The role of Smart Grids to foster energy efficiency

The traditional electricity grid has remained the same for most of last century, without major architectural improvements. However, its requirements, guidelines and goals do have changed, especially during the last few years, driven by the sustainability in energy generation and energy efficiency principles. Thus, taking greenhouse gases emissions and CO₂ footprint reduction as key objectives and information and communications technologies as key enabler technologies, a novel and revolutionary electric grid paradigm, the so-called Smart Grid, is emerging, in which energy efficiency and renewable generation play a central role. This paper presents an overview on the main requirements and features of Smart Grids to integrate energy efficiency, on the work done and to be done, on the enabler technologies, as well as on the expected impacts and the main benefits Smart Grids will bring.     

The effect of carbon taxation on cross-border competition and energy efficiency investments

Carbon taxes increase costs for energy-consuming firms and can impact firms‘ ability to compete with other firms located in regions without that tax. This paper considers the effect of asymmetric carbon taxation when firms are able to adjust their energy efficiency investment levels to reflect the presence of the tax. Using a dynamic model of firm competition, we find that allowing firms to adjust their energy efficiency levels in response to a carbon tax could potentially allow firms to significantly mitigate the competition effects of that carbon tax. In our baseline parameterization, additional energy efficiency investments non-trivially mitigates profit loss for the firm facing the carbon tax as well as spurring adding energy efficiency investments in the non-taxing jurisdiction, thus reducing carbon leakage. This increase in energy efficiency can potentially reduce total energy usage by the firm in the taxing jurisdiction by more than the carbon tax alone. While the quantitative impact of energy efficiency investments on firm competitiveness depends on the nature of the industry, from a policy standpoint, the ability of energy efficiency investments to mitigate cross-border emissions leakage and negative competition effects without policy interventions such as a carbon border tax softens these two common criticisms of unilateral regional carbon taxes.     

Incentive mechanisms to promote energy efficiency programs in power distribution companies

Power distribution companies (DISCOs) play an important role in promoting energy efficiency (hereafter EE), mainly due to the fact that they have detailed information regarding their clients' consumption patterns. However, under the traditional regulatory framework, DISCOs have disincentives to promote EE, due to the fact that a reduction in sales also means a reduction in their revenues and profits. Most regulatory policies encouraging EE have some embedded payment schemes that allow financing EE programs. In this paper, we focus on these EE-programs' payment schemes that are embedded into the regulatory policies. Specifically, this paper studies two models of the Principal–Agent bi-level type in order to analyze the economic effects of implementing different payment schemes to foster EE in DISCOs. The main difference between each model is that uncertainty in energy savings is considered by the electricity regulatory institution in only one of the models. In terms of the results, it is observed that, in general terms, it is more convenient for the regulator to adopt a performance-based incentive mechanism than a payment scheme financing only the fixed costs of implementing EE programs. However, if the electricity regulatory institution seeks a higher level of minimum expected utility, it is optimal to adopt a mixed system of compensation, which takes into account the fixed cost compensation and performance-based incentive payments.     

Impact of the regulatory framework for transmission investments on the cost of renewable energy in the EU

Under the current regulatory frame in the EU, transmission planning is done at the national level to maximize national welfare, rather than European welfare. In this paper, we develop a competitive equilibrium model that calculates the impact of this imperfect regulatory framework on the cost of renewable energy. We apply the model to a power system with two interconnected zones, and find that the impact is case specific, but significant. We also find that the negative impact of national transmission planning on the cost of renewable energy is more significant in a state of the world in which Member States trade renewable energy, but that this negative effect is much smaller than the positive effect of renewable energy trade between Member States. We conclude that the imperfect regulatory framework for transmission investment is a significant cost for renewable energy in the EU, but that it should not stop Member States from trading renewable energy.     

Electricity generation:: regulatory mechanisms to incentive renewable alternative energy sources in Brazil

The dissemination of renewable alternative energy sources for electricity generation has always being done through regulatory mechanisms, created and managed by the government of each country. Since these sources are more costly to generate, they have received incentives in response to worldwide environmental concerns, above all with regard to the reduction of CO₂ emissions. In Brazil, the electricity generation from renewable alternative sources is experiencing a new phase of growth. Until a short time ago, environmental appeal was the strongest incentive to these sources in Brazil but it was insufficient to attain its objective. With the electricity crisis and the rationing imposed in 2001, another important factor gained awareness: the need to diversify energy sources. Within this context, this work has the objective of analyzing the regulatory mechanisms recently developed to stimulate electricity generation from renewable alternative energy sources in Brazil by following the experience of other countries such as the United States, United Kingdom and Germany.     

