REQUEST FOR CEO ENDORSEMENT/APPROVAL PROJECT TYPE : Medium-sized Project THE GEF TRUST FUND
Submission Date : 6 May 2010
PART I: PROJECT INFORMATION Expected Calendar (mm/dd/yy) GEFSEC PROJECT ID: 3719 Milestones Dates GEF AGENCY PROJECT ID: GF/MOL/08/00X Work Program (for FSPs only) COUNTRY (IES ): The Republic of MOLDOVA PROJECT TITLE : Reducing Greenhouse Gas Emissions through Agency Approval date May 2010 Improved Energy Efficiency in the Industrial Sector in Implementation Start June 2010 Moldova Mid-term Evaluation ( if planned) NA GEF AGENCY (IES ): UNIDO Project Closing Date 31 Dec 2013 OTHER EXECUTING PARTNER (S): MINISTRY OF ENVIRONMENT ;
MINISTRY OF ECONOMY OF THE REPUBLIC OF MOLDOVA GEF FOCAL AREA (s):CLIMATE CHANGE GEF-4 STRATEGIC PROGRAM(s): SP2 – Industrial Energy Efficiency NAME OF PARENT PROGRAM /UMBRELLA PROJECT : NOT APPLICABLE A. PROJECT FRAMEWORK (Expand table as necessary)
Project Objective : Improved Energy Efficiency of Moldovan Industrial Sector leading to reduced global environmental impact and enhanced competitiveness. Indicate Indicative GEF Indicative Total Project whether Expected Expected Outputs Financing* Co-financing* ($) Components Invest, TA, Outcomes ($) a % ($) b % c =a + b or STA** 1.Development, TA Establishment of 1. Structure and procedures for 240,000 25.0 188,500 5.7 428,500 formulation and policy, legal and monitoring, tracking and of of implementation regulatory benchmarking energy consumption GEF Co-fin. of policies, frameworks that in industry are developed and total total regulation and promote and established. programs to support 2. National IEE Best Practices promote and sustainable information and dissemination support industrial energy program developed & established. sustainable efficiency and industrial stimulate the 3. National IEE Best Practices energy creation of a Recognition Program is developed efficiency national market and established. (IEE). for IEE products 4. National Industrial Energy and services. Manager Certification Program is developed and established. 2. Capacity TA Increased 1. A cadre 40 professionals, 410,000 42.7 1,340,500 40.6 1,750,500 building, adoption by comprising of energy efficiency of of development of Moldovan consultants and experts, industry GEF Co-fin. tools for and industries of engineers and managers, industrial total total implementation energy efficient equipment vendors and others are of industrial technologies and trained at an expert level and are systems energy equipped with the technical capacity optimization management as and tools required to: a) develop and and energy integral part of implement energy management management their business systems and energy efficiency practices. projects, focusing on steam system optimization, in industry; b) provide training to industry and energy 1
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professionals and offer commercial IEE services. 2. At least 40 IEE projects for cumulative 213-426 GWh of energy savings are developed and implemented by industrial enterprises as result of their participation in the Expert Training program of the project. 3. Industry decision-makers understand their potential for EE gains and consequent environmental and economic benefits. 4. A Practical Guide to the Implementation of Energy Management in Industry in compliance with the EN 16001 and ISO 50001 international standards is developed. 3. Industrial TA Accelerated and 1. At least 6 pilot IEE projects for 200,000 20.8 1,670,500 50.6 1,870,500 energy increased cumulative 45-60 GWh of energy of of efficiency pilot adoption by savings over the investments GEF Co-fin. projects Moldovan duration are implemented by total total industries of enterprises, from key industrial energy efficient sectors, partnering in the project. practice and technologies as result of showcasing and disseminating successful national IEE projects 4. M&E - Final TA Not Applicable Independent final project evaluation 17,000 1.8 10,000 0.3 27,000 evaluation of of GEF Co-fin. total total 5. Project 93,000 9.7 93,000 2.8 186,000 management Total project 960,000 100.0 3,302,500 100.0 4,252,500 costs * List the $ by project components. The percentage is the share of GEF and Co-financing respectively to the total amount for the component. ** TA = Technical Assistance; STA = Scientific & technical analysis.
B. SOURCES OF CONFIRMED CO-FINANCING FOR THE PROJECT (expand the table line items as necessary) Name of Co-financier (source) Classification Type Project %* UNIDO Implementing Agency In-kind 200,000 6.1 Ministry of Environment National Government In-kind 51,000 1.5 Ministry of Economy - AEE National Government In-kind 112,000 3.4 Technical University of Moldova Public Institution In-kind 11,000 0.3 Private sector - Carmez Private sector In-kind 16,500 0.5 Cash 104,000 3.1 Private sector - Franzeluta Private sector In-kind 2,500 0.1 Cash 314,000 9.5 Private sector - Lactis Private sector In-kind 5,500 0.2 Cash 45,000 1.4 2
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Private sector - Natur Bravo Private sector In-kind 6,000 0.2 Cash 85,000 2.6 Private sector - Sudzucker Private sector In-kind 30,000 0.9 Cash 2,320,000 70.3 Total Co-financing 3,302,500 100% * Percentage of each co-financier’s contribution at CEO endorsement to total co-financing.
C. FINANCING PLAN SUMMARY FOR THE PROJECT ($) For comparison: Project Preparation Project Total Agency Fee GEF and Co- a b c = a + b financing at PIF GEF financing 40,000 960,000 1,000,000 100,000 960,000 Co-financing 80,000 3,302,500 3,382,500 2,040,000 Total 120,000 4,262,500 4,382,500 100,000 3,000,000
D. GEF RESOURCES REQUESTED BY AGENCY (IES ), FOCAL AREA (S) AND COUNTRY (IES )1 Country Name/ (in $) GEF Agency Focal Area Global Project (a) Agency Fee ( b)2 Total c=a+b N/A N/A N/A N/A N/A N/A (select) (select) Total GEF Resources
1 No need to provide information for this table if it is a single focal area, single country and single GEF Agency project. 2 Relates to the project and any previous project preparation funding that have been provided and for which no Agency fee has been requested from Trustee.
E. CONSULTANTS WORKING FOR TECHNICAL ASSISTANCE COMPONENTS : Estimated GEF Co-financing Project total Component person weeks amount($) ($) ($) Local consultants* 1,193 126,300 78,900 205,200 International consultants* 182 494,500 140,000 634,500 Total 1,375 620,800 218,900 839,700 * Details to be provided in Annex C.
F. PROJECT MANAGEMENT BUDGET /COST Total Estimated GEF Cost Items person amount Co-financing Project total weeks/months ($) ($) ($) Local consultants* 411 90,090 37,800 127,890 International consultants* 0 0 42,000 42,000 Office facilities, equipment, 1,910 13,200 15,110 vehicles and communications* Travel* 1,000 1,000 Others** Total 93,000 93,000 186,000 * Details to be provided in Annex C . ** For others, it has to clearly specify what type of expenses here in a footnote.
G. DOES THE PROJECT INCLUDE A “NON -GRANT ” INSTRUMENT ? yes no (I f non-grant instruments are used, provide in Annex E an indicative calendar of expected reflows to your agency and to the GEF Trust Fund). 3
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H. DESCRIBE THE BUDGETED M &E PLAN: Project monitoring and evaluation (M&E) will be carried out in accordance with established UNIDO and GEF guidance and procedures. The overall objective of the monitoring and evaluation process is to ensure successful and quality implementation of the project by: i) tracking and reviewing project activities execution and actual accomplishments; ii) providing visibility into progress as the project proceeds so that the implementation team can take early corrective action if performance deviates significantly from original plans; and iii) adjust and update project strategy and implementation plan to reflect possible changes on the ground, results achieved and corrective actions taken. A detailed monitoring plan for tracking and reporting on project time-bound milestones and accomplishments will be prepared by UNIDO in collaboration with the Project Implementation Unit (PIU) and project partners at the beginning of project implementation and then periodically updated. By making reference to the impact and performance indicators defined in the Project Results Framework, the monitoring plan will track, report on and review project activities and accomplishments in relation to: a. Energy savings and GHGs emission reductions directly generated by the UNIDO GEF project These will include also type and the number of energy efficiency projects developed and implemented and energy intensity of enterprises participating in the project. b. Energy savings and GHGs emission reductions in-directly generated by the UNIDO GEF project These will include also type and the number of energy efficiency projects developed and implemented and, wherever feasible, energy intensity of enterprises c. Energy efficiency investments generated by the UNIDO GEF project, directly and indirectly d. Development of policy programs and normative instruments aimed to promote and support industrial energy efficiency e. Level of awareness and technical capacity for industrial energy efficiency and energy management within relevant institutions, in the market and within enterprises The National Project Manager will be responsible for continuous monitoring of project activities execution, performance and track progress towards milestones. However, tracking and monitoring project performance with respect to direct and in-direct energy savings and GHGs emission reduction, and related information, will be integral part of the activities to be executed for establishing an industrial energy efficiency Monitoring, Tracking and Benchmarking Program under Project Component 1. The UNIDO project manager will be responsible for tracking overall project milestones and progress towards the attainment of the set project outputs. The UNIDO project manager will be responsible for narrative reporting to the GEF. A final external evaluation will be carried out 6 months after operational completion of the project. The following table provides the tentative budget for the final evaluation, which has been included in Project Component 4. Final evaluation budget
Source of funding USD GEF funding 17,000 Co-financing (Gov.) 2,000 Co-financing (UNIDO) 8,000 Total 27,000
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PART II: PROJECT JUSTIFICATION : . A. STATE THE ISSUE , HOW THE PROJECT SEEKS TO ADDRESS IT , AND THE EXPECTED GLOBAL ENVIRONMENTAL BENEFITS TO BE DELIVERED :
Context Policy and economic reforms carried out over the last decade have generated positive developments in the Republic of Moldova. The decline in gross domestic product stopped in 2000 and the GDP growth averaged 5.7% between 2000 and 2007 (Fig. 1).
