Ghana’s Programmatic CDM
Proposal for Energy Efficiency
Standard for Room Air
Conditioners
A.K. Ofosu Ahenkorah
Energy Foundation
COP/MOP 12
Nairobi 2006
CDM Project Objectives
• Make Mandatory Room Air Conditioner
Standard enforceable in Ghana by building a
modern testing Laboratory at the Ghana
Standards Board.
• Reasons:
•
The removal of the least efficient air conditioners
from the Ghanaian market will save significant
amounts of energy
Reduce growing dependence on imported energy
•
Reduce cost of electricity for consumers
•
Basis of Standard: Room Air
Conditioner Survey 2001 & Analysis
• Objectives of Survey:
To establish the basis for a proposed minimum
energy efficiency standard for Room Air
Conditioners (RAC)
Findings
• Purchase price increases w/ cooling capacity
• Wide range of prices within capacity
categories
• Prices may not increase with efficiency
• Wide range of efficiency within capacity
categories
• Most expensive not necessarily most efficient!
All Units
Purchase Price vs. Efficiency
$1,800
$1,600
US$
$1,400
$1,200
RAC Units
$1,000
$800
$600
$400
2
2.25
2.5
EER
2.75
3
3.25
The Proposed Standard
• Require that the minimum air conditioner have an
“Energy Efficiency Ratio” or EER of 2.8 or higher.
• The EER is the amount of electricity required per unit of
“cooling,” expressed as watt/watt or Btu/hr/watt.
Cooling Capacity is the maximum amount of “cooling”
that a unit can provide, expressed as Btu/hr or kW.
• Any AC units below this standard cannot be sold in the
Ghanaian market.
• A testing lab would be required to enforce the standard.
• The goal is to stop the “dumping” in Ghana of inefficient
units that cannot be sold in the West
•
•
•
•
•
•
Potential
Energy
&
Cost
Savings
The RAC Standard will save Ghanaian consumers an average of $64
million annually in energy bills.
Payback on the initial incremental investment in efficiency by
consumers is less than 9 months.
The average price of RAC may go up by about 3% for the proposed
standard, however, the new RACs will use about 9% less energy,
paying off the investment very quickly.
Carbon dioxide emissions will be reduced by about 2.8 million tons
over 30 years (104,890 tons per year).
A 2003 compliance with the standard would have immediately freed
up 13 megawatts of generating capacity and by 2014 will be saving
the equivalent of a 150MW generating plant. By 2020, this standard
alone will be saving about 950GWh per year, freeing up nearly
250MW of generating capacity at net negative cost to the economy.
In contrast, the 400MW Bui hydropower plant is being constructed at
a cost of nearly US$600 million.
National Energy and Consumer Cost Savings
Energy Savings (2.8
EER)
High growth, high
electricity prices &
low interest rates.
Low growth, low
electricity prices, &
high interest rates
up to 2010
1,453 GWh
1,200 GWh
up to 2020
8,522 GWh
6,764 GWh
up to 2030
19,497 GWh
15,109 GWh
(Dollar savings to
consumers, NPV,
2010)
$245.10 million
$116.64 million
Emission reduction, 0.2 mt of CO2
up to 2010
0.16 mt of CO2
up to 2020
1.2 mt of CO2
0.9 mt of CO2
up to 2030
2.8 mt of CO2
2.1 mt of CO2
Cost and Saving of New Room Air Conditioners
2005
2010
2015
2020
2025
2030
3.0
2.5
2.0
1.5
1.0
0.5
0.0
Energy Saving
Price Change
Net Saving
-0.5
Per-Capita 2001 Dollars
2000
Why Would Standards be a CDM Project?
• Although Mandatory Standards relate to Policy and
Legislation issues EE standards face a number of
barriers:
• Enforcement, testing labs, public awareness, etc. Major
upfront analysis as well and all these have costs that
need to be paid for
• CERs are a good way to attract investors for upfront
costs, such as a testing lab.
• CERs are a good way to pay for monitoring and
enforcement, which can also be expensive.
