Increasing Urban Energy Supply through Energy Efficiency

1. Increasing Urban Energy Supply through Energy Efficiency UN Symposium on Sustainable Cities

2. Cities need energy to grow • Cities economic growth is constrained by inadequate electricity supply • Brown outs and load shedding are a fact of life in many cities • Generators are ubiquitous • New energy infrastructure is expensive • Urban poor are under-served

3. Energy efficiency increasesenergy supply • Energy efficiency = boosting energy productivity • Lowest cost source of energy; using energy more efficiently, not wasting it • Energy demand in developing countries growing at 3.4% annually • Energy efficiency could cut energy demand in half to 1.4% per year • Would reduce energy demand by 25% by 2025 • Time is of the essence: 50% of capital stock (buildings) will be constructed or refurbished in next 20 years • Implementing optimal energy efficiency can lock in energy savings for decades

4. Scope for urban energy efficiency • Energy efficient building codes to cover HVAC, lighting and thermal insulation • Street lighting, stop lights • Sizing of pumps for water and sanitation • Green procurement: only energy efficient products • Collaborate with private sector ESCOs in energy performance contracts for government buildings • Promote energy efficient consumer behavior

5. Market barriers to energy efficiency • Capital costs for EE equipment (HVAC, refrigerators, air conditioners,…) are higher • Consumers and builders lack information to make right energy choices • Builders do not operate buildings, are concerned with lowering upfront building costs, no incentive to reduce operating costs • EE projects often small, need to be aggregated to attract investment • Due to energy subsidies, consumers are insulated from true price of energy • Tighter credit markets make financing more difficult

6. Pricing • In many countries, consumers pay less than the supply cost of energy • IEA argues to reduce fuel subsidies – $250 billion in annual subsidies in developing countries in 2005 • Inhibits investment in new energy infrastructure • Makes energy efficiency measures uneconomic • Alternative – direct cash/credit payments to urban poor for electricity use • Case study from Baja California, Mexico

7. Baja California, Mexico: Credits to urban poor for electricity bills • Income from a wind power plant ($2.6 million) made available as credit against electricity bills and energy-efficient appliances for 35,000 impoverished families of Mexicali • Priority given to elderly, single mothers, low-income families with children and disabled • Save up to 40 percent off electricity bills during summer months • Provide monthly cards of credit $$ to urban poor for payment of electricity bills

8. Energy efficiency standards and labels • Energy efficiency standards are regulations that specify the minimum allowable energy performance for appliances, lighting, equipment, even buildings • Standards prevent inefficient products from entering the market • Provide information to consumers and builders so they can make informed choices • Green procurement: government is largest consumer; procurement of only EE products can transform market

9. Develop energy efficiency building codes • Require builders to use only highly efficient HVAC equipment, windows and lighting products • Mandate adequate building thermal insulation • Mandate optimization of new building energy performance • Can yield significant savings in operational costs in terms of energy and money • Locks in energy savings for decades

10. Energy labeling aids Endorsement label: top 20% Information label

11. Energy efficient refrigerators

12. LED street lighting • Decreasing costs, super high efficiency of LEDs driving new applications • Up to 88% savings in electricity costs • Delivers 30 lux from 4.5 meters using only 25 watts • 60,000 hrs lifetime (5-10 X increase) • Uniform light distribution with minimal glare • Similar energy savings for LED stoplights

13. Engage the Private Sector Energy Service Companies (ESCOs) are proliferating around the world • Identify potential energy savings • Perform feasibility study • Conceptualize a project • Arrange financing • Implement energy efficiency measures • Measure energy savings over next few years and guarantee savings under an energy performance contract

14. ESCO innovative finance • Finances energy efficiency projects from energy savings • Permits the realization of projects for which $$$ may not otherwise be available • Mobilizes private capital • Ensures that savings will be realized in a certain time frame • World Bank, IFC, Econoler and Nexant supporting ESCO development

15. Consumer awareness raising • Information campaigns can shape public behavior and values toward energy efficiency • Utilize the gamut of social media: TV, newspapers, bus stop posters, school posters, workplace guidelines, messages in electricity bills,…

16. California energy crisis in 2001Public information campaign • Energy crisis due to electricity market distortions • Government launched Flex Your Power media campaign • Target audience: from CEOs to school children • Within 10 months, reduced peak electricity load by 6300 MW of which 40% due to behavior change

17. Thank you Mohan Peck UN consultant mohan.peck@gmail.com