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BulgariaKey Energy
Challenges: Energy Efficiency
Peter JohansenSenior Energy SpecialistWorld Bank
Presentation at Kapital Energy Conference
Sofia, February 23, 2010
Key Energy Challenges
1. Tightening demand-supply balance– Economic crisis provided only temporary “relief” as demand declined
while supply surplus has eroded
2. Gas supply security concerns – Ukraine-Russia gas crises demonstrated the vulnerability of the
Bulgarian gas sector to external shocks
3. High energy intensity – Bulgaria is the most energy intensive country in the EU and in the
Balkans. This hurts competitiveness
4. Underdeveloped regional energy market– Low electricity prices encourage wasteful energy use and discourage
investments. Low gas penetration. Need for regional cooperation in gas transport and power trade.
Bulgaria’s Energy Intensity – Decreasing Bulgaria’s Energy Intensity – Decreasing But not Fast EnoughBut not Fast Enough
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Energy Intensity ComparisonEnergy Intensity Comparison
TPES/GDP TPES/PPP GDP
Bulgaria 1.19 0.31
Czech Republic 0.64 0.23
France 0.19 0.16
Germany 0.17 0.15
Greece 0.19 0.12
Italy 0.16 0.12
Poland 0.46 0.20
Spain 0.20 0.14
United Kingdom 0.14 0.13
Source: IEA, 2006
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EE is Cost Effective CO2 Abatement
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Source : MCKinsey
Energy Efficiency – The Silver Bullet?
• EE sounds easy: – “Money lying on the ground”, “low hanging fruit”, “saves on energy
bills and often provides greater comfort”
• But in practice it is not that simple:– Much of the energy efficiency potential remains untapped due to
various barriers– “Money” continues to lie on the ground and “low hanging fruit”
continues to hang!
• Despite years of efforts the EE potential is mostly untapped– Estimates of EE potential keep increasing instead of decreasing in
many countries– Even the EU15 continue to have significant EE improvement
potential (e.g., the EU 20% target)
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Negawatts versus Megawatts
• Negawatts (avoided or saved capacity, whether in power, gas or district heating) are more valuable than Megawatts:– worldwide, 1 Euro invested in energy efficiency (NWs)
avoids >2 Euros in capacity investment– they reduce local pollution and global greenhouse gas
emissions, create more jobs
• NWs are also much cheaper than MWs on a life cycle cost basis, including investment and operating cost
• But NWs are more complex than MWs
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Megawatts Negawatts• 1-2 stakeholders
(equipment supplier and electric utility)
• Multiple stakeholders (equipment supplier(s), electric utility, consumers, intermediares like ESCOs, etc.)
• One decision maker (generally the utility)
• Multiple decision makers (utility, millions of consumers, etc.)
• Asset-based deal; relatively simple. Financing straightforward
• Savings-based deal, hence requires pre- assessment (audits), measurement and verification,etc. Financiers hesitant
• Mature market (tested technologies, quality standards, etc. already in place for decades)
• Evolving market (standards may not exist, eg., CFLs, LEDs, product may not be available)
• Less sensitive to (subsidized) consumer tariffs
• Highly sensitive to (subsidized) consumer tariffs 8
EE in Bulgaria - Huge Investments Needed
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0
500
1 000
1 500
2 000
2 500
Buildings State and Municipal
Property
Industrial Enterprises
Public Transport
Enterprises
Apartments
EUR million
EE Investment Potential
Accesible volume up to 2015
Estimated total volume
Source: BEEF and EEA
Capitalization of Bulgarian EE Credit Lines in the Period 2005-2009
Credit line Financing Beneficiaries Million EURO
BEEF WB/GEFAll sectors
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Bulgaria EUEEFF EBRD/PHARE
Industry
20
BEERECL EBRD/KIDSF
Industry
160
REECL EBRD/KIDSF
Individuals
51
EIB EERECL EIB/KIDSF
Public sector Municipalities Industry 36
KIDSF (direct funding) KIDSF
Public sector
15.7
Enemona EESF EBRD/Enemona
Municipalities Industry 11.2
Total 304.9
10Source: BEEF
Creating an Enabling Framework
• Gradually move all energy prices to full cost recovery level, while protecting the vulnerable groups
• Strengthening institutional framework for EE with capacity to formulate and implement EE policy
• Improving energy data system (EE indicators and benchmarking)
• Introducing long-term awareness campaigns and training programs for architects, contractors, equipment suppliers etc.
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Carrots and Sticks
• Creating long-term subsidy and tax incentive/ credit schemes for EE investments in residential and SME sectors so consumers can count on it and plan ahead
• Mandate efficiency and service improvements on the side of the energy supply companies
• Setting and enforcing building codes and standards for appliances, industrial equipment, and vehicle fuel efficiency
• Mandate solar water heating in new public buildings
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Leading by Example
• Public sector should be the first mover and lead by example with a comprehensive EE program, e.g.:– Gradually target EE upgrade of all public buildings before
2020– This will boost the market for energy auditors, suppliers,
and contractors (creates employment – green jobs)– Investment needs would be in the order of EUR 150-200
million per year– Green Investment Scheme revenues can be used to get
started– Concessional funding (e.g. from EU) must be used
leveraged with commercial finance– Gradually introduce market financing through energy
service companies
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