

o Heating;

o Street lighting;

o Indoor lighting;

o Ventilation;

o Commercial freezing and refrigeration;

o Other electric motors.

Fraunhofer-Institute et al (2008) have evaluated energy consumption projections by crossing

different scenarios of economic and market conditions and different projections of technology

and policy drivers. Four different scenarios have been considered and named: “autonomous

progress”, “low policy intensity”, “high policy intensity” and “technical” scenarios.

Within the “autonomous progress” scenario, the consumption determinants (technology

diffusion, buildings and equipments refurbishment rates, etc.) are determined under cost-

effectiveness conditions for the final customers with usual market conditions and by

considering the current and earlier energy policies and technological progress. This scenario

is the Business-As-Usual (BAU) scenario (or “reference scenario”) for calculating energy

savings achieved within the other three scenarios. Forthcoming amounts of energy savings

considered in this report have been estimated by using this reference scenario and have thus

to be regarded as additional savings.

The “low policy intensity” scenario wants to represent the energy saving that can be achieved

against the “autonomous progress” scenario with the best available technologies which are

economic for the consumer under the usual market conditions of today and reflecting the

cost-effectiveness criteria of the consumers by assuming a real discount rate of 8-15%. It has

been considered that the diffusion of the best available technologies is driven by increases of

energy prices and a low intensity level of energy efficiency policies in the Member States.

The “high policy intensity” scenario wants to represent the energy savings that can be

achieved with the best available technologies which are economic for the whole country, this

being reflected in an assumed discount rate of 4% for the consumers. Moreover, the diffusion

of best available technologies is driven by a major energy efficiency policy effort (supposed

to remove existing barriers and reduce transaction costs).

4 Electrical appliances are excluded from our analysis

5 Only the energy savings potential from refurbishment of existing building is considered. Energy

savings from the implementation of new thermal regulation or improvement of buildings codes are so

excluded from our analysis.

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Finally the “technical scenario” gives the energy savings amount achievable with the best

available technologies and practices whatever the investment costs and the energy prices.

Within this present work we use the different outputs from the four scenarios in order to

evaluate the yearly market open to EES, which can be defined as the annual value of energy

savings susceptible to be tackled by EES. In a first part, we have used data from “low policy

intensity” and “high policy intensity” scenarios as one basis for an estimate specifying a

range of the considered economic EE potentials. In a second part, we have exploited the

outputs from the technical scenario to build an alternative approach based on the contract

durations accepted by the market.

4.2 Evaluation of additional economic energy savings open to EES

Evaluations presented in this document section are performed by assuming that future end-

users‟ investments on EES will be mainly driven by cost-effectiveness of the investment for

the energy end-users. In the low policy intensity scenario, it is assumed that future energy

efficiency policies or actions undertaken to overcome existing EES market barriers will only

play a minor role in investment decisions, contrary to the high policy intensity scenario in

which investments are driven by a lower discount rate leading to a higher refurbishment rate

and penetration rate for high efficient equipments.

Calculations have been realised on the basis of outputs of Fraunhofer-Institute et al (2008)

and of some additional inputs from the author, in particularly to extract the electricity and

fuels energy savings from the existing stock improvement. Based on these data, the

additional energy savings potential which is susceptible to be tackled by EES in EU-27 in all

end-uses has been estimated between 582 TWh and 934 TWh in 2020 by comparison with

the autonomous scenario (see Table 1).

In both scenarios electricity savings are less important than fuels savings as they represent

between 33% and 43% of the identified overall energy savings. This characteristic is quite

understandable in particularly in the residential sector because in our scope we do not

account electrical appliances which do not have been identified as suitable for EES. This

exclusion decreases deeply the electricity savings for the residential sector whose savings

come thus only from heating savings (and domestic hot water savings). As at the European

level the electricity consumption for heating is very lower than the fuels consumption the

electricity savings are lowered as well.

Moreover, in the residential sector, the difference between electricity and fuels savings might

be explained by two ways. Firstly, the energy performance of direct electric heating systems

can only be improved marginally as their energy efficiency is considered to already be 100%

by Fraunhofer Institute et al. (2008). Secondly the considered improvement alternative of

existing electric heating systems is the implementation of heat pumps. But this energy

savings option is not widely implemented in existing buildings which are heated by electric

systems because of the high investments costs to provide the heat pump and the associated

heated water distribution network. Finally, heat pumps might substitute old fuel and gas

boiler which is the most favourite situation for implementing such heating systems. In that

case, a significant amount of fuels consumption is substituted by electric consumption which

decreases the overall electricity savings.

