Large-scale GEF program in Poland
Large-scale GEF program in Poland
Although Poland already produces considerable quantities of compact fluorescent lamps (CFLs), most are exported, and only a few are sold on the Polish market. The US$5 million Poland Efficiency Lighting Project (PELP) is now under way in Poland to develop the Polish market for CFLs. A million CFLs are to be sold primarily to residential and small business customers over an 18-month period.
The project is financed by the Global Environmental Facility (GEF), which was set up as a result of the Climate Convention of 1992 and administered by a GEFCouncil and Secretariat in association with the World Bank and the United Nations Environmental Program and the UN Development Program. PELP is administered by the International Finance Corporation (IFC) which is the private sector affiliate of the World Bank Group.
IFC selected Netherlands Energy Efficient Lighting BV (NECEL), a private company owned by the Dutch utilities, to administer the project.
"It is the first utility DSM project undertaken by IFC and an important pilot project for the Global Environment Facility being implemented by private sector entities" says Dana Younger IFC's GEF coordinator. The project concept was developed with assistance from the International Institute for Energy Conservation (IIEC), the US Battelle Pacific Northwest Laboratory and the Polish Foundation for Energy Efficiency (FEWE)
$40 MILLION ELECTRICITY SAVINGS
The aim of PELP is to replace a million incandescent lamps with CFLs in the domestic sector in Poland. Over their lifetime the lamps are estimated to save the customers some US$ 40 million in electricity costs and cut greenhouse gas emissions by at least 200000 tonnes carbon equivalent, compared with the incandescent lamps they replace. However, this is only the beginning. The intention of PELP is to permanently shift the Polish residential lighting market towards higher energy efficiency: Using a number of independent calculation methods, project personnel have estimated the market potential to be 20-25 million CFLs.
Improving residential lighting efficiency can also yield benefits for the electricity distribution system. "Poles typically don't use electricity for heating and cooking as much as in many European countries, so lighting can be an important part of the peak load", says IFC's project consultant Chris Granda.
MANUFACTURER REBATES
The largest part of the project funds go to price subsidies for CFLs. Contracts have been signed with CFL manufacturers in Poland (four at the moment). The subsidies are provided in the form of a rebate to the manufacturers who pass them on to the customers through reduced wholesale prices, which are translated into even larger retail-price reductions. (For a description of a similar program pioneered by Southern California Edison in the US, see Rebates that Shook the Market, IAEEL Newsletter 1/94.)
Price subsidies of lamps are important in the short term because CFLs presently cost more in Poland than in OECD countries. Most of the funds are earmarked for screw-based CFLs, but some will also be available for dedicated CFL fixtures.
The rebates were allocated on a competitive basis according to production and marketing plans and technical proposals submitted by manufacturers. A decisive factor was the displaced kilowatt savings to be created. There are also some minimum criteria for warranty, efficacy, etc. Manufacturers must also show that they have sold the agreed-upon products at the agreed-upon prices in order to collect the rebates.
EARLY RESULTS CAUSE OPTIMISM
Granda believes that competition in the CFL market is good for the Polish consumers and for the environment, and he adds: "Manufacturers must be able to produce effective, reasonably priced products to survive."
Subsidized CFLs first became available on the Polish market through PELP on November 30, 1995, and Granda says that the early results make him "cautiously optimistic".
Other parts of the project focus on marketing and education. Market research shows that although residential customers generally do not know about CFLs, they are well aware of the environmental importance of energy savings. Advertisements are currently running on Polish TV and will also appear on the radio and in printed media. Educational material will be provided to teachers. PELP is working with several Polish environmental and consumer non-governmental organizations to try and spread the news about the benefits of CFLs as widely as possible.
PELP is also working with Polish electric utilities and municipalities to develop demand-side management (DSM) projects. This part of PELP will show how CFLs can be an alternative to distribution-system expansion investments and how public utility customers can minimize their expenses by improving energy efficiency. Since electricity price subsidies will be phased out, energy efficiency can mitigate the rate shock for customers.
COST-EFFECTIVE PROGRAM
The cost effectiveness of the PELP as a greenhouse mitigation strategy has been calculated. The cost of saved energy is $0.01/kWh which, of course, is lower than the utilities' long-term marginal costs and lower than the variable costs of most power plants. The cost of the reduction in greenhouse gas emissions is estimated at $21/ton not counting money saved for customers and utilities, or the value of market transformation. Assuming that the project advances the Polish CFL market by five years, the program would produce an additional 2 million tonnes of carbon savings at $2/ton. The program includes a monitoring and evaluation component to substantiate its benefits.
(See also The World Bank Moves Towards Mexican CFL Loan, IAEEL 2/92)
Fredrik Lundberg
Contact:
Chris Granda (US)
Tel: +1 617 643 1144,
Email:CAGranda@aol.com
Joep Rijntjes(The Netherlands)
Tel: +31 26 356 3363,
Fax: +31 26 35 11 050