Energy efficiency and renewable energy sources in Bosnia and Herzegovina

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A shorter version of this lesson has been featured on the booklet produced by the MDG-F Environment and Climate Change window "Seeds of Knowledge - Contributing to Climate Change Solutions". - Read more about the booklet or download it in English / Spanish / French / Arabic.

Contents

Summary

When it comes to environmental protection, many have assumed that the ideal approach is through enormous investments in large-scale projects, somehow playing to the idea of “bigger is better”. However, it has been shown that such a tactic is not always the best, most efficient and/or most appropriate for every circumstance. With this in mind, this Joint Program (JP) has chosen a different method for tackling energy issues in Bosnia & Herzegovina (B&H). In many circumstances, several smaller-scale projects can have a greater impact as it allows for a decentralization of the benefits (energy savings, health improvements, local economic growth, “green jobs”, awareness-raising, etc.) to be spread across the country.

In particular, a multi-pronged approach has been chosen to target various stakeholders differently, with a heavy emphasis on the following sub-sectors: energy efficiency (EE), renewable energy sources (RES) and public buildings. All of these areas have been somewhat ignored at various levels of B&H government, and if left neglected would constitute a significant obstacle to sustainable development, international climate change obligations and even poverty reduction in B&H.

Building efficiency has been deemed a high priority for the energy sector for three major reasons: 1) buildings are responsible for a significant amount of the country’s overall energy consumption, 2) their standards of efficiency are quite low and so the benefits of upgrades are high, and 3) a considerable amount of governmental budgets at all levels is essentially wasted on the energy costs of inefficient public buildings.

By introducing a couple of grant windows within the JP for municipalities to implement EE/RES projects, they will be able to consume less energy, therefore being responsible for fewer greenhouse gases (GHGs) and reducing local poverty (through local economic growth and lowered health care costs). Meanwhile, it will of course mean that local budgets are freed up somewhat through the energy savings, and subsequently able to invest in other priorities, thus improving the overall quality of life of their citizens.

At the same time, municipalities have been strongly encouraged to think and act strategically. On the one hand, 37 municipalities developed Local Environment Action Plans (LEAPs) for which energy issues were for the first time given a priority status. On the other hand, 5 of the larger municipalities in B&H were selected to serve as role models for neighboring towns by creating their own, specialized strategies: Sustainable Energy Action Plans (SEAPs). In the case of both types of plans, it helps municipalities to think and act more in a long-term manner, and therefore to avoid the somewhat haphazard manner in which many municipalities tackled problems before.

Another important approach was to engage not only local actors, but also national and international stakeholders, throughout the JP. National-level authorities were encouraged to coordinate with each other, as well as establish their own mechanisms for stimulating energy reforms at all levels. In the meantime, collaboration with other international agencies was seen to be fruitful, not just in terms of merging available funds, but also in harmonizing future plans for the energy sector to develop a sense of inter-agency synergy.

The final important method was one of sustainability being incorporated as much as possible. An Energy Management Information System (EMIS) was set up whereby each local EE/RES measure could input its data into a database, whose purpose would be to provide country-wide energy data for stakeholders to utilize, as well as highlight best practices for localities wishing to replicate these EE/RES projects on their own.

The fact that locals themselves are the ones maintaining this system might be cause enough to declare it a success, but even more significant than that is the fact that local municipalities co-financed their own projects. It might seem a somewhat benign point to highlight, but not only was their total contribution even larger than the JP’s to these EE/RES projects, but in the B&H context it’s practically revolutionary that local-level actors are categorically claiming ownership of energy issues.

Purpose of the activity

The main objectives of this activity are to reduce fossil fuel usage, decrease CO2 emissions and reduce energy costs that would ultimately also result in public budget savings. The objectives are reached through the introduction of EE/RES measures into public sector buildings, as well as increased awareness and knowledge among the primary stakeholders within local communities. A side benefit of this activity is the general promotion of EE/RES to the public, which therefore might indirectly encourage higher efficiency standards for new buildings (perhaps through upgraded building codes) and creatie sustainable demand among B&H citizens both for EE/RES measures and the improved capacities of those able to provide such services.