10%
8%
6%
GDP growth (annual %) 4%
2% GDP growth (%) growth GDP
0% 1999 2000 2001 2002 2003 2004 2005 2006 2007
-2%
-4%
Source: World Bank, 2007
Agriculture and related industries are extremely important components of the Moldovan economy. Agriculture and forestry accounted for around 22% of GDP in 2006. In 2007 the figure contracted to around 18% as a result of a serious drought. The industrial sector, which is dominated by food-processing, contributed 22% of GDP in 2006. The share of services, including construction, trade and transport, has been growing steadily since independence, to 61% in 2007. The private sector accounts for around four-fifths of GDP. Its share of employment ranges from over 95% in agriculture to around 55% in services, which includes public-sector employment such as education and health.
Real gross domestic product by sector (% share of GDP) 2003 2004 2005 2006 2007 Agriculture 21.5 21.3 21.7 21.5 17.8 Industry 24.3 24.4 23.8 22.0 21.7 Services 54.3 54.3 54.5 56.5 60.5 Source: Economist Intelligence Unit.
The food-processing and beverages sector dominates the manufacturing industry. Producers in this sector were badly hit by the Russian ban on Moldovan wine in 2006-07, with their share of total industrial output falling to 33% in 2007 from 45% two years earlier. Production of wine, the most important product, fell by 50% in 2006 and by a further 30% the following year, and its share in total industrial output shrank from 17% in 2005 to 6% in 2007. Next in terms of importance are dairy produce, processed meat, and canned fruit and vegetables. Light industry has become the most important industrial exporter after food processing, largely because of the increase in exports to Western markets. The textiles and clothing sector, the most important component of light industry, is now Moldova’s second-largest exporter. A labour-intensive industry based on the assembly of imported materials, it has 5
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attracted substantial foreign investment because of the country’s low wages. Many other industrial sectors are largely oriented towards the domestic agricultural sector, including machinery (tractors and pumps), chemicals (fertilisers) and glass (bottling). They too have suffered from the slump in wine production. In contrast, industries connected with housing construction have done well in recent years, because of the remittance-fuelled construction boom.
Industrial production (% change, year on year) 2003 2004 2005 2006 2007 Industrial production 15.6 8.2 7.0 -6.9 -2.7 Source: Central Statistical Organization
Figures 2 and 3 provide a breakdown of the industrial production value by manufacturing sector and the sector distribution of manufacturing enterprises population. In 2007 the total number of manufacturing enterprises was 630.
million MDL
2500.0 50.0%
45.0% 2005 2000.0 40.0% 2006 2007 35.0% 1500.0 30.0%
25.0%
1000.0 20.0%
15.0%
500.0 10.0%
5.0%
0.0 0.0% 15 16 17 18 19 20 21 22 24 25 26 28 29 36 Al 15 16 17 18 19 20 21 22 24 25 26 28 29 Al ISIC Code ISICISIC Code Code
Fig. 2 Value of industrial production in 2000 constant prices Fig. 3 Distribution of manufacturing enterprises population (Source: UNIDO and Moldova National Bureau of Statistics) by sector (Source: Moldova National Bureau of Statistics)
Table 1. Manufacturing sectors - ISIC Code 3rd Rev 15 - Manufacture of food products and beverages 16 - Manufacture of tobacco products 17 - Manufacture of textiles 18 - Manufacture of wearing apparel; dressing and dyeing of furs 19 - Manufacture of leather, leather products and manufacture of footwear 20 - Manufacture of wood and wood products 21 - Manufacture of paper and paperboard 22 - Publishing, printing and reproduction of informational materials 24 - Manufacture of chemicals and chemical products 25 - Manufacture of rubber and plastic products 26 - Manufacture of other non-metallic mineral products 28 - Manufacture of fabricated metal products, except machinery and equipment 29 - Manufacture of machinery and equipment 36 - Manufacture of furniture Al - Other sectors 6
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Industry is the second biggest consumer of energy in Moldova after the residential sector. In 2005 industry accounted for 18% and 34% of national energy and electricity consumption. It was responsible for the emission of 1,551,200 tons CO2 eq, equal to 12.8% of total GHGs emissions (12,092,200 tons CO2eq including electricity imports).
Moldovan industry still shows significantly higher energy intensity (energy used/value of output) than many countries in the region and three-four times higher than the energy intensity of most Western European countries. Fig.4 shows a steady reduction of the manufacturing industry energy intensity, which may convey the idea of steady efficiency improvements. However, looking at Fig.5, where energy intensity is measured in constant prices, manufacturing industry energy consumption performance versus output value have remained relatively stable. Looking then at individual sectors performance, energy intensity shows more dynamic trends, both upward and downward (Fig.6 and Fig.7 show two examples).
MJ/MDL Energy intensity of Manufacturing Production (Current prices) MJ/MDL Energy intensity of Manufacturing Production (Constant prices) 2.0 4.5
1.8 4.0 1.6 3.5 1.4 3.0 1.2 2.5 1.0 2.0 0.8 1.5 0.6 1.0 0.4
0.2 0.5
0.0 0.0 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
Fig. 4 Energy intensity of manufacturing production - value Fig. 5 Energy intensity of manufacturing production - value in current prices. (Source: Moldova National Bureau of Statistics) in constant prices. (Source: WB, UNIDO)
Manufacture of Food and Beverages Manufacture of other non-metallic mineral products MJ/MDL MJ/MDL 3.0 14.0
2.5 12.0 10.0 2.0 8.0 1.5 6.0 1.0 4.0
0.5 2.0
0.0 0.0 2000 2001 2002 2003 2004 2005 2006 2007 2000 2001 2002 2003 2004 2005 2006 2007
Specific energy consumption (constant prices):MJ/MDL Specific energy consumption at constant prices: MJ/MDL
Fig. 6 Energy intensity of Food and Beverage sector - value Fig. 7 Energy intensity of other non-metallic mineral products in constant prices. (Source: UNIDO and MNBS) sector - value in constant prices. (Source: UNIDO and MNBS)
In recent years, energy prices (oil, natural gas and electricity) have significantly increased as result of international energy markets dynamics as well as progressive removal of subsidies and end of preferential power purchase agreements. Fig.8 and 9 shows past and projected evolution of natural gas and electricity prices
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MDL/1000 m3 Tariffs for natural gas 2000-2015 MDL/kWh Electricity tariffs for manufacturing enterprises 9,000 3.0
8,000 Peak hour 2.5 7,000
6,000 2.0 Basic tariff 5,000 1.5 4,000
3,000 1.0
2,000 Off-peak 0.5 1,000 110 kV connected
0 0.0 2000 2003 2006 2009 2012 2015 2000 2003 2006 2009 2012 2015
Fig. 8 Natural gas tariffs for industrial consumers – current Fig. 9 Union Fenosa electricity tariffs for industrial
prices. (Source: National Agency for Energy Regulation - ANRE) customers – current prices. (Source: ANRE and UNIDO)
Such rising prices have had a significant impact on production costs and profits of Moldovan enterprises, making them well aware of the energy cost issue.
Barriers to industrial energy efficiency The rapidly raising energy prices combined with low levels of energy performance and relatively old capital stock have generated major economic and market potential for industrial energy efficiency products and services. Nevertheless, Moldovan institutions and enterprises have so far failed, to a great extent, to respectively support and reap the benefits of such potential for efficiency improvement and subsequent energy and cost savings.
