Georgia: Assistance with the Drafting of the First...

Georgia: Assistance with the Drafting of the First National Energy Efficiency Action Plan (Phase I)

Draft NEEAP Report

Prepared by: NEEAP Expert teamLast edited: 06 May 2023

55 Chislehurst Road, Chislehurst, BR7 5NP, United KingdomTel: +44-20 30 120 130Fax: +44-20 30 120 [email protected]

This report has been prepared for the EBRD in partial fulfilment of the contract C31458rev/SWME-2014-12-14.

Team leader: Seth Landau, Eco [email protected]

QA/QC: Grant Ballard-Tremeer, Eco Ltd

Author: NEEAP Expert team

Eco, May 2023 Draft NEEAP Report i

mailto:[email protected]

ContentsList of abbreviations.............................................................................................iv

Units of energy and conversions.........................................................................v

1 Introduction......................................................................................................11.1 Overview of Georgian economic and energy situation...........................................................11.2 Legal framework of energy in Georgia....................................................................................21.3 Developments in other sectors – renewable energy...............................................................41.4 Additional information on the policy framework......................................................................5

2 Overview of National Energy Targets.............................................................62.1 Overview national energy efficiency targets...........................................................................62.2 Additional energy efficiency targets......................................................................................112.3 Overview of primary energy savings.....................................................................................112.4 Information on the achieved final energy savings and forecast savings in energy end-use by 2016 from previous NEEAPs...............................................................................................................12

3 Policy measures implementing the EED......................................................133.1 Horizontal measures.............................................................................................................133.2 Energy efficiency measures in buildings...............................................................................573.3 Energy efficiency measures in public bodies........................................................................713.4 Energy efficiency measures in industry................................................................................993.5 Energy efficiency measures in transport.............................................................................1283.6 Promotion of efficient heating and cooling:.........................................................................1613.7 Energy transformation, transmission, distribution, and demand response.........................161

Annex 1. Specific policy and regulatory elements for achievement of targets192

Annex 2. Energy saving measures, targets for savings in 2020, and the cost of investment per MWh saved...............................................................................195

Annex 3: Elaborated case of EE for residential buildings..............................199

Annex 4: Elaborated case of EE for commercial buildings – school buildings202

Annex 5: Recent and planned activities by international organisations related to energy efficiency in Georgia.........................................................................204

Annex 6. Complementary Information on the Calculation Methodologies...207Information on how the theoretical EEO target was calculated.........................................................207Distribution losses amongst the 3 main electricity distribution companies from 2012 - 2015...........208Losses amongst the 3 main natural gas distribution companies from 2012 – 2015.........................209Calculation of conversion efficiencies and distribution/transmission losses for electricity................210Calculation of distribution losses for natural gas...............................................................................214

Eco, May 2023 Draft NEEAP Report ii

Annex 7: Information on the process of developing the NEEAP...................216

Annex 8: Works cited.........................................................................................217

Eco, May 2023 Draft NEEAP Report iii

List of abbreviationsBAU Business As Usual

CCGT Combined Cycle Gas Turbine

CO carbon monoxide

CO2 carbon dioxide

CO2eq carbon dioxide equivalent

CoM Covenant of Mayors

EBRD European Bank for Reconstruction and Development

EE Energy Efficiency

EED Energy Efficiency Directive

EEO Energy Efficiency Obligation

EnPC Energy Performance Contracting

EPBD Energy Performance in Buildings Directive

ESCO Electricity System Commercial Operator of Georgia

EU European Union

EUR Euro

GDP Gross Domestic Product

GHG greenhouse gas

GNERC Georgian National Energy and Water Supply Regulatory Commission

GSE Georgian State Electrosystem

HPP Hydro-power plant

IFC International Finance Corporation

IFI International Financial Institution

IRR Internal Rate of Return

INDC Intended Nationally Determined Contribution

LED light-emitting diode

LEDS Low Emission Development Strategy

LFI Local Financial Institution

NAMA Nationally Appropriate Mitigation Action

NEEAP National Energy Efficiency Action Plan

NGO Non-governmental Organization

NO2 nitrogen dioxide

ME Ministry of Energy

MENRP Ministry of Environment and Natural Resources Protection

MESD Ministry of Economy and Sustainable Development

PPP Purchasing Power Parity

Eco, May 2023 Draft NEEAP Report iv

RECP Resource Efficient and Cleaner Production

SEAP Sustainable Energy Action Plan

SME Small and medium-sized enterprises

TCSA Technical and Construction Supervision Agency

TPP Thermal Power Plant

UNIDO United Nations Industrial Development Organization

USD United States dollar

WPP Wind power plant

Units of energy and conversionskV kilovolt

kWh kilowatt-hourMWh megawatt-hour = 1,000 kWhGWh gigawatt-hour = 1,000,000 kWhTWh terawatt-hour = 1,000,000,000 kWh

Mtoe million tonnes of oil equivalent

W wattkW kilowatt = 1,000 WMW megawatt = 1,000,000 W

Kg kilogramt tonne = 1,000 kgKt kiloton = 1,000,000 kgMt Megaton = 1,000,000,000 kg

km kilometertkm tonne-kilometerpkm passenger-kilometer

TOE per MWh: 0.085984523TOE per GJ: 0.02388459MWh per GJ: 0.277777778 Gcal per MWh: 0.859845228

GEL per EUR: 2.7206USD per EUR: 1.092

Eco, May 2023 Draft NEEAP Report v

1 IntroductionIndicated as recommended for EED reporting by the Guidance and proposed for inclusion

1.1 Overview of Georgian economic and energy situation

A recent census of Georgia has evaluated the population 2015 at 3.713 million which is a dramatic reduction from previous estimates of 4.49 million.1 Georgia is classified as an upper-middle-income country2 with a per-capita Gross Domestic Product (GDP) in 2015 of approximately EUR 2,810 per person. The Georgian economy has been developing with a steady growth rate – though this has been undermined by the global financial/economic crisis and by conflict with Russia. For the period 2010-2015, real GDP in domestic currency has increased by 27%.3 However, Georgia has not yet achieved the economic standards of EU countries. For instance, real GDP per capita (Purchasing Power Parity - PPP) in 2015 was USD 9,679 while GDP per capita (PPP) of one of the “poorest” EU countries, Bulgaria, was USD 17,511.4

2010 2011 2012 2013 2014 20150

2,000

4,000

6,000

8,000

10,000

12,000Main Economic Indicators

EUR

Figure 1-1: Main economic indicators in GeorgiaSource: Geostat*Data for the population 2015 is based on the latest census. Population for previous years is based on the previous census. The GDP and GDP per capita is adjusted for exchange rate fluctuations.

Upon its independence, Georgia inherited a significantly developed infrastructure. However, efficient system management was impeded by economic crises, political unrest, wars and corruption. Starting from 1991 the energy sector entered a cycle of degradation where the infrastructure as well as economic relations started to disintegrate together with the crisis of statehood. Widespread theft of energy plants and equipment, lack of repairs and maintenance, the cut-off of gas supplies from Russia, theft of electricity and the resulting energy crisis led to an almost complete deterioration of the system’s condition. Electricity consumption fell from 18 TWh in 1988 to 7 TWh in 1997 (see Figure 1-2).

1 Geostat (2016) Population: http://www.geostat.ge/index.php?action=page&p_id=152&lang=eng 2 World Bank (2016) Country and Lending Groups: http://data.worldbank.org/about/country-and-lending-groups 3 Based on Geostat statistics for GDP 4 Source: World Bank (2016) GDP per capita, PPP (current international $) http://data.worldbank.org/indicator/NY.GDP.PCAP.PP.CD

Eco, May 2023 Draft NEEAP Report 1

http://data.worldbank.org/about/country-and-lending-groups

http://www.geostat.ge/index.php?action=page&p_id=152&lang=eng

After dramatic reforms, the situation of the Georgian power sector has improved substantially. Rehabilitation works were conducted at Enguri hydro, along with 14 major hydro-power plants and the Tbilsresi thermal power plants; the 500 KV transmission line Kavkasioni and the Alaverdi 220 kV line were restored along with other transmission lines and substations. Construction of several new hydro plants began, while tenders were announced for the construction of yet more. Import dependence dropped and for the 5 years 2007-2011, Georgia became a net electricity exporter (see Table 1-2).

1988

1990

1992

1994

1996

1998

2000

2002

2004

2006

2008

2010

2012

2014

- 2,000 4,000 6,000 8,000

10,000 12,000 14,000 16,000 18,000 20,000

Electricity Consumption in Georgia 1988-2014

GW

h

Figure 1-2: Electricity consumption dynamics in Georgia from 1988 to 2014Source: Electricity System Commercial Operator of Georgia (ESCO)

Georgia’s energy system is in a state of active development. Reforms are particularly influenced by the Association Agreement signed with the European Union in June 2014. Under the Agreement, Georgia took an obligation of implementing the EU directives in energy sector and will have to comply with the requirements of the third energy package.5

Based on energy balance data, in 2014, fossil fuels accounted 73% of primary energy consumption in Georgia. Almost all fossil fuels (95%) are imported from neighbouring countries which means that energy security and independence are important for the country – especially since there are strained relationships within the region. Moreover, there is a tendency of an increase in fossil fuels consumption in recent years (see Table 1-1 and Table 1-2) which leads to increase in imports volumes. The largest increase can be seen in natural gas imports.

5 European Union (30 August 2014) Association Agreement between the European Union and the European Atomic Energy Community and their Member States, of the one part, and Georgia, of the other part. Official Journal of the European Union L261/4 Available at http://eeas.europa.eu/georgia/pdf/eu-ge_aa-dcfta_en.pdf


http://eeas.europa.eu/georgia/pdf/eu-ge_aa-dcfta_en.pdf

Table 1-1: Final energy consumption by sector in 2013 and 2014 (GWh)

GWh

Commercial and public services

Residential Industry Agriculture/ forestry/ fishing Transport Not elsewhere

specified (Other) Total

2013 2014 2013 2014 2013 2014 2013 2014 2013 2014 2013 2014 2013 2014Coal 5 8 4 4 3,656 3,365 - - - - - - 3,665 3,378Crude Oil - - - - - - - - - - - - - -Oil products 54 81 180 198 1,670 894 108 67 10,494 11,912 - - 12,506 13,152Natural Gas 798 2,166 7,699 5,810 798 2,166 16 38 546 3,403 - - 12,312 14,862Geothermal, solar, etc 93 109 64 58 - - - 6 - - - - 157 173Biofuel & Waste 93 90 5,500 5,314 2 4 1 0 - - - - 5,595 5,408Electricity 1,202 2,568 3,624 2,465 2,327 2,817 35 30 282 267 1,605 1,639 9,075 9,786Total 2,244 5,021 17,071 13,850 10,909 10,526 160 141 11,322 15,582 1,605 1,639 43,310 46,758

Source: Geostat (2014 & 2015) Energy Balances for 2014 and 2013: http://www.geostat.ge/index.php?action=page&p_id=1895&lang=eng. Note that these numbers include non-energy use of various energy sources but do not include non-energy use of oil products in the energy sector (27 GWh for both 2013 and 2014).

2013 2014 -

5,000

10,000

15,000

Energy consumption according to fuel - 2013 and 2014CoalCrude OilOil productsNatural GasGeothermal, solar, etcBiofuel & WasteElectricity

YearEner

gy c

onsu

mpt

ion

(Gw

h -

incl

udin

g no

n-en

ergy

use

s)

Figure 1-3: Graphical representation of final energy consumption according to fuel – 2013 and 2014



In this context energy efficiency is an essential component of sustainable development of Georgia’s energy sector. Energy efficiency is internationally recognized as the most cost-effective way of reducing dependency on fossil fuels.

Table 1-2: Export/Imports volumes by country from 2010 to 2015

2010 2011 2012 2013 2014 2015Electricity (GWh)

ImportsRussia 211.9 447.6 517.0 460.5 607.0 511.0

Azerbaijan 10.1 23.4 97.5 23.6 184.2 101.7Armenia 86.5

Total 222.0 471.0 614.6 484.1 791.2 699.2Exports

Russia 1,117.1 588.6 369.4 370.6 160.1 169.6Azerbaijan 14.3 5.9 11.8 6.6 8.0 -

Turkey 303.4 218.6 79.0 - 236.5 419.5Armenia 89.4 117.5 67.9 73.2 140.5 70.9

Total 1,524.2 930.6 528.2 450.4 545.1 660.0Oil Products (1000 tonnes)

Petroleum imports 409,093 402,466 382,403 376,485 373,860

Diesel imports 399,878 428,634 459,858 479,431 529,658Total 808,971 831,100 842,261 855,916 903,518

Natural gas (million m3)Total 1,131 1,711 1,920 1,907 2,097

Source: ESCO, Ministry of Energy

Figure 1-4 shows the percentage of final energy demand according to the sector from 2014. The main energy consumers are the Residential, Transport and Industry sectors. The main fuels consumed in the Residential and Transport sectors are natural gas and oil products, both of which are mainly imported. Further development of these sectors will require sustainable increased energy supply.

11%

30%

15%

0%

33%

8% 4%

Shares of economic sectors in energy balance 2014

Commercial

Residential

Industry

Agriculture

Transport

Non energy use

Other

Figure 1-4: Shares of economic sectors’ energy consumptionSource: Geostat (2015) Energy Balance of Georgia, 2014


Figure 1-5 shows GDP intensity comparison of Georgia with some EU countries. GDP intensity6 measures how much energy is needed to generate 1 unit (in this case USD) of GDP. This is a common tool to measure energy efficiency across countries. Even though compared to other countries the Georgian economy does not have much energy intensive industry its GDP intensity is still much higher than, for instance, in Turkey, which has a much more energy intensive economic structure. This indicates that there is potential for energy efficiency improvements.

Figure 1-5: Energy intensity as a function of GDP of various countries Source: Based on World Bank’s World Development Indicators. The chart can be generated online via http://www.tsp-data-portal.org/Energy-Intensity-of-GDP#tspQvChart

1.2 Legal framework of energy in Georgia

The energy sector of Georgia has been largely shaped since 2003, after which a series of reforms have been undertaken. The priority of these reforms has been to enhance the legal and regulatory framework for doing business, along with deregulation, which has helped to trigger strong economic growth. Many problems of the energy sector in the early 2000s have been resolved due to these reforms.

The Law on Electricity and Natural Gas7 is the key piece of legislation regulating the country’s energy sector since 1997. The objectives of the law include stimulating the use of local hydro energy and other renewable energy sources. This Law has been amended several times since 2006 and currently incorporates some EU principles – notably reflecting the principles of deregulation and liberalisation of the energy market. The law defines small power plants as those with an installed capacity of less than 13 MW, with an emphasis on small scale power plants operating on renewable energy resources.8

After adopting the first energy policy document – “Main Directions of the State Energy Policy of Georgia” in 2006, the utilization of the country’s local indigenous renewable energy sources became one of the major

6 There is some criticism of the use of GDP intensity as a tool to measure energy efficiency. The variable is affected by population size, travel patterns, natural resource endowments, changing activity within the economy like shifting from steel production to electronics, technological improvements like using robots, etc. On the other hand when the economy is growing faster than energy consumption, energy intensity falls. But in a recession, GDP tends to fall faster than energy consumption, and so the energy intensity ratio rises. This would be true even if there were no change in energy efficiency.7 Available in its updated form at: http://www.energy.gov.ge/legislation.php?lang=eng&id_pages=33 8 Paragraph H-5 of the Law on Electricity and Natural Gas


http://www.energy.gov.ge/legislation.php?lang=eng&id_pages=33

http://www.tsp-data-portal.org/Energy-Intensity-of-GDP#tspQvChart

http://www.tsp-data-portal.org/Energy-Intensity-of-GDP#tspQvChart

factors of Georgia’s energy sector development. The key priority of the first energy policy was a full satisfaction of customer demand for electricity with the maximum possible utilization of local hydropower resources, initially alongside imports, and, eventually, by substituting imports with local thermal generation. Additionally, there is the aim of developing alternative energy sources such as wind, solar, and geothermal.

Although “The Main Directions of the State Energy Policy of Georgia” has been amended by a new Energy Policy, adopted on June 2015,9 the key policy directions have not changed significantly. The aim of the updated Energy Policy is to develop a long-term comprehensive state vision, which will later become the basis for the development of short, medium and long term strategies for 2030, with a special emphasis on the utilization of Georgia’s renewable energy resources. Energy efficiency is also incorporated into the document as well as into the Social-economic Development Strategy of Georgia “Georgia 2020”.10

Since the adoption of the new energy policy the Georgian Government has continued working towards the improvement of self-sufficiency via the utilization of local renewable energy resources by constructing new generation units – Hydro-power plants (HPPs), Wind Power Plants (WPPs), Combined Cycle natural gas-fired turbine plants (CCGTs), etc. – aiming towards the reduction of dependency on imports.

For the purpose of supporting the construction of new generation, units the Government of Georgia has adopted state programs and several sub-laws, in particular:

Resolution No.107 on the Approval of the National Program “Renewable Energy 2008”,11 which defines the procedure for initiating and implementing renewable energy projects in Georgia. This resolution does not contain renewable energy targets or a national action plan in the sector.

Resolution No. 214 on the “Approval of Rules for Expressing Interest in Conducting Technical and Economic Feasibility Studies for the Construction, Ownership and Operation of Power Plants in Georgia”12 which effectively replaced resolution No.107 for new power plant projects and at the same time somewhat modifies the approach introduced by the 2008 resolution.

Decree No. 40 of the Minister of Energy of Georgia13 regulates the rules for construction, ownership and operation of WPPs and other renewable energy resources.

According to the “Georgia 2020” strategy the Government plans to develop policies aimed at developing transport infrastructure and the maximum realisation of transit potential. The increased number of infrastructure projects will increase the level of activity (and therefore energy consumption) in the Construction sub sector which will affect energy consumption of the Industry sector as a whole – causing it to increase. According to the same document, small and medium businesses are going to be supported by the government through policies and regulations as well as there will be support for the development of entrepreneurship and new businesses. This in turn will lead to development of different Industry subsectors and require a sustainable energy supply. Development of the Agriculture sector is also one of priorities of the strategy. However, due to its insignificant share in final energy balance, development of Agriculture sector will not likely put a burden on the Georgian energy system.

1.3 Developments in other sectors – renewable energy

9 Available at: http://www.energy.gov.ge/ministry.php?id_pages=12&lang=eng 10 Government of Georgia (2013) Social-economic Development Strategy of Georgia “GEORGIA 2020”. Available at: http://static.mrdi.gov.ge/530226580cf298a857ab7dcf.pdf 11 Georgian Government (18 April 2008) Decree #107: About the Approval of the Rule to Enable the Construction of Renewable Energy Sources in Georgia. Available at http://www.esco.ge/files/decree_107_final.pdf 12 Government of Georgia (21 August 2013) Decree #214: About the Approval of the Rule of Expressing Interest in Technical and Economical Study of the Construction, Construction, Ownership, and Operation of Power Plants in Georgia. Available at: http://www.esco.ge/files/decree_214.pdf 13 Ministry of Energy (10 April 2014) Order №40 On Approval of the Terms and Conditions for Submission and Review of the Proposals about Construction Technical and Economic Feasibility Study, Construction, Ownership and Operation of those Hydro Power Plants to the Ministry of Energy of Georgia, which are not Included in the List of Potential Power Plants in Georgia. Available at http://www.energy.gov.ge/projects/pdf/pages/Order%2040%2010042014%20On%20Approval%20of%20the%20terms%20and%20conditions%20648%20eng.pdf


http://www.energy.gov.ge/projects/pdf/pages/Order%2040%2010042014%20On%20Approval%20of%20the%20terms%20and%20conditions%20648%20eng.pdf


http://www.esco.ge/files/decree_214.pdf

http://www.esco.ge/files/decree_107_final.pdf

http://static.mrdi.gov.ge/530226580cf298a857ab7dcf.pdf

http://www.energy.gov.ge/ministry.php?id_pages=12&lang=eng

According to the 2014 Energy Balance of Georgia14 renewable energy accounted for 87% of the Georgian energy production, and 27% of total primary energy supply (TPES) made up of hydro - 16%, biofuels (mainly wood) and waste – 10% and Geothermal, solar, etc. – 0.4%. These levels were similar in 2013. It is worth noting that biomass, mostly the firewood, has major share in primary energy consumption and is increasingly causing forest degradation. Additionally, it is expected that wind energy production will begin from early 2017.

Georgia has an immense untapped potential of wind, solar, geothermal, biomass and especially hydro resources. Out of 26,000 rivers in Georgia there are up to 300 with significant energy potential. The potential installed capacity of green-field hydropower plant projects’ is estimated to be equivalent to 15,000 MW with annual generation potential to 50 TWh per year. Today, only 18% of Georgia’s hydro potential is utilized. The average annual electricity generation potential of wind in Georgia is estimated to be 4 TWh with an installed capacity of 1,500 MW.15

According to recent hydro-geological studies, the Georgian geothermal water reserves reach 250 million m3 per year. At present there are more than 250 natural and artificial water channels, where the average temperature of geothermal waters ranges from 30 to 110°C, while the total potential amount to be withdrawn is 160,000 m3 per 24 hours.16

Due to the geographical location of Georgia, solar radiation is rather high. In most regions of the country there are 250 – 280 sunny days annually with approximately 6,000 – 6,780 hours of sunlight per year. The annual solar radiation varies depending on the region from 1,250-1,800 kWh/m2.17

The effective utilization of renewable energy sources could result in the production of an additional 20 TWh in the near future, which will save about 7 million tonnes of conventional fuels. At a regional scale, the exploitation of renewable energy resources outlined above would allow the country to reduce the utilization of fossil fuels and reduce the greenhouse gas emissions in the atmosphere: by 9 million tonnes of CO2; 5,000 tonnes of CO; and 44,000 tonnes of NO2. The full utilization of Georgia’s renewable energy resources could significantly contribute to climate change mitigation in the country.18

To this end, the implementation of the above-mentioned regulations have simplified the regulatory regime for small and medium-sized HPPs and wind power plans. Since 2012, 16 new HPPs have been commissioned and as of 20 January 2017, 35 HPPs are under the licensing and construction stage.19 One WPP has been constructed and is operational near Gori (20 MW) and several Memoranda of Understanding (MoU) for implementation of additional WPPs have been signed. Additionally, two MoUs for solar power plant development have been signed and the Ministry of Energy intends to sign an MoU with the “Caucasus Solar Company”, to develop feasibility studies for solar development.20

Georgia is still lacking a renewable energy law or a strategy that would cover the entire legal framework for effective utilization of all kind of renewable energy resources. There are also no renewable energy targets. As Georgia has applied for full membership in the Energy Community and signed the association agreement with EU, it is expected that the country will have to adopt a mandatory renewable energy target and develop a renewable energy action plan in the near future.

1.4 Additional information on the policy framework

14 Geostat (2015) Energy Balance of Georgia, 2014. Available at http://geostat.ge/?action=page&&p_id=2084&lang=eng 15 Ministry of Energy (2013) HPP Potential: http://www.energy.gov.ge/energy.php?lang=eng&id_pages=60 16 Ministry of Energy (2013) Geothermal Energy: http://www.energy.gov.ge/investor.php?id_pages=22&lang=eng 17 Ministry of Energy (2013) Solar Energy: http://www.energy.gov.ge/investor.php?id_pages=21&lang=eng 18 Ministry of Energy (2013) Electrical Energy Potential. Available at: http://www.energy.gov.ge/energy.php?lang=eng&id_pages=60 19 See Ministry of Energy (2017) Ongoing Renewable Investment Projects - 20.01.2017 . Available at http://www.energy.gov.ge/projects/pdf/pages/Ongoing%20Renewable%20Investment%20Projects%201582%20eng.pdf20 Information based on discussions with the Ministry of Energy and other national stakeholders.


http://www.energy.gov.ge/energy.php?lang=eng&id_pages=60

http://www.energy.gov.ge/investor.php?id_pages=21&lang=eng



http://geostat.ge/?action=page&&p_id=2084&lang=eng

There are two additional important national strategies/action plans which related to climate and energy:

The National Environmental Action Programme (NEAP) of Georgia 2012-1621 assumes that Georgia is on a fast track for economic development. Economic growth is the basis for the country’s welfare which may bring considerable pressure on natural resources and the environment. Therefore, sustainable economic development is important for the country from the perspective of environmental protection and rational use of natural resources. The NEAP sets long term (20-year) goals and short term (5-year) targets in 11 thematic environmental areas including climate change. Climate change mitigation is among the short term targets – Target 3: the creation of favourable conditions for the reduction of GHG emissions. The proposed measures related to this National Energy Efficiency Action Plan (NEEAP) are: the elaboration of Low Emission Development Strategy (LEDS) (ongoing) and the Promotion of EE in the Transport and Building sectors.

Internationally, Georgia has signed several environmental agreements, resulting in international obligations and access to international scientific and technological knowledge and funds. Much of this is related to the accession process to the EU.

Georgia has also developed Georgia’s Intended Nationally Determined Contribution (INDC)22 which was submitted to the United Nations Framework Convention on Climate Change (UNFCCC) at the COP21 in Paris at the end of 2015. Georgia plans to unconditionally reduce its greenhouse gas (GHG) emissions by 15% below the Business As Usual scenario (BAU) for the year 2030. The 15% reduction target can be increased up to 25% in a conditional manner, subject to a global agreement addressing the importance of technical cooperation, access to low-cost financial resources and technology transfer. The 25% reduction below BAU scenario would also ensure that Georgian GHG emissions by 2030 will stay at 40% below the 1990 levels.

21 Ministry of Environment Protection of Georgia (2012) The National Environmental Action Programme (NEAP) of Georgia 2012-16. Approved by the Resolution of the Government #127 of 24 January 2012: http://www.preventionweb.net/files/28719_neap2.eng.pdf22 Government of Georgia (2015) Georgia’s Intended Nationally Determined Contribution Submission to the UNFCCC. Available at: http://www4.unfccc.int/submissions/INDC/Published%20Documents/Georgia/1/INDC_of_Georgia.pdf


http://www4.unfccc.int/submissions/INDC/Published%20Documents/Georgia/1/INDC_of_Georgia.pdf

http://www.preventionweb.net/files/28719_neap2.eng.pdf

2 Overview of National Energy Targets2.1 Overview national energy efficiency targets

Indicated as required for EED reporting by the Guidance and proposed for inclusion

Georgia’s indicative national energy efficiency targets for 2020, 2025, and 2030 are laid out in Table 2-3. The country intends to use 2020 and 2025 as interim target deadlines, with 2030 as an additional indicative target deadline for longer-term projections.

Table 2-3: Georgia’s indicative energy efficiency targets for 2020, 2025, and 2030 versus the Business As Usual Case

Year 2014 2020 2025 2030

CategoryPrimary Energy (GWh)

Final energy (GWh)

Primary Energy (GWh)

Final energy (GWh)


Final energy (GWh)


Final energy (GWh)

BAU 54,894 46,758 63,185 57,426 85,542 70,201 101,810 83,710Savings from measures - - 6,494 3,767 13,334 7,698 17,321 10,936

With measures 54,894 46,758 56,691 53,659 72,209 62,502 84,489 72,774% energy reduction from the BAU

0% 0% 10% 7% 16% 11% 17% 13%

Note: Figures for energy consumption in 2014 come from Geostat’s Energy Balance (published in 2015). The final energy consumption figures for 2014 do not include 27 GWh of non-energy use consumption of oil products in the energy sector.

The BAU estimates of primary and final energy consumption are based on modelling in MARKAL carried out by the Ministry of Energy (see major assumptions below). Savings from measures represent the sum of savings elaborated upon later in this document.

Indicated as recommended for EED reporting by the Guidance and proposed for inclusion

As can be seen from Table 2-3, energy efficiency measures described in this NEEAP would have a significant impact on Georgia’s energy consumption as well as the efficiency of energy production – particularly on electricity production from natural gas-fired power plants.

Detailed methodologies on how the impacts on energy consumption have been calculated are described within each measure – with additional statistical information included in Annex 6.

The BAU scenario was developed using MARKAL modelling software using inputs developed by the Georgian Government as part of the LEDS project. The critical assumptions underlying the Business As Usual scenario are as follows:

The current population is assumed to be 3,729,500 people23 – and would remain constant at this level.

GDP growth is projected to be 5.6% through 2030. Per capita GDP is projected to grow from ~EUR 3,450 in 2015 to ~EUR 7,660 in 2030. The number of households is projected to remain steady at 955,000 through 2030. Growth of energy consumption in industry is projected to grow by 5.6% per year through 2030.

23 See Geostat (2016) Population: http://www.geostat.ge/index.php?action=page&p_id=152&lang=eng



The assumptions for GDP and population for 2015 and the target years are shown in Table 2-4. Projections of primary energy demand according to sector through 2030 are shown in Figure 2-6.

Table 2-4: Population and GDP assumptions for the target years

Name of the variable Units 2015 2020 2025 2030Population growth % 0.0% 0.0% 0.0% 0.0%Population # 3,729,500 3,729,500 3,729,500 3,729,500GDP growth % 3.5% 5.6% 5.6% 5.6%GDP 1000 EUR € 12,870,970 € 16,565,604 € 21,753,387 € 28,565,805

Source: Calculations using the assumptions in the MARKAL model

2014

2016

2018

2020

2022

2024

2026

2028

2030

-

20,000

40,000

60,000

80,000

100,000

120,000

Primary energy demand according to sector - 2014 to 2030

AgricultureElectric (only) Generating PlantsTransportationIndustrialResidentialCommercial

Prim

ary

ener

gy d

eman

d (G

Wh)

Figure 2-6: Primary energy demand according to sector – 2014 to 2030

Source: Calculations using the assumptions in the MARKAL model

The impact on energy consumption has been calculated through the use of individual models for each measure – wherein a BAU case was developed in terms of final energy use and primary energy use, and then the energy efficiency case was developed which entailed a number of potential changes including:

Switching to energy sources which use less primary energy input from non-renewable fuels for the same amount of final energy – such as switching from electricity for hot water heating to solar resources – wherein there is no savings of final energy demand, but there is savings of primary energy as the primary energy to create electricity is reduced.

Improvement of distribution/ transmission/ transformation efficiencies – such as reducing electricity losses or natural gas losses on their respective networks, or improving the efficiency of natural-gas fired power plants by switching to combined-cycle plants.

Improving the efficiency of end-use equipment – such as introducing efficient lighting, efficient wood-stoves, improving the efficiency of vehicles, efficient pumps and boilers in industry, etc.

Switching to more efficient transport means – such as switching from personal cars to buses, trams, or metros. This also includes switching from heavy trucks to rail for freight transport.

Reduction of end-user demand – such as reduction of heating losses in building envelopes, reduction in the use of motorized transport (switching to walking/cycling), improving maintenance of industrial firms, etc.

For electricity, the conversion factor for converting final energy savings into primary energy savings were based on levels of efficiency and losses for electricity production projected over the time period. The


primary energy to be consumed is the final energy divided by the conversion efficiency. The following methodological issues are relevant:

For efficiency measures related to primary energy production/transformation or transmission: the conversion factor used was before the losses in the transmission and distribution – with the assumption that the decreased energy required would result in less production from natural gas-fired power plants (i.e. the conversion factor used was Conversion Factor #1 below)

For most end-use efficiency measures resulting in reduction of electricity demand: the conversion factor used was the average conversion efficiency of primary energy to final energy for natural gas-fired power plants (Conversion Factor #3) – with the assumption that the reduction in demand would result in less natural-gas fired power plant energy production which is the marginal electricity resource typically used.

For end-use measures in the industry sector and building sector resulting in reduction of electricity demand: the conversion factor used was the average conversion efficiency of primary energy to final energy for all power plants (Conversion factor #5) – assuming that the power production displaced would be a mix of natural-gas fired plants and hydro-plants.

For end-use measures resulting in reduction of natural gas demand: Conversion factor #6 was used which reflects the losses in the distribution grid.

For all other fuels (diesel, gasoline, wood, etc.): a conversion factor of 100% was used.

The calculation of primary energy from final energy is given by the following equation:

Primary energy = Final Energy / Conversion factor

Table 2-5: Average conversion efficiencies and losses for electricity production/distribution and for natural gas distribution

Conversion factor # Label Units 2015 2020 2025 2030

1 Average conversion efficiency of natural gas-fired power plants

MWh (grid)/MWh (primary) 32.9% 35.1% 35.8% 36.7%

2 Average network transmission and distribution losses

MWh (final)/MWh (grid) 7.5% 8.5% 8.5% 8.5%

3Average conversion efficiency of primary energy to final energy for natural gas-fired power plants

MWh (final)/MWh (primary) 30.5% 32.1% 32.8% 33.6%

4 Average conversion efficiency of all power plants

MWh(grid)/MWh(primary) 72.9% 78.1% 85.6% 87.0%

5Average conversion efficiency of primary energy to final energy for all power plants

MWh (final)/MWh (primary) 67.4% 71.5% 78.3% 79.6%

6 Average end delivery of the natural gas network (1 - % losses) MWh (final)/MWh primary 91.3% 93.4% 94.7% 95.6%

7 All other fuels MWh (final)/MWh primary 100% 100% 100% 100%

Note: Additional information on the calculation of Conversion factors 1, 2, 4, and 6 are included in Annex 6.The BAU only includes a limited transition to CCGT plants (as described in Measure E-1’s assumptions and in Annex 6 under “Thermal power plants – BAU” – taken from the MARKAL model.


The targets for measures were calculated based as much as possible on the market potential for EE interventions for particular measures – with certain assumptions made regarding the market penetration levels or levels of investment which would occur. These are described in detail for each measure in Section 3 of this NEEAP.


The dates of 2020, 2025, and 2030 as the target dates were chosen to be consistent with the planning horizon of the EU and Energy Community – as well as with Georgia’s Intended Nationally Determined Contribution for reduction of greenhouse gases against the BAU scenario for the UNFCCC.

The targets of energy consumption reduction are less ambitious than the Energy Community targets for 2030 of 30% reduction in final energy consumption. This is due to the fact that Georgia is beginning the process of introducing energy efficiency measures many years after their introduction in most Energy Community contracting parties (with most having joined in 2005 or 2006). Potential savings have not been calculated for a number of measures – most notably related to investments in public buildings that are not kindergartens or schools. With the implementation of these measures, savings could increase beyond the indicative targets of this NEEAP.

The achievement of the indicative targets of this NEEAP is particularly dependent on three factors:1. The implementation of an ambitious policy agenda for energy efficiency:

a. Implementation of an overall project identification, technical assistance, and grant distribution scheme via a renewable energy & energy efficiency agency or an energy efficiency agency – with the exact scope to be decided by the Government (H-1)

b. Incentivizing energy efficiency in industry (H-2)c. In buildings, implementation of the EPBD including energy audit rules (H-9) and building up

expertise (H-5).d. In industry, building up knowledge amongst decision-makers (H-3), establishing energy audit

rules (H-7) and expertise amongst auditors (H-6)e. The introduction of green public procurement practices (P-8)f. A regulatory mechanism to increase the share of the market for efficient light bulbs (B-1 –

impacting P-3 and I-8); andg. A technical inspection programme of vehicles (T-2)

2. The availability of technical assistance for implementation: Many measures are contingent upon the availability of technical assistance within the various sub-sectors to assist private and public sector actors in planning energy efficiency investments.

3. The availability of investment funds for implementation: Furthermore, the availability of lending funds at a reasonable rate – and for some measures grants – will prove to be crucial for widespread uptake of measures.

Table 2-6 and Figure 2-7 show the division of the amount of savings per sector. It can be noted that the savings are fairly well spread across the sectors, with the primary energy sector and transport sectors having a large impact on primary energy savings. Savings targets were not calculated for most horizontal measures, as their impact will be mostly related to stimulation of investment in other sectors. Section 3 of this document goes into detail for each sector describing each energy efficiency measure, assumptions, and expected energy savings.

Table 2-6: Expected energy and GHG savings by measures according to sector

Sector

2020 2025 2030

Primary energy savings (GWh)

Final energy savings (GWh)

GHG emissions abated per year (tonnes CO2eq)







Horizontal measures 96 85 26,134 895 1,033 281,614 2,048 1,936 632,501

Building sector measures 237 170 59,388 306 239 83,767 175 140 48,830

Public sector measures 154 60 32,444 339 138 74,364 391 173 89,785

Industry sector measures 820 771 265,945 1,493 1,376 464,267 2,719 2,498 836,881

Transport sector measures

2,580 2,591 592,882 4,609 4,631 1,128,319 5,702 5,728 1,397,996


Energy transformation, transmission, distribution, and demand response measures

2,606 91 1,209,028 5,693 281 2,343,911 6,285 463 2,576,941

Total savings 6,494 3,767 2,185,821 13,334 7,698 4,376,242 17,321 10,936 5,582,934

2020 2025 2030 -

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

18,000

20,000

Energy transformation, transmis-sion, distribution, and demand response measuresTransport sector measuresIndustry sector measuresPublic sector measuresBuilding sector measuresHorizontal measures

Figure 2-7: Primary energy savings according to sector for 2020, 2025, and 2030 (GWh)


The breakdown of projected overall primary energy consumption and consumption by sectors in 2020, 2025, and 2030 is provided in Table 2-7. It can be seen that primary energy consumption is projected to almost double from 2014 levels.

Table 2-7: Estimates of key national energy production and consumption figures in 2020, 2025, and 2030

Estimate of energy consumption GWh – 2020 GWh – 2025 GWh – 2030

Total primary energy consumption 63,185 85,542 101,810

Electricity transformation input (thermal power generation) 6,332 6,600 6,962

Electricity generation output (thermal power generation) 2,321 2,460 2,647

CHP transformation input - - -

CHP transformation output – thermal - - -

CHP transformation output – electrical - - -

Energy transformation losses 4,012 4,141 4,315

Electricity distribution and transmission losses 1,214 2,097 2,451

Natural gas distribution losses 928 1,039 1,183

Additional losses N/A 8,065 10,150


Total final energy consumption 57,426 70,201 83,710

Final energy consumption – Commercial 6,094 7,147 8,307

Final energy consumption – Residential 17,861 21,356 24,327

Final energy consumption – Industry 10,399 13,263 16,877

Final energy consumption – Transport 20,947 26,160 31,884

Final energy consumption – Other sectors 2,124 2,276 2,315Note: Primary energy consumption and final energy consumption per sector were calculated using the MARKAL model. Expected energy distribution and transmission losses for electricity and distribution losses for natural gas are described in Annex 6.

2.2 Additional energy efficiency targets2.2.1 Additional targets related to energy efficiency

As noted in Section 1.4, Georgia plans to unconditionally reduce its GHG emissions by 15% below the BAU for the year 2030. This is equal to reduction in emission intensity per unit of GDP by approximately 34% from 2013 to 2030. The 15% reduction target would be increased up to 25% in a conditional manner, subject to a global agreement addressing the importance of technical cooperation, access to low-cost financial resources and technology transfer. This is equal to a reduction of emission intensity per unit of GDP by approximately 43% from 2013 to 2030. The 25% reduction below the BAU scenario would also ensure that Georgian GHG emissions by 2030 would stay 40% below 1990 levels.

It is envisaged that the most intensive pre-2020 mitigation action in Georgia should be the voluntary reduction of GHG emissions committed by thirteen self-governing cities and municipalities which have joined the EU initiative “Covenant of Mayors” (CoM). Further facilitation of this initiative will significantly contribute to post -2020 implementation processes. Three Nationally Appropriate Mitigation Actions (NAMA) are under preparation related to transport and buildings. In the case of international support, these actions are expected to be implemented prior to 2020. They are expected to be a basis for subsequent larger-scale mitigation actions for the post-2020 period.

2.2.2 National intermediate target for nearly zero energy buildings for 2020

The implementation of the EPBD is expected in Georgia within the next few years (see the measures described under Section 3.1. However, given the early stages of the implementation process, there is not yet an intermediate target for nearly zero buildings. Plans for considering this target will be developed during the coming 3-year period.24

2.3 Overview of primary energy savings


The primary and final energy savings expected for 2020, 2025 and 2030 are provided in Table 2-8. As noted in Section 2.1, the primary energy savings are linked to final energy savings in that primary consumption is calculated based on final consumption divided by a conversion factor. The factors used are specific to each measure and described in the assumptions in the measure descriptions in Section 3. The final energy savings and how they will be achieved are also outlined in the description of the measures in Section 3.

24 Note that for the EU members, this target for new buildings is 100% by 2020


Table 2-8: Overview of the estimates of primary and final energy savings



2020 6,494 3,7672025 13,334 7,6982030 17,321 10,936

2.4 Information on the achieved final energy savings and forecast savings in energy end-use by 2016 from previous NEEAPs

Information on final or primary energy savings arising from previous measures implementing the EED is not available for this NEEAP since this is the Georgia’s first. Though some energy efficiency measures have been introduced in Georgia – particularly within certain municipalities – their targets and measurements are not the subject of this NEEAP.

It is worth noting, however, that a significant amount has been invested in energy efficiency, most notably by:

Various municipalities as part of the Covenant of Mayors programme – in particular Tbilisi; Various international finance institutions; Energy distribution, transmission, and transportation companies; and The Government in particular related to infrastructure projects and implementing more efficient

thermal power plants.


3 Policy measures implementing the EEDThis section is aimed at bringing together information on all important energy efficiency measures adopted or planned to be adopted in Georgia to implement the EU’s Energy Efficiency Directive (EED - 2012/27/EU). In particular, the main policy measures contributing toward the national 2020, 2025 and 2030 targets for energy efficiency are included.

The analysis and presentation of measures planned for the NEEAP was developed by the Ministry of Energy with the assistance of a consortium experts which were funded by the EBRD and the Government of Sweden. Significant inputs from a variety of national-level stakeholders and municipal stakeholders have been incorporated into the action plan.

Overall responsibility for the implementation and monitoring of the NEEAP will be confirmed by the Government of Georgia. A number of other national and sub-national entities (including municipalities) will play a significant role as well. These are outlined in detail within the description of the measures.

In addition to the 3-year planning horizon for NEEAP implementation, it is envisioned that every year a shorter action plan is developed which will detail what actions have already occurred and what should occur in the coming year. This is consistent with EED requirements.

3.1 Horizontal measures3.1.1 Energy efficiency obligation scheme/ alternative measures

Overall theoretical target of the Energy Efficiency Obligation scheme/alternative measures

Article 7 of the EED requires EU member states to set up an energy efficiency obligation (EEO) scheme or to achieve the same amount of savings with alternative measures. The EEO scheme requires energy distribution companies to achieve yearly energy savings of at least 1.5% of annual sales to final consumers. For Energy Community Contracting Parties, the target for EEOs was set at 0.7% each year from 1 January 2017 to 31 December 2020 over the most recent three-year period prior to 1 January 2016. A country can opt to introduce the above 0.7% target gradually (i.e., 0.5% in 2017 and 2018; 0.7 % in 2019 and 2020), and such and other alternative calculation measures should be notified by 15 October 2017.

Georgia has opted to utilise alternative policy measures in combination with various investment/technical measures within the different sectors in order to achieve these targets. Therefore, the EEO target will not be used for Georgia’s NEEAP. For reference, however, information has been included to demonstrate that the planned achieved savings of the NEEAP will far surpass those of the EEO. Table 3-9 shows the theoretical EEO targets for each year starting in 2017 and going to 2020.

Table 3-9: Energy Efficiency Obligation Scheme targets for Georgia

Savings per year - EEO according to EnC adoption of the EED (MWh) 0.50% 0.50% 0.70% 0.70% Total Cumulative

2017 75,587 75,587 75,5872018 75,587 75,587 151,175 226,7622019 75,587 75,587 105,822 256,997 483,7592020 75,587 75,587 105,822 105,822 362,819 846,578

Annual average 90,705NEEAP target for savings in 2020 3,766,712


Instead of implementing an EEO scheme, Georgia plans to implement a set of alternative policy measures linked with technical/investment measures which reduce final energy consumption. As an alternative (or supplement) to setting up an energy efficiency obligation scheme, the Article 7 of EED allows to take other policy measures to achieve energy savings among final consumers.

The alternative measures included in the Republic of Georgia’s first NEEAP are as follows: Financing schemes for energy efficiency Incentivising / requiring energy efficiency in industry Training and education, including energy advisory programmes Standards and norms and labelling schemes in appliances25

The above measures will not achieve direct savings equivalent to the impact of the EEO scheme, however they will make it possible to achieve savings through the specific technical/investment measures described later in this section which are linked to these alternative measures. Savings in sector-specific measures will more than make up for the lack of savings achieved by a lack of an EEO scheme.

Since the alternative policy measures described are be linked to other sector-specific technical/investment measures, energy savings have not been calculated for any of them except for the measure related to standards and norms and labelling schemes in appliances. The lack of energy savings calculations for the first three measures ensures that there is no double-counting in the presentation of potential savings for this NEEAP. For reporting on the NEEAP, double-counting will be avoided by ensuring transparency of information on where the savings are reported.

H-1: Alternative policy measures – Financing schemes for energy efficiency26

Summary of the measure:

The Government of Georgia plans to establish a new Renewable Energy & Energy Efficiency Agency or an Energy Efficiency Agency - with the exact scope to be decided by the Government) (from here onwards – the New Agency) to support faster implementation of successful energy efficiency programmes and promotion of investments. The key principles of the Agency will be:

The overall mandate of the Agency will have a broad scope for interventions. This would mean that a regulatory act to start the fund would allow it to intervene related to at a minimum energy efficiency.

The institution will be extra-budgetary. Though it may initially be housed within a Ministry (either the Ministry of Energy or Ministry of Economy and Sustainable Development)27, its budget will eventually move towards being independent of allocations from the Central Government – though Central Government funds and donor funds could be utilised.

Budget periods will be longer than one year to allow for flexibility in investments (2 – 3 years). The Agency will initially be funded by Central Government allocations, but investigate

implementation of ongoing revenue streams to allow for grant-making: This is yet to be defined, but could include mechanisms such as (for example):

o Funding from a line item in electricity/natural gas bills;o Funding from an increased excise tax or other fee on cars which have larger engine

sizes/fuel consumption (e.g. a car which is not energy efficient would have a higher fee);o A levy related to energy usage of industrial companies if they do not meet their commitments

for energy efficiency. Initial activities will focus on project/investment identification, donor coordination,

facilitation of grant-making, and facilitation of technical assistance. There are a number of activities and investments planned in Georgia (see the Annex 4). These activities include numerous current and potential large-scale investment programmes for EE, indicating that access to loan

25 This measure is linked to Directive 2010/30/EU but Georgia is not yet an EU Member State – though it is in the process of becoming a Contracting Party to the Energy Community. Therefore, for classification purposes the measure is considered as an “Alternative Policy Measure” for this NEEAP.26 Note that the name and location of the Agency described in this measure is yet to be decided – including whether the Agency would focus on both renewable energy and energy efficiency. During the finalization of the NEEAP this scope will be decided upon. 27 Or possibly within the existing Georgia Energy Development Fund.


finance is not the barrier either for the public sector or for the industry or transport sectors. Indeed, the barriers related to finance are much more likely to be related to the bankability of the organizations taking a loan, identification of investment opportunities, capacity of organizations to apply for finance or develop projects, awareness of end-consumers and business leaders, etc. rather than ability to identify concessional finance. A national organization should carry out and coordinate such activities. This institution (in the form of an Agency) would then remain in place post-project – which would be important for ensuring the impact is sustainable and nation-wide. If there is no sustained national institution which can capture the capacity being built, there may not be a sustainable impact from these programmes. Operationally, this would mean – for example – that donor funds for grants (and some of the technical assistance budgets) are funnelled through the Agency who then hires staff or consultants as needed. These activities should be particularly focused on leveraging grants and technical assistance for private sector finance.

The focus will not be on establishing a Financial Institution which lends directly to clients: Georgia already has a vibrant and largely effective finance sector which can serve end users such as households, industries, etc. Setting up a parallel financial institution does not seem necessary since it could crowd out private finance and also take a lot of time and effort.

The initial focus will be based on 3 main beneficiary groups in areas where activities are already planned for implementation but which are not coordinated and otherwise may not lead to lasting capacity being built. The 3 main groups would be:

o Private actors including industries and power sector companies for EE improvements and audits. UNIDO for example is planning to implement a project for industries. And there may be significant scope for investment in improved hydro-power production.

o Municipalities and central-government ministries/agencies for public building improvements, street lighting improvements, and transport fleet improvements. There are significant investments already being planned by EBRD (up to EUR 130 million and more), NEFCO/E5P (EUR 8.4 million), and likely KfW in these areas. It would be very useful to have central coordination of these activities in combination with technical assistance packages which increase the capacity of a specific Government-owned entity (the Agency) for evaluating and implementing on-going investments.

o The general public including for example: General EE awareness in the residential sector and related to efficient lighting

regulations. Green driving information campaigns (perhaps also promoting technical inspections). The NAMA planned for efficient stoves and solar hot water heaters.

Figure 3-8 shows the type of measures to be implemented by the Agency. The development of the legal framework, bylaws, and operational procedures of the Agency will be completed and the formal establishment of the fund completed by the end of 2017.


Figure 3-8: Horizontal measures to be implemented by the New Agency

Implementing body(ies):

The Ministry of Energy or Ministry of Economy and Sustainable Development initially is expected to house the Agency – then it will be developed into a separate entity. The primary legislation and political decision will be adoption of a legal framework for the Agency, and development and adoption of its charter and operational procedures. The Government will develop a funding strategy and work with donors, IFIs, and energy distribution companies to provide the Agency with resources.

Calculation methodology:

No energy savings are calculated for this measure as it will potentially be linked to the investment and implementation of a number of sector-specific measures.

Assumptions: Estimated 2017 establishment of the Agency (including the legal framework) and investments

starting in 2018 Potential sources of funding could be: grants, a line item in natural gas/ electricity bills, , technical

inspection/taxes on inefficient vehicles, etc. In-kind contribution from the Government of Georgia for policy development, then staff for

implementation/management – estimated 5 to 10 staff-people initially, then growing depending upon the level of programmes/funding.

Technical assistance will be required to assist in establishing the Agency and building capacity. Additional investment resources have not been defined here but will be from other sources (e.g.

IFIs, EU resources, etc.) – including grants mobilised from Donors/IFI’s. Significant resources are identified in various other measures which could be routed through this fund.

Potential positive or adverse impacts or risks of proposed measures on the population


The measure is not expected to have any direct impacts on the population but rather would have in-direct impacts from investments made by the Agency in sector-specific measures.

Additional information on the measure is included in Table 3-10.

Table 3-10: Basic information on H-1: Alternative policy measures – Financing schemes for energy efficiency

Title of the Measure Alternative policy measures - Financing schemes for energy efficiency

Index of the measure H-1

DescriptionCategory Financial instruments

Timeframe Beginning: 2017 End: 2020Aim/brief description Establishment of a new Renewable Energy & Energy Efficiency Agency or Energy Efficiency Agency

Target end-use EE measures in all sectors to be defined by charter and operational manual

Target group All sectorsRegional application Nationwide

Information on implementation

Budget and financial source (2017 - 2030)

Source Type of financing

Budget

2017 2018 2019 2020Total 2017 - 2020

2021 - 2030

Central Government In-kind € 12,000 € 137,000 € 204,000 € 260,000 € 613,000 € 2,902,000

IFIs/Banks - Investment Grants TBD TBD TBD TBD TBD TBD

Total € 12,000 € 137,000 € 204,000 € 260,000 € 613,000 € 2,902,000Non-leveraged 15-year IRR

Not calculated

Implementing body

Ministry of Energy or Ministry of Economy and Sustainable Development initially – then developed into a separate entity

Monitoring authority *

Ministry of Energy and Ministry of Economy and Sustainable Development for energy savings, Ministry of Finance for financial issues

Energy and GHG savingsMethod for monitoring/ measuring the resulting savings

Savings not calculated here, but savings will be monitored based on actual investments from the fund using bottom-up methodologies and verification mechanisms within sector-specific measures. A unified monitoring and measurement tool for all policy measures should be utilised.

Type of savings

Expected primary energy savings (MWh)

Expected final energy savings (MWh)

GHG savings expected (tonnes CO2eq per year)

2020 Not calculated Not calculated Not calculated2025 Not calculated Not calculated Not calculated

2030 Not calculated Not calculated Not calculated

Overlaps, multiplication effect, synergy

Any measure which will receive financing from the Agency can potentially have overlapping in reporting. There are a number of measures which are expected to be implemented by the Agency. To avoid double-counting, savings will only be counted as part of one measure within the sector-level measures. Partly for this reason, savings have not been calculated for this measure.

* Note that the monitoring body would be responsible for reporting the status of measures and the activities / results achieved while the implementing body would be responsible for carrying out activities.


H-2: Alternative policy measures – Incentivising / mandating energy efficiency in industry28


Incentive programmes to encourage EE in industry can take many forms. Given the relatively small size of Georgia’s industrial sector, energy-saving agreements will signal to industry that the Government is supportive of EE investments.29 Such a mechanism will reward industries that invest in EE. This measure will be coupled with steps in the coming years by the Government to allow the prices for energy for industry to increase to reflect the market price (and no more than this). All mechanisms and policies which may result in an increase in energy prices will be studied thoroughly to assess the consequences for industry and how any negative consequences can be counteracted with support for energy efficiency.

The introduction of a measure to incentivise and potentially mandate energy efficiency is envisioned for this first NEEAP period. The measure would involve the Georgian Government negotiating and then agreeing with key industrial actors and/or sub-sectors on a series of realistic energy performance targets, with interim milestones. Targets will be performance related, i.e. energy or emissions per unit of production.

These negotiations would be would likely be: bespoke for large, energy-intense industry organisations top-down/ generic for sub-sectors with large numbers of SME operators

Targets for such a scheme should be challenging but realistic and be based on energy-audit findings (H-7) and/or benchmark comparisons between the Georgian Enterprise and typical and best international practices (e.g. EU BREF Notes). Overall, the targets should be broadly in line with the Georgian Government’s long-term targets to improve energy performance across industry between now and 2030.

In moving forward with such a measure, the process will: Start with recognized energy-intense sectors and/or very large sites Over time, be rolled out to medium and smaller energy-intense sectors and/or sites as Government

become confident in the process.

The measure will initially be voluntary, and there will be incentives to participate/ disincentives not to participate. Over time, if deemed necessary, the agreements may become mandatory for certain industrial actors. The details of the scheme, its mechanism and “what if” questions, will be addressed through consultation between Government, industry and other stakeholders. However, the scheme may include the following:

Those within the scheme and meeting their targets are eligible for Government support such as technical assistance, access to grant funding/interest rate subsidies, etc.

Those outside the scheme or failing to meet their targets would not be able to access these support programmes and may have an additional fee for energy or pollutant emissions (with some flexibility to accommodate organizations that can clearly demonstrate energy-saving activities, but that have been foiled by events outside their control, such as substantial downturn in production).

