MRV arrangements of Smart Street Lighting Initiative

SSLI – NAMA Indonesia Improving energy efficiency and livelihoods in

Indonesian cities

Background

Indonesian cities typically have sub-optimal street lighting systems, with illegal connections, limited metering coverage, and poor service standards. Cities commonly use inefficient mercury and sodium lamps rather than modern lamp technologies.

Only a few cities including Yogyakarta and Makassar have implemented full metering and are switching to more efficient technologies such as LEDs. This shows that 50-80% of a city’s street lighting electricity bill can be saved by optimizing the system.

The national utility, PLN, recovers the cost of electricity used for street lighting and currently bills cities on a ‘lump sum’ basis which tends to overestimate consumption. Many cities are unable to further increase their tax receipts for providing street lighting to inhabitants and are now facing budgetary shortfalls as a result (bills issued by PLN already or will soon exceed the tax receipts).

Due to the slow pace of installing metering in Indonesian cities and the current billing practices, cities have very little incentive to install more energy-efficient street lighting.

SSLI NAMA Objective Increasing the energy efficiency of street lighting by substituting conventional

street lighting systems with more efficient street lighting technologies in Indonesian cities and urban areas. Less energy consumption on the supply side, thus leading to a reduction in greenhouse gas (GHG) emissions > pave the way to a more efficient, stabile and less carbon intensive energy system. • In 2011, about 3068 GWh or 2.3 million tons of CO2 resulted from public street

lighting’s power consumption Up to 40% of CO2 emission reductions can be achieved with more efficient lighting technologies and management.

• The SSLI NAMA objective: 400.000 tCO2e emission reduction to 2020; Considering the current average lifetime (10 years) of LED street lighting techologies, the SSLI NAMA would achieve up to approx. 1.400.000 tCO2e in 2024.

• This emission target is based on only replacing the street light bulbs with LED, addititional emission savings result from installation of metering systems and improvement of cabling and services)

Co-Benefits (Social, Economic, and Environmental)

reduced GHG emissions

promotion of energy efficient technologies

energy security of supply (reduced electricty load)

electrification (by freeing up existing and new capacity)

phase out of electricity subsidies

job creation in installation and maintenance

improved public lighting and living quality

improved night-time safety in cities

leverage of public and private investment

SSLI NAMA Framework

• The “Smart Street Lighting Initiative” (SSLI) aims to kick-start the implementation of more efficient lighting technologies in Indonesian cities in the time frame from 2014 to 2020.

• It aims to do so utilising a combination of domestic and international finance sources, both public and private, to support capital investment and provide technical assistance to participating cities

• The SSLI NAMA aims to cover up to 22 cities, achieving transformational scale

Demonstration phase in Jan 2014 - Jun 2015 2-4 cities join

Scaling-up phase in Jul 2015 – Dec 2016 2-8 cities join

Transformation phase in Jan 2017 – Dec 2019 5-10 cities join

SSLI NAMA Partners

• Ministry of Energy and Mineral Resources – SSLI NAMA lead agency

• German Development Cooperation (GIZ) – Technical Assistance agency

• Ministry of Finance / Government Investment Facility (PIP)

• Indonesian Climate Change Trust Fund (ICCTF) – Financing agency

SSLI NAMA organizational structure

Steering body

ICCTF

• Management of International finance

MoFinance- PIP

• Domestic finance (loans)

Implementors

Municipalities (PJU)

• Replacement of street lights with LED

• Improvement street light management

• Trainings on Smart Street lighting management

• MRV

MEMR

SSLI Technical Support Unit

• Feasibility

• TA on SSL proposal design

• Trainings for LGU on SSL installation and management

• Oversight of MRV in coordination with KLH

International financial

Assistance

International financial

Assistance

SSLI NAMA components

Replacement of conventional street lights with more energy efficient (LED) street lights in SSLI partner cities

Capacity building in SSLI partner cities to install and maintain energy-efficient street lights

Technical assistance to support more rapid uptake of meters and ESCO participation

Development of energy efficiency performance and safety standards for efficient lighting products

Awareness-raising on usage of energy-efficient street lighting technologies among relevant stakeholders

MRV Unilateral support International support

Type of finance To be financed domestically To receive international financial, capacity building and/or technology support

Stringency and scrutiny Lower Depends on national standards adopted

Higher Designed to provide confidence to financiers that emissions reductions claimed are credible

Programme oversight Government department (e.g. MEMR) International (bilateral or multilateral) agreement between governments involved, implemented by matching national legislation and using nationally accredited bodies

Standards to be applied “National standards” appropriate for Non-Annex I parties (NAI)

Bilateral standards to be defined by donor and recipient

Auditing/ Verification

Defined by implementing government (could be internal audit only)