Such failure is the result of several barriers that relate to: i) the inadequacy of existing policies, institutions and regulatory framework, and the lack of resources to effectively promote and support energy efficiency in industry Despite progress over the last decade, the current policy, institutional and legal framework is still inadequate and it has not generated tangible results. Government technical capacity remains seriously constrained by lack of financial and human resources, and expertise to implement substantive and effective policies and programs to promote and support energy efficiency in industry. In 2002 the Government approved the establishment of the National Agency for Energy Conservation (NAEC). With the support of international technical assistance NAEC developed the Moldovan National Program of Energy Conservation for the years 2003-2010, document which was approved by the Government in 2003. The Moldovan National Program of Energy Conservation provided for a comprehensive set of actions for improving the energy efficiency of Moldovan economy. However, as of 2009 very little has been done in terms of implementation in the industrial sector. The limited national resources made available and the energy- related technical assistance provided since 2003 have been mainly focusing on the supply side (improved efficiency and rehabilitation of the national district heating and natural gas distribution networks), on reforming the power sector and consolidating primary and secondary legislations for the electricity and natural gas sectors, including cost-reflective tariffs. Endowed with meager human resources (2 staff), without sustainable funding and staff expertise development plans, the NAEC basically stopped its activities in 2006. ii) lack of understanding among industry decision-makers of their economic potential for energy efficiency improvements While most enterprises now pay great attention to energy costs, they have limited awareness and understanding of the financial and qualitative benefits that energy management and energy efficiency can deliver. On the one hand this is consequence of lack of information about what is technically feasible and what is commercially available with regard to IEE. There are no structured IEE dissemination and education programs. On the other hand, inadequate 8
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energy data monitoring and analysis practices and insufficient technical capacity are the causes of poor energy performance assessments and subsequent impossibility to size the potential energy and costs savings. iii) insufficient technical capacity within enterprises and in the market to identify, develop and implement industrial energy efficiency projects and measures Energy audits carried out during the PPG have shown good engineering capacity within enterprises but limited understanding of energy system efficiency and impact of operating conditions. For instance, in those plants where refrigeration systems were significant there was low technical awareness of those operating parameters which influence energy use. Expertise is concentrated on key equipment and attention is focused on reliability and continuity of operations. While a growing number of enterprises, though still overall small, is becoming ISO 9001 certified, the transition from old management practices to those required by modern market economy has been reported to lag behind. Most of surveyed companies using management system standards such as ISO 9001 and HACCP, mainly large ones, have reported to have some elements of an energy management system in place, such as a policy, energy reduction targets and an appointed person responsible for energy. But at the level of planning, implementation, and performance review practices show inconsistencies and lack of systematic approach. In the vast majority of of Moldovan enterprises there is a lack of structured approach to managing energy Interviews of equipment vendors and service providers to industry as well as meetings with representatives of other international technical assistance programs to enterprises have shown that there is very limited and partial availability of expertise and services on industrial energy efficiency. Just 20% of the major equipment vendors and suppliers interviewed by the GEF UNIDO project team during the PPG phase offer advice to clients on how improving energy use and efficiency as it relates to their product. The lack of qualified industrial energy efficiency auditors and experts has been reported by all ongoing international technical assistance programs as well as identified by the Government as key barrier to increased efficiency of the economy: the forthcoming Law on Energy Efficiency is supposed to lay the legal ground for the creation of energy service companies in Moldova.
iv) delays in transitioning away from subsidized energy prices towards modern cost-reflective tariff regimes Evidence from other countries experience with industrial energy efficiency is that energy price is the main determinant of enterprises’ increased attention for energy production costs and energy consumption savings. Prices and tariffs for electricity, natural gas and commercial heat in Moldova have only in recent years become cost- reflective and unsubsidized for the manufacturing sector (Fig.8 and 9). This has delayed energy in climbing up enterprise top management’s agenda. v) financing and credit constraints faced by both private and public enterprises The primary need to restructure their business and upgrade their production technology despite meager profit margins combined with consistently high lending interest rates, have posed under pressure enterprises own resources and serious limitations in borrowing to finance new investments, with inevitable greater negative impact on investment not perceived as mostly beneficial like energy efficiency. Based on interviews with companies as well as market studies the shortage of funds for the development and preparation of IEE projects have surfaced as probably the most critical financing barrier to the implementation of IEE projects, because once shown with detailed cost-benefit analysis some enterprises would be prepared or able to invest. As of 2009 no dedicated fund and credit line was in place for supporting the development and implementation of industrial energy efficiency projects. Interest rates (%) 2003 2004 2005 2006 2007 Lending interest rates 19.3 20.9 19.3 18.1 18.8 Source: IMF, International Financial Statistics.
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How the project seeks to solve the Issue. The project seeks to address many of the existing barriers to industrial energy efficiency (IEE), to deliver measurable results and to make an impact on how Moldovan industry manages and uses energy through an integrated approach that combines substantial capacity building with technical assistance interventions at the policy and EE project level. Primary target groups of the project are manufacturing enterprises decision-makers (managers and engineers), industrial equipment vendors, energy professionals and service providers, and energy efficiency policy-making and implementing institutions. The project consists of three technical components. Project Component 1 (PC1) aims to address the inadequacy of existing policies, institutions and regulatory framework to effectively promote and support industrial energy efficiency and the lack of technical expertise, resources and programs that lay behind it. PC1 will also make a major contribution towards raising industry awareness of its economic potential for energy efficiency improvements and in so doing stimulating increased demand for IEE services. Project Component 2 (PC2) primarily focuses on addressing the insufficient technical capacity within enterprises and in the market to identify, develop and implement industrial energy efficiency projects and continually improve energy performance. As integral part of its training program, PC2 will also work with at least 40 enterprises to identify, develop and implement operational improvement measures and steam system optimization projects, and will generate a number of case studies for dissemination. Project Component 3 (PC3) tackles the enterprises lack of funds for the development and preparation of IEE projects and the lack of available national IEE best practices to support awareness raising and IEE promotion initiative.
Project component 1 –Development, formulation and implementation of policies, regulation and programs to promote and support sustainable industrial energy efficiency The project will provide technical assistance to develop and help establish market oriented policies, programs and normative instruments needed to support sustainable progression of Moldova industries towards international best energy performance and contribute to the creation of a national market for IEE products and services. Under this component the project will work with the Ministry of Economy, the national Agency for Energy Efficiency and other relevant national institutions to build and strengthen institutional technical capacity and deliver the following outputs: 1) Develop and establish an IEE Monitoring, Tracking and Benchmarking Program; 2) Develop and establish a National IEE Best Practices Dissemination Program; 3) Develop and establish a National IEE Best Practices Recognition Program; 4) Develop and establish a National Industrial Energy Manager Certification Program.
1) The objectives of the IEE Monitoring, Tracking and Benchmarking (MTB) Program during the implementation period of the GEF project are: To develop and establish a GEF project energy savings reporting structure to be used for/by the enterprises participating in the project This reporting structure would serve for the following purposes: Monitoring and verifying the energy and GHG emissions savings directly generated by and through the GEF project Identifying enterprises that in different sectors have achieved the greatest energy efficiency and energy performance improvements setting the bar of national IEE best practices
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Informing the selection process of the enterprises to be awarded by the national IEE best practices recognition program to be established by the GEF project To develop and establish a national reporting structure for energy consumption and savings in industry that allows defining and tracking energy performance and efficiency indicators at the sector and sub-sector level This national reporting structure would be an evolution of the GEF project structure. The purpose of this national structure would be to better inform the design and measure the impact of targeted short- and medium- term policies and programs aimed to support IEE; for example by prioritizing types of interventions and sectors/sub-sectors to receive Government support; developing target-setting agreements and others. To develop and test energy benchmarking methodology tailored to the Moldova manufacturing sectors/sub- sectors The development of energy benchmarks would be beneficial to policy-makers in designing more targeted and quantitative based IEE supporting policies, such as energy efficiency target setting agreements, but it would be particularly beneficial also to enterprises, which would have the opportunity to better understand their energy performance and identify areas for improvements and/or further analysis. Based on the results of the IEE survey carried out by the project team during the PPG phase, 100% of surveyed enterprises believes that energy benchmarks would be vey useful in identifying EE opportunities and improve performance 1.
2) The objective of the National IEE Best Practices Dissemination (BPD) program is twofold: To raise awareness of an increasingly broader industrial audience about the best practices, the benefits as well as the costs of energy efficiency (EE) and energy management (EM) in the manufacturing sector of Moldova and elsewhere To offer a reference point for EE and EM practitioners as well as enterprises where to find information and resources for establishing an energy management system and identifying and developing IEE projects The IEE BPD program being established during the GEF project will consist of the following elements: a) Development of IEE case studies These case studies will be produced in different ways: simply translating international case studies; based on results and projects generated by the GEF project; based on results/ case studies generated by the EBRD MoSEFF 2 and the BAS 3 program b) Creation and maintenance of an IEE Best Practices Dissemination website c) Development and production of various IEE outreach material d) Development of a Practical Guide to the Implementation of Energy Management in Industry in compliance with the EN 16001/ISO 50001 international standards e) Organization of half-day seminars on the importance of energy efficiency in industry and IEE best practices at the margin of the major events/ conferences of/for the Moldova manufacturing industry
3) The objective of the National IEE Best Practices Recognition (BPR) program is: To offer enterprises an incentive for engaging and doing well in the GEF UNIDO project first, and in future national IEE programs afterwards. The BPR Program is directly linked to the MTB Program. The BPR Program will consist of an annual event that will give nation-wide visibility to the best performing and achieving Moldovan enterprises in terms of energy management and energy efficiency improvements.
1 Other country IEE surveys conducted by UNIDO returned similar results with percentages ranging from 80% to 95%. 2 Moldova Sustainable Energy Financing Facility 3 Business Advisory Service 11
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4) The objectives of the National Industrial Energy Manager Certification (IECM) program are: To provide a policy and normative instrument for supporting medium- and long-term sustainability and progression of energy savings in industry To contribute to the creation of a national market for energy efficiency services and products for industry and other sectors
The IECM program will be developed and established as first step towards the creation of a more comprehensive Energy Manager Certification Program which will include, at a later stage, also energy efficiency in buildings. The IECM program will capitalize the resources and outputs produced mainly through the capacity building component of the GEF project. It is worth noting that the current draft Moldova Energy Efficiency Law at Article 17 mandates all business entities that consume annually energy resources equivalent to more 500 tons of conventional fuels to appoint an energy manager.