The threshold effects of energy efficiency on the elasticity of substitution between energy and non-energy factors

Considerable efforts have been made to estimate the relationship between energy and non-energy inputs in the production process. However, it remains controversial whether energy and non-energy inputs are complements or substitutes. Empirical analysis is conflicting on this issue. This study seeks to explore an alternative way to explain these conflicting results by examining the issue from the perspective of energy efficiency. This study is based on time series data for capital, labor, and energy from 28 Chinese provinces, covering 1985 to 2012. The results show that capital and energy are substitutes in all of the provinces, whereas labor and energy are complements in most of the provinces. Using the threshold effect model, we discover evidence of a threshold point based on the amount of energy efficiency activity in a province. This point separates the substitution behavior of provinces between energy and non-energy inputs. Low-energy efficiency provinces do not substitute as readily as high-energy efficiency provinces. The findings imply that the energy-saving technologies should be applied in provinces with comparatively higher energy intensity because they have more energy conservation potential.     

Attraction of carbon investments to implement the solar energy thermal utilization projects

The possibilities for attracting investments of carbon funds to implement solar energy thermal projects using solar collectors under the Clean Development Mechanism are analyzed. Calculations are performed, and it is shown that under the now-existing prices, the investments attracted will amount to about 10% of the funds required for project implementation.     

Organizational human factors as barriers to energy efficiency in electrical motors systems in industry

This paper presents a study accomplished in the State of Parana in Southern Brazil, aiming at verifying the correlation between organizational human factors (OHF) and the level of energy losses in organizations. The purpose is to subsidize the formularization of institutional policies in organizations to improve the energy efficiency in the productive sector. The research was carried out in ten industries of the following sectors: pulp and paper; food; wood and chemical products. The losses of electric energy were determined in motor systems with the aid of a mathematical model and the evaluation of 27 OHF identified in the literature review was made with the supervisors in the industries by means of a structurized questionnaire. Seven OHF had presented significant correlation with energy losses and six of them are inversely proportional to the losses, in accordance with linear regression analysis. The inversely proportional factors to the losses also with significant correlation are considered determinative OHF and constitute barriers for energy efficiency in organizations. These barriers are linked with the following organizational areas: management system; education of employees; strategical vision. The study recommends the implementation of the determinative OHF in organizations as a way to transpose the human barriers for energy efficiency.     

Financing investments in renewable energy : the impacts of policy design

The costs of electric power projects utilizing renewable energy technologies (RETs) are highly sensitive to financing terms. Consequently, as the electricity industry is restructured and new renewables policies are created, it is important for policymakers to consider the impacts of renewables policy design on RET financing. This paper reviews the power plant financing process for renewable energy projects, estimates the impact of financing terms on levelized energy costs, and provides insights to policymakers on the important nexus between renewables policy design and financing. We review five case studies of renewable energy policies, and find that one of the key reasons that RET policies are not more effective is that project development and financing processes are frequently ignored or misunderstood when designing and implementing renewable energy policies. The case studies specifically show that policies that do not provide long-term stability or that have negative secondary impacts on investment decisions will increase financing costs, sometimes dramatically reducing the effectiveness of the program. Within U.S. electricity restructuring proceedings, new renewable energy policies are being created, and restructuring itself is changing the way RETs are financed. As these new policies are created and implemented, it is essential that policymakers acknowledge the financing difficulties faced by renewables developers and pay special attention to the impacts of renewables policy design on financing. As shown in this paper, a renewables policy that is carefully designed can reduce renewable energy costs dramatically by providing revenue certainty that will, in turn, reduce financing risk premiums.     