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A huge difference between the results of both scenarios may be observed in the residential

sector too. This gap comes from the various assumptions taken for the performance of

insulation for building refurbishment which is improved under the HPI scenario with respect

to the LPI scenario thanks to the enhancement of building standards for refurbishment. In

other words the energy savings in HPI scenario come more from the refurbishment of shell

buildings than from other energy efficiency improvement actions by comparison to the LPI

scenario: the contribution of the heating systems‟ improvements to the overall final thermal

energy savings decreases from 39% in the LPI scenario to 29% in the HPI scenario (see

Fraunhofer Institute et al. (2008)).

Table 1: Additional6 energy savings potential in 2020 for EU-27 (based on Fraunhofer Institute et al. 2008 and

author‟s own calculations)

End-use

sectors

Electricity savings

(TWh)

Fuels savings

(TWh)

Overall energy savings

(TWh)

LPI

scenario

HPI

scenario

LPI

scenario

HPI

scenario

LPI

scenario

HPI

scenario

Industry 116.7 169.2 96.3 110.7 212.9 279.8

Residential7 14.6 21.2 125.4 357.6 140.0 378.9

Tertiary 116.7 117.7 112.4 157.3 229.1 275.1

All sectors 248.0 308.1 334.0 625.6 582.0 933.8

Some illustrations of the energy savings origin are presented in the following. We present

figures within the low policy intensity scenario but figures within high policy intensity scenario

are quite similar.

6 Energy savings are “additional” because they are calculated by comparison with the autonomous

scenario (energy savings coming from already implemented measures are not accounted)

7 Includes energy savings from heating and water heating only: energy savings from electrical

appliances are excluded.

19


Figure 4 : Additional energy savings potential in EU-27 Industry by 2020 within LPI scenario – Sharing by

industrial branch

10.0%

3.2%

24.0%

6.3%

24.2%

16.1%

16.1%

Total energy savings potential in industry - Sharing by branch

Iron and steel

Non ferrous metals

Chemical industry

Non-metallic mineral products

Paper and printing

Food, drink and tobacco

Engineering and other metal

These above figures have been assessed on the LPI scenario outputs by Fraunhofer Institute et al. 2008

In the Industry sector, the highest potential may be found in chemical industry and paper

industry, which represent both one quarter of the overall potential (see Figure 4). Food and

engineering sectors represent together one third of EU-27 energy saving potential in the

industry sector by 2020, whereas saving potentials from traditional steel and iron industries

are rather low.

Figure 5 shows that the highest potential for energy savings (more than one half of the total)

in the industrial sector derives from the improvement of electrical motors and the

refurbishment of lighting installation. The second highest potential (around a third of the total)

comes from the improvement of heat generation devices whereas industrial processes

represents only 12% of the overall energy savings potential in Industry.

20


Figure 5 : Additional energy savings potential in EU-27 Industry by 2020 – Sharing by end-use

32.3%

55.8%

11.8%

Total energy savings potential in industry - Sharing by end-use

Heat generation

Motors and lighting

Process technologies


As we may expect, Figure 6 shows how large is the potential of energy savings of the

heating systems in EU-27 households sector. According to our outputs, more than 80 % may

be reached by building refurbishment (i.e. with insulation and heating devices improvement)

whereas the other part may come from the improvement of sanitary water heating devices.

As we already mentioned, the huge difference between electricity and fuels savings comes

first from the relative weight of both energies in the overall heating consumption at the

European level and secondly from the various assumptions which have been taken in the

simulations lead by Fraunhofer Institute et al. (2008): fuels savings for heating come thus

from the refurbishment of insulation, the improvement of existing boilers through the

penetration of condensing boilers and the substitution of existing boilers with heat pumps

21


Figure 6 : Additional energy savings potential in EU-27 Households by 2020 – Sharing by end-use (Electric

appliances excluded)

12.5%

73.4%

2.3%

11.8%

Total energy savings potential in existing households - Sharing by end-use

Heating - Electricity

Heating - Fuels

Sanitary water heating - Electricity

Sanitary water heating - Fuels


Figure 7 indicates that the highest energy saving potential in tertiary sector may be found in

HVAC systems: heating, air conditioning and ventilation represent together around 70 % of

the total potential in this sector. Lighting system refurbishments still represents 20% of the

total saving potential despite lighting improvement actions are already quite usual nowadays.