Project component 2 - Capacity building, development of tools for and implementation of industrial systems optimization and energy management Project Component 2 aims to build and strengthen technical capacity with respect to energy management and steam system optimization at the institutional, market and enterprises level through a “training-the-trainers” approach. As result of the expert level trainings at least 40 energy efficiency projects (energy management systems put in place and implemented in 20 enterprises, steam system optimization projects developed and implemented in 20 enterprises) will be developed and implemented. The capacity building program to be implemented by the project consists of two stages: 1st Stage: Training of a small group of national professionals to an “Expert level” in energy management and steam system optimization in industry 2nd Stage: Training of enterprises’ managers and engineers to an “User level” in energy management and steam system optimization in industry
1st Stage – Energy Management and Steam System Optimization Expert Training A group of 40 professionals will be provided with in-depth training and equipped with the technical capacity and tools required to: a) develop and implement energy management systems and energy efficiency projects in industry, focusing on steam system optimization; b) provide training to industry and energy professionals and offer commercial IEE services. This group of professionals will comprise of energy efficiency consultants and service providers, representatives of relevant Government and public institutions such as the Agency for Energy Efficiency and the Technical University of Moldova, equipment vendors, and engineers and managers from enterprises. Some of these trained professionals will subsequently assume roles as national Energy Management (EM) and Steam System Optimization (SSO) experts and become a source of expertise and services for the GEF project as well as Moldovan enterprises.
The Expert training (in this case for Energy Management) consists of the following steps:
Step 1 Preparation of the training program This involves the preparation of the training material, the selection of trainees, the identification of appropriate factories for in-plant group exercises, securing approval for site visits, classroom logistics, etc.
st Step 2 1 training period 12
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International experts provide training to national trainees in classroom and plant settings. This first period covers the development and establishment of energy management systems (EnMS) in compliance with EN16001/ ISO50001. This will include the definition of the EnMS boundaries; identification of significant energy uses; definition of the energy profile, baseline and performance indicators; development of action plans and operational improvement measures, and so on. During the in-plant session trainees receive “on- the-job” training on how working with enterprises’ management and personnel in getting an energy management plan started.
Step 3 Trainees apply knowledge, skills and tools provided Trainees coming from manufacturing enterprises go back to their factories and apply the knowledge, skills and tools that have been provided with to get an energy management system compliant with EN 16001/ ISO 50001 started and develop operational improvement measures. Trainees NOT coming from manufacturing enterprises apply knowledge, skills and tools received in other manufacturing enterprises that have agreed to participate in the program (Type B participating enterprises). During this period of time, trainees have access to international experts’ “remote” coaching and technical advice.
Step 4 2nd training period International experts provide advanced training to national trainees in classroom and plant settings. They review and discuss energy management systems and operational improvement measures identified and developed by trainees. They observe and provide feedback to trainees in the application of skills in plants. They teach how, observe and provide feedback to trainees in delivering training to factory energy managers.
Step 5 Implementation of EnMS and operational improvement measures Trainees work with the manufacturing enterprises that have taken part in the training program to fully operationalize the energy management systems developed and reviewed by international experts, and to implement initial operational improvement measures. Operational improvement measures usually do require only staff time and external expertise. In case capital investments might be needed, the GEF project will provide additional technical assistance to work with EE financing programs in place, such as the EBRD MoSEFF and EBRD BAS program, to ensure that operational improvement measures are implemented. It is worth noting that the implementation of energy management systems and energy monitoring are listed between the Best Available Techniques (BAT) eligible for financing under both EBRD financing schemes. International experts’ “remote” technical advice is available to trainees during project implementation.
Step 6 Reporting of implemented EnMS and improvement measures Trainees will work with the manufacturing enterprises to report annually, for the first two years after implementation, to the GEF project/ Agency for Energy Efficiency on energy performance improvements and energy savings achieved.
The envisaged composition of the group of professionals to be trained as expert consists of representatives from the Agency for Energy Efficiency (AEE), the Technical University of Moldova, the National Cleaner Production Centre being established by UNIDO, managers/engineers from 5-6 manufacturing enterprises with more than one production sites, and about 10 independent consultants and experts providing energy efficiency or environmental management systems technical advisory services. As far as the participation of manufacturing enterprises in the Expert training is concerned, there will be two types of participation: Type A: Enterprise has a staff between the trainees Type B: Enterprise does not have a staff between the trainees but it participates by agreeing to receive the visit of and work with one of the trainees during Steps 3 to 6.
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Fig. 10 below provides a schematic representation of the EM Expert training.
Energy Management Expert T raining Program
Trainees from EnM system s enterprises A implemented in enterprises A International EnM Experts
Trainees from EnM System s EE experts, implemented in NEEA, TUM enterprises B
Fig.10. Diagram of the Energy Management Expert Training
The Steam System Optimization Expert training follows the same structure.
It has to be noted that the establishment of an energy management system and the implementation of many operational improvement measures usually do require only staff time and external expertise. However, in some cases some capital investments might be needed. As for steam system optimization project investments will be needed. However, for most optimization interventions, usually the more effective one in terms of energy savings, investment are of relatively small and medium size. Investments needed for the implementation of operational improvements and steam system optimization measures implementation are expected to be provided by the enterprises (Type A and Type B) as part of their agreed co- financing commitment before the beginning of the training program. In case enterprises may face problems in investing capital, the GEF project will provide additional technical assistance to work with the EBRD MoSEFF and EBRD BAS program to ensure that operational improvement measures and steam system optimization projects are implemented. In order to minimize the risk that EE projects developed through the Expert trainings are not implemented, the selection of the enterprises participating in the training program will be of critical importance. The GEF project will coordinate such selection with colleagues of the EBRD MoSEFF and EBRD BAS program to ensure that selected enterprises meets the eligibility criteria for accessing credit under these two financing schemes for energy efficiency projects. It is worth noting that both energy management and steam system optimization projects are listed between the Best Available Techniques (BAT) eligible for financing under both EBRD financing schemes While the GEF UNIDO project does not plan, at the moment, to provide any investment support for projects developed as result of the expert trainings, small resources might be granted on an ad-hoc basis provided that some funds allocated under Project Component 3 will remain unobligated..
2nd Stage – Energy Management and Steam System Optimization Training of Enterprises’ Managers and Engineers About 25 workshops and trainings for enterprises’ managers and engineers will be organized by the GEF project. The first 4-6 events will be jointly delivered by the project international experts and the trained national experts. 14
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The rest will be delivered by the national experts. The following three types of events will be delivered: a. ½ day workshop on energy management for industry top managers b. 2-day training on Energy Management for industry managers/engineers c. 2-day training on Steam System Optimization for industry engineers The ½ day workshop is designed as an introduction to the topic of energy management for enterprises managers and a networking opportunity. The objective of this workshop is to raise awareness and to encourage top managers to authorize their key staff to participate in the subsequent two-day training sessions on energy management implementation and steam system optimization that will be offered by the GEF project. The two-day training on Energy Management is targeted to the person designated by enterprises as responsible for energy management. The training will guide participants through the Plan-Do-Check-Act cycle as it applies to the EN 16001/ ISO 50001 energy management standards. Instructions will be given on how to establish an effective energy policy, set improvement targets and objectives, establish energy performance indicators, identify significant energy uses and opportunities for improvement. At least ½ day will be dedicated to internal auditing and integrating the EN 16001 and/or ISO 50001 energy management system into other management systems such ISO 9001 and 14001. This two-day training is targeted to energy engineers or other staff responsible for the operation of enterprises steam and heat system. The goal of this training is to prepare enterprises’ engineers to identify, develop and implement steam system optimization projects with limited outside assistance. Fig.11 below provides a schematic representation of the capacity building program to be implemented under Project Component 2. Beside addressing the major barrier of the current lack of adequate IEE expertise and services in the market and knowledge in enterprises, the capacity building program will contribute to the development of a market for IEE products and services in Moldova.
Information, Awareness and Promotion
EM/EE training of enterprise personnel Development of a Energy Management and Market for EM/EE System Optimization services to industry Expert Training Provision of EE technical services to industry
Implementation of EE projects in industry
Project duration After project time Fig.11 Diagram of GEF UNIDO project capacity building program As results from the implementation of the energy management systems established in enterprises participating in the Energy Management Expert training will start to accrue, a Practical Guide to the Implementation of Energy Management in Industry in compliance with EN 16001/ISO 50001 international standards tailored to the Moldova context will be developed building on the output of UNIDO parallel project. The Practical Guide will provide a very useful tool for wider dissemination of energy management best practices and supporting implementation.
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Project component 3 – Industrial energy efficiency pilot projects Under Project Component 3 the project will provide investments-specific technical assistance, including energy audits and project financing, to support the implementation of a limited number of demonstration IEE projects with high replication and/or energy savings potential in key sectors of Moldova’s industry. Fig.11 and 12 show the energy consumption and the number of enterprises for selected manufacturing sectors.