If a fee system is chosen, it will be valued at around 5-10% of the unit cost of the fuel, i.e. enough to raise awareness nationally, focus the attention of top-management and encourage enterprises to carry-out the many simple, no/low cost EE activities that should be undertaken anyway, but without being overly burdensome to the enterprise.

28 Note that the exact nature and timing of the incentive / mandatory energy efficiency policy described in this measure is yet to be finalized – most notably whether the policy will include mandatory requirements for achieving EE standards or whether there will only be incentives utilised.29 Negotiated energy-saving agreements with industry are something that several EU Member states have introduced with industry over the past 10-15 years. These and similar processes have been effective as a driver to improve industry performance, as well as raising awareness of energy management and energy-efficiency. Implementation of such a measure could dramatically increase energy savings from the industry sector.

Negotiated agreements are implemented in addition to the over-arching EU Emissions Trading Scheme (EU ETS), a cap and trade scheme for large, point-of-generation GHG emitters such as thermal power plants, cement/ glass/ metal manufacturers, sites with large scale boilers or other thermal processing plant, etc.


GNERC already sets fuel tariff rates, therefore can adjust the tariff rates so that the process is revenue neutral overall.

Options will be explored to allow organisations to participate in a “White certificate” or similar trading scheme to (i) trade/ sell their excess energy (or CO2) savings and/or (ii) purchase kWh (or CO2) in the case of under-performance, so as to remain within the Agreement.

A secondary benefit from this measure would be to create a series of sector-organisations that could act as the focal point for these agreements plus other activities, for example identifying suitably qualified independent energy auditors for their sector.

Figure 3-9: Implementation timeline of horizontal measures / policies related to industry


The main implementing body will be the Ministry of Economy and Sustainable Development (Sustainable Development Division) in cooperation with the Ministry of Energy’s Energy Department.


No energy savings are calculated for this measure as it will potentially be linked to the investment and implementation of a number of sector-specific measures.

Assumptions:

Assumes 24 man-months of Government time to develop the legal framework and the equivalent of 4 staff (potentially part-time of existing staff) to run the programme.

Assumes a number of industries will join in the programme – 500 the first year and 25 each year after that for 5 years – with some administrative costs to each industrial enterprise for developing the agreements (estimated at EUR 1,500 each – which would likely be in-kind using staff time).


Technical assistance from both international and national consultants would be necessary for this measure.


The measure is not expected to have any direct impacts on the population but rather would have indirect impacts from investments made by the Agency in sector-specific measures. Indirect positive impacts on the population could be include decreased pollution, increased availability of cheaper energy (since for example natural gas consumption could go down freeing up more “social tariff” natural gas), and improved competitiveness of industries allowing for added growth. Possible negative impacts could occur if a pricing mechanism is too harsh and causes financial stress to industries – putting additional stress on the labour force.


Table 3-11: Basic information on H-2: Alternative policy measures – Incentivising / mandating energy efficiency in industry

Title of the Measure Alternative policy measures – Incentivising / mandating energy efficiency in industry


DescriptionCategory Voluntary agreements and co-operative instruments

Timeframe Beginning: 2017 End: 2020

Aim/brief description

This measure involves establishing a series of energy saving agreements with (a) Large industry companies, (b) important industrial sectors which are energy-intense. The process will:- start with recognized energy-intense sectors and/or very large sites - be rolled out to medium and smaller energy-intense sectors and/or sites as they become confident in the process.

Target end-use All industry, but particularly large industrial sites or large sectors in Georgia

Target group All industry, but particularly large industrial sites or large sectors in GeorgiaRegional application National



SourceType of financin

g

Budget

2017 2018 2019 2020 Total 2017 - 2020 2021 - 2030


Industry/Private companies In-kind € 0 € 796,000 € 41,000 € 41,000 € 878,000 € 129,000

Total € 25,000 € 872,000 € 145,000 € 147,000 € 1,189,000 € 1,313,000

Non-leveraged 15-year IRR Not calculated

Implementing body Ministry of Economy and Sustainable Development

Monitoring authority Ministry of Economy and Sustainable Development with cooperation from the Ministry of Energy


The performance of the organisation will be compared against its agreed targets at key milestone dates. If the organisation meets its targets, it can utilise various incentive programmes, if it misses its target, it cannot.


Type of savings








This measure is directly linked with others in the industry sector: many of the EE investment decisions in industry will be influence by sites/ sectors wanting to meet their energy performance targets.

H-3: Alternative policy measures – Training and education, including energy advisory programmes


The market of energy efficiency in Georgia lacks capacity of adequate project developers, EE and sustainable energy investment professionals as well as adequate expertise which can help the project owners and beneficiaries adequately initiate dialogue and conclude an EE financing deal between the EE project owner and the financier. The business environment for energy efficiency investments will be accelerated by developing a holistic capacity building program and implementing it targeting training project developers and local financial institutions on key aspects of EE project finance. In particular, the measure will involve:

Identifying key entities who can develop energy efficiency projects, providing them with improved knowledge and skills for making better EE investment decisions;

Presenting trainees with EU best practices on EE financing conditions, technologies and methods, including risk management, security activities and monitoring steps, as well as their efficient use,

Presenting effective approaches and systems for EE financing, including case studies of completed loan deals and investment projects, as well as demonstration of working plants constructed through EE financing tools, and projects implemented within the scope of EE financing;

Producing bankable EE projects and business plans, organizing Business-to-Business meetings with financial institutions and other potential interested investors

The three pillars of the energy efficiency investment market are the borrowers (local companies which are energy consumers), the project developers (engineers, auditors, ESCOs, etc.), and financiers (local financial institutions who offer financing for investments). If one or more of these pillars lacks institutional or technical capacity to adequately process decisions on energy efficiency finance, the market will remain underdeveloped.

To develop the capacity of borrowers, trainings on the use and benefits of energy auditing, investing energy efficiency will be organized for industries and SMEs.

At the same time, the energy engineers, energy audit companies and companies providing energy services will be trained to offer and commercialize their services to the local companies, and deliver adequate investment documents (in addition to the engineering reports).

As the last pillar, capacity building will be organized for local financial institutions and companies providing energy services on performance contracting. 30

Where possible, combined study tours and capacity building workshop on EE Awareness Raising. Study tours to an EU country with advanced EE in partnership with local EE info centre or similar institute, including on site workshops, will be organized. The task may also be implemented in synergy with H-5 “Qualification, accreditation, and certification schemes”.


30 For more on Energy Performance Contracting, see http://iet.jrc.ec.europa.eu/energyefficiency/european-energy-service-companies/energy-performance-contracting


http://iet.jrc.ec.europa.eu/energyefficiency/european-energy-service-companies/energy-performance-contracting

http://iet.jrc.ec.europa.eu/energyefficiency/european-energy-service-companies/energy-performance-contracting

The New Agency (from H-1) is expected to be tasked with building the programme – in cooperation with the Ministry of Economy and Sustainable Development, the Ministry of Energy, and/or the Ministry of Environment and Natural Resources. The Agency will develop curricula for energy managers, companies providing energy services, and local financial institutions related to energy efficiency, organize site visit, study tours, workshops and seminars on EE financing for bankers, senior officials within the local financial institutions (LFIs), project developers, business entities.


No energy savings are calculated for this measure. The above capacity building efforts will not directly result in energy savings – as a typical horizontal measure the savings will be produced from sector-specific measures and investments which result from the enhanced capacities of market players.

Assumptions:

Over the entire period of implementation, costs are expected to include: In-kind contribution from the Government of Georgia for policy development and employees for the

implementation/management of the training institution – including carrying out trainings/events, etc. Technical assistance of national experts and international experts over the course of the first 3

years. Training location costs of for setting up the physical location and on-going costs.

The measure’s success is likely dependent upon the implementation of H-2: Alternative policy measures – Incentivising / mandating energy efficiency in industry– which will provide a signal that EE is important for industrial actors in particular.

Potential positive or adverse impacts or risks of proposed measures on the population:

The measure is not expected to have any adverse impacts on the general population.


Table 3-12: Basic information on H-3: Alternative policy measures – Training and education, including energy advisory programmes

Title of the Measure Alternative policy measures – Training and education, including energy advisory programmes


DescriptionCategory Information and mandatory information measures



Facilitate business environment for energy efficiency investments by training project developers and local financial institutions on key aspects of EE project finance.

Target end-use Commercial/business and state entities – particularly related to commercial and industrial sector

Target group Commercial/business and state entities, companies and professionals providing energy services, local financial institutions

Regional application Nationwide




Budget

2017 2018 2019 2020 Total 2017 - 2020 2021 - 2030

Central Government In-kind € 0 € 156,000 € 101,000 € 136,000 € 393,000 € 1,523,000

Total € 0 € 156,000 € 101,000 € 136,000 € 393,000 € 1,523,000Non- Not calculated


leveraged 15-year IRRImplementing body

The New Agency in cooperation with Ministry of Economy and Sustainable Development, Ministry of Energy, Ministry of Environment, donors/ IFIs

Monitoring authority Ministry of Economy and Sustainable Development and Ministry of Energy

Energy and GHG savings

Method for monitoring/ measuring the resulting savings

The measure is not expected to result in direct energy savings - though as a part of follow up from the training carried out, it will be requested that participants report on savings achieved as a result of the trainings – i.e. a bottom-up approach. A unified monitoring and measurement tool for all policy measures should be utilised.

Type of savings








This is a horizontal measure. It is expected to be implemented by the New Agency. The impact of enhanced awareness will have a cross-cutting impact on all sectors and accelerate the investments in implementation of other EE improvement measures in the NEEAP.

This measure is complementary to:- H-2: Alternative policy measures – Incentivising / mandating energy efficiency in industry - which will provide motivation for executives to be interested in energy efficiency- H-6: Qualification, accreditation, and certification schemes - Industry - which deals with the setting up of official qualification, accreditation, and certification schemes.- H-7: Energy audits and management systems, boiler inspections in the industry sector – which focuses on energy audits and boiler inspection in the industry but focuses on training the industry sector directly rather than external actors which would influence the sector.

This measure is expected to build awareness and knowledge which can then be utilised in the development of official schemes while at the same time moving the process forward in parallel to legal regulations being adopted. It will also contribute to measures involving investments in industrial energy efficiency.

H-4: Alternative policy measures – Standards and norms and labelling schemes in appliances


As a Candidate to become a Contracting Party to the Energy Community Treaty (soon to be full member), Georgia plans to follow the provisions of the EU Directives and plan the transposition according to the Energy Community work program. Using the provisions of the Directive 2010/30/EU of the European Parliament and of the Council as the basis for defining labelling requirements, an energy efficiency labelling system for energy consuming appliances in Georgia will be introduced based on best practice. This will include drafting, adopting and ensuring enforcement of legislation and its delegated acts on Labelling of energy related products. Implementation will apply a phased approach, with only a limited number of appliances subject to labelling in the first phase. The list of appliances subject to labelling would then be gradually enlarged. To this aim, the corresponding international and European (CEN) standards on testing the energy performance of selected energy-consuming appliances must be translated and adopted. The development and enforcement of the regulatory package for appliance labelling must be accompanied by design and launch of a labelling outreach campaign.

Due to the missing framework and low level of awareness, the appliance labelling program will require extensive groundwork. In addition, the appliance labelling has a delayed impact on the appliance market due to the slow appliance replacement rate, especially in years of low economic activity. Consequently, this activity will not deliver energy savings within the first three years.

Energy savings will be achieved through:


Increased awareness and consequently modified end-user behaviour. Informed decision-making in purchase or replacement of appliances, vehicles, and industrial

equipment. Enhanced market penetration of energy efficient appliances.


The Ministry of Economy and Sustainable Development will be lead the drafting, adopting and ensuring enforcement of a Government Decision on energy labelling regulation.31


The calculation for energy saved involved estimating energy savings for newly purchased household appliances where:

New appliances purchased (including new penetration and 15-year replacement rate) were estimated for each year from now through 2030 – including dishwashers, washing machines, televisions and refrigerators. Other items which could be impacted by this measure (lighting, industrial equipment, etc.) are covered under other measures;

Energy consumption per inefficient appliance in the BAU was estimated according to EU averages and cross-checked against the average household consumption from energy audits;

Energy consumption per efficient appliance was estimated according to EU averages (EE case); Total projected primary and final energy consumed by was calculated for the BAU and EE cases.

Assumptions:

Energy savings calculations focus on relatively significant energy consuming household appliances, and assume the following cases:32

Total number of households in 2017 of 955,000 remaining constant through 2030. Case 1: Washing machines:

o 74.67% market penetration in 2017 of which 20% will not be replaced. Remaining 80% to be replaced at 8.33% per year. Growing market penetration to 90.67% in 2030.

o BAU appliances with consumption of 222 kWh per year and EE appliances with consumption of 193 kWh per year33

Case 2: Dishwashers: o 2.08% market penetration in 2017 of which 20% will not be replaced. Remaining 80% to be

replaced at 8.33% per year. Growing market penetration to 8.58% in 2030.o BAU appliances with consumption of 290 kWh per year and EE appliances with consumption

of 261 kWh per year34

Case 3: Refrigerating appliances: o 87.58% market penetration in 2015 of which 20% will not be replaced. Remaining 80% to be

replaced at 8.00% per year. Growing market penetration to 98.58% in 2030.o BAU appliances with consumption of 243 kWh per year and EE appliances with 196 kWh per

year consumption35

Case 4: Televisions:o 100% market penetration in 2015 remaining constant – of which 20% will not be replaced.

Remaining 80% to be replaced at 13.33% per year.

31 Technical assistance for this measure is currently being provided by DANIDA.32 Estimate from MARKAL model for the market penetration of the various appliances over time.33 Based on TopTen.eu (2015) Energy efficiency of White Goods in Europe: monitoring the market with sales data - p. 31 – referring to an appliance with an A rating (BAU) and with an A++ rating (EE case).34 Example used for the BAU case of A+ machine at AO.com (2016) Beko DFC05R10W Standard Dishwasher – White. Available at: http://ao.com/product/dfc05r10w-beko-standard-dishwasher-white-36586-23.aspx

For the EE case A++ machine at AO.com (2016) Beko DFN28R20W Standard Dishwasher – White. Available at: http://ao.com/product/dfn28r20w-beko-standard-dishwasher-white-36657-23.aspx35 Based on TopTen.eu (2015) Energy efficiency of White Goods in Europe: monitoring the market with sales data - p. 15 – referring to an appliance with an A rating (BAU) and with an A++ rating (EE case).


http://ao.com/product/dfc05r10w-beko-standard-dishwasher-white-36586-23.aspx

http://ao.com/product/dfn28r20w-beko-standard-dishwasher-white-36657-23.aspx

o BAU appliances with consumption of 118 kWh per year and EE appliances with 83 kWh per year consumption.36

Already in Georgia some labels are being used. It is assumed that the following percentages of new appliances purchased will be A+, A++, or A+++:

2017, 2018, and 2019: 5% 40% in 2020 and growing by 7.5% each year until reaching 95% in 2028

Over the period of implementation, costs are expected to include: In-kind contribution from the Government of Georgia for policy development and then for

implementation/management (part time from inspection agencies); Technical assistance of national experts and international experts over the course of the first 3

years would be necessary for setting up the policy, training inspection agencies, and ensuring a smooth implementation.


The measure is not expected to have any direct impacts on the population but rather would improve access to information about the efficiency of appliances – improving customer choices. This measure does not involve banning inefficient appliances, but rather labelling all appliances. Consumer education would occur but the actual impacts on the population would depend upon consumer choices and not on the regulatory framework.


Table 3-13: Basic information on H-4: Alternative policy measures – Standards and norms and labelling schemes in appliances

Title of the Measure Alternative policy measures - Standards and norms and labelling schemes in appliances


DescriptionCategory Regulation Information and mandatory information measures



Using the provisions of the EC Directive (2010/30/EU) as the basis for defining labelling requirements, an energy efficiency labelling system for energy consuming appliances in Georgia will be introduced based on best practice. This will include drafting, adopting and ensuring enforcement of a Government Decision on energy labelling regulation. The development and enforcement of the regulatory package for appliance labelling must be accompanied by design and launch of a labelling outreach campaign.

Target end-use Existing buildings, appliance replacement

Target group Property owners, tenants, product suppliers





Budget

2017 2018 2019 2020 Total 2017 - 2020 2021 - 2030

Central Government In-kind € 0 € 87,000 € 89,000 € 78,000 € 254,000 € 870,000

Households Investment € 0 € 1,405,000 €

1,433,000€

11,692,000€

14,530,000€

243,621,000

Total € 0 € 1,492,000 € 1,522,000

€ 11,770,000

€ 14,784,000

€ 244,491,000

Non-leveraged

Not calculated

36 Based on London Economics (2014) Study on the impact of the energy label – and potential changes to it – on consumer understanding and on purchase decisions, p 52


15-year IRR

Implementing body Ministry of Economy and Sustainable Development



In order to monitor the effects of this measure it is necessary to use Top-Down methodology as recommended by the European Commission involving analysis of market penetration and sales of different types of household appliances, etc. A unified monitoring and measurement tool for all policy measures should be utilised.

Type of savings




2020 5,962 4,261 1,491

2025 38,337 30,031 10,511

2030 84,618 67,318 23,561


This is a horizontal measure. The impact may overlap with other measures particularly those raising public awareness, facilitating energy efficiency finance, and legal-regulatory reform. Note that for the calculation of energy savings, only household appliances of dishwashers, washing machines, televisions and refrigeration appliances were examined. Most other products which could be covered by this measure (lighting, buildings, etc.) would be covered under other measures.

3.1.2 Energy savings as a result of the implementation of the EEO and alternative policy measures

Since this is Georgia’s 1st NEEAP, there is no information on results achieved to date as a result of the implementation of the EEO and alternative policy measures.

3.1.3 Availability of qualification, accreditation and certification schemes


Buildings:

National level of technical competence, objectivity and reliability of the qualification, accreditation and certification schemes

The current level of technical competence objectivity and reliability of the qualification, accreditation and certification schemes is insufficient in Georgia. There is some – but limited – good existing experience of certification of energy auditors carried out within the framework of the long term capacity building program: "Energy Efficiency and Cleaner Production in Georgia" launched by the Norwegian Government in 2003. The program aimed to develop local capacities and skills for contributing to energy efficiency in industry and buildings. As a basic discipline for any EE activities in buildings, training on Energy Auditing of Buildings was carried out by the ENSI Company from Norway in 2004. This program envisaged close co-operation with the Georgian Technical University (GTU). Sixteen participants were enrolled in this one year training program and in April 2006 received certificates of Energy Auditors.

Existing or planned qualification, accreditation and certification schemes

The level of technical competence on the qualification, accreditation and certification schemes in buildings sector must be improved at a national level. To fulfil this objective the Government of Georgia is already planning the coordinated support for energy efficiency in buildings sector. Under a partnership cooperation programme between the Danish Ministry of Foreign Affairs and the Ministry of Energy as part of the


“Support to Energy Efficiency and Sustainable Energy in Georgia” within the framework of the Danish Neighbourhood Programme, it is currently envisaged that building codes will be developed with consideration of energy efficiency targets. Capacity will also be strengthened for monitoring and reporting on national energy consumption. To contribute to these national energy efficiency objectives it is envisaged that the Nordic Environment Finance Corporation (NEFCO) will support energy efficient building design for public buildings and awareness raising campaigns, as well as the training of energy auditors. It is expected that these activities will initiate suitable training programs and improve level of competence of energy service providers, energy managers, energy auditors and construction companies involved in the installation of building elements requiring high energy performance.

These planned activities are reflected in Measures H-8: Consumer information programmes and training and H-5: Qualification, accreditation, and certification schemes – buildings.

Industry:

National level of technical competence, objectivity and reliability of the qualification, accreditation and certification schemes

There are currently no official qualification, accreditation, and certification schemes for industry in Georgia. Related to this, the general level of technical competence is low related to energy efficiency opportunities in industry – which represents a major barrier to improvement in the sector.

Existing or planned qualification, accreditation and certification schemes

One of the long term outputs from the proposed mandatory auditing and EE agreements will be to continue to develop a pool of local Georgian expertise in energy-management and EE technologies. As mentioned under H-6’s descriptions, the Georgian Government plans to regulate energy auditing skills via scoring (or rating) levels of experience and expertise across key sectors and technologies. A similar process is already used in several EU member states to ensure the quality of the auditors is above a minimum standard.

Several accreditation bodies recognise that industry is represented by multiple sectors and sub-sectors, as well as numerous technologies – some sector specific (for instance electric-arc melting in steel, or rotary kilns for cement), others generic (motors, compressed-air, refrigeration plant, boilers & steam systems. It is unlikely that any one individual or company will be “expert” for all sectors and for all technologies and techniques, therefore the sectors and technologies need to be disaggregated and the scoring levels need to be clear and supported with evidence and, ideally, “peer-review” confirmation.

Certified auditors can be internal to the company, or external – either in a consultancy organisation or sole-traders. Details of the accreditation plan will be agreed between Government and other stakeholders. It is currently planned that it will be the individual who is certified; as it is the individual who will have the experience in the sector or technology.

There is a great need for increased competence in technical skills related to energy efficiency in the industry sector in Georgia. The process of accreditation can be extended to “soft” skills, such as energy management. Understanding the fundamentals of energy management and energy-efficiency is important and it is currently planned that the training institution under H-5 will provide training and awareness on:

Energy management techniques, including: understanding key energy centres, sub-metering/ monitoring and targeting, process optimisation - planning & scheduling,

Energy auditing techniques: how to carry out an audit in accordance with ISO50002/ EN 1624737

Financial appraisal techniques and putting forward good economic case for investment Engaging with workforce and modifying attitudes/ behaviour/ motivation, Understanding frequently occurring no/low cost EE opportunities, including motors, fans & pumps,

lights, compressed air, refrigeration systems, boilers, hot-water and steam systems, heat-recovery, etc.

37 Translation of these standards will also be necessary.


Activities to increase competence and introduce qualification, accreditation, and certification schemes are outlined in measure H-6: Qualification, accreditation, and certification schemes – Industry.


H-5: Qualification, accreditation, and certification schemes – Buildings


This measure involves the setting up of officially approved certification and/or accreditation schemes, including suitable training facility and programmes as relates to buildings. This will increase the number and capacity of providers of energy services, energy audits, energy managers and installers of energy-related building elements.

The Government will ensure that the proposed scheme provides transparency to consumers, are reliable and contributes to national energy efficiency objectives.

The Government will also make publicly available the certification and/or accreditation schemes or equivalent qualification schemes and shall cooperate among themselves on comparisons between, and recognition of, the schemes.

The Government will take appropriate measures such as the development of a website to make consumers aware of the availability of qualification and/or certification schemes and of certified auditors.

Energy audits carried out by trainees and checked by supervisors will also be used to develop a database of buildings and energy use (See Measure P-1 for example).


The primary implementing body will be the Ministry of Economy and Sustainable Development (Spatial Planning Department) with potential cooperation with an administrating entity.


No energy savings are calculated for this measure. The capacity building efforts will not directly result in energy savings – as a typical horizontal measure the savings will be produced from sector-specific measures and investments which result from the enhanced capacity of market players.

Assumptions:

Assumes the availability of institutional ownership and funding.

Over the entire period of implementation, costs are expected to include: In-kind contribution from the Government of Georgia – 9 months for policy development, 2

employees per year for implementation/management until the end of technical assistance – at which time there would be 3 employees per year. Costs could/would be recouped by fees for becoming certified.

Technical assistance from national experts and international experts over the course of the first 3 years.38

EUR 250,000 in Government assistance in developing of the measure – materials, lecturers fees, rent, etc.


38 Currently being planned as a part of a Technical Assistance Programme by NEFCO.


This measure is not expected to have any direct positive or adverse impacts on the general population. At the same time, an increase in skills amongst implementing actors will likely create increased economic opportunity.

Additional information on Measure H-5 is included in Table 3-14.

Table 3-14: Basic information on H-5: Qualification, accreditation, and certification schemes – BuildingsTitle of the Measure Qualification, accreditation, and certification schemes - Buildings





This measure involves the setting up of officially sanctioned certification and/or accreditation schemes and/or equivalent qualification schemes, including suitable training programmes for providers of energy services, energy audits, energy managers and installers of energy-related building elements. The aim is to increase capacity in a measurable way for the provision of energy services, audits, etc. for buildings.

Target end-use Buildings

Target group Building professionals and energy professionals/energy managers for buildings





Budget

2017 2018 2019 2020 Total 2017 - 2020

2021 - 2030

Central Government In-kind € 137,000 € 131,000 € 101,000 € 78,000 € 447,000 € 870,000

Total € 137,000 € 131,000 € 101,000 € 78,000 € 447,000 € 870,000Non-leveraged 15-year IRR

Not calculated

Implementing body Ministry of Economy and Sustainable Development with close cooperation with a training institution



Energy savings not calculated – but there will be a monitoring of the number of officially certified energy professionals

Type of savings









The measure is directly linked to:- H-3: Training and education, including energy advisory programmes;- H-6: Energy audits and management systems, boiler inspections in the industry sector; and- H-8: EPBD Transposition and Enforcement: Standards and norms and labelling schemes in buildings

While these three measures involve training and implementation of energy auditing schemes, this measure involves the codification of the schemes into an officially sanctioned format for buildings in particular – as well as publication of information on those who have become qualified/ certified.

Energy audits carried out by trainees and checked by supervisors will also be used to develop a database of buildings and energy use (See P-1).

H-6: Qualification, accreditation, and certification schemes – Industry


This measure involves the setting up of officially approved certification and/or accreditation schemes, including suitable training facility and programmes for industry. This will increase the number and capacity of providers of energy services, energy audits, energy managers and installers of energy-related building elements.

The Government will ensure that the proposed scheme provides transparency to consumers, are reliable and contributes to national energy efficiency objectives.

The Government will also make publicly available the certification and/or accreditation schemes or equivalent qualification schemes and shall cooperate among themselves on comparisons between, and recognition of, the schemes.

The Government will take appropriate measures such as the development of a website to make consumers aware of the availability of qualification and/or certification schemes and of certified auditors.


The primary implementing body will be the Ministry of Economy and Sustainable Development (Sustainable Development Division) with potential cooperation with an administrating entity.


No energy savings are calculated for this measure. The capacity building efforts will not directly result in energy savings – as a typical horizontal measure the savings will be produced from sector-specific measures and investments which result from the enhanced capacity of market players.

Assumptions:


Over the entire period of implementation, costs are expected to include: In-kind contribution from the Government of Georgia – 9 months for policy development, 2

employees per year for implementation/management until the end of technical assistance – at which time there would be 3 employees per year. Costs could/would be recouped by fees for becoming certified.

Technical assistance – national experts and international experts over the course of the first 3 years EUR 250,000 in Government assistance in developing of the measure – materials, lecturers fees,

rent, etc.



This measure is not expected to have any direct positive or adverse impacts on the general population. At the same time, an increase in skills amongst implementing actors will likely create increased economic opportunity.


Table 3-15: Basic information on H-6: Qualification, accreditation, and certification schemes – IndustryTitle of the Measure Qualification, accreditation, and certification schemes - Industry





This measure involves the setting up of officially sanctioned certification and/or accreditation schemes and/or equivalent qualification schemes, including suitable training programmes for providers of energy services, energy audits, energy managers and installers of energy-related industry elements. The aim is to increase capacity in a measurable way for the provision of energy services, audits, etc. for industry.

Target end-use Industry

Target group Energy professionals/energy managers in industryRegional application Nationwide




g

Budget

2017 2018 2019 2020 Total 2017 - 2020

2021 - 2030

Central Government In-kind € 137,000 € 131,000 € 101,000 € 78,000 € 447,000 €

870,000

Total € 137,000 € 131,000 € 101,000 € 78,000 € 447,000 € 870,000

Non-leveraged 15-year IRR

Not calculated

Implementing body Ministry of Economy and Sustainable Development with close cooperation with a training institution

Monitoring authority Ministry of Economy and Sustainable Development and cooperation from the Ministry of Energy


Energy savings not calculated – but there will be a monitoring of the number of officially certified energy professionals

Type of savings








The measure is directly linked to:- H-2: Alternative policy measures – Incentivising / mandating energy efficiency in industry - H-3: Training and education, including energy advisory programmes- H-5: Qualification, accreditation, and certification schemes - Buildings- H-7: Energy audits and management systems, boiler inspections in the industry sector

While these measures involve training and implementation of energy auditing schemes as well as encouraging industrial actors to take action on energy efficiency, this measure involves the codification of auditing schemes into an officially sanctioned format in the industry sector in particular – as well as publication of information on those who have become qualified/ certified.


3.1.4 Energy audits and management systems

Activities planned and already undertaken to promote energy audits and energy management systems – Industry

In recent years, Georgia has had several donor-funded Energy assessment / audit type programmes, although these have generally been small-scale and ad-hoc. There has been no systematic encouragement of energy audits in industry by the central Government. Donor-funded programmes have included:

United Nations Industrial Development Organization (UNIDO) “walk-through” or “express” energy audits, carried out by local consultants.

A Resource Efficient and Cleaner Production (RECP) demonstration project, within the framework of UNIDO’s EapGREEN Programme. The prime objective of the project is to improve resource productivity and environmental performance of Georgian enterprises and to put sustainable industrial development into practice. The first set of RECP projects was completed in 2014, comprising 10 organisations from food, construction materials and chemicals production sectors. The RECP assessment identified annual savings of 3.15 GWh of potential energy savings and 10,532 m3 of potential water savings. The estimated cost of investment was EUR 317,000 with an average payback period of less than 2 years. This programme is also supported at the local level in Rustavi.

European Bank for Reconstruction and Development (EBRD) short audits and Case Studies of EE opportunities. As part of this programme, in recent years, EBRD and its consultants implemented (amongst other smaller audits):

o An efficiency audit at JSC GeoSteel;o An efficiency audit at Cross JSC Wissol Petroleum Georgia;o An efficiency audit at Healthy Water in Tbilisi;o An energy audit of the company “Castel Georgia” brewery.

EBRD sponsored energy audits of the company “Margebeli”, which comprised 5 industrial companies (in 2009).

International Finance Corporation (IFC) also sponsored the carrying out of an Energy Performance Assessment and Review of Energy Efficiency Management Systems at JSC SANTE GMT Milk Products (in 2012).

Additionally, as a part of the preparation of this NEEAP, the expert team conducted brief visits to 8 industrial sites which were used to feed into the overall NEEAP appraisal of total energy saving opportunities across all Georgian industry, and what would be the best interventions.

Plans for obliging large enterprises to carry out energy audits

As part of the 2012 Energy Efficiency Directive39, Article 8 obliged all “non-SME” organisations (i.e. large businesses) within EU Member States to introduce:

Mandatory energy auditing of at least 90% of the Organisation’s estate every 4 years, or Independent certification of a recognized Energy Management system standards (e.g. ISO 50001).

The deadline for implementation of the first round of mandatory energy auditing was 5 December 2015. Non-Member States applying for EU membership were expected to harmonize with this Directive. The Energy Community then adopted a decision for implementation of the directive40 which sets the deadline for the first round of mandatory energy audits as being complete by 5 November 2018. Given the late start with this system, it is unlikely that Georgia will meet this deadline, but it is likely that the system will be in place by this date and that audits will be underway.

39 Directive 2012/27/EU of the European Parliament and of the Council of 25 October 2012 on energy efficiency, amending Directives 2009/125/EC and 2010/30/EU and repealing Directives 2004/8/EC and 2006/32/EC.40 Decision of the Ministerial Council of the Energy Community # D/2015/08/MC-EnC: on the implementation of the Directive 2012/27/EU of the European Parliament and of the Council of 25 October 2012 on energy efficiency, amending Directives 2009/125/EC and 2010/30/EU and repealing Directives 2004/8/EC and 2006/32/EC. Dated 8 December, 2015.


It is important to note that the EU definition for a “large” organisation is rather different from Georgia’s current definition. The EU defines a large organisation as:

250 employees (per Member State) or Turnover of more than EUR 50 million and assets of more than EUR 43 million

Whereas Georgia has the following definitions: Large: turnover more than 1.5 million GEL per year (approx. EUR 500,000 per year) and over 100

employees. Both criteria need to be met for the company to be considered large. Medium: turnover of between 0.5 – 1.5 million GEL per year and between 20-100 employees Small: turnover of less than 0.5 million GEL per year and less than 20 employees. The company is

considered small if either of these criteria is met.

Georgia plans to change its definitions to become more in-line with EU standards.

According to Geostat data, in 2013, there were 536 “large”, 661 “medium” and 5,487 “small” industrial organisations in Georgia – using the Georgian definition. Using the EU definition, the NEEAP team estimate there are between 50 and 100 “large” industrial organisations and a further 1,100 – 1,250 “medium” organisations in Georgia.

Measure H-7 describes the plans for obliging large enterprises to carry out energy audits in Georgia. However, it is not envisioned that this obligation takes effect until the later stages of the first NEEAP – though energy audits be highly encouraged through technical assistance activities.

H-7: Energy audits and management systems, boiler inspections in the industry sector


This measure involves ensuring the availability of efficient, high-quality energy audits which are designed to identify potential energy efficiency improvement measures and which are carried out in an independent manner, to all final industrial consumers, including large, medium, and small industrial customers.

Energy saving actions:

The measure involves two energy saving actions:

Energy audits: Improve the process for energy-management, improve capacity of energy auditing, and implementation of mandatory energy auditing amongst large industrial consumers. This includes ensuring the availability of efficient, high-quality energy audit schemes which are designed to identify potential energy efficiency improvement measures and which are carried out in an independent manner, to all final consumers, including smaller domestic, commercial and small and medium-sized industrial customers.

Inspections of boilers/air conditioning systems: Based on site visits, a large proportion of industry and non-industry boilers and steam/ hot-water systems, as well as air-handling/ air-conditioning systems, are old, poorly insulated (if at all), badly maintained and generally not functioning correctly – thus wasting significant amounts of energy. Regular inspections are legally prescribed by the Rule Book on Building Energy performances pursuant to the requirements of the Energy Performance of Buildings Directive. The Technical and Construction Supervision Agency (TCSA) is the governmental entity in charge of supervising hot water boilers including supervision of safety and control of subsequent documentation of regular inspections performed by industries.

Steps for implementation:

This measure would involve several activities:


Defining criteria to decide which industries are required to either carry out audits or have an Energy Management System in place – then developing a list of these companies based on statistical reporting.

Development and adoption of Energy Audit Rulebook (for industries) Development and adoption of industrial Boiler Inspection Procedures Training and certification of Independent Energy Auditors Training and certification of Hot Water Boilers Auditors Improving information availability, training, advice, free or low-priced energy audit support, etc. Raising EE technology and techniques knowledge & awareness through:

o Effective energy management – ideally working towards ISO 50001 o Process optimisation: pinch technologies, planning & scheduling, design.o System optimisation (compressed air, fan systems, pump systems, motors, boilers and

steam/ hot-water generation and distribution, waste-heat recovery). Development of programmes to encourage SMEs to undergo energy audits and implement

recommendations – including helping to cover costs Encourage training programmes for the qualification of energy auditors in order to facilitate sufficient

availability of experts.

Benefits of implementation:

Energy audits of industry, particularly large/ energy-intense industries will be a valuable route forward for establishing a sustainable long-term plan for encouraging and making energy-savings across industry. There are many benefits, including:

Identifying simple “no/low” cost and “behavioural" EE opportunities, which can offer Georgian industrial enterprises more than 20% energy savings, with an payback of less than 2 years.

Robust energy and production data is gathered and reported large (and medium sized) organisations. Lack of good quality basic base-year data is a recurring problem for developing a National Energy Action Plan, and data robustness has been identified as a potential issue for understanding Georgia’s industry base-line position.

Introducing individuals to the fundamentals of effective energy management systems, which will help ensure longevity of the process within that organisation as well as (long-term) building a pool of local (transferrable) energy expertize within Georgia. This lack of local energy-experts is a major weakness for implementing industry energy savings in Georgia.

Better define the costs and benefits of larger capital investment projects, reducing uncertainty and risk in the capital expenditure appraisal.

Allow “benchmarking” individual Georgian enterprises against similar industries elsewhere, as well as better estimating the realistic potential for cost-effective energy savings (and water, raw-material, waste) at the sites.

Act as the basis for setting challenging but realistic energy saving targets for industrial organisation between now and 2030, potentially negotiated and agreed between Georgian Government and industrial organisations at a future date.

The EED (Article 7, Clause 24) mandates that large industries have audits every 4 years or implement an energy management system. This mandate is not expected to be introduced in Georgia in initial 2 year time period – but the obligation is expected to be in place by 2020. In the mean-time, it is planned to identify co-financing for energy audits from donors alongside strong encouragement from the Government for implementation.

Barriers to Industry Energy audits: lack of local auditing expertise

The biggest long-term barrier to introducing mandatory energy auditing across Georgian industry is the lack of local skills and expertise in industrial energy auditing. This has already been recognised and an important component of UNIDO’s RECP Demonstration project is human and institutional capacity building. A total of 18 Georgian experts were selected and trained in application of RECP techniques and methodology in the period April – August 2014 and June – December 2015.


Initially, this gap should be bridged by making use of international industry auditing expertise from EU and other advanced economies,41 where energy auditing is more widespread. This is factored into the measure budget. Whilst carrying out the audits, these international experts will also provide on-the-job training for local consultants.

Control of the Auditing Community

Longer term, one of the outputs from the proposed auditing of industry and other large organisations will be to create a pool of local Georgian expertise in energy-management and energy efficiency technologies. This will be through attention to effective energy management at the site or organisation level. As industry energy auditing requirements grow, the Energy Auditing community is likely to grow. Unfortunately, experience elsewhere has shown that unscrupulous organisations may try to take advantage of this expanding market, offering services without necessarily having the required skills. This needs to be prevented.

Clearly, an auditor can gain knowledge of a sector or technology via training, but direct experience in the sector/ technology can be much more valuable. The Georgian Government plans therefore to regulate energy auditing skills via scoring levels of expertize in key sectors and technologies. This scoring will need to be supported with evidence and, ideally, “peer-review” confirmation. This will prevent undermining the integrity of the Auditing community and the audit process itself.

Details will be agreed between Government and other stakeholders, but it is important that it is the individual who is certified.

Robust Energy Management systems and ISO50001

Large Enterprises in EU Member states are exempted from carrying out energy audits if they implement an energy or environmental management system which (i) is certified by an independent body according to the relevant European and International Standards and (ii) includes an energy audit on the basis of the minimum criteria.

ISO50001 is the internationally recognized standard for Energy Management systems. It accompanies its sister standard on Energy Auditing, ISO50002. For several EU Member States, if an organisation has ISO50001 certification for part or all of its sites, this counts partially or wholly towards it meeting the obligations to undergo an audit every 4 years. The idea is that, site(s) that have ISO50001 certification already have good control on their energy consumption and will have a strategy for identifying and implementing no/low cost EE activities as well as an investment plan. These strategies are often brought about from external or internal audits of their sites. Part of the long-term aim of the National Energy programme will be to encourage larger industrial organisations to work towards effective energy-management and ISO50001 certification.


The measure would be implemented by the Ministry of Economy and Sustainable Development (Sustainable Development Division) who would also set up a controlling mechanism for the quality of energy audits and auditors and with the Ministry of Energy involved as a stakeholder. As noted above, the TCSA is the governmental entity in charge of supervising hot water boilers including supervision of safety and control of subsequent documentation of regular inspections performed by industries.


The energy savings of this measure are calculated by estimating the likely savings from no-cost/low-cost energy management improvements for the sector as a whole which would be triggered by energy audits – dominated by large and medium-sized industries.

41 Any international expert should be able to demonstrate that they work to EN16247 or ISO50002 (Energy Auditing standard) – usually by being recognised through a certified body in their home-country.


Baseline energy data is provided by Georgia’s 2014 Energy Balance42 with the sector’s energy consumption increasing over time according to its growth.

The projected year-on-year impact from the capacity building programme on industry energy performance over time would start with zero impact for first 2 years, then increase by approximately 0.5% additional impact per year starting in 2019 – up to a total of 4.25% savings against the BAU case in industry for the year 2028 (then continuing at that level until 2030). These savings will be mostly via improved energy management and control using existing equipment, plus implementation of no and low cost opportunities.

Assumptions:

The measure assumes that rulebooks and standards for auditing will be adopted by 2018, with ongoing implementation.

Year-on-year impact from the capacity building programme on industry energy performance over time are projected to start with zero impact for first 2 years, thereafter approximately 0.25% additional impact per year starting in 2019 through 2021, then 0.5% additional impact per year through 2028 – resulting in a cumulative impact of 4.25% savings against the BAU case. These will be mostly via improved energy management and control using existing equipment, plus implementation of no and low cost opportunities. Expected implementation in:

100% of large industries over the course of a 5-year period (estimated 86 firms through 2020) – after which audits for these companies will become mandatory every 4 years if they do not have an approved Energy Management System in place (i.e. 25% of firms implementing audits every year).

6% of medium-sized industries per year (67 per year out of an estimated 1,111) 1% of small-sized industries per year (55 per year out of 5,487)

Cost per audit assumed to be EUR 10,000 for large industries, EUR 6,000 for medium, and EUR 3,000 for small. These costs would decrease (by about half) after the market is more fully established.

IRR calculated based on an example energy audit of a large industrial company currently consuming approximately 101 GWh of electricity per year and 18.4 GWh of coal. Investment assumes to be EUR 10,000 for an energy audit plus an additional EUR 30,000 investment for an energy manager and savings of just 1% per year from a large industrial example (a very conservative amount of savings) – resulting in net savings of over EUR 78,000 per year.

Over the entire initial period of implementation, costs are expected to include: In-kind contribution of 12 man-months from the Government of Georgia for policy development and

for implementation/management. Technical assistance of national experts and international experts over the course of the first 4

years – mostly for carrying out energy audits but with significant work in developing rule books and trainings as well.

Industry investments in audits where there is no technical assistance available.


This measure is not considered to have adverse impacts or risks to the general population, though there may be positive impacts due to improved competitiveness of industry and reduced pollution at sites which implement changes due to the energy audits.


Table 3-16: Basic information on H-7: Energy audits and management systems, boiler inspections in the industry sector

Title of the Measure Energy audits and management systems, boiler inspections in the industry sector

42 Available at: http://www.geostat.ge/index.php?action=page&p_id=1895&lang=eng







This measure involves ensuring the availability of efficient, high-quality energy audits which are designed to identify potential energy efficiency improvement measures and which are carried out in an independent manner, to all final industrial consumers, including smaller Georgian companies including large, medium, and small industrial customers.

Target end-use All industry

Target group All industryRegional application National




Budget

2017 2018 2019 2020 Total 2017 - 2020 2021 - 2030


Industry/Private companies

Investment € 0 € 0 € 347,000 € 460,000 € 807,000 € 4,362,000


119.3%

Implementing body Ministry of Economy and Sustainable Development including the TCSA

Monitoring authority Ministry of Economy and Sustainable Development including the TCSA


Tracking of overall energy performance of industry sector over time, after adjustment for changes to industry product-mix.

Type of savings




2020 70,887 62,082 18,6942025 434,542 590,035 130,8482030 932,919 854,659 257,353


The calculations have estimated the impact of the capacity building programme over-and-above the direct energy-saving opportunities identified elsewhere, including the many technical/ investment opportunities.

The measure is directly linked to investment measures in industry and is also directly linked with - H-3: Alternative policy measures – Training and education, including energy advisory programmes- H-6: Qualification, accreditation, and certification schemes - Industry

The number of energy audits expected to be carried out in the upcoming period (until 2020)

Initially, the aim will be to carry out a series of simple/ general audits, covering all major energy centres, with a view to carrying out more detailed audits of specific processes or technologies that appears to offer good EE potential based on the general audit findings.

Initially, audits will be targeted for large/ very large organisations (the 50 – 100 “large” Georgian industry organisations, using the EU definition). Some will be multiple-sites, for others it may be possible to sample a selection of sites then apply the findings to all. If/when Georgia harmonizes its legislation with the EED, these would be mandatory. Overall, an estimated 250 audits in total will be carried out by the end of 2020.


In the medium-term, the scope can be expanded to medium sized organisations. Clearly, if all the estimated 1,100 medium sized organisations were to be audited, this would require an additional >1,100 site-audits, albeit these would be shorter than the “larger” sites. Longer term, if and when some of the smaller sites are audited, the number would quickly rise to >1000. A major driver for energy audits of medium sized enterprises would be the impact from a volunteer agreement mechanism geared towards encouraging EE in Industry – see measure H-2. If medium-sized (and smaller) enterprises are covered under any Voluntary Agreements scheme or similar, then this will create a large demand for energy audits to help these organisations identify opportunities and develop an Action Plan for meeting their energy-saving targets.

Table 3-17: Expected number of audits to be carried out of industry before 2020

Year 2018 2019 2020 Total# of large industries undertaking audits/implementing energy management systems

22 43 22 86

# of medium industries undertaking audits/implementing energy management systems

28 39 50 117

# of small industries undertaking audits/implementing energy management systems

14 41 55 110

Total # of audits/energy management systems implemented 63 123 126 312

3.1.5 Metering and billing

Overall, the metering and billing regime in Georgia is based on actual consumption for the main energy sources. This does not include Abkhazia, where consumers are mostly not metered to industry standards.

Gas consumption is currently metered for all residential and commercial consumers. As a part of the extension of the gas supply to new customers, meters to measure consumption are installed in all cases.

Electricity supply is currently being metered for practically all commercial and industrial consumers. According to Georgia National Energy and Water Supply Regulatory Commission’s Annual Report of 2014, as of January 2015 only about 160 consumers were not individually metered.43 These are mainly residential consumers. There are three main distributors of electricity. They each have had some level of consumers who were not metered individually but rather were subject to collective metering:

AES Telasi: previously had 42,000 consumers without individual meters. According to recent updates by the company however, individual metering of consumers has been completed and they are now installing the modern electronic meters in the network to bring online intelligent metering.

JSC ENERGO-PRO Georgia: previously had 80,000 consumers without individual meters. According to recent updates by the company however, they have now metered an additional 30,000 customers and now the total number of consumers without individual meters is 50,000; and

JSC Kakheti Energy Distribution: approximately 32,000 consumers are without individual meters.

Financial difficulties in JSC ENERGO-PRO Georgia and JSC Kakheti Energy Distribution likely have affected their ability to meter these consumers. It is expected that JSC ENERGO-PRO Georgia will complete installation of individual meters in 2017.

In the gas network all consumers are metered.

Meter readings are performed monthly and electricity and gas consumption information is supplied to the consumers monthly and is shown on respective bills – which are mandatory for payment in an allocated period of time.

43 The annual report is available via http://gnerc.org/en/home


http://gnerc.org/en/home

Regarding information about minimum frequencies for the provision of complementary information on actual consumption44 there is no information of this type provided unless requested by the consumer – though it is available.

Regarding easy access of costumers to complementary information on actual consumption. AES Telasi has a website providing the billing history for consumers. Customers need to register for this website and they can read their previous billing and payment history for electricity, water and waste disposal.

Information is not available regarding the number and percentage of final customers who opted for electronic billing or requested more frequent provision of billing information.

Metering in the water supply is relatively rare since it was not envisaged in original design and requires major rearrangement of existing piping based on risers going from floor to floor. A majority of households are paying a flat payment based on the number of inhabitants in the dwelling. Larger commercial and industrial consumers are metered individually. Domestic hot water is not provided to residential consumers except maybe in some exceptional cases. Heating/cooling is commercially provided only to businesses in big commercial buildings and is subject to general contractual arrangements between building owner and the business.

3.1.6 Consumer information programmes and training

The responsible ministries (Ministry of Economy and Sustainable Development, Ministry of Energy, Ministry of Environment and Natural Resources) in cooperation with Donors/IFI while developing an EE program will elaborate various communication programs connected to the specific measures as outlined within each of the measures’ descriptions. The Public Relations office of relevant state institutions must each develop its own communication strategy and invite professional associations and/or other Non-governmental Organizations (NGOs) in the development of outreach campaigns. Public broadcaster and other media must be actively involved in this process. This is particularly important as the Central Government has access to the use of certain media outlets for the purposes of promoting its programmes – which could be used for encouraging energy efficiency.


Information on measures promoting behavioural change among small energy consumers

Public awareness is important to increase and stimulate support, self-mobilization and action, mobilization of knowledge and resources. Awareness raising requires strategies of effective communication to reach the desired outcome. The combination of these communication strategies for a target groups is an “awareness raising campaign”. The aim of awareness raising campaigns is informing the targeted audience, the creation of positive image, and to achieve long-term lasting behavioural changes.

Campaigns on raising public awareness on the costs and environmental impacts associated with energy consumption address different groups of stakeholders, mostly energy consumers, but also children (future consumers),educational & public institutions, businesses, as well as government.

In Georgia, energy efficiency public awareness campaigns are mostly run by non-governmental organizations working in the environmental or energy field. Such campaigns were/are usually linked to donor funded projects implemented by these organizations, including workshops and trainings, conferences, summer eco-camps for school students, and publication of thematic brochures.

The first broad-scale country-wide EE public awareness campaign was initiated by BP and supported the “Energy Bus” – the energy information centre/exhibition on wheels with on-board multi-media interactive displays and models of renewable energy and EE technologies. The campaign aimed to effectively

44 This complementary information includes (a) cumulative data for at least the three previous years or the period since the start of the supply contract if this is shorter; and (b) detailed data according to the time of use for any day, week, month and year – to be made available to the final customer via the internet or the meter interface.


communicate best practices in energy efficiency and alternative energy technologies in villages and towns throughout Georgia.

In 2010 Tbilisi first joined the Covenant of Mayors, and since then 12 more cities have joined. As part of being a part of this organization, these municipalities began the implementation of various energy efficient measures – which included capacity building of their employees and public awareness activities such as the organization of Sustainable Energy Days/Weeks including exhibitions, conferences, youth competitions, sports activities, etc. Currently, the Tbilisi City Hall is also working with donor support on the establishment of the “Tbilisi Sustainable Energy Information Centre” to be housed in the city hall building with a dedicated web-site.

Technical assistance activities and information programmes targeted at improving energy efficiency at SMEs

Georgian industry comprises a large number of SMEs – there are an estimated 6,500 SME industrial operators (using the EU definition). Clearly, these cannot all be reached individually – even through a significant programme.

Section 3.1.4 has provided information on industry energy auditing – which will initially target the large and medium sized enterprises in Georgia. Energy auditing will still be viable for SMEs, but the administrative costs and effort versus energy savings are generally not as good as for larger sites.

Part of the tasks of the New Agency (H-1) would therefore be to:1. Gather and provide up-to-date information, on frequently occurring saving opportunities for sectors

with a large SME population. These will include: Food & Drink and Engineering sectors.2. Generate “Case Studies” of successful EE actions and investments made by Georgian (or

neighbouring country) industrial sites that would give confidence in the technology. 3. Maintain a list of certified energy auditors with skills and experience relevant to the sector and its

key technologies.4. Provide training and awareness, on:

a. energy management, including monitoring and targeting, b. workforce attitudes/ behaviour, c. Good (frequently occurring) no/low cost EE opportunities

5. Others, as the programme develops and matures.

Dissemination of information among relevant market actors

Information about available EE mechanisms and financial and legal frameworks is currently disseminated primarily on the basis of particular EE programmes/projects. Within these programmes/projects, it is common that there is a technical assistance which is a result of cooperation with donors – which then cooperate with local NGO’s targeting the communication strategy for specific market actors.

The communication strategy via official publication from Parliament and the Ministries involve official communication channels. These can involve the dissemination of information on EE financial and legal frameworks via:

Live TV/ Radio talk shows in national and regional TV/Radio channels; Identification and dissemination of information of success stories from Georgia and/or Energy

Community/EU countries which underline the role and benefits of the main market player groups. Development and publication of articles in printed media

Dissemination of information to banks and other financial institutions

As with other market actors, the dissemination of information to banks and other financial institutions about the possibilities of participating, including through the creation of public/private partnerships, in the financing of energy efficiency improvement measures takes place often via a technical assistance programme in cooperation with Donors and local NGOs.


There have been a number of energy efficiency programmes which have involved local financial institutions – most notably the Energocredit Georgia45 programme being implemented by EBRD which has a technical assistance component and is geared towards working with local financial institutions to promote lending to households and businesses for EE.

Communication and information measures facilitating the engagement of consumers and consumer organisations during the possible rollout of smart meters

Currently, there are no plans for the wide-spread implementation of smart meters in Georgia. Therefore, communication and information measures related to this are not envisioned.

Information, awareness-raising, and training initiatives planned to inform citizens of the benefits and practicalities of taking energy efficiency improvement measures

There are a number of measures described within this NEEAP which have components related to awareness raising. They are described in Table 3-18. The information dissemination/awareness raising activities implies the vertical involvement of the appropriate public institutions, based on their competences and authorities assigned by law. It also will involve significant technical assistance – primarily in designing the activities.

Table 3-18: Measures with awareness raising components to them in the NEEAP

Index of Measure

Title of the Measure Target group Public Awareness/outreach

Activities

Proposed budget for awareness raising activities (2017 - 2020)

H-1

Alternative policy measures - Financing schemes for energy efficiency

All sectors

The New Agency could assist in carrying out promotional programmes to promote energy efficiency in various fields.

N/A - budget not specifically developed for awareness raising in this NEEAP

H-4

Alternative policy measures - Standards and norms and labelling schemes in appliances

Property owners, tenants, product suppliers

Development and enforcement of the regulatory package for appliance labelling must be accompanied by design and launch of a labelling outreach campaign.

N/A - budget not specifically developed for awareness raising in this NEEAP

H-8

Consumer information programmes and training

End-users in residential sector, public, commercial/ businesses, media

Highlighting particular problems that need to be addressed through legislation or regulation (i.e. preparing the public for EE legislation/ regulations which will be implemented)- Providing the public with information on EE measures which can be carried out- Developing EE information materials and working with general public, including students and children, as well officials, business entities, NGOs, etc.

€ 600,000

H-9

EPBD Transposition and Enforcement: Standards and

Building owners, building professionals (architects, building engineers,

Energy certificates on buildings will be important for building awareness.

N/A - budget not specifically developed for awareness

45 See http://www.energocredit.ge/en for details


http://www.energocredit.ge/en

Index of Measure


Activities


norms and labelling schemes in buildings

construction companies, real estate developers), public institutions

raising in this NEEAP

B-1

Regulations leading to improved efficient lighting systems in residential and commercial buildings

The general public and private commercial companies

Awareness raising will take place regarding the benefits of the policy and why it is being implemented

N/A - budget for awareness raising for this measure is included in H-8

P-3Efficient lighting systems in public buildings

Public institutions – excluding schools and kindergartens

Reminders posted to employees encouraging them to switch off lights when not working.

To be decided based on Technical Assistance

P-4

Improvement of the energy efficiency in central government-owned public buildings - schools

School buildings and the occupants of the schools

- Information distributed on implemented measures and potential savings for teachers, schoolchildren, parents; - Trainings for teachers on energy savings;- Introducing “Energy Efficiency hour” in the school curriculum;- Schoolchildren involvement in monitoring energy savings.