Figure 7 : Additional energy savings potential in EU-27 Tertiary sector by 2020 – Sharing by end-use

49.1%

4.2%

15.6%

7.8%

10.1%

9.2%

4.1%

Total energy savings potential in Tertiary sector - Sharing by end-use

Heating (fuels)

Street lighting

Office lighting

Commercial refrigeration and freezing

Fans (no air con)

Air conditioning (central)

Other motor appliances


22


By pricing the above reported saving potentials with final customers‟ tariffs, an evaluation of

the potential yearly market open to EES may be drawn. Final customers‟ tariffs have been

extracted from EUROSTAT database for each energy, customer type (industry, households

and tertiary) and country. We have calculated for each sector mean customers‟ tariff (see

annexe 2). For this evaluation, we do not consider any inflation rate and results are

expressed in constant Euros of year 2010.

Within these assumptions, the additional yearly market open to EES by 2020 represents

around 2 140 million Euros within the LPI scenario assumptions and around

3 180 million Euros within the HPI scenario assumptions. The detailed outputs for yearly

additional market open to EES for each EU-27 country are presented in Table 2 hereafter.

Table 2: Yearly EU-27 additional market open to EES until 2020 (range features are based on LPI and HPI

scenarios)

LPI scenario HPI scenario LPI scenario HPI scenario LPI scenario HPI scenario LPI scenario HPI scenario

Austria 15.3 16.3 13.3 31.8 17.4 19.1 46.1 67.2

Belgium 22.5 23.2 36.3 83.2 17.3 18.9 76.1 125.3

Bulgaria 6.1 6.6 3.5 6.4 5.6 6.2 15.1 19.1

Cyprus 0.6 0.5 0.6 0.8 1.7 1.8 2.9 3.2

Czech Republic 29.4 29.6 10.5 19.7 16.1 20.6 56.1 70.0

Denmark 9.4 9.7 20.4 41.5 15.7 17.7 45.6 68.9

Estonia 1.2 1.3 1.3 2.4 1.4 1.5 3.8 5.2

Finland 26.9 29.6 6.6 11.5 9.8 10.3 43.3 51.3

France 62.3 67.6 38.8 292.8 95.2 103.9 196.3 464.2

Germany 164.7 171.2 165.9 446.9 165.0 182.6 495.7 800.8

Greece 7.8 8.1 8.1 16.4 21.3 23.3 37.2 47.8

Hungary 6.3 6.2 10.8 17.6 12.4 16.4 29.5 40.2

Ireland 11.3 11.4 3.0 6.6 12.7 13.4 27.0 31.4

Italy 100.2 98.7 54.9 127.7 94.8 104.5 250.0 330.9

Latvia 2.1 2.3 0.9 1.5 2.0 2.2 5.0 6.0

Lithuania 2.5 2.8 1.5 3.1 2.9 3.4 6.9 9.3

Luxembourg 2.9 3.2 0.8 1.5 1.4 1.5 5.1 6.2

Malta 0.5 0.5 0.3 0.4 0.8 0.9 1.6 1.8

Netherlands 26.7 28.5 12.2 36.2 37.2 39.9 76.0 104.6

Poland 33.4 34.7 40.3 78.4 35.9 50.8 109.6 163.9

Portugal 11.5 11.4 5.7 14.9 13.5 14.9 30.6 41.2

Romania 21.1 22.4 3.8 14.0 11.3 15.0 36.2 51.4

Slovak Republic 9.7 9.1 8.1 13.8 8.7 11.5 26.5 34.4

Slovenia 6.7 7.2 1.9 4.8 2.7 3.1 11.3 15.1

Spain 59.4 65.9 27.6 42.8 86.8 91.5 173.9 200.2

Sweden 47.1 52.6 18.5 35.5 20.4 21.3 86.0 109.4

United Kingdom 89.4 90.7 31.0 85.7 127.0 136.4 247.4 312.7

Total 777.2 811.1 526.5 1 438.0 837.1 932.7 2 140.8 3 181.8

Industry (M€) Households (M€) Tertiary (M€) Total (M€)

The accessibility for EES providers to the potential markets mentioned above differs thus

from one end-use sector to another because of various reasons: lack of awareness,

knowledge or understanding, short-term view (short paybacks), high transaction costs, lack

of financing, etc. For example Vine (2005) showed that ESCOs do not target the different

end-use sectors in the same way. By summarising his conclusions, one can say that very

few ESCOs target residential sector, whereas the commercial, public and mostly industry

sector are much more represented within ESCOs activity.