Original issue addressed by the activity

While regional/global initiatives and trends in the field of environmental protection and climate change are more and more focusing on EE/RES opportunities, in this regard, B&H is unfortunately still not improving sufficiently and there remains very little progress on these issues in general, nor adequate efforts from local authorities and other stakeholders to mainstream these issues in a comprehensive manner which factors in longer-term perspectives. The latest studies and analyses show that energy consumption within the building sector (residential, public and commercial) in B&H comprises 57% of the country’s total energy consumption, while in the EU this rate for buildings is as low as 40%. Clearly, there are standards in place in the EU that result in much lower energy consumption in buildings when compared to those in B&H.

International experience shows that EE improvements for buildings can save up to 30% of their energy usage in a typical case, and it is safe to assume that in B&H the energy saving potential is even greater considering the low-efficiency baseline currently found. Based on the scarce data available, the estimation is that B&H suffers significant economic and environmental losses because of the low EE standards found in both private residential buildings and in publically-managed buildings and facilities, which typically have very high expenditures on heating, water, air conditioning, lighting, etc. At the same time, citizens and decision-makers are not even sufficiently aware of the situation, nor equipped to properly control or manage these costs more efficiently. If one takes into consideration the low GDP of B&H, such inefficient use of energy runs directly counter to any of the country’s poverty reduction efforts, not to mention those initiatives by UN or similar agencies.

To date B&H has relied on two major RES – hydropower for electricity generation and biomass for heating, with wood being used as the primary fuel, though only in its traditional forms (fireplace, small furnaces, etc.). Available RES potentials, such as geothermal, solar, biomass (including from waste) and wind have not been significantly explored, except in small-scale settings, and unfortunately there are no high-level strategies or plans to change this state of affairs.

The power sector in B&H now consists of three vertically-integrated monopolies: Elektroprivreda B&H, Elektroprivreda Hrvatske Zajednice Herceg Bosna and Elektroprivreda of the Republic of Srpska. These power companies are synchronized and interconnected, but there is no competition among them, since they are allowed to function as virtual monopolies within their exclusive, ethnically-based territories.

In order to provide services without breakdowns, the three companies established a Joint Power Coordination Centre (JPCC) to coordinate the work of three power transmission systems, whose ultimate goal is to establish full operation of the 400kV grid and synchronize it with the western European grid and EU systems.

This is the only form of cooperation between the service providers. When it comes to chances to connect other types of RES systems to the grid, so far there are no legislative or technical possibilities which are both feasible and practical. For example, a few small hydro power plants built by private investors are still waiting to be incorporated into system, years after they were completed. When it comes to solar power plants, it practically becomes an impossible mission to achieve, primarily due to lacking legislation.

In general, not only are policies missing in relation to these issues, but also experience remains inadequate among the three service providers to deal appropriately with innovative, alternative options of this kind. Since there is a lack of national strategies/plans, several of the more progressive municipalities have decided to link up with European initiatives for which they do not require approval from higher levels in the system. Two of those are the signing of the Covenant of Mayors Agreement (by which a municipality unilaterally pledges to increase its own EE by 20%, reduce its CO2 emissions by 20% and expand its RES usage by 20%) and the creation of local-level SEAPs.

The JP directly supported the creation of SEAPs in 5 municipalities, 1 was separately supported by UNDP, and several have been supported by the German development agency Gesellschaft für Internationale Zusammenarbeit (GIZ).

Meanwhile there are also some other municipalities trying on their own to develop SEAPs without outside facilitation or support, but so far there are no results or completed SEAPs reported, which indicates that, in this field, more support to municipalities should be provided if any sense of sustainability is to be engrained.

Strategy / approach chosen to address the issue

Considering all the above, the JP, as part of wider efforts in the promotion of EE/RES in B&H, aims to identify and support a number of innovative pilot projects within the field of EE/RES in public buildings.

The primary goal is to directly contribute to the development of capacities among local and national stakeholders in the fields of environmental protection, EE and RES, and also to practically demonstrate to institutions, local authorities, individual users and other relevant stakeholders the benefits of applying EU-approved EE standards and modern energy management practices in public buildings (EU standards are typically the archetype aspired to across this region, because they tend to be the most immediate, progressive model to look towards, while at the same time countries such as B&H wish to join the EU and therefore would be eventually required to meet such standards anyway).