P-5

Improvement of the energy efficiency in central government-owned public buildings - non-schools

Central Government - with additional awareness of the general public

- Informational meetings for employees on energy efficiency measures;- Displays, booths or bulletin boards placed in high-traffic areas and lobbies to promote the implemented measures


P-6

Improvement of the energy efficiency of non-central government-owned public buildings - kindergartens

Municipalities which are owners of the kindergartens and the occupants of the kindergartens

- Information distributed on implemented measures and potential savings for teachers, children, parents- Trainings for teachers on energy savings.


P-7

Improvement of the energy efficiency of non-central government-owned public buildings - non-kindergartens

Non-central Government - predominantly municipalities - with additional awareness of the general public

- Informational meetings for employees on energy efficiency measures;- Displays, booths or bulletin boards placed in high-traffic areas and lobbies to promote the implemented measures


P-9

Improvement of efficiency in street-lighting/outdoor lighting

Predominantly municipalities with some inter-city areas - with additional awareness of the general public

Awareness raising for the general public regarding the measure's implementation


T-1Vehicle improvement - Mandatory periodic

General populationAwareness raising will take place regarding the benefits of the policy and why it is being implemented

N/A - budget for awareness raising for this


Index of Measure


Activities


roadworthiness tests for motor vehicles

measure is included in T-2

T-2

Public awareness - Information campaign for transport

Professional drivers for education, and general public for a broader campaign

Information campaign on energy efficient behaviour in transport € 406,000

T-4

Urban mobility - Encouraging modal shifts from cars to public transport/ walking/ bicycling

General population

Awareness raising for the general public regarding the measure's implementation, alternative means of transport, etc.

N/A - budget for awareness raising for this measure is included in T-2

E-7Efficient wood-burning stoves for rural households

Households

Awareness raising will take place regarding the benefits of the policy, opportunities for finance, etc. Leaflets on smart utilization of forestry resources and energy efficient stoves, articles especially in regional media and TV spots in regional TV stations.


E-8 Solar hot water heating Residential buildings

Awareness raising will take place regarding the benefits of the policy, opportunities for finance, etc. Leaflets on ways of utilization of solar energy for hot water supply; articles especially in regional media and TV spots in regional TV stations.


Total €1,006,000

H-8: Consumer information programmes and training


As a part of the awareness raising activities, there will be a specific horizontal measure linked to investments in the building and public sector. This measure seeks to promote EE policy by engaging in outreach and awareness-raising events, focused predominantly on the general public but also including businesses. Particular issues to be addressed include:

Highlighting particular problems that need to be addressed through legislation or regulation (i.e. preparing the public for EE legislation/regulations which will be implemented);

Providing the public with information on EE measures which can be carried out; Developing EE information materials and working with general public, including students and

children, as well officials, business entities, NGOs, etc.

This measure also equips participants with improved knowledge and skills for making better EE awareness-raising decisions.


The New Agency – in cooperation with the Ministry of Economy and Sustainable Development, Ministry of Energy, Ministry of Environment and Natural Resources, Municipalities, NGOs, donors/ IFIs.



No energy savings are calculated for this measure. The awareness raising efforts will not directly result in energy savings – as a typical horizontal measure the savings will be produced from sector-specific measures and investments which result from the enhanced awareness of market players.

Assumptions:


Over the initial 4-year period, total cost estimated to broken down as follows: EUR 1.56 million from the Government in public awareness campaigns either in cash or in-kind

contributions - advertisement purchasing and placement EUR 600,000 from municipalities implementing various energy efficiency awareness activities

(approximately EUR 20,000 per year for 10 municipalities) Additional in-kind contribution for setting up the programme and one staff-person on-going involved

(likely from the New Agency) Technical assistance of national experts and international experts for designing the campaign,

advertisements, etc.


No adverse impacts are expected from the measure on the general population. Potential positive impacts would include increased energy and financial savings from implementation of energy efficiency measures.

Additional information about measure H-8 is included in Table 3-19.

Table 3-19: Basic information on H-8: Consumer information programmes and trainingTitle of the Measure Consumer information programmes and training



Timeframe Beginning: 2018 End: 2020Aim/brief description

The aim is to communicate cost-effective and easy-to-achieve changes in energy use, and/or information on EE measures.

Target end-use End-users in residential sector, public, commercial/businesses, media

Target group End-users in residential sector, public, commercial/businesses, mediaRegional application Nationwide




g

Budget

2017 2018 2019 2020 Total 2017 - 2020 2021 - 2030

Central Government In-kind € 0 € 6,000 € 782,000 € 776,000 €

1,564,000 € 1,040,000

Municipalities In-kind € 0 € 200,000 € 200,000 € 200,000 € 600,000 € 0

Total € 0 € 206,000 € 982,000 € 976,000 € 2,164,000 € 1,040,000


Not calculated

Implementing body

The New Agency - in cooperation with the Ministry of Economy and Sustainable Development, Ministry of Energy, Ministry of Environment and Natural Resources, Municipalities, NGOs, donors/ IFIs

Monitoring authority Ministry of Energy and Ministry of Economy and Sustainable Development



Savings not calculated here, but savings will be monitored based on changes in consumer behaviour via public surveys before and after implementation.

Type of savings








This is a horizontal measure. The impact of enhanced awareness will have a cross-cutting impact on all sectors and accelerate the implementation of other EE improvement measures in the NEEAP. There are also other measures which include awareness raising in the public sector, the transport sector, and the buildings sector. The measure will also be implemented mostly by the New Agency.

3.1.7 Energy Services

Indicated as required for EED reporting by the Guidance

Information on measures related to energy performance contracting and energy services are not yet applicable as the market does not exist – nor are there concrete plans to promote them yet.

Based upon analysis carried out in preparation of this NEEAP, the scope for the potential market for Energy Performance Contracting (EnPC) are as follows related to specific sectors in which EnPCs are common:

Industry: There is a large market potential for EnPC implementation in the industrial sector, with potentially over EUR 200 million in investment opportunities available with IRRs over 30%. However, there are significant market barriers which would inhibit the growth of such a market – notably lack of awareness of savings opportunities, and lack of stability within the industry sector leading to risk-averse behaviour related to capital investments (i.e. industries are not willing to invest or implement energy efficiency measures due to concern about the basic health of the business.

Public sector buildings: There is limited scope for EnPC implementation in the public building sector due mostly to low IRRs related to heating of buildings (typically 1 – 10% at a maximum). This is primarily due to low energy consumption in existing buildings and low energy prices – particularly natural gas.

Public sector lighting: There is a large market potential for EnPC implementation in public sector lighting – with potentially over EUR 90 million in investment required and typical IRRs of over 30%. Specific steps will need to be taken to establish this market.

The types of companies which could provide these services include national engineering and construction firms – likely linked with international firms interested in the Georgian market. An additional potential implementing company could be the energy distribution companies – who could set up separate companies to implement energy efficiency measures via an EnPC modality.

Actions which should/could be taken to develop the market for energy services in Georgia include: Addressing specific regulatory and non-regulatory barriers – particularly related to public

procurement (see P-8 – Green Public Procurement); Development and publication of model contracts for energy services providers and best practices

for energy performance contracting; Assignment of a national point of contact to provide consumers with information on energy services; Development of an independent mechanism such as an ombudsman to ensure the handling of

complaints on energy service contracts; Steps to enable independent market intermediaries to play a role in stimulating market development

of the demand and supply sides; and


Steps to ensure that energy distributors, distribution system operators and retail energy sales companies refrain from activities that may impede the demand for and delivery of energy services, or hinder the development of markets for such services.

3.1.8 Other energy efficiency measures of a horizontal nature


In addition to those Horizontal measures describe above, in the coming period, Georgia also plans to undertake the following activities/measures to encourage energy efficiency:

Investigating the changing of regulations on multi-family apartment buildings to allow for building-level investment;

Implementing regulations in public procurement to allow for energy efficiency/lifetime costs to be included in decision-making (See measure P-8 Green Procurement on Energy Efficiency); and

Transposing the EU’s Energy Performance in Buildings directive in the coming years (see H-9 below).

H-9: EPBD Transposition and Enforcement: Standards and norms and labelling schemes in buildings


This measure involves the national scale transposition and enforcement of the Energy Performance in Buildings Directive (2010/31/EU). It will establish the building energy performance requirements through building codes and certification. The current construction code includes a statement on energy efficiency but does not set up any energy efficiency indicators for buildings. Based on Code’s requirement, the Government of Georgia will elaborate and issue technical regulations on building energy efficiency by 1 June 2019. This measure will cumulatively promote efficiency improvements in the subsector for public, residential, and commercial buildings. Implementation of the EPBD will create the legal and regulatory basis, technical capacity, norms and technical guidance, as well as awareness of users of buildings and transform the market towards more efficient buildings.

Aspects of the transposition and enforcement of the EPBD include the following: Adoption of a methodology for calculating the energy performance of buildings Calculation of cost-optimal levels of minimum energy performance requirements and setting these

levels for new and existing buildings For new buildings, ensuring that before construction starts, the technical, environmental and

economic feasibility of high-efficiency alternative systems if available is considered and taken into account

For existing buildings, ensuring that when buildings undergo major renovation, the energy performance of the building or the renovated part is upgraded to meet minimum energy performance requirements

For the purpose of optimising the energy use of technical building systems, setting system requirements in respect of the overall energy performance, the proper installation, and the appropriate dimensioning, adjustment and control of the technical building systems

Ensuring that a target date is set and implemented for all new buildings to be nearly zero energy buildings – as well as some level of refurbished buildings;

Where considered appropriate, development financial incentives to address market barriers Development and implementation of a system for energy performance certification for new and

existing buildings Implementation of necessary actions to establish regular inspection of the accessible parts of

systems used for heating buildings and air conditioning systems Development of a building stock Inventory Development of reference buildings


The full policy package will require laws, regulations and activities which are to be adopted/ amended and enforced/ implemented, as follows:

Spatial planning and construction code of Georgia; Laws and regulations affecting construction and the operation of the residential building stock; Energy Law; Technical regulations on energy audits; Technical regulations on building energy efficiency; A programme for training, examination and certification of energy auditors; A programme for training of Home Owners and Home Owners Associations; A tariff system for charging for trainings and examination; and A tariff system for charging for carrying out energy audits.

Energy auditing will define the technology connected to building materials, windows, doors, insulation materials, lighting and HVAC systems.

In order to realize the measure, the following steps will be undertaken initially as relates to energy audits and certification to allow for more effective later implementation (see also H-5: Qualification, accreditation, and certification schemes – Buildings). The New Agency in collaboration with MoESD will:

Select organizations that will provide trainings and tests for Energy Auditors Provide for the preparation and approval of the program for training of Energy Auditors Provide for the preparation of a text book for the training of Energy Auditors Provide trainings and certification of Energy Auditors (to start approximately at the end of 2019)

Public sector entities will be obliged to carry out regular energy audits of their building stock every 3 years and to provide energy performance certificate.

Starting from 2020, energy performance certificates will become mandatory for (a) buildings or building units which are constructed, sold or rented out to a new tenant;(b) buildings where a total useful floor area over 500 m2 is occupied by a public authority and

frequently visited by the public – later this threshold of 500 m2 shall be lowered to 250 m2.

Implementation of the EPBD will involve a phased approach with new buildings addressed first, then buildings undergoing major renovations, public buildings, and then moving on to requirements for existing buildings.


The measure will primarily be implemented by the Ministry of Economy and Sustainable Development (Spatial-Planning and Construction Policy Department) with cooperation from other institutions – in particular municipalities wherein the inspection services for buildings are housed.46


The calculation for energy saved involved estimating energy savings for newly-built residential buildings where:

New dwellings and buildings projected to be built were estimated for each year from now through 2030;

Energy consumption per dwelling/building was estimated according to building type without any EPBD intervention (BAU case);

Energy consumption per dwelling/building was estimated according to building type with energy demand reductions due to EPBD interventions (EE case);

Total projected primary and final energy consumed by new dwellings was calculated for the BAU and EE cases.

Assumptions:

46 It should be noted that many municipalities do not have building inspectors currently on staff.


The measure assumes political will to develop and adopt the regulatory package.

Energy savings calculations focus on new buildings in the residential sector, and assume the following cases: 47

Case 1: Apartments heating with natural gas - urban, central heating (i.e. a radiator system – not district heating):

o 2,500 – 3,000 new dwellings each year with 84.9 m2 per dwellingo 150 kWh/m2 specific heating demand in the BAU case and a 67% reduction in demand in

the EE case.o Heating 100% of floor area using natural gas central heaters with 93% efficiency.

Case 2: Home heating with natural gas - urban, central heating (i.e. a radiator system – not district heating):

o 300 new dwellings per year in 2017 increasing to 620 new dwellings per year in 2030 with an average size of 149 m2.

o 200 kWh/m2 specific heating demand in the BAU case, 57% reduction in demand in the EE case.

o Heating 90% of floor area using natural gas central heaters with 93% efficiency. Case 3: Home heating with natural gas - urban, local area heating:

o 860 new dwellings per year in 2017 decreasing to 400 new dwellings per year in 2030 over the period with an average size of 149 m2.

o 250 kWh/m2 specific heating demand in the BAU case, 57% reduction in demand in the EE case.

o Only heating 36% of floor area initially and building to 58% over 15 years using natural gas heaters with 93% efficiency. In the EE case, the heated area would increase to 80% in the first year after implementation and stay at that level.

Case 4: House heating with wood logs - rural - local are heating:o 2,300 new dwellings in 2017 reducing to 1,360 per year in 2030 with an average size of 196

m2.o 250 kWh/m2 specific heating demand in the BAU case, 57% reduction in demand in the EE

caseo In the BAU case, only heating 28% of floor area initially and building to 54% over 15 years

using wood stoves with 40% efficiency. In the EE case, the heated area would increase to 75% in the first year and the wood stove efficiency would increase to 60%.

New buildings are expected to have to meet new standards starting in 2023 – with a 3-year phase in period in 2020, 2021, and 2021 (where 25% of new buildings are expected to meet standards in 2020, 50% of new buildings will meet standards in 2021, 75% of new buildings will meet standards in 2022, and 100% of new buildings will meet standards from 2023)..

Over the entire period of implementation, costs are expected to include: In-kind contribution from the Government of Georgia of 36 man-months for policy development

(part-time by existing staff) and 4 (potentially new) staff for implementation/management who would, amongst other activities, check and file energy audits, assist municipalities, etc.

In-kind contributions from municipalities of approximately 0.5 man-months for inspection services per municipality/region per year with 64 of municipalities/regions per year.

Technical assistance including national and international experts over the course of the first 4 years.


This measure is not expected to have adverse impacts on the general population. One impact will be that for those selling or renting building spaces, they will be required to invest in energy audits. Experience from

47 Estimate from MARKAL model for the number of dwellings built and size of dwellings (except for Case 4, where the average size was based on the average size of houses amongst urban areas with SEAPs combined with studies done on a number of smaller municipal areas by the NEEAP preparation team – likely underestimated), with specific energy demand based on energy audits in the residential sector in Georgia. Dynamics of percentage of floor heated was based on expert opinion of the NEEAP development team.

Energy consumption figures are based on energy audits of new houses carried out by experts developing the NEEAP.


EU countries show that this cost is typically EUR 50 – 200 per apartment or house for the residential sector. This represents a small fraction of the cost of purchasing or renting a home or apartment but has proven valuable for identifying potential energy savings and providing information on building quality to buyers/renters. For new buildings, the EPBD requirements will likely lead to significant cost-effective energy savings.


Table 3-20: Basic information on H-9: EPBD Transposition and Enforcement: Standards and norms and labelling schemes in buildings

Title of the Measure EPBD Transposition and Enforcement: Standards and norms and labelling schemes in buildings


DescriptionCategory Information and mandatory information measures Regulation



The national scale transposition and enforcement of the Energy Performance in Buildings Directive (2010/31/EU) will establish the building energy performance requirements through building codes and certification. This will cumulatively promote efficiency improvements in the subsector for public, residential, and commercial buildings. Implementation of the EPBD will create the legal and regulatory basis, technical capacity, norms and technical guidance, as well as awareness of users of buildings and transform the market towards more efficient buildings.

Target end-use

New buildings, significant reconstruction of existing buildings (including appliances and systems for lightning, heating, cooling), and existing buildings being rented, sold, or public.

Target group Building owners, building professionals (architects, building engineers, construction companies, real estate developers), public institutions





Budget

2017 2018 2019 2020 Total 2017 - 2020 2021 - 2030


Real estate developers/ building owners

Investment € 0 € 0 € 0 €

7,390,000€

7,390,000€

275,395,000

Municipalities In-kind € 49,000 € 50,000 € 51,000 € 52,000 € 202,000 € 580,000

Total € 73,000 € 75,000 € 76,000 € 7,546,000

€ 7,770,000

€ 277,136,000


- For Case 1: Apartments heating with natural gas - urban, central heating: 1%.- For Case 2: Home heating with natural gas - urban, central heating: 2%.- For Case 3: Home heating with natural gas - urban, local heating: -11%.- For Case 4: House heating with wood logs - rural, local heating: -2%.

Implementing body Ministry of Economy and Sustainable Development and Municipalities

Monitoring authority Ministry of Economy and Sustainable Development and Municipalities which approve building permits


Energy savings have not been calculated for this measure as it is expected that energy savings are unlikely during the period of implementation of the first NEEAP.


Type of savings




2020 18,755 18,175 5,949

2025 421,851 412,695 140,254

2030 1,030,768 1,013,640 351,587


This measure will have a cross-cutting impact on energy efficiency in buildings in general and is connected in particular to measures in the public sector and in the buildings sector. It is also linked to:- H-5: Qualification, accreditation, and certification schemes - Buildings - in that certified auditors will be crucial to the implementation of the EPBD.- H-8: Consumer information programmes and training - in that H-8 will contribute to the public understanding of this measure.

3.1.9 Savings arising from horizontal measures


The estimated energy savings related to the horizontal measures have for the most part been attributed and reported on in other section(s) to avoid double counting and to clarify where investments are to take place. The Horizontal Measures are summarized in Table 3-21.


Table 3-21: Overview of individual horizontal measures

No.Title of the

energy saving measure

End-use targeted Duration (years)

2020 2025 2030










H-1


EE measures in all sectors to be defined by charter and operational manual

3 Not calculated

Not calculated

Not calculated

Not calculated

Not calculated

Not calculated

Not calculated

Not calculated

Not calculated

H-2

Alternative policy measures – Incentivising / mandating energy efficiency in industry

All industry, but particularly large industrial sites or large sectors in Georgia

3 Not calculated

Not calculated

Not calculated

Not calculated

Not calculated

Not calculated

Not calculated

Not calculated

Not calculated

H-3

Alternative policy measures – Training and education, including energy advisory programmes

Commercial/business and state entities – particularly related to commercial and industrial sector

2 Not calculated

Not calculated

Not calculated

Not calculated

Not calculated

Not calculated

Not calculated

Not calculated

Not calculated

H-4


Existing buildings, appliance replacement, vehicles, and industrial equipment

2 6.0 4.3 1,491 38.3 30.0 10,511

84.6

67.3

23,561

H-5

Qualification, accreditation, and certification schemes - Buildings

Buildings 2 Not calculated

Not calculated

Not calculated

Not calculated

Not calculated

Not calculated

Not calculated

Not calculated

Not calculated

H-6 Qualification, Industry 2 Not Not Not Not Not Not Not Not Not


No.Title of the

energy saving measure

End-use targeted Duration (years)

2020 2025 2030










accreditation, and certification schemes - Industry

calculated calculated calculated calculated calculated calculated calculated calculated calculated

H-7

Energy audits and management systems, boiler inspections in the industry sector

All industry 3 70.9 62.1 18,694 434.5 590.0 130,848

932.9

854.7

257,353

H-8


End-users in residential sector, public, commercial/businesses, media

2 Not calculated

Not calculated

Not calculated

Not calculated

Not calculated

Not calculated

Not calculated

Not calculated

Not calculated

H-9

EPBD Transposition and Enforcement: Standards and norms and labelling schemes in buildings


6 18.8 18.2 5,949 421.9 412.7 140,254

1,030.8

1,013.6

351,587

Total 95.6 84.5 26,134 894.7 1,032.8

281,614 2,048.3

1,935.6

632,501


3.1.10 Financing of horizontal measures


Table 3-22 shows the expected financing needs for the period of 2017 to 2030 for Horizontal measures.

According to the Guidance on NEEAP development, measure-specific information should indicate the amount of planned financing from the EU Structural and Cohesion Funds and other amounts of co-financing coming from state budget. Because Georgia is not qualified to receive EU Structural and Cohesion Funds, this is not included.


Table 3-22: Overview of financing of horizontal measures

No.

Title of the energy saving measure Implementing body Source Type of

financing

Required financing in the coming period (2017-2020) Longer-term financing required

2017 2018 2019 2020 Total 2017 - 2020 2021 - 2030

H-1


Ministry of Energy or Ministry of Economy and Sustainable Development initially – then developed into a separate entity

Central Government In-kind € 12,000 € 137,000 € 204,000 € 260,000 € 613,000 € 2,902,000IFIs/Banks - Investment Grants TBD TBD TBD TBD TBD TBD

Total € 12,000 € 137,000 € 204,000 € 260,000 € 613,000 € 2,902,000

H-2


Ministry of Economy and Sustainable Development

Central Government In-kind € 25,000 € 76,000 € 104,000 € 106,000 € 311,000 € 1,184,000Industry/Private companies In-kind € 0 € 796,000 € 41,000 € 41,000 € 878,000 € 129,000

Total € 25,000 € 872,000 € 145,000 € 147,000 € 1,189,000 € 1,313,000

H-3


The New Agency in cooperation with Ministry of Economy and Sustainable Development, Ministry of Energy, Ministry of Environment, donors/ IFIs

Central Government In-kind € 0 € 156,000 € 101,000 € 136,000 € 393,000 € 1,523,000

Total € 0 € 156,000 € 101,000 € 136,000 € 393,000 € 1,523,000

H-4


Ministry of Economy and Sustainable Development


Households Investment € 0 € 1,405,000 € 1,433,000 € 11,692,000

€ 14,530,000

€ 243,621,000

Total € 0 € 1,492,000 € 1,522,000 € 11,770,000

€ 14,784,000

€ 244,491,000

H-5


Ministry of Economy and Sustainable Development with close cooperation with a training institution


Total € 137,000 € 131,000 € 101,000 € 78,000 € 447,000 € 870,000

H-6

Qualification, accreditation, and

Ministry of Economy and Sustainable Central Government In-kind € 137,000 € 131,000 € 101,000 € 78,000 € 447,000 € 870,000


No.


financing

Required financing in the coming period (2017-2020) Longer-term financing required

2017 2018 2019 2020 Total 2017 - 2020 2021 - 2030

certification schemes - Industry

Development with close cooperation with a training institution

Total € 137,000 € 131,000 € 101,000 € 78,000 € 447,000 € 870,000

H-7


Ministry of Economy and Sustainable Development including the Technical and Construction Supervision Agency


Industry/Private companies Investment € 0 € 0 € 347,000 € 460,000 € 807,000 € 4,362,000

Total € 37,000 € 37,000 € 398,000 € 512,000 € 984,000 € 4,652,000

H-8


The New Agency - in cooperation with the Ministry of Economy and Sustainable Development, Ministry of Energy, Ministry of Environment and Natural Resources, Municipalities, NGOs, donors/ IFIs

Central Government In-kind € 0 € 6,000 € 782,000 € 776,000 € 1,564,000 € 1,040,000

Municipalities In-kind € 0 € 200,000 € 200,000 € 200,000 € 600,000 € 0

Total € 0 € 206,000 € 982,000 € 976,000 € 2,164,000 € 1,040,000

H-9


Ministry of Economy and Sustainable Development and Municipalities


Real estate developers/ building owners

Investment € 0 € 0 € 0 € 7,390,000 € 7,390,000 € 275,395,000


Total € 73,000 € 75,000 € 76,000 € 7,546,000 € 7,770,000 € 277,136,000

Total € 284,000 € 3,106,000 € 3,529,000 € 21,425,000

€ 28,344,000

€ 533,927,000


3.2 Energy efficiency measures in buildings

Policy and investment measures linked to buildings and to public bodies are closely connected. This is because public sector measures are often linked to EE in buildings and also because the policy framework bringing about investments in the private building sector and public sector are closely linked – as described in Figure 3-10.

Figure 3-10: Policy measures linked to investment/ technical measures in buildings and the public sector

3.2.1 Addressing the requirements of the recast EPBD (2010/31/EU)

Indicated as required for EED reporting by the Guidance but not necessarily within the timeframe of the NEEAP and proposed for inclusion

In 2014 Georgia signed the Association Agreement with the EU.48 The Agreement recognizes Georgia’s commitment to implementing and promoting energy efficiency in the buildings sector under the EPBD. Annex XXV of the Agreement states that the EPBD 2010/31/EU provisions shall be implemented in accordance with the timeline agreed by Georgia in the framework of the Energy Community Treaty. Should Georgia's accession to the Energy Community Treaty not become effective within two years of the entry into force of this Agreement, a proposal for a timeline will be submitted to the Association Council no later than three years after the entry into force of this Agreement.

Georgia is obligated to align its national laws with the EU legislation and is at the beginning of the EPBD transposition process. Support for reforms in the field of energy outlined in the EU-Georgian Association Agreement for building sector improvement is currently being planned within the framework of the Danish Neighbourhood Program launched by the Government of Denmark and Ministry of Energy of Georgia.

48 Official Journal of the European Union L26/4 (30 August 2014) Association Agreement between the European Union and the European Atomic Energy Community and their Member States, of the one part, and Georgia, of the other part. Available at http://eeas.europa.eu/georgia/pdf/eu-ge_aa-dcfta_en.pdf



Denmark is already supporting energy efficiency in Georgia with the multi-donor fund “The Eastern Europe Energy Efficiency and Environmental Partnership” (E5P) offering a combination of grants and loans for investments in energy efficiency.

The Danish Neighbourhood Program objectives for Georgia envisage: The development of the energy efficiency buildings codes by 2019; The showcasing of energy efficiency demonstration projects.

It is expected that new codes will provide minimum energy performance indicators that with the aid of demonstration projects will help Government of Georgia to demonstrate compliance for public sector buildings with the new energy performance and owners and users of public buildings will benefit from reduction of operational costs of buildings.

Additional details on the plans and expected activities related to EPBD implementation are included under the Horizontal Measure H-9 in Section 3.1.8.

3.2.2 Building renovation strategy

Indicated as required for EED reporting by the Guidance and proposed for inclusion (with adaptations)

The EED requires that the NEEAP present a long-term strategy for mobilising investment in the renovation of buildings and that it is included in the NEEAP. However, there is currently no national building renovation strategy in place and very limited information on the sector available (in particular, on the building stock).

Public sector buildings – Central Government

In Georgia there is not yet an inventory of public buildings and their energy performance – nor have minimum energy performance requirements been established. The establishment of minimum energy performance requirements is envisaged as part of H-9: EPBD Transposition and Enforcement: Standards and norms and labelling schemes in buildings.

Information on the inventory of public schools and the type of energy used for heat is available from the Ministry of Education and Science. However, public buildings of other types is only partially available and based mostly upon the Sustainable Energy Action Plans (SEAPs) developed by specific municipalities – Tbilisi, Kutaisi, Batumi, Rustavi, Zugdidi, Gori, and Telavi. Notably, information on administrative buildings is not available for analysis. An on-going effort is underway to inventory all publicly owned buildings but it was not yet complete at the time of development of this NEEAP. It is likely, however, that schools are the predominant type of building owned by the Central Government – even if administrative buildings, military buildings, prisons, etc. are accounted for. The information that is known is described in Table 3-23. However, the inventory of the building stock in Georgia is currently underway and thus providing reliable information on the entire Central Government building stock will not be possible.

Table 3-23: Break-down of the known types of buildings owned by the central government and their area

Type of building Total Heated Area*** Number of buildings Average Heated Aream2 # m2

Schools* 3,942,384 2,200 1,792Administrative buildings** 603,246 1,192 506Museums** 2,250 5 450Courts** 4,268 2 2,134Police offices** 15,573 35 445Medical institutions** 12,826 22 583Other** 6,459 18 359Total 4,587,006 3,474 1,320

* Information received from the Ministry of Education and Science** Based on information in the various municipal SEAPs and from Tbilisi*** Information differentiating total plot area from heated area is not available for most buildings


Related to fuels used, electricity is used for lighting, appliances, and cooling. The typical fuels used for Central Government buildings are natural gas for heat, and some electric space heaters. District heating is not used. Schools heat using a mix mostly of natural gas and wood logs with some electricity as follows.

Total number of schools: 2,200 Total number of schools with central heating – electricity: 72 Total number of schools with heating – natural gas: 536 Total number of schools with heating – wood: 377 Total number of schools with unknown heating source – 1,215

The level of energy consumption according to types of buildings is not currently known though the total amount is tracked as a part of the development of the energy balance. Energy audits of a number of schools have yielded varying results, but the typical electricity consumption for lighting is 2.5 kWh/m2 and a specific heating demand of 150 kWh/m2.

Technologies typically used in Central Government-owned building are natural gas boilers, natural gas space heaters for smaller spaces, electricity based air conditioning/heating units, and highly inefficient wood stoves for area heating.

As mentioned, there are significant data limitations related to the inventory of the building stock, the energy consumption of that building stock, levels of comfort, and financial expenses.

Special features in energy consumption for the central government buildings sector include: A significant amount of under-heated buildings meaning there is suppressed demand; Very poor energy properties of the external building envelopes; The use of inefficient wood or electric space heaters in many instances which only heat parts of the

buildings.

There have been in recent years significant investments planned for the improvement of the Central Government-owned public building stock – particularly renovation of schools. These have not necessarily included energy efficiency as a key priority. At the same time, there are plans for implementation of continued renovation in public schools – which are mostly owned by the central Government and likely make up the vast majority of the building stock. These renovations will likely include energy efficiency investments.

The typical IRR for investments in energy efficiency in Central Government-owned public buildings is not well known as there have not been sufficient energy audits in most types of buildings. For schools, however, IRRs typically range from 1% to 6%, depending on the fuel used for heating. The two most important factors for these estimates are the low cost of energy (natural gas, wood, and electricity) and the high level of suppressed demand.

There are number of barriers complicating the wide implementation of energy efficiency in this sub-sector. The most important are:

Lack of pipeline of good energy efficiency projects No legal requirements about the minimum energy performance An absence of incentives for implementing agents (administrators) Awareness of options and impacts.

Public sector buildings – non-Central Government

Non-Central Government buildings represent a large part of public buildings. In Georgia there is not yet an inventory of public buildings and their energy performance – nor have minimum energy performance requirements been established.

Information on non-Central Government owned public buildings is partially available based mostly upon the SEAPs developed by specific municipalities – Tbilisi, Kutaisi, Batumi, Rustavi, Zugdidi, Gori, and Telavi. As noted for Central Government owned buildings, an on-going effort is underway to inventory all publicly owned buildings but it was not yet complete at the time of development of this NEEAP. It is likely, however,


that kindergartens and administrative buildings are the predominant type of public building not owned by the Central Government. The information that is known is described in Table 3-24.

Table 3-24: Break-down of the known types of public buildings not owned by the central government and their area

Type of building Total Heated Area Number of buildings Average Heated Area

m2 # m2

Kindergartens 319,885 258 1,240Music school/ Art school 30,244 35 864Sport school 13,950 4 3,488Sport buildings 56,359 19 2,966Hospitals - - -Polyclinics - - -Medical dispensaries/ pharmacies 26,763 27 991Retirement Homes 2,321 6 387Libraries 16,082 48 335Administrative buildings 60,238 129 467Fire stations 8,464 6 1,411Police offices - - -Theatres 22,819 6 3,803Museums/ Galleries 11,060 22 503Other/unknown 137,644 104 1,323Total 705,830 664 1,063

Source: Based on information in the various municipal SEAPsInformation differentiating total plot area from heated area is not available for most buildings

Related to fuels used, electricity is used for lighting, appliances, and cooling. The typical fuels used for public buildings not owned by the Central Government are natural gas for heat, and some electric space heaters. District heating is not used. Kindergartens heat using a mix mostly of natural gas and wood logs with some electricity though official information is not known what the breakdown of fuel use is.

The level of energy consumption according to types of buildings is not currently known though the total amount is tracked as a part of the development of the energy balance. Energy audits of a number of kindergartens have yielded varying results, but the typical electricity consumption for lighting is 2.5 kWh/m2 and a specific heating demand of 200 kWh/m2.

Technologies typically used in public buildings not owned by the Central Government are natural gas boilers, natural gas space heaters for smaller spaces, electricity based air conditioning/heating units, and highly inefficient wood stoves for area heating.

As mentioned, there are significant data limitations related to the inventory of the building stock, the energy consumption of that building stock, levels of comfort, and financial expenses.

Special features in energy consumption for these types of buildings include: A significant amount of under-heated buildings meaning there is suppressed demand; Very poor energy properties of the external building envelopes; The use of inefficient wood or electric space heaters in many instances which only heat parts of the

buildings.

There have been in recent years significant investments planned for the improvement of various municipally-owned public buildings – particularly renovation of kindergartens. These have not necessarily included energy efficiency as a key priority but have included some energy saving components – most notably a large renovation programme in Tbilisi. Additional investments are also planned by various municipalities as part of meeting their obligations under the Covenant of Mayors.


The typical IRR for investments in energy efficiency in non-Central Government-owned public buildings is not well known as there have not been sufficient energy audits in most types of buildings. For kindergartens, however, IRRs typically range from 1% to 10%, depending on the fuel used for heating. The two most important factors for these estimates is the low cost of energy (natural gas, wood, and electricity) and the high level of suppressed demand.

There are number of barriers complicating the wide implementation of energy efficiency in this sub-sector. The most important are:

Lack of pipeline of good energy efficiency projects No legal requirements about the minimum energy performance An absence of incentives for implementing agents (administrators) Awareness of options and impacts

Commercial sector buildings – private

There is no official information on private commercial buildings sector. There is limited information from previous analysis as well as from the municipal SEAPs in Kutaisi, Batumi, Gori, and Zugdidi. In order to estimate the total amount of commercial sector buildings, the known amount of plot area and number of buildings based on particular cities were multiplied by a factor which was estimated based on expert opinion. This information is provided in Table 3-25. It is noteworthy that most hospitals and medical centres are privately owned.

The typical fuels used in these buildings varies, but in general, natural gas is used for heating in more urban areas, while wood (and sometimes electricity) is used in more rural areas.

Energy consumption in these buildings is not generally known in any systematic way – though some energy audits have been conducted for hospitals/medical centres and large supermarkets and generally have high energy consumption (e.g. Specific heating and hot water demand of 250 kWh/m2 in hospitals).

There are severe data limitations in this sector, so development of the building stock will be an important first step in developing a strategy.

Special features in energy consumption for the private commercial buildings sector include: A significant amount of under-heated buildings meaning there is suppressed demand; Very poor energy properties of the external building envelopes; The use of inefficient wood or electric space heaters in many instances which only heat parts of the

buildings.

Key barriers to investment are mostly related to finance and awareness of potential energy savings from implementing measures.

Typical internal rates of return for investments in this sub-sector are likely to be in the range of 1% to 10% - depending on the fuel used and percentage of building already heated/cooled.

Table 3-25: Estimates of non-public commercial building space in Georgia

Type of Building/Location

Total Plot Area

Number of Buildings

Average Plot Area Multiplication

factorTotal market

estimateNumber of buildings

m2 # m2 m2 #A B C D = B/C E F = E x B G = C x E

Hospitals1 163,024 221 738 2 326,048 442Polyclinics2 41,305 92 449 3 123,915 276Other pre-school institutions3 1,680 7 240 10 16,800 70Pharmacies4 5,987 174 34 10 59,870 1,740Commercial shops4 80,022 1,720 47 10 800,220 17,200Groceries4 75,000 1,500 50 10 750,000 15,000


Type of Building/Location

Total Plot Area

Number of Buildings

Average Plot Area Multiplication

factorTotal market

estimateNumber of buildings

m2 # m2 m2 #Post offices4 2,130 4 533 10 21,300 40Bank branches4 11,540 51 226 10 115,400 510Medical centres5 104,098 86 1,210 8 832,784 688Gyms4 4,700 12 392 10 47,000 120Cinemas4 750 1 750 10 7,500 10Exhibition halls4 200 2 100 10 2,000 20Dance and Disco halls4 3,750 25 150 10 37,500 250Bars, cafes4 6,350 97 65 10 63,500 970Fast food restaurants4 660 30 22 10 6,600 300Restaurants4 9,400 36 261 10 94,000 360Offices and bureaus4 21,600 480 45 10 216,000 4,800Hotels4 440 52 8 10 4,400 520Religious buildings4 980 6 163 10 9,800 60Other commercial buildings4 55,335 97 570 10 553,350 970Total 588,951 4,693 125 4,087,987 44,346

1 Includes Tbilisi, Batumi, Zugdidi, and Gori2 Includes only Tbilisi3 Batumi only4 Batumi and Zugdidi only5 Kutaisi, Batumi and Zugdidi only

Residential sector buildings

There is no official information on residential buildings sector related to area, number of dwellings, or number of buildings. There is some information from previous analysis as well as from the municipal SEAPs in Tbilisi, Kutaisi, Batumi, Gori, Zugdidi, and Telavi – as well as additional energy surveys which have been done in smaller municipalities. The results of the recently carried out census will also likely have information on the residential sector.

In order to estimate the total amount of residential sector and its projected dynamics of growth based on population changes in rural and urban areas. This information is provided in Table 3-26. The typical size of apartments ranges between 60 and 100 m2 (average 85 m2 in Tbilisi for example). The typical size of houses ranges between 85 m2 and 200 m2 (average of 149 m2 in SEAP cities for example). It is noteworthy that the vast majority of residential buildings are privately owned by the families living in them.

The typical fuels used in these buildings varies, but in general, natural gas is used for heating in more urban areas, while wood is used in more rural areas.

Energy consumption in these buildings is not generally known in any systematic way – though some energy audits have been conducted which show that they generally have high energy consumption (e.g. Specific heating demand of 200 kWh/m2 in houses and 170 kWh/m2 in apartments).

There are severe data limitations in this sector, so development of the building stock will be an important first step in developing a strategy.

Special features in energy consumption for the residential buildings sector include:49

49 Multiple surveys in various parts of Georgia have been carried out related to this topic, including:

SDAP (2013) Technical Report 21: Energy Analysis of Lower Alazani-Iori Pilot Watershed Area (Dedoplistskaro Municipality, Kakheti Region)

SDAP (2013) Technical Report 22: Energy Analysis of Lower Rioni Pilot Watershed Area (Khobi and Senaki Municipalities, Samegrelo and Zemo Svaneti region)

SDAP (2013) Technical Report 23: Energy Analysis of Upper Alazani Pilot Watershed Area (Akhmeta and Telavi Municipalities, Kakheti Region)


A significant amount of under-heated buildings meaning there is suppressed demand. This is particularly prevalent amongst single houses;

Very poor energy properties of the external building envelopes; The use of inefficient wood, electric, or natural gas space heaters in many instances which only

heat parts of the buildings.

Key barriers to investment are mostly related to finance and awareness of potential energy savings from implementing measures.

Typical internal rates of return for investments in this sub-sector are likely to be negative for single houses and between 0 – 10% for apartment buildings – depending on the fuel used and percentage of building already heated/cooled. However, this does not account for increases in property value due to investments – which could be substantial, though not immediately reflected in cash flow projections.

Table 3-26: Projected make-up of the residential sector

Name of the variable Units 2015 2020 2025 2030

Population # 3,729,500 3,729,500 3,729,500 3,729,500# of people per household # 3.91 3.91 3.91 3.91# of households # 955,058 955,058 955,058 955,058 Allocation per type of dwelling Apartments – urban # 384,024 407,901 431,777 455,654 Single House - Urban - Central # 36,391 48,329 60,267 72,205 Single House - Urban - Local # 145,261 133,323 121,385 109,447 Single House - Rural - Local # 389,381 365,505 341,628 317,752 Total # 955,058 955,058 955,058 955,058 Of which are expected to be newly constructed dwellings according to type of dwelling Apartments – urban # 2,484 15,476 29,371 44,101 Single House - Urban - Central # 235 1,834 4,100 6,989 Single House - Urban - Local # 939 5,058 8,257 10,593 Single House - Rural - Local # 2,518 13,867 23,239 30,754 Total new dwellings # 6,177 36,235 64,967 92,437

Steps in the coming 3-year period to develop a strategy

In the coming 3-year period, the following steps should be carried out to develop a full strategy for improvement of energy efficiency in the building sector:

1. Decide upon reference building types to be examined. Some potential categories could be: Central government buildings Administrative buildings – municipal or commercial Schools Hospitals Kindergartens Sport buildings 1-2 storey apartment buildings 3-7 storey apartment buildings 8-9 storey apartment buildings 15-16 storey apartment buildings Other

SDAP (2013) Technical Report 24: Energy Analysis of Upper Rioni Pilot Watershed Area (Ambrolauri and Oni Municipalities, Racha-Lechkhumi and Kvemo Svaneti region) and

VTT (2016) Market Assessment of the Residential Sector in Georgia: Policy, Legal, Regulatory, Institutional, Technical and Financial Considerations (Phase I)


2. Establish a system for tracking the inventory of buildings. This should be linked to Measure P-1 Develop a national energy efficiency information system for publicly owned buildings and street-lighting

3. Conduct energy audits and building inventories for the various sub-sectors throughout the country – focusing on urban areas first (especially municipalities that are signatories to the Covenant of Mayors). Energy audits can be conducted and filed as a part of training programmes under H-5: Qualification, accreditation, and certification schemes - Buildings. When an energy audit is performed as a part of a training course, it can be filed in the national energy information system.

4. Officially establish other aspects of the building stock inventory and strategy such as: Age bands50 that have a material bearing on building energy performance; The combinations of building type, age and climatic zone; Typical energy use and performance characteristics of each building combination; Technical opportunities for retrofit of energy efficiency measures for each building category.

5. In parallel to these steps, there should be an energy efficiency programme set up for the various sub-sectors which stimulate investment in each of them. Energy audits and lessons learned as a part of these investments can be filed with the national energy information system. Particular measures which can be implemented in parallel to data-gathering are outlined in other sections and include:

B-1: Regulations leading to improved efficient lighting systems in residential and commercial buildings

P-2: Pilot project for low energy public sector buildings P-3: Efficient lighting systems in public buildings P-4: Improvement of the energy efficiency in central government-owned public buildings -

schools P-6: Improvement of the energy efficiency of non-central government-owned public buildings

- kindergartensAdditional measures which are not in the NEEAP but could be explored include:

Improvement of energy efficiency in existing houses Improvement of energy efficiency in existing apartment buildings Improvement of the energy efficiency in existing commercial buildings

As a part of the on-going data gathering effort and investments, plans for further energy efficiency investments can be changed and developed – either leading to changes in the measures described under point 5 or further development of measures P-5: Improvement of the energy efficiency in central government-owned public buildings - non-schools and P-7: Improvement of the energy efficiency of non-central government-owned public buildings - non-kindergartens.

3.2.3 Additional measures addressing energy efficiency in buildings and appliances


Details on planned measures addressing energy efficiency in residential and non-residential, non-public buildings are below. It is noteworthy that for all potential measures in this sub-sector with the exception of B-1, the availability of finance – including for grant mechanisms are critical.

B-1: Regulations leading to improved efficient lighting systems in residential and commercial buildingsSummary of the measure:

50 Age bands refer to a period of years during which a building was constructed (e.g. 1900 – 1920, 1920 – 1940, etc.). The age of the building’s structural elements (materials) have an impact on its energy performance and also certain age bands have certain typical characteristics. This has been added in a footnote.


The measure involves the replacement of incandescent and halogen bulbs with energy efficient bulbs in residential and commercial buildings - increasing over time to cover 100% of these buildings by the end of 2022.

The measure would be implemented through the introduction of regulations to discourage the import and/or sale of non-efficient bulbs. This could involve banning the import and sale of bulbs that do not meet certain efficiency requirements or – more likely – via an increased excise tax on inefficient bulbs. Additionally, upon clearance through customs, bulbs would be categorized according to their efficiency. Already, the Custom Department of the Revenue Service of Georgia has developed a classification code for imported incandescent light bulbs (versus CFLs of LEDs), which was initiated by the Ministry of Energy.

It is noteworthy that it may be necessary to purchase new lamps in some cases where the bulb sizes are different than inefficient bulbs.


The measure will be implemented by the Ministry of Energy (developing regulations) in cooperation with the customs office.


The calculation of final energy savings was carried out by estimating the potential for energy saved and costs for implementation in three types of buildings – individual homes, apartments, and in commercial buildings (non-public and non-industry). Primary energy savings were then calculated using the conversion factor for electricity for each year. The calculations were then scaled up according to assumptions of market penetration of efficient lighting devices.

Assumptions:51

Estimated 571,000 single-family houses (average size 149 m2) and 384,000 apartment dwellings (average size 85 m2) with:

Inefficient bulbs consumption of 5 kWh/m2 per year For houses, 1 light bulb per 10 m2 of area to be replaced - i.e. 15 bulbs per house For apartments, 1 light bulb per 8 m2 of area to be replaced - i.e. 11 bulbs per apartment Efficient bulbs result in 80% reduction of electricity demand (1 kWh/m2 per year) Increase from 23% of area lighted by efficient bulbs by 50% to 73% by the end of 202252

Estimated 4.1 million m2 of commercial area with: Inefficient bulbs operating 4 hours per day, 230 days per year at 30 W per bulb (i.e. a mix of CFLs

and incandescent/halogen bulbs) - resulting in 6.9 kWh/m2 per year in an estimated 50% of building space 2.5 bulbs per 10 m2 of area - energy consumption using inefficient bulbs with 75 W per bulb Efficient bulbs result in 70% savings - resulting in 2.07 kWh/m2 per year Increase from 23% of lighted area by efficient bulbs to 73% by the end of 2022.

Key variables for costs of the measure include: Cost of EUR 5.51 per bulb increasing with inflation (2%) Electricity costs vary according to the type of consumer. Approximately 6 man-months of Government staff time to draft new regulations and 3 man-months

of additional time for inspectors each year.

51 Number of single-family houses and number of apartment dwellings described in the Table above. The average size of existing single-family houses is based on the municipal SEAPs combined with studies of 12 smaller communities conducted by a member of the NEEAP preparation team. Energy consumption per m2 and the number of bulbs per 10 m2 for replacement are based on expert judgement based on energy audits of various residential and commercial buildings.52 Based on USAID (2014) Household Energy End-Use Survey – Final Report.


It is also assumed that the quality of electricity will be improved in the coming years via grid and distribution improvements to allow the bulbs to reach their lifetime of usefulness.


This measure would result in a slight increase in prices for light-bulbs which could impact the poorest segment of the population. The increased up-front costs could be counter-acted via subsidy programmes for new bulbs financed by – for example the New Agency.

Additional basic information about the measure is included in Table 3-27.

Table 3-27: Basic information on B-1: Regulations leading to improved efficient lighting systems in residential and commercial buildings

Title of the Measure Regulations leading to improved efficient lighting systems in residential and commercial buildings

Index of the measure B-1

DescriptionCategory Energy efficiency investments Regulation



The measure would involve achieving energy savings by switching lighting systems from inefficient incandescent or halogen bulbs to more efficient models such as fluorescent ones or LEDs. This would be done through regulation (potentially an increased excise tax) on imports and sales of non-efficient bulbs.

Target end-use

Existing and new buildings - Practically all types of buildings except those owned by the public and by industries - which are covered in other measures

Target group The general public and private commercial companiesRegional application Nationwide




Budget

2017 2018 2019 2020 Total 2017 - 2020

2021 - 2030


Households Investment € 3,586,000

€ 7,304,000

€ 7,439,000

€ 7,576,00

0

€ 25,905,000

€ 11,645,00

0

Commercial enterprises Investment € 793,000 €

1,618,000€

1,650,000

€ 1,683,00

0€ 5,744,000 €

2,593,000

Total € 4,397,000

€ 8,928,000

€ 9,095,000

€ 9,265,00

0€

31,685,000€

14,311,000


- For Residential sector - single-family houses: 44.2%.- For Residential sector - apartments: 33%- For Commercial sector - non-public buildings: 9.9%

Implementing body Ministry of Energy in cooperation with the customs office

Monitoring authority Ministry of Energy in cooperation with the customs office



Bottom-up based on reporting from building managers of the number of bulbs replaced each year.


Type of savings




2020 237,402 169,681 59,388

2025 305,527 239,335 83,767

2030 175,366 139,514 48,830Overlaps, multiplication effect, synergy

This measure has synergies with the horizontal measures related to awareness raising (H-8) and related to labelling (H-4). Improvement of the quality of electricity is also necessary for the successful implementation of this measure to avoid blowing out bulbs before their planned lifetime.

The following additional measures in the non-public buildings sector have been considered for the NEEAP but not been included due to the lack of financial viability in the near term. They will be revisited in the coming years:

Improvement of energy efficiency in existing houses Improvement of energy efficiency in existing apartment buildings Improvement of the energy efficiency in existing commercial buildings.

3.2.4 Savings arising from measures addressing energy efficiency in buildings


The estimated energy savings and related to the non-public building sector measures are summarized in Table 3-28.


Table 3-28: Overview of individual measures in the buildings sector

No.

Title of the energy saving

measure End-use targeted

Duration

(years)

2020 2025 2030










B-1



5 237.4 169.7 59,388 305.5 239.3 83,767 175.4 139.5 48,830

Total 237.4 169.7 59,388 305.5 239.3 83,767 175.4 139.5 48,830


3.2.5 Financing of energy efficiency measures in buildings


Table 3-29 shows the expected financing needs for the period of 2017 to 2030 for measures in the buildings sector.

According to the Guidance on NEEAP development, measure-specific information should indicate the amount of planned financing from the EU Structural and Cohesion Funds and other amounts of co-financing coming from state budget. Because Georgia is not qualified to receive EU Structural and Cohesion Funds, this is not included.


Table 3-29: Overview of financing of measures in buildings

No.


financingRequired financing in the coming period (2017-2020)

Longer-term financing required

2017 2018 2019 2020 Total 2017 - 2020 2021 - 2030

B-1


Ministry of Energy in cooperation with the customs office


Households Investment € 3,586,000

€ 7,304,000

€ 7,439,000

€ 7,576,000

€ 25,905,000 € 11,645,000

Commercial enterprises Investment € 793,000 €

1,618,000€

1,650,000€

1,683,000 € 5,744,000 € 2,593,000

Total € 4,397,000

€ 8,928,000

€ 9,095,000

€ 9,265,000

€ 31,685,000 € 14,311,000

Total €4,397,000 €8,928,000 €9,095,000 €9,265,000 €31,685,000 €14,311,000


3.3 Energy efficiency measures in public bodies3.3.1 Central government buildings

Indicated as required for EED reporting by the Guidance and proposed for inclusion (with adaptations)

As per the Energy Community’s adoption of the EED, Contracting Parties to the Energy Community must ensure that, as from 1 December 2017, 1% of the total floor area of heated and/or cooled buildings owned and occupied by their central government is renovated each year to meet at least the minimum energy performance requirements set out in the recast EPBD. The 1% rate is to be calculated on the total floor area of buildings with a useful floor area over 500 m2 that do not meet the national minimum energy performance requirements. That threshold will be lowered to 250 m2 as of 1 January 2019. However, as noted in Section 3.2.2, the number of buildings and useful floor area are not yet known in Georgia. Additionally, the national minimum energy performance requirements have not been established. The establishment of minimum energy performance requirements is envisaged as part of H-9: EPBD Transposition and Enforcement: Standards and norms and labelling schemes in buildings.

Assuming that the total amount useful area shown in Table 3-23 in Section 3.2.2 is a reasonable estimate for the total useful area of Central Government-owned buildings, 1% of this amount would be 45,870 m2 to be renovated per year. Assuming only renovations of schools were to occur, then this would be equivalent to approximately 25 schools per year. While these numbers are indicative, they do provide a sense of scale of the needs for renovation to comply with the Energy Community requirements.

Certainly investment in energy efficiency in Central Government owned buildings can occur without fixing a target, but the target can only be fixed after implementation of H-9: EPBD Transposition and Enforcement: Standards and norms and labelling schemes in buildings and P-1 described below. Additionally, measures P-2, P-3, P-4, and P-5 described below will also influence the energy efficiency of centrally-owned public buildings.

P-1: Develop a national energy efficiency information system for publicly owned buildings and street-lighting


The aim of this measure is to provide information about energy efficiency planning on the municipal and national level for publicly owned buildings and street lighting initially – with potential expansion to other sub-sectors of the public sector. The measure involves creating a database on energy consumption at the municipal and national level to allow for analysis and evaluation. The information system should be implemented at the municipal level. The government/appropriate ministry can then aggregate municipal information adding data about central-government owned buildings.

At the municipal level, the database would extend over the entire stock of buildings owned by the municipality or placed under its management ((governmental offices, education, health care, social services, culture, municipal services, etc.). The information would include:

Primary information about the site (principal design and construction characteristics of the building, installed capacity and energy supply systems);

Variable data on energy consumption by fuel types, time periods, and technologies

Data Entry includes: Information about municipal sites, street lighting, budgetary expenditures, degree days, energy production.

Information about sites includes: General information – the name of the site, sector, address, contact person, number of buildings; Descriptive information of the building – type of building, year of construction, number of floors, type

of construction, floor area, total floor area, built up volume, type of heating, capacity of heat installation, heated space, average annual number of permanent residents/tenants, duty cycle of


building use, number of workdays per year and per week, number of workhours per day, energy efficiency activities/measures, using of renewable energy and type of renewable energy, data about installation of building and heating/cooling sources;

Information about fuel and energy consumption for a fixed period – quantity and amount with possibility of conversion into tonnes of oil equivalent, MWh and specific energy consumption (kWh/m2).

Information about street lighting includes: Quantity of supply poles; Quantity of luminaries; Total installed capacity; Quantity of supply power distribution substations, electric meters, hours of lighting per year, night

and semi-night lighting, centralized control system; Light sources; Energy consumption.

Information about energy production includes: Type of heat plant; Used fuel; Type of production; Annual energy production in MWh.

The structure of a national database could be the same as for municipalities – and by necessity aggregate the municipal databases into a national one. This database could aggregate data not only at national level, but according to the administrative or climatic zones. Comparison of average data form different municipalities, or average data about typical buildings will give good ideas about municipal and governmental initiatives. Ideally, this system would be developed in way to provide on-line access with the respective levels of access.


The implementing body will be the Ministry of Economy and Sustainable Development – as the coordinating body, with the Ministry of Regional Development and Infrastructure to carry out requests for information requested from the municipalities.


No energy savings are calculated for this measure. The building of the information system will not directly result in energy savings.

Assumptions:

Assumes willingness and ability of municipalities to participate in the measure.

