assessing investment & financial flows for mitigation in the electricity sector undp i&ff...
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Assessing Investment & Financial flows for Mitigation in the ELECTRICITY Sector
UNDP I&FF Methodology Guidebook: Mitigation
Relevance of Electricity Sector
Electricity generation accounts for 15% of total Turkmen national emissions (2004)
68% of generation capacity older than 20yrs
Domestic electricity consumption growing rapidly in line with economic development
Significant expansion of capacity for export
Define scope & boundaries for the assessment
Define the institutional framework Specify the time horizon for the
analysis: 2005-2030 recommended, base year 2005 recommended
Build on existing model & projections for the sector where possible
1. Establish key parameters of the assessment
Subsector electricity generation1. Establish key parameters of assessment
Define boundaries for the assessment1. Establish key parameters of assessment
Subsectors Data availability
Investment (baseline & prior 10 years)
Priority in mitigation scenario
High Medium
Low Rank
Fossil-fired generationTotal electricityHydro energyWind energyBiofuel energyTidal energyNuclear energyTransmission & distributionOther renewables
Example list of subsectors for screening & prioritization
Define boundaries for the assessment1. Establish key parameters of assessment
Turkmenistan: Scope of Assessment: Electricity Generation Y
Gas fired power plant Low carbon alternatives (nuclear, renewables) Sequestration technologies
Electricity transmission ? Electricity distribution ? Demand side efficiency ?
Industry, Transport, Residential/Commercial?
1. Establish key parameters of assessment
Select preliminary mitigation options for energy related GHG
reduction
Currently Commercial Technologies
fuel switching from coal to gas
nuclear power
renewable heat & power (hydropower, solar, wind, geothermal & power (hydropower, solar, wind, geothermal & bioenergy)
renewable heat switching from coal to gas
Improved supply & distribution efficiency
Technologies to become commercial by 2030
Carbon capture & storage (CCS) for gas, biomass & coal & coal-fired electricity
advanced nuclear power
advanced fired electricity
advanced renewable energy, including ocean energy, concentrating renewable energy, including ocean energy, concentrating solar, & solar Photovoltaic (PV)
Development of simple speadsheets
Use of existing energy models
Sector projectsions/trends To arrive at an estimate of projected
demand & supply in the sector
1. Establish key parameters of assessment
Select analytical approach
National accounts: System of National Accounts (SNA) Systems of integrated environmental & economic accounts
(SEEA) Existing sectoral plans Energy sector/econometric models: Private sector reports Other sources: GHG Inventories, National Communications
etc.
Sources of Data
2. Compile historical I&FF data and other input data for scenarios
2. Compile historical I&FF data and other input data for scenarios
Electricity production by fuel & technology Electricity consumption by sector & fuel Inventory of large generation &
transmission infrastructure, including commissioning & expected retirement/upgrade timescales
Capital infrastructure investment data 1996-2005
O&M data for key infrastructure Electricity price & subsidy data GHG emissions data for electricity sector Power generation efficiencies 1996-2005 Transmission & distribution losses 1996-
2005 National energy resource assessments
Socio-Economic growth forecasts (population/GDP)
National energy forecast models Forecasts for electricity production Forecast electricity demand & export National resource assessments by fuel Forecast sector investment data Forecast upgrades for end of life
equipment Forecasts for price support & subsidies Emissions projections for sector 2005-
2030 Cost forecasts for new & emerging
technologies
Historical Data (1996-2005) Forecast Data (2005-2030)
Compile annual IF&FF data at the appropriate level of disagregation (according to the national circumstances): By investment type i.e.:
Switch to renewable energy sources Improved efficiency of electricity production (e.g.
gas turbine efficiency) By investment entity
Government Public corporations Private corporations (domestic) Private corporation (foreign) ODA
2. Compile historical I&FF data and other
input data for scenarios
Data collection, rely on national accounts data
2. Compile historical I&FF data and other
input data for scenarios
Data collection, rely on national accounts data
Examples of I&FF data disaggregation in each sub-sector
Define the physical basis for the Baseline Scenario
A baseline scenario: description of what is likely to occur in the absence of ADDITIONAL policies to address climate change; expected socioeconomic trends (e.g., population growth & migration, economic growth), technological change (if relevant), & expected business-as-usual investments in the sector.