23


Several policy measures could be implemented (see Boonekamp et al. (2010)) in order to

enhance the accessibility to the EES market for new EES providers (awareness raising,

transaction costs lowering trough accreditation and certification schemes, financing support

for investments, etc.) but economic criteria like payback time would probably be scarcely

affected by these measures and be mostly driven by the economic acceptability of customers

and EES providers. As investment payback times influence strongly the contracting

opportunities between a customer and an EES provider, especially if the EES is supplied by

EPCs with the shared savings clause, we propose in the following to evaluate the

accessibility of the additional market open to EES by considering the payback of energy

efficiency actions. We assume thus that a required condition for the implementation of EES is

that its commitment duration covers – at least – the payback time of the efficiency

improvement action

4.3 Potential market open to EES – Evaluation by payback times of energy

efficiency actions in the residential and tertiary sectors

In the “technical scenario” of Fraunhofer Institute et al (2008) the potential of energy

efficiency improvements has been evaluated by assuming that the additional energy savings

are obtained through the refurbishment of equipments and buildings or the penetration of

improved buildings codes and regulations whatever the costs and prices of technologies and

energies: the best available technologies are always implemented regardless of any

economic consideration except the capability of actual markets to suit with a high

improvement rate in the following decade. It represents thus the field of energy savings from

pure technical improvement: in the following part of this report we will call them “technical

energy savings”.

In the following it is assumed that the diffusion rates of best available technologies are

speeded up to their maximum feasible. The estimations of current and further stocks of

equipments or buildings have been extracted from existing surveys. This technical scenario

considers only existing and standard technologies (no micro CHP for instance) whose

characteristics are defined by the current technological and policy context. We assume that

this improvement and corresponding additional energy savings may be realised through the

implementation of EES.

In this part we based our analysis on the one hand on the technical potential of energy

savings from Fraunhofer Institute et al. (2008) and on the other hand on one fundamental

economic criterion which is the payback time. The aim is to disaggregate the overall

technical potential according to the payback time of the different energy efficiency actions in

order to make emerge their relative acceptability by the market actors (EES providers and

customers). For each energy efficiency action (insulation, boiler refurbishment, etc.) we have

estimated the corresponding average payback time in each EU-27 country on the basis on

the average energy savings and energy costs in each country. We have thus obtained an

alternative evaluation of energy savings potential which may be reached throughout EES

implementation according to the payback time of energy efficiency action which is supposed

to be the minimum duration of EPCs. By pricing this potential with the same methodology

used in part 4.2, we obtained thus an alternative evaluation of yearly market open to EES.

24


As we did not get disaggregated data about potential of energy efficiency improvements for

each typical energy efficiency action in the different end-use sectors, they have been

estimated by considering the typical energy savings that can be achieved for each energy

end-use. These typical energy savings have been estimated with features coming from

existing surveys (in particularly from the EcoDesign studies which have been directed for

preparing the EuP Directive) or collected by ChangeBest national experts, from database

used by Fraunhofer Institute et al. (2008) and author‟s data.

Payback times of the possible EE improvement actions in the end-use sectors considered

have been estimated based on a simplified technical- economic analysis. Investments costs

and the economic value of energy savings have been evaluated by taking into account the

variety of economic context of the Member States (energy prices and labour and equipment

costs). In the same way the technical variety (and thus energy savings variability) has been

represented by taking into account the main technical parameters for energy savings

evaluation We thus consider the performance of buildings and equipment stocks in each

country and the energy end-use needs as well as the main explicative variables of these

energy end-use needs: heating degree-days for heating, working hours for motors, pumps,

and fans, operative hours for lighting.

Because of the lack of data and in particularly of harmonised data for all EU Members, the

industry sector could not be studied with the methodology we have proposed. For this sector

reliable information on EE improvement action implementation costs is lacking as well as for

the technical data regarding the consumption of energy end uses and its variations. Contrary

to the residential and tertiary sectors, in which equipments are well standardised, the

industrial sector is indeed characterised by highly differentiated and context specific

installations and technologies depending of the various processes which are running. In this

situation costs and disaggregated energy savings technical potential assessments are much

trickier.