Third party or approved government body

Transparency requirements

MRV reports are internal only, but archived for possible review

Internal and available to relevant participants (e.g. donors) via registry

MRV MRV of GHG emissions

• Approved small-scale CDM methodology AMS-II.L, Demand-side activities for efficient outdoor and street lighting technologies, defines criteria for MRV that can be used in the SSLI NAMA MRV framework

• Two options for MRV of GHG emissions reductions (option A is based on the approved CDM methodology):

Approach A does not require actual monitoring of consumption using metering, but relies on monitoring of the following key parameters:

– Number of lamps replaced; rated power/wattage of replaced lamps; wattage/rated power of efficient lamps; annual operating hours (done by sampling)

Approach B: Use individual meters and eventually smart control systems.

– Requires a solution for dealing with illegal connections to exclude them from the system

Proposed MRV institutional set-up

KLH

BUR

Emission reductions

Tracking of SSLI NAMA finance

Next steps

• Establishment of Technical Support Unit including MRV database

• Kick-off demonstration phase

• Seeking for strategic partners for additional NAMA finance

Thank you for your attention!

Download the SSLI NAMA implementation plan at:

http://www.ebtke.esdm.go.id/en/download/doc_download/562-giz-esdm-ssli-nama-ip-english.html

Contact us:

Gita Lestari

gitalestari@hotmail.com

Ministry of Energy and Mineral Resources

Jalan Pengangsaan Timur No. 1A,

10320 Jakarta

www.ebtke.esdm.go.id

One technology promoted by the SSLI is the light-emitting

diode (LED) which provides a vast range of benefits:

Energy-efficiency: LED consume between 40-80% less

energy compared to conventional street lights.

Longer lifetime and less maintenance costs: LED street

lights have a significantly longer lifetime than

conventional lamps, resulting in additional maintenance

cost savings.

Better lighting quality: The uniformity of LED lighting

results in better lighting distribution and reduced glare.

LED street lights emit a more natural light than other

technologies and stay brighter longer.

Technology Back up slide

Summary of SSLI NAMA measures and outcomes

Summary of activities

Provision of technical assistance via establishment of Technical Support Unit to provide staff training, MRV and help cities with access to finance.

Encourage policy reform, prioritization of metering and a transparent approach to billing

Provision of financial assistance to cities via loans and grants

Outreach and awareness raising to increase scale over time

Summary of outcomes

Improved technical capabilities in Indonesian city PJUs (units responsible for street lighting)

Increased uptake of metering and efficient street lighting in cities

Improved quality of life and road safety for citizens of Indonesia due to better illumination

Reduced electricity bills for cities

GHG emissions reductions due to energy savings

Back up slide

Estimated financing needs and resulting impacts

Financing requirements

Conservative pathway (up to 10 cities in total to 2020)

Ambitious pathway (up to 22 cities in total to 2020)

Initial NAMA grant of USD 19m includes: • USD 11.5m for capital investment • USD 8.5m for technical assistance

USD 40m in PIP loans (5% interest) USD 30m in ESCO finance (10% margin) USD 80m bank loans (12% interest)

Total investment USD 155m

Initial NAMA grant of USD 19m includes: • USD 11.5m for capital investment • USD 8.5m for technical assistance

USD 40m PIP loans (5% interest) USD 30m ESCO finance (10% margin)

Scenario 1: USD 310m bank loans (12%) Scenario 2: 2nd NAMA grant USD 11.5m

Total investment USD 420m

NPV to 2024 (8% discount rate)

USD 3m USD -7m in Scenario 1

USD +15m in Scenario 2

Emissions reductions

Cost of abatement (8% discount rate)

210,000 t CO2-e

-5,5 USD/t CO2-e

640,000 t CO2-e to 2020 Approximately 1.5 Mt CO2-e by 2024

Scenario 1: 2,7 USD/t CO2 Scenario 2: -11 USD/t CO2

preliminary calculations!

Back up slide

Demonstration phase

(2014 – mid 2015)

• Training on benefits and implementation in several cities

• Lighting substitution in up to 4 cities supported by ICCTF grants and concessional loans by PIP

• Technical assistance (TA) to help cities access finance

• Elaboration of the ESCO model

Scaling-up phase

(mid 2015 – mid 2017)

• Up to 8 new cities join the NAMA

• PIP loans play a major role in providing access to finance

• TA on maintenance and MRV

• Facilitation of ESCO participation and further testing in 1-2 cities

• Ongoing outreach to achieve growth in scale

Transformation phase

(mid 2017 – end 2019)

• Widespread implementation in up to 10 additional cities

• Primarily utilising domestic sources of finance but with scope for further international support

• Major role for ESCOs in providing energy contracting services

SSLI NAMA phases Back up slide