Energy consumption in Moldova manufacturing sectors - 2005 Enterprise population of manufacturing sectors - 2005 TJ # of companies 7,000 350
6,000 300 Heat
5,000 Electricity 250
4,000 200
3,000 150
2,000 100
1,000 50
0 0 15 17 20 21 24 26 29 15 17 20 21 24 26 29 ISIC Code ISIC Code
Fig. 11 Energy consumption in Moldova manufacturing Fig. 12 Enterprise population of manufacturing sectors – sectors – 2005. (Source: Moldova National Bureau of Statistics) 2005. (Source: Moldova National Bureau of Statistics)
The project will support the implementation of at least 6 pilot IEE projects. It has to be pointed out that these pilot projects are not meant to be necessarily steam system optimization and energy management projects. This is because the objective of Project Component 3 is to generate a broader set of case studies on IEE best practices. On the basis of energy audits carried out as well as discussion with Moldovan industrial experts and equipment suppliers, and bearing in mind the key manufacturing sectors of Moldova, refrigeration and compressed air systems offer significant opportunities for energy efficiency improvements and they would be very relevant. However, other energy efficiency and GHG emission reduction projects will be considered and implemented, especially where enterprises may be keener to invest. At the end of the PPG phase, the project has identified a number of potential pilot projects and other potential projects have been proposed by few enterprises. Letters of co-financing commitment have been secured from 5 4 enterprises.
The ultimate goal of the GEF UNIDO project is to reduce greenhouse gas emissions by contributing to establish a policy and normative environment that enables and supports sustainable adoption of energy efficient technologies and management as an integral part of industries’ business practices; an environment in which a cadre of well-trained and equipped experts in energy management and system optimization assists industries in developing and implementing energy efficiency improvement projects.
Expected Global Environmental Benefits to be delivered. Moldovan decision-makers, likewise most of their peers and markets in developed countries, essentially associate improved energy efficiency with new hardware, either being new production technologies or looking at individual components substitution (motors, pumps, boilers, etc.) rather than how energy is managed and how energy producing and consuming systems are operated. In best cases, such approach leads to significant unrealized energy savings. In worst cases, the result is negligible savings with consequent detrimental effect on widespread IEE. Being energy
4 A sixth letter of commitment of resources for participation in the EM and SO Expert training programs and implementation of a pilot IEE project is expected from the enterprise JLC in mid-January 2010, when the new top management will take office. 16
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efficient in industry requires attention to how energy is intertwined with the whole production process and the adoption of an energy system optimization approach. Past experience in OECD countries shows that: a. While equipment components substitution can usually deliver efficiency gains of 2-5%, energy savings in excess of 20% are achieved through system optimization. b. Enterprises that have integrated energy efficiency in their corporate practice through the establishment and implementation of energy management systems have achieved sustainable energy intensity reduction rates of 2.5-3.0% per year, 2-3 times higher than the reduction rates of enterprises without active and consistent energy management. Based on the data collected and the energy audits carried out during the PPG phase, consideration of possible baseline trajectory, review of existing literature on national experiences in other countries and international best practices, it has been estimated that over the period 2012-2021 the project will be instrumental to deliver between 62,000 to 114,000 tons CO 2eq of cumulative direct GHG emissions savings and 265,000 to 503,000 tons CO 2eq of indirect emissions savings by 2023. Please see Additional Annex F for a detailed description of how direct and indirect GHG emission savings have been estimated.
Institutional continuity and replicability, and sustainability of global environmental benefits The outputs to be generated by the GEF UNIDO Project Component 1 and 2 aim and will contribute to create an enabling environment for a steady growth of energy efficiency performance in industry and stimulate the creation of a national market for industrial energy efficiency products and services. All planned outputs are consistent with and instrumental to achievements of the objectives of Moldovan key energy policies and legislation as well as recommended plan of actions. Project Component 1 The planned national IEE Best Practices Dissemination (BPD) and Recognition (BPR) programs will play a major role in determining the growth rate of IEE projects implementation during and after completion of GEF project implementation. It is expected to generate the level of awareness needed to boost the interest in and demand for IEE services and projects. The BPD program is integral part of the Agency for Energy Efficiency mandate. It will see also the involvement and active participation of private sector organizations, such as the Chamber of Commerce and Industry of Moldova and other industry associations, which can rely on well established national networks and platforms, and have the provision of business-relevant information as one of their core services to constituent members. The planned national Monitoring, Tracking and Benchmarking (MTB) program of industrial energy consumption and efficiency will provide a key “infrastructural” element for more effective IEE policy initiatives. To be developed and established in collaboration with the Agency for Energy Efficiency, it will allow better informed design and measure of impact of targeted short- and medium-term policies and programs aimed to support IEE, including target-setting agreements. The MTB program will be also critical for the enforcement and monitoring of the future Law on Energy Efficiency, which in its current formulation includes the development and implementation of energy efficiency plans and the verification of performance improvements for companies and institutions with energy consumption above a defined threshold. The planned national Industrial Energy Manager Certification (IEMC) program will provide another key infrastructural IEE policy element considering that the current draft Law on Energy Efficiency at Article 17 mandates all business entities that consume annually energy resources equivalent to more 500 tons of conventional fuels to appoint an energy manager. The IEE Best Practices Dissemination and Recognition programs, the Monitoring, Tracking and Benchmarking program and the Industrial Energy Manager Certification program to be developed and established by the GEF UNIDO project and the Agency for Energy Efficiency will provide key pillars of a new and robust IEE policy framework. The coherence and alignment of these programs with existing Moldova energy policy objectives, plan of actions, institutions’ mandate and forthcoming legislation, combined with the commitment of resources pledged by the Ministry of Economy (please see Letter of Co-financing) provide strong foundations for institutional continuity, sustainability and further development of the GEF UNIDO project outputs as well as achievement of expected project’s outcomes. 17
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Project Component 2 The creation of a group of industrial energy efficiency experts highly skilled and fully equipped in the development and implementation of steam system optimization and energy management projects, provision of training on these subjects and other IEE services, is expected to play a most important role in generating and implementing new IEE projects during and after the completion of the GEF project implementation. During the GEF project implementation period the trained steam system optimization (SSO) and energy management (EM) experts not coming from one of the participating enterprises will become a resource of the GEF project and will work to deliver workshops and trainings on EM and SSO to engineers and managers of industrial enterprises. The awareness and capacity built through these “IEE User Trainings” will stimulate the development and implementation of new IEE projects and generate additional energy and GHG emission savings. It is important to note that all enterprises participating in the 2-day trainings on EM and SSO will be required to register with the project/national Monitoring, Tracking and Benchmarking program and will be subsequently provided with the Practical Guide to the Implementation of Energy Management as well as other material and tools to be developed by the GEF UNIDO project. After the completion of the GEF UNIDO project implementation trained SSO and energy management experts coming from public and private sector institutions such as the Agency for Energy Efficiency and the Chamber of Commerce and Industry will raise awareness, provide training and technical assistance as part of their mandate and/or portfolio of services to their clients. For instance, the Chamber of Commerce has 10 offices in as many districts, where industrial engineers and experts provide advisory/ consultancy services to enterprises, particularly SMEs, on technology upgrade, business and investment planning, as well as training. Trained independent SSO and EM experts will continue offering and providing steam system optimization, energy management and other IEE services to industry as result of increased demand for IEE services, kicking -off the development of provider start-ups and the growth of a national IEE market.
The availability of increased financing for IEE through the EBRD MoSEFF and the Moldova Energy Efficiency Fund together with the policy-drive for the creation of Energy Service Companies (ESCOs) inherent in the forthcoming Law on Energy Efficiency will provide conducive market conditions for progressive and sustained scaling-up of industrial energy efficiency projects and performance improvements, and consequent global environmental benefits.