For these reasons EES providers have developed specific products for entering this sector,

and have to adapt their technical solutions to this variety of processes and equipments. Note

that moreover this sector is anyway well penetrated by EES products (see Labanca (2010)).

4.3.1 Residential sector

The energy efficiency measures which have been considered address EE improvement

actions related to the refurbishment of insulation (walls, roof, ground, windows) to comply

with the EPBD standard, the replacement of existing boilers by condensing gas boilers and

the substitution of existing direct electric heaters with heat pumps. The technical and

economic values used for performing the analysis have been extracted from ECOFYS

(2005), PU Benefs (2005), Bleyl-Androschin (2009), Fraunhofer Institute et al. (2008) and

data from ChangeBest national experts and author.

25


The Table 3 summarises the main data which have been used and the range of our results in

terms of payback times.

Table 3: Data for the technical and economic analysis of energy efficiency measures in the households sector

(EU-27 average value)

Energy efficiency

improvement measure

Energy efficiency

improvement

(EU-27 average)

Lifetime Payback

(EU-27 range)

Wall insulation 30 % 25 years 3 – 25 years

Ground insulation 10 % 25 years 7 – 27 years

Roof insulation 20 % 25 years 2 – 14 years

Windows replacement

(double glazing)

10 % 20 years 8 – 20 years

Condensing boiler (multi-

family buildings)

15 % 15 years 2 – 10 years

Condensing boiler (single-

family buildings)

15 % 15 years 8 – 20 years

Heat pumps 70 % 15 years 4 – 20 years

Payback time ranges therein reported reflect the diversity of EU Member states climates,

energy prices, building stock characteristics and economic context (in terms of labour and

material costs).

Figure 8 illustrates the results of the technical and economical analysis which has been

performed. For each typical energy efficiency action and for each country, the technical

energy savings potential and the associated average payback time have been established.

These national technical potentials have been sorted by rising payback time and cumulated

in order to represent EU-27 “offer curve” of technical energy savings according to their

payback time. We represent in the Figure 8 the different cumulated on EU-27 technical

potentials for each energy efficiency action considered.

One can note that the largest potential could come from wall and roof insulation. Both energy

efficiency measures can be obtained with short payback times in the countries with moderate

or warm climates. The potential is less open in colder climates because of the better quality

of existing insulation solutions.

Boiler replacement has a short payback time and represents hence a very open EES market

potential, mostly in multi-family buildings for which payback times are very short (less than 5

years for most countries). Heat pumps have also short payback times but their energy saving

potential is smaller. Note that heat pumps have only been considered as an energy efficiency

option in existing buildings and not in new buildings in which heat pumps are expected to

save much more energy by comparison to the business-as-usual scenario (new buildings are

excluded from this survey).

26


0

20 000

40 000

60 000

80 000

100 000

120 000

140 000

160 000

180 000

200 000

0 5 10 15 20 25 30

Tech

nic

al p

ote

nti

al o

f en

erg

y sa

vin

gs (G

Wh

)

Payback (years)

Wall insulation

Roof insulation

Ground insulation

Double Glazing

Condensing boiler in single-family buildings

Condensing boiler in multi-family buildings

Heat pumps

Finally, double glazing8 and ground isolation represent a non negligible potential but their

payback times seem to be too long to be considered as open potential for EES (more than

ten years).

The overall energy savings technical potential of the considered energy efficiency measures

in the residential sector represents around 555 TWh in 2020 whatever the payback time. If

we translate these figures in terms of yearly market, we have estimated that the yearly

potential market open to EES is around 2 250 million Euros (see Figure 9). But that would

imply that some EES contracts are stipulated for more than 25 years which seems fairly

unrealistic. If we order these technical potentials by their corresponding payback times we

can note that this yearly potential market open to EES could reach 600 million Euros if EES

contracts are limited to 4,5 years which is close to the lower bound of the range from our

previous results (see Table 2).

But this analysis shows how, if EES could be offered on a longer period thanks to suitable

policy measures or by providing new types of EES (in particularly long-term contracting), a

much higher potential could be exploited (see Figure 9): with less than 8 years contracting,

the annual EES potential market open to EES rises to 1 600 million Euros which is coherent

8 The thermal performance of windows frames have not been taken into account: the energy savings

only come from the glazing improvement.