Over the entire period of implementation, costs are expected to include: In-kind contribution from the Government of Georgia for administration and ongoing implementation. In-kind contribution from the 64 Georgian municipalities for the first year when implementing the

measure and a smaller amount per year afterwards. Technical assistance of national experts and international experts over the course of the first 3

years.


The measure is not expected to have direct impacts on the general population.



Table 3-30: Basic information on P-1: Develop a national energy efficiency information system for publicly owned buildings and street-lighting

Title of the Measure

Develop a national energy efficiency information system for publicly owned buildings and street-lighting

Index of the measure P-1




To provide information about energy efficiency planning on the municipal and national level for publicly owned buildings and street lighting initially – with potential expansion to other sub-sectors of the public sector.

Target end-use

- All types of publicly owned buildings and energy consumers in them. - Consumption/ production of energy on municipal level Including for street lighting. - Potentially other sub-sectors of the public sector (vehicles, waste management processes, etc.)

Target group - Municipalities- Central Government (Including ministries)





Budget

2017 2018 2019 2020 Total 2017 - 2020 2021 - 2030


Municipalities Investment € 46,000 € 117,000 € 138,000 € 104,000 € 405,000 € 1,161,000


Not calculated

Implementing body

Ministry of Economy and Sustainable Development for developing and coordinating the system, with the Ministry of Regional Development and Infrastructure to carry out requests for information requested from the municipalities.

Monitoring authority

Ministry of Economy and Sustainable Development for developing the system and municipalities for gathering data/implementation at the sub-national level


Direct energy savings are not calculated for this measure though indirect savings are possible.

Type of savings








This measure is linked to all measures in the public sector – as it will help provide a basis for planning of interventions and investments as well as monitoring results.

Energy audits as part of this measure could be carried out by trainees from measure H-5: Qualification, accreditation, and certification schemes – Buildings

P-2: Pilot project for low energy public sector buildings



As part of better understanding and establishing the minimum energy performance requirements for buildings, it will be useful to have at least one pilot project with a public building to establish potential savings.

This measure would thus involve the implementation of a pilot project of renovation on a non-school/non-kindergarten public-sector administrative building to demonstrate the potential costs and benefits associated with such an action.

This measure will incorporate four main energy efficiency dimensions identified for efficient buildings: High insulation of building exterior properties; Efficient modern central heating and domestic water supply system with improved ventilation

system; and Efficient lighting system Solar hot water supply.

In carrying out an assessment of this measure an integrated approach has been used based on results derived from the following measures such as: refurbishment of building’s structural components with the enhanced energy efficiency, installation of central boiler and modern heating as well as water supply system and installation of efficient bulbs.


This measure will be carried out by Municipal authorities – with information then distributed to various municipalities and national government representatives (via the Ministry of Economy and Sustainable Development).


The calculation of potential energy saved is based on an energy audit of a small administrative building in the region of Kakheti.

Assumptions:

Assumed a building of 1000 m2 which heats 1000 m2 with natural gas and a boiler of 93% efficiency. Final energy requirements of 150 kWh/m2 per year in BAU for heating and 2.5 W/m2 for lighting

using inefficient lamps - operating 52 weeks per year and 50 hours per week (6.5 kWh/m2 per year) Improvements of 60% reductions in final energy requirements for heat and 60% reductions for

lighting using efficient lighting systems. Cost of EUR 40 per m2 of improved floor space, EUR 5,000 for heating system/ventilation

improvement, EUR 500 for lighting improvements, and EUR 1,500 for solar hot water supply.




Table 3-31: Basic information on P-2: Pilot project for low energy public sector buildingsTitle of the Measure Pilot project for low energy public sector buildings






This measure involves the implementation of a pilot project of renovation on a non-school/non-kindergarten public-sector administrative building to demonstrate the potential costs and benefits associated with such an action.

Target end-use Existing public administrative building(s)

Target group Municipal administration - with information then distributed to various municipalities and national government representatives

Regional application

The measure is applicable for all urban areas though is expected to be first carried out in either Telavi or Batumi




Budget

2017 2018 2019 2020 Total 2017 - 2020

2021 - 2030

Central Government In-kind € 12,000 € 0 € 0 € 0 € 12,000 € 0

Donors - Grants Grants € 35,000 € 0 € 0 € 0 € 35,000 € 0

Total € 47,000 € 0 € 0 € 0 € 47,000 € 0Non-leveraged 15-year IRR

-1.9%

Implementing body

Municipal administration - with information then distributed to various municipalities and national government representatives (Ministry of Economy and Sustainable Development)

Monitoring authority Municipality implementing the measure

Energy and GHG savings Method for monitoring/ measuring the resulting savings

Bottom-up reporting based on invoices of energy consumption

Type of savings




2020 116 101 22

2025 114 101 22

2030 113 101 22


The measure will have demonstration impacts/be synergistic for:- P-5: Improvement of the energy efficiency in central government-owned public buildings - non-schools- P-7: Improvement of the energy efficiency of non-central government-owned public buildings - non-kindergartens

P-3: Efficient lighting systems in public buildings


The measure involves the replacement of incandescent bulbs with energy efficient bulbs in public buildings – increasing over time to cover 100% of public buildings by the end of 2020 – covering a useful area of approximately 987,000 m2 – note that this excludes kindergartens and schools.

Additionally, reminders will be posted to encourage employees to switch off lights when not working.


For Central Government-owned buildings, the Ministry of Economy and Sustainable Development would be the coordinating organization for implementing the measure. For municipally-owned buildings, municipalities would implement the measure with some coordination from the Ministry of Regional Development and Infrastructure.



The calculation of final energy savings was carried out by estimating the potential for energy saved and costs for implementation on a per m2 basis – then assuming a certain market size and penetration rate growth (described below under Assumptions). Primary energy savings were then calculated using the conversion factor for electricity for each year.

Assumptions:

Estimated 987,000 m2 of government/municipally-owned buildings (645,000 m2 centrally-owned and 342,000 m2 municipally-owned) which are not schools or kindergartens with:

Inefficient bulbs operating 50 hours per week, 52 weeks per year in at least 60% of building space 2.5 W/m2 of lighted area - energy consumption using inefficient bulbs (CFLs mixed with halogen and

incandescent lights) 1 W/m2 of lighted area - energy consumption using efficient bulbs (e.g. LEDs) Increase from 40% of area lighted by efficient bulbs to 100% by the end of 2020 Cost of EUR 5.51 per bulb increasing with inflation (2%) and 0.15 bulbs per m2 of space No additional O&M costs as replacement will take place as part of usual maintenance Electricity costs of 75.11 EUR/MWh constant over 15-year period Technical assistance would involve audits/technical plans/tender procedures over a 4-year period. Additional budget of within technical assistance for awareness raising/training is also assumed.





Table 3-32: Basic information on P-3: Efficient lighting systems in public buildingsTitle of the Measure Efficient lighting systems in public buildings


DescriptionCategory Energy efficiency investments



The energy savings potential has been identified through an analysis performed for a lighting system with incandescent bulbs compared to a lighting system with fluorescent ones or LEDs.

Target end-use

Existing and new buildings - Practically all types of governmental and municipally-owned buildings except for schools and kindergartens which are covered in separate measures.

Target group Public institutions – excluding schools and kindergartens





Budget

2017 2018 2019 2020 Total 2017 - 2020

2021 - 2030

Central Government Investment € 27,000 € 83,000 € 85,000 € 144,000 € 339,000 € 0

Municipalities Investment € 14,000 € 44,000 € 45,000 € 77,000 € 180,000 € 0

Total € 41,000 € 127,000 € 130,000 € 221,000 € 519,000 € 0Non- 50.4%


leveraged 15-year IRRImplementing body

Ministry of Economy and Sustainable Development for central government-owned buildings.Ministry of Regional Development for municipally-owned buildings.


Ministry of Economy and Sustainable Development for central government-owned buildings.Municipalities for municipally-owned buildings.


Bottom-up based on reporting from building managers of the number of bulbs replaced each year.

Type of savings




2020 7,191 2,310 1,417

2025 7,049 2,310 1,417

2030 6,881 2,310 1,417


This measure has synergies with the horizontal measures as well as government plans to impose a fee on inefficient lightbulbs. It also has synergies with measures related to public awareness raising. It also is related to regulations for Green Procurement (measure P-8) - which would allow for procurement of light bulbs according to energy efficiency properties as well as initial cost.

Furthermore, improvements to the electricity quality is necessary to ensure that the bulbs are not compromised by surges, etc.

P-4: Improvement of the energy efficiency in central government-owned public buildings – schools


This measure involves the retrofitting/ insulation of the all exterior properties of the school building envelope including part of the windows and installation of efficient end-use systems: efficient bulbs and efficient heaters in buildings heating with solid fuel including wood.

These investments/renovations will take place as part of a larger investment programme of renovations in schools. Cooling systems are not addressed in the calculation. In general, schools with 2 shifts should be the priority for the following interventions:

1. Insulation of roof; 2. Installation of some new windows; 3. Insulation of walls;4. Insulation of floor;5. Installation of efficient bulbs;6. Installation of efficient wood stoves in those which heat on wood;7. Installation of solar hot water heaters.

For schools heating with wood, wood chips could be used to improve the burning efficiency - likely to be developed in the market in 10 years (probably as pellets).


The measure will be implemented by the Ministry of Education and Science in cooperation with IFIs who would provide financial resources and technical assistance.


The calculation of final energy savings was carried out by estimating the potential for energy saved and costs for implementation in three types of buildings – schools heating with natural gas, schools heating with


wood logs, and schools heating with electricity. It assumed all schools use natural gas for hot water. Primary energy savings were then calculated using the conversion factor for natural gas, electricity, and for wood logs for each year. The calculations were then scaled up according to assumptions of market penetration of efficiency improvements.

Assumptions:

The calculations on savings are indicative using example school buildings with the following characteristics: 1800 m2 floor area: 90% heated for those heating with electricity and natural gas, whereas for those

heating with wood, assumed 50% floor heated growing to 90% in the BAU over 9 years (or over 1 year in the EE case).

150 kWh/m2 final heating demand 60% potential savings in final heating demand 93% efficiency of natural gas boilers 50% efficiency of wood heaters improved to 75% in the EE case 2.5 W/m2 lighting requirement in BAU improved to 1 W/m2 for EE case EUR 5.51 per bulb replaced (including installation costs) and 0.15 bulb per m2

Annual renovation of 1 electricity-heated school, 6 natural gas-heated schools, and 4 wood-heated schools per year (total 11 schools per year)53

Over the entire period of implementation, costs are expected to include: In-kind contribution from the Government of Georgia for tender procedures Technical plans/audits covered by Technical Assistance in the first 3 years EUR 35 per m2 of area for EE investments (EUR 50-100 per m2 for non-EE improvements not

included in the costs of the measure) EUR 10,000 for improved heating/ventilation systems in schools heated by electricity and natural

gas54, and EUR 40,000 for schools heating with wood logs (switching from space heaters to a boiler/radiator system)

Additional technical assistance in the first 3 years for awareness raising


The measure is not expected to have direct impacts on the general population. Indirect impacts are likely to include a more comfortable learning environment for children during the winter months.


Table 3-33: Basic information on P-4: Improvement of the energy efficiency in central government-owned public buildings - schools

Title of the Measure Improvement of the energy efficiency in central government-owned public buildings - schools





Energy efficiency investments as part of the renovation of schools:- Retrofitting/ insulation of the all exterior properties of the school building envelope including part of the windows- Installation of efficient end-use systems of efficient bulbs- Installation of efficient heaters in buildings heating with solid fuel including wood- Installation of solar hot water heaters

Target end- Existing school buildings

53 There is currently a project beginning to renovate at least 25 schools involving a EUR 14 million loan from The Council of Europe Development Bank and a EUR 6 million grant from E5P which will cover most of the costs of this measure for the first 3 years.54 This assumes only improvement of heating/ ventilation systems – not complete installation.


use Target group School buildings and the occupants of the schools





Budget

2017 2018 2019 2020Total 2017 - 2020

2021 - 2030


Eastern Europe Energy Efficiency and Environment Partnership (E5P)

Grants € 1,178,000

€ 1,202,000

€ 1,226,00

0

€ 1,251,00

0

€ 4,857,000 € 0

IFIs/Banks - Investment

Investment € 0 € 0 € 0 € 0 € 0 € 13,968,000

Total € 1,197,000

€ 1,221,000

€ 1,245,00

0

€ 1,330,00

0€

4,993,000 € 14,855,000


- For Case 1: School heating with electricity: 12%.- For Case 2: School heating with natural gas: -1%- For Case 3: School heating with wood logs: 1%

Implementing body Ministry of Education and Science

Monitoring authority Ministry of Education and Science


Bottom-up based on invoices for energy consumption

Type of savings




2020 13,512 11,339 4,319

2025 35,688 31,067 12,109

2030 55,139 48,326 18,836


This measure has synergies with - P-6 related to the improvement of kindergartens. - P-1 wherein the data obtained from energy audits in schools can be put into the national energy efficiency information system. - H-9 - EPBD Transposition and Enforcement: Standards and norms and labelling schemes in buildings.

P-5: Improvement of the energy efficiency in central government-owned public buildings - non-schools


This measure involves the improvement of the building envelope in Central Government-owned public buildings that are not schools. Refurbishments or improvements are necessary because some parts of the buildings, like roofs and windows, need replacement. In carrying out these improvements and refurbishments, energy efficiency measures would also be included in the package of investments.


Investments will include refurbishment of the building envelopes to reduce overall energy losses/decrease demand including:

Insulation of exterior walls; Improved R values of windows; Insulation of roofs; Insulation of basements.

Lighting improvements would be handled as a separate measure.


The implementing organizations for this measure would be the ministries using specific buildings – with potential coordination from the Ministry of Economy and Sustainable Development and the New Agency.


The potential savings and levels of investment in this measure have not been calculated as they are dependent upon an inventory of buildings and energy audits being conducted within the central-government owned building sub-sector – which will be carried out as part of P-1. Savings potentials and achieved will be calculated as part of the next NEEAP.

Assumptions:

Over the entire period of implementation, costs are expected to include: Ongoing in-kind contribution from the Government of Georgia for staffing and implementation. Technical assistance of national experts and international experts over the course of the first 3

years. Investment programme by NEFCO and E5P.55




Table 3-34: Basic information on P-5: Improvement of the energy efficiency in central government-owned public buildings - non-schools

Title of the Measure Improvement of the energy efficiency in central government-owned public buildings - non-schools





Refurbishments or improvements are necessary because some parts of the buildings, like roofs and windows, need replacement. In carrying out these improvements and refurbishments, energy efficiency measures would also be included in the package of investments.

Target end-use Public buildings owned by the central government. This does not include schools which are handled as separate measures. It would include office buildings, sports centres/ recreation halls, police buildings, museums, social homes, and potentially military buildings and prisons.

Target group Central Government - with additional awareness of the general publicRegional application Nationwide

55 Note that as of 15 November 2016, these projects have already been tendered.





Budget

2017 2018 2019 2020 Total 2017 - 2020

2021 - 2030


145,000

NEFCO Investment € 0 €

1,500,000€

1,500,000

€ 2,000,00

0

€ 5,000,000 € 0


Grants € 0 € 1,000,000

€ 1,000,000

€ 1,350,00

0

€ 3,350,000 € 0

Total € 12,000 € 2,512,000

€ 2,513,000

€ 3,363,00

0€

8,400,000€

145,000

Non-leveraged 15-year IRR Not calculated

Implementing body

Ministries using specific buildings – with potential coordination from the Ministry of Economy and Sustainable Development and the New Agency.

Monitoring authority Ministry of Economy and Sustainable Development


Energy savings will be monitored via tracking expenses on an annual basis for each building.

Type of savings








These interventions will be carried out in conjunction with the inventory of central-government owned buildings (P-1) and build off of the pilot project as described in P-2. It will also have synergies with the horizontal measure H-9 - EPBD Transposition and Enforcement: Standards and norms and labelling schemes in buildings.

3.3.2 Buildings of other public bodies

The EED requires that public bodies that are not part of central government should be encouraged to demonstrate their exemplary role in buildings energy efficiency. A description of this sub-sector can be found in in Section 3.2.2. Measures to be implemented related to this sub-sector are described by P-6 and P-7 below.


Related to these measures, as has been mentioned, a number of municipalities have developed SEAPs which include energy efficiency measures. These municipalities include:

Tbilisi – which adopted its SEAP in 2011 and a new one in 2015. Rustavi – which adopted its SEAP in 2012 Batumi, Zugdidi, Gori, and Telavi which adopted their SEAPs in 2015.


All of these plans contain specific energy saving and efficiency objectives and actions through 2020. In the building sector, these plans are based on energy audits, though there are not currently energy management systems in place which cover the entire breadth of the organizations which have adopted the SEAPs.

Additionally, as with the Central Government, there are no current plans of non-central Government bodies to develop the energy performance contracting market and energy performance contracting in connection to financing renovations of buildings of public bodies. It is likely that there is potential in the public lighting arena, but this has not yet been developed.


P-6: Improvement of the energy efficiency of non-central government-owned public buildings – kindergartens


This measure involves the retrofitting/ insulation of the all exterior properties of the building envelope including windows and installation of efficient end-use systems.

These investments/renovations will take place as part of a larger investment programme of renovations in kindergartens. They will include:

1. Insulation of roof; 2. Installation of new windows; 3. Insulation of walls; 4. Insulation of the floor; 5. Installation of new heating systems in combination with solar water collectors for hot water supply

system; 6. Installation of a new ventilation system; 7. Installation of efficient bulbs;8. Installation of solar hot water systems.

Cooling systems are not addressed in the calculation.


Municipalities with assistance from IFIs who would provide technical assistance and financing.56


The calculation of final energy savings was carried out by estimating the potential for energy saved and costs for implementation in three types of buildings – kindergartens heating with natural gas, kindergartens heating with wood logs, and kindergartens heating with electricity. It assumed all kindergartens use natural gas for hot water. Primary energy savings were then calculated using the conversion factor for natural gas, electricity, and for wood logs for each year. The calculations were then scaled up according to assumptions of market penetration of efficiency improvements.

Assumptions:

Energy saving calculations are indicative using example kindergarten buildings with the following characteristics:

700 m2 floor area, 100% heated except for kindergartens heating with wood, which are assumed to be 50% heated – increasing to 100% over 10 years

200 kWh/m2 heating demand

56 Note that KfW is planning investments in municipally-owned buildings in Batumi and EBRD is planning a multi-municipality programme for financing of various EE measures.


60% potential savings in final heating demand 93% efficiency of natural gas boilers 35% efficiency of wood heaters improved to 65% 2.5 W/m2 lighting requirement in BAU improved to 1 W/m2 for the EE case with 0.15 bulbs per m2

Estimated market size as follows: Estimated 13 kindergartens heating with electricity, 323 with natural gas, and 310 with wood – a

total of 645 kindergartens identified in municipalities which have developed SEAPs with 451,500 m2

Estimated interventions in 1 electricity-heated kindergarten per year, 8 natural gas-heated, and 2 wood-heated – a total of 11 kindergartens nationally per year.

Over the entire period of implementation, costs are expected to include: In-kind contribution from municipalities for 13 municipalities Technical assistance for technical plans, audits, and tender procedures EUR 40 per m2 for demand-side energy efficiency interventions (and EUR 50-100 per m2 for non-

energy efficiency renovations) EUR 5,000 for heating and ventilation system improvements for those heated with natural gas and

electricity57 EUR 25,000 for those based on wood (switching from a space heater to a boiler/radiator system)

EUR 5.51 per bulb replaced (including installation costs) EUR 4,000 per solar hot water heating system Additional technical assistance for awareness raising over a 3-year period


The measure is not expected to have direct impacts on the general population. Indirect impacts are likely to include a more comfortable learning environment for children during the winter months.


Table 3-35: Basic information on P-6: Improvement of the energy efficiency of non-central government-owned public buildings – kindergartens







Energy efficiency investments as part of the renovation of kindergartens:- Retrofitting/ insulation of the all exterior properties of the building envelope including part of the windows- Installation of efficient bulbs- Installation of efficient heaters in buildings heating with solid fuel including wood- Installation of solar hot water heaters

Target end-use Existing kindergartens

Target group Municipalities which are owners of the kindergartens and the occupants of the kindergartens


Nation-wide, but specifically in cities which are signatories to the Covenant of Mayors (Tbilisi, Batumi, Kutaisi, Rustavi, Zugdidi, Gori, Telavi, etc.)




Budget

2017 2018 2019 2020 Total 2017 - 2020 2021 - 2030


57 This assumes only improvement of heating/ ventilation systems – not complete installation.



Investment € 462,000 € 472,000 € 481,000 € 491,000 €

1,906,000 € 5,481,000

Total € 522,000 € 533,000 € 543,000 € 572,000 € 2,170,000 € 6,388,000


- For Case 1: Kindergarten heating with electricity: 10%.- For Case 2: Kindergarten heating with natural gas: 1%- For Case 3: Kindergarten heating with wood: 0%

Implementing body Municipalities with assistance from international organizations

Monitoring authority Municipalities


Bottom-up based on invoices for energy consumption

Type of savings




2020 6,289 4,981 1,592

2025 15,783 13,008 4,358

2030 24,332 20,235 6,778


This measure has synergies with:- P-4 related to the improvement of schools. - P-1 wherein the data obtained from energy audits in kindergartens can be put into the national energy efficiency information system. - H-9 - EPBD Transposition and Enforcement: Standards and norms and labelling schemes in buildings.

P-7: Improvement of the energy efficiency of non-central government-owned public buildings - non-kindergartens


This measure involves the improvement of the building envelope in public buildings not owned by the Central Government that are not kindergartens. Refurbishments or improvements are necessary because some parts of the buildings, like roofs and windows, need replacement. In carrying out these improvements and refurbishments, energy efficiency measures would also be included in the package of investments.

Investments will include refurbishment of the building envelopes to reduce overall energy losses/decrease demand including:

Insulation of exterior walls; Improved R values of windows; Insulation of roofs; Insulation of basements.

Lighting improvements would be handled as a separate measure (P-3).


The measure will be implemented by municipalities with assistance from international organizations and IFIs.58

58 Note that KfW is planning investments in municipally-owned buildings in Batumi and EBRD is planning a multi-municipality programme for financing of various EE measures.



The potential savings and levels of investment in this measure have not been calculated as they are dependent upon an inventory of buildings and energy audits being conducted within the central-government owned building sub-sector – which will be carried out as part of P-1. Savings potentials and achieved will be calculated as part of the next NEEAP.

Assumptions:

The potential savings of this measure have not been calculated as they are dependent upon an inventory of buildings and energy audits being conducted within the non-central government owned building sub-sector – which will be carried out as part of P-1. The levels of investment are likely to be substantial.

Over the entire period of implementation, costs are expected to include: In-kind contribution from the Government of Georgia for staffing and implementation. In-kind contribution from 13 Municipalities for staffing and implementation. Technical assistance of national experts and international experts over the course of the first 4

years.




Table 3-36: Basic information on P-7: Improvement of the energy efficiency of non-central government-owned public buildings - non-kindergartens







Refurbishments or improvements are necessary because some parts of the buildings, like roofs and windows, need replacement. In carrying out these improvements and refurbishments, energy efficiency measures would also be included in the package of investments.

Target end-use

Public buildings owned by the non-central government (predominantly municipalities). This does not include kindergartens which are handled as a separate measure. It would include office buildings, sports centres/ recreation halls, retirement homes, and libraries.

Target group Non-central Government - predominantly municipalities - with additional awareness of the general public


Nation-wide, but specifically in cities which are signatories to the Covenant of Mayors (Tbilisi, Batumi, Kutaisi, Rustavi, Zugdidi, Gori, Telavi, etc.)




Budget

2017 2018 2019 2020 Total 2017 - 2020

2021 - 2030



Total € 66,000 € 67,000 € 68,000 € 69,000 € 270,000 € 780,000

Non-leveraged 15- Not calculated


year IRRImplementing body Municipalities with assistance from the Ministry of Regional Development

Monitoring authority Municipalities


Energy savings will be monitored via tracking expenses on an annual basis for each building.

Type of savings








These interventions will be carried out in conjunction with the inventory of government owned buildings (P-1) and build off of the pilot project as described in P-2. It will also have synergies with the horizontal measure H-9 - EPBD Transposition and Enforcement: Standards and norms and labelling schemes in buildings.

3.3.3 Purchasing by public bodies

The EED requires that central governments purchase products, services and buildings with high-energy efficiency performance and that all public bodies should be encouraged to do likewise. Green public procurement leads the market by example, by creating demand of EE goods, reducing the market prices, enhancing the sustainability and diversity of the market for EE goods and services. The following measure is planned for implementation.

P-8: Green Procurement on Energy Efficiency


The Government of Georgia plans to elaborate and adopt procurement regulations that would include operation and maintenance costs during the operational life-time of the energy consuming products, goods and services including buildings and transport means.

The main aim is to achieve long term sustainability in optimisation of overall operation and maintenance costs of state property via decreasing energy bills for any procured goods and properties by state and or local government institutions. The secondary aim is to promote EE product market formulation.

An additional aim of this measure is to lead the market by the example set by the public sector, which will help improve the general knowledge of all public procurement stakeholders in order to increase the inclusion of green public procurement elements in public procurement procedures at both national and local levels. In order to achieve this, further work must be done on producing appropriate educational materials (reference books, guides) and distributing the existing educational and promotional materials electronically and through workshops.

The measure will involve developing legislation and a national programme for public procurement with technical know-how for including and evaluating energy efficiency requirements in public procurement procedures by applying the criterion of the economically most favourable bid. Procurement guidelines will have to be developed which will include life cycle cost and methods of calculation this, along with calculation of IRR and NPV and other financial parameters for procurement of high energy consuming goods and products.


This measure will ensure the inclusion of energy efficiency criteria in public procurement procedures in accordance with national legislation on public procurement (Law on Public Procurement 20/04/2015 N1388 IS – Amended 17/11/2015) combined with capacity building.

A programme/plan for integration of green procurement requirements into public procurement rulebooks will be developed. The process will involve establishing targets and identifying the key stakeholders and actions that should be undertaken on the national and local level in order to achieve better integration of the green public procurement criteria into the public procurement procedures. There would be a lower ambition level in the early period, followed by gradual upgrade of the requirements to raise the minimum efficiency requirements as well as the fraction of public procurement that must meet the set criteria. The European Commission criteria for green public procurement and efficiency indicators can provide guidance on international best practice.

The guidelines and Order of the Chairman of State Procurement Agency59 will be applicable for all forms of procurement procedures (Simplified Procurement Procedures, Contests, Tender and Consolidated Tenders).

The measure will be combined with capacity building, such as development of instruction manuals, delivery of trainings and advice on application of this regulatory tool. The capacity building must address the use of EE criteria, the EE requirements for most frequently procured/ typical products, the integration of additional EE criteria into procurement documentation.


The measure will be implemented by the State Procurement Agency in cooperation with the Ministry of Economy and Sustainable Development for development of standards. Also the Ministry of Regional Development and Infrastructure will be involved in cooperation with local governments for implementation.


The potential energy savings from this measure have not been calculated as they are to be counted within the savings of other public sector measures.

Assumptions:

Assumes Government willingness to pursue reform and adopt the necessary regulatory package.

It is estimated that resources needed will include: Government staff time to develop the legislation/regulations A small amount of additional man-months per year amongst the estimated 20 procurement

agencies which may utilise the measure A small amount of additional man-months per year amongst 64 municipalities which may utilize the

measure Technical assistance from national consultants and international consultants in developing the

regulations and assisting with procurement processes during the initial period.




Table 3-37: Basic information on P-8: Green Procurement on Energy EfficiencyTitle of the Measure Green procurement on energy efficiency

59 See http://www.procurement.gov.ge/ELibrary/LegalActs.aspx?lang=en-US


http://www.procurement.gov.ge/ELibrary/LegalActs.aspx?lang=en-US


DescriptionCategory Voluntary agreements and co-operative instruments Regulation



The main aim is to achieve long term sustainability in optimisation of overall operation and maintenance costs of state property via decreasing energy bills for any procured goods and properties by state and or local government institutions. The secondary aim is to promote EE product market formulation.

The measure will involve developing legislation and a national programme for public procurement with technical know-how for including and evaluating energy efficiency requirements in public procurement procedures by applying the criterion of the economically most favourable bid.

This measure will ensure the inclusion of energy efficiency criteria in public procurement procedures in accordance with national legislation on public procurement (Law On Public Procurement 20/04/2015 N1388 IS – Amended 17/11/2015) combined with capacity building.

Target end-use

All types of end use in public sector, such as heating, ventilation and air conditioning, lighting, office equipment, means of transportation, etc.

Target group National and Municipal decision-makers, Staff of State Procurement Agency





Budget

2017 2018 2019 2020Total 2017 - 2020

2021 - 2030


242,000


Total € 48,000 € 33,000 € 72,000 € 74,000 € 227,000 € 822,000


Not calculated

Implementing body

State Procurement Agency in cooperation with the Ministry of Economy and Sustainable Development for development of standards. Also the Ministry of Regional Development and Infrastructure in cooperation with local governments for implementation.

Monitoring authority State Procurement Agency


Energy savings have not been calculated for this measure but savings can be monitored ex-ante as a part of the procurement process - comparing energy consumption of various bids in the procurement process to differentiate business as usual from the EE case.

Type of savings








This measure is linked to all measures in the public sector – as it will help provide a basis for procurement of EE goods and services. It is also linked to the adoption of municipal energy performance standards, SEAPs and Covenant of Mayors-East developments.


P-9: Improvement of efficiency in street-lighting/outdoor lighting


An additional measure which is in the public sector but not related to buildings is improvement of efficiency in street-lighting/outdoor lighting. The measure involves modernising and improving the outdoor lighting system of cities and inter-city areas - changing current sodium-vapour lamps to energy saving lamps. The main goal of the project is to provide power efficiency, economic effect, long operational time, and modern design.

The measure is to be carried out in: Tbilisi, Kutaisi, Batumi, Rustavi, Zugdidi, Gori, Telavi, and potentially others. To some extent, this measure is already underway in a number of the municipalities, but will be scaled up.

Additionally, lighting improvements can be made for inter-city roads such as on the East-West Highway.


The measure will be implemented by Municipalities for lighting within municipalities and the Ministry of Regional Development inter-city roadways.

Donor assistance for capacity building and potential finance from IFIs is also necessary.60


The calculation of final energy savings was carried out by estimating the potential for energy saved and costs for implementation on a per unit basis for street-lighting. Primary energy savings were then calculated using the conversion factor for electricity for each year. The calculations were then scaled up according to assumptions of market penetration of efficiency improvements (described in Assumptions).

Assumptions:

Estimated market size as follows: Total potential market amongst the main cities with SEAPs is estimated at 132,000 lights - which would be replaced at a rate of 10% per year over 10 years. The total national market (including these cities) is estimated to be double this amount.

Energy saving calculations are indicative using the following characteristics: Street-lights estimated to operate 11 hours per day on average61

Inefficient (sodium) bulbs estimated as an average of 250 W per light with a lifetime of 20,000 hours (needing replacement every 5 years). For IRR calculations, the cost of replacement with sodium bulbs is EUR 200/bulb

Efficient LED bulbs estimated as an average of 140 W/light per light with a lifetime of 50,000 hours (needing replacement every 12 years)

Over the entire period of implementation, costs are expected to include: Cost of installing a new LED bulb is EUR 365 including labour62

Some limited National Government staff-time per year to implement the programme Some limited municipality staff-time per year to implement the programme in 64 municipalities Additional resources required via technical assistance for technical analysis, training, and

awareness raising

60 Note that KfW is planning investments in municipally-owned buildings in Batumi and EBRD is planning a multi-municipality programme for financing of various EE measures.61 Though this is somewhat higher than reported in the SEAPs, it is more in line with international standard values.62 This price is likely to actually be lower when bought in mass quantities and given that prices are falling over time.



The measure is not expected to have direct impacts on the general population – though improved lighting may improve quality of life for some communities.


Table 3-38: Basic information on P-9: Improvement of efficiency in street-lighting/outdoor lightingTitle of the Measure Improvement of efficiency in street-lighting/outdoor lighting





The measure involves modernising and improving the outdoor lighting system of cities - changing current sodium-vapour lamps to energy saving lamps.

Target end-use Street-lighting

Target group Predominantly municipalities with some inter-city areas - with additional awareness of the general public


Nation-wide, as well as specifically in cities which are signatories to the Covenant of Mayors (Tbilisi, Batumi, Kutaisi, Rustavi, Zugdidi, Gori, Telavi, etc.)




Budget

2017 2018 2019 2020Total 2017 - 2020

2021 - 2030


Municipalities In-kind € 98,000 € 100,000 € 102,000

€ 139,000 € 439,000 € 329,000


Investment € 8,617,000 € 8,790,000

€ 8,965,00

0

€ 9,145,00

0

€ 35,517,00

0

€ 58,840,00

0

Total € 8,721,000 € 8,896,000€

9,073,000

€ 9,290,00

0

€ 35,980,00

0

€ 59,176,00

0Non-leveraged 15-year IRR

34.2%

Implementing body

Municipalities and the Ministry of Regional Development and Infrastructure with donor/IFI assistance for capacity building and finance.

Monitoring authority Municipalities and the Ministry of Regional Development and Infrastructure


Energy savings will be monitored via tracking expenses on an annual basis for each street lighting system.

Type of savings




2020 127,304 40,890 25,092

2025 280,780 92,002 56,458

2030 304,543 102,224 62,731



This measure has synergies with measure P-8 as relates to regulations for Green Procurement - which would allow for procurement of light bulbs according to energy efficiency properties as well as cost.

3.3.4 Savings arising from measures in central government and other public bodies


The estimated energy savings and related to the public sector measures have are summarized in Table 3-39.


Table 3-39: Overview of individual measures in the public sector

No.


measure End-use targeted Duration

(years)

2020 2025 2030










P-1



2 Not calculated

Not calculated

Not calculated

Not calculated

Not calculated

Not calculated

Not calculated

Not calculated

Not calculated

P-2Pilot project for low energy public sector buildings

Existing public administrative building(s)

2 0.1 0.1 22 0.1 0.1 22 0.1 0.1 22



3 7.2 2.3 1,417 7.0 2.3 1,417 6.9 2.3 1,417

P-4


Existing school buildings 3 13.5 11.3 4,319 35.7 31.1 12,109 55.1 48.3 18,836

P-5

Improvement of the energy efficiency in central

Public buildings owned by the central government. This does not include schools

3 Not calculated

Not calculated

Not calculated

Not calculated

Not calculated

Not calculated

Not calculated

Not calculated

Not calculated


No.



(years)

2020 2025 2030










government-owned public buildings - non-schools

which are handled as separate measures. It would include office buildings, sports centres/ recreation halls, police buildings, museums, social homes, and potentially military buildings and prisons.

P-6


Existing kindergartens 3 6.3 5.0 1,592 15.8 13.0 4,358 24.3 20.2 6,778

P-7



13 Not calculated

Not calculated

Not calculated

Not calculated

Not calculated

Not calculated

Not calculated

Not calculated

Not calculated

P-8Green procurement on energy efficiency


7 Not calculated

Not calculated

Not calculated

Not calculated

Not calculated

Not calculated

Not calculated

Not calculated

Not calculated


No.



(years)

2020 2025 2030










P-9


Street-lighting 5 127.3 40.9 25,092 280.8 92.0 56,458 304.5 102.2 62,731

Total 154.4 59.6 32,444 339.4 138.5 74,364 391.0 173.2 89,785


3.3.5 Financing of energy efficiency measures in public bodies


Table 3-40 shows the expected financing needs for the period of 2017 to 2030 for measures in the public sector.

According to the Guidance on NEEAP development from the European Commission, measure-specific information should indicate the amount of planned financing from the EU Structural and Cohesion Funds and other amounts of co-financing coming from state budget. Because Georgia is not qualified to receive EU Structural and Cohesion Funds, this is not included.


Table 3-40: Overview of financing of measures in the public sector

No.


measure Implementing body Source Type of



2017 2018 2019 2020 Total 2017 - 2020 2021 - 2030

P-1


Ministry of Economy and Sustainable Development for developing and coordinating the system, with the Ministry of Regional Development and Infrastructure to carry out requests for information requested from the municipalities.


Municipalities Investment € 46,000 € 117,000 € 138,000 € 104,000 € 405,000 € 1,161,000

Total € 58,000 € 123,000 € 144,000 € 108,000 € 433,000 € 1,209,000


Municipal administration - with information then distributed to various municipalities and national government representatives (Ministry of Economy and Sustainable Development)


Donors - Grants Grants € 35,000 € 0 € 0 € 0 € 35,000 € 0

Total € 47,000 € 0 € 0 € 0 € 47,000 € 0


Ministry of Economy and Sustainable Development for central government-owned buildings.Ministry of Regional Development for municipally-owned buildings.

Central Government Investment € 27,000 € 83,000 € 85,000 € 144,000 € 339,000 € 0

Municipalities Investment € 14,000 € 44,000 € 45,000 € 77,000 € 180,000 € 0

Total € 41,000 € 127,000 € 130,000 € 221,000 € 519,000 € 0

P-4


Ministry of Education and Science



Grants € 1,178,000 € 1,202,000 € 1,226,000 € 1,251,000 € 4,857,000 € 0

IFIs/Banks - Investment Investment € 0 € 0 € 0 € 0 € 0 € 13,968,000

Total € 1,197,000 € 1,221,000 € 1,245,000 € 1,330,000 € 4,993,000 € 14,855,000


No.





2017 2018 2019 2020 Total 2017 - 2020 2021 - 2030

P-5


Ministries using specific buildings – with potential coordination from the Ministry of Economy and Sustainable Development and the New Agency.


NEFCO Investment € 0 € 1,500,000 € 1,500,000 € 2,000,000 € 5,000,000 € 0


Grants € 0 € 1,000,000 € 1,000,000 € 1,350,000 € 3,350,000 € 0

Total € 12,000 € 2,512,000 € 2,513,000 € 3,363,000 € 8,400,000 € 145,000

P-6


Municipalities with assistance from international organizations


IFIs/Banks - Investment Investment € 462,000 € 472,000 € 481,000 € 491,000 € 1,906,000 € 5,481,000

Total € 522,000 € 533,000 € 543,000 € 572,000 € 2,170,000 € 6,388,000

P-7


Municipalities with assistance from the Ministry of Regional Development



Total € 66,000 € 67,000 € 68,000 € 69,000 € 270,000 € 780,000

P-8Green procurement on energy efficiency

State Procurement Agency in cooperation with the Ministry of Economy and Sustainable Development for development of standards. Also the Ministry of Regional Development and Infrastructure in cooperation with local governments for implementation.



Total € 48,000 € 33,000 € 72,000 € 74,000 € 227,000 € 822,000

P-9 Improvement of efficiency in

Municipalities and the Ministry of Regional

Central Government

In-kind € 6,000 € 6,000 € 6,000 € 6,000 € 24,000 € 7,000


No.





2017 2018 2019 2020 Total 2017 - 2020 2021 - 2030

street-lighting/outdoor lighting

Development and Infrastructure with donor/IFI assistance for capacity building and finance.

Municipalities In-kind € 98,000 € 100,000 € 102,000 € 139,000 € 439,000 € 329,000IFIs/Banks - Investment Investment € 8,617,000 € 8,790,000 € 8,965,000 € 9,145,000 € 35,517,000 € 58,840,000

Total € 8,721,000 € 8,896,000 € 9,073,000 € 9,290,000 € 35,980,000 € 59,176,000Total € 10,712,000 € 13,512,000 € 13,788,000 € 15,027,000 € 53,039,000 € 83,375,000


3.4 Energy efficiency measures in industry

Overall information about the industrial sector

Georgian industry is not a large consumer of energy. At the same time, the 10.5 TWh of energy consumed in 2014 (for both energy and non-energy use) represents 22% of all energy consumed in Georgia that year. As can be seen in Table 3-41, total energy consumption actually decreased from 2013 to 2014, although this is mainly due to nearly 0.8 TWh of oil for the mineral sector being re-allocated to transport.

Although 2.5 TWh of natural gas is reported as raw-material feedstock for fertilizer production, this is actually a dual fuel and feedstock, because site will benefit from the energy released during processing. Therefore, it should be considered as industrial energy consumption, even if it is ascribed to non-energy. Most of the remaining non-energy is oil products used either as lubricants or as bitumen for roads, neither of which are dual-fuel/ feedstock.

Table 3-41: Energy consumption in the industry sector for 2013 and 2014 (GWh)

2013 2014Energy useCoal 3,656 3,365Oil products 813 11Natural Gas 810 930Biofuel & Waste 2 4Electricity 2,327 2,817Total energy use 7,607 7,126Non-energy useOil products 858 884Natural Gas 2,444 2,516Total non-energy use 3,302 3,400Total 10,909 10,526

Source: Geostat Energy Balances for Georgia from 2013 and 2014

Historically, Georgia was a much larger energy consumer emitter; in 1990 industry consumed nearly 3 times more energy than in 2013/2014. However, since 1990, there was a large reduction in industry (and other sectors) immediately after the break-up of the Soviet Union.

Industry and commercial organisations in Georgia are currently suffering from a Regional recession and this is causing low site utilisation plus cash-flow issues.63 Several models, including the MARKAL model being developed by the Georgian Government, project large year-year growth between now and 2030 – with the MARKAL model predicting growth of energy consumption in industry by 4.94% per year through 2030 – directly linked to GDP growth. For the purposes of the NEEAP the MARKAL projected growth figures have been used, though they are considered optimistic. This level of growth would involve doubling of production between 2016 and 2030.

Main sub-sectors and their energy consumption

As can be seen in Table 3-42, the predominant energy consuming sub-sectors in industry are: Non-metallic minerals with 26% of all consumption Chemicals (including petrochemical) with 26% of all consumption if non-energy use of natural gas

is included; and Iron and steel with 25% of all consumption;

63 As reported by several firms during interviews carried out during preparation of this NEEAP.


Additionally, it is suspected that energy consumption in Food, beverages and tobacco (already 4th ranked) is under-reported in the official energy balance. This is discussed further below.

Table 3-42: Georgia industry energy consumption in 2014 – sorted by fuel and sub-sector (GWh)

# Sub-sector CoalOil products

Natural Gas

Biofuel & Waste Electricity Total %

Energy use 3,364.8 10.5 929.6 3.8 2,816.9 7,125.6 68%1 Iron and steel 1,095.4 3.9 89.0 - 1,446.4 2,634.7 25%

2Chemical (including petrochemical) - 0.0 24.7 - 198.3 223.0 2%

3 Non-ferrous metals - - - - - - 0%4 Non-metallic minerals 2,242.1 3.6 278.8 0.0 221.9 2,746.4 26%5 Transport equipment - - 4.3 - 6.6 10.9 0%6 Machinery - - 1.1 - 11.1 12.2 0%7 Mining and quarrying - 0.0 7.2 - 91.8 99.0 1%

8Food, beverages and tobacco 25.6 0.1 383.2 3.5 194.6 606.9 6%

9Paper, pulp and printing - - 22.2 0.0 13.3 35.5 0%

10Wood and wood products - 0.0 0.2 - 4.1 4.3 0%

11 Construction - 2.6 95.7 0.2 371.5 469.9 4%12 Textiles and leather - - 7.8 - 7.4 15.3 0%

13Not elsewhere specified (Industry) 1.6 0.3 15.5 0.0 250.1 267.6 3%

Non-energy use - 883.9 2,516.3 - - 3,400.2 32%

14Chemical (including petrochemical) - 0.1 2,516.3 - - 2,516.3 24%

15 Construction - 823.7 - - - 823.7 8%16 Other sectors - 60.2 - - - 60.2 1%

Total 3,364.8 894.5 3,445.9 3.8 2,816.9 10,525.8 100%Source: Based on Geostat data, the Industry sector/ sub-sector split for 2014

Number of large industries and number of SMEs

In total there are 6,684 industrial enterprises registered in Georgia according to communications with Geostat. As discussed in Section 3.1.4, Georgia’s definition of large versus medium and small industrial enterprises is different than that of the EU. Georgia is considering changing its definitions to become more in-line with EU standards. According to Geostat data, in 2013, there were 536 “large”, 661 “medium” and 5487 “small” industrial organisations in Georgia – using the Georgian definition. Using the EU definition, the NEEAP team estimate there are between 50 and 100 “large” industrial organisations and a further 1,100 – 1,250 “medium” organisations in Georgia. Information was not available as to the breakdown of the size of companies and their sub-sectors.

Comparison with EU and other countries & comments on the tendencies/trends

With a population of 3.729 million people, industry energy consumption equates to 2,822 kWh/person. This can be compared with:

The UK an economically developed nation, with a very large commercial and service sector. In 2012, UK industry consumed 278,771 GWh for a population of 63.7 million, i.e. 4,376 kWh/person.

Kazakhstan: a former Soviet nation that is heavily industrial. In 2012, industry consumed 266,187 GWh for a population of 16.8 M, i.e. 15,844 kWh/person.


Whilst is it not surprising that Georgian industry is considerably less energy-intense than Kazakhstan, with its large mineral and metal processing sectors, it is surprising that it is only half that of the UK. Regarding energy consumption per units of production, estimates of production have been calculated as in Table 3-43.

Table 3-43: Estimates of production in the industrial sector

Sector Approximate tonnes

Comments on sources and information

Aggregates 12,602,861 Tonnage data from GeostatIron & steel 188,737 Tonnage data from GeostatChemicals/ petrochemicals

45,397 Tonnage data from GeostatThis figure appears low. It is less than tonnage data from one major industrial producer who was interviewed for the NEEAP

Non-metal Minerals 6,161,029 Approximately 1.6 Mt of cement is produced each year, but there appears to be multiple counting of same product as: clinker, cement then concrete products. Additionally, there may be some multiple counting of aggregates.

Food & drink 1,518,612 Comprising 874 kt of food and 645 t of drink. This figure appears low – see below

Wood based 59,202 Mixture of units – back estimated by the NEEAP preparation team

Paper based 21,985 Mixture of units – back estimated by the NEEAP preparation team

Clothing 8,302 Very rough back-estimate based on economic production

Engineering 55,866 Mixture of units – back estimated by the NEEAP preparation team

Construction n/a No information

It is difficult to make conclusions and comparisons with EU countries, as there seem to be some issues with the compilation of information of energy consumption and of goods production.

It is noteworthy that the tonnage of chemicals/petrochemicals produced is less than the amount of tonnes produced which the NEEAP preparation team found based on one major industrial producer in that sector.

Additionally, it is noteworthy that the tonnage of food production appears very low: 874 kt food / 3.72 million people = 234 kg per person per year. This compares with USA figure of approx. 900 kg per person per year.64 It is likely that the average Georgian will eat less than the average US citizen and that many Georgian, particularly those in rural communities, will grow a proportion of their own food. However, it is unlikely that the difference would be a factor of 4.

Within the non-metal minerals sector, it is noteworthy that much of the cement production is carried out using a wet process, which is significantly less energy efficient than a dry process. For comparison to the EU in the cement industry, as noted in discussions of measure I-3: Conversion of wet-cement process to dry cement process, the wet process in Georgia requires 1.26 to 1.62 MWh brown coal energy per tonne of production in the two plants in Georgia operating with the wet process. The dry process is expected to require only 0.92 MWh of brown coal energy per tonne of production.

As noted, comparisons of the energy intensity (energy consumption per tonne of output) for other industrial processes with the EU are difficult as there is not disaggregated information available on exact products and processes for production in Georgia and their energy consumption. For example, making steel from ore

64 See Aubrey (2011 December 31) “The Average American Ate (Literally) A Ton This Year” NPR. Available at: http://www.npr.org/sections/thesalt/2011/12/31/144478009/the-average-american-ate-literally-a-ton-this-year and Inspiration Green (undated) The American Diet! Available at: http://www.inspirationgreen.com/food-consumption-in-america.html


http://www.inspirationgreen.com/food-consumption-in-america.html

takes significantly more energy than making steel from recycling – and this information is not disaggregated at the moment. For this reason, the measures “I-1: Attention to base year data: energy and production” and “I-2: Industry data disaggregation” are necessary to improve the information available and allow for meaningful comparisons.

Special features in energy consumption

Food, beverages and tobacco are often cited as an important industrial sector in Georgia, yet based on the 2014 data, it represents only 6% of the industry total energy. In theory, this would be a sector with lots of recurring opportunities, where Government support should help generate cost-effective savings. However, with only 606.9 GWh/year consumption, valued at approximately EUR 20-25 million per year, even a 30% reduction would be worth only EUR 6-8 million per year. It seems possible that Food & Drink may have been under-reported by a factor of even between 4 to 5x. Further evidence for this view is provided below.

The chemicals (including petrochemicals) sub-sector is likely also under-reported for production. Furthermore, within this sub-sector it is difficult to justify 2,516 GWh/year as entirely non-energy use of natural gas. This gas will be used both as a fuel and feedstock because site will benefit from the energy released during processing. Some of this amount may be partly or fully re-assigned to energy.

Metal processing now accounts for nearly 25% of the total industry energy. The majority of the delivered energy is either coal (ferro-manganese) or electricity, which suggests electric melting of steel.

Construction accounts for over 10% of consumption in industry, although a large proportion of this is non-energy use of oil-based fuels – bitumen for roads.

The paper, wood, textile and engineering sectors all appear to be small consumers of energy. This is particularly surprising as relates to engineering, which typically comprises a large SME “tail” of companies, and this estimate would benefit from review.

Based on reviews of audits and sites visits conducted during the preparation of the NEEAP, industry energy savings will come from 4 main routes:

1. No/low cost energy-saving from good energy management and control, which is also an enabling step to identifying and eliminating poor behaviour/ bad practice. These include:

Understanding site energy consumption patterns, through suitable sub-metering and software;

Identifying and eliminating poor-practices, “good-housekeeping”, behavioural changes; Attention to planning and scheduling for optimum efficiency; Identifying and financially assessing low-cost technical opportunities.

2. Low-cost technical opportunities, which naturally follow good energy management. Some of the more important being:

Thermal insulation on steam/ hot-water/ refrigerant gas pipes; Attention to steam leaks, steam traps, maximum condensate returns, etc.; Compressed air leak detection, water traps, etc. Upgrades to building fabric: glazing, roof and wall insulation; Lighting: replacing HID, incandescent or old style T8 tubes with EE LED lighting.

3. Sector specific technical investment opportunities: Traditionally, this is what emerging nations focus upon. There are several excellent sector-specific opportunities within Georgia. Details of two of these – steel and cement – are provided in the list of measures.

4. Cross-sector investment opportunities common to several industrial sectors: Four of the more important are also provided in the list of measures:

Boilers and Steam/ hot water systems: combination of no/low cost EE actions combined with replacing old (inefficient, over-sized) boilers with new, correctly sized EE boilers

Refrigeration compressors and distribution systems – similar comments related to replacing old (inefficient, oversized) refrigeration units with new, correctly sized ones.


Motors: replacing old (inefficient and over-sized) motors with new, correctly sized IE3 or better motors, where applicable with Variable Speed Drive (VSD) controls.

Lighting: concerted effort to upgrade, particularly incandescent lights with LED equivalents.

Key barriers and drivers of investments

There are several key drivers of and barriers to investment in the industry sector, some of which have already been discussed in Section 3.1.4. These include:

Technology & Equipment: Historically, there has been little or no investment in energy-saving equipment; for some sites this is an issue that goes back decades. There is still a great deal of Soviet style equipment still in use that:

Is old technology, built with robustness rather than efficiency in mind; Was built at a time when energy costs were subsidized; efficiency was not a prime consideration; Was oversized even for outputs in the 1960’s – 80’s; oversized equipment is inherently inefficient

compared with correctly sized units. With continued reduction in demand, this oversize issue has become more acute.

Mentality and awareness: The mind-set of industry is still production driven, a historic mind-set and not entirely due to the poor state of the economy. There is limited awareness of modern energy management techniques and EE technologies relevant to the site. This is more prevalent for SME organisations and less so for some of the larger organisations.

Energy Management: There is limited understanding of where energy is consumed across each site. This is true for electricity consumption and secondary energy consumption such as steam, hot water, or compressed air. For example, the consumption at the boiler may be known but where this heat is used is not known.

External support and skills/ expertize: As previously discussed in Section 3.1.4, unlike EU Member States, there is very little independent energy-efficiency expertize that Georgian industry can draw-on, including generic/ cross-sector technologies and sector-specific technologies.

Limited funds or opportunity to borrow: The Georgian industrial sector has had significant market-based problems, particularly in the past 2 years. Many long-standing export markets: Russia, Ukraine and other Regional countries – have been directly or indirectly affected by conflicts or embargos, which has reduced export demand hence production. Issues, such as EE, are a long way down the priority list. Even when good EE investment opportunities are identified by site managers or by external consultants, there is limited opportunity to borrow for investment.

Low energy costs: Although unit costs have been rising substantially in recent years and are now approx. 50 – 70 EUR/MWh (electricity) and 20 to 25 EUR/MWh (natural gas), they are still only around 50% (electricity) to 70% (natural gas) of the unit costs for EU industry.

High cost for investment in EE technologies: There is no local production of EE equipment: boilers, furnaces, motors, etc. As such, Georgian industry has to pay international prices for any EE equipment plus transport and any import levies. Therefore, investments in energy efficiency will not necessarily be cheaper in Georgia due to other things (such as labour) being cheaper. Certainly there are cases where individual investment costs are lower, but in general, investment costs tend to be just as high as other countries. Given the lower energy costs (in absolute terms), this makes investments less attractive than in many other countries.

Lack of incentives, covering several areas: There are currently no incentive-based mechanisms to encourage energy efficiency or renewable energy in industry – such as for example:

Negotiated Energy agreements to reduce energy prices for those achieving efficient production; A trading scheme such as a “white certificate” system for selling excess energy savings over and

above the agreed target. Incentives for waste-heat recovery – i.e. for cogeneration of electricity from high-temperature waste

streams; investments are straightforward commercial decisions;


Energy-from-waste (EfW) is not incentivised; currently there is no municipal waste-separation nor any gate-fee/ landfill tax. In EU Member States, avoiding waste disposal costs make EfW plants commercially attractive.

The main investment incentive appears to be the “Produced in Georgia” programme; which offers up to 10% off the interest rates for the first 5 years of loans to organizations making tangible goods.

Data limitations

It appears there may be some issues in the data collection of energy consumption and goods production in the industry sector in Georgia – as outlined above. The estimates of energy efficiency potentials represented in the measures below are based on energy audits and interviews in over 30 industrial enterprises, including larger companies and SMEs. However, in order to have a clearer picture of the potential for efficiency measures, improved data disaggregation and a large number of new energy audits would be beneficial – and also likely trigger investments.