B. DESCRIBE THE CONSISTENCY OF THE PROJECT WITH NATIONAL AND /OR REGIONAL PRIORITIES /PLANS : The current Environmental Policy of the Republic of Moldova adopted by the Parliament in November 2001 (Parliament Decision No. 605-XV of 02.11.2001) provides the reference framework for the Ministry of Environment (MoEN) activities. The policy pleads for strengthening the integration of environmental concerns into the socio- economic development of the Republic of Moldova in order to prevent and mitigate the adverse impact of economic activities on the environment and public health. The ultimate goal is to reconcile the ongoing social and economic changes of the country with environment sustainability at the national, regional and global level. Priority areas for MoEN’s action include integration of requirements for environmental protection into sector policies and providing technical assistance and support for environmentally sound investment projects. With respect to Climate Change, the MoEN action will be guided by the “National Strategy and Sector Programs on GHG Mitigation” and the “National Action Plan on Adaptation to Climate Change”. These documents, currently under development, will contribute to fulfil the commitments of Moldova under the UNFCCC as well as complement and complete the policy framework of the MoEN. It is within the context of the Sector Programs on GHG Emission Mitigation that the elaboration and implementation of energy conservation initiatives has become stringent as a fundamental action in reducing GHG emissions. The first legislative act of the Government to promote and support EE in Moldova dates back to year 2000; namely the Energy Conservation Law, No 1136 dated 13.07.2000. This was followed by a series of government decisions aimed to set up a legal framework supportive of EE: i) Government Decision No 1527 dated 26.11.2002 approved the establishment of a National Agency for Energy Conservation (NAEC); ii) Government Decision No 1528 dated 26.11.2002 approved the Regulation of the National Fund for Energy Conservation; iii) Renewable Energy Resources Law, No. 160 dated 12.07.2007 approved the transformation of the NAEC in the Agency for Energy Efficiency 18
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(AEE) and partial restructuring of NAEC governance, staffing and competencies. The Renewable Energy Resources Law provides also for the establishment of an Energy Efficiency Fund aimed to support the implementation of energy efficiency projects through a range of financing means, such as loans, investment guaranties and others. The Moldovan National Program of Energy Conservation for the years 2003-2010 approved by Government Decree No 1078 dated 05.09.2003 is the main enacted policy document guiding government actions in pursuing increased EE of the economy. It sets out quantitative targets for efficiency improvements at the economy level, priority areas for energy conservation and efficiency interventions and it indicates activities to carry out in order to achieve stated objectives. The Energy Strategy of the Republic of Moldova to the year 2020 approved by Government Decision No 958 dated 21.08.2007 has three strategic objectives: 1) security of energy supply; 2) promoting energy and economic efficiency; 3) liberalization of the energy market and restructuring of power industry. The document elaborates on energy saving and enhancing energy efficiency. It indicates key principles that shall guide policy and normative formulation, specific objectives in the field of increased energy efficiency and recommended measures to implement in order to achieve such objectives. The Energy Strategy also dedicates a section to International Cooperation in which it recognizes the critical importance of and calls upon international development assistance in achieving the Energy Strategy objectives. The Ministry of Economy and Trade is currently working to finalize the Law on Energy Efficiency. The draft Law has been developed looking at relevant legislation of EU neighbouring countries and it is now being reviewed (November 2009) to ensure it conforms to the EU Directive 2006/32/EC on energy end-use efficiency and energy services 5. In its current formulation the draft Law on EE includes mandatory energy audits every 5 years, the appointment of an energy manager and the development and implementation of energy efficiency plans for companies with energy consumption above three different defined thresholds. The Law appoints the national Agency for Energy Efficiency the responsibility for the development and maintenance of energy efficiency indicators, establishing mechanisms for monitoring and tracking energy savings and energy intensity, disseminating information and undertaking education campaigns on energy efficiency. Considering all the above, the proposed UNIDO-GEF project is perfectly in line with the strategic as well as specific objectives of Moldovan key policy documents and it is consistent with and supplemental to the recommended plan of actions. The proposed project would provide the additional international expertise, technical best-practices and financing inputs needed to support and effectively leverage national efforts. The project will contribute to the development of the human, institutional and industry capacity, and supporting structure necessary to realize the industrial energy efficiency related goals of the Energy Strategy, Energy Conservation Program and Energy Efficiency Law of the Republic of Moldova.
C. DESCRIBE THE CONSISTENCY OF THE PROJECT WITH GEF STRATEGIES AND STRATEGIC PROGRAMS : The project falls under and supports GEF-4 Climate Change Strategic Program 2 : Promoting energy efficiency in the industrial sector. By addressing key existing information, capacity and policy barriers for sustainable IEE in Moldova, the project will directly contribute to promote and increase the deployment and diffusion of energy–efficient technologies and practices in industrial production and manufacturing processes (Climate Change Strategic Long- term Objective 2 ). The project would also make a tangible contribution to stimulate the creation of a Moldovan market for IEE products and services.
D. JUSTIFY THE TYPE OF FINANCING SUPPORT PROVIDED WITH THE GEF RESOURCES . The context and barriers analysis as well as stakeholders discussions carried out during the PIF preparation and PPG implementation have clearly shown that:
5 It has to be noted that as response to the EU Directive 2006/32/EC on energy end-use efficiency and energy services, on July 1 st 2009, the European Committee for Normalization (CEN) released the European Standard for Energy Management System EN 16001. 19
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the Government has insufficient resources, lack the technical expertise and institutional capacity to autonomously structure and implement programs to promote and support energy efficiency in industry in the short- to medium-term the very limited and partial industrial energy efficiency expertise currently available in Moldova is not going to be addressed without the transfer of expertise and best practices from countries with more advance IEE markets to convince enterprises that investing in energy efficiency makes very good economic and environmental sense, the availability of a sufficient number of national success stories is a critical component of any effective promotional and educational campaign The project is targeted to address and remove existing policy gaps and technical capacity barriers at the institutional and market level by providing technical assistance. GEF resources are needed to secure incremental international and national expertise, human resources and services needed to address and remove many of identified barriers to IEE by carrying out the described activities.
E. OUTLINE THE COORDINATION WITH OTHER RELATED INITIATIVES : The GEF UNIDO project will collaborate with the Moldova Sustainable Energy Financing Facility (MoSEFF) of the European Bank for Reconstruction and Development (EBRD). The MoSEFF is establishing a €20 million credit line through partner Moldovan commercial banks for on-lending to investments in sustainable energy (focus will be on energy efficiency in industries, agribusiness and commercial buildings as well as renewable energy production). Loans will range from €25,000 to €2 million and will be offered at commercial terms and interest rates. MoSEFF will also provide some technical assistance to prospective sub- borrowers and participating banks for development and techno- economic due diligence of projects. Over the last 12 months UNIDO and EBRD have been constantly communicating, exchanging information and collaborating to ensure maximum synergy between their respective efforts in the Republic of Moldova.6. EBRD and UNIDO believe that the MoSEFF and the GEF UNIDO project together can offer a comprehensive response to address almost all the existing barriers that are preventing Moldovan manufacturing enterprises from becoming more energy and cost efficient, and ultimately more competitive. The following two areas have been identified for collaboration: 1) Building capacity of national experts and enterprise personnel EBRD MoSEFF consultants will be invited to present the MoSEFF and its project financing and eligibility criteria as part of the GEF UNIDO trainings for experts as well as enterprise engineers and managers. 2) Provision of advisory services to enterprises and financing of IEE projects The GEF UNIDO project capacity building component will generate a pipeline of energy system optimization and energy management projects. These two categories of projects are both eligible for financing under the MoSEFF. In case enterprises may face problems in financing the developed projects, the GEF UNIDO project will coordinate with the EBRD MoSEFF consultants to advice enterprises on possible submission to the Moldovan commercial banks participating in the MoSEFF for financing Unfortunately, due to administrative constraints related to the donor agreement supporting the EBRD MoSEFF, EBRD could not make any co-financing/ resource commitment towards the implementation of the GEF UNIDO project. However a letter of intent has been provided by EBRD (please Annex 4 of UNIDO project document). The GEF UNIDO project will collaborate also with the Moldova Business Advisory Service (BAS) Program . The BAS program aims to support micro, small and medium enterprises (from 5 to 250 employees) in developing their businesses by providing short-term technical advisory services using local consultants. In February 2009 the BAS program has launched a new Energy Efficiency initiative, funded by the Swedish International Development Agency (SIDA), aimed to raise awareness of SMEs in the commercial and industrial sector about energy efficiency and to
6 This included EBRD MoSEFF project manager’s participation to the national seminar organized by UNIDO and the Ministry of Environment in September 2009 and getting and acknowledging feedback from EBRD MoSEFF consultants on the energy audit protocol used by UNIDO experts during the PPG phase. 20
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support the implementation of energy saving actions by providing consultancy services for the development of EE projects. The BAS EE program plans to carry out a number of seminars and training (3-4 per year of the duration of 2- day each) to raise awareness and build capacity in enterprises. It is worth to point out that colleagues of the BAS program reported that they had major problems to source local experts for consultancy services on industrial energy efficiency and energy auditing in industry. The GEF UNIDO project will collaborate with the BAS program in the same areas identified for collaboration with the EBRD MoSEFF, but with some complementary differences: 1) Building capacity of national experts and enterprise personnel The GEF UNIDO project and BAS program will join efforts in the organization of few workshops and training in 2011. 2) Support to IEE projects implementation The BAS program has a small grant facility (up to € 10,000) for project preparation and/or implementation. The GEF UNIDO project will coordinate with the BAS program in case SMEs participating in the Expert training program may face problems in financing the developed IEE projects and the size of the project is to small for the MoSEFF. Likewise to EBRD, due to administrative and time constraints, the BAS could not make a formal co-financing/ resource commitment towards the implementation of the GEF UNIDO project. The GEF UNIDO project is seeking collaboration and discussing possible co-financing agreement with the Support to Energy Market Integration and Sustainable Energy in the NIS (SEMISE) project. The SEMISE project has been launched in Moldova in October 2009. One of the objectives of SEMISE is promoting the development of sustainable energy policies through the provision of technical assistance, institutional strengthening and capacity building. Based on discussion with SEMISE colleagues the following areas have been identified for collaboration and joint activities: a. Building and strengthening IEE technical capacity of the Agency for Energy Efficiency b. Development of an Industrial Energy Manager and Auditor Certification program c. Creation of a cadre of national experts on energy efficiency, management and auditing in industry UNIDO and its Moldovan counterparts will continue to discuss with the SEMISE project to define how to best collaborate on the ground and if a formal co-financing commitment from SEMISE to the GEF project will be possible. The GEF UNIDO project is discussing collaboration and co-financing with the Swedish International Development Agency (SIDA). SIDA is assessing the possibility to providing funds for Moldova to support institutional strengthening of the Agency for Energy Efficiency. The technical assistance to be provided by the GEF UNIDO project under Project Component 1 has been acknowledge as very well aligned with SIDA objectives. However, since SIDA assessment is still ongoing, no formal commitment of funds to the GEF UNIDO project was possible. UNIDO and its Moldovan counterparts (Ministry of Environment and Ministry of Economy) will continue to discuss with SIDA the possibility of cash co-financing contribution to the GEF UNIDO project.