A focus on public sector infrastructure (including schools, universities, health facilities, administrative buildings, cultural heritage sites, public lighting systems, etc.) represents also the greatest potential for the reduction of GHGs as the global building sector has been found to contribute 74% of countries’ GHG emissions worldwide. Therefore any improvements in public building EE will drastically help B&H achieve its international climate change obligations, as well as achieve significant economic benefits for the country, public sector, private businesses and even individuals.

By implementing the planned set of pilot EE projects, by the end of 2012, the JP, in coordination with its partners, will be able to present to B&H public and authorities a portfolio of about 30 completed EE/RES pilot projects. The projects are diversified both in terms of the types of buildings/facilities they target and their locations being spread all across B&H, from small towns to larger cities.

The projects clearly demonstrate the added value of investing in EE. With environmental and financial results being carefully recorded and compared with baseline data, this kind of a systematic approach enables clarity in measurements and calculated benefits for each of the individual projects. All of this data is being inserted into EMIS, whose purpose is to concretely show the statistical benefits of EE/RES measures, as well as to estimate more accurately the gross potential for energy saving in similar buildings/facilities across B&H.

In the end, these 30 visible and feasible projects provide critical examples to show other municipalities that similar solutions can be simply replicated. To a large degree, this is due to a diligent selection process at the beginning, focusing on building types found in any municipality requiring realistic, cost-effective technical solutions that are affordable and easily replicable.

These projects have been financed through two separate JP funding windows targeting municipalities that have developed SEAPs and/or LEAPs – though most LEAPs developed before the JP lack an emphasis on EE/RES components, the JP required that all 37 of the LEAPs it supported include such measures: Innovative Grants (IGs) and Micro-Capital Grants (MCGs). IGs tend to support larger investment projects, and in most cases merged funds with both international and local donors to maximize efforts and results. MCGs, on the other hand, helped finance smaller concepts, with local donors providing co-financing. In both grant cases, the contribution of funds from local budgets fostered a true sense of ownership that will help ensure sustainability of EE/RES in the country.

Implementation of the strategy / chosen approach

The team identified all relevant and possible actors (e.g. other potential donors and target municipalities). Municipalities with an apparent progressive approach in regards to environmental protection and EE/RES were given priority in the selection process. The result of such criteria was not limited to larger or higher-budget municipalities, but also smaller/lower-budget towns where it was clear that the authorities showed significant progress in terms of environment protection.

To a large extent, these forward-thinking attitudes were deemed necessary in order to stimulate a diversity of EE/RES concepts. To be sure, there were plenty of more “classic” activities dealing with repairs of existing infrastructure (e.g. walls, windows, doors, roofs, furnaces, etc.), but such actions were only the necessary foundation for pursuing more advanced measures: thermal façades, roof insulation, EE windows/doors, thermal solar collectors, biomass furnaces, LED public-lighting, etc. While some of these might not seem extremely sophisticated to many Western minds, that B&H authorities now consider them as real local priorities, much less contributed more co-financing (42.6%) than the either the JP itself (39.8%) or other donors (17.6%), is a fairly revolutionary notion for the country.

Furthermore, there will be a solid foundation for determining project success and actual budget savings. Since all projects had to undergo energy audits at the beginning, all relevant parameters can and will be followed up. While the energy audits provided baseline data and predicted both the expected savings (monetary, energy, CO2, etc.) of the measure and a payback period (when the investment “pays for itself”), the installed monitoring systems and trained local personnel will continue to verify energy consumption in the future. Finally, because this data is expected to be input into EMIS, it will provide a substantial resource for other stakeholders at all levels to determine which kinds of EE/RES measures would work best for their own circumstances.

All activities have been closely coordinated with and monitored by representatives of all involved stakeholders, be it cooperation with local authorities/CSOs/end-users, consultation with national-level ministries/funds or collaboration with international actors to overcome funding gaps. Such a methodology has proven very fruitful to all parties, and in particular has proven to be an excellent means of problem-solving (e.g. a frequent lack of blueprints for old/war-devastated buildings) with a plethora of ideas for solutions put forward.