Figure 8 : EU-27 cumulated additional energy savings from various EE measures according to their payback time in

the residential sector

27


to the upper bound of the range shown in Table 2). Moreover, 8 years contracting allows

exploiting more than 70 % of the technical potential which has been evaluated. That

highlights the great accessibility of this market, if we consider that the 8 years is an

acceptable time horizon for households.

Figure 9 : Potential yearly EU-27 market open to EES according to their commitment duration for the household

sector9

0

250

500

750

1 000

1 250

1 500

1 750

2 000

2 250

2 500

0 5 10 15 20 25 30

Year

ly m

arke

t (M

€)

Payback of energy efficiency measures (years)

Potential yearly EES market in households

4.3.2 Tertiary sector

A methodology similar to the one considered for the residential sector has been implemented

for the estimate of the market potential related to the following energy efficiency measures in

the tertiary sector:

- Ventilation: motor resizing, replacement of existing fans by optimized fans

- Commercial refrigerating : replacement by improved equipement

- Indoor lighting : improved luminaries

- Public lighting

- Building insulation improvement

9 This figure represents the cumulated value of the various EE measures in EU-27 countries. The

cumulated potential from the various EE measures showed in Figure 8 have been sorted by rising

payback time and then valuated with average customers‟ tariffs. We thus obtain the “offer curve” for

EU-27 sorted with rising payback time.

28


- Heating devices performance improvement (mainly gas boiler).

For heating, ventilation, commercial refrigerating and lighting, the energy efficiency

improvement measures have been evaluated by considering the average standard materials

and equipments available on the market as baseline. On the contrary, the energy efficiency

measures for insulation are evaluated by considering the performances of the building stock

as baseline (new buildings are hence excluded in our estimates).

The technical and economic values used for performing the analysis have been extracted

from ECOFYS (2005), Monnier et al. (2007), Ragden et al. (2008), Van Tichelen et

al. (2007a), Van Tichelen et al. (2007b), Fraunhofer Institute et al. (2008), and data from

ChangeBest national experts.

The Table 4 summarizes the main data which have been used and the range of calculated

payback times. Payback time ranges reflect the diversity of EU Member states climates,

energy prices, building stock characteristics and economic context (in terms of labour and

material costs).

Table 4 : Data for the technical and economic analysis of energy efficiency measures in the commercial sector

(EU-27 average value)

Energy efficiency

improvement measure

Energy efficiency

improvement

(EU-27 average)

Lifetime Payback

(EU-27 range)

Wall insulation 30 % 25 years 4 – 25 years

Ground insulation 12 % 25 years 6 – 28 years

Roof insulation 20 % 25 years 3 – 14 years

Windows replacement

(double glazing)

8 % 20 years 7 – 18 years

Condensing boiler 15 % 15 years 1 – 10 years

Fans replacement 30 % 0.8 – 2.5 years

Commercial refrigeration

upgrading

35 % 9 years 1.6 – 4 years

Office lighting (lamps +

luminaires)

45 % 20 years 2.2 – 6 years

Street lighting (lamps +

luminaires)

60 % 20 years 2.4 – 6.3 years

Figure 10 shows the various technical potentials of considered energy efficiency

improvement measures and their payback times. As for the residential sector, wall and roof

insulation represent a high technical potential available with a relatively short payback time

(less than 10 years for 95% of the overall energy savings potential from roof and wall

insulation) in countries with warm or moderate climates. Also for the tertiary sector this

potential is more difficultly exploitable in colder climates because of the better quality of

existing insulation solutions.

29


Ventilation improvement represents a high energy savings potential too with very short

payback time (less than 3 years). The improvement options on fans are very cost-efficient

because they mainly rely on the improvement of electric motors by highly efficient motors

and on the use of inverters for managing the needed power for ventilation. In the same way,

the improvement options for commercial freezers are cost-efficient: energy savings in

commercial refrigeration are available with payback times under 3 years for 75 % of the

overall technical energy saving potential. Finally technical energy savings potential for office

lighting is very high (2 900 TWh) and the improvement measures are quite cost-efficient

(payback time between 2 and 6 years).

On the contrary street lighting and double glazing represent a moderate energy savings

potential and are mainly available for payback time over 10 years.

By adding all these cumulated potentials as it has been done for the residential sector, the

overall technical potential of energy savings reaches 314 TWh whatever the payback time.