F. DISCUSS THE VALUE -ADDED OF GEF INVOLVEMENT IN THE PROJECT DEMONSTRATED THROUGH INCREMENTAL REASONING :
Baseline scenario
Policy, legal and institutional framework The policy and legal framework for energy efficiency has been under continuous development and improvement for almost a decade. However, as of end of 2009 very little has been achieved on the ground, and almost nothing in the manufacturing sector. This has been mainly due to the lack of institutional capacity and resources to support policies implementation combined with energy price regimes that only in last few years have progressively moved to cost- 21
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reflective and unsubsidized tariffs. The Renewable Energy Resources Law , ruling the establishment the Agency for Energy Efficiency and the creation of an Energy Efficiency Fund, and the Law on Energy Efficiency , pending the first reading by the Government, represent decisive positive step towards strengthen policy and legal frameworks for energy efficiency. However, given the persistent lack of expertise and poor resources endowment, it is most likely that very little, if anything, in terms of industrial energy efficiency programs development and implementation will happen over the next 5 years unless external technical assistance is provided. A clear example is indeed offered by the Agency for Energy Efficiency and the creation of the Energy Efficiency Fund, still to be established after more than 2 years since the approval of the Renewable Energy Resources Law . The Government is well aware of its resource and capability constraints and for this reason is seeking international support from both multilateral and bilateral donors.
Industrial Energy Efficiency Market The steep increase of energy prices experienced over the last years (Fig.8 and 9) have moved energy up at the top of manufacturing enterprises agenda 7. However, the very low awareness and understanding of their energy performance level, of what can be done to improve efficiency and how it can be done, have prevented most enterprises to traduce their drive for cost reduction in actual cost-effective energy savings. Most of the energy efficiency improvements have been mainly achieved through capital intensive renovation and/or replacement of production technologies. No structured awareness and education programs to inform and marketing energy efficiency to industrial enterprises top management is in place and will be in place in the short-term. The awareness raising and capacity building seminars and workshops to be delivered between enterprises by the BAS program represent just a good start. Without a comprehensive and sustainable approach, the existing major technical and economic potential for energy efficiency improvement in industry is likely to remain mainly untapped in the short-term. This is also primary consequence of the very limited industrial energy efficiency expertise (experts and consultancies) currently available on the Moldovan market and a focus between industrial equipment vendors and suppliers to sell just “hardware” rather then a more comprehensive energy service. Just 20% of the major equipment vendors and suppliers interviewed by the project team during the PPG phase offer advice to clients on how improving energy use and efficiency as it relates to their product. It is worth noting that the lack of energy service providers in the market has been identified by the Government as a major barrier to improved energy efficiency of Moldova economy. The forthcoming Law on Energy Efficiency is supposed to also pave the way to the creation of energy service companies.
Financing Over the last decade Moldovan enterprises have been struggling to upgrade their technology and production despite meager profit margins and high commercial interest rates, and to survive. Many companies reported to draw commercial loans only as last resort and anyway, always keeping the debt ratio of investments well below 50%. Financing is perceived as one of the main, if not the main, barrier to improved energy efficiency. While it can not be argued that most Moldovan enterprises face serious financial constraints, it can and has to be argued that financing is the main barrier to improved energy efficiency. It is simply not true. The cause of such misperception is the ignorance of enterprises about how energy efficiency can be achieved and the association of improved efficiency with new equipment and technology: for the vast majority of enterprises energy efficiency is still just something that you buy. Energy audits carried out during the PPG phase in a number of enterprises, some between the best performing in their sector, have shown significant opportunities for energy savings at no or low costs (with payback period of less than 6-9 months and therefore fundable from the operational rather than the capital budget). The energy audits have also revealed that new technologies do not necessarily mean improved efficiency. Most of the existing steam boilers
7 Interviews, meetings and seminar, and lastly the survey carried out during the project preparation phase have consistently shown that energy conservation and costs reduction are primary goals of most enterprises. 22
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analyzed would have the possibility to reach efficiency level 6-8% higher than any brand new Western European boiler if complemented with the appropriate ancillary control devices 8. Financing can become the main barrier to increased energy efficiency when enterprises need to draw on external advisory services for project identification and development and they do not have the resources, or when all no and low costs improvement measures have been implemented. The Moldova Sustainable Energy Financing Facility (MoSEFF) to be established by the European Bank for Reconstruction and Development (EBRD) is expected to make a significant positive contribution to address the financing barrier for energy efficiency projects. The MoSEFF funds will be loaned out by local banks at commercial interest rates. The incentive for sub-borrowers (including industrial enterprises) is the payment by MoSEFF of Completion Fees upon successful completion of the energy efficiency project/ investment. Completion Fees can range from 5 to 20% of the loan amount depending on the size of the loan, the energy efficiency technology used and the energy/GHG emission savings. For the MoSEFF to be successful enterprises management will have to be convinced to invest in energy efficiency. Technical assistance will be provided through consultants for that and assisting in project development. However, the MoSEFF will not undertake any structured and nation wide education campaign on industrial energy efficiency and it will not carry out any capacity building program at enterprise level. Technical assistance will be offered only to those enterprises that are client and/or meet the creditworthiness criteria of the local commercial banks partnering in MoSEFF. Furthermore, the €25,000 bottom threshold for the MoSEFF loans will be most likely too high for many of the Moldovan companies.
Baseline trajectory In the absence of the proposed GEF-UNIDO project very little steps, if any, towards the implementation of policies and programs to monitor, promote and support industrial energy efficiency are likely to be made in the short-term. The vast majority of manufacturing enterprises will continue to suffer from lack of energy efficiency information, understanding and technical capacity, missing sizeable opportunities for energy savings and costs reduction through better energy management practices and the implementation of no and low cost operational improvement measures. No significant changes would happen in the market with respect to the provision of energy management and system optimization advisory services. It is very unlikely that the few equipment vendors that are now offering some energy efficiency advice related to their product will broaden the scope of their services to encompass the entire system or factory, unless they clearly see its market potential and they can locally procure the required expertise. Energy service companies (ESCOs) are likely to appear and become operational only in the medium term, considering that according with the current draft Law on Energy Efficiency they will have to work through performance contracts and bear part of projects’ financial risk. Considering that and past experience of OECD countries, ESCOs will almost certainly concentrate in the commercial sector initially and only at a later stage engage with industry. The level of energy efficiency investments in the manufacturing sector will increase compared to the recent past, mainly through the EBRD Moldova Sustainable Energy Financing Facility; but to what extent is difficult to predict. What seems very likely is that the majority of Moldovan enterprises will not be able to get access to the MoSEFF, SMEs in particular; the same small and medium enterprises that would have the greatest potential for economic energy savings and efficiency improvements. In conclusion, in the short-term, the baseline scenario would not be able to bring about significant mitigation of most infrastructural barriers that are hampering energy efficiency progression in Moldova industry and the creation of a modern industrial energy efficiency service market. Energy efficiency projects and investments will increase compared to the past thanks to the MoSEFF, but they would most likely remain localized in a relatively small number of companies. The underlying critical problem of the lack of adequate institutional capacity and supporting policy programs for IEE and good technical expertise and skills on the market would remain unresolved. Most enterprises
8 Soviet time boiler manufacturers used water tubes technology already for boilers with steam production capacity of 1 ton/hour. Nowadays, most Western Europe boiler manufacturers use water tubes technology only for boilers with steam production capacity of 20 tons/hour and above. 23
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would continue to lack structured approaches to and capacity for energy management and energy efficiency, jeopardizing the sustainability of the efficiency gains that some of them will achieve through EE investments made as well as determining the loss of those major potential energy savings and GHGs emissions that could be reaped by most SMEs through no and low cost energy efficiency measures. The harvest of the major economic energy efficiency improvement potential in Moldova industry would be further delayed and prolonged with consequent GHG emissions that could be otherwise avoided to the Global Environment.