Results and Impacts

The greatest impact achieved by the JP through the implementation of its EE/RES activities is that it has truly initiated the process of mainstreaming EE/RES in a meaningful way. Whereas before the JP, few in B&H dealt with the issues in any kind of a systematic way (the only real action was done only at higher levels and often in a somewhat uncoordinated manner), now the most important actors at all levels are finally playing a role and taking responsibility for the sector. Significant steps forward have been made by the JP in mobilizing B&H government organs and other stakeholders to ultimately claim ownership both of the consequences from and solutions for the energy sector.

They are now extensively aware of the fact that progress in the public building sector in particular is crucial to better protect the environment, reach climate change goals, improve public health and achieve poverty reduction through budget savings for governments, businesses and individuals. Some of the exact savings have been summarized in the table below, as well as linking those savings to the investments made both by donors and the locals themselves:

Total EE/RES investment 3.123.841 USD
Annual Cost Savings 550.375 USD
Average “simple payback” period 6,7 years
Annual CO2 reduction 11.502 tons
Direct beneficiaries 359.700 people
Indirect beneficiaries 1.917.900 people
Total number of EE/RES grants 28 (16 MCGs + 12 IGs)

One of the key points that such data makes abundantly clear is that EE/RES measures make an unambiguously positive contribution to reducing poverty in the region. This remains true in several respects, whether one considers merely the monetary aspect of the municipalities and individuals spending much less of their budgets on energy costs, but also in the associated CO2 reductions, which will decrease costs related to both environmental clean-up and health care from air pollution. One should also not neglect to mention the potential of green jobs, namely economic growth and increased employment as citizens and other municipalities demand that new service providers fill the niche of a developing EE/RES market or as the municipalities can begin to promote themselves as eco-tourism havens due to their cleaner air and environment.

Furthermore, it has been shown that the implementation of such visible EE/RES projects forms an important component of a comprehensive energy program. At the same time as these measures, the JP also dealt with energy issues on several other fronts, having stimulated the creation of SEAPs, encouraging municipalities to tackle the energy sector within their LEAPs, creating a country-wide database with EMIS and finally establishing a Designated National Authority which brings together for the first time higher-level ministries to work on climate change issues – potentially their cooperation could serve as a positive model for similar national commissions of other sectors (EE/RES, water, waste, environment, health…).

Evidence

The JP’s multi-pronged approach has already achieved obvious results, particularly among local stakeholders, who seem to have finally awakened to the potential role they can play in energy issues. A few pertinent examples come to mind which illustrate well the positive example the JP has served in promoting EE/RES at the local level:

  1. During the second round of calls for MCGs, over half of the CSOs’ submitted proposals dealt just with the EE/RES sector, and furthermore, that municipalities in all cases were more than willing to co-finance such measures, showing that local authorities also see value in the EE/RES sector. These two facts represent a relative groundswell of support from the bottom-up and is a trend which is expected to only increase over the coming years.
  2. Analysis of the JP’s LEAPs shows that 78% of the JP municipalities deem energy to be a priority issue and have together budgeted over 34 million EUR (or 14% of the total from all 37 LEAPs’ budgets) to implement EE/RES, climate change and air quality measures. Such statistics should be compared to the previous state of affairs, mentioned above, that LEAPs very rarely had any energy-related content at all. This situation shows that many have already taken the lesson to heart that it is important to strategically plan out energy solutions in a methodical manner, rather than simply implementing a few projects haphazardly without any sort of a longer-term perspective, as has largely been the case before now.
  3. The EMIS system has already proven to be a sustainable concept, as municipal personnel continue to verify data input, or in some cases, even add new entries to the database by integrating data from new public facilities which had not been covered by the JP. Furthermore its very existence provides an archive of evidence showing the real-world benefits (project investment, monetary savings, CO2 reductions, payback period…) to be gained from EE/RES actions, such as those in this JP, and it attests to the viability of such an approach to these issues.