3.4.1 Main policy measures addressing energy efficiency in industry

The following measures can be carried out in the industry sector. They are directly linked with the following measures (see Figure 3-11):

H-2: Alternative policy measures – Incentivising / mandating energy efficiency in industry – which will stimulate interest and improve the financial case for investment even beyond the strong financial parameters present;

H-3: Alternative policy measures – Training and education, including energy advisory programmes – which will educate industry’s decision-makers on investment options;

H-6: Qualification, accreditation, and certification schemes, and potentially to energy efficiency investment schemes – Industry – which will increase the level of certified expertise in the industry sector to better enable investment planning and implementation.

H-7: Energy audits and management systems, boiler inspections in the industry sector – which will require energy audits/energy management in large industries and encourage them in SMEs


Figure 3-11: Policy measures linked to investment/ technical measures in industry

The implementation of these measures would involve the following key aspects: Improvement of the statistical data on industry production and energy consumption A programme of technical assistance for the period 2017 – 2020. Energy audits from the horizontal measures (H-7) would also be linked to investments in this sector

– which has technical assistance requirements. Investment from industry – via a credit line, bank financing, or other financing sources of a total of

approximately EUR 106 million over the period of 2017 through 2020. This number is mostly due to investments in the cement industry (78% of the investments expected). However, the potential for investment in other industries is also likely to be significantly larger than the targets set out in this NEEAP.

I-1: Attention to base year data: energy and production


2014 is Geostat’s most recent full year of data at the time of preparing the NEEAP. Based on analysis of the industrial sector-level energy consumption and production, some of the 2014 sub-sector totals do not appear consistent with energy audits carried out in the sub-sectors. Specifically, energy consumption and production data may be under-reported for several sub-sectors, most notably:

Food and Drink: 2013 and 2014 both appear very low Chemicals: Production values may not fully reflect the sector Non-metal minerals: appears to be partially re-ascribed to metals in 2014

This needs review and confirmation/ correction. Base-year data needs to be robust, otherwise any energy-saving targets will be less valuable. The review of energy consumption and production information should


take place via detailed surveys of at the very least a sample number of producers and cross-checked against energy audits in those sub-sectors.


The measure will be implemented by Geostat with the cooperation of the Ministry of Economy and Sustainable Development.


Energy savings have not been calculated for this measure as it is related to information gathering.

Assumptions:

Over the entire period of implementation, costs are expected to include technical assistance including national experts and international experts. This will be in order to check the data which has been received and whether all important consumers have been included, as well as surveying industry where necessary. The measure is expected to last one year and is expected to be complete in 2017.

It is noteworthy that a change went into effect on the law on statistics in June 2015 which now requires that industries provide information available to them to the statistical agency or face a penalty. This will likely improve the accuracy and quality of data.




Table 3-44: Basic information on I-1: Attention to base year data: energy and productionTitle of the Measure Attention to base year data: energy and production

Index of the measure I-1




2014 is Geostat’s most recent full year of data at the time of preparing the NEEAP. It was notable that some sectors total energy and fuel split were significantly different from the 2013 data. Based on analysis of the industrial sector-level energy consumption and production, some of the 2013 and 2014 sub-sector totals do not appear consistent with energy audits carried out in the sub-sectors. This needs review and confirmation/ correction. Base-year data needs to be robust, otherwise any energy-saving targets will be less valuable.


Target group Georgia Government: Ministry of Economy and Sustainable Development, Ministry of Environment and Natural Resources

Regional application National




Budget

2017 2018 2019 2020Total 2017 - 2020

2021 - 2030

Central Government In kind € 6,000 € 0 € 0 € 0 € 6,000 € 0

Total € 6,000 € 0 € 0 € 0 € 6,000 € 0Non-leveraged 15-year IRR Not calculated


Implementing body Geostat

Monitoring authority Geostat and Ministry of Economy and Sustainable Development


N/A - direct energy savings are not expected from this measure

Type of savings Expected primary energy savings (MWh)







This measure is important for establishing the appropriate baseline energy consumption and production data for evaluating the macro-level potential savings in various sub-sectors - which is relevant to all other industry sector measures.

I-2: Industry data disaggregation


In order to track changes of industry performance over time, recognizing that industry has a complex and dynamic structure, it is necessary to disaggregate industry into meaningful sectors / subsectors, and recording energy use and production. This makes it possible to:

Back-assess energy each sector/sub-sector would have consumed in the base-year, had it produced the same output as in the reference year;

Sum the total; and Compare this with the actual energy use in the reference year.

Headline macro-level comparisons, such as MWh/MEUR turnover, are ineffective. They take no account of the relative energy-intensity per MEUR turnover of different sectors/ sub-sectors, which can “swamp” the impact of energy-saving measures.

This measure would involve gathering: Total sub-industry energy consumption, fuel split and production; Agreeing upon the division of industry into key sectors/ sub-sectors (e.g. within the food and drink

sub-industry, further disaggregating by type of products), Energy consumption, fuel split and production for each main sector/ sub-sector

The latter split is needed so that changes to overall industry product mix can be factored into comparisons of future performance against the base-year.


The measure will be implemented by Geostat with the cooperation of the Ministry of Economy and Sustainable Development.


Energy savings have not been calculated for this measure as it is related to information gathering and processing.

Assumptions:


Over the entire period of implementation, technical assistance will be necessary including national experts and international experts. The measure is expected to last one year and is to be complete in 2018.




Table 3-45: Basic information on I-2: Industry data disaggregation

Title of the Measure Industry data disaggregation Index of the measure I-2




In order to track changes of industry performance over time, recognizing that industry has a complex and dynamic structure, it is necessary to disaggregate industry into meaningful sectors / subsectors, and recording energy use and production. This action would also help track major changes to how and why different processes have been ascribed to different industrial sub-sectors between 2013 - 2014.

Target end-use Improved baseline information

Target group Georgia Government: Ministry of Economy and Sustainable Development, Ministry of Environment and Natural Resources





Budget

2017 2018 2019 2020Total 2017 - 2020

2021 - 2030


Total € 6,000 € 0 € 0 € 0 € 6,000 € 0Non-leveraged 15-year IRR Not calculated

Implementing body GeostatMonitoring authority Geostat and Ministry of Economy and Sustainable Development


This intervention is to enable monitoring of industry performance over time.

Type of savings Expected primary energy savings (MWh)







This measure is directly linked with measure I-1: Attention to base year data: energy and production. It is also important for establishing the appropriate baseline energy consumption and production data for potential savings in various sub-sectors - which is relevant to all other industry sector measures, including implementing voluntary agreements.

I-3: Conversion of wet-cement process to dry cement process



Cement making is one of the biggest energy-consuming sector in Georgia. This measure would involve switching production processes to a dry process from a wet process. Geostat data indicates coal consumption for non-metallic minerals accounted for 2,242 GWh in 2014, equivalent to 21.3% of the total energy consumed by Georgian industry (including for energy uses and non-energy uses). Most of this will be for cement, and most of Georgia’s cement industry still uses the “wet kiln process”, recognized as energy-inefficient. One cement kiln recently converted to dry, however it is estimated that there remains approximately 1.0 million tonne/year still produced via the wet-process.

The wet process requires 1.26 to 1.62 MWh brown coal energy per tonne of production in the two plants in Georgia operating with the wet process. The dry process is expected to require only 0.92 MWh of brown coal energy per tonne of production.

In addition to switching the process from wet to dry, energy received during clinker cooling process should be used to dry raw materials and frequency regulators can be used in the rotating furnace and exhaust switcher.


Cement and mineral processing industry – potentially with finance and technical assistance from IFIs.


The calculation of final energy savings was carried out by estimating the potential for energy saved on a per unit basis for cement production in the wet process versus the dry process. Primary energy savings were then calculated using the conversion factor for coal (1:1). The calculations were then scaled up according to assumptions of market growth as well as assumptions of penetration of efficiency improvements (described in Assumptions).

Assumptions:65

Assumes currently, 1.6 million tonnes of cement produced per year, growing by 4.94% per year through 2030 – Noted that some of this is already produced by "dry" process. Currently 1.204 Mt/year is produced via wet process which would grow at 4.94% per year in the BAU.

Replacement/ upgrade to dry process to take place initially on a large scale (66.7% of cement currently produced by the wet process) by 2019.66 Later, it is expected that the remaining 33.3% would be switched by 2028.

Conversion efficiency from primary to final energy of 1:1 as coal is the fuel to be saved and is used on-site.

Over the entire period of implementation, costs are expected to include: Technical assistance for planning and implementation. Investment of in total of approximately EUR 133 million – of which EUR 82.4 million would be

realized by 2019 and the rest realized by 2028.

This measure’s success is likely to be aided by the success of: H-2: Alternative policy measures – Incentivising / mandating energy efficiency in industry H-3: Alternative policy measures – Training and education, including energy advisory programmes

and H-7: Energy audits and management systems, boiler inspections in the industry sector.


65 Baseline production of cement based on communications with cement manufacturers in Georgia – as are estimates of investment. Estimates of growth are based on the MARKAL model.66 This reflects current investment plans by Heidelberg Cement.


The measure is not expected to have direct impacts on the general population. Benefits associated with this measure could include improved efficiency/competitiveness of industry which could help keep employment secure. Additionally, less pollution from coal burning could result in improved air quality.


Table 3-46: Basic information on I-3: Conversion of wet-cement process to dry cement processTitle of the Measure Conversion of wet-cement process to dry cement process





Cement making is one of the biggest energy-consuming sector in Georgia. This measure would involve switching production processes to a dry process from a wet process.

Target end-use Cement sector production process

Target group Cement sector

Regional application Rustavi




Budget

2017 2018 2019 2020

Total 2017 - 2020 2021 - 2030

Central Government N/A € 0 € 0 € 0 € 0 € 0 € 0

Industry/private companies

Investment € 41,209,000 € 41,209,000 € 0 € 0 € 82,418,000 € 50,736,000

Total € 41,209,000 € 41,209,000 € 0 € 0 € 82,418,000 € 50,736,000Non-leveraged 15-year IRR

18.4%

Implementing body Cement and mineral processing industry

Monitoring authority Ministry of Economy and Sustainable Development and Geostat


To be self-monitored by industry and reported as part of statistical information submission to the Ministry of Economy and Sustainable Development and/or Geostat.

Type of savings




2020 584,638 584,638 206,629

2025 744,033 744,033 262,964

2030 1,189,990 1,189,990 420,578


This measure is directly linked to measures:- H-2: Alternative policy measures – Incentivising / mandating energy efficiency in industry - which will be an impetus for investment- H-3: Alternative policy measures – Training and education, including energy advisory programmes - which will provide awareness raising to decision-makers and - H-7: Energy audits and management systems, boiler inspections in the industry sector

However, no energy savings are calculated for these three measures related to investment, so no overlap is possible.


I-4: Energy saving activities at metal manufacturers


The measure involves continued EE improvements at large steel/metal manufacturers. Steel, ferro-manganese and other metal making in Georgia accounted for 2,635 GWh in 2014, or 25% of Georgia industry energy consumption (including for energy uses and non-energy uses). All sites have the opportunity for upgrades and improvements. These include:

Gas burners in electric arc furnaces (EAF) for chemical energy to reduce electricity demand Hot-charging cast billets directly to re-heat ovens Other sector specific or service improvements

Other, site specific upgrades could include: Utilising flue gases, including carbon monoxide for heat utilization (15-20% savings) Replacement old power transformers (2-5% savings of electricity) Thermal insulation

Overall, cost-effective investment savings of 10-20% are considered realistic for the sector as a whole.


Large steel/metal manufacturers – potentially with finance and technical assistance from IFIs.


The calculation of final energy savings was carried out by estimating the potential for energy saved as 14% across the sub-sector. Primary energy savings were then calculated using the conversion factor for the various fuels (including electricity). The calculations were scaled up according to assumptions of market growth as well as assumptions of penetration of efficiency improvements versus the BAU (described in Assumptions).

Assumptions:67

Assumes energy consumption growing by 4.94% per year through 2030 in the BAU case Assumes savings increasing by 0.5% each year over a 13-year period starting in 2018 across all

fuels used in the sub-sector – so a total of 6.5% savings by 2030.

Over the entire period of implementation, costs are expected to include: Technical assistance of national experts and international experts over a 3-year period. Investment of the industry/private companies in total of approximately EUR 1.63 million per year

over the time period increasing with inflation – this is estimated to be half of the potential investment which could be realised

Expected increased ongoing costs of 10% of total investment made to date (not included in the budget)

This measure’s success is likely to be dependent on the success of H-2: Alternative policy measures – Incentivising / mandating energy efficiency in industry, H-3: Alternative policy measures – Training and education, including energy advisory programmes and H-7: Energy audits and management systems, boiler inspections in the industry sector.


67 Baseline production based on communications with metal manufacturers in Georgia – as are estimates of investment. Estimates of growth are based on the MARKAL model.




Table 3-47: Basic information on I-4: Energy saving activities at metal manufacturersTitle of the Measure Energy saving activities at metal manufacturers



Timeframe Beginning: 2018 End: 2021Aim/brief description Continued EE improvements at large steel/metal manufacturers

Target end-use Secondary steel/ aluminium processors

Target group Steel and metal industryRegional application Rustavi and other industrial centres




Budget201

7 2018 2019 2020 Total 2017 - 2020 2021 - 2030



Investment € 0 €

1,633,000€

1,665,000€

1,699,000€

4,997,000 € 18,971,000

Total € 0 € 1,633,000

€ 1,665,000

€ 1,699,000

€ 4,997,000 € 18,971,000


36.3%

Implementing body Large steel/metal manufacturers




Type of savings




2020 62,168 50,895 18,297

2025 199,274 172,723 62,094

2030 408,147 357,199 128,413





I-5: Improved boilers and steam/ hot water distribution systems


This measure involves continued EE improvements at large food and drink manufacturers, chemicals manufacturers, paper manufacturers and other process sub-sectors by upgrades and/or replacement of boiler and steam/ hot water distribution systems. Boilers and steam/ hot water distribution systems are a major energy centre for these sectors. The same is true for other low-temperature heat processes, e.g. delivery of warm air for drying mineral raw materials or desiccating food products.

Typically, steam/ hot-water generation accounts for 80-90% of the gas, oil and coal consumption for these sectors. Most steam/ hot water boilers in Georgia are > 20 years old are old, oversized, inefficient and built for robustness rather than efficiency.

Secondly, most distribution systems are old and poorly maintained, with minimal (if any) insulation, many leaks, failed steam traps and other inefficiencies.

There are two sets of related energy saving actions:(1) Low-cost EE activities: approximately 20% efficiency savings through activities such as:

rationalization of end-uses; upgrades to distribution network, including steam traps, flange fittings and improved pipe insulation; simple waste-heat recapture and re-use; and control of gas: fuel mix ratio.

(2) Investment opportunities: typically one can expect a further 20-30% efficiency savings through investment: replacing older boilers with modern, well-insulated gas-fired boilers – correctly sized for the lower demand and with flame modulation control, economizers, etc.

It is recommended that Action 1 should be carried out first, partly because it will give good energy cost savings for small investment, and secondly because the rating (therefore investment cost) of any replacement boiler will be lower once the simple fixes have been made.


Industry with boilers & steam/hot-water systems – likely with finance and technical assistance from IFIs and inspections / oversight by the Technical and Construction Supervision Agency within the Ministry of Economy and Sustainable Development.


The calculation of final energy savings was carried out by estimating the use of specific fuels for specific sub-sectors as relates to boilers and steam/hot water distribution systems. The potential for energy saved was then assumed as 20% across various sub-sectors for low-cost EE activities (improved distribution systems) and 25% for investment-oriented activities (improved boilers). The calculations were scaled up according to assumptions of market growth as well as assumptions of penetration of efficiency improvements versus the BAU (described in Assumptions). Primary energy savings were then calculated using the conversion factor for the various fuels (including electricity).

Assumptions:68

Baseline energy use has been taken from the Geostat energy balance from 2014. Food, Beverage, and Tobacco is believed to be under-reported (by 3-5x). There are major uncertainties for other key sectors:

68 Baseline energy consumption for boilers and steam/hot water distribution based on data from Geostat combined with a number of energy audits in various sub-sectors to gauge the energy usage in particular sub-sectors for this purpose. Estimates of growth are based on the MARKAL model.


Chemicals was considered under-reported (by at least 3x) in 2013, as well as non-metal minerals appeared under-reported. Data for these latter sub-sectors increased substantially in revisions of 2013 and in the totals for 2014, which creates uncertainty in data robustness. This issue has been raised already in measure I-1.

Assumptions range on types and percentages of energy usage for boilers and steam/hot water distribution systems are based on several energy audits in various sub-sectors plus NEEAP industry team's own experience. For food and drink, chemicals, and paper industries; typically 80 – 90% of natural gas, coal, and biomass energy source are estimated to be used for boilers/steam and hot water systems.

The estimated energy savings from upgrading steam/ hot water distribution system is 20% and for improved boilers is 25%. These are generic; in some industries, these savings will be higher, others lower.

It is assumed that over the 13-year period from 2018 to 2030, most industrial actors will need to replace their boiler and distribution system – of which at least 1/3 will invest in more efficient systems – i.e. penetration rates growing linearly (2.54% each year) to 33% by 2030.

Over the entire period of implementation, costs are expected to include: Total investment required is based on energy savings estimated. Typical payback for upgrade to

distribution system and other low-cost activities are approximately 1 year. Typical payback for replacement boiler are 2-3 years (assumed 3 for the calculation). The payback periods may be much better, especially if and when a boiler or its system fails and replacement becomes business critical.

Technical assistance including national experts and international experts over the course of the first 4 years – mostly related to assisting industry in planning and carrying out investments.

Investment of the industry/private companies in total of approximately EUR 23.6 million. This is consistent with an estimated 833 industries investing EUR 28,300 each (an appropriate average).





Table 3-48: Basic information on I-5: Improved boilers and steam/ hot water distribution systemsTitle of the Measure Improved boilers and steam/ hot water distribution systems





Continued EE improvements at large food and drink manufacturers, chemicals manufacturers, paper manufacturers and other process sub-sectors by upgrades and/or replacement of boiler and steam/ hot water distribution systems. Boilers and steam / hot water distribution systems are a major energy centre for these sectors. The same is true for other low-temperature heat processes, e.g. delivery of warm air for drying mineral raw materials or desiccating food products.

Target end-use

- Food and drink- Chemicals- Paper- Other process sub-sectors


Target group Industry - various sub-sectorsRegional application National




Budget201

7 2018 2019 2020 Total 2017 - 2020 2021 - 2030



Investment € 0 €

806,000 € 919,000 € 1,043,000 € 2,768,000 € 20,820,000

Total € 0 € 806,000 € 919,000 €

1,043,000 € 2,768,000 € 20,820,000


48.2%

Implementing body

Industry with boilers & steam/hot-water systems with inspections / oversight by the TCSA within the Ministry of Economy and Sustainable Development

Monitoring authority Ministry of Economy and Sustainable Development (TCSA) and Geostat



Type of savings




2020 52,099 48,875 10,734

2025 174,473 165,868 36,428

2030 357,797 343,021 75,334




I-6: Attention to motors, fans, pumps, compressors


Motors for fans, pumps, compressors, conveyors, etc. typically account for 60% of the electricity consumption in many industrial sub-sectors, the main exception is secondary melting of metals (which use electricity for the melting) and Food & Drink (which use a lot of electricity for chillers).

In Georgia, many motors are old (> 20 years), inefficient (IE1 or worse), oversized for their application, fixed-speed and have been re-wound to avoid new capital purchase costs. Secondly, several of their applications are also inefficient: left running when not in use, poorly designed / not maintained systems, or suffer other inefficiencies such as compressed air leaks.

There are two sets of excellent energy saving potential:

(1) Approximately 20% EE through low-cost EE activities:


Automatic switch off/ down when not in use System optimisation of the pump/ fan/ compressed air system, including leak repair, etc Frequency inverter (VSD) control of existing units

(2) A further 20% EE through investment, namely: replacing older (oversized) motors with new, correctly sized, higher-efficiency units (IE3 or better).

It is recommended that Action 1 be carried out first, partly because it will give good savings for small investment, and secondly because the rating (therefore investment cost) of the replacement motor will be lower once the simple fixes have been made.


Industrial companies – likely with finance and technical assistance from IFIs.


The calculation of final energy savings was carried out by estimating the use of electricity for motors, fans, pumps, and compressors in various sub-sector. The potential for energy saved was then assumed as 40% of this energy across various sub-sectors. The calculations were scaled up according to assumptions of market growth as well as assumptions of penetration of efficiency improvements versus the BAU (described in Assumptions). Primary energy savings were then calculated using the conversion factor for electricity over the course of the period.

Assumptions:69

The measure is expected to be carried out by all sub-industries and is potentially linked to a credit line from an IFI and with encouragement from the Government.

Baseline energy use is based on Geostat energy data from 2014. Assumes between 40 and 60% of electricity in industries is used for fans, pumps, etc. (except for in metals, where only 10% of electricity is estimated to be used for fans, pumps, etc.)

The estimated energy savings from upgrading motors and motor systems are generic and estimated to be 40%; some will be higher, others lower.

Typical payback period for upgrade to distribution system and other low-cost activities is approximately 1 year. Typical payback for replacement of motors is 3 years. The weighted average used was 2 years - which was used to calculate estimated investment required. Some payback periods will be much better, especially if and when a motor fails and its replacement becomes business critical.

The assumption is that most industry will need to replace their motors, fans, pumps, and compressors within the upcoming 13 years from 2018 to 2030 – with 1/3 of these investing in EE measures - i.e. investments growing linearly (2.34% annually) to 33% penetration in 2030.

Over the entire period of implementation, costs are expected to include: Technical assistance of national experts and international experts over the course of the first 4

years. Investment of the industry/private companies in total of approximately EUR 35.0 million.


69 Baseline energy consumption for motors, fans, pumps, and compressors based on data from Geostat combined with a number of energy audits in various sub-sectors to gauge the energy usage in particular sub-sectors for this purpose. Estimates of growth are based on the MARKAL model.



The measure is not expected to have direct impacts on the general population. Benefits associated with this measure could include improved efficiency/competitiveness of industry which could help keep employment secure.


Table 3-49: Basic information on I-6: Attention to motors, fans, pumps, compressorsTitle of the Measure Attention to motors, fans, pumps, compressors





Motors for fans, pumps, compressors, conveyors, etc. typically account for 60% of the electricity consumption in many industrial sub-sectors, the main exception is secondary melting of metals (which use electricity for the melting) and Food & Drink (which use a lot of electricity for chillers).

In Georgia, many motors are old (> 20 years), inefficient (IE1 or worse), oversized for their application, fixed-speed and have been re-wound to avoid new capital purchase costs. Secondly, several of their applications are also inefficient: left running when not in use, poorly designed / not maintained systems, or suffer other inefficiencies such as compressed air leaks.

Target end-use All Industry

Target group All industryRegional application National




Budget

2017 2018 2019 2020 Total 2017 - 2020 2021 - 2030


Industry/ private companies

Investment € 0 € 1,601,000

€ 1,759,000

€ 1,929,000

€ 5,289,000 € 31,495,000

Total € 0 € 1,601,000

€ 1,759,000

€ 1,929,000

€ 5,289,000 € 31,495,000


49.8%

Implementing body Industrial companies




Type of savings




2020 50,937 36,407 12,742

2025 157,725 123,553 43,244

2030 321,174 255,513 89,430

Overlaps, multiplicatio

This measure is directly linked to measures:- H-2: Alternative policy measures – Incentivising / mandating energy efficiency in industry - which will be an


n effect, synergy

impetus for investment- H-3: Alternative policy measures – Training and education, including energy advisory programmes - which will provide awareness raising to decision-makers and - H-7: Energy audits and management systems, boiler inspections in the industry sector


I-7: Energy efficient refrigeration systems


This measure involves improvement/ upgrading of refrigeration systems in many food & drink and chemicals sub-sectors.

There are two areas offering excellent energy saving potential:(1) Approximately 15% EE through low-cost EE activities:

Automatic switch down when not in use System optimisation of the pumps/ fan/ compressors, including keeping clean and clear of

obstructions, leak repair, etc. Frequency inverter (VSD) control of existing units

(2) A further 15% EE through investment, namely: replacing older (oversized) units with new, correctly sized, higher-efficiency refrigerant units.

It is recommended that (1) be carried out first, partly because it will give good savings for small investment, and secondly because the rating (therefore investment cost) of the replacement refrigeration/ chiller unit will be lower once the simple fixes have been made.


Industrial companies - food & drink, chemical manufacturers, likely with finance and technical assistance from IFIs.


The calculation of final energy savings was carried out by estimating the use of electricity for refrigeration systems in the food and drink and chemicals sub-sectors. The potential for energy saved was then assumed as 30% of this energy across the two sub-sectors. The calculations were scaled up according to assumptions of market growth as well as assumptions of penetration of efficiency improvements versus the BAU (described in Assumptions). Primary energy savings were then calculated using the conversion factor for electricity over the course of the period.

Assumptions:70

Baseline energy use is approximately 20% of electricity use for chemicals and 40% of electricity use for food and drink - based on Geostat energy balance data from 2014. However, food & drink is likely under-reported (by 3-5x) and chemicals are potentially under-reported.

The estimated energy savings from upgrading refrigeration systems will be significant for these 2 sectors – estimated at 30% of energy used for refrigeration.

Typical payback for low-cost activities is approximately 1 year. Typical payback for replacement of refrigeration systems is 3 years. The weighted average used was 2 years - which was used to

70 Baseline energy consumption for refrigeration based on data from Geostat combined with a number of energy audits in various sub-sectors to gauge the energy usage in particular sub-sectors for this purpose. Estimates of growth are based on the MARKAL model.


calculate estimated investment required. Some payback periods will be much better, especially if and when a refrigerator fails and its replacement becomes business critical.

The assumption is that most industry will need to replace their refrigeration systems within the upcoming 13 years from 2018 to 2030 – with 1/3 of these investing in EE measures - i.e. investments growing linearly (2.34% annually) to 33% penetration in 2030.

Over the entire period of implementation, costs are expected to include: Technical assistance of national experts and international experts over the course of the first 4

years. Investment of the industry/private companies in total of approximately EUR 3.33 million





Table 3-50: Basic information on I-7: Energy efficient refrigeration systemsTitle of the Measure Energy efficient refrigeration systems



Timeframe Beginning: 2018 End: 2021Aim/brief description Improve/ upgrade refrigeration systems in many food & drink and chemicals sub-sectors

Target end-use Existing food & drink, chemical manufacturers

Target group Industry: Food & drink sub-sector and chemicals sub-sectorRegional application National




Budget

2017 2018 2019 2020

Total 2017 - 2020

2021 - 2030


Industry/ private companies Investment € 0 € 152,000 € 167,000 € 183,000 € 502,000 € 2,990,000

Total € 0 € 152,000 € 167,000 € 183,000 € 502,000 € 2,990,000Non-leveraged 15-year IRR 49.8%



Energy and GHG savingsMethod for monitoring/ measuring the resulting



savings

Type of savings




2020 4,836 3,456 1,210

2025 14,974 11,730 4,105

2030 30,491 24,257 8,490




I-8: LED lighting


Low efficiency lighting dominates Georgian industry. Most are incandescent filament, HID, SON or T8/T12 fluorescent tube; there are very few T5 or LED lights. This measure involves systematically replacing existing inefficient lighting systems with efficient ones.

Based on energy audits, lighting is estimated to account for approximately 10% of the electricity consumption for many industrial sectors (except secondary metal melting operations). There is excellent energy saving potential:

(1) Replace with LED equivalents (or, for sites where T8 fluorescent tubes predominate, with T5 equivalents; the latter offers smaller energy savings but is far more cost-effective upgrade for those already with fluorescent tube fittings).(2) For areas with intermittent occupancy, PIR (passive infra-red) detection. PIR can automatically control lights, depending on presence sensors.

For some industrial sectors requiring chilling, there is a secondary benefit from reducing fugitive heat from the low efficiency bulbs (100W bulb generates >95 W of heat), which in turn reduced the amount of heat that needs to be extracted. This is particularly useful for food & drink sectors, but has not been factored into the calculations.


Industrial companies in all sub-sectors – likely with finance and technical assistance from IFIs.


The calculation of final energy savings was carried out by estimating the use of electricity for lighting in various sub-sectors. The potential for energy saved was then assumed as 75% of this energy across various sub-sectors. The calculations were scaled up according to assumptions of market growth as well as assumptions of penetration of efficiency improvements versus the BAU (described in Assumptions). Primary energy savings were then calculated using the conversion factor for electricity over the course of the period.


Assumptions:71

Assumes in most sub-sectors that lighting utilises 10% of electricity consumption – with the exception of the metals sub-sector, where the assumption is 5%.

Given the poor efficiency and poor control of existing lights, long-term energy savings of up to 90% should be possible (for instance, a 10W LED lamp generally has better luminosity compared with a 100 W incandescent bulb).

Assumes a long-term EE target of 75% electricity savings for lighting through LED replacement plus PIR control.

Assumes all industries will switch their lighting in the next 13 years from 2018 to 2030 due to regulatory changes, cost-effectiveness of the measure, and need to replace bulbs – increasing linearly (7.69% per year).

Typical payback for lighting replacement is approximately 3 years – which was used to calculate estimated investment required based upon energy savings. Some payback periods will be much better, especially if and when a lightbulb needs replacement in any case.

Over the entire period of implementation, costs are expected to include: Technical assistance of national experts over the course of the first 3-4 years. Investment of the industry/private companies in total of approximately EUR 67.3 million over the

entire period – which represents a 100% penetration rate for efficient technologies. This is equivalent to approximately EUR 10,000 per enterprise (assuming 6,684 enterprises in industry) - with some having much larger investments. This is consistent with experience in the industry sector in other countries.

This measure’s success is likely to be dependent on the success of H-2: Alternative policy measures – Incentivising / mandating energy efficiency in industry, H-3: Alternative policy measures – Training and education, including energy advisory programmes and H-7: Energy audits and management systems, boiler inspections in the industry sector. It is also linked to B-1: Regulations leading to improved efficient lighting systems in residential and commercial buildings – as these regulations will inhibit the sale of inefficient bulbs.





Table 3-51: Basic information on I-8: LED lighting at industrial sitesTitle of the Measure LED lighting




Systematically replacing existing incandescent, HID, SON and T8 fluorescent tubes with LED or T5 equivalents.


Target group All industry

71 Baseline energy consumption for lighting based on data from Geostat combined with a number of energy audits in various sub-sectors to gauge the energy usage in particular sub-sectors for this purpose. Estimates of growth are based on the MARKAL model.






Budget201

7 2018 2019 2020 Total 2017 - 2020 2021 - 2030


Industry/ private companies

Investment € 0 € 3,078,000

€ 3,383,000

€ 3,709,000 € 10,170,000 € 60,558,000

Total € 0 € 3,078,000

€ 3,383,000

€ 3,709,000 € 10,170,000 € 60,558,000


32.7%





Type of savings




2020 65,293 46,668 16,334

2025 202,179 158,377 55,432

2030 411,698 327,530 114,636


Similar opportunities are possible in offices and commercial buildings. Less fugitive heat release for low-efficiency lighting will offer secondary energy-saving benefits to air-conditioning demand.

This measure is directly linked to measures:- B-1: Efficient lighting systems in residential and commercial buildings - which involves regulations on the import of efficient bulbs (though only analyses savings in the buildings sector)- H-2: Alternative policy measures – Incentivising / mandating energy efficiency in industry - which will be an impetus for investment- H-3: Alternative policy measures – Training and education, including energy advisory programmes - which will provide awareness raising to decision-makers and - H-7: Energy audits and management systems, boiler inspections in the industry sector

However, no energy savings are calculated for these four measures related to investment in industry, so no overlap is possible.

3.4.2 Savings arising from industry measures


The estimated energy savings and related to the industry sector measures are summarized in Table 3-52.


Table 3-52: Overview of individual measures in the industry sector

No.


measure End-use targeted

Duration (years)

2020 2025 2030










I-1Attention to base year data: energy and production

All industry 1 Not calculated

Not calculated

Not calculated

Not calculated

Not calculated

Not calculated

Not calculated

Not calculated

Not calculated

I-2 Industry data disaggregation

Improved baseline information

1 Not calculated

Not calculated

Not calculated

Not calculated

Not calculated

Not calculated

Not calculated

Not calculated

Not calculated

I-3

Conversion of wet-cement process to dry cement process

Cement sector production process

2 584.6 584.6 206,629 744.0 744.0 262,964 1,190.0 1,190.0

420,578

I-4Energy saving activities at metal manufacturers

Secondary steel/ aluminium processors

4 62.2 50.9 18,297 199.3 172.7 62,094 408.1 357.2

128,413

I-5

Improved boilers and steam/ hot water distribution systems


3 52.1 48.9 10,734 174.5 165.9 36,428 357.8 343.0

75,334

I-6

Attention to motors, fans, pumps, compressors

All Industry 3 50.9 36.4 12,742 157.7 123.6 43,244 321.2 255.5

89,430

I-7Energy efficient refrigeration systems

Existing food & drink, chemical manufacturers

4 4.8 3.5 1,210 15.0 11.7 4,105 30.5 24.3

8,490

I-8 LED lighting All industry 3 65.3 46.7 16,334 202.2 158.4 55,432 411.7 327.5

114,636

Total 820.0 770.9 265,945 1,492.7 1,376.3 464,267 2,719.3 2,497.5

836,881


3.4.3 Financing of energy efficiency measures in industry


Table 3-53 shows the expected financing needs for the period of 2017 to 2030 for measures in the industry sector.



Table 3-53: Overview of financing of measures in industry

No.




2017 2018 2019 2020 Total 2017 - 2020 2021 - 2030


GeostatCentral Government In-kind € 6,000 € 0 € 0 € 0 € 6,000 € 0

Total € 6,000 € 0 € 0 € 0 € 6,000 € 0

I-2 Industry data disaggregation Geostat


Total € 6,000 € 0 € 0 € 0 € 6,000 € 0

I-3Conversion of wet-cement process to dry cement process

Cement and mineral processing industry


Industry/Private companies Investment €

41,209,000€

41,209,000 € 0 € 0 € 82,418,000 € 50,736,000

Total € 41,209,000

€ 41,209,000 € 0 € 0 € 82,418,000 € 50,736,000

I-4 Energy saving activities at metal manufacturers

Large steel/metal manufacturers


Industry/Private companies Investment € 0 € 1,633,000 €

1,665,000€

1,699,000 € 4,997,000 € 18,971,000

Total € 0 € 1,633,000 € 1,665,000

€ 1,699,000 € 4,997,000 € 18,971,000

I-5Improved boilers and steam/ hot water distribution systems

Industry with boilers & steam/hot-water systems


Industry/Private companies Investment € 0 € 806,000 € 919,000 €

1,043,000 € 2,768,000 € 20,820,000

Total € 0 € 806,000 € 919,000 € 1,043,000 € 2,768,000 € 20,820,000

I-6Attention to motors, fans, pumps, compressors

Industrial companies



1,759,000€

1,929,000 € 5,289,000 € 31,495,000

Total € 0 € 1,601,000 € 1,759,000

€ 1,929,000 € 5,289,000 € 31,495,000

I-7 Energy efficient refrigeration systems Industrial companies


Industry/Private companies Investment € 0 € 152,000 € 167,000 € 183,000 € 502,000 € 2,990,000

Total € 0 € 152,000 € 167,000 € 183,000 € 502,000 € 2,990,000


No.




2017 2018 2019 2020 Total 2017 - 2020 2021 - 2030

I-8 LED lighting Industrial companies



3,383,000€

3,709,000 € 10,170,000 € 60,558,000

Total € 0 € 3,078,000 € 3,383,000

€ 3,709,000 € 10,170,000 € 60,558,000

Total €41,221,000 €48,479,000 €7,893,000 €8,563,000 €106,156,000 €185,570,000


3.5 Energy efficiency measures in transport

Not indicated for EED reporting by the Guidance but proposed for inclusion

Transport is an important sector for energy consumption in Georgia – and continues to grow. In 2014, transport accounted for 33% of all energy consumption in Georgia – up from 26% in 2013. The vast majority of fuel used in the transport sector is either oil products (diesel and gasoline) or natural gas – all of which are imported. Diesel, gasoline, and natural gas use make up 91.8% of energy consumption in the transport sector - 14,175 GWh. This amount represents over 30% of all energy consumed in Georgia in 2014. For this reason, energy efficiency in the sector is becoming more and more important.

Table 3-54: Breakdown of energy consumption in transport by end-use and by fuel (GWh)

Type of transport FuelEnergy consumption in

2014 (GWh) %Rail Electricity 266.8 1.7%Rail Road diesel 119.9 0.8%Rail Fuel oil-low sulphur (< 1%) 4.8 0.0%Road Natural gas 3,402.8 22.0%Road Liquefied Petroleum Gases 26.3 0.2%Road Motor Gasoline 4,651.8 30.1%Road Road diesel 5,991.9 38.8%International aviation Kerosene type Jet Fuel 963.8 6.2%Domestic aviation Kerosene type Jet Fuel 9.6 0.1%Domestic navigation Road diesel 8.2 0.1%Total 15,445.8 100.0%

Source: Based on Geostat’s 2014 Energy Balance

Key assumptions and projections for this sector include:72

No autonomous improvements in fuel efficiency. This is due to the fact that Georgia often imports old cars and does not currently have a technical inspection regime that brings their efficiency levels up to normal levels.

Growth of the vehicle fleet, travel, and energy consumption are directly linked to:o GDP growth;o Population growth; ando GDP per capita growth

Growth in light duty passenger vehicle transport at 7.28% through 2023, then 3.36% through 2030 – directly related to GDP and # of cars per 1000 people, which is currently 187 and projected to grow to over 418 per 1000 people in 2030.

Growth in passenger bus travel and mini-bus travel (i.e. number of passengers) of 0.47% per year throughout the period.

Growth in metro and railway passenger travel (i.e. number of passengers) of 3.14% through 2030. No major new metro investments.

Growth in freight trucks transport (small and large) at 6.16% annually through 2018, then 5.32% through 2030.

Growth in railway freight travel (i.e. number of tonnes) at 3.81% through 2030.

Separate energy models were developed for the cities of Tbilisi, Kutaisi, Batumi, Rustavi, Zugdidi, and Gori – where they have developed Sustainable Energy Action Plans with major transportation investments/plans.

The dominant types of transport in Georgia include:

72 Based on the MARKAL model projections.


In passenger transport, there is a strong public transportation system utilising mini-buses – along with large buses. However, increasingly, private light-duty passenger vehicles are taking up a large amount of passenger-km.

In freight transport, there is a significant amount of freight being transported by rail. The breakdown according to official statistics is included in Table 3-55. However, it is likely that the estimate for freight carried by motor vehicles is under-estimated by a large factor.

Table 3-55: Breakdown of freight carried by railroad and motor vehicles in Georgia according to official statistics

Description Unit 2013 2014 % of total EU average

Freight carried by railroad tonnes 20,076,000 18,185,000 38%Freight carried by motor vehicles tonnes 29,110,800 29,431,000 62%

Freight carried by railroad1000 tonnes-

km 5,976,600 5,525,900 90% 19%Freight carried by motor vehicles

1000 tonnes-km 637,300 646,100 10% 81%

Average length of transport by railroad km 298 304Average length of transport by motor vehicle km 22 22

Source: Geostat (2015) 2014 Statistical Yearbook of Georgia for Georgia statistics. EU percentages based on data from European Commission (2015) EU Transport in Figures – Statistical Pocketbook, 2015. Available at http://ec.europa.eu/transport/facts-fundings/statistics/doc/2015/pocketbook2015.pdf

There is no official data on the fuel efficiency of the passenger vehicle fleet, thought it can be assumed that it is less efficient than that of the EU – given the age of most vehicles in Georgia where 91% of vehicles are older than 10 years.73

There are significant limitations in the data available for the Georgian transport sector – in particular related to the road vehicle fleet for both passenger vehicles and freight vehicles. On the other hand, there is fairly good data available on the vehicle fleet for public transportation – including mini-buses, buses, and the metro in Tbilisi.

It is noteworthy that in Georgia, CNG is an increasingly popular fuel – with fuelling stations throughout the country and a large number of vehicles utilising this fuel. However, there are no reliable statistics as to the level of penetration of these types of vehicles.

Key barriers and drivers of investment include: Inadequate infrastructure for expansion of freight transport; Lack of knowledge about the vehicle fleet and lack of regulations to ensure vehicles are less

polluting; Lack of walking/cycling friendly infrastructure in most major urban areas – in particular the capital; A lack of comfortable / reliable public transport; A culture increasingly geared towards personal cars resulting in significant traffic and pollution

problems in the capital and elsewhere.

3.5.1 Main policy measures addressing energy efficiency in transport


The package of measures outlined below would involve the following key aspects:

73 Geostat (2015) 2014 Statistical Yearbook of Georgia for Georgia statistics.


http://ec.europa.eu/transport/facts-fundings/statistics/doc/2015/pocketbook2015.pdf

Vehicle improvement measures would result in fuel switching to natural gas (and potentially electricity) and better management of the existing fleet – including due to introduction of technical inspections.

Public awareness campaigns on Eco-driving and to encourage efficient transport modes would increase the efficiency of driving habits.

Investments in intra-city urban mobility would result in modal shifts from passenger cars to public transport, walking, and cycling. Additionally, improvements in the road infrastructure would improve efficiency of movement of traffic.

Investments in rail would involve 2 large investment programmes and would result in a large modal shift of 10% of freight transport from heavy trucks (business as usual) to railways – representing an additional approximately 20,000 tonnes per year for railways on top of the existing load of ~16,000 tonnes per year.74

The three major policy/information measures are expected to achieve significant energy savings results whilst other technical measures are generally independent of policies at a national level.

Figure 3-12: Transport sector policy measures and their savings as well as savings from other transport measures

Technical assistance would be necessary for implementation of these measures, likely to be divided into 2 programmes:75

1. Assistance to municipalities for urban infrastructure and transport planning – including feasibility studies for major infrastructure projects such as tramlines, bike lanes, etc.

2. Assistance to the national government in implementing the programme for mandatory periodic roadworthiness tests for motor vehicles, as well as in planning major national infrastructure projects and evaluating – amongst other aspects - how they may impact energy consumption.

Specific measures in transport are described below.

74 Under the estimates put forward in the MARKAL model, with 3.81% growth, the annual freight by rail in the BAU would increase from approximately 16.8 million tonnes per year in 2015 to approximately 29 million tonnes per year in 2030 whereas in the EE case with 10% modal shift from truck to rail, in 2030, 36.8 million tonnes would be shipped by rail. 75 EBRD is currently planning a significant programme of technical assistance linked to investment for municipalities which could address item 1 above. The Asian Development Bank is also active in providing technical assistance in the sector.


T-1: Vehicle improvement - Mandatory periodic roadworthiness tests for motor vehicles


This measure involves introduction of an inspection regime for all types of road vehicles which would be linked with vehicle registration – in line with Directive No 2009/40/EC on roadworthiness tests for motor vehicles and their trailers. Inspection of all types of road vehicles linked with vehicle registration will be introduced - first for trucks/buses (by the end of 2016), then for cars (by the end of 2018).76 The measure will improve safety, efficiency and environment impact of the vehicles. Implementation would involve the setting up of approximately 30 technical inspection centres around the country, with 3 inspection lanes each. The inspections would be mandatory each year for all registered cars - with the exception of new cars which may have a grace period of 2-3 years.

In addition to the technical inspection which would test for pollutants and potential safety hazards in vehicles, the inspection regime would allow the Government to "know the fleet", collecting detailed information for each vehicle on (amongst other items):

Model of the vehicle Size of the engine (potentially also listed fuel efficiency) Type of fuel used Kilometres travelled each year

Energy savings will result from improved energy performance due to improved maintenance of the vehicle fleet. An awareness campaign will also be necessary related to this process.

This measure would also improve safety of vehicles and likely save a significant amount of a lives. Additionally, other pollutants - such as carbon monoxide and sulphur dioxide - would be reduced drastically.


Ministry of Internal Affairs, in partnership with the Ministry of Environment and Natural Resources and the Ministry of Economy and Sustainable Development


Final energy consumption savings were calculated by reducing the total amount of energy consumed for road traffic by a given percentage – as described under the assumptions.

Assumptions:

For the entire market of road transport (passenger vehicles & freight vehicles), increase in fuel efficiency of 0.5% per year starting in 2018 and going up to 3.0% in 2023 – then staying at this level.

IRR calculated on a per-unit basis for a typical mini-bus as follows: 77

Average distance driven of 41,500 km per year Fuel use of 18 litres/100 km gasoline and 16 litres/100 km diesel In the BAU case, cost of maintenance of EUR 200 every 3 years – increasing with inflation In the EE case:

o Fuel saving of 5% due to better maintenance required by inspection78

o Additional cost of inspection of 50 EUR/year – increasing with inflation (likely to be less for light duty passenger vehicles)

o Additional cost of maintenance of 150 EUR/year - increasing with inflation

76 These dates are outlined in the EU Association Agreement with Georgia – Annex 9.77 Data on fuel efficiency and km travelled based on inputs from the MARKAL model.78 See USAID (2004) Vehicle Inspection and Maintenance Programs: International Experience and Best Practices: http://pdf.usaid.gov/pdf_docs/Pnadb317.pdf (p8) for savings parameters.


http://pdf.usaid.gov/pdf_docs/Pnadb317.pdf

IRR not calculated for light duty passenger vehicles or taxis. For light duty passenger vehicles it is unlikely that savings would be more than costs, except through the potential lengthening of the lifetime of the vehicle.

Investment:79

Investment in inspection centres expected to be EUR 60,000 per lane. This can be done via tender procedures where a contracting agent makes the investment.80

Each lane would serve 32 vehicles per day 6 days a week – approximately 10,000 vehicles per year (typically 2 or 3 lanes per inspection centre)

Expected to be 859,000 vehicles to be tested starting in 2018 – increasing to 1,705,000 in 2030. This means a need for 86 lanes in 2017 – increasing to 171 by 2030

Additional costs expected include: 24 man-months of part-time Government staff-time for policy development and up to 5 full-time staff

for management of the programme and inspection regimes Estimated EUR 700,000 in Government resources for public awareness campaigns over 2017 to

2020 Technical assistance national and international experts to assist in development and

implementation Additional donor resources envisioned for developing the marketing plan, materials, and assistance

with implementation of public awareness campaign


The measure is expected to have a direct impact on a high percentage of the population in that there will be increased safety checks for existing vehicles – resulting in fewer accidents, injuries and deaths. Additionally, it is expected that there will be an indirect positive impact on the population due to decreased air pollution from road vehicles.

There will also be an adverse effect in that owners of vehicles will have to pay annually for inspection – though this is expected to be a minimal amount in comparison to the costs of owning a vehicle. Furthermore, some road vehicles will not be able to pass inspection. These are likely to be those owned by poorer populations. For this reason, improvements in public transportation are important to counteract this potential negative impact.


Table 3-56: Basic information on T-1: Vehicle improvement - Mandatory periodic roadworthiness tests for motor vehicles

Title of the Measure Vehicle improvement - Mandatory periodic roadworthiness tests for motor vehicles

Index of the measure T-1

DescriptionCategory Transport specific measures



This measure involves introduction of better inspections to improve safety, efficiency and environment impact of the vehicles.

Target end-use Passenger transport within cities - public transport, private vehicles, and freight vehicles

Target group General populationRegional application Nation-wide

79 See USAID (2004) Vehicle Inspection and Maintenance Programs: International Experience and Best Practices: http://pdf.usaid.gov/pdf_docs/Pnadb317.pdf (p24) for investment parameters.80 The modality for this investment has not yet been decided by the Government.






Budget

2017 2018 2019 2020 Total 2017 - 2020 2021 - 2030

Central Government In-kind € 249,000 € 400,000 € 327,000 € 130,000 €

1,106,000 € 1,451,000

Industry/ Private companies

Investment € 5,263,000 € 375,000 € 446,000 € 455,000 €

6,539,000 € 4,674,000

Total € 5,512,000 € 775,000 € 773,000 € 585,000 €

7,645,000 € 6,125,000


IRR calculated only for mini-buses as follows:- For gasoline fuelled mini-buses: 25%.- For diesel-fuelled mini-buses: 8%

Implementing body


Monitoring authority Ministry of Internal Affairs in cooperation with Geostat


Energy savings will be measured in a top-down manner, calculating the number of vehicle-km travelled by the fleet versus the total fuel consumption in the transport sector

Type of savings




2020 403,267 403,267 97,2002025 775,349 775,349 187,4802030 912,896 912,896 221,756Overlaps, multiplication effect, synergy

This measure would have impacts on all of the other measures in reducing the energy consumption and emissions from the road sub-sector.

T-2: Public awareness - Information campaign for transport


This measure involves using of media and established educational channels to raise awareness of the people as a measure for improving of transport efficiency. It would involve a number of different aspects, including:

Raising awareness about the benefits of public transport and/or cycling and walking Raising awareness via media and drivers' education courses related to fuel efficient, "Eco-driving".

These can be especially geared towards professional drivers. Highlighting the activities within the different municipalities to encourage better, more efficient

transport mechanisms (such as public transport, cycling, walking)

Studies in other countries such as Croatia have shown that "Eco-driving" alone can improve efficiency by 8% amongst professional drivers and up to 18% amongst the general public.


Ministry of Economy and Sustainable Development – with potential partnership with the Ministry of Foreign Affairs, Municipalities, and the Ministry of Education and Science. Municipalities are also developing and implementing this measure.



Savings for this measure were calculated based on estimating the current and projected fuel consumption from professionally driven vehicles – then reducing this consumption by a target percentage.

Assumptions:

While the measure is applicable for the public as a whole, energy savings calculations have been developed to only include interventions with professional drivers: 81

Taxis: Estimated 72,300 estimated vehicles in 2017 remaining constant through 2030, 50,000 km driven per year, 3,932 GWh in 2017 remaining constant over time

Mini-buses: 8,081 vehicles in 2017 increasing to 8,586 in 2030, 41,500 km driven per year, 5800 GWh in 2015 increasing according to vehicle increase

Light commercial freight vehicles: 16,241 vehicles in 2017 increasing to 32,114 in 2030, 9,889 km driven per year, 227 GWh in 2017 increasing according to vehicle increase

Heavy goods vehicles: 46,224 vehicles in 2017 increasing to 91,402 in 2030, 25,645 km driven per year, 3,584 GWh in 2017 increasing according to vehicle increase

EE case includes reduction from the BAU each year of 1.0% from 2018 through 2021 - with an impact of 4.0% reduction from the BAU in 2021 and remaining at that level of impact for the remainder of the period.82

Over the entire period of implementation, costs are expected to include: One full-time government employee to manage the ongoing programme Awareness campaign at a national level costing EUR 200,000 spread over 4 years Awareness campaigns in municipalities totalling EUR 240,000 spread over 4 years Technical assistance for of national experts and international experts to help develop and

implement the measure. Costs for implementing on-going trainings assumed to be part of other driving training courses for

professionals.


The measure is expected to have a positive impact on the population by providing them the ability to reduce their fuel costs through better driving techniques.


Table 3-57: Basic information on T-2: Public awareness – Information campaign for transportTitle of the Measure Public awareness - Information campaign for transport


DescriptionCategory Transport specific measures Information and mandatory information measures



This measure involves using of media to raise awareness of the people as a measure for improving of transport efficiency. Studies in other countries have shown that "Eco-driving" alone can improve efficiency by 8% amongst professional drivers and up to 18% amongst the general public.

Target end-use Passenger and freight transport throughout Georgia

Target group Professional drivers for education, and general public for a broader campaignRegional application Nationwide

81 Based on MARKAL model data except for the taxi fleet, which is based upon data from the Municipal SEAPs for the baseline – then modelled over time.82 Studies in other countries have shown that "Eco-driving" alone can improve efficiency by 8% amongst professional drivers and up to 18% amongst the general public: Energy Institute Hrvoje Pozar & Oryx (2013) Izrada analize rezultata Eko voznje





g

Budget

2017 2018 2019 2020 Total 2017 - 2020

2021 - 2030

Central Government In-kind € 0 € 75,000 € 75,000 € 76,000 € 226,000 €

340,000

Municipalities In-kind € 0 € 60,000 € 60,000 € 60,000 € 180,000 € 60,000

Total € 0 € 135,000 € 135,000 € 136,000 € 406,000 € 400,000


Not calculated

Implementing body

Ministry of Economy and Sustainable Development – with potential partnership with the Ministry of Foreign Affairs, Municipalities, and the Ministry of Education



Savings to be reported based on surveys of participants in trainings as well as of the general public related to incorporation of efficient driving and transportation habits

Type of savings




2020 270,304 270,304 66,262

2025 414,080 414,080 102,807


This measure can have a synergistic impact on savings for any and all other transport measures.

T-3: Urban mobility - Improvement of buses/ minivan transport systems


This measure involves using of modern technology to rationalize public transport systems and make them more efficient in terms of their systems. Specific activities in municipalities include:

Tbilisi: Electronic displays at bus stops showing times/schedules, etc.83

Improved top-up services for ticket purchasing Minibus reduction plan and route optimization

Kutaisi: Introduction of modern payment system for city public transport – 100 modern machines Mountable electrical boards (220 units) with management software to provide information to

passengers Develop an automated Urban Transport Management System Development of public transport GPS-supported automated dispatch software for distanced

monitoring of vehicles Bus Rapid Transit Development

Batumi: Create 2 bus transfer terminals

83 This has to some extent already been implemented. For example, mini-bus routes could be found at the web-site: http://tm.ge//routes/site.php.


http://tm.ge//routes/site.php

Improvement and optimization of public transport routes Minibus reduction plan and route optimization

Rustavi: Optimization of fleet number, lengths of routes and movement schemes

Zugdidi: Creating bus stops, installing electronic display boards, improving transport routes

Gori: Optimizing the regular passenger transportation routes Arranging information displays at stopping stations, establishing stations, adopting an integrated

ticketing system Upgrading of buses


Municipal authorities and their municipally-owned transport companies – potentially with the involvement and finance of IFIs.


Final energy savings were calculated by calculating the impact of a modal shift of passenger traffic between one mode of transport and another – typically from light duty passenger vehicles, but each municipality is a unique case. Energy savings were calculated using values of energy consumption per 1000 passenger-km. Primary energy consumption in the BAU and EE case were then calculated using conversion efficiencies for diesel and gasoline (1:1). Assumptions related to the growth in passenger transport are described below.

