Mandatory Energy-Efficiency
Standard for Room Air Conditioners
in Ghana,
Alfred Ofosu-Ahenkorah,
Ghana Energy Foundation
COP-11/MOP-1 2005
Project Objectives
• Make Room Air Conditioner Standard
mandatory and enforceable in Ghana by
building a modern testing Laboratory at the
Ghana Standards Board.
•
The removal of the least efficient air conditioners on
the Ghanaian market will save significant amounts of
energy
•
Reduce growing dependence on imported energy
•
Reduce cost of electricity for consumers
The Electricity Demand-Supply
Situation -1
Energy Demand, GWh
Energy, GWh
50,000
40,000
LEGS
30,000
MEGS
20,000
HEGS
Present Capacity
10,000
2000 2005 2010 2015 2020 2025
Years
The Electricity Demand-Supply
Situation-2
Electricity Generation Mix (2000-2020)
4000
3500
3000
Thermal
2000
Hydro
1500
1000
500
Year
20
20
20
18
20
16
20
14
20
12
20
10
20
08
20
06
20
04
20
02
0
20
00
MW
2500
Challenges in the Energy Sector-1
•
•
Rapidly growing demand for energy by all sectors due
to the expanding economy and the growing
population.
Risk of fundamental imbalance between energy
production and indigenous resource, which is
imminent for all the major energy forms.
•
Risk of over reliance on imports to meet local
shortfalls of conventional fuels, which could threaten
the country’s supply security, making it vulnerable to
external pressures.
•
Operational inefficiencies by utilities leading to high
losses and consequently increasing cost of supply
and distribution.
Challenges in the Energy Sector-2
• Over reliance on wood fuels, which could
threaten the country’s forest, cover.
• High levels of end-use inefficiency
culminating in waste of final energy
forms.
• Inadequate investments to match the
growing demand due to lack of capital.
BOTTLENECKS TO EFFICIENT
ENERGY UTILISATION
• Lack of Information on efficient methods and
technologies
• Shortage of skilled energy management
professionals
• Absence of energy efficient technologies on the
local market
• Absence of clear policy, standards and
regulations on performance of industrial and
commercial equipment and household
appliances.
• Difficulty in accessing financing for energy
efficiency projects
Energy Savings (mill kWh)
Potential Energy Savings from
Standards in Ghana – 1998
Survey
500
Room Air Conditioners
400
Refrigerators
Residential Lighting
300
200
100
0
2000
2001
2002
2003
2004
2005
YEAR
2006
2007
2008
2009
2010
Why Would Standards be a CDM
Project?
• EE standards face a number of barriers -enforcement, testing labs, public awareness,
etc. Major upfront analysis as well.
• These all 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
• Methodology on hold until MOP decides
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.
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.
Payback on the initial incremental investment in efficiency by
consumers is less than 9 months.
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 200MW Bui hydropower plant is being constructed at
a cost of nearly US$600 million.
National Energy Savings
Standard
2.8 EER
3.0 EER
3.2 EER
High Benefits
Low Benefits
up to 2010
1,453 GWh
1200 GWh
up to 2020
8,522 GWh
6764 GWh
up to 2030
19,497 GWh
15109 GWh
up to 2010
2555 GWh
2121 GWh
up to 2020
15430 GWh
12222 GWh
up to 2030
38296 GWh
29554 GWh
up to 2010
3520 GWh
2931 GWh
up to 2020
21174 GWh
16713 GWh
up to 2030
53841 GWh
41292 GWh
Carbon Emissions Savings
2.8 EER
3.0 EER
3.2 EER
High Benefits
Low Benefits
up to 2010
0.2 mt of CO2
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
up to 2010
0.34 mt of CO2
0.3 mt of CO2
up to 2020
2.1 mt of CO2
1.7 mt of CO2
up to 2030
5.5 mt of CO2
4.2 mt of CO2
up to 2010
0.5 mt of CO2
0.4 mt of CO2
up to 2020
2.9 mt of CO2
2.3 mt of CO2
up to 2030
7.8 mt of CO2
5.9 mt of CO2
Issues as a CDM Project
• Ownership of CERs – who owns the credits for
such a dispersed project? Proposal in this
case: Ghana Standards Board
• 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.
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.
• 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)
• 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 standards agency – 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.
Key Benefit from a CDM and
Ghanaian Perspective
• One can really scale up CER output if large-scale program/policy
CDM is allowed.
• Can be a major push to implement policies that may be too difficult
to implement in many developing countries.
• This project will save Ghanaian consumers millions of dollars in
lower energy bills and free up electricity for Ghana’s strained grid.
• GDP grew at an average annual rate of 4.7% from 1995-1997, but
drought-induced power shortages in 1998 hampered industrial and
service sector outputs and limited GDP growth to 2.0%, with rolling
blackouts into 2000.
• Economy is back on growth path. GDP Growth in 2002 -5.2%,
2003 – 5.8%, 2004-5.8%, projected to cross the 6% mark in 2006.
• Air conditioning use is rising rapidly as more homes and
businesses purchase room units.
Additionality
• The Ghana air conditioner standard depends on the
construction of a modern testing laboratory.
• These are expensive, 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, 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.
The Next Steps, as agreed 02/02/02 meeting
with Parliamentary Select Committees
• Legislative Instrument enforcing standards to be passed
by Parliament, under Act 541, – by June 2002.. Now by
Dec 9th 2005
• Voluntary Labelling Regime by January 2003… Now
January 2006
• Testing Facility to be built – completed by Dec. 2004…
Now expected in December 2006
• Testing and Full enforcement by January 2005…Now
January 2007
• Refrigerator, Lighting and Electric Motor Standards to
be developed beginning May 2002… Now January
2006
Ghana Air Conditioner Label
Appliance Standards
Worldwide
*
*as of 1999