Next Steps

The first steps are to complete those remaining EE/RES grant projects still under implementation or in the pipeline (all MCGs planned to finish by the end of October 2012 and all IGs by the end of 2012 or in the spring of 2013). In the meantime, these energy-centric concepts will be promoted wherever possible, including at special events held for each MCG, IG and SEAP completed, as well as at a LEAP-centered conference in late autumn of 2012.

As mentioned above, EMIS input is on-going, though the long term plan remains the same: to provide all B&H municipalities with this software so that they can integrate all their public buildings and facilities to the central system.

This will provide a comprehensive dataset for monitoring country-wide energy consumption trends, but also encourage future EE/RES efforts in both the public and private sectors as various stakeholders are able to see concrete proof portraying the benefits to be gained from mainstreaming EE/RES measures.

Meanwhile, it should also be noted that a few important observations were made during the implementation of these EE/RES measures that should encourage follow-up action on the part of UN or other agencies, as well as national/local actors. For one thing, it’s clear that many older buildings cannot easily be repaired or retro-fitted with EE/RES techniques, usually due to improper design/construction from the socialist period or even damage from during the war; such buildings realistically require drastic renovation and/or in-depth, site-specific energy plans to determine how best to improve their EE characteristics and RES potential.

On the other hand, many of the local stakeholders came up with quite innovative ideas that should be pursued further (e.g. expanding efficient LED lighting beyond streets to include buildings/monuments, taking advantage of some areas’ thermal springs by introducing heat pumps, etc.); unfortunately these progressive ideas were not able to be explored to the necessary extent during the JP timeframe, but they still merit inclusion in future actions from UN or other agencies.

Potential replication / application

The concept of replicability was built into the JP from the beginning. One example mentioned previously was that an important criteria in selecting the EE/RES grants to be implemented was the extent to which a proposed facility could serve as an appropriate example either for other buildings in the same municipality or for similar buildings in other municipalities. Also the methodology for creating strategic documents (SEAPs, LEAPs, etc.) has been formulated in a way that the approach could be applicable to any other location (within B&H or beyond) with the willingness to act in a progressive manner towards environmental and energy issues.

Experience in the JP has already begun to show that this strategy for replication should prove quite successful. In several cases, municipalities and CSOs that were not even included in the JP have come forward seeking advice in developing their own SEAPs and/or LEAPs, wishing to incorporate their own public buildings within the EMIS system (itself a lesson adopted from UNDP Croatia’s experiences) and/or implementing similar EE/RES measures as the JP’s IGs and MCGs in their own towns. This clearly shows the adoptability of such endeavors all across B&H, or even to other countries for that matter.

Though EU integration remains a strong motivation for much of the national interest in EE/RES, the majority of the local will behind this can be more readily attributed to desires for local financial security (and in a few cases, environmental protection and/or health concerns). Such an emphasis on monetary benefits is likely to be quite applicable to any locale around the world, though obviously the ability to take advantage of EU aspirations is a “carrot on a stick” that is only a valid tool for a few countries.

The only factor that really seems to remain uncertain is concerning the financial investment necessary to ensure success and sustainability of these approaches. Luckily, local authorities in B&H have already shown a ready willingness to co-finance such initiatives (itself a strong testament to assertions that they have claimed ownership), but there still remains a large gap to be filled by outside donors for the funding that local levels simply are unable to afford; the LEAP analysis mentioned above reveals that municipalities in the country still require 74%, or just over 25 million EUR, to successfully realize their energy-related programs.

Clearly such a large amount of money is beyond the budget constraints of B&H municipalities amidst all their other responsibilities, not to mention the global economic crisis’ effects on a country still emerging out of socialist stagnation and recovering from war damage. Therefore, it remains firmly in the hands of national authorities and the international community to continue cooperating with each other to build up synergies of funding that can efficiently bridge this budgetary gap. But at the least, this JP has shown that though the required investments are large in total, these are not the large-scale projects of past times. These are “anywhere” kinds of projects which, though on a smaller scale than large power plants or transmission grids, still can provide, in just about any location, the same or better end results through the “negawatts” (from the “negative megawatts” of energy saved) they generate via EE/RES savings.

Information products

There is a set of publications of 7 booklets on the topic of EE/RES in the public sector, which is especially meant for students.

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