Assumptions:84

Assumes under BAU that passenger transport develops as follows from 2017 to 2030 in the following cities for the following market segments:

Tbilisi: 8,396 million passenger-km in 2017 growing to 13,230 million in 2030 from light duty passenger vehicles, buses, and mini-buses

Kutaisi: 1,219 million passenger-km in 2017 growing to 1,811 million in 2030 from light duty passenger vehicles and mini-buses

Batumi: 745 million passenger-km in 2017 growing to 791 million in 2030 from mini-buses and buses (note that light duty passenger vehicles are not included in the calculation)

Rustavi: 33 million passenger-km in 2017 growing to 58 million in 2030 from light duty passenger vehicles and mini-buses

Zugdidi: 319 million passenger-km in 2017 growing to 627 million in 2030 from light duty passenger vehicles and mini-buses

Gori: 96 million passenger-km in 2017 growing to 161 million in 2030 from light duty passenger vehicles, buses and mini-buses

Under the EE scenario: Tbilisi: Reduction in market share of light-duty passenger vehicles of 12% from 2016 to 2020 (from

65.6% to 53.6%) with the modal shift evenly between buses and mini-buses Kutaisi: Reduction in market share of light-duty passenger vehicles of 10% from 2016 to 2020

(from 78.3% to 68.3%) with the modal shift to mini-buses Batumi: Reduction in market share of mini-buses by 45% from 2016 to 2020 (from 77.9% to 32.9%)

with the modal shift to buses (light duty passenger vehicles are not included) Rustavi: Reduction in market share of light-duty passenger vehicles of 5% from 2016 to 2020 (from

45.3% to 40.3%) with the modal shift to mini-buses Zugdidi: Reduction in market share of light-duty passenger vehicles of 10% from 2016 to 2025

(from 96.6% to 86.6%) with the modal shift to mini-buses

84 Assumptions on percentage energy saved as well as budgets for investment by municipalities are based on the municipal SEAPs. The BAU energy consumption is based on models created for each municipality using baseline information on the vehicle fleets provided by the municipalities either directly (Tbilisi) or within the SEAPs (Kutaisi, Batumi, Rustavi, Zugdidi, Gori) .


Gori: Reduction in market share of light-duty passenger vehicles and taxis of 5% from 2016 to 2020 (from 84.4% to 79.4%) with the modal shift to mini-buses and buses (50% to each)

Technical assistance will be necessary for developing feasibility studies, plans, and monitoring & evaluation mechanisms estimated.


The measure is expected to have a positive impact on urban mobility – and thus on the population due to decreased traffic congestion and associated air pollution. It is also expected to improve the availability and quality of public transport options.


Table 3-58: Basic information on T-3: Urban mobility – Improvement of buses/ minivan transport systemsTitle of the Measure Urban mobility - Improvement of buses/ minivan transport systems





This measure involves using of modern technology to rationalize public transport systems and make them more efficient in terms of their systems.

Target end-use Passenger transport within cities - public transport

Target group General populationRegional application Tbilisi, Kutaisi, Batumi, Rustavi, Zugdidi, Gori




Budget

2017 2018 2019 2020 Total 2017 - 2020

2021 - 2030

Municipalities Investment € 2,656,000 € 2,428,000

€ 1,877,000 € 1,114,000 € 8,075,000 € 0

Total € 2,656,000 € 2,428,000

€ 1,877,000 € 1,114,000 € 8,075,000 € 0


Not calculated

Implementing body Municipal authorities and their municipally-owned transport companies

Monitoring authority Municipal governments


Monitoring will be based on tracking of the number of passenger-km via various forms of transport within each municipality - then calculating the % of market share and therefore energy saved versus the business as usual case.

Type of savings




2020 954,430 954,430 218,475

2025 1,374,217 1,374,217 314,855

2030 1,810,958 1,810,958 414,793



This measure potentially over-laps with various other measures related to urban transport (T7, T8, and T9) in that it will encourage the modal shift to public transport. It also has synergies with T-2 related to public awareness - which could include messages about public transport, parking policies, etc.

T-4: Urban mobility - Encouraging modal shifts from cars to public transport/ walking/ bicycling


This measure is to be carried out in a number of municipalities in Georgia, with the following key actions: Creation of a public parking system for payment and enforcement of regulations - reducing the

incentive to drive Creation and/or improvement of pedestrian and cycling routes.85

This would result in better transport management and a decrease of utilization of mechanized transport. The measure is planned to be carried out in Tbilisi, Batumi, Kutaisi, Zugdidi, and Gori.


Municipalities – potentially with the involvement and finance of IFIs.


Energy savings were calculated in a top-down manner, where for each municipality a BAU scenario was created using baseline information on the vehicle fleets, population, etc. and assumptions of growth. Savings were then assumed as a percentage of the BAU energy consumption.

Assumptions: 86

Tbilisi: An overall annual saving of 6.0% from the BAU case of the entire transport sector (3% for cycling measures, 3% for parking measures) – building from 0% in 2017 to 6% in 2022 and remaining at 6% until 2030.

Kutaisi: An overall annual saving of 6.0% from the BAU case of the entire transport sector (5% from encouraging walking and cycling, and 1% for improved parking systems) – building from 0% in 2016 to 6% in 2022 and remaining at 6% until 2030.

Batumi: An overall annual saving of 1.5% from the BAU case of the entire transport sector (1% from encouraging walking and cycling, and 0.5% for improved parking systems) – building from 0% in 2016 to 1.5% in 2021 and remaining at 1.5% until 2030.

Zugdidi: An overall annual saving of 5.0% from the BAU case of the entire transport sector (2% from encouraging walking and cycling, and 3% for improved parking systems) – building from 0% in 2016 to 5% in 2021 and remaining at 5% until 2030.

Gori: An overall annual saving of 4.0% from the BAU case of the entire transport sector (3% from encouraging walking and cycling, and 1% for improved parking systems) – building from 0% in 2016 to 4% in 2021 and remaining at 4% until 2030.

Levels of investment required are tentative and contingent upon feasibility studies within each municipality. For this reason, the measure would require technical assistance for each municipality to further develop the measure's activities.


85 This has to some extent already been introduced. For example, Kutaisi now has a 4.5 km bicycle trail.86 Assumptions on percentage energy saved as well as budgets for investment by municipalities are based on the municipal SEAPs. The BAU energy consumption is based on models created for each municipality using baseline information on the vehicle fleets provided by the municipalities either directly (Tbilisi) or within the SEAPs (Kutaisi, Batumi, Rustavi, Zugdidi, Gori) .


The measure is expected to have a positive impact on urban mobility – and thus on the population due to decreased traffic congestion and associated air pollution. It is also expected to improve the availability and quality of non-road transport options.


Table 3-59: Basic information on T-4: Urban mobility - Encouraging modal shifts from cars to public transport/ walking/ bicycling

Title of the Measure Urban mobility - Encouraging modal shifts from cars to public transport/ walking/ bicycling





Creating of paid parking systems combined with cycling/ pedestrianized routes as a measure for better transport management decrease of utilization of mechanized transport.

Target end-use Passenger transport within cities

Target group General population Regional application Tbilisi, Batumi, Kutaisi, Zugdidi, Gori




Budget

2017 2018 2019 2020 Total 2017 - 2020

2021 - 2030

Municipalities Investment € 1,002,000

€ 1,002,000

€ 1,002,000 € 346,000 €

3,352,000 € 346,000

Total € 1,002,000

€ 1,002,000

€ 1,002,000 € 346,000 €

3,352,000 € 346,000


Not calculated

Implementing body Municipal authorities

Monitoring authority Municipal authorities


Monitoring to be based upon surveys of the population to gauge the frequency of walking/ bicycling (not as a leisure activity) or taking public transport in the baseline versus with the measure.

Type of savings




2020 480,240 478,937 115,172

2025 843,376 841,794 203,695


This measure potentially over-laps with various other measures related to urban transport (T6, T7, and T9) in that it will encourage the modal shift to more sustainable modes of transport.


T-5: Urban mobility - Improved road infrastructure and traffic management within cities


This measure involves improvement of the road infrastructure to upgrade transport efficiency and road network within cities. It would also include the optimization of traffic patterns. The following activities are planned in individual municipalities:

Tbilisi: o Establishment of a Traffic Lights Management Centre for efficient traffic light electronic

management throughout the whole city o Implementation of green wave systems to reduce waiting time on the crossroads and to

improve traffic flow.o Maintain current rehabilitated central roads and rehabilitation of new/secondary and internal

roads. Hole repairs and street rehabilitation;o Install new traffic lights to organize traffic and ensure safety;

Kutaisi: Maintain central roads and rehabilitation of new/secondary and internal roads, installing new traffic lights to organize traffic and ensure safety, adjusting the city transport system to the bypass road.

Batumi: Creation of a traffic signal control centre, restricting private vehicle traffic Rustavi: Reconstruction of 31,000 m2 of roads, establishing of traffic light management centre,

installing sensors on traffic lights, revoking traffic lights on the roads with intensive traffic, creating "Green waves” of traffic lights

Zugdidi: Construction of additional bridges to reduce driving times Gori: Improvement of traffic signs, setting up new traffic lines, construction of a new streets to

reduce traffic in the centre and on Tskhinvali highway

Full feasibility studies for improvements should be developed for each municipality.


Municipal authorities – potentially with the involvement and finance of IFIs.


Energy savings were calculated in a top-down manner, where for each municipality a BAU scenario was created using baseline information on the vehicle fleets, population, etc. and assumptions of growth. Savings were then assumed as a percentage of the BAU energy consumption.

Assumptions:87

In each city, improvements to traffic flows are estimated to improve energy efficiency under the BAU by 1.00% per year by 2020 starting in 2017 – growing by 0.25% per year for 4 years.

Municipal budget estimates from the municipalities are subject to changes based on feasibility studies to be developed. For this reason, the measure would require technical assistance for each municipality to further develop the measure's activities.


The measure is expected to have a positive impact on urban mobility – and thus on the population due to decreased traffic congestion and associated air pollution.

87 Assumptions on percentage energy saved as well as budgets for investment by municipalities are based on the municipal SEAPs. The BAU energy consumption is based on models created for each municipality using baseline information on the vehicle fleets provided by the municipalities either directly (Tbilisi) or within the SEAPs (Kutaisi, Batumi, Rustavi, Zugdidi, Gori) .



Table 3-60: Basic information on T-5: Urban mobility - Improved road infrastructure and traffic management within cities

Title of the Measure Urban mobility - Improved road infrastructure and traffic management within cities





This measure involves improvement of the road infrastructure to upgrade transport efficiency and road network within cities. It would also include the optimization of traffic patterns.

Target end-use Passenger transport within cities

Target group General population - in particular driversRegional application Tbilisi, Kutaisi, Batumi, Rustavi, Zugdidi, Gori




Budget

2017 2018 2019 2020 Total 2017 - 2020

2021 - 2030


€ 17,054,000

€ 8,743,000

€ 1,500,000 € 47,117,000 € 0

Total € 19,820,000

€ 17,054,000

€ 8,743,000

€ 1,500,000 € 47,117,000 € 0


Not calculated

Implementing body Municipal authorities

Monitoring authority Municipal authorities


Monitoring will be carried out using top-down methodology for individual municipalities - based on the number of vehicles, passenger-km and tonne-km travelled, and fuel consumption per unit of travel.

Type of savings




2020 124,096 124,096 29,833

2025 147,026 147,026 35,580

2030 172,655 172,655 42,032


This measure is linked to Measure T-1: Vehicle improvement - Mandatory periodic roadworthiness tests for motor vehicles in that as part of the inspection regime, top-down information will be gathered on the vehicle stock and the number of km travelled.

It is potentially connected to other measures in that it could off-set some of the impact of measures related to public transport improvements and measures to increase the share of walking and cycling. This is because if traffic conditions are improved, people may be more likely to drive rather than take public transport/ walk/ cycle.


T-6: Urban mobility – Tram/ gondola system development & bus rapid transit


This measure involves the re-introduction of a tram system in Tbilisi and the introduction of a tram system and rapid public transit in Kutaisi

In Tbilisi, this will involve implementing a gondola system linked with the metro service between Chavchavadze and Turtle Lake (already implemented and being utilised).

In Kutaisi, this will involve implementing a 5.5 km tramline from the beginning of Nikea Street up to a bypass road (highway) that will replace buses and minibuses. It will also involve implementing a bus rapid transit system to provide buses with advantages over passenger cars.


City of Tbilisi, City of Kutaisi – potentially with the involvement and finance of IFIs.


Final energy savings were calculated by calculating the impact of a modal shift of passenger traffic between one mode of transport and another – from mini-buses or light-duty passenger vehicles to gondolas, trams or buses. Energy savings were calculated using values of energy consumption per 1000 passenger-km. Primary energy consumption in the BAU and EE case were then calculated using conversion efficiencies for diesel and gasoline (1:1) and for electricity. Assumptions related to the growth in passenger transport are described below.

Assumptions:88

Tbilisi: One gondola with a total of approximately 2.5 km with 2,000 passengers per day (730,000 per year)

– with an average of 6.4 km travelled per passenger (average for metro riders) – resulting in a total of 4.673 million passenger-km (pkm) per year

Of the 4.673 million pkms shifting modes, it is assumed that 50% would have otherwise taken light-duty passenger vehicles and 50% would have otherwise taken mini-buses

The BAU case would involve 0.657 MWh/1000 pkm via light-duty passenger vehicles and 0.142 MWh/1000 pkm for mini-buses

Construction is expected to be finished in 2017 The efficient case involves gondola passengers (linked to the metro) increasing from 0 pkm in 2016

to 4.673 million pkm in 2021 Energy consumption and GHG emissions per 1000 pkm for gondola plus metro is assumed to be

the same as the metro – 0.110 MWh/1000 pkm and 0.350 tonnes CO2eq/MWh

Kutaisi: Energy consumption and GHG emissions per 1000 pkm for light duty passenger vehicles is

calculated as 0.524 MWh/1000 pkm and 0.131 tonnes CO2eq/1000 pkm Energy consumption and GHG emissions per 1000 pkm for buses is calculated as 0.210 MWh/1000

pkm and 0.057 tonnes CO2eq/1000 pkm Energy consumption and GHG emissions per 1000 pkm for trams is assumed to be 0.114

MWh/1000 pkm (1/4 of that of passenger vehicles) and 0.350 tonnes CO2eq/MWh

In the BAU: Light-duty passenger vehicles: 968.4 million pkm in 2017 growing to 1,545 million in 2030 Buses: 77 million pkm in 2015 growing to 82 million in 2030

88 Assumptions on the length of tram lines/ bus rapid transit lines are based on the municipal SEAPs (Tbilisi from 2011 and Kutaisi from 2015). The BAU energy consumption is based on models created for each municipality using baseline information on the vehicle fleets provided by the municipalities either directly (Tbilisi) or within the SEAP (Kutaisi).


In the EE case: Switch of 1% per year from light-duty passenger vehicles to buses starting in 2018 and increasing to

7% per year of modal shift in 2024 Switch of 1% per year from light-duty passenger vehicles to trams starting in 2020 and increasing to

3% per year of modal shift in 2022

Investment costs are estimated by the municipalities though additional technical assistance would be helpful for feasibility studies.




Table 3-61: Basic information on T-6: Urban mobility – Tram/ gondola system development & bus rapid transit

Title of the Measure Urban mobility - Tram/gondola system development & bus rapid transit




Re-introduction of a gondola system in Tbilisi and the introduction of a tram system and rapid public transit in Kutaisi

Target end-use Passenger transport within cities - public transport

Target group General populationRegional application Kutaisi, Tbilisi




Budget

2017 2018 2019 2020 Total 2017 - 2020

2021 - 2030

Municipalities Investment € 4,125,000 € 6,694,000 € 8,081,000 €

3,000,000 € 21,900,000 € 0

Total € 4,125,000 € 6,694,000 € 8,081,000 €

3,000,000 € 21,900,000 € 0


Not calculated

Implementing body City of Tbilisi, City of Kutaisi

Monitoring authority City of Tbilisi, City of Kutaisi


Monitoring to take place via monitoring the number of passengers and passenger-km per year compared with the Business As Usual case of road transport.

Type of savings




2020 21,368 22,112 5,084


2025 56,616 58,071 13,368


This measure potentially over-laps with various other measures related to urban transport (T7 and T-9) in that it will encourage the modal shift to more sustainable modes of transport.

T-7: Urban mobility - Expansion of the metro system in Tbilisi


This measure involves the expansion of the Tbilisi metro system to add one additional stop. The construction of the tunnel to the University station will result in energy savings from switching passenger transport within the city from mini-buses and passenger cars to the more energy efficient metro system.


City of Tbilisi


Final energy savings were calculated by calculating the impact of a modal shift of passenger traffic between one mode of transport and another – from personal cars to metro. Energy savings were calculated using values of energy consumption per 1000 passenger-km. Primary energy consumption in the BAU and EE case were then calculated using conversion efficiencies for diesel and gasoline (1:1). Assumptions related to the growth in passenger transport are described below.

Assumptions:

The distance increase of the route is 1.5 km and it is expected that the extension will add 4.4 million passengers per year to the metro network and be operational in 2019.89

Assumed a typical passenger will travel 6.4 km (based on statistical data for # of passengers and passenger-km - pkm)90 - resulting in 28.16 million passenger-km shifting to the metro – assuming a shift from personal car use.

Energy per 1000 passenger-km is calculated to be 0.657 MWh/1000 pkm for personal cars and 0.110 MWh/1000 pkm for metro.91

Assumes the passenger load stays steady at 4.4 million passengers per year over the period. The investment is estimated based to be EUR 30.51 million based upon the currently tendered

contract.92




Table 3-62: Basic information on T-7: Urban mobility - Expansion of the metro system in TbilisiTitle of the Urban mobility - Expansion of the metro system in Tbilisi

89 Winrock International and Remissia (2011) SEAP for Tbilisi90 Based on Geostat (2015) 2014 Statistical Yearbook of Georgia91 Calculated based on data provided from the city of Tbilisi92 See Tbilisi’s 2015 SEAP.


MeasureIndex of the measure T-7



Aim/brief description This measure involves the expansion of the Tbilisi metro system to add one additional stop.

Target end-use Passenger transport within Tbilisi (metro)

Target group General populationRegional application Tbilisi




Budget

2017 2018 2019 2020 Total 2017 - 2020

2021 - 2030

Municipalities Investment € 30,508,000 € 0 € 0 € 0 € 30,508,000 € 0Total € 30,508,000 € 0 € 0 € 0 € 30,508,000 € 0


Not calculated

Implementing body City of Tbilisi

Monitoring authority City of Tbilisi


Monitoring to be based upon passengers/passenger km using the new Metro stop - to be reported by the city. Savings will be calculated based on comparison with the Business As Usual case (road transport).

Type of savings




2020 14,187 15,418 3,294

2025 14,565 15,418 3,294


This measure potentially over-laps with various other measures related to urban transport (T6 and T9) in that it will encourage the modal shift to public transport in Tbilisi.

T-8: Vehicle improvement - Increase of hybrid and electric vehicles


This measure involves an existing national policy to stimulate the purchase of hybrid and electric vehicles by reducing the excise tax on them.93 This policy has eliminated the excise tax for electric vehicles and cut the excise tax in half for hybrids. Since all cars are imported to Georgia, this will have an impact on fuel efficiency and the vehicle fleet.


Ministry of Internal Affairs in cooperation with border inspection services

93 The policy can be found here: https://matsne.gov.ge/ka/document/view/3250146


https://matsne.gov.ge/ka/document/view/3250146


Energy savings were calculated by estimating the percentage of the vehicle fleet represented by regular vehicles, hybrid vehicles, and by electric vehicles over time and multiplying by energy consumed per vehicle in the BAU case versus the EE case.

Assumptions:

It is assumed that electric cars will not enter the market in a meaningful percentage without significant investments in charging infrastructure (not currently planned).

For the per unit IRR calculation for hybrids, as well as for investment: Estimated 12,870 km driven per year94

8.5 litres/100 km for gasoline cars which would switch to gasoline hybrids which would have efficiency of 6 litres/100 km95

Assumed a new (pre-owned) vehicle would be bought in any case, with:96

o Cost of EUR 10,000 for a gasoline vehicle – growing with inflationo Cost of EUR 12,500 for a hybrid car – growing with inflation

Fuel prices taken from published figures for gasoline.

Potential market size estimated as follows: Assumes a personal vehicle fleet of 748,147 vehicles (422,552 gasoline-fuelled vehicles) in 2017 –

growing to 1,398,853 vehicles (848,132 gasoline-fuelled vehicles) in 2030 of which none would be hybrids without the measure

Annual replacement of 0.5% of the vehicle fleet with hybrid vehicles from 2017 to 2026 – up to 5% total (61,000 in 2026 and 70,000 in 2030)

Assumes that the foregone excise tax per vehicle is on average EUR 500.


The measure would result in reduced costs to purchase more efficient vehicles – which would then save money on fuel costs.


Table 3-63: Basic information on T-8: Vehicle improvement - Increase of hybrid and electric vehicles

Title of the Measure Vehicle improvement - Increase of hybrid and electric vehicles





This measure involves the replacement of inefficient vehicles with hybrid and electric vehicles due to decreased excise taxes for their import - 50% for hybrids and 100% reductions for electric cars.

Target end-use Passenger transport

Target group Passenger vehicle ownersRegional application Nation-wide

94 From the MARKAL model95 Gasoline vehicle fuel efficiency based on the MARKAL model and fuel efficiency of hybrid vehicles is based on market research of the Toyota Prius96 Based on analysis of market prices





Budget

2017 2018 2019 2020 Total 2017 - 2020 2021 - 2030

Central Government

In-kind € 1,775,000

€ 2,062,000

€ 2,381,000

€ 2,734,000 € 8,952,000 €

28,312,000

Other Investment

€ 45,259,00

0

€ 53,634,00

0

€ 63,165,00

0

€ 73,994,00

0

€ 236,052,00

0

€ 838,238,00

0

Total€

47,034,000

€ 55,696,00

0

€ 65,546,00

0

€ 76,728,00

0

€ 245,004,00

0

€ 866,550,00


6.6%

Implementing body Ministry of Internal Affairs in cooperation with border inspection services

Monitoring authority Ministry of Internal Affairs in cooperation with Geostat


Monitoring will take place via reporting the number of hybrid and electric vehicles imported, along with km travelled of vehicles - then calculating for energy savings versus the business as usual case.

Type of savings




2020 55,460 55,460 14,173

2025 174,922 174,922 44,701


Monitoring will require implementation of mandatory periodic roadworthiness tests for motor vehicles.

T-9: Vehicle improvement - Renewal of the public transport fleet


This measure involves the replacement of buses and mini-buses with more efficient vehicles - including fuel switching from diesel to CNG as follows:

Tbilisi: Procurement of 175 new buses Kutaisi: Procurement of 70 to 80 new buses and 90 new mini-buses Batumi: Procurement of 25 new buses Rustavi: Procurement of 8 new buses Zugdidi: Procurement of 25 new buses


Municipal Governments - potentially with support from the Central Government and with finances from IFIs.


Final energy consumption savings were calculated by calculating the energy saved on a per-unit basis of replacing diesel buses with an equivalent, efficient CNG-fuelled bus. The total final energy consumption savings were calculated based on total market penetration (# of replacement buses) over time. Primary energy consumption savings were assumed to be the same as final energy consumption savings.


Assumptions: 97

On a per unit basis: Buses assumed to drive between 40,000 km per year (Kutaisi and Batumi) and 63,000 km per year

(Rustavi) Fuel efficiency of an inefficient bus is assumed to be 38 litres/100 km of diesel Fuel efficiency of an efficient CNG bus is assumed to be 30 m3/100 km The investment cost of a new diesel vehicle for replacement would be EUR 159,90098

The investment cost of a new CNG vehicle would be EUR 224,90099

Over a 5-year period (2017 – 2021): 100

Total bus fleet in the six cities of 1048 buses would be partially replaced with 302 buses Tbilisi would replace 175 buses out of 697 Kutaisi would replace 80 buses out of 97 Batumi would replace 25 buses out of 132 Rustavi would replace 8 buses out of 8 Zugdidi would purchase 25 buses – replacing 14 existing diesel buses

The measure also assumes access to finance for the various municipalities.101


The measure is expected to have an indirect positive impact on the population due to decreased air pollution from buses.


Table 3-64: Basic information on T-9: Vehicle improvement - Renewal of the public transport fleetTitle of the Measure Vehicle improvement - Renewal of the public transport fleet





This measure involves the replacement of buses and mini-buses with more efficient vehicles - including fuel switching from diesel to CNG.

Target end-use Passenger transport within cities (public transport)

Target group Cities which own the public transport system as well as other public transport providers.Regional application Tbilisi, Kutaisi, Batumi, Rustavi, Zugdidi

Information on implementation Budget and financial source (2017 - 2030)


Budget

2017 2018 2019 2020Total 2017 - 2020

2021 - 2030

Municipalities

Investment

€ 13,270,00

€ 13,554,00

€ 13,844,00

€ 15,093,00

€ 55,761,00

€ 16,140,00

97 Data on fuel consumption and km travelled provided by the City of Tbilisi and the SEAPs for the other municipalities.98 Based on a review of market data on diesel buses.99 Based on marginal cost quoted in Low Carbon Vehicle Partnership (2016) LTA Toolkit Financial Calculator: http://www.lowcvp.org.uk/initiatives/lceb/local-policy/lta-toolkit.htm 100 Baseline amount of buses based on the SEAPs. Level of replacement based on the SEAPs for all cities except for Tbilisi – where the programme is discussed in EBRD (2016) Tbilisi Bus Project: http://www.ebrd.com/work-with-us/procurement/p-pn-160122b.html 101 EBRD for example is working with the city of Tbilisi to purchase CNG vehicles and may work with others.


http://www.ebrd.com/work-with-us/procurement/p-pn-160122b.html


http://www.lowcvp.org.uk/initiatives/lceb/local-policy/lta-toolkit.htm

0 0 0 0 0 0Donors - Grants Grants € 953,000 € 953,000 € 953,000 € 0 €

2,859,000 € 0

Total€

14,223,000

€ 14,507,00

0

€ 14,797,00

0

€ 15,093,00

0

€ 58,620,00

0

€ 16,140,00

0Non-leveraged 15-year IRR 3.4%

Implementing body Municipal Governments - potentially with support from the Central Government.

Monitoring authority Municipal Governments


Monitoring will take place via reporting invoices for fuel consumption and km travelled of vehicles - then calculating for energy savings versus the business as usual case.

Type of savings




2020 5,348 5,348 4,123

2025 6,716 6,716 5,178

2030 6,716 6,716 5,178


Potential synergies with other measures geared towards increasing the use and efficiency of public transportation systems - which could lead to increased demand for buses, increased financial solvency of companies, and then increased energy savings from replacement of the fleets.

T-10: Railway improvement - Modernization of Georgian Railways


The main objectives of this measure are: optimising freight and passenger traffic; optimising stations, depots and infrastructure; optimising freight and passenger rolling stock; reducing operational expenses; improving operational safety; improving social and environmental safety; increasing train speeds; introducing a clear and defined maintenance programme; and switching the electricity system from DC to AC.

Energy savings will result from modal shifts from truck-based freight transport to rail-based freight transport. Additional savings will result from improvement of the electricity system (switching from DC to AC).

This measure focuses on the mainline from Tbilisi to the Black Sea, in particular to the terminals at Poti and Batumi. The Company intends to:

Modernise the railroad and electric supply infrastructure between Tbilisi and Batumi (315 kilometres), including the 40-kilometre mountainous gorge region in Central Georgia

Repair the main line railway track, electric power systems, railway buildings, bridges, and overpasses.

Achieve passenger train speeds of 80 km/h on the gorge section and 120 km/h on the rest of the mainline, as compared to current average speeds of approximately 55 km/h in the gorge section and approximately 65-90 km/h on the rest of the mainline.

Improving the railway infrastructure, rolling stock and locomotive fleet would result in energy savings due to increase in tonnes-km of freight on railways due to increased capacity of rolling stock - increasing capacity


from 27 million tonnes/year to 100 million tonnes/year - switching a significant amount of freight movement from less efficient freight modes (heavy trucks).


The measure is being implemented by JSC Georgian Railway expected to be complete in 2019.


Final energy savings were calculated by calculating the impact of a modal shift of heavy freight between heavy trucks and rail. Final energy consumption per 1000 tkm was calculated for both heavy trucks and rail, and total final energy consumption is this rate multiplied by the total freight transported (in tkm). To calculate primary energy consumption the ratio of 1:1 was used for heavy trucks while the final energy consumption / primary energy consumption ratio for electricity was used for railway (see ratio 5 under Table 2-3 in Section 2.1) was used. Final and primary energy consumption in the BAU and EE case were then calculated using assumptions related to the growth in freight transport and switching a percentage of freight transported from one mode to another as described below.

Assumptions:102

Assumes under the BAU scenario that freight transport develops as follows from 2015 to 2030: Railways: 5.106 billion tonne-km in 2015 growing to 8.821 billion in 2030 Heavy duty trucks: 6.734 billon tonne-km in 2015 growing to 14.682 billion in 2030

Under the EE scenario: The measure will result in 5% of the freight sector being switched from heavy trucks to rail -

resulting in energy savings due to more efficiency in MWh per tonne-km of freight (0.0401 MWh/1000 tonne-km for rail versus 0.4828 MWh/1000 tonne-km for heavy trucks)

The switching would take place linearly over a 5-year time period from 2019 through 2023 (1% per year) and stay at the same percentage level until 2030.

Also assumes financing in place and an investment of USD 500 million over the period of 2015 to 2019 (EUR 458 million) period starting from 2015 and ending in 2019 – with the same amount each year (budgets for 2017 through 2020 shown below).103


The measure is expected to have direct impacts on the general population in that railway passenger traffic will also become more attractive (though not included in the savings calculations. Additional benefits associated with this measure could include improved air quality due to a reduction of diesel truck traffic.


Table 3-65: Basic information on T-10: Railway improvement - Modernization of Georgian RailwaysTitle of the Measure Railway improvement - Modernization of Georgian Railways




102 Assumptions for BAU energy consumption are based on a model developed using the same assumptions as the MARKAL model but with updated data on vehicles and energy usage. Budgets are based on communication with the Georgian Railways LLC. Assumptions for impacts are based on expert judgement linked with projections of increased tonnage as reported by Georgian Railways LLC.103 These funds have already been raised via a bond issue.



This measure aims to bring about modal shifts from truck-based freight transport to rail-based freight transport. The main objectives of the measure are:· optimising freight and passenger traffic;· optimising stations, depots and infrastructure;· optimising freight and passenger rolling stock;· reducing operational expenses;· improving operational safety;· improving social and environmental safety;· increasing train speeds; · introducing a clear and defined maintenance programme; and· switching from DC to AC electricity system.

Target end-use Freight transport and inter-city passenger transport

Target group Goods distributors, Inter-city travellersRegional application National




Budget

2017 2018 2019 2020

Total 2017 - 2020

Total 2017 - 2020


JSC Georgian Railway

Investment € 91,575,000 € 91,575,000 € 91,575,000 € 0 € 274,725,000 € 0

Total € 91,575,000 € 91,575,000 € 91,575,000 € 0 € 274,725,000 € 0Non-leveraged 15-year IRR

Not calculated

Implementing body JSC Georgian Railway



Monitoring of tonne-km per year in freight as reported by JSC Georgian Railway

Type of savings




2020 125,900 130,791 34,534

2025 400,935 411,603 108,681

2030 506,283 518,776 136,979


This measure is related to other measures related to railways (T-11). The assumption is approximately 10% switching from heavy trucks to railways - with this measure accounting for half (5%) of that amount.

T-11: Railway improvement - Baku-Tbilisi-Kars Railway


The Baku- Tbilisi- Kars Railway is a new corridor that will connect Azerbaijan, Georgian and Turkish railways. It involves the rehabilitation and reconstruction of 180 km-long railway between Marabda and Akhalkalaki and construction of a new railway from Akhalkalaki to the Turkish border. This measure aims to increase the transit potential for rail in Georgia and at the same time bring about modal shifts from truck-based freight transport to rail-based freight transport.


Increase of the use of rail transport instead of road transport for freight on the order of 2 million tonnes per year by 2020 is expected.


The measure is being implemented by LLC Marabda-Krtsanisi Railway with funds from a loan from Azerbaijan. Improvements are expected to be complete in 2019.


Final energy savings were calculated by calculating the impact of a modal shift of heavy freight between heavy trucks and rail. Final energy consumption per 1000 tkm was calculated for both heavy trucks and rail, and total final energy consumption is this rate multiplied by the total freight transported (in tkm). To calculate primary energy consumption the ratio of 1:1 was used for heavy trucks while the final energy consumption / primary energy consumption ratio for electricity was used for railway (see ratio 5 under Table 2-3 in Section 2.1) was used. Final and primary energy consumption in the BAU and EE case were then calculated using assumptions related to the growth in freight transport and switching a percentage of freight transported from one mode to another as described below.

Assumptions: 104

Assumes under the BAU scenario that freight transport develops as follows from 2015 to 2030: Railways: 5.106 billion tonne-km in 2015 growing to 8.821 billion in 2030 Heavy duty trucks: 6.734 billon tonne-km in 2015 growing to 14.682 billion in 2030

Under the EE scenario: The measure will result in 5% of the freight sector being switched from heavy trucks to rail -

resulting in energy savings due to more efficiency in MWh per tonne-km of freight (0.0401 MWh/1000 tonne-km for rail versus 0.4828 MWh/1000 tonne-km for heavy trucks)

The switching would take place linearly over the period from 2019 through 2023 (0.5% per year).

Assumes financing of EUR 700 million in place and an investment period starting from 2015 and ending in 2017 – with the same amount each year. Investments from 2015 and 2016 are not included in the table below.


The measure is expected to have direct impacts on the general population in that railway passenger traffic will also become more attractive (though not included in the savings calculations. Benefits associated with this measure could also include improved air quality due to a reduction of diesel truck traffic.


Table 3-66: Basic information on T-12: Railway improvement - Baku-Tbilisi-Kars RailwayTitle of the Measure Railway improvement - Baku-Tbilisi-Kars Railway




104 Assumptions for BAU energy consumption are based on a model developed using the same assumptions as the MARKAL model but with updated data on vehicles and energy usage. Assumptions for impacts are based on expert judgement linked with projections of increased tonnage as reported by Georgian Railways LLC. Budgets are based on public documentation of the project – to be confirmed.



This measure aims to increase the transit potential for rail in Georgia and at the same time bring about modal shifts from truck-based freight transport to rail-based freight transport. The Baku- Tbilisi- Kars Railway is a new corridor that will connect Azerbaijan, Georgian and Turkish railways. It involves the rehabilitation and reconstruction of 178 km-long railway between Marabda and Akhalkalaki and construction of a new railway from Akhalkalaki to the Turkish border. An increase to 5 million tonnes per year by 2017 is expected - with potential for up to 15 million tonnes per year by 2030, as well as an estimated 1 million new passengers.

Target end-use Freight transport

Target group Goods distributors, Georgian RailwaysRegional application Kars to Tbilisi - but with implications for national rail and transportation services.




Budget

2017 2018 2019 2020 Total 2017 - 2020

2021 - 2030


LLC Marabda-Krtsanisi Railway

Investment € 234,203,000 € 0 € 0 € 0 € 234,203,000 € 0

Total € 234,203,000 € 0 € 0 € 0 € 234,203,000 € 0Non-leveraged 15-year IRR

Not calculated

Implementing body JSC Georgian Railway and Azerbaijan Railways



Monitoring of tonne-km per year in freight as reported by JSC Georgian Railway

Type of savings




2020 125,900 130,791 34,534

2025 400,935 411,603 108,681


This measure is related to other measures related to railways (T-10). The assumption is approximately 10% switching from heavy trucks to railways - with this measure accounting for half (5%) of that amount.

Additional activities related to transport

A number of other additional activities are currently being planned for Georgia which are not classified as measures for this NEEAP, but which are useful to note. These include the following:

There is additional investment being planned for railway improvement for the Tbilisi Railway Bypass. This railway activity involves changing the route of railway traffic which passes through Tbilisi to enhance capacity in terms of tonnes per year - as well as speed. It would save energy by increasing the capacity for freight transport - resulting in switching from heavy goods vehicles on the road to railways using electricity. The energy savings would occur due to more efficient mode of transport on a per tonne-km basis. The measure is currently being planned by Georgian Railways with potential funds from the Central Government. Improvements are expected to be complete in 2020 – though the activity is still in its planning phases.

This activity is expected to have direct impacts on the general population in that railway passenger traffic will also become more attractive (though not included in the savings calculations. On the other hand, some potential displacement of local populations or decreases in property values may


occur around Tbilisi. At the same time, new land will be opened up for development in the city. Benefits associated with this measure could also include improved air quality due to a reduction of diesel truck traffic.

There is a planned railway connection for the port in Anaklia currently in the planning stages which would reduce freight travel via road and increase travel via railway.

The International Maritime Organization is undertaking some energy efficiency efforts in cooperation with in Georgia as part of a global project.

3.5.2 Savings arising from transport measures


The estimated energy savings and related to the transport sector measures are summarized in Table 3-67.


Table 3-67: Overview of individual measures in the transport sector

No. Title of the energy saving measure

End-use targeted

Duration (years)

2020 2025 2030










T-1

Vehicle improvement - Mandatory periodic roadworthiness tests for motor vehicles

Passenger transport within cities - public transport, private vehicles, and freight vehicles

3 403.3 403.3 97,200 775.3 775.3 187,480 912.9 912.9 221,756

T-2Public awareness - Information campaign for transport

Passenger and freight transport throughout Georgia

4 270.3 270.3 66,262 414.1 414.1 102,807 483.5 483.5 121,502

T-3

Urban mobility - Improvement of buses/ minivan transport systems

Passenger transport within cities - public transport

4 954.4 954.4 218,475 1,374.2 1,374.2 314,855 1,811.0 1,811.0 414,793

T-4


Passenger transport within cities

5 480.2 478.9 115,172 843.4 841.8 203,695 987.5 985.8 240,017

T-5

Urban mobility - Improved road infrastructure and traffic management within cities

Passenger transport within cities

3 124.1 124.1 30 147.0 147.0 35,580 172.7 172.7 42,032

T-6

Urban mobility - Tram/gondola system development & bus rapid transit

Passenger transport within cities - public transport

4 21.4 22.1 5,084 56.6 58.1 13,368 69.9 71.5 16,472

T-7

Urban mobility - Expansion of the metro system in Tbilisi

Passenger transport within Tbilisi (metro)

1 14.2 15.4 3,294 14.6 15.4 3,294 14.6 15.4 3,294

T-8Vehicle improvement - Increase of hybrid and electric vehicles

Passenger transport 8 55.5 55.5 14,173 174.9 174.9 44,701 230.9 230.9 58,995

T-9 Vehicle improvement Passenger 8 5.3 5.3 4,123 6.7 6.7 5,178 6.7 6.7 5,178


No. Title of the energy saving measure

End-use targeted

Duration (years)

2020 2025 2030










- Renewal of the public transport fleet

transport within cities (public transport)

T-10

Railway improvement - Modernization of Georgian Railways

Freight transport and inter-city passenger transport

3 125.9 130.8 34,534 400.9 411.6 108,681 506.3 518.8 136,979

T-11

Railway improvement - Baku-Tbilisi-Kars Railway

Freight transport 1 125.9 130.8 34,534 400.9 411.6 108,681 506.3 518.8 136,979

Total 2,580 2,591 592,882 4,609 4,631 1,128,319 5,702 5,728 1,397,996


3.5.3 Financing of energy efficiency measures in transport


Table 3-68 shows the expected financing needs for the period of 2017 to 2030 for measures in the transport sector.



Table 3-68: Overview of financing of measures in transport

No. Title of the energy saving measure Implementing body Source Type of

financing

Required financing in the coming period (2017-2020)Longer-term

financing required

2017 2018 2019 2020 Total 2017 - 2020 2021 - 2030

T-1



Central Government In-kind € 249,000 € 400,000 € 327,000 € 130,000 € 1,106,000 € 1,451,000

Industry/Private companies Investment € 5,263,000 € 375,000 € 446,000 € 455,000 € 6,539,000 € 4,674,000

Total € 5,512,000 € 775,000 € 773,000 € 585,000 € 7,645,000 € 6,125,000


Ministry of Economy and Sustainable Development – with potential partnership with the Ministry of Foreign Affairs, Municipalities, and the Ministry of Education


Municipalities In-kind € 0 € 60,000 € 60,000 € 60,000 € 180,000 € 60,000

Total € 0 € 135,000 € 135,000 € 136,000 € 406,000 € 400,000

T-3


Municipal authorities and their municipally-owned transport companies

Municipalities Investment € 2,656,000 € 2,428,000 € 1,877,000 € 1,114,000 € 8,075,000 € 0

Total € 2,656,000 € 2,428,000 € 1,877,000 € 1,114,000 € 8,075,000 € 0

T-4


Municipal authorities

Municipalities Investment € 1,002,000 € 1,002,000 € 1,002,000 € 346,000 € 3,352,000 € 346,000

Total € 1,002,000 € 1,002,000 € 1,002,000 € 346,000 € 3,352,000 € 346,000

T-5


Municipal authorities


€ 17,054,000 € 8,743,000 €

1,500,000 € 47,117,000 € 0

Total € 19,820,000

€ 17,054,000 € 8,743,000 €

1,500,000 € 47,117,000 € 0

T-6


City of Tbilisi, City of KutaisiMunicipalities Investment € 4,125,000 € 6,694,000 € 8,081,000 €

3,000,000 € 21,900,000 € 0

Total € 4,125,000 € 6,694,000 € 8,081,000 € 3,000,000 € 21,900,000 € 0

T-7 Urban mobility - Expansion of the metro

City of Tbilisi Municipalities Investment € 30,508,000

€ 0 € 0 € 0 € 30,508,000 € 0


No. Title of the energy saving measure Implementing body Source Type of

financing


financing required

2017 2018 2019 2020 Total 2017 - 2020 2021 - 2030

system in Tbilisi Total € 30,508,000 € 0 € 0 € 0 € 30,508,000 € 0


Ministry of Internal Affairs in cooperation with border inspection services

Central Government In-kind € 1,775,000 € 2,062,000 € 2,381,000 €

2,734,000 € 8,952,000 € 28,312,000

Other Investment € 45,259,000

€ 53,634,000

€ 63,165,000

€ 73,994,000

€ 236,052,000 € 838,238,000

Total € 47,034,000

€ 55,696,000

€ 65,546,000

€ 76,728,000

€ 245,004,000 € 866,550,000

T-9Vehicle improvement - Renewal of the public transport fleet

Municipal Governments - potentially with support from the Central Government.


€ 13,554,000

€ 13,844,000

€ 15,093,000 € 55,761,000 € 16,140,000

Donors - Grants Grants € 953,000 € 953,000 € 953,000 € 0 € 2,859,000 € 0

Total € 14,223,000

€ 14,507,000

€ 14,797,000

€ 15,093,000 € 58,620,000 € 16,140,000

T-10


JSC Georgian Railway

JSC Georgian Railway Investment €

91,575,000€

91,575,000€

91,575,000 € 0 € 274,725,000 € 0

Total € 91,575,000

€ 91,575,000

€ 91,575,000 € 0 €

274,725,000 € 0

T-11


JSC Georgian Railway and Azerbaijan Railways

LLC Marabda-Krtsanisi Railway Investment €

234,203,000 € 0 € 0 € 0 € 234,203,000 € 0

Total € 234,203,000 € 0 € 0 € 0 €

234,203,000 € 0

Total € 450,658,000

€ 189,866,000

€ 192,529,000

€ 98,502,000

€ 931,555,000 € 889,561,000


3.6 Promotion of efficient heating and cooling: 3.6.1 Comprehensive assessment

The section refers to the requirement to carry out and report on a comprehensive assessment of the potential for the application of high-efficiency cogeneration and efficient district heating and cooling which is of significant scale.105 However, within the Georgia there are currently no significant district heating or cooling networks active. For this reason, this section is not elaborated upon in this NEEAP.

3.6.2 Individual installations: cost-benefit analysis and results

The process of identification of competent authorities and actors, and development of methodology for installation-level cost-benefit analysis have not yet been developed in Georgia. This measure will be revisited in future NEEAPs. It is worth noting that the Georgian Government is also considering implementing a measure that for construction in large urban areas small district heating and gas supply units would be mandatory.

3.6.3 Individual installations: exemptions and exempting decisions

The process for cost-benefit analysis related to this portion of the EED has not yet been developed. Therefore, no exemptions have been provided.

3.7 Energy transformation, transmission, distribution, and demand response

Total installed capacity in the system

Georgia’s total installed capacity is 3,721 MW (including a recent 13.2 MW coal power plant) the most significant addition being the 231.2 MW thermal power plant (TPP) operating with new technologies (combined cycle natural gas-fired power plant) commissioned in 2015. Of this total capacity, almost 75% is from hydro power with the remainder being from thermal plants based mostly on natural gas.

Table 3-69: Electricity plants in Georgia

# Name Installed Power (MW)

Annual Generation - 2015 (GWh)

Hydro Electricity Plants

105 This level of scale is elaborated within the Energy Efficiency Directive (EED - 2012/27/EU) under Article 14 (6) as follows: 5. Member States shall ensure that a cost-benefit analysis in accordance with Part 2 of Annex IX is carried out when, after 5 June 2014:

(a) a new thermal electricity generation installation with a total thermal input exceeding 20 MW is planned, in order to assess the cost and benefits of providing for the operation of the installation as a high-efficiency cogeneration installation;

(b) an existing thermal electricity generation installation with a total thermal input exceeding 20 MW is substantially refurbished, in order to assess the cost and benefits of converting it to high-efficiency cogeneration;

(c) an industrial installation with a total thermal input exceeding 20 MW generating waste heat at a useful temperature level is planned or substantially refurbished, in order to assess the cost and benefits of utilising the waste heat to satisfy economically justified demand, including through cogeneration, and of the connection of that installation to a district heating and cooling network;

(d) a new district heating and cooling network is planned or in an existing district heating or cooling network a new energy production installation with a total thermal input exceeding 20 MW is planned or an existing such installation is to be substantially refurbished, in order to assess the cost and benefits of utilising the waste heat from nearby industrial installations.


1 Engurhesi 1,300.0 3,313.9 2 Vardnilhesi 220.0 592.0 3 Khramhesi 1 112.8 228.3 4 Khramhesi 2 114.4 346.0 5 Zhinvalhesi 130.0 410.5 6 Cascade of Vartsikhe 184.0 774.9 7 Rionhesi 48.0 311.6 8 Gumathesi 66.8 288.8 9 Lajanurhesi 112.5 382.4

10 Dzevrulahesi 80.0 120.5 11 Shaorhesi 38.4 107.1 12 Zahesi 35.8 188.0 13 Ortachalhesi 18.0 79.2 14 Atshesi 16.0 58.9 15 Chitakhevi 21.0 96.2 16 Satskhenhesi 14.0 18.4 17 Khadorhesi 24.0 139.3 18 Larsihesi 19.0 68.9 19 Faravanhesi 86.5 410.7

20Other Hydro Power Plants (44 Small Hydro power plants) 153.9 518.4

Total hydro 2,795.1 8,453.8 Thermal Electricity Plants

21 Mtkvari energy 300.0 1,212.0 22 Tbilsresi 272.0 760.8 23 G-power 110.0 24.9 24 Gardabani CCGT 231.2 380.7 25 Tkibuli Coal-fired plant 13.2 0.4

Total thermal 926.4 2,378.7 Total 3,721.5 10,832.6

Source: For total capacity: Geostat (2015) Energy Balance of Georgia, 2014For total power produced: ESCO (2016) Georgia's 2015 Electrical Energy Balance.

Total energy transformation sorted by the source of energy

The only significant energy transformation within Georgia is the transformation of gas (with some coal) for electricity. In 2014, 5.59 TWh of gas were supplied to thermal power plants producing electricity amounted to 2.04 TWh – of which 0.103 TWh were for own use – yielding a gross transformation efficiency of 36.4% and net transformation efficiency of 34.6%. In 2015 the conversion efficiency is expected to have been higher due to commissioning of a 231 MW combined cycle gas turbine power plant with expected 54% efficiency.106

Grid transmission losses

High voltage transmission grid total losses in 2014 were around 2% which is a high standard.107 The transmission losses are expected to grow with the commissioning of additional capacities. However,

106 At the time of NEEAP development, this efficiency could not be calculated in retrospect for 2015 as the energy balances had not been completed for 2015. 107 Transmission System Operator JSC “Georgian State Electrosystem” (2015) Ten Year National Development Plan for 2015-2025, table 10.1, page 140. In EU Member States, the average losses in transmission networks are between 1% and 2.6% (Ecofys 2013 “Incentives to improve energy efficiency in EU Grids”).


according to the 10 year development plan of the network, investment in certain projects has a local effect of reducing the losses for particular regimes of the network.108

Total losses via transmission and distribution

In total, the losses per year via transmission and distribution of the electricity system are shown in Table 3-70. As can be seen, average electricity distribution losses have been decreasing and the level of losses can be considered average when compared with losses in EU countries such as Bulgaria (9%) and Romania (12%) but high in comparison to EU countries such as Germany (4%) and France (7%) – see Table 3-72. It is noteworthy that in 2015, AES Telasi and JSC ENERGO-PRO Georgia had losses of below 10%, JSC Kakheti Energy Distribution had losses of well over 15%.109 From 2009 to 2015, the losses (in MWh) within Georgian electricity system have been decreased by 6.65%. At the same time, the amounts of electricity losses in both transmission and distribution networks have increased from 2014 to 2015. Distribution losses overall have increased due to increased losses in the JSC ENERGO-PRO Georgia network, though they are generally decreasing from AES Telasi and JSC Kakheti Energy Distribution due to investment.110

Table 3-70: Electricity system distribution losses from 2012 to 2015 from the 3 main electricity distributors in Georgia – and total system losses disaggregated by distribution and transmission losses

Electricity (MWh)Source of information 2012 2013 2014 2015 Average

Supply (MWh) Calculated 7,272

,549 7,302,4

31 7,728,

096 7,346

,300 7,412,344

Losses (MWh)GNERC 2015 annual report

624,080

572,280

581,700

610,510 597,143

Losses (%)GNERC 2015 annual report 8.58% 7.84% 7.53% 8.31% 8.06%

Final delivery (MWh)

GNERC 2015 annual report

6,648,469

6,730,151

7,146,396

6,735,790 6,815,201

System losses 2012 2013 2014 2015Distribution losses 6.19% 5.53% 5.29% 5.41%Transmission losses 1.77% 1.97% 2.11% 2.21%Total 7.96% 7.50% 7.40% 7.62%

Source: GNERC (2016) Report on Activities of 2015: http://gnerc.org/en/public-information/gazi/tsliuri-angarishi

Table 3-71: Natural gas losses from 2012 to 2014 for the 3 main natural gas distributors in Georgia

Natural Gas (mln.m3)

Source of information 2012 2013 2014 2015 Average

Supply (1000 m3) GNERC 558,302 835,497 1,020,000 1,066,599 870,100

Losses (1000 m3) GNERC 77,954 96,553 89,265 97,426 90,299

Losses (%) Calculated 13.96% 11.56% 8.75% 9.13% 10.38%Consumption (MWh) Calculated 5,220,125 7,811,898 9,537,000 9,972,699 8,135,431

Losses (MWh) Calculated 728,870 902,766 767,855 910,933 827,606Final delivery (MWh) Calculated 4,491,255 6,909,132 8,769,145 9,061,766 7,307,824

Note: The MWh figure is calculated by multiplying the 1000 m3 by 9.35 MWh / 1000 m3 – which is the coefficient used by the Geostat (2015) Energy Balance of Georgia, 2014.

108 Transmission System Operator JSC “Georgian State Electrosystem” (2015) Ten Year National Development Plan for 2015-2025 Figure 1.11.109 Based on discussions with GNERC110 Based on GNERC (2016) Report on Activities of 2015: http://gnerc.org/en/public-information/gazi/tsliuri-angarishi


http://gnerc.org/en/public-information/gazi/tsliuri-angarishi


Planned development of the sector

Sector development plans are not yet formulated into one strategy and differ between the agencies. The Ministry of Energy is currently developing an energy sector strategy but it is still the work in progress. The 10-year network development plan has within it an aggressive projection of energy production and export with significant increase of generation capacity. There are three scenarios of demand growth: 3%, 5% and 7% annual growth.

As noted previously, the total potential of HPPs is estimated to be around 15,000 MW with annual generation of 50 TWh per year. There are more than 120 hydropower projects in development under memorandums signed with potential investors.111

Along with hydropower, the 10 Year Plan Network Development Plan also envisages construction of two 250 MW TPPs operating with new technologies (expected to be combined cycle natural gas-fired power plants) by 2019 and 2026 respectively and one coal fired 150 MW power plant in 2020.

Additionally, the completion of a 20.7 MW wind power plant near Gori in 2016 is introducing wind technology for the first time in Georgia and generate 88 GWh per year, with the further potential of expansion to 100 MW.112

The total generation capacity is expected to grow from the current level to: 5,461 MW by 2020 7,743 MW by 2025; and 8,018 MW by 2030.

Furthermore, new regulations have been developed to allow for the integration of distributed energy producers into the grid – such as micro producers. The adopted regulations deal with power production of no more than 100 kW and a total of no more than 2% of the peak load of the distribution network. This micro-power development can have an impact on forecasted losses and energy consumption. For example, if a site uses micro-power plants which generate 50% of electricity demand, this will reduce demand on the energy distribution networks – resulting in reduced losses. Though this was not modelled as a part of the NEEAP, it can be considered an energy saving measure.

Along with the major expected developments in power sector, there is an ongoing development in oil and gas. Expansion of South Caucasus Pipeline (SCPx) is expected to add about 0.8 billion m3 of natural gas to Georgia’s energy balance by 2019-2020. There is also an ongoing development of a gas storage facility which will be completed for when the new capacity of the SCPx will start operation.

Related to distribution, the completion of individual electricity metering and expansion of the gas network are the major expected developments. In Tbilisi the individual metering has been completed while in the regions about 40,000 consumers still need to be metered individually. Completion of individual electricity metering is expected in 2017.

So far energy efficiency has been only marginally mentioned and not taken into account as a real opportunity of demand reduction in strategic documents. Only policy briefs based on MARKAL modelling have mentioned energy efficiency but the concept has not made it yet to the final strategies. Related to this, the BAU scenario for energy production and consumption – using the MARKAL model as the tool for analysis, is still under development in EC LEDS project and has no official status yet.

Data limitations

111 Based on information from the Ministry of Energy 112 As of 15 November 2016, the WPP Plant is in its testing regime. Opening ceremony was held on October 6, 2016. The plant is owned by JSC Georgian Energy Development Fund


Data limitations for analysis of EE measures are mostly related to the distribution sector – as it was not possible to obtain information on planned measures from all distributors. However, this has been compensated for with assumptions based of potential losses based on international benchmarks. New amendments to the grid codes oblige distribution companies to prepare distribution network development plans. Therefore, 5-year development plans are expected to be developed by the distribution sector in the coming period.

Special features in energy consumption, production, distribution and demand response

Among the special features in energy consumption and production is that there is a strong seasonal dependence on hydropower as the main source of electricity in Georgia. As a result there is a mismatch between hydropower production and demand patterns where peak of consumption is in winter, while peak of hydropower generation is in spring / summer. Additionally, the summer peak and winter peak are both trending upwards as summer demand is increasing. Thus, it becomes difficult to develop hydropower without seasonal trade or exchange with neighbouring countries. Therefore the development of power sector in Georgia is strongly related to its neighbouring countries. For example, a strong stimulating role in developing the HPP projects has been played construction of transmission capacity to Turkey.