By pricing these potentials the corresponding value is around 14,7 billion Euros, which

corresponds to a yearly market of 930 M€ (see Figure 11). One can note that more than one

half of this potential is available with a payback time inferior to 4 years, whereas the yearly

market available for EES with payback times below 10 years reaches 820 M€.

As for the residential sector, a large part of the additional technical energy savings potential

for the tertiary sector could be exploited by considering EES with payback times reasonably

short: most part of this potential could be available by EES with payback times below 10

years.

Figure 10 : EU-27 cumulated additional energy savings from various EE measures according to their payback

time in the tertiary sector

0

10 000

20 000

30 000

40 000

50 000

60 000

0 5 10 15 20 25 30

Tech

nic

al p

ote

nti

al o

f en

erg

y sa

vin

gs (G

Wh

)

Payback time (years)

Wall insulation

Roof insulation

Ground insulation

Double glazing

Condensing boilers

Ventilation

Commercial refrigeration

Office lighting

Street lighting

30


These figures show that potential market open to EES is quite accessible but hard to improve

with the actual scope of technical options. The improvement of technical and economic

conditions between the assumptions of LPI and HPI scenarios, like the enhancement of

building refurbishment rate or the lowering of discount rate, only has a weak influence on the

potential market. As explained by Fraunhofer et al. (2008) this output may be explained by

the fact that the EuP studies, which provide most of the collected data for processing the

energy savings, consider for each end-use the technical options with the lowest life cycle

cost. As a consequence the data for the different scenarios (LPI, HPI and technical) in

Fraunhofer et al. (2008) are quite similar from one scenario to another which explains how

outputs from LPI and HPI are so close.

Figure 11 : Potential yearly market open to EES according to their commitment duration for the tertiary sector

0

100

200

300

400

500

600

700

800

900

1000

0 5 10 15 20 25 30

Year

ly m

arke

t (M

€)

Payback (years)

Potential yearly market in tertiary sector

31


5 Conclusion

With this report we aim to contribute to give some figures on the potential market opne to

energy efficiency services. Our evaluations have been based on the main added value of

such EES, that is to say the additional energy savings achieved through these services. As

we deal within ChangeBest with new or promising EES, which are susceptible to bring

additional energy savings, we do not consider energy savings which are expected to be

achieved with existing energy policies or according to the business as usual trends. Based

on existing studies – mainly the evaluation of energy savings potentials in EU Members

performed by Fraunhofer et al (2008) and the EcoDesign studies – and some additional data

from ChangeBest national expert and the report author, the energy savings evaluation wants

to represent additional energy savings achievable with enhanced refurbishment of existing

solutions and market penetration rate of best available equipments and materials. By

crossing both technical and economic features of energy savings potentials which are

susceptible to be achieved with suitable EES we build two representations of potential

market open to EES.

First, by considering that EES may be a large contributor to additional energy savings in an

improved policy context, we established a range for the possible additional EES market

volume. Let‟s remind us that in both evaluations, we only consider the energy efficiency

improvement of existing stocks. Secondly, we analysed the technical potential of energy

savings and their corresponding payback time. By assuming that EES contracts have to last

an equivalent time period in order to allow to the EES providers to find cost-efficiency, we

draw an order picture of potential market open to EES based on the contract durations

accepted by the market.

Within both above mentioned analysis frameworks we have estimated the potential market

open to EES in the EU-27 until 2020. The first analysis shows that even in an improved

energy policy context, the potential market open to EES could not rise over about 1 440 M€

and 930 M€ respectively for the residential and the tertiary sector (see table 5).

Table 5: Evaluation of EES market potential in EU-27 based on LPI and HPI scenarios - Summary

Additional market for energy efficiency services according to future

energy policies‟ impact

(yearly market in M€)

LPI scenario HPI scenario

Residential 527 1438

Tertiary 837 933

Total 1364 2371

But the second analysis shows that a this market volume could be tackled with EES contract

duration inferior to 8 years (see Table 6) which seems not to be unrealistic. Moreover a very

accessible additional market open to EES, which considers the energy efficiency measures

32


with a payback time below 3 years, has been estimated at around 540 M€ per year until 2020

(see Table 6). Finally one quarter of the estimated value of the technical energy saving

potential could be considered as less accessible in the sense that the corresponding

payback times are greater than 8 years which are not yet widely contract duration (see Table

6). In the residential sector these additional energy savings can not be achieved even with an

improved policy context (HPI scenario).