Identifying barriers to the success of consumer energy conservation policies

Barriers to energy conservation inhibit or retard changes in current inefficient patterns of energy use. This paper reports the results of a project which identified barriers to energy conservation by individual householders. The focus was specifically on non-technical barriers; that is, social, institutional and economic factors which prevent people from increasing the efficiency with which they use energy. Barriers were identified by content analysis of interviews with householders; these barriers were therefore those that were seen as being important from the perspective of the householder. Six categories of barriers were identified on the basis of the circumstances out of which the barriers arose. Distributed among these six categories were 25 different types of barriers. Householders' responses towards energy conservation policy proposals were also assessed. Favourable evaluation of a policy proposal did not necessarily lead to an intention to adopt an energy-conserving practice, presumably because of the existence of barriers to energy conservation. Energy policy makers should examine in detail barriers to energy conservation of the types identified in this paper, and then develop appropriate policy mechanisms to overcome these barriers.     

The efficiency of the rational use of energy

From an ecological point of view, the reduction of the “consumption” of energy is the first aim. The reduction of the CO₂-emissions is only a subsidiary aim. On the other hand in industry, the reduction of the costs for energy is the main motive power to increase the efficiency of energy use.Therefore, efficiency may be interpreted in different ways and the understanding of efficiency is led by different criteria. Nevertheless, from a scientifical point of view, an efficient use of energy means the minimization of the input energy for a given energy application. This objective definition has been applied in the German directive for the evaluation of the efficient use of heat in buildings within the “Energie-Einspar-Verordnung 2002” [EnEV – Verordnung über energiesparenden Wärmeschutz und energiesparende Anlagentechnik bei Gebäuden – Bundesgesetzblatt Teil I Nr. 59 vom 21. Nov. 2001. S. 3085 ff.], the German directive for the saving of energy in buildings.In this paper, a criterion for the rational use of energy in industry. The starting point therefore is the exergy and the corresponding input energy. A project for the efficient use of energy in industry that is run in Germany [Schaumann G, Pohl Ch. Transferstelle Bingen Projekt since 2000; www.energie-industrie.de.] is presented and the formulae for the cogeneration of heat-and-power is shown as an example.     

The impact of policy measures on profitability and risk in geothermal energy investments

The development of geothermal energy is below the European National Renewable Energy Action Plans’ anticipated trajectory. High upfront investment costs and multiple sources of uncertainty result in a major investment risk, hampering the mobilization of required capital. To evaluate different policy measures, we developed a geological economic Monte Carlo simulation model that integrates both market and geological uncertainty and a firms’ option to abandon the geothermal project development after a first drilling is made. If the objective is to reduce the abandonment rate of geothermal projects, a heat premium comes forward as the most cost-efficient policy instrument. However, the risk that a project turns out unprofitable is not reduced and windfall profits do occur. In contrast, a recoverable loan reduces both the investment risk and the abandonment rate. An insurance scheme targets the investment risk as well. However, it also increases the abandonment rate and appears as the least cost-efficient policy measure. Considering the different policy performance indicators, a tax rebate is never preferred. Our results demonstrate the intricacies of choosing the correct policy measure, and the need to support such policy decisions with quantitative analyses.     

Passive House at the crossroads: The past and the present of a voluntary standard that managed to bridge the energy efficiency gap

Improving energy efficiency in dwellings is generally seen as the low-hanging fruit of climate change mitigation. In particular decreased heat loss through better insulation is suggested as one of the most cost-effective means to achieve the ambitious national and international goals of climate gas reduction. However, the literature shows that a profitable technological solution is not sufficient to reach the energy goals. Aspects such as a lack of information, unobserved costs, and heterogeneity among users can compromise the success of technical innovation. Still, there are successful concepts that drive the technological development in the construction sector. The Passive House is an example for such innovations that manage to bridge the energy efficiency gap. This paper addresses the Passive House concept and standard as a success story of technological innovation. With Bruno Latour's Science in Action (1987) as a starting point, we describe the conditions under which the standard was created, the role of the network built around the Passive House Institute, and the consequences of exporting the standard. We identify success factors that have supported the diffusion of the Passive House standard and concept and discuss its possible development in the current situation which is characterized by its wide-spread adoption.     

The role of energy efficiency and renewable energies in the future world energy market

The world population is rising rapidly, notably in the developing countries. Historical trends suggest that increased annual energy use per capita is a good surrogate for the standard of living factors which promote a decrease in population growth rate. If these trends continue, the stabilization of the world's population will require the increased use of all sources of energy as cheap oil and gas are depleted. The improved efficiency of energy use and renewable energy sources will be essential to stabilizing population, while providing a decent standard all over the world.     