Another special feature in Georgia is the significant portion of wasteful electricity consumption (about 18% of all consumption) by Abkhazia without any payment to power suppliers (mainly Enguri) and at extremely low tariffs.

It is also worth noting that in energy consumption there is still a strong contribution of fuel wood which is consumed very inefficiently in simple stoves in poorly insulated homes. Furthermore, for this wood, mainly newly cut trees are burned.113

Comparison with EU, comment on the tendencies/trends (level of losses);

In comparison with the EU, Georgia has a much higher share of renewable energy for electricity production. In the EU 28 in 2013 25.4% of electricity was produced from renewable energy.114 In 2014, Georgia had 80.4% of electricity produced was from renewable hydropower. 115

Related to electricity losses, Georgia’s level of system losses are higher than those of some EU countries but lower than others – and can generally be considered average, though with room for improvement.

Table 3-72: Transmission and distribution losses in Georgia versus some EU countries

Germany France BulgariaAverage (2012 -

2015) for Georgia RomaniaLosses (%) 4% 7% 9% 7.62% 12%

Source: For Georgia, losses are based on the average losses over the period from GNERC (2016) (See Table 3-71). For other countries, based on data from OECD/IEA (2014) IEA Statistics http://www.iea.org/stats/index.asp - as cited at http://data.worldbank.org/indicator/EG.ELC.LOSS.ZS

Key barriers and drivers of investments

113 See Public Policy Research & Training Centre (2014) საქართველოს შინამეურნეობათა მდგრადი ენერგომოხმარების წახალისების პოლიტიკა (eng: Policy to encourage sustainable energy consumption by Georgian households”) https://tenders.procurement.gov.ge/public/lib/files.php?mode=app&file=866803&code=1408364354114 EuroStat (2015) Renewable energy statistics: Available at http://ec.europa.eu/eurostat/statistics-explained/index.php/Renewable_energy_statistics 115 Geostat (2015) Energy Balance of Georgia, 2014. Available at http://geostat.ge/?action=page&&p_id=2084&lang=eng


http://data.worldbank.org/indicator/EG.ELC.LOSS.ZS

http://www.iea.org/stats/index.asp


http://ec.europa.eu/eurostat/statistics-explained/index.php/Renewable_energy_statistics

In the power sector, as is generally the case with power infrastructure projects, investors are reluctant to invest at their own risk into major projects unless there are strong possibilities for off-taker agreements. For this reason, some major drivers of investments are as follows:

Companies have good ties to the Turkish market where they can export to. To facilitate this process, USAID’s G4G project is working to establish the trading mechanism that will allow Georgian producers to trade on the Turkish market.

There are strong power purchase guarantees provided by ESCO and backed by the Government. Companies which are producing power for their own consumption – of which there are a number in

Georgia.

At the same time, as is described more fully as part of measures E-5 and E-6 below, the regulations dealing with electricity and gas distribution are highly encouraging of energy efficiency.

One additional driver of investment in the gas sector is that the government is investing in extending the gas network to the regions (to the settlement level). This is mostly based on the desire to provide better energy options to non-urban areas. SOCAR is continuing this investment to bring the connection to the customers’ property.116.

A good example of efficiency improvements was provided by the CDM project on loss reduction in Kaztransgas distribution network, however with the drop of CER market prices, the routine maintenance for loss reduction has been partly abandoned. Under existing regulations, Kaztransgas is paying for gas losses in its network. This means that the company has incentives to reduce losses. It is likely that overall financial problems may be leading to a lack of loss reduction.117

3.7.1 Energy efficiency criteria in network tariffs and regulations


The Charter of the Georgian National Energy and Water Supply Regulatory Commission (GNERC) establishes their independent responsibility to regulate the activities of power plants, importers, exporters, market operator and suppliers, as well as monitor the electricity and natural gas markets. They are responsible for setting up the licensing rules and conditions for the electricity generation, transmission, dispatch and distribution, and for natural gas transportation and distribution, and this responsibility includes tariff setting and methodology development. The Charter does not include explicit requirements to pay due regard to energy efficiency when carrying out their regulatory duties.118

In 2014, GNERC developed a new tariff methodology that provides incentives for electricity distribution companies to provide investments into the network and to optimize operational costs. The new methodology of calculations and rate setting (with defining periods of regulation), requires harmonized approaches to defining and regulating normative losses. These “Rules of calculation of normative electricity losses” are based on international best practice and aim to provide an incentive for power companies to reduce network losses. According to these rules, normative losses for each period of regulation are set on the basis of actual losses of the previous period and they are not changed during the regulation period, thus providing an incentive for the network company to reduce network losses within the regulated period.

116 The connection cost for low pressure customers (0-6 m3/h) is 400 GEL (lump sum payment). See GNERC (2009 July 9) Decision #12: http://gnerc.org/files/untitled%20folder2/mierTeba.pdf). “New Customers” of natural gas (those connected to the grid after 2008) are deregulated, which means that GNERC does not set a tariff cap for those customers. See Ministry of Energy’s Decree # 69 of 25 September 2007 on “Natural Gas Supply Deregulation and Partial Deregulation”: (https://matsne.gov.ge/ka/document/view/73006) and the following amendment in 2008 (Energy Minister’s Decree # 73 of 24 July 2008. https://matsne.gov.ge/ka/document/view/78880).117 The project is estimated to result in the emissions reduction of 339,197 tonnes CO2eq per year over a 10 year period (See the Validation Report here: https://cdm.unfccc.int/Projects/DB/SGS-UKL1234786138.56/view. However, this reduction may not materialize due to lack of ongoing investment. 118 See Georgian National Energy and Water Supply Regulatory Commission Resolution (2014 March 6) №6 On Approval of the Charter of the Georgian National Energy and Water Supply Regulatory Commission. Available at: http://gnerc.org/en/about/debuleba#sthash.vWOUAyZO.dpuf


https://cdm.unfccc.int/Projects/DB/SGS-UKL1234786138.56/view



http://gnerc.org/files/untitled%20folder2/mierTeba.pdf

3.7.2 Facilitate and promote demand response


There is currently no provision for involving the wholesale consumers in balancing the demand.119

On the retail electricity consumer side there are block tariffs within the residential sector which provide some incentives for electricity saving.

Related to the electricity tariff system for consumers being structured to shift demand to non-peak times, there are currently no seasonal or time of use tariffs that might incentivize consumers to save energy at certain times.

3.7.3 Energy efficiency in network design and operation


Improvements in electricity network are mostly related to necessity of connecting a large number of new and upcoming generating facilities to the network. This requires significant investment and strengthening of transmission network. The transmission network development plan envisages investment of about EUR 800 million in transmission grid – 46% of which is planned for the years 2016-2018, 27% in 2019-2020 and 27% in 2021-2026. This is described more fully in Measure E-4.

Additional planned investments in the electricity and gas distribution grids are described in Measures E-5 and E-6 respectively.

3.7.4 Planned policies and investments in the primary energy sector

Planned investments for the primary energy sector are described in the measures below. The implementation of these measures would involve the following key aspects:

Policies – which are to some extent already in place – to trigger investments (see Figure 3-13); Potential improvements of the dispatch system to reduce costs and primary energy consumption120

Large-scale investments in improvements of:o The efficiency of hydropower plants;o More efficient natural gas fired power plants;o Improvements in the electricity grid, o Improvements in the natural gas distribution networko Efficient household energy production from solar hot water heaters and biomass stoves –

including a grant mechanism. A programme of technical assistance for the period 2017 – 2020 – This would likely be via:

o One package oriented towards improvements in the hydro-power and dispatch systemso One package oriented towards distribution systemso One package linked to the residential sector measures which would be focused on solar hot

water heaters & efficient biomass stoves.

119 This would include mechanisms such as differentiated pricing based on peak loads, smart grids, smart meters, etc. to reduce peak demand. Only in case of emergencies there are certain consumers that are being disconnected by load shedding equipment – Based on input from the dispatch centre in GSE.120 Reducing system costs could be the primary purpose of the measure – and reducing hourly or daily balancing system costs would probably also reduce primary energy consumption.


Figure 3-13: Energy sector policy measures and their savings as well as savings from other energy sector measures

E-1: Natural gas savings through replacement of old Thermal Power Plants (TPP) with new technologies Summary of the measure:

This measure involves primary energy savings in thermal power production by substituting the utilisation of old Thermal Power Plants (TPP) with newer more efficient TPPs (likely combined cycle gas turbine technology). Under this measure:

The Gardabani CCGT TPP of 231 MW has already been installed in Kvemo Kartli (2015) and Tbilsresi Unit 3+4 will be decommissioned in 2020 or at least not favoured in the dispatch system.

A Stage 2 CCGT of 230 MW is to be introduced as early as 2019 A Stage 3 CCGT of 230 MW is to be introduced in 2025 Mtkvari Unit 9 is to be decommissioned in 2025.


The Government through a co-investment fund JSC Georgian Oil & Gas Corporation (GOGC) will implement the measure.

GNERC would monitor the measure in terms of energy saved (via power produced from CCGT versus open cycle plants).


Final energy savings do not result of this measure. Primary energy savings were estimated by calculating the amount of electricity which could be produced by the CCGT, then replacing the older TPPs with the CCGT plant and calculating the primary energy needs to produce the same amount of electricity for the grid. Primary energy savings are achieved by a reduction of primary energy required for the same amount


of electricity production from thermal power plants – where the conversion coefficient of the older plants is much lower than the CCGT plant. This essentially means that less fuel / natural gas would be required (primary energy) to produce the same amount of electricity (final energy).

Assumptions:

Modelled using MARKAL for the BAU and for electricity demand from natural gas-fired power plants. The EE scenario assumes that:

Stage 1 is already installed (231 MW); Stage 2 is expected to come on-line in the coming years – as early as 2019; Stage 3 is expected to come on-line as early as 2025. Total investment of EUR 180 m for Stage 1, EUR 180m for Stage 2 (spread out over 3 years in the

table below), and EUR 180 m for Stage 3; Investment started in 2011 for Phase 1; Phase 2 is expected to be complete by 2019; Phase 3

would be expected to be complete by 2025. Gardabani 231 MW CCTPP was introduced in 2015 (54% conversion efficiency); New efficient TPP with capacity 230 MW will be introduced as early as 2019 and another of the

same capacity as early as 2025 (54% conversion efficiency); Tbilsresi Units 3 and 4 will be less of a priority as well in terms of dispatch and be effectively

decommissioned in 2019 – otherwise it would produce 741 GWh annually for the grid through the period (operating at 31% conversion efficiency); and

Mtkvari Unit 9 will be less of a priority in terms of dispatch when the new capacity comes on line and be effectively decommissioned in 2025 – otherwise it would produce 1,147 GWh annually for the grid through the period (operating at 34% conversion efficiency);

Electricity production from the new efficient TPP plants would compensate for reductions due to decommissioning of plants as well as provide additional capacity to the system. Energy savings are calculated based on an assuming that the entirety of the production Tbilsresi Units 3 and 4 and Mtkvari Unit 9 will be replaced by efficient TPPs.


The measure will impact the population if the levels of investment require prices for electricity to be increased.


Table 3-73: Basic information on E-1: Natural gas savings through replacement of old Thermal Power Plants (TPP) with new technologies

Title of the Measure Natural gas savings through replacement of old Thermal Power Plants (TPP) with new technologies

Index of the measure E-1




Energy savings in thermal power production by decommissioning old TPP and putting into operation efficient TPPs.

Target end-use Improved energy efficiency and energy savings of power sector

Target group Power sectorRegional application Nationwide

Information on implementation Budget and Source Type of Budget


financial source (2017 - 2030)

financing 2017 2018 2019 2020 Total 2017 - 2020 2021 - 2030

Central Government In-kind € 0 € 0 € 0 € 0 € 0 € 0

JSC GOGC Investment€

60,000,000

€ 60,000,00

0

€ 60,000,00

0€ 0 €

180,000,000€

180,000,000

Total€

60,000,000

€ 60,000,00

0

€ 60,000,00

0€ 0 €

180,000,000€

180,000,000


Not calculated

Implementing body JSC GOGC

Monitoring authority GNERC


Bottom up: meters of the companies; reported to GNERC in quarterly and annual reporting. GHG emissions will be reported to the Ministry of Environment Protection

Type of savings




2020 1,019,054 0 205,999

2025 2,268,683 0 458,608

2030 2,268,683 0 458,608


The measure would be impacted by:- E-2: Policies and investments to rehabilitate hydropower assets and- E-3: Optimization of reserves and seasonal operational regimesThese measures could influence the level of demand for thermal power since increased power production from hydro sources could displace thermal power (reducing primary energy savings)

Additionally, any demand-side energy efficiency measures could have the impact of reducing requirements of usage of the thermal plants.

E-2: Policies and investments to rehabilitate hydropower assets


This measure involves increasing hydropower production through covering upstream and downstream measures within hydropower stations – i.e. renovating existing stations and systems to increase capacity and output. Specific interventions are likely to include the following though this list is indicative:

Upgrade of generators (stator cores and windings) and excitation systems Turbine renovation Upgrade / renovation of transformers, switchboards, etc. Replacement of power cables Tunnel and other civil rehabilitation Etc.

As part of the generation licensing agreement, it will be required that power generators undergo feasibility studies as to potential improvements in performance – which can then be utilized by the companies to decide whether they will invest or not. Out of the entire capacity of 2,971 MW of existing hydropower plants, 2,614.3 MW of those build before 2012121 could be upgraded over 10 years.

121 This number represents the entire amount of hydro capacity minus the 180 MW of plants - Khadori 2 (5.4 MW), Racha (11 MW), Bakhvi 3 (10 MW), Shilda (4.8 MW), Larsi (19 MW), Aragvi (8 MW), Kazreti (2.5 MW), Alazani 2 (6 MW), Akhmeta (9.1 MW), Kazbegi (6 MW), Paravani (86.5 MW), Pshavala (1.9 MW), Debeda (3.4 MW), Shaqshaqeti (1.5 MW), and Saguramo (4.4 MW) – which do not require additional intervention


It is noteworthy that JSC ENERGO PRO Georgia has a program planned for the rehabilitation of its power plants until 2025, which serves to increase the reliability of the plants and increase electricity generation.


Hydropower generation companies – with technical assistance and finance from IFIs encouragement from the Ministry of Energy and adopting respective regulations by GNERC


Final energy savings do not result from this measure. Primary energy savings were estimated by calculating the amount of additional electricity which could be produced by hydro-power through renovation – scaling up over the course of time to reach market potential. Primary energy savings are achieved by displacing power that would otherwise be produced by thermal power. The TPPs have a much lower conversion coefficient (i.e. 30 – 50% versus 100%).

Assumptions:

Calculations are based on total final energy demand data from MARKAL BAU for electricity: Total electricity generation from hydro and TPPs grows from 10,674 GWh in 2015 to 30,511 GWh in

2030. From natural gas-fired power plants this demand grows from 1,952 GWh for 2015 to 2,647 GWh in

2030 with average conversion efficiency of 34% to 38% over the period. Only existing “old” hydropower plants of 2,614.3 MW built before 2012 to be renovated (i.e. new

capacity will not need significant investment over the next 15 years). Renovation effects of 5% improvement per MW estimated based on literature122 – resulting in

increased capacity of 130.7 MW over a 10-year investment schedule Increased annual production of 3,336 MWh/MW representing a 38% capacity factor Primary energy consumption to be reduced by reduction of natural gas-fired power plant utilisation –

assuming conversion efficiency of 100% in hydro-energy.

Costs of this measure would include: Investment of 6 man-months of Government time to draft regulations for the requirement of

feasibility studies for renovation of hydro-power plants. Investment of EUR 2,000 per MW in technical analysis for investment measures – to be covered

with technical assistance in the first 3 years, then industry/private companies afterwards. Costs estimated at 600 EUR/kW123 of increased capacity (i.e. EUR 30,000 per MW of already

installed power to increase its output by 5%) – meaning for every 10 MW of installed power which increases its output, an investment of EUR 300,000 would be estimated. The cost per kW of increased capacity is expected to increase by 2% each year due to inflation.

For the calculation of IRR, it is assumed that there would be an off-taker price of EUR 26.35 per MWh for hydro-power plants in 2017 – which would increase with inflation.124




122 IRENA (2012) Renewable Energy Technologies: Cost Analysis Series – Hydropower: http://www.irena.org/documentdownloads/publications/re_technologies_cost_analysis-hydropower.pdf123 IRENA (2012) Renewable Energy Technologies: Cost Analysis Series – Hydropower: http://www.irena.org/documentdownloads/publications/re_technologies_cost_analysis-hydropower.pdf124 This off-taker price is the same as the average off-taker price for electricity distributors when buying marginal increments of power.


http://www.irena.org/documentdownloads/publications/re_technologies_cost_analysis-hydropower.pdf


Table 3-74: Basic information on E-2: Policies and investments to rehabilitate hydropower assetsTitle of the Measure Policies and investments to rehabilitate hydropower assets





This measure Involves developing policies to encourage the increase of hydropower production through covering upstream and downstream measures within hydropower stations – i.e. renovating existing stations to increase their capacity and output.

Target end-use Power production

Target group Hydropower producersRegional application Nationwide




Budget

2017 2018 2019 2020 Total 2017 - 2020 2021 - 2030

Central Government In-kind €

31,000 € 6,000 € 6,000 € 6,000 € 49,000 € 73,000

Industry/Private companies Investment € 0 €

1,561,000€

3,184,000€

8,659,000€

13,404,000€

83,438,000

Total € 31,000

€ 1,567,000

€ 3,190,000

€ 8,665,000

€ 13,453,000

€ 83,511,000


13.7%

Implementing body

Hydropower generation companies – with technical assistance and finance from IFIs and encouragement from the Ministry of Energy and GNERC

Monitoring authority GNERC, Ministry of Energy, and Ministry of Finance


Bottom up: meters of the companies; reported to GNERC in quarterly and annual reporting

Type of savings




2020 123,276 0 38,409

2025 567,749 0 178,840

2030 752,197 0 240,215Overlaps, multiplication effect, synergy

Implementing this measure would also mean a reduction of natural gas required for electricity – potentially meaning a reduction of savings from E-1 which replaces old natural gas plants with CCGT plants.

E-3: Optimization of reserves and seasonal operational regimes


This measure involves analysis and potential changes to the dispatch system to allow for more use of hydro-electric power rather than thermal power. It would involve review of dispatch practice between thermal and hydropower as well as improvement of reserve requirements to allow better optimization of operational regimes which would result in increased use of hydropower and decreased use of thermal


natural gas fired power plants. Expert analysis of the dispatch system will be conducted to identify if there are ways to increase the efficiency of the system to minimise costs, minimise greenhouse gas emissions and minimise natural gas consumption while maximising the use of relatively inexpensive hydro-power. This would include:

Review and improvement of reserve requirements to allow better optimization of operational regimes.

Avoidance of excess spinning reserve. Developing a study and introducing the guidelines and norms for dispatch plus ongoing support to

ensuring these guidelines and norms are implemented. Ongoing investment and monitoring of dispatch system to ensure continued improvement.

The dispatch system will likely be liberalized in the coming years which can also be expected increase efficiency. Assuming this occurs, the potential energy savings are likely to be similar to an improved top-down dispatch approach as most hydro power is less expensive than thermal plants or imports. The measure must be consistent with Rule 434 describing the technical regulations for the use of power plants and the grid – in particular Article 46 which describes the conduct of the planning regime.125


The dispatch centre within GSE will be involved in analysis of the dispatch system. This may be related to the development of ancillary services market in harmony with EU Energy Acquis.


Final energy savings do not result from this measure. Primary energy savings were estimated by calculating the amount of additional electricity which could be produced by hydro-power through improved dispatch – scaling up over the course of time to reach market potential. Primary energy savings are achieved by a reduction of the same amount of energy production from thermal power plants – where the conversion coefficient is much lower.

Assumptions:

Calculations are based on total final energy demand data from MARKAL BAU for electricity: Total electricity generation from hydro and natural gas plants grows from 10,674 GWh in 2015 to

30,511 GWh in 2030. From natural gas-fired power plants this demand grows from 1,952 GWh for 2015 to 2,647 GWh in

2030 with average conversion efficiency of 34% to 37% over the period. For the dispatch system, it is estimated that hydro power plants are losing at least 400 GWh of

production annually due to operation of units in spinning reserve. It is believed that at least half of this loss can be avoided without loss of system reliability, with more optimal reserving of capacity – 200 GWh per year initially126 and increasing linearly with the amount of total power generation up to 280 GWh.

The increase in dispatch of hydro-power instead of thermal power would be combined with additional investments in the network and involve improved management. Investment amounts have not been estimated.

Primary energy consumption to be reduced by reduction of natural gas-fired power plant utilisation – assuming conversion efficiency of 100% in hydro-energy.

Costs of this measure would include: Technical assistance of international consultants and national consultants for the initial study and

assistance in improving the dispatch system. Ongoing costs expected to be an increase in 2 total employees to ensure proper implementation of

the dispatch system.

125 Government of Georgia (31 December 2013) დადგენილება №434: ტექნიკური რეგლამენტი - ელექტროსადგურების და ქსელების ტექნიკური ექსპლუატაციის წესების დამტკიცების შესახებ. 126 Based on communications with the Enguri Power Plant operators – scaled up to include all hydropower operators.





Table 3-75: Basic information on E-3: Optimization of reserves and seasonal operational regimes

Title of the Measure Optimization of reserves and seasonal operational regimes





This measure involves analysis and potential changes to the dispatch system to allow for more use of hydro-electric power rather than thermal power.

Target end-use Power production

Target group Dispatch companyRegional application Nationwide




Budget

2017 2018 2019 2020 Total 2017 - 2020

2021 - 2030


580,000

Total € 73,000 € 50,000 € 51,000 € 52,000 € 226,000 € 580,000


Not calculated

Implementing body GSE with involvement of the Ministry of Energy

Monitoring authority GNERC and Ministry of Energy



Type of savings




2020 530,785 0 165,375

2025 766,315 0 241,389

2030 778,733 0 248,689Overlaps, multiplication effect, synergy

Implementing this measure would also potentially mean a reduction of natural gas required for electricity – meaning a reduction of savings from E-1 which replaces old natural gas plants with CCGT plants.

E-4: Reduction of losses in electricity transmission networks and grid integration of new generation



This measure involves energy savings through measures to develop Georgia's transmission networks to accommodate for larger energy production and consumption. JSC Georgian State Electrosystem (GSE) is a 100% state-owned joint stock company which provides transmission and exclusive dispatch services to about 50 eligible companies in Georgia. Cross-border electricity trade opportunities, high electricity demand growth, and the need for evacuation of the energy generated by the planned power plants will mean a need for investments in the transmission infrastructure for ensuring adequate development of the network. GSE and its daughter company Energotrans own in total 141 lines of 500-220-110-35 kV with the total length of 3350.62 km, including:

500kV transmission line length – 270.5 km 400kV transmission line length – 32.2 km 220kV transmission line length – 1595.72 km 110kV transmission line length – 913.24 km 35kV transmission line length – 538.96 km

In 2015, GSE – in cooperation with the Ministry of Energy, GNERC, electricity transmission licensees, and other agencies developed Georgia's 10-year Network Development Plan 2015-2025. Activities / investments included in the plan include the following:

Batumi-Akhaltsikhe (2017-2018), loss reduction of 2-5 MW Tskaltubo - Zestaponi (2015 - 2016), loss reduction of <1 MW Ksani-Kazbegi-Mozdok (2017 / 2020), loss reduction of 35-40 MW Marneuli (2016 - 2018), loss reduction of <1 MW Jvari-Tskaltubo-Akhaltsikhe (2018-2019), loss reduction of 25 MW North Ring - Tskaltubo (2018-2021), loss reduction of 10 MW Ozurgeti (2019), loss reduction of <1 MW Akhaltsikhe - Tortum (2020), loss reduction of <1 MW Batumi - Muratli (2020), loss reduction of <1 MW Namakhvani-Tskaltubo (2022), loss reduction of <1 MW


Georgian State Electrosystem (GSE)


Energy savings are not calculated for this measure – as they involve the complete restructuring of the electricity grid and connection of numerous new power generation sources. Therefore, the BAU would be impossible to quantify. It is also possible under certain conditions that this measure will result in increased losses.

Assumptions:

Assumes the implementation of the Ten Year Development Plan of the grid – which involves a total investment of EUR 653,350,000127 – of which it is assumed that EUR 527,473,000 will be invested from 2017 to 2022 and EUR 480,403,000 will be invested from 2017 – 2020.


The measure is not expected to have direct impacts on the general population. Indirectly, it will make possible the development of new power generation facilities in Georgia as well as reduce the likelihood of grid outages. It will also enable grid integration of new generation facilities necessary to cover the growing demand.

127 GSE (2015) Ten Year National Development Plan 2015-2025



Table 3-76: Basic information on E-4: Reduction of losses in electricity transmission networks and grid integration of new generation

Title of the Measure Reduction of losses in electricity transmission networks and grid integration of new generation





Energy savings through measures to develop Georgia's transmission networks to accommodate for larger energy production and consumption

Target end-use Energy transmission

Target group Transmission operatorsRegional application Nationwide




Budget

2017 2018 2019 2020 Total 2017 - 2020

2021 - 2030


Investment

€ 111,927,00

0

€ 155,639,00

0

€ 127,056,00

0

€ 85,781,00

0

€ 480,403,00

0

€ 47,070,00

0

Total€

111,927,000

€ 155,639,00

0

€ 127,056,00

0

€ 85,781,00

0

€ 480,403,00

0

€ 47,070,00


Not calculated

Implementing body Georgian State Electrosystem

Monitoring body GNERC


Bottom up: GSE data reported to GNERC in quarterly and annual reporting

Type of savings








For any new power plant which is developed (hydro or otherwise) this measure is important. Therefore, it has synergies with- E-2: Policies and investments to rehabilitate hydropower assets and- E-3: Optimization of reserves and seasonal operational regimesAs these measures envision a great deal of new hydropower electricity production added.

E-5: Regulations on the rules of calculation of normative electricity losses - stimulating investments



This measure involves the use of tariff methodology that provides incentives for distribution companies to make investments into their network and to optimize operational costs.

These “Rules of calculation of normative electricity losses” are based on international practice to reduce network losses. According to these rules normative losses for each period of regulation are set on the basis of actual losses of the previous period, and they are not changed during the whole regulation period. This incentivises distribution companies to reduce network losses within the regulated period.

In 2006 GNERC established group of experts for the purpose of studying and analysing energy losses in the electricity network. Based on research and recommendations, GNERC approves normative electricity losses in electricity networks for transmission and distribution licensees.


JSC ENERGO-PRO Georgia, AES Telasi, and JSC Kakheti Energy Distribution with support for monitoring from GNERC


Final energy savings do not result of this measure. Primary energy savings were estimated by calculating the reduction in the amount of electricity to be purchased by the distribution companies from the electricity producers – assuming that this would represent a reduction in purchases from thermal power plants which are more expensive than hydro-power plants. Primary energy savings are achieved by a reduction of primary energy required for thermal power plants for the same amount of energy delivered to the end-consumer.

Assumptions:128

Calculations are based on total final energy demand data from MARKAL BAU for the three distribution companies with distribution losses as follows:

Discussions with GNERC indicate that the achievable levels of total losses are: For AES Telasi – 2,252 GWh per year in 2014 increasing proportionally with electricity

demand/production. Currently losses are 5.33%; expected to increase to 6.5% in the BAU and remain at 5.33% in the EE case.

For JSC ENERGO-PRO Georgia – 4,400 GWh per year in 2014 increasing proportionally with electricity demand/production. Currently losses are 8.0%; expected to increase to 9.0% in the BAU and decrease to 7.0% by 2025 in the EE case.

For JSC Kakheti Energy Distribution – 310 GWh per year in 2014 increasing proportionally with electricity demand/production. Currently losses are 18.25%; expected to stay at this level in the BAU and decrease to 8% by 2028 in the EE case. This would involve significant investment.

Other assumptions include: Transmission losses of 2% constant throughout the period. 32.9% initial average conversion efficiency of all thermal power plants – increasing to 36.7%

eventually with the introduction of the CCGT plant in the BAU case of energy production No change in final electricity demand from BAU.

IRR calculated from the perspective of the network operating companies. Investment costs of EUR 10.47 million for year 1 and EUR 10.66 million for year 2 – then increasing

with inflation (2%) – based on approved GNERC figures for 2016-2017 extrapolated to 2025 for ongoing investment.

128 Information on existing losses comes from GNERC (2015) Report on Activities of 2014: http://gnerc.org/files/wliuri%20angariSi/Anual_Report_Eng_opt.pdf. Information on BAU versus the EE case come from communications with GNERC.


http://gnerc.org/files/wliuri%20angariSi/Anual_Report_Eng_opt.pdf

Price for electricity saved of EUR 26.35 per MWh increasing with inflation (2% annually) (i.e. this is the weighted average marginal off-taker price which the network operators would be paying to producers).

Investment from 2017 to 2020 estimated to be EUR 43.57 million for energy efficiency improvements – representing almost half of planned investment for the period. However, it is possible that significantly more investments will be required to achieve these reductions in losses.




Table 3-77: Basic information on E-5: Regulations on the rules of calculation of normative electricity losses - stimulating investments

Title of the Measure Regulations on the rules of calculation of normative electricity losses - stimulating investments





This measure is an existing tariff methodology that provides incentives for distribution companies to make investments into their network and to optimize operational costs.

Target end-use Electricity distribution

Target group Electricity distribution companiesRegional application Nationwide




Budget

2017 2018 2019 2020Total 2017 - 2020

2021 - 2030


Investment € 10,471,000

€ 10,656,00

0

€ 11,112,00

0

€ 11,334,00

0

€ 43,573,00

0

€ 60,163,00

0

Total € 10,471,000€

10,656,000

€ 11,112,00

0

€ 11,334,00

0

€ 43,573,00

0

€ 60,163,00


13.5%

Implementing body JSC ENERGO-PRO Georgia, AES Telasi, and JSC Kakheti Energy Distribution

Monitoring authority GNERC, Ministry of Energy, and Ministry of Finance



Type of savings




2020 423,549 0 91,280

2025 1,119,067 0 246,027

2030 1,302,648 0 293,379



Reduced losses would result in reductions in demand for electricity production – particularly from natural-gas fired power plants. This would impact savings in E-1 as well as the primary energy savings from any demand-side measure.

E-6: Regulations on the rules of calculation of normative natural gas pipeline losses - stimulating investments


In total in Georgia there are 970,101 customers including 939,552 household customers. The main distribution networks are operated by SOCAR Georgia Gas, KazTransGas-TBILISI, JSC SakOrgGaz – covering 95% of all customers. There are also 27 other smaller distributors. The natural gas distribution network is currently being expanded to new areas in Georgia – allowing for increased numbers of private connections and consumers. Overall losses in 2015 in the distribution network amounted to 103.8 million m3 with losses by KazTransGas-TBILISI accounting for 64% of these losses.129

This measure involves implementation of rehabilitationof gas networks / systems – including pipelines, valves, pressure reduction stations, etc. Reductions in losses are highly encouraged under licensing agreements. Specific interventions include:

Replacement of old, depreciated gas pipelines; Enhanced maintenance and leakage control; Control of meters and replacement as needed; and Additional measures including those to combat non-technical losses such as theft.

These measures mostly reduce leakage within the gas distribution pipeline. There will also be significant investments in other aspects such as metering, but these are not included in the financial or energy parameters of the measure.

As part of the regulations, natural gas distribution companies are required to achieve low levels of losses of 2% in the coming 5 years. It is planned that they will undertake feasibility studies as to potential improvements in performance – which can then be utilised by the companies to define an investment programme.130 It is planned that they will undertake feasibility studies as to potential improvements in performance – which can then be utilised by the companies to define an investment programme.

Already, Kaztransgas-Tbilisi - the natural gas distribution company has developed the CDM project “Leak reduction in above ground gas distribution equipment in the Kaztransgaz-Tbilisi”.131


Natural gas distribution companies (SOCAR Georgia Gas, KazTransGas-TBILISI, JSC SakOrgGaz, and 27 other distributors) with support for monitoring from GNERC.


Final energy savings do not result from this measure. Primary energy savings were estimated by calculating the reduction in the amount of natural gas to be purchased (to compensate for losses) by the distribution companies. Primary energy savings are achieved by a reduction of primary energy required for the same amount of final energy delivered to the end-consumer.

129 See GNERC (2016) Report on Activities of 2015.130 See GNERC (2015) დადგენილება №5, 2015 წლის 26 მარტი, „ბუნებრივი გაზის გამანაწილებელ ქსელში ნორმატიული დანაკარგების გაანგარიშების წესის“ დამტკიცების შესახებ. Available at https://matsne.gov.ge/ka/document/view/2800042 131 The project is estimated to result in the emissions reduction of 339,197 tonnes CO2eq per year over a 10 year period (See the Validation Report here: https://cdm.unfccc.int/Projects/DB/SGS-UKL1234786138.56/view. However, this reduction may not materialize due to lack of ongoing investment.


https://cdm.unfccc.int/Projects/DB/SGS-UKL1234786138.56/view


Assumptions:

Calculations are based on total final gas consumption data from 2014 and projected into the future based on the MARKAL BAU (~8.83 TWh or 1.03 billion m3 for 2014 – assumed to be the same in 2015 and growing over time)132 for three distribution companies with distribution losses as follows:

KazTransGas-TBILISI network – 4,949 GWh per year final gas consumption in 2015 with 10.3% losses remaining constant in the BAU and decreasing to 2% in 2022 in the EE case.

SOCAR network – 2,454 GWh per year final gas consumption in 2015 with 3.9% losses remaining constant in the BAU and decreasing to 2% in 2022 in the EE case.

Sakorggas network – 1,426 GWh per year final gas consumption in 2015 with 8.8% losses remaining constant in the BAU and decreasing to 2% in 2022 in the EE case.

New networks with growing distribution up to 16,881 GWh in 2030 with constant losses of 2.0%. The EE scenario would reduce losses by over 739 million m3 over the course of 14 years. Emission factor of 15 tonnes of CO2eq for every 1000 m3 of fugitive emissions.133

IRR calculated from the perspective of distribution companies.

Investment costs come from estimated previous annual investments by KazTransGas for reducing leakages,134 and have been spread over 5 year period – adjusted according to the relative amount of volume of natural gas delivered by each country. However, it is possible that significantly more investments will be required to achieve these reductions in losses.

Financial savings are calculated based on not having to purchase natural gas which is lost – with the price as the estimated marginal cost of natural gas (200 EUR/1000 m3) increasing with inflation over time (2%).


The measure is not expected to have significant direct impacts on the general population unless the investment amounts required are at least an order of magnitude higher than estimated. If investment costs are significantly higher than estimated, then there may be an impact in terms of the requirement of increased natural gas tariffs.


Table 3-78: Basic information on E-6: Regulations on the rules of calculation of normative natural gas pipeline losses - stimulating investments


Regulations on the rules of calculation of normative natural gas pipeline losses - stimulating investments



132 It is noteworthy that these companies reported approximately 1 billion m3 of distribution in 2014, and in 2015, GNERC reports that these 3 companies distributed 1.5 billion m3 of natural gas – which more than expected under the MARKAL BAU (where this level of consumption is only expected to occur in 2020).133 Calculated based on CDM Project 2404: Leak Reduction in Gas Distribution-CER Spreadsheet134 According to GNERC’s 2015 Annual Report, KazTransGas invested 7,566,540 GEL (~EUR 2.78 million) in 2015. For the purposes of estimating the total investment requirements, it was assumed that all of this investment was to decrease losses – with SOCAR then requiring EUR 1.4 million per year and Sakorgas requiring EUR 800,000 per year. The approach of using the entire investment amount results in a potentially conservatively high estimate of total investment required for each company – though in any case additional feasibility studies are required to fully evaluate investment requirements.

The cost per MWh of savings per year based on these estimates is 57 EUR/MWh saved. This can be compared to – for example – the UK, where one investment programme of GBP 23 million (approximately EUR 25 million) was expected to have a cost per MWh of savings of 263 EUR/MWh per year. However, this system losses in the UK were estimated at 0.57% (see Dennett & Vallender 2009). These system losses in the UK are much lower than in Georgia. It can be assumed that investment per unit of savings should be lower in Georgia than in the UK since Georgia will still have “low hanging fruit” and since labour is generally less expensive.




This measure involves developing and implementing a tariff methodology that provides incentives for natural gas distribution companies to make investments into their network to reduce losses. Investments would include the implementation of rehabilitation of gas pipelines and meters.

Target end-use Gas supply

Target group Gas utility companiesRegional application Nationwide




Budget

2017 2018 2019 2020 Total 2017 - 2020

2021 - 2030

Central Government

In-kind € 12,000 € 12,000 € 0 € 0 € 24,000 € 0


Investment

€ 4,928,000

€ 4,928,000

€ 4,928,000

€ 4,928,000

€ 19,712,000

€ 9,856,000

Total € 4,940,000

€ 4,940,000

€ 4,928,000

€ 4,928,000

€ 19,736,000

€ 9,856,000


30.7%

Implementing body Distribution licensees

Monitoring authority GNERC


Normative losses are / will be reported to GNERC by the distribution companies based on wholesale meters

Type of savings




2020 408,732 0 656,105

2025 659,665 0 1,058,909

2030 659,665 0 1,058,909Overlaps, multiplication effect, synergy

Reductions in natural gas pipeline losses would also mean reductions of primary energy usage for all end-uses of natural gas.

E-7: Efficient wood-burning stoves


About 400,000 households and public buildings in rural areas of Georgia use on average about 9 m3 firewood per household for heating and cooking (7 m3) and for hot water (2 m3). In total firewood consumption is about 3.6 million m3. Of this, 57% or about 2,000,000 m3 is non-renewable. This leads to about 2.3 million tCO2 GHG emissions annually. Over-use of wood resources causes serious forest degradation. As previously noted, wood-burning stoves are typically very inefficient in Georgian and for this wood, mainly newly cut trees are burned.135 Rural households also suffer from widespread fuel poverty,

135 See Public Policy Research & Training Centre (2014) საქართველოს შინამეურნეობათა მდგრადი ენერგომოხმარების წახალისების პოლიტიკა (eng: Policy to encourage sustainable energy consumption by Georgian households”) https://tenders.procurement.gov.ge/public/lib/files.php?mode=app&file=866803&code=1408364354


spending average 30% of their income on energy. They lack access to finances and technologies to implement cleaner and more economic alternatives.

This measure involves energy saving achieved through introduction of energy efficient wood-burning stoves in households including the following specific activities:

Upgrading inefficient stoves (installation of airtight combustion chamber, inlet air control, flue air control, and additional heat transfer area);

Installation of new energy efficient stoves; Educational and awareness raising activities Assistance from donors (either within Georgia or outside) to provide grants for stove purchase and

other market promotion activities.


The international NGO Women in Europe for a Common Future (WECF) – likely in cooperation with municipalities and the Ministry of Environment and Natural Resources Protection.


Final energy consumption savings were calculated by calculating the energy saved on a per-unit basis of replacing inefficient wood stoves with efficient wood stoves which deliver the same amount of heat. The total final energy consumption savings were calculated based on total market penetration (# of replacement stoves) over time. Primary energy consumption savings were calculated using the coefficient for wood (1:1).

Assumptions:136

Estimated 400,000 households (HH) using biomass stoves – to remain constant over the period analysed.

Increasing share of households using medium-efficient stoves of 1 to 1.25% per year through 2030 (4,000 to 5,000 stoves per year) increasing from 0% in 2015 to 15% in 2030.

Though it should be noted that there is currently net migration to the cities and extension of the gas network to more consumers, there is still a vast potential market size for efficient wood stoves to replace inefficient stoves. The expected intervention would involve a combined total of approximately 61,000 stoves over a 14 year period – approximately 15% of the total estimated current market size.

Energy savings as follows: Efficiency of existing stoves in Georgia is around 35%. 6,067 GWh per year of biomass used in heating in households per year – 15.2 MWh per household

per year Typical consumption of 7 m3 (loose volume) and 5.38 m3 (solid volume) from a household survey137

7.5 GJ/m3 energy content138

Average heating efficiency of a medium-efficient stove 70%139

Conversion efficiency of primary energy to final energy of 1.0 – i.e. not incorporating up-stream energy consumption for procurement of wood supplies

Average cost of wood of 29.41 EUR/m3 (~13.57 EUR/MWh) Suppressed demand is not calculated as increasing demand would involve heating more rooms in a

house which would be a different technical solution (either more stoves or a different heating system).

Financial requirements as follows:

136 Assumptions based on Women in Europe for a Common Future (WECF) (2015) NS-229 - Efficient use of biomass for equitable, climate proof and sustainable rural development137 Women in Europe for a Common Future (WECF) (2015)138 Geostat (2015) Georgia Energy Balance139 Based on expert knowledge of the potential market.


IRR calculated from the perspective of a household without a grant Average cost of efficient stoves at 150 EUR/stove140

24 man-months of government time for policy development and programme management – incentives and standards

Technical assistance of national experts and international experts over 5 years as well as for three years in awareness raising

50% grant per stove for families receiving subsidies for wood consumption - resulting in 75 EUR/stove in grants for the first 2 years, then decreasing to 40% in 2019, 30% in 2020, and 0 in 2021.

Grants could be funded through donor funds or other options.


This measure would have highly positive impacts on the population – particularly poorer households. This would be in the form of decreased costs for wood or increased comfort from the same amount of wood being used to heat homes better. The measure would also decrease the likelihood of health problems resulting from inefficient wood stoves being used in homes.


Table 3-79: Basic information on E-7: Efficient wood-burning stovesTitle of the Measure Efficient wood-burning stoves for rural households


DescriptionCategory Energy saving mechanisms and other combinations of other (sub)categories



Energy saving achieved through introduction of energy efficient wood-burning stoves in households and solar hot water heaters in rural areas

Target end-use Residential heating

Target group HouseholdsRegional application Nationwide




Budget

2017 2018 2019 2020 Total 2017 - 2020

2021 - 2030

Central Government In-kind € 24,000 € 25,000 € 0 € 0 € 49,000 € 0

Donors - Grants Grants € 0 € 300,000 € 240,000 € 180,000 € 720,000 € 0

Households Investment € 0 € 624,000 € 637,000 € 649,000 € 1,910,000

€ 8,869,000

Total € 24,000 € 949,000 € 877,000 € 829,000 € 2,679,000

€ 8,869,000


69.8%

Implementing body

Women in Europe for a Common Future (WECF) – likely in cooperation with municipalities and the Ministry of Environment and Natural Resources Protection

Monitoring authority Local / municipal authorities, Ministry of Energy, and Ministry of Environment and Natural Resources Protection


140 Based on expert knowledge of the potential market.



Bottom-up, households surveys with a representative sample of beneficiary households

Type of savings




2020 91,000 91,000 39,161

2025 280,583 280,583 120,747

2030 462,583 462,583 199,070


Linked along with E-8 as a part of NAMA NS-229 - Efficient use of biomass for equitable, climate proof and sustainable rural development.

E-8: Solar hot water heating


Energy savings from this measure are to be achieved through installation of solar hot water heaters in the residential sector. The measure involves a market creation programme including:

Addressing policy issues (standards, planning permission); Awareness raising; Project development support; and A 4-year incentive scheme.

In addition to this market creation measure, there are various pilot projects that are being carried out throughout Georgia, such as by FC Torpedo in Kutaisi and as a part of energy efficiency measures in schools and kindergartens (See P-4 and P-6).


Women in Europe for a Common Future (WECF) – likely in cooperation with municipalities and the Ministry of Environment and Natural Resources Protection.


No final energy savings will result from this measure – only primary energy savings – though the final energy will be from a renewable source. Primary energy savings were calculated by calculating the amount of energy (either natural gas or electricity) which could be replaced by solar hot water heaters in three different cases (described below), then scaled up according to estimated level of market penetration over time.

Assumptions:141

Potential market size as follows: There are an estimated 567,000 single houses in Georgia (35% of which are using electricity for hot

water, 35% using natural gas, and 30% using wood). This number of total single houses is projected to be reduced to 451,000 in 2030 due to people moving to apartments

Equivalent of 12,718 apartment buildings (382,000 dwellings) – growing over time to 13,718 buildings in 2030

The measure will focus on homes heating water with wood, though financial parameters have been calculated for all types of homes

141 Assumptions on market size are based on the MARKAL model. Assumptions on the production of energy from solar hot water heaters are based on calculations carried out in RETSCREEN. Assumptions on costs of interventions based on contact with suppliers while developing the NEEAP.


The measure will result in increased market share of solar hot water heaters in this type of home from 0% in 2016 to 41.25% in 2030 for homes heating with wood – equivalent to 3,000 – 6,000 systems installed per year

For single houses heating water with wood: 225 l/day consumption of hot water, 6.96 m2 of solar collectors installed, 4.33 MWh consumed each

year for hot water Solar system covers 48% of hot water needs Cost of EUR 375 for installation Cost of EUR 29.41 per m3 of wood (EUR 0.0136 per kWh) under base case and under the efficient

case (increasing with inflation) Conversion efficiency of 100% for solar energy IRR calculated from the perspective of home-owners/ apartment owners

Cost estimated from 2017 to 2020 to include: 12 man-months of Government resources for policy development and initial programme

implementation National and international expert time in technical assistance 40% grant for solar installations for the first 4 years - 2017 to 2020 – for an estimated 9,250 units

installed in total.


This measure would have positive impacts on the population. This would be in the form of decreased costs for hot water heating.


Table 3-80: Basic information for E-8: Solar hot water heatingTitle of the Measure Solar hot water heating


Description

Category Energy saving mechanisms and other combinations of other (sub)categories Financial instruments



Energy savings achieved through installation of solar hot water heaters in the residential sector - focusing on households using wood for hot water

Target end-use Residential hot water

Target group Residential buildingsRegional application Nationwide




Budget

2017 2018 2019 2020 Total 2017 - 2020 2021 - 2030


Donors - Grants Grants € 248,000 €

305,000 € 368,000 € 493,000 € 1,414,000 € 0

Households Investment € 372,000 € 458,000 € 552,000 € 739,000 €

2,121,000 € 22,492,000

Total € 632,000 € 775,000 € 920,000 €

1,232,000€

3,559,000 € 22,492,000



- For Case 1: Single houses heating water with electricity: 7%- For Case 2: Single houses heating water with gas: -4%- For Case 3: Single houses heating water with wood: 12%- For Case 4: Apartment building, 9 floors, 30 units, heating water with electricity: 7%

Implementing body

Women in Europe for a Common Future (WECF) – likely in cooperation with municipalities, and the Ministry of Environment and Natural Resources Protection


Local/municipal authorities, Ministry of Energy, and the Ministry of Environment and Natural Resources Protection


Bottom up, Energy surveys

Type of savings




2020 9,837 0 12,700

2025 30,511 0 39,390

2030 60,471 0 78,070


Linked along with E-7 as a part of NAMA NS-229 - Efficient use of biomass for equitable, climate proof and sustainable rural development. Additionally, if scaled up to include households using other fuels besides wood, reduced electricity consumption for hot water heaters would result in decreased need for natural gas-fired power plants – impacting E-1.

3.7.5 Savings arising from all energy supply measures


The estimated energy savings and related to the primary energy sector measures are summarized in Table3-81.


Table 3-81: Overview of individual measures in the energy supply sector

No.

Title of the energy saving measure

End-use targeted

Duration (years)

2020 2025 2030










E-1

Natural gas savings through replacement of old Thermal Power Plants (TPP) with new technologies

Improved energy efficiency and energy savings of power sector

3 1,019 - 205,999 2,269 - 458,608 2,269 - 458,608

E-2

Policies and investments to rehabilitate hydropower assets

Power production 3 123 - 38,409 568 - 178,840 752 - 240,215

E-3

Optimization of reserves and seasonal operational regimes

Power production 2 531 - 165,375 766 - 241,389 779 - 248,689

E-4

Reduction of losses in electricity transmission networks and grid integration of new generation

Energy transmission 8 Not

calculatedNot

calculatedNot

calculatedNot

calculatedNot

calculatedNot

calculatedNot

calculatedNot

calculatedNot

calculated

E-5

Regulations on the rules of calculation of normative electricity losses - stimulating investments

Electricity distribution 3 424 - 91,280 1,119 - 246,027 1,303 - 293,379

E-6


Gas supply 5 409 - 656,105 660 - 1,058,909 660 - 1,058,909


Residential heating 6 91 91 39,161 281 281 120,747 463 463 199,070

E-8 Solar hot water heating

Residential hot water 5 10 - 12,700 31 - 39,390 60 - 78,070

Total 2,606 91 1,209,028 5,693 281 2,343,911 6,285 463 2,576,941


3.7.6 Financing of energy efficiency measures in energy supply


Table 3-82 shows the expected financing needs for the period of 2017 to 2030 for measures in the primary energy sector.



Table 3-82: Overview of financing of measures in the energy supply sector

No.


financing


financing required

2017 2018 2019 2020 Total 2017 - 2020 2021 - 2030

E-1


JSC GOGC

Central Government In-kind € 0 € 0 € 0 € 0 € 0 € 0

JSC GOGC Investment € 60,000,000 € 60,000,000 € 60,000,000 € 0 € 180,000,000 € 180,000,000

Total € 60,000,000 € 60,000,000 € 60,000,000 € 0 € 180,000,000 € 180,000,000

E-2


Hydropower generation companies – with technical assistance and finance from IFIs and encouragement from the Ministry of Energy and GNERC


Industry/Private companies Investment € 0 € 1,561,000 € 3,184,000 € 8,659,000 € 13,404,000 € 83,438,000

Total € 31,000 € 1,567,000 € 3,190,000 € 8,665,000 € 13,453,000 € 83,511,000

E-3


GSE with involvement of the Ministry of Energy


Total € 73,000 € 50,000 € 51,000 € 52,000 € 226,000 € 580,000

E-4


Georgian State Electrosystem

Industry/Private companies Investment €

111,927,000€

155,639,000€

127,056,000€

85,781,000 € 480,403,000 € 47,070,000

Total € 111,927,000

€ 155,639,000

€ 127,056,000

€ 85,781,000 € 480,403,000 € 47,070,000

E-5


JSC ENERGO-PRO Georgia, AES Telasi, and JSC Kakheti Energy Distribution

Industry/Private companies Investment € 10,471,000 € 10,656,000 € 11,112,000 €

11,334,000 € 43,573,000 € 60,163,000

Total € 10,471,000 € 10,656,000 € 11,112,000 € 11,334,000 € 43,573,000 € 60,163,000

E-6

Regulations on the rules of calculation of normative natural gas pipeline losses -

Distribution licensees


Industry/Private companies Investment € 4,928,000 € 4,928,000 € 4,928,000 € 4,928,000 € 19,712,000 € 9,856,000

Total € 4,940,000 € 4,940,000 € 4,928,000 € 4,928,000 € 19,736,000 € 9,856,000


No.


financing


financing required

2017 2018 2019 2020 Total 2017 - 2020 2021 - 2030

stimulating




Donors - Grants Grants € 0 € 300,000 € 240,000 € 180,000 € 720,000 € 0

Households Investment € 0 € 624,000 € 637,000 € 649,000 € 1,910,000 € 8,869,000

Total € 24,000 € 949,000 € 877,000 € 829,000 € 2,679,000 € 8,869,000

E-8 Solar hot water heating



Donors - Grants Grants € 248,000 € 305,000 € 368,000 € 493,000 € 1,414,000 € 0

Households Investment € 372,000 € 458,000 € 552,000 € 739,000 € 2,121,000 € 22,492,000

Total € 632,000 € 775,000 € 920,000 € 1,232,000 € 3,559,000 € 22,492,000

Total € 188,025,000

€ 234,526,000

€ 208,083,000

€ 112,769,000 € 743,403,000 € 411,961,000


Annex 1. Specific policy and regulatory elements for achievement of targets

The following table outlines the legislative, regulatory, and strategy elements for the implementation of the NEEAP. It does not include existing regulations and laws which are described within the NEEAP – such as those related to decreasing losses in the electricity and natural gas distribution networks. Elements which are not necessarily mandatory for the implementation of the NEEAP but would be useful are marked as “potential”.

Policy/ regulatory element Sector impactedWhich NEEAP

Measure

Responsible Government

Body

Expected time-line

for adoption

Primary legislation: Law on Energy Efficiency Cross-sectoral Horizontal

Ministry of Economy and Sustainable Development (MESD), Ministry of Energy (ME)

2017

Finalization of the Low-Emission Development Strategy (LEDS) Cross-sectoral Horizontal

Ministry of Environment and Natural Resources Protection (MENRP), MESD, ME

2017

Regulation(s) regarding Energy auditing, including indication of consumer and project groups subject to mandatory energy auditing, based on ISO 50002, accreditation and certification of auditors, tariff-setting for auditing services, training and education of energy auditors

Buildings, Industry H-6, H-7 MESD, ME 2018

Regulation on Mandatory Boiler Inspection Buildings, Industry H-6, H-7, I-

5MESD, ME, Geostat 2018

Regulations regarding the Establishment of a New Agency (including bylaws, operational manual, financial scheme with allocation of State Budget or Local Budget resources, IFI and donor finance). The Law on Energy Efficiency would be the primary legislation serving as a basis for this.

Cross-sectoral H-1 MESD, ME 2017

(Potential) Amendment to the Law on Electricity and Natural Gas to reflect the changes in tariff policy, introducing two-tier tariff system, incentivizing EE and RES utilization

Energy H-1, H-2 ME 2017

Secondary legislation on Voluntary Agreements and energy audit accreditation

Industry H-2, H-6 MESD 2017



Measure


Body

Expected time-line

for adoption

Template Agreement for industries introducing energy efficiency Industry H-2 MESD 2017

Regulation on the transposition of industrial efficiency benchmarks to be selected by Government (BAT, EU BREF notes, IFC benchmarking, ISO 50001, UNIDO RECP scheme, or else)


Best practice guidelines on general requirements to implement energy management systems (potentially ISO 50001)


Regulation / Government Decision on Energy Labelling / transposing EC Directives

Cross-cutting H-4 MESD, ME 2018

Primary and secondary legislation for the transposition and enforcement of the Energy Performance in Buildings Directive (2010/31/EU) – including adoption of:- The Spatial planning and construction code of Georgia, transposing EPBD provisions- Building Energy Codes- Regulation on Building Energy Efficiency (alternatively, the Law on Energy Efficiency to include full provisions related to building EE)- Definition of minimum requirements for building energy performance- Regulation on Building Energy Certification and Labelling- Adoption of relevant supporting CEN standards- Standard on Building Energy Passport, Certificate and Label Template- National Methodology for Calculating Building Energy Performance- Reference building database and building stock inventory- Building climatology

Buildings H-5, H-9 MESD 2017 - 2023

Adoption of relevant supporting CEN standards for calculation of efficiency in:- Boilers- HVAC systems- System energy needs- Infiltration losses- Lighting standards (by building purpose)- Automation, monitoring & control, etc.