Table 6: Potential of the market open to EES in EU-27 evaluated by payback times (PBT) of energy efficiency

actions - Summary

Additional market for energy efficiency services according their

accessibility

(yearly market in M€)

Very accessible

(PBT < 3 years)

Accessible

(3 years <PBT< 8 years)

Less accessible

PBT > 8 years

Residential 194 1450 795

Tertiary 348 450 125

Total 542 1 900 920

This analysis showed how large could be the potential market for new EES in EU-27: starting

from a very accessible market evaluated at 542 M€ per year up to 2020, this market may

represent about 2,4 billion Euros per year for the residential and tertiary sectors (see

Table 6) if the coming EES products focus on the implementation of the best available

technologies in these sectors and longer associated contract duration up to 8 years are

accepted by the actors.

33


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35

Annexe : Final energy prices

Data by Fraunhofer Institute et al. (2008) do not allow distributing the energy savings

among the different customers types, especially in tertiary and industry sector in

which energy prices may vary a lot from one customer to another one according to

their size. This is why we arbitrarily define mean customers in order to determine

energy prices in each country and represent the energy price diversity among EU-27.

- Industry

o Gas : type I4, yearly consumption between 100 000 GJ and

1 000 000 GJ;

o Electricity, type IF, yearly consumption between 70 000 MWh and

150 000 MWh;

- Tertiary

o Gas : type I2, yearly consumption between 1 000 GJ and 10 000 GJ;

o Electricity : type IC, yearly consumption between 500 MWh and

2 000 MWh;

- Residential

o Gas: type D1, yearly consumption under 20 GJ

o Electricity: type DD, yearly consumption between 5 000 kWh and

15 000 kWh

Energy prices extracted from Eurostat are given in the following table and expressed

in € (without taxes) for the 2nd semester of year 2007. Missing data have been

substituted by EU-27 mean value (italic figures).

Country Residential Industry Tertiary

Electricity

(€/kWh)

Gas

(€/kWh)

Electricity

(€/kWh)

Gas

(€/kWh)

Electricity

(€/kWh)

Gas

(€/kWh)

Austria 0.118 0.056 0.025 0.060 0.077 0.038

Belgium 0.113 0.063 0.026 0.057 0.085 0.034

Bulgaria 0.059 0.026 0.016 0.038 0.056 0.019

Cyprus 0.135 0.055 n.a. 0.113 0.085 0.033

Czech

Republic 0.072 0.046 0.023 0.067 0.095 0.026

Denmark 0.087 0.108 0.020 0.071 0.077 0.049

Estonia 0.063 0.033 0.017 0.033 0.052 0.019

Finland 0.074 0.055 0.022 0.042 0.056 0.033

France 0.081 0.082 0.026 0.043 0.052 0.035

36


Country Residential Industry Tertiary

Electricity

(€/kWh)

Gas

(€/kWh)

Electricity

(€/kWh)

Gas

(€/kWh)

Electricity

(€/kWh)

Gas

(€/kWh)

Germany 0.119 0.064 0.028 0.072 0.089 0.038

Greece 0.110 0.055 0.025 0.060 0.079 0.033

Hungary 0.099 0.032 0.025 0.059 0.100 0.032

Ireland 0.153 0.096 0.025 0.103 0.124 0.039

Italy 0.108 0.051 0.026 0.065 0.085 0.034

Latvia 0.069 0.028 0.027 0.043 0.059 0.029

Lithuania 0.070 0.031 0.021 0.056 0.074 0.024

Luxembourg 0.131 0.040 0.025 0.065 0.093 0.031

Malta 0.122 0.055 0.025 0.065 0.122 0.033

Netherlands 0.119 0.065 0.027 0.076 0.086 0.036

Poland 0.079 0.042 0.023 0.044 0.084 0.030

Portugal 0.119 0.079 0.021 0.050 0.073 0.039

Romania 0.096 0.023 0.023 0.057 0.091 0.023

Slovak

Republic 0.093 0.069 0.027 0.074 0.105 0.030

Slovenia 0.080 0.049 0.024 0.065 0.087 0.038

Spain 0.106 0.060 0.024 0.053 0.091 0.026

Sweden 0.090 0.067 0.034 0.051 0.065 0.045

United

Kingdom 0.128 0.037 0.021 0.082 0.103 0.031

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