3. Define Baseline Scenario
3. Define baseline scenario
Characterizing each relevant electricity supply & electricity end-use subsector over the assessment period Assuming no new climate change policies
are implemented Baseline scenario reflects
Current sectoral & national plans Expected socioeconomic trends Expected investments in the subsectors
Define baseline scenario
3. Define baseline scenario
Define physical basis for the Baseline Scenario
Information should be disaggregated by: Year (starting 10 years before the
assessment’s Base Year) Source (by corporations & government) Type (national funds, foreign direct
investment, official development assistance)
Compile annual estimates, disaggregated by investment entity, source, investment flow type, & financial flow type
Calculate the total investment cost in real, unannualized terms over the planning period.
Estimate annual investment costs associated with the new plan
Develop a breakdown of total investments into major categories (e.g., ODA, FDI, domestic funds)
4. Derive I&FF for baseline scenario
4. Derive I&FF for baseline
scenarioEstimate annual I&FF
Cumulative investment(2005-2030)
Funding entity category Source of funds
(billion2005 $) (%)
Households Domestic funds
Governments
Domestic funds (budgetary) Foreign borrowing (loans) Foreign aid (ODA)
Corporations
Domestic equity Foreign investment Domestic debt Foreign borrowing Government support Foreign aid (ODA) Total
Adding costs to baseline scenario
Mitigation scenario: incorporates measures to reduce GHG emissions
The mitigation scenario should describe expected socioeconomic trends, technological change (if relevant), measures to mitigate GHG emissions, & the expected investments in the sector given implementation of the mitigation measures.
Costing tools & international information sources may help to identify I&FF needs for different mitigation options
5. Define Mitigation scenario
5. Define mitigation scenario
Category of Mitigation Measure
Energy Supply Measures Energy End-Use Measures
Reduce Combustion Emissions
Reduce Fugitive Emissions
Reduce Combustion Emissions
Reduce Energy Demand
Improve efficiency of energy use
Efficiency improvements in energy supply processes
Efficiency improvements in energy end-use technologies
Energy conservation measures
Reduce emissions per unit of energy production or use
Switch to lower carbon fuels
Switch to lower carbon fuels
Switch to alternative energy sources
Switch to alternative energy sources
Reduce fugitive losses (including recovery & use)
Energy Sector Mitigation Measures
5. Define mitigation scenario
Two approaches to define Mitigation Scenario
Approach #1: assume an end point for electricity supply emissions E.g. setting a target in 2030 for accumulated
emissions from the electricity sector, favouring alternative sources
Approach #2: assume a set of technologies for electricity supply: E.g. Review national potential for energy policy
that articulate a set of technological options, such as renewable energy, & other carbon-reducing options to meet future energy demand.
