www.ecn.nl

Energy efficient electric motors

– incentives

Gideon van Toledo

Jakarta

16/12/15

Synergy Efficiency Solutions

2

Building Performance

Simulation

Energy Audits

Indonesian company with international experience

Over 80 energy efficiency projects in commercial and industrial sectors

Existing and new buildings/ facilities

Energy Performance Contracting (ESCO)

Awards for most efficient building: Indonesian Ministry of Energy (2013), ASEAN (2014) for University Multimedia Nusantara, ASEAN (2015) for ICE convention center

Gideon is SES’ financial expert

EE motors & financial returns

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• 100 EE motors (22 kW, IE-3)

• Lifetime 15 years

• 8,000 running hours/ year

• Cost of capital: 14% (100% loan; interest tax deductible)

• 2 scenarios: I) additional investment; II) new investment

• SPP I: 0,7 years; SPP II: 3,2 years

• E-price IDR 796/ kWh!

Goal

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For attendants to discuss and advice on:

• Financial incentives...

• That will increase private sector investments in energy efficiency…

• Specifically for EE motors and EMDS

Interviews conducted with GiZ, ESDM, MoI – Desk study

Content

1. Introduction to financial incentives

2. Financial incentives in Indonesia

3. Financial incentives in The Netherlands

4. Interactive working session

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13.30 – 14.15 : Incentives to support the policy program (Gideon van Toledo, Synergy Efficiency Solutions) 14.15 – 15.00 : Interactive smaller group discussions (Bahasa Indonesia)

Message

“It is key to understand what barriers financial incentives can take away”

The most important barriers are:

• Investing in energy efficiency is not profitable enough. Energy audits, equipment are too expensive

• Investing in energy efficiency makes sense. But we don’t have (access to) the money for energy audits and investments

6 What is stopping you to invest?

1. Introduction to financial incentives

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When is an incentive successful?

• Effective: – Taking away key barriers for energy users to take action (-i-

profitability; -ii- access to finance)

– Directly contribute to policy objectives for Energy Efficiency, in this case EMDS and EE motors (incentives are used)

• Easy to implement: – Incentive is easy to access for target group

– Incentive is easy to implement for implementing agency (like ministries)

• Efficient – Maximum effect for IDR invested (energy saving/ IDR)

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Incentives - overview

• Tax incentives (profitability)

• Grants (profitability)

• Energy price measures/ subsidies (profitability)

• Fines (if not complying with regulations) (profitability)

• Loan and guarantee instruments (access to finance)

• Third party upfront investment & service (access to finance) – Leasing

– Energy performance contracting (shared savings)

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Tax incentives & Grants

Tax incentives

• Import tax

• Profit tax (accelerated depreciation)

• Value Added Tax (VAT/ PPN) (differentiated)

Grants

• Energy audits and procurement

• Purchasing price equipment

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Energy price & Access to finance

Energy price measures/ subsidies

• Take away subsidies on energy & electricity

• Lower energy prices for more efficient energy users

Incentives that increase access to finance

• Loan (debt) – On-bill financing (energy bill? taxes?)

• Investment (equity)

• Guarantees and insurance

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2. Financial incentives in Indonesia

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Overview

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Energy price policy effective! Grants: small budgets; Loans not working so far. TA promising

3. Financial incentives in The Netherlands

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3. Overview

15 Available budgets in The Netherlands are significantly higher

4. Interactive working sessions

Goal:

interactive discussion about financial incentives that can increase investments in EE and EMDS in Indonesia.

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The sessions

1. Each participant fills in the questionnaire and hands it in (15 minutes)

2. Participants are divided into smaller groups that will discuss financial incentives and prepare an advise about: – Incentives that will be work, why and for which energy user

groups?

– Incentives that will not work, why and for which energy user groups?

3. Present the findings for both: – Big energy users

– Smaller users (SMEs) 17

Incentives - overview

• Tax incentives (profitability)

• Grants (profitability)

• Energy price measures/ subsidies (profitability)

• Fines (if not complying with regulations) (profitability)

• Loan and guarantee instruments (access to finance)

• Third party upfront investment & service (access to finance) – Leasing

– Energy performance contracting (shared savings)

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When is an incentive successful?

• Effective? do you want to use it?

• Easy to implement? do you think it is easy and understandable?

• Efficient?: do you think it is expensive (especially for Government)

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Findings

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Thank you!

Session1: Jeffrey Sipma; ECN Policy Studies; sipma@ecn.nl Session 2: Maarten van Werkhoven, EMSA, TPA-advisors Session 3: Gideon van Toledo, SYS (Synergy efficiency solutions)

ECN

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1755 LE Petten 1755 ZG Petten

The Netherlands The Netherlands

T +31 88 515 49 49 info@ecn.nl

F +31 88 515 44 80 www.ecn.nl 21

Supported by CDKN

This product is an output from a project funded by the UK Department for International

Development (DFID) and the Netherlands Directorate-General for International

Cooperation (DGIS). However, the views expressed and information contained in it are

not necessarily those of or endorsed by DFID, DGIS or the entities managing the delivery

of the International Climate Initiative or the Climate and Development Knowledge

Network*, which can accept no responsibility or liability for such views, completeness or

accuracy of the information or for any reliance placed on them.

*The Climate and Development Knowledge Network (“CDKN”) is a project funded by the

UK Department for International Development and the Netherlands Directorate-General

for International Cooperation

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Supported by CDKN