Final energy use in IEA countries: The role of energy efficiency

Improved energy efficiency is a key policy goal of all International Energy Agency (IEA) member countries, but tracking energy efficiency gains is not straightforward. As part of its contribution to the G8 Gleneagles Plan of Action, the IEA has been developing in-depth indicators—tools that provide data and analysis of energy use and efficiency trends. This paper gives an overview of the IEA indicator methodology and presents examples of how disaggregated indicators can be used to identify the factors that drive and restrain energy demand at the end-use level. A decomposition approach is also used to separate efficiency effects from the impacts of structure and activity. The results clearly show the important role that energy efficiency has played in shaping trends in final energy use in IEA countries for more than 30 years. However, the analysis also reveals that recent gains in energy efficiency have been much lower than in earlier decades. Accelerating energy efficiency improvements is therefore a crucial challenge for IEA governments and indicators have an important role to play in helping to develop and evaluate the policies that will be required.     

Assessment of energy efficiency measures: The case of the Lebanese energy sector

This paper examines in detail the electric energy sector in Lebanon on the levels of both the supply and end‐use sides. The aim of the study is to assess the feasibility of implementing some energy efficiency options in the country. For this purpose, baseline scenarios will be first developed to examine the effects of government policies with regard to the energy balance, and then energy efficiency scenarios will be built for the residential, commercial and industrial sectors. Feasible options will be highlighted and recommendations to remove barriers hindering the fast penetration of energy efficiency programmes in the Lebanese energy sector will be provided. Throughout the analysis, uncertainties related to factors such as discount rates, demand growth and technology penetration rates will be treated by defining lower and upper bounds on their variations, and will be accommodated through scenario‐type analysis. Copyright © 2001 John Wiley & Sons, Ltd.     

The effect of the feed-in-system policy on renewable energy investments: Evidence from the EU countries

We study the effect of the Feed-in-System (FIS) policy on wind and solar photovoltaic energy investments in the European Union (EU), over the time period between 1992 and 2015, considering the heterogeneity of the policies and market conditions across the EU countries. We develop a FIS subsidy performance indicator that distinguishes feed-in-tariff (FIT) from feed-in-premium (FIP) and considers other important aspects of each of these contracts, such as the duration, tariff price, energy spot price and production costs, as well as the market conditions. We conclude that the mere existence of the FIS policy does not necessarily enhance renewable energy investments, it depends on the type of the FIS contract and its features, and may vary across the different sources of renewable energy. Some of our findings are new to the literature and can have important implications in the development of new public investment incentives to promote renewable energy.     

Examining the role of energy efficiency and non-economic factors in energy demand and CO2 emissions in Nigeria: Policy implications

This paper examines the role of energy efficiency and non-economic factors such as consumers' preferences, lifestyles and values (which have hitherto been ignored) in energy demand and CO₂ emissions modelling for Nigeria. We use a structural time series model to estimate various energy demand and CO₂ intensity models that take account of the aforementioned factors. We adopt preferred models from these estimates to analyse how energy demand and CO₂ emissions in Nigeria might evolve by generating three different future scenarios to 2025. We find energy efficiency and non-economic factors to influence energy demand and CO₂ emissions. The long-run income and price elasticities obtained differ significantly from those in existing studies that have ignored these salient factors. In a business-as-usual scenario, the results indicate that energy demand will continue to grow. Consequently, present policies do not sufficiently mitigate aggregate CO₂ emissions in Nigeria. The lesson for policy makers is that the extant policies introduced to restrain CO₂ emissions (from a production perspective) have to be combined with new policies that influence consumers' lifestyles and behaviours, develop energy efficient technologies and apply low tariffs on imported energy efficient appliances, to drive down CO₂ emissions from a consumption perspective.     

家用太阳能热水器的能效系数浅析

编者按:太阳能热水器能效强制性国家标准的制定工作即将正式启动.太阳能热水器的能效系数及太阳热水器热性能等对于标准制定和产业发展影响重大.殷志强教授特撰文两篇在本刊发表,供制定标准参考.