Compile annual estimates, disaggregated by investment entity, source, investment flow type, & financial flow type
Estimate annual investment costs associated with the alternative management plan
Calculate the total investment cost in real, unannualized terms over the planning period
Develop a breakdown of total investments into major categories (e.g., ODA, FDI, domestic funds)
6. Derive I&FF for Mitigation Scenario
6. Derive I&FF for mitigation
scenario
Project I&FF associated with the Mitigation Scenario
Adding costs to mitigation scenario
Cumulative infrastructure (2005-2030)
Unit cost
Facility/Technology
Wind energy plant (# units) (2005 $/unit)
Energy efficient light bulbs
(# pieces) (2005 $/piece)
… (# …) (2005 $/…)
Total
Projecting investments6. Derive I&FF for mitigation scenario
Adding costs to mitigation scenarioCumulative
investment(2005-2030)
Funding entity category
Source of funds (billion 2005 $)
(%)
Households Equity & debt
Governments
Domestic funds (budgetary) Foreign borrowing (loans) Foreign aid (ODA)
Corporations
Domestic equity Foreign investment Domestic debt Foreign borrowing Government support Foreign aid (ODA) Total
Subtract the baseline annual I&FF, by entity & source, from the mitigation annual I&FF, by entity & source
Subtraction of the Baseline Scenario from the Mitigation Scenario
Sum incremental amounts over all years, by entity & source
7. Estimate changes in annual I&FF needed to implement adaptation
[
Subtract the baseline annual I&FF from the mitigation annual I&FF
7. Estimate changes in
annual I&FF needed to implement mitigation
For each chosen electricity mitigation option, the analysis should identify the incremental investment (total dollars) by source (domestic funds, ODA, FDI etc.) up through 2030 to support the respective electricity management option
[
Summarizing incremental investments
7. Estimate changes in annual I&FF
needed to implement mitigation
Investment (billion 2005 $)Cumulative (2005-2030)
Incremental
Funding entity category
Source of funds Baseline scenario
Mitigation Scenario
HouseholdsEquity & debt Baseline
valueMitigation value
Mitigation minus Baseline value
Governments
Domestic funds (budgetary)Foreign borrowing (loans) … … …Foreign aid (ODA) … … …
Corporations
Domestic equity … .. …Foreign investment … … …Domestic debt … … …Foreign borrowing … … …Government support … … …Foreign aid (ODA) … … …Total
Sum(Baseline)
Sum (Mitigation)
Sum (Mitigation minus Baseline)
REGIONAL CENTRE: PLEASE INSERT COUNRTY FIGURES FOR THE COUNTRY
Determine policy instruments & measures to encourage changes in I&FF
Identify the entities that are responsible for the significant incremental changes in I&FF
Determine the predominant sources of their funds, particularly important to distinguish between public & private sources of finance
8. Evaluate policy implications
Assess policy options and summarize the projected I&FF for the key sector
8. Evaluate policy
implications
Policy optionsPolicy objectives
Economic instruments
Regulatory instruments
Policy processes
Voluntary agreement
s
Information &
strategic planning
Technological RD&D &
deployment
Energy efficiency
•Higher energy taxes•Lower energy subsidies•Power plant GHG taxes•Fiscal incentives•Tradable emissions permits
•Power plant minimum efficient standards•Best available technologies prescriptions
•Voluntary commitments to improve power plant efficiency
•Information & education campaigns
•Cleaner power generation from fossil fuels
Energy source switching
•GHG taxes•Tradable emissions permits•Fiscal incentives
•Power plant fuel portfolio standards
•Voluntary commitments to fuel portfolio changes
•Information & education campaigns
•Increased power generation from renewable, nuclear & hydrogen
Renewable energy
•Capital grants•Feed-in tariffs•Quota obligation & permit trading•GHG taxes•Tradable emissions permits
•Targets•Supportive transmission tariffs & transmission access
•Voluntary agreements to install renewable energy capacity
•Information & education campaigns•Green electricity validation
•Increased power generation from renewable energy sources
For more information on synthesizing results, documentation & the completion of the report, please refer to the Reporting Guidelines
9. Synthesize results and complete report
Q&A CLARIFICATIONS
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Additional Information Possible models and methods
NameDevelop
erPlatfor
m
Metho-
dology
Cost (US$)/
Licensing
Web Site/Contact
Description
CO2DB IIASA, WindowsDatabase
Database of CO2 emitting energy technologies
ENERGY COSTING TOOL
UNDP ExcelAccounting
Free
Estimates the amounts & types of energy investments required to meet the Millennium Development Goals
ENPEP Argonne National
Windows Various
Depends on modules used & type of institution.
WWW.DIS.ANL.GOV [email protected]
Suite of Models for Integrated Energy/Environment Analysis
HOMER National Renewable Energy
WindowsOptimization
Freewww.nrel.gov/homer
Design of off- & on-grid electrification options
LEAP Stockholm Environment Institute
Windows
Physical Accounting, Simulation
Free to qualified users from developing countries.
Integrated Energy/Environment Analysis
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