Buildings, Industry, street-lighting, information measures

H-5, H-9, I-1 to I-8

MESD, MENR, Geostat

2017 - 2023



Measure


Body

Expected time-line

for adoption

(Potential) National Housing Legislation Governing Multi-Apartment Building Management and Home-Owners Associations

Buildings H-5, H-9 MESD 2017 - 2023

(Potential) Government Decision Adoption Template Energy Performance Contract

Industry P-8 MESD 2017

Regulation on Green Public Procurement, amending acting Law on Public Procurement incorporating energy efficiency requirements (amending The guidelines and Order of the Chairman of State Procurement Agency for all forms of procurement procedures – Simplified Procurement Procedures, Contests, Tender and Consolidated Tenders)

Buildings, street lighting, public/municipal transportation

B-1, H-4, H-8, P-8 ME 2017

(Potential) National Energy Efficiency Programme with staged approach for: - Public sector (rehabilitation of public buildings and street lighting, including passive houses and use of RES for heating public building)- Residential Buildings, based on the necessary favourable investment climate

Buildings B-1, H-4, H-8 ME 2017

Regulations leading to improved efficient lighting systems in residential and commercial buildings – including Minimum Energy Performance Standards and Customs Regulations for Lighting Appliances

Buildings B-1, H-4, H-8 ME 2017

Government Decision approving development of a national energy efficiency information system for publicly owned buildings and street lighting

Buildings, street lighting

B-1, H-4, H-8, P-1 ME 2017

Government Decision on Detailed Energy Balance and Disaggregated Industry Data on Energy Consumption, combined with template statistical data collection forms

Industry, Power I-2 MESD, ME, Geostat 2017

Regulations including technical Standards for Vehicle Inspection Guidelines

Transport T-1Ministry of Internal Affairs (MIA), MENR, MESD,

2017


Annex 2. Energy saving measures, targets for savings in 2020, and the cost of investment per MWh saved

The following table highlights the targeted energy savings of each measure for 2020 along with indicative investment costs per MWh savings over the course of the lifetime of the energy efficiency improvement.

No. Title of the energy saving measure End-use targeted

2020Cost per

MWh savings



GHG emissions abated per

year (tonnes CO2eq)

H-1


EE measures in all sectors to be defined by charter and operational manual

Not calculated

Not calculated

Not calculated N/A

H-2


All industry, but particularly large industrial sites or large sectors in Georgia

Not calculated

Not calculated

Not calculated N/A

H-3


Commercial/business and state entities – particularly related to commercial and industrial sector

Not calculated

Not calculated

Not calculated N/A

H-4


Existing buildings, appliance replacement, vehicles, and industrial equipment 6 4 1,491 € 229.58

H-5


Buildings Not calculated

Not calculated

Not calculated N/A

H-6

Qualification, accreditation, and certification schemes - Industry

Industry Not calculated

Not calculated

Not calculated N/A

H-7


All industry 71 62 18,694 € 2.59

H-8


End-users in residential sector, public, commercial/businesses, media

Not calculated

Not calculated

Not calculated N/A

H-9



19 18 5,949 € 12.55

B-1



237 170 59,388 € 12.35



2020Cost per

MWh savings




year (tonnes CO2eq)

P-1



Not calculated

Not calculated

Not calculated N/A


Existing public administrative building(s) 0.1 0.1 22 € 19.93



7.2 2.3 1,417 € 12.93

P-4


Existing school buildings 13.5 11.3 4,319 € 19.90

P-5


Public buildings owned by the central government. This does not include schools which are handled as separate measures. It would include office buildings, sports centres/ recreation halls, police buildings, museums, social homes, and potentially military buildings and prisons.

Not calculated

Not calculated

Not calculated N/A

P-6


Existing kindergartens 6.3 5.0 1,592 € 15.63

P-7



Not calculated

Not calculated

Not calculated N/A

P-8 Green procurement on energy efficiency


Not calculated

Not calculated

Not calculated N/A

P-9


Street-lighting 127.3 40.9 25,092 € 26.03


All industry Not calculated

Not calculated

Not calculated N/A

I-2 Industry data disaggregation Improved baseline information Not

calculatedNot

calculatedNot

calculated N/A

I-3Conversion of wet-cement process to dry cement process

Cement sector production process 584.6 584.6 206,629 € 14.79

I-4 Energy saving Secondary steel/ aluminium processors 62.2 50.9 18,297 € 10.60



2020Cost per

MWh savings




year (tonnes CO2eq)

activities at metal manufacturers

I-5Improved boilers and steam/ hot water distribution systems


52.1 48.9 10,734 € 5.45

I-6Attention to motors, fans, pumps, compressors

All Industry 50.9 36.4 12,742 € 14.53

I-7 Energy efficient refrigeration systems

Existing food & drink, chemical manufacturers 4.8 3.5 1,210 € 14.53

I-8 LED lighting All industry 65.3 46.7 16,334 € 21.79

T-1


Passenger transport within cities - public transport, private vehicles, and freight vehicles

403.3 403.3 97,200 € 4.22


Passenger and freight transport throughout Georgia 270.3 270.3 66,262 € 0.42

T-3


Passenger transport within cities - public transport 954.4 954.4 218,475 € 6.39

T-4


Passenger transport within cities 480.2 478.9 115,172 € 7.65

T-5


Passenger transport within cities 124.1 124.1 30 € 17.98

T-6


Passenger transport within cities - public transport 21.4 22.1 5,084 € 974.31

T-7

Urban mobility - Expansion of the metro system in Tbilisi

Passenger transport within Tbilisi (metro) 14.2 15.4 3,294 € 71.68


Passenger transport 55.5 55.5 14,173 € 60.86

T-9Vehicle improvement - Renewal of the public transport fleet

Passenger transport within cities (public transport) 5.3 5.3 4,123 € 235.21

T-10


Freight transport and inter-city passenger transport 125.9 130.8 34,534 € 41.91

T-11


Freight transport 125.9 130.8 34,534 € 64.31

E-1


Improved energy efficiency and energy savings of power sector 1,019.1 - 205,999 € 17.66



2020Cost per

MWh savings




year (tonnes CO2eq)

E-2


Power production 123.3 - 38,409 € 3.02

E-3


Power production 530.8 - 165,375 € 0.19

E-4


Energy transmission Not calculated

Not calculated

Not calculated N/A

E-5


Electricity distribution 423.5 - 91,280 € 7.02

E-6


Gas supply 408.7 - 656,105 € 5.51


Residential heating 91.0 91.0 39,161 € 1.98

E-8 Solar hot water heating Residential hot water 9.8 - 12,700 € 12.82


Annex 3: Elaborated case of EE for residential buildings

In 2014, the Tbilisi Municipality launched a pilot project on residential energy efficiency aiming at showcasing implementation of profitable energy saving measures in multi-apartment buildings. The pilot project was carried out with technical assistance of the EU/Energy Saving Initiative in Buildings (ESIB) project. A 9-story multi-apartment residential building located in the Temka district of Tbilisi City was selected for energy efficiency rehabilitation.

The objectives of the pilot residential project in particular were: Assessment of energy saving potential and development of energy saving measures as well as

associated reduction of greenhouse gases emissions via energy auditing; Showcasing the EE rehabilitation of a multi-apartment building through the implementation of

energy efficiency measures; Public outreach and capacity building through conducting trainings for residents and Tbilisi

Municipal officials on the elaborated rehabilitation project findings.

A residential building with identical A and B units was selected for intervention, and a decision was made to implement thermal insulation in one of the two units with the objective of comparing actual results of energy consumption between the insulated and non-insulated units.142

Construction characteristics of the building are presented in the table:

Characteristics of the residential building Unit A Unit BWall surface, m2 1,190.3 1,024.7

Surface of single-glazed wooden windows, m2 91.17 109.525Surface of double-glazed wooden windows, m2 51.17 33.59

Surface of metal plastic windows, m2 157.27 115.525Total surface of windows, m2 300.15 258.72

Roof surface, m2 186.15 186.15Floor surface, m2 186.15 186.15

Floor-to-floor height, m 2.7 2.7Number of floors 9 8Heated area, m2 1,674 1,491

Heated volume, m3 5,022 4,473

An energy audit carried out identified the energy saving potential in the form of proposed EE measures as: Thermal insulation of walls (in unit A); Thermal insulation of roof (floor of attic in the unit A); Thermal insulation of floor (ceiling of basement in the unit A); Installation of new metal plastic double glazed windows in both A & B units (only in the remaining

apartments with single glazed wooden framed windows); Installation of a central heating system with a boiler room and individual apartment metering system

combined with a hot water supply system with solar collectors (in both A & B units).

Energy consumption profiles for the baseline as well as after implementation of the EE rehabilitation project with the breakdown by end use systems are given in the following table:

142 The first floor of the unit B building is occupied by the commercial company. Due to this reason it was excluded from the above residential building area.


Item

Energy consumption

Baseline After project implementation

[kWh per year] [kWh per year]1. Heating 285,589 87,765

2. Domestic hot water system (DHW) 70,586 23,619

3. Lighting 12,220 12,220

4. Fans and pumps 1,348 1,348

5. Household appliances 12,307 12,307

Total: 382,050 137,259

An assessment of the proposed EE measures shows that in total energy savings of around 64% can be expected due to the solar hot water system combined with the heating system. Specific savings and pay-back periods for measures are given in the following table (for Unit A) together with the investment costs that are supplemented by the breakdown of savings for each measure in kWh and in GEL/EUR with the payback period.

It should be noted however, that in addition to financial savings from energy consumption reduction, there are also significant increases in the value of the property as a result of the measure as well as in the level of comfort of residents – which are not incorporated into any financial calculations. For this reason, analysis of energy efficiency in the residential sector should include both the financial aspects of energy savings (reflected in the table below) as well as the non-financial aspects of improvement in quality of life of residents.

Energy saving potential (unit А)Residential building in Temka sub-district (unit A) Heated area (m2): 1,674

# Energy efficient measuresInvestment Saving

Simple payback period

GEL EUREUR/m2

of heated area

kWh per year GEL/year EUR/year Years

1 Thermal insulation of walls 64,057 23,545 14.1 63,904 6,787 2,495 9.4

2 Thermal insulation of roof (floor of attic) 6,486 2,384 1.4 15,499 1,646 605 3.9

3 Thermal insulation of floor (ceiling of basement) 4,750 1,746 1.0 21,353 2,268 834 2.1

4Installation of new metal plastic double glazed windows

20,138 7,402 4.4 17,911 1,902 699 10.6

Total for end-use EE measures 95,430 35,077 21 118,667 12,602 4,632 7.6

5

Installation of central heating system with boiler room combined with solar hot water system (DHW) with solar collectors

379,937 139,652 83.4 126,124 13,394 4,923 28.4

Total 475,368 174,729 104 244,791 25,997 9,555 18.3

According to the energy audit results, there is also a considerable energy saving potential for the unit B of the residential building as outlined in the table below:


Energy saving potential (unit B)Residential building in Temka sub-district (unit B) Heated area (m2): 1,491

#Energy efficient

measures

Investment SavingSimple payback period

GEL EUR EUR/m2 of heated area

kWh per year

GEL/year

EUR/year Years

Total for end-use EE measures - Unit B 389,587 143,199 96 143,82

9 15,275 5,614 25.5

The total energy savings for both A & B units of the residential building from the baseline energy consumption scenario constitute 53% and the reduction of GHG emissions from this EE project intervention has been calculated as: 49.6 tonnes CO2eq/year.

# Energy use

Energy consumption

Fuel used

GHGs

BaselineAfter project

implementation

GHG per MWh

Total GHGs before

Total GHGs after

GHG reduction

s

kWh per year kWh per year

tonnes CO2eq/MW

h

tonnes CO2e

q

tonnes CO2e

q

tonnes CO2eq

1 Heating 285,589 87,765 Natural gas 0.202 57.8 17.8 40.0

2Domestic hot water system

(DHW)70,586 23,619 Natural gas 0.202 14.3 4.8 9.5

3 Lighting 12,220 12,220 Electricity 0.350 4.3 4.3 0.0

4 Fans and pumps 1,348 1,348 Electricity 0.350 0.5 0.5 0.0

5 Household appliances 12,307 12,307 Electricity 0.350 4.3 4.3 0.0

Total: 382,050 137,259 Total: 81.2 31.6 49.6


Annex 4: Elaborated case of EE for commercial buildings – school buildings

School buildings in Georgia do not come under the direct ownership of the Ministry of Education and Science however the Ministry enjoys full right to use them as well as carry out any reconstruction works within budget funds allocated to these needs. This is important point since the Ministry plans to implement energy efficiency measures with the support of IFIs in these school buildings in the upcoming years.

The majority of school buildings in Georgia were built during the Soviet era with poor exterior properties because energy efficiency was not considered as a priority at that time.

Energy audits carried out for school buildings have identified significant energy saving potential with common packages of interventions that can be specified as follows:

Insulation of walls; Insulation of roofs; Insulation of floors; Replacement of single glazed old wooden frame windows with metal plastic double glazed windows; Installation of modern heating systems with a natural gas boiler ; Installation of efficient lighting systems.

The reduction of energy consumption from the baseline scenario after implementation of the most common profitable package of measures can lead at least to 60% energy savings, depending on the level of comprehensiveness of the measures.

Depending on specific geometry of school buildings, the energy savings are distributed between selected components of the profitable package. These numbers can slightly differ. However in general the distribution of energy savings among energy budget components can be presented as percentage for each measure as it follows:

Intervention % of savingsWall insulation 36.0%Roof insulation 23.0%Floor insulation 6.5%Replacement of the remaining single glazed wooden framed windows (30% replacement) 5.5%Installation of the modern heating system with the efficient gas boiler and automatic control system 22.0%Efficient lighting system 7.0%Total 100.0%

Computer simulation models carried out with the ENSI EA software identifies slight differences in distribution of the energy savings depending on different combinations of common measures and particularities of the building. For instance in the case of replacement of all windows, energy savings for this measure will account for around 16%, with the increased share of energy savings between the baseline and energy efficiency scenarios indicating savings for other components as well.

The specific energy consumption for heating /heating demand for school buildings in Georgia constitutes around 150 kWh/m2 – though many are under-heated (in particular those heated with wood).

Implementation of package of the profitable energy efficiency measures in buildings will result in reduction of GHG emissions at least by 60%.


The table below demonstrates the basic energy savings and financial parameters of 3 types of schools – those heated with natural gas, those heated with electricity, and those heated with wood. It assumes 90% heating of all of the schools, though in actuality with wood-heated schools this is unlikely to be the case. The table also shows the typical parameters for improvement of lighting systems.

Table: Analysis of profitability and savings for schools heated with natural gas, electricity and wood – as well as for EE lighting

Name of the variable UnitSchool

heating with natural gas

School heating with

electricity

School heating

with woodEE lighting -

electricity

Total floor area m2 1,800 1,800 1,800 1,800% heated/lit floor area % 90% 90% 90% 100%Total heated floor area m2 1,620 1,620 1,620 1,800

Specific heating/lighting demand kWh/m2 150 150 150 6.25

Reduction in heating/ electricity demand % 60% 60% 60% 60%

Proposed case - Specific heating/lighting demand kWh/m2 60 60 60 2.5

Base case heating unit efficiency % 93% 100% 35% 100%

Base case fuel consumption MWh per school per year 261.29 243.00 694.29 11.25

Proposed case heating unit efficiency % 93% 100% 60% 100%

Proposed case fuel consumption MWh/year 104.52 97.20 162.00 4.50

Reduction in final energy consumption MWh/year 156.77 145.80 532.29 6.75

GHG emissions per MWh (note for electricity - assumes reduction in thermal power plant production)

tonnes CO2eq/MWh 0.202 0.582 0.430 0.582

GHG reductions per school with EE measures

tonnes CO2eq/year 31.7 84.9 229.1 3.9

Fuel price EUR/MWh € 23.79 € 72.07 € 13.57 € 72.07Base case fuel cost EUR € 6,215 € 17,513 € 9,423 € 811Proposed case fuel cost EUR € 2,486 € 7,005 € 2,199 € 324Annual savings EUR € 3,729 € 10,508 € 7,224 € 486

Cost of heating and ventilation system improvements EUR/building € 10,000 € 10,000 € 39,000 N/A

Cost per m2 of renovations (building envelope) EUR/m2 € 35 € 35 € 35 N/A

Cost of implementing efficiency measures EUR € 73,000 € 73,000 € 102,000 € 1,489

Simple pay-back period years 19.6 6.9 14.1 3.115-year non-leveraged Internal Rate of Return % 2.0% 17.4% 4.9% 32.2%


Annex 5: Recent and planned activities by international organisations related to energy efficiency in Georgia

Organization Title of the programme/ project

Years of operation (planned or actual)

Sector focus Funds allocated to the programme

Results achieved/ status of implementation

DANIDA and NEFCO

Support to Energy Efficiency and Sustainable Energy inGeorgia

12/2015 – 12/2019

Building Codes Product labeling Monitoring and reporting on end-

users energy consumption Legislation on integration of

renewable energy into national power system Renovation of public buildings in

selected municipalities and supporting capacity building

30 million DKK for TA (EUR 4.0 million)

37.5 million DKK for NEFCO loans (EUR 5.0 million)

25 million DKK from E5P as an expected grant (EUR 3.4 million)

Just underway

KfW Pre-Feasibility Study for introduction of an Energy Efficiency Framework andShort-Listing for Municipal a Buildings

06/2016 – 12/2016

Buildings: Residential, municipal (public) and tertiary (commercial) buildings in Batumi

Not defined – 20 person-months (likely EUR 300 – 400,000) in TA

Investment not defined

In planning

UNIDO The UNIDO Regional Resources Efficient and Cleaner Production (RECP) Demonstration Project

2013 – 2016 Industry: Energy audits and improved human capacity

Unknown A number of energy audits (10+) carried out. Some investments carried out, but the full scale is not known.

UNIDO is also interested to expand TA in industry

EBRD EnergoCredit Georgia 2014 - Industry: Technical assistance, grants, and investment via sub-loans

Residential sector: Technical assistance, grants, and investment via sub-loans. Mostly successful related to appliances, though eligible for others

USD 125 million to local financial institutions in the form of loans (credit lines) for sub-loans

10 – 15% grant for industry, 10% for residential

Significant investments in the residential sector and industry sector.






EBRD FINTECC and other bi-lateral lending to industry

2015 - Industry: Technical assistance, grants (up to 25%), and investment via direct investment

USD 10 million in grants for TA and investment (only part for Georgia)

At least USD 77 million for lending committed (only part for Georgia)

Investment deals have been signed with – for example Healthy Water for USD 10 million, audits carried out for various industry actors

EBRD Tbilisi Bus Project 2015 – 2016 Transport: Changing of buses from diesel to LNG

EUR 40 million in loans Tbilisi has applied for the loan

JICA Green procurement related to transport – buses and cars

2015 Transport: Changing of buses from diesel to LNG

JPY 500 million in grants (EUR 4 million) for improving the transport fleet

Grant being coordinated by the Ministry of Economy and Sustainable Development and the city of Tbilisi

EBRD Green Cities Georgia Upcoming – 2016

Municipal investments: (various sub-sectors)

Expected EUR 100 million in direct investment in the facility and EUR 30 million for grants and TA

In planning

The Council of Europe Development Bank

Rehabilitation of state schools in Tbilisi

2016 - Buildings: Ministry of Education – schools in Tbilisi

EUR 14 million loan to the national GovernmentEUR 6 million grant from E5P for TA and investments in EE

In planning

Asian Development Bank

Georgia: Sustainable Urban Transport Investment Program

2010 - Transport infrastructure: Most recent tranche for : (i) Batumi coastal protection (5 km) to defend urban infrastructure and roads against severe erosion; (ii) setup of a management information system for the executing agency; and (iii) consulting services for feasibility studies and detailed engineering design for sustainable urban transport projects.

Up to USD 300 million for sustainable urban transport programmes

Under implementation.

USAID Institutionalization of Climate Change Adaptation and Mitigation in Georgian Regions

2012 – 2016 Various: Supports the integration of environmental and climate change considerations into policy priorities of local authorities through the establishment of special units on

Uncertain Under implementation.






climate change, environment, and sustainable agriculture.

USAID Enhancing Capacity for Low Emission Development Strategies (EC-LEDS) Clean Energy Program

09/2013 – 09/2017

Various, focusing on three activities: Energy Efficiency in Georgian Municipalities, Green Building Rating and Certification Systems, and Advisory assistance to the national LEDS development process.

Uncertain Under implementation. MARKAL model developed, Sustainable Energy Action Plans developed in a number of municipalities, and the LEDS is currently being developed.

Women in Europe for a Common Future (WECF)

Efficient use of biomass for equitable, climateproof and sustainable rural development

2016 – 2022 Residential/Primary energy: Promoting solar hot water heaters and efficient biomass stoves for the rural residential sector.

Uncertain – the planned project is USD 12,7 million with 2.7 million in grants to be identified

Feasibility study conducted, pilots carried out, NAMA published, and currently seeking funding.


Annex 6. Complementary Information on the Calculation Methodologies

Information on how the theoretical EEO target was calculated

The amount of energy savings for the Energy Efficiency Obligation Scheme is calculated using the datasets for energy distribution for the major electricity and natural gas distribution companies in Georgia – for the years 2013 to 2015 (the last years for which this data is complete. Other energy sources (e.g. coal, oil products, and wood) are not included in this calculation. This data set is provided in the table below.

Table: Final delivery of electricity and natural gas by distributor from 2013 – 2015

Electricity (MWh) Unit 2013 2014 2015 % of delivery

AES Telasi Final delivery (MWh) 2,062,900 2,251,600 2,419,400 32.7%

JSC Kakheti Energy Distribution

Final delivery (MWh) 278,100 310,400 336,400 4.5%

JSC ENERGO-PRO Georgia Final delivery (MWh) 4,170,100 4,400,300 4,590,500 63.8%

Total Final delivery (MWh) 6,730,151 7,146,396 6,735,790 100.0%

Natural Gas (mln.m3) Unit 2013 2014 2015 % of delivery

KazTransGas-TBILISI Final delivery (MWh) 4,318,576 4,948,955 5,408,218 59.3%

SOCAR Final delivery (MWh) 1,397,991 2,457,730 2,215,343 24.5%

Sakorggas Final delivery (MWh) 1,192,564 1,362,460 1,438,205 16.1%

Total Final delivery (MWh) 6,909,132 8,769,145 9,061,766 100.0%

Electricity plus gas Units 2013 2014 2015 Average (2013 - 2015)

Total Final delivery (MWh) 13,639,283 15,915,541 15,797,556 15,117,460

Sources: Georgian National Energy and Water Supply Regulatory Commission (GNERC) annual reports: http://gnerc.org/ge/public-information/reports/tsliuri-angarishi and communications.

For the purposes of calculating the theoretical EEO targets, final energy used in the transport sector has been fully excluded from the calculation – except in that some of the electricity is actually delivered for transport for the Tbilisi metro and for the national rail company. Energy efficiency measures in the transport sector are dealt with in Section 3.5.

The calculation does not exclude the sales of energy used in industrial activities listed in Annex I to Directive 2003/87/EC (The Emissions Trading System – ETS – Directive). This is because Georgia is not a part of the European ETS, so no deductions are possible.

Energy savings resulting from individual actions newly implemented since 31 December 2008 that continue to have an impact in 2020 and that can be measured and verified, towards the amount of energy savings will not be allowed to count towards the required energy savings. Because this Georgia’s 1st NEEAP, the reporting on achievements to date is not appropriate.


http://gnerc.org/ge/public-information/reports/tsliuri-angarishi

Distribution losses amongst the 3 main electricity distribution companies from 2012 - 2015

Electricity (MWh) Label Source of information 2012 2013 2014 2015 Total (2012 - 2015)

AES Telasi

Supply (MWh) Calculated 2,363,

531 2,400,6

16 2,571,1

61 2,657,

195 9,992,

503

Losses (MWh)GNERC (2016) Report on Activities of 2015

203,500

155,800

137,300

145,880

642,480

Losses (%)GNERC (2016) Report on Activities of 2015 8.61% 6.49% 5.34% 5.49% 6.43%


GNERC (2016) Report on Activities of 2015

2,022,800

2,062,900

2,251,600

2,419,400

9,350,023

JSC Kakheti Energy Distribution

Supply (MWh) Calculated 272,

176 287,1

48 310,6

85 336,3

83 1,206,

392


68,180

70,380

56,700

62,500

257,760




272,200

278,100

310,400

336,400

948,632

JSC ENERGO-PRO Georgia


842 4,614,6

67 4,846,2

50 4,868,

402 18,966

,161


352,400

346,100

387,700

402,130

1,488,330




3,967,000

4,170,100

4,400,300

4,590,500

17,477,831

Total


549 7,302,4

31 7,728,0

96 7,346,

300 29,649

,376

Losses (MWh) Calculated 624,

080 572,2

80 581,7

00 610,5

10 2,388,

570 Losses (%) Calculated 8.58% 7.84% 7.53% 8.31% 8.06%Final delivery (MWh) Calculated

6,648,469

6,730,151

7,146,396

6,735,790

27,260,806


Losses amongst the 3 main natural gas distribution companies from 2012 – 2015

Natural Gas (mln.m3) 2012 2013 2014 2015 Total (2012 - 2015)

KazTransGas-TBILISI

Supply (1000 m3) GNERC 469,863 535,022 590,000 644,974 2,239,859Losses (1000 m3) GNERC 70,535 73,142 60,700 66,555 270,932Losses (%) Calculated 15.0% 13.7% 10.3% 10.3% 12.1%Consumption (MWh) Calculated 4,393,217 5,002,458 5,516,500 6,030,507 20,942,682Losses (MWh) Calculated 659,503 683,881 567,545 622,289 2,533,218Final delivery (MWh) Calculated 3,733,715 4,318,576 4,948,955 5,408,218 18,409,464

SOCAR

Supply (1000 m3) GNERC 88,439 156,345 270,000 249,280 764,064Losses (1000 m3) GNERC 7,419 6,827 7,141 12,345 33,732Losses (%) Calculated 8.4% 4.4% 2.6% 5.0% 4.4%Consumption (MWh) Calculated 826,907.83 1,461,825 2,524,500 2,330,769 7,144,002Losses (MWh) Calculated 69,367 63,834 66,770 115,426 315,397Final delivery (MWh) Calculated 757,540 1,397,991 2,457,730 2,215,343 6,828,605

Sakorggas

Supply (1000 m3) GNERC - 144,130 160,000 172,345 476,475Losses (1000 m3) GNERC 16,583 14,282 18,526 49,391Losses (%) Calculated 11.5% 8.9% 10.7% 10.4%Consumption (MWh) Calculated - 1,347,616 1,496,000 1,611,423 4,455,038Losses (MWh) Calculated - 155,051 133,540 173,218 461,809Final delivery (MWh) Calculated - 1,192,564 1,362,460 1,438,205 3,993,229

Total

Supply (1000 m3) Calculated 558,302 835,497 1,020,000 1,066,599 3,480,398Losses (1000 m3) Calculated 77,954 96,553 89,265 97,426 361,197Losses (%) Calculated 13.96% 11.56% 8.75% 9.13% 10.4%Consumption (MWh) Calculated 5,220,125 7,811,898 9,537,000 9,972,699 32,541,722Losses (MWh) Calculated 728,870 902,766 767,855 910,933 3,377,194Final delivery (MWh) Calculated 4,491,255 6,909,132 8,769,145 9,061,766 29,164,528


Calculation of conversion efficiencies and distribution/transmission losses for electricity

Name of the variable Units Source of information 2015 2016 2017 2018 2019 2020 2025 2030Electricity Demand/Supply Scenarios of Georgia, 2015

Total Generation TWh MARKAL model - BAU 10.71 11.29 12.33 13.38 14.44 15.49 26.77 31.30HPPs TWh MARKAL model - BAU 8.72 9.24 10.16 11.07 12.04 13.01 23.84 27.86Other Potentials TWh MARKAL model - BAU 0.00 0.00 0.04 0.09 0.09 0.09 0.09 0.09TPPs TWh MARKAL model - BAU 1.99 2.05 2.13 2.22 2.31 2.39 2.84 3.34Demand TWh MARKAL model - BAU 10.01 10.23 10.67 11.11 11.54 11.97 14.22 16.71Import (Deficit) TWh MARKAL model - BAU 0.77 0.68 0.68 0.68 0.68 0.68 2.72 2.72Export TWh MARKAL model - BAU -0.86 -1.11 -1.69 -2.26 -2.87 -3.47 -14.38 -16.25

Thermal power plants - BAUEnergy Invest [GAS] Efficiency MWh/MWh Industry reporting 35% 35% 35% 35% 35% 35% 35% 35%

Gas consumption per unit of electricity 1000 m3/MWh Calculated 0.31 0.31 0.31 0.31 0.31 0.31 0.31 0.31

MWh put onto the grid MWhMARKAL model with linear interpolations 41,667 41,667 41,667 41,667 41,667 41,667 41,667 41,667

MWh primary energy used MWh Calculated 119,048 119,048 119,048 119,048 119,048 119,048 119,048 119,048Natural gas consumed 1000 m3 Calculated 12,732 12,732 12,732 12,732 12,732 12,732 12,732 12,732Gardabani TPP Efficiency MWh/MWh Industry reporting 54% 54% 54% 54% 54% 54% 54% 54%



MWh primary energy used MWh Calculated 39,275 78,549 242,567 406,584 564,635 722,685 979,784 1,326,852Natural gas consumed 1000 m3 Calculated 4,201 8,401 25,943 43,485 60,389 77,293 104,790 141,909Mtkvari Unit 9 [GAS] Efficiency MWh/MWh Industry reporting 34% 34% 34% 34% 34% 34% 34% 34%



Name of the variable Units Source of information 2015 2016 2017 2018 2019 2020 2025 2030

MWh put onto the grid MWhMARKAL model with linear interpolations 1,147,236 1,147,222 1,147,222 1,147,222 1,147,222 1,147,222 1,147,194 1,147,194

MWh primary energy used MWh Calculated 3,374,224 3,374,183 3,374,183 3,374,183 3,374,183 3,374,183 3,374,101 3,374,101Natural gas consumed 1000 m3 Calculated 360,880 360,875 360,875 360,875 360,875 360,875 360,866 360,866

Tbilsresi Unit 3+4 [GAS 06, HFO now too] Efficiency MWh/MWh Industry reporting 31% 31% 31% 31% 31% 31% 31% 31%



MWh primary energy used MWh Calculated 2,392,473 2,392,473 2,392,473 2,392,473 2,392,518 2,392,563 2,392,473 2,392,473Natural gas consumed 1000 m3 Calculated 255,879 255,879 255,879 255,879 255,884 255,889 255,879 255,879

Total final energy - BAU (put onto the grid) MWh Calculated 1,951,778 1,972,972 2,061,542 2,150,111 2,235,472 2,320,833 2,459,611 2,647,028

Total primary energy consumed by natural gas plants - BAU MWh Calculated 5,925,019 5,964,253 6,128,271 6,292,288 6,450,383 6,608,479 6,865,406 7,212,474Total m3 of natural gas consumed - BAU 1000 m3 Calculated 633,692 637,888 655,430 672,972 689,881 706,789 734,268 771,388

Average conversion efficiency of natural gas-fired power plants

MWh (grid)/MWh (primary) Calculated 32.9% 33.1% 33.6% 34.2% 34.7% 35.1% 35.8% 36.7%

Average network transmission and distribution losses

MWh (final)/MWh (grid) Calculated below 7.5% 7.9% 8.2% 8.5% 8.5% 8.5% 8.5% 8.5%

Average conversion efficiency of primary energy to final energy for natural gas-fired power plants

MWh (final)/MWh (primary) Calculated 30.5% 30.5% 30.9% 31.3% 31.7% 32.1% 32.8% 33.6%

Average conversion efficiency of all power plants

MWh(grid)/MWh(primary) Calculated 72.9% 73.7% 75.0% 76.1% 77.2% 78.1% 85.6% 87.0%

Average conversion efficiency of primary energy to final energy for all power plants

MWh (final)/MWh (primary) Calculated 67.4% 68.0% 68.9% 69.6% 70.6% 71.5% 78.3% 79.6%

Electricity distribution and grid losses - BAUTotal demand MWh MARKAL model - BAU 10,710,514 11,285,944 12,333,30 13,380,66 14,437,528 15,494,38 26,767,792 31,295,33


Name of the variable Units Source of information 2015 2016 2017 2018 2019 2020 2025 20306 7 9 3

Production for AES Telasi MWh

GNERC annual report adjusted annually to expected growth 2,648,296 2,790,578 3,049,550 3,308,521 3,569,842 3,831,163 6,618,640 7,738,126

Production for JSC ENERGO-PRO Georgia MWh

GNERC annual report adjusted annually to expected growth 4,991,638 5,259,817 5,747,940 6,236,063 6,728,613 7,221,164 12,475,136

14,585,197

Production for JSC Kakheti Energy Distribution MWh

GNERC annual report adjusted annually to expected growth 320,005 337,198 368,491 399,783 431,360 462,937 799,760 935,032

Total production to the distribution companies MWh Calculated 7,959,939 8,387,593 9,165,980 9,944,368 10,729,816

11,515,263 19,893,535

23,258,356

Losses in AES Telasi network base %

Assumption based on discussions with GNERC 5.33% 5.72% 6.11% 6.50% 6.50% 6.50% 6.50% 6.50%

Losses in AES Telasi network - BAU MWh Calculated 141,154 159,621 186,327 215,054 232,040 249,026 430,212 502,978

Losses in JSC ENERGO-PRO Georgia network - BAU %


Losses in JSC ENERGO-PRO Georgia network - BAU MWh Calculated 399,331 438,318 498,155 561,246 605,575 649,905 1,122,762 1,312,668

Losses in JSC Kakheti Energy Distribution network - BAU %


Losses in JSC Kakheti Energy Distribution network - BAU MWh Calculated 58,401 61,539 67,250 72,960 78,723 84,486 145,956 170,643

Total losses - Distribution company networks MWh Calculated 598,886 659,478 751,732 849,260 916,338 983,416 1,698,930 1,986,289Total losses - Distribution company networks % Calculated 7.52% 7.86% 8.20% 8.54% 8.54% 8.54% 8.54% 8.54%

Transmission losses - BAU %Georgian State Electrosystem 2% 2% 2% 2% 2% 2% 2% 2%

Total network losses - BAU % Calculated 9.5% 9.9% 10.2% 10.5% 10.5% 10.5% 10.5% 10.5%Total network losses - BAU MWh Calculated 758,085 827,230 935,051 1,048,147 1,130,934 1,213,722 2,096,801 2,451,456


Name of the variable Units Source of information 2015 2016 2017 2018 2019 2020 2025 2030Total final energy consumption - BAU MWh Calculated 7,201,854 7,560,363 8,230,929 8,896,220 9,598,881

10,301,542 17,796,735

20,806,899

Average conversion efficiency of all power plants

MWh(grid)/MWh(primary) Calculated 72.9% 73.7% 75.0% 76.1% 77.2% 78.1% 85.6% 87.0%

Total primary energy consumption - BAU MWh Calculated 10,922,857 11,373,085

12,217,182

13,060,189 13,897,532

14,735,172 23,226,674

26,738,508

Emissions analysis

GHG emissions per MWh of natural gas primary energy

tonnes CO2eq/MWh

IPCC (2006) Guidelines for National GHG Inventories 0.2021

MWh per 1000 m3 of natural gas primary energy MWh/1000 m3 MARKAL model 9.3500

GHG emissions per 1000 m3 of natural gas primary energy

tonnes CO2eq/m3 Calculated 1.89008

Energy Invest [GAS]

GHG emissions per MWh of electricity produced

tonnes CO2eq/MWh Calculated 0.578 0.578 0.578 0.578 0.578 0.578 0.578 0.578

GHG emissions total tonnes CO2eq Calculated 24,065 24,065 24,065 24,065 24,065 24,065 24,065 24,065Gardabani TPP



GHG emissions total tonnes CO2eq Calculated 7,939 15,879 49,034 82,190 114,139 146,089 198,061 268,219Mtkvari Unit 9 [GAS]



GHG emissions total tonnes CO2eq Calculated 682,090 682,082 682,082 682,082 682,082 682,082 682,065 682,065

Tbilsresi Unit 3+4 [GAS 06, HFO now too]



GHG emissions total tonnes CO2eq Calculated 483,632 483,632 483,632 483,632 483,641 483,650 483,632 483,632GHG emissions - BAU - total tonnes CO2eq Calculated 1,197,726 1,205,657 1,238,813 1,271,968 1,303,927 1,335,885 1,387,823 1,457,981

GHG emissions per MWh - BAU - total


GHG emissions per MWh - BAU - grid

tonnes CO2eq/MWh Calculated 0.104


Calculation of distribution losses for natural gas


Natural gas pipelines - BAUKazTransGas-TBILISI Total final gas consumption - existing network - BAU MWh EEO Calculation sheet 4,948,955 4,948,95

54,948,95

5 4,948,955 4,948,955

4,948,955 4,948,955 4,948,955

Distribution losses - existing network - BAU % EEO Calculation sheet 10.3% 10.3% 10.3% 10.3% 10.3% 10.3% 10.3% 10.3%

Total primary gas consumption - existing network - BAU MWh Calculated 5,516,500 5,516,50

05,516,50

0 5,516,500 5,516,500

5,516,500 5,516,500 5,516,500

Total losses - existing network - BAU MWh Calculated 567,545 567,545 567,545 567,545 567,545 567,545 567,545 567,545

SOCAR Total final gas consumption - existing network - BAU MWh EEO Calculation sheet 2,457,730 2,457,73

02,457,73

0 2,457,730 2,457,730

2,457,730 2,457,730 2,457,730



72,571,24

7 2,571,247 2,571,247

2,571,247 2,571,247 2,571,247


Sakorggas Total final gas consumption - existing network - BAU MWh EEO Calculation sheet 1,362,460 1,362,46

01,362,46

0 1,362,460 1,362,460

1,362,460 1,362,460 1,362,460



61,520,02

6 1,520,026 1,520,026

1,520,026 1,520,026 1,520,026


Distribution losses - new networks - BAU % MARKAL -

Assumption 2.00% 2.00% 2.00% 2.00% 2.00% 2.00% 2.00% 2.00%

Total final gas consumption - new network - BAU MWh MARKAL - - 1,021,26

4 2,042,528 3,211,861

4,381,194 9,834,361 16,881,13

9



Total primary gas consumption - new network - BAU MWh Calculated - - 1,042,10

6 2,084,212 3,277,409

4,470,607 10,035,062 17,225,65

2Total losses - new network - BAU MWh Calculated - - 20,842 41,684 65,548 89,412 200,701 344,513

Total losses - entire network - BAU MWh Calculated 838,628 838,628 859,470 880,312 904,176 928,040 1,039,329 1,183,141

Average network losses - BAU % Calculated 8.73% 8.73% 8.07% 7.53% 7.02% 6.59% 5.29% 4.41%Average end delivery of the natural gas network (1 - % losses)

MWh (final) / MWh (primary) Calculated 91.3% 91.3% 91.9% 92.5% 93.0% 93.4% 94.7% 95.6%


Annex 7: Information on the process of developing the NEEAP

The NEEAP was developed by the Ministry of Energy with the assistance of a consortium experts which were funded by the EBRD and the Government of Sweden. The process involved the development of a work plan and methodology presented at a Kick-Off meeting organised in Tbilisi in June 2016. The work-plan and methodology have been approved by key stockholders (EBRD, key ministries and consortium of experts).

The NEEAP was focused on the following key sector sub-groups: Energy production, transformation, and distribution; Transport; Public sector (including public buildings); Buildings (including the private commercial sector and residential buildings); Industry; and Horizontal-cross cutting issues.

A long list of over 75 stakeholders (central and local governmental bodies, private sector and NGOs) was developed and these stakeholders were contacted in order to assess what plans they already were developing for energy efficiency measures. Tailored questionnaires for each stakeholder were elaborated and then personally presented to each official contact person. In order to guarantee high quality information, further consultation meetings were also conducted with contact persons, including visits to industries and selected municipalities which are members of the Covenant of Mayors.

After receiving and analysing feedback, the expert developed analysis of the potential impact, costs, and benefits of each energy efficiency measure.

Drafts of the descriptions of the measures, as well as the assumptions which led to the calculations of costs, benefits, and energy savings, were then shared with stakeholders to ensure agreement. Furthermore, all policy measures were reviewed by a number of Governmental stakeholders to ensure agreement with current plans in Georgia. This also took place via 2 different workshops.

Based on feedback received, the draft NEEAP was finalized.


Annex 8: Works citedAubrey (2011 December 31) “The Average American Ate (Literally) A Ton This Year” NPR. Available at: http://www.npr.org/sections/thesalt/2011/12/31/144478009/the-average-american-ate-literally-a-ton-this-year

AO.com (2016) Beko DFC05R10W Standard Dishwasher – White. Available at: http://ao.com/product/dfc05r10w-beko-standard-dishwasher-white-36586-23.aspx

AO.com (2016) Beko DFN28R20W Standard Dishwasher – White. Available at: http://ao.com/product/dfn28r20w-beko-standard-dishwasher-white-36657-23.aspx

Dennett & Vallender (2009) Reducing Fugitive Emissions from Gas Distribution Systems by the Systematic Application of Pressure Profiling Technology. Available at: http://members.igu.org/html/wgc2009/papers/docs/wgcFinal00558.pdf

"Enhancing Capacity for Low Emission Development Strategies (EC-LEDS)/Clean Energy Program" implemented by Winrock International Georgia with the support of US Agency for International Development (USAID), in cooperation with Sustainable Development Center “Remissia

Energy Institute Hrvoje Pozar & Oryx (2013) Izrada analize rezultata Eko voznje

EBRD (2016) Tbilisi Bus Project: http://www.ebrd.com/work-with-us/procurement/p-pn-160122b.html

ESCO (2016) Georgia's 2015 Electrical Energy Balance. Available at: http://esco.ge/files/energobalans_2015_eng.pdf

European Commission (2015) EU Transport in Figures – Statistical Pocketbook, 2015. Available at http://ec.europa.eu/transport/facts-fundings/statistics/doc/2015/pocketbook2015.pdf

European Union (30 August 2014) Association Agreement between the European Union and the European Atomic Energy Community and their Member States, of the one part, and Georgia, of the other part. Official Journal of the European Union L261/4 Available at http://eeas.europa.eu/georgia/pdf/eu-ge_aa-dcfta_en.pdf

Geostat (2014) Energy Balance of Georgia, 2013: http://www.geostat.ge/index.php?action=page&p_id=1895&lang=eng

Geostat (2015) Energy Balance of Georgia, 2014. http://geostat.ge/?action=page&&p_id=2084&lang=eng

Geostat (2015) 2014 Statistical Yearbook of Georgia for Georgia statistics.

Geostat (2016) Population: http://www.geostat.ge/index.php?action=page&p_id=152&lang=eng

GNERC (Georgian National Energy and Water Supply Regulatory Commission Resolution) (2014 March 6) №6 On Approval of the Charter of the Georgian National Energy and Water Supply Regulatory Commission. Available at: http://gnerc.org/en/about/debuleba#sthash.vWOUAyZO.dpuf

GNERC (2015) დადგენილება №5, 2015 წლის 26 მარტი, „ბუნებრივი გაზის გამანაწილებელ ქსელში ნორმატიული დანაკარგების გაანგარიშების წესის“ დამტკიცების შესახებ. Available at https://matsne.gov.ge/ka/document/view/2800042

GNERC (2015) Report on Activities of 2014: http://gnerc.org/files/wliuri%20angariSi/Anual_Report_Eng_opt.pdf

GNERC (2016) Report on Activities of 2015: http://gnerc.org/en/public-information/gazi/tsliuri-angarishi


http://gnerc.org/files/wliuri%20angariSi/Anual_Report_Eng_opt.pdf


http://gnerc.org/en/about/debuleba#sthash.vWOUAyZO.dpuf







http://ec.europa.eu/transport/facts-fundings/statistics/doc/2015/pocketbook2015.pdf

http://esco.ge/files/energobalans_2015_eng.pdf


http://members.igu.org/html/wgc2009/papers/docs/wgcFinal00558.pdf

http://ao.com/product/dfn28r20w-beko-standard-dishwasher-white-36657-23.aspx

http://ao.com/product/dfc05r10w-beko-standard-dishwasher-white-36586-23.aspx

http://www.npr.org/sections/thesalt/2011/12/31/144478009/the-average-american-ate-literally-a-ton-this-year

http://www.npr.org/sections/thesalt/2011/12/31/144478009/the-average-american-ate-literally-a-ton-this-year

Georgian Government (18 April 2008) Decree #107: About the Approval of the Rule to Enable the Construction of Renewable Energy Sources in Georgia. Available at http://www.esco.ge/files/decree_107_final.pdf

Government of Georgia (2013) Social-economic Development Strategy of Georgia “GEORGIA 2020”. Available at: http://static.mrdi.gov.ge/530226580cf298a857ab7dcf.pdf

Government of Georgia (21 August 2013) Decree #214: About the Approval of the Rule of Expressing Interest in Technical and Economical Study of the Construction, Construction, Ownership, and Operation of Power Plants in Georgia. Available at: http://www.esco.ge/files/decree_214.pdf

Government of Georgia (31 December 2013) დადგენილება №434: ტექნიკური რეგლამენტი - ელექტროსადგურების და ქსელების ტექნიკური ექსპლუატაციის წესების დამტკიცების შესახებ

Government of Georgia (2015) Main Directions of the State Policy in Energy Sector of Georgia. Available at: http://www.energy.gov.ge/ministry.php?id_pages=12&lang=eng

Government of Georgia (2015) საქართველოს კანონი ელექტროენერგეტიკისა და ბუნებრივი გაზის შესახებ (30.04.99 N 1934 საკანონმდებლო მაცნე N 15(22)). Available at: http://www.energy.gov.ge/legislation.php?lang=eng&id_pages=33

Government of Georgia (2015) საქართველოს კანონი ლიცენზიებისა და ნებართვების შესახებ. Available at: http://www.energy.gov.ge/legislation.php?lang=eng&id_pages=33

Government of Georgia (2015) Georgia’s Intended Nationally Determined Contribution Submission to the UNFCCC http://www4.unfccc.int/submissions/INDC/Published%20Documents/Georgia/1/INDC_of_Georgia.pdf

GSE (2015) Ten Year National Development Plan 2015-2025.

IMF (2015) World Economic Outlook Database. Available at: https://www.imf.org/external/pubs/ft/weo/2015/02/weodata/index.aspx

Inspiration Green (undated) The American Diet! Available at: http://www.inspirationgreen.com/food-consumption-in-america.html IRENA (2012) Renewable Energy Technologies: Cost Analysis Series – Hydropower: http://www.irena.org/documentdownloads/publications/re_technologies_cost_analysis-hydropower.pdf

Levy, A (3 June 2013) Comparative Subway Construction Costs, Revised: https://pedestrianobservations.wordpress.com/2013/06/03/comparative-subway-construction-costs-revised/

London Economics (2014) Study on the impact of the energy label – and potential changes to it – on consumer understanding and on purchase decisions. Available at: https://ec.europa.eu/energy/sites/ener/files/documents/Impact%20of%20energy%20labels%20on%20consumer%20behaviour.pdf

Low Carbon Vehicle Partnership (2016) LTA Toolkit Financial Calculator: http://www.lowcvp.org.uk/initiatives/lceb/local-policy/lta-toolkit.htm

Ministry of Energy (2013) HPP Potential: http://www.energy.gov.ge/energy.php?lang=eng&id_pages=60

Ministry of Energy (2013) Geothermal Energy: http://www.energy.gov.ge/investor.php?id_pages=22&lang=eng

Ministry of Energy (2013) Solar Energy: http://www.energy.gov.ge/investor.php?id_pages=21&lang=eng






http://www.lowcvp.org.uk/initiatives/lceb/local-policy/lta-toolkit.htm

https://ec.europa.eu/energy/sites/ener/files/documents/Impact%20of%20energy%20labels%20on%20consumer%20behaviour.pdf

https://ec.europa.eu/energy/sites/ener/files/documents/Impact%20of%20energy%20labels%20on%20consumer%20behaviour.pdf

https://pedestrianobservations.wordpress.com/2013/06/03/comparative-subway-construction-costs-revised/




https://www.imf.org/external/pubs/ft/weo/2015/02/weodata/index.aspx





http://www.energy.gov.ge/ministry.php?id_pages=12&lang=eng

http://www.esco.ge/files/decree_214.pdf

http://static.mrdi.gov.ge/530226580cf298a857ab7dcf.pdf

http://www.esco.ge/files/decree_107_final.pdf

Ministry of Energy (2013) Electrical Energy Potential: http://www.energy.gov.ge/energy.php?lang=eng&id_pages=60

Ministry of Energy (2013) Approval of the 2013 Natural Gas Balance. Available at: http://energy.gov.ge/projects/pdf/pages/Bunebrivi%20Gazis%20Balansi%20%202013%20Tsvlileba%20967%20geo.pdf

Ministry of Energy (10 April 2014) Order №40 On Approval of the Terms and Conditions for Submission and Review of the Proposals about Construction Technical and Economic Feasibility Study, Construction, Ownership and Operation of those Hydro Power Plants to the Ministry of Energy of Georgia, which are not Included in the List of Potential Power Plants in Georgia. Available at http://www.energy.gov.ge/projects/pdf/pages/Order%2040%2010042014%20On%20Approval%20of%20the%20terms%20and%20conditions%20648%20eng.pdf

Ministry of Energy (2014) Approval of the 2014 Natural Gas Balance. Available at: http://energy.gov.ge/projects/pdf/pages/Bunebrivi%20Gazis%20Balansi%20%202014%20971%20geo.pdf

Ministry of Energy (2017) Ongoing Renewable Investment Projects - 20.01.2017. Available at http://www.energy.gov.ge/projects/pdf/pages/Ongoing%20Renewable%20Investment%20Projects%201582%20eng.pdf

Ministry of Environment Protection of Georgia (2012) The National Environmental Action Programme (NEAP) of Georgia 2012-16. Approved by the Resolution of the Government #127 of 24 January 2012: http://www.preventionweb.net/files/28719_neap2.eng.pdf

Ministry of Regional Development and Infrastructure (2014) Action Plan – 2014. Available at: http://static.mrdi.gov.ge/52e616ca0cf20c165d71f152.pdf

OECD/IEA (2014) IEA Statistics http://www.iea.org/stats/index.asp - as cited at http://data.worldbank.org/indicator/EG.ELC.LOSS.ZS

Official Journal of the European Union L26/4 (30 August 2014) Association Agreement between the European Union and the European Atomic Energy Community and their Member States, of the one part, and Georgia, of the other part. Available at http://eeas.europa.eu/georgia/pdf/eu-ge_aa-dcfta_en.pdf

SDAP (2013) Technical Report 21: Energy Analysis of Lower Alazani-Iori Pilot Watershed Area (Dedoplistskaro Municipality, Kakheti Region)

SDAP (2013) Technical Report 22: Energy Analysis of Lower Rioni Pilot Watershed Area (Khobi and Senaki Municipalities, Samegrelo and Zemo Svaneti region)

SDAP (2013) Technical Report 23: Energy Analysis of Upper Alazani Pilot Watershed Area (Akhmeta and Telavi Municipalities, Kakheti Region)

SDAP (2013) Technical Report 24: Energy Analysis of Upper Rioni Pilot Watershed Area (Ambrolauri and Oni Municipalities, Racha-Lechkhumi and Kvemo Svaneti region) and

TopTen.eu (2015) Energy efficiency of White Goods in Europe: monitoring the market with sales data - p. 31 – referring to an appliance with an A rating (BAU). Available at: http://www.topten.eu/uploads/File/WhiteGoods_in_Europe_June15.pdf

Transmission System Operator JSC “Georgian State Electrosystem” (2015) Ten Year National Development Plan for 2015-2025.

USAID (2004) Vehicle Inspection and Maintenance Programs: International Experience and Best Practices: http://pdf.usaid.gov/pdf_docs/Pnadb317.pdf



http://www.topten.eu/uploads/File/WhiteGoods_in_Europe_June15.pdf


http://data.worldbank.org/indicator/EG.ELC.LOSS.ZS

http://www.iea.org/stats/index.asp

http://static.mrdi.gov.ge/52e616ca0cf20c165d71f152.pdf

http://www.preventionweb.net/files/28719_neap2.eng.pdf

http://energy.gov.ge/projects/pdf/pages/Bunebrivi%20Gazis%20Balansi%20%202014%20971%20geo.pdf



http://energy.gov.ge/projects/pdf/pages/Bunebrivi%20Gazis%20Balansi%20%202013%20Tsvlileba%20967%20geo.pdf

http://energy.gov.ge/projects/pdf/pages/Bunebrivi%20Gazis%20Balansi%20%202013%20Tsvlileba%20967%20geo.pdf



USAID (2014) Household Energy End-Use Survey – Final Report.

Public Policy Research & Training Centre (2014) საქართველოს შინამეურნეობათა მდგრადი ენერგომოხმარების წახალისების პოლიტიკა (eng: Policy to encourage sustainable energy consumption by Georgian households”) https://tenders.procurement.gov.ge/public/lib/files.php?mode=app&file=866803&code=1408364354

VTT (2016) Market Assessment of the Residential Sector in Georgia: Policy, Legal, Regulatory, Institutional, Technical and Financial Considerations (Phase I)

Women in Europe for a Common Future (WECF) (2015) NS-229 - Efficient use of biomass for equitable, climate proof and sustainable rural development

Winrock International Georgia (2008) Wood Heating Stoves in Rural Georgia http://weg.ge/wp-content/uploads/2012/12/wood_heating_stoves_en.pdf

Winrock International and Remissia (2011) SEAP for Tbilisi

Winrock International and Remissia (2014) SEAP for Batumi

Winrock International and Remissia (2015) SEAP for Gori

Winrock International and Remissia (2015) SEAP for Kutaisi

Winrock International and Remissia (2015) SEAP for Telavi

Winrock International and Remissia (2015) SEAP for Zugdidi

World Bank (2016) GDP per capita, PPP (current international $) http://data.worldbank.org/indicator/NY.GDP.PCAP.PP.CD

World Bank (2016) Country and Lending Groups: http://data.worldbank.org/about/country-and-lending-groups




http://data.worldbank.org/indicator/NY.GDP.PCAP.PP.CD

http://weg.ge/wp-content/uploads/2012/12/wood_heating_stoves_en.pdf

https://tenders.procurement.gov.ge/public/lib/files.php?mode=app&file=866803&code=1408364354

https://tenders.procurement.gov.ge/public/lib/files.php?mode=app&file=866803&code=1408364354

Georgia: Assistance with the Drafting of the First...

Documents

Transcript of Georgia: Assistance with the Drafting of the First...