• In the case of Ghana, without CERs, there is no way
this standard can be implemented.
From the CDM Perspective
• This is a unique kind of project – a government
policy itself being the CDM project
• Energy Foundation and QualityTonnes
submitted this project as NM0072 to the Meth
Panel. MP requested guidance from CDM EB.
• CDM EB could not agree on whether
mandatory government policies can count for
CDM until COP/MOP 2005-Montreal
Issues Raised
• Ownership of CERs – who owns the credits for such a
dispersed project? Proposal in this case: Ghana’s Energy
Commission – The Energy Regulator
• Additionality – need to show that the policy itself could not be
implemented without CDM. This is possible in the case of
Ghana but may be tricky in other cases. May require an
additional level of proof by the project developer beyond the
current additionality test tool.
• Monitoring: Methodology requires sampling of key variables
(hours of use, etc.). Method proposes sampling to a margin of
error of less than 5% -- then discounting ERs by the margin of
error to be conservative. Sampling is allowed in CDM.
Issues (con’t)
• Double-Counting – in the case of this project, no one should
be able to claim credit from buying a new AC unit – whether its
retailers, distributors or individuals. Ghana DNA can enforce
through approval process.
• Free Riders: Could be a problem with other types of
programmatic CDM (eg: a voluntary EE program). The
mandatory standards avoids that problem by making only one
entity – the Government Energy Regulator – the sole holder of
CERs.
• Leakage: No additional leakage should occur in this case but
again, could be an issue in other types of policy-CDM
programs.
• Decision http://unfccc.int/meetings/cop_11/items/3394.php in
the document called "Further guidance relating to the clean
development mechanism", para. 20. now clears the way for
programmatic CDM
Additionality
• The Ghana air conditioner standard depends on the
construction of a modern testing laboratory.
• This is an expensive piece of equipment, difficult to maintain
and require a trained staff. Few developing countries have
government-run testing labs, because of these barriers.
• There are no plans to build a testing lab in Ghana, and thus
according to the policy of the Government and to avoid
unnecessary litigation, the standard will only be voluntary
without the testing lab, the primary means of enforcement and
monitoring. As such, the standard will most likely be
worthless in terms of getting the least efficient models
dropped from the market.
• Only with carbon investment is the testing lab likely to get
built and the standard – with all of its benefits – likely to be
implemented.
Investment Requirements and
Sources
• Development Cost = US$0 (much of analysis has been
completed)
• Installed cost of equipment = US$1.4million
• Other Costs =US$0.625million ($25k one time
investment for Staff training, staff cost per
year=US$60k/yr for 10 years=$625k)
• Total Cost =US$2.025million
• Ghana Govt contribution=US$684,110
• Carbon Finance= US$1,240,890 over 10 years
• Indicative CER/VER unit price=US$5/tonne CO2.
Project Risks
• the economy has a severe recession or political instability disrupts
economic growth. In that case, fewer room air conditioner units
would be sold. However, given Ghana’s political stability over the
years, this seems like a modest risk.
• The monitoring of the CO2 reductions will provide a challenge as
sales numbers (important here will be import data which is publicly
available), surveys on use of air conditioners and other data will
need to be performed as much as every year or two.
• The monitoring costs of the project will be higher than single-site
projects and will depend on high-quality, statistically significant
survey data. This risk is mitigated somewhat by the amounts of
technical assistance provided to Ghana already from USAID and
the UN Foundation. This work has already led to voluminous
amounts of data and built capacity.
Current Status & Next Steps
• Legislative Instrument enforcing standards passed by
Parliament, under Act 541 in November 2005
• Public Education to Commenced September, 2006
• Mandatory Labeling to commence November 30, 2006
• Testing Facility to be built – expected completion
date????
• Testing and Full enforcement after completion of Test
Facility
• Refrigerator, Deep Freezer Standards being developed
Ghana Air Conditioner Label
Appliance Standards
Worldwide
*
*as of 1999
Thank you
www.ghanaef.or
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