GEF Project Alternative scenario
The proposed UNIDO-GEF project would provide the incremental policy, technical and financial inputs required to support and effectively leverage national efforts in setting up and maintaining an infrastructure capable to support IEE policy development and implementation, effect sustainable energy efficiency in industry, stimulate the creation of a market for IEE services and products and obtain relevant GHG emission reductions. In so doing the project would greatly multiply the impact and global environmental returns of resources allocated to IEE by the Moldovan Government as well as by other international initiatives and programs. At the policy and institutional levels the project would add the technical assistance needed to strengthen local expertise, knowledge and capacity in developing, implementing and maintaining effective IEE policies and programs; to streamline and ensure timely development of planned and new policy and normative measures (i.e. IEE monitoring, tracking and benchmarking program, best practices information and dissemination program, certification of industrial energy managers, energy management system implementation guidelines, etc.). At the IEE market level the project would target all players. To industry decision-makers , managers and engineers, the project would provide the knowledge to fully understand the economic and environmental benefits of energy efficiency and management in industry; the technical capacity and tools to go beyond simple equipment/component replacement and capture the real efficiency gains that stem from system optimization and integration of energy efficiency in industry corporate practices. Industry wide and increased awareness of IEE potential and benefits delivered by the project will boost demand for IEE services and products generating the pull for market creation. Creating a cadre of national energy management and steam system optimization experts the project will remove a critical existing barrier, it will offer a response to the new demand for IEE services and will most likely kick-off the establishment of start-ups in the field of IEE services and products provision that may well develop then in energy service companies. At the IEE project implementation level the project would provide IEE project-specific technical assistance and financing support through Component 3 to facilitate the implementation of selected pilot IEE projects with high replication and/or energy savings potential in the key sectors on Moldova manufacturing industry. The project would also secure the implementation of 40 IEE projects as result of the expert training program to be executed under Component 2. The implementation of these IEE projects would generate Moldovan IEE best practices and demonstrated success stories to be then disseminated through the other GEF UNIDO project activities. This is expected to fuel the interest of industry in IEE and reduce the associated perceived investment risk. Considering the articulated structure of the GEF-UNIDO project and its high complementary, especially PC1 and PC2, with other ongoing and planned IEE related technical assistance programs, project implementation would provide and receive critical contributions for multiplying the overall impact of Climate Change related technical assistance to Moldova.
G. INDICATE RISKS , INCLUDING CLIMATE CHANGE RISKS , THAT MIGHT PREVENT THE PROJECT OBJECTIVE (S) FROM BEING ACHIEVED AND OUTLINE RISK MANAGEMENT MEASURES : Six categories of risks related to the project and its objectives being achieved are considered: i) institutional; ii) technical; iii) market; iv) financial; v) implementation; vi) sustainability. 24
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Institutional risk 1: Low government commitment to energy efficiency and the GEF UNIDO project Potential impact: Medium Probability: Very low The project objectives and activities are perfectly in line with national energy policies objectives and actions plans for improving industrial energy efficiency (IEE) and creating a market for IEE products and services. It has to be pointed out that the project is also perfectly in line with the European Commission Green Paper and Directives on Energy Efficiency and future integration of Moldova in the European Union is the key political objective of basically all political parties. Moldovan Government counterparts have been proactive and supportive during the whole project development phase. Management: Close coordination, regular communication and delegation of responsibility will ensure continuous active involvement of key policy/institutional counterparts.
Institutional risk 2: Delay in establishing the Agency for Energy Efficiency Potential impact: Low Probability: High The establishment of the Agency for Energy Efficiency was ruled in Moldovan legislation by the approval of the Renewable Energy Resources Law in July 2007. Due to a redistribution of Ministries portfolios first and then a change of Government coalition the legislative process for setting the Agency into operation has been slow and at the end of 2009 the Agency is not in operation, as it was instead planned. However, remaining legal and administrative acts have been already prepared and they are waiting for Cabinet reading and approval. Based on discussion with Government counterparts the AEE is expected be staffed and in operation by the 2 nd – 3 rd quarter 2010. Management: A transitory solution has been agreed with the Ministry of Economy, under whose authority the AEE will be established, for bridging the gap between the beginning of the implementation of GEF-UNIDO PC 1 activities and the beginning of the AEE operations. A small unit of national staff (2-3 persons) will be formed by the GEF- UNIDO project and the Ministry of Economy to receive training and work to the implementation of Project Component 1 activities. Once the AEE will enter into operation, the national staff of the GEF UNIDO PC1 unit will be integrated in the AEE.
Technical risk Potential impact: High Probability: Very Low There are no noteworthy technical risks associated with the policy measures and capacity building activities proposed by the UNIDO GEF project. All of them are well proven interventions, tested by national experiences and through UNIDO projects in many countries. Management: Execution of activities to be implemented under Project Component 1 will be carried out with the support of international experts/companies with demonstrated and successful past experience. With respect to the capacity building and enabling activities special attention will be given to further defining the existing baseline in order to develop effective tailored and well-targeted training programs and curricula.
Market risk: Industry decision-makers do not participate/ engage actively in the project Potential impact: High Probability: Very Low The manufacturing sector in Moldova is striving to enhance its competitiveness in national as well as international markets. Technology upgrade and energy consumption have become areas of industry’s primary attention due to rapidly increasing energy prices and quality of product issues. While the prospect of benefiting from significant energy savings and consequent production costs reduction is expected to drive and fuel industry participation in the project, there might still be the risk of not attracting the critical mass of enterprises needed for the project to make a sizeable impact. 25
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However, the level of interest and collaboration shown by enterprises during the PPG phase leads to legitimately expect strong participation. Management: During the project preparation phase about 50 enterprises have been reached by the project through bilateral meetings, energy audits, questionnaires and a national seminar. The general response was of strong support and interest to participate in the project. A well-structured national information campaign at the beginning of project implementation combined with an active dialogue and involvement of industrial associations at the regional and province level during the whole project duration will ensure the desired industry response to the project.
Financial risk: Financial and credit constraints prevent enterprises from investing in IEE . Potential impact: Medium. Probability: Low-Medium Financial and credit constraints of the Moldovan manufacturing sector are expected to have low impact on the GEF project outputs. Impact on project outcomes, i.e. indirect energy savings, might be greater. Management: Project Component 2 and 3 combined with the selection of suitable partner enterprises and close collaboration with the EBRD MoSEFF are expected to minimize the financial risk impact on project outputs. With respect to project outcomes, and in particular indirect energy savings, the project expects to mitigate the financial and credit risk by improving industry understanding of energy efficiency cost benefits and the way energy-related investment-decisions are made, ensuring that least-capital cost is not the sole appraisal criterion. Market and industry experience in OECD countries show that for many industrial energy efficiency measures the pay back period is less than 1 year, well within the timeframe of commercial lending. Furthermore, the project will closely coordinate, and whenever possible join efforts, with other initiatives aimed to provide financing for energy efficiency investments such as the Business Advisory Service Program, ongoing, and the Moldova Energy Efficiency Fund, due to be established.
Implementation risk Potential impact: Medium. Probability: Very low. UNIDO has long-standing direct experience in the development and implementation of IEE projects and it has a strong knowledge of the key variables that determine the success and the failure of project implementation. The Climate Change Office of the Ministry of Environment (MoEN) has proven experience and successful track records in the implementation of technical assistance projects requiring coordination of multiple Central and Local Public Authorities, non-Governmental sector and academic institutions. Management: UNIDO will mitigate this risk through detailed development of activities plans in close cooperation with in-country project partners, stakeholders and developers. Agreed and transparent modus operandi will be defined before the start of the project implementation.
Sustainability risk: Failure to achieve project outcomes and objective after successful delivery of outputs Potential impact: Medium. Probability: Very low. Establishing a monitoring, tracking and benchmarking program, a national best practice dissemination program and an Industrial Energy Manager Certification program, the project would create the conditions to produce and sustain a policy and normative driven push for industrial energy efficiency. In parallel, by making industries, equipment suppliers and energy efficiency experts fully aware of the economic potential for energy efficiency improvements in manufacturing sector, and equipping them with capacity and tools to realize and reap the benefits of such potential, the project would generate a self-reinforcing market pull for energy efficiency in industry. Such balanced and flexible policy-push and market-pull being created by and through the delivery of project outputs is expected to ensure the attainment of the project outcomes and their sustainability.
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H. EXPLAIN HOW COST -EFFECTIVENESS IS REFLECTED IN THE PROJECT DESIGN : The project takes a comprehensive approach to address many of the barriers that are preventing Moldova manufacturing sector to achieve its full economic potential for energy efficiency improvements, in particular those related to awareness and capacity of industry as well as IEE relevant institutions and policy instruments. The strategy of the project to achieve high cost-effectiveness is geared on four principles: 1) build on and maximize leverage of national public and private resources; 2) training-the-trainers approach for industry-wide awareness raising of and capacity building on industrial energy efficiency, system optimization and energy management; 3) select pilot IEE projects primarily on the basis of their short- and medium-term energy and GHGs savings potential; 4) searching and maximizing synergies with ongoing and future programs and credit lines for investment in energy efficiency projects in industry. Given its focus on addressing policy and technical capacity barriers, the GEF UNIDO project will generate the biggest share of GHG emission savings after the project implementation period, when the capacity built and the programs established will deploy their full impact at manufacturing sector-wide level on how industries manage energy and operate energy systems. The project is expected to generate cumulative DIRECT GHG emission savings in the range of 62,650 – 114,470 ton CO 2eq and INDIRECT GHG emission savings in the range of 265, 650 – 503,980 ton CO 2eq . The GEF resources cost- efficiency for the DIRECT GHG emission savings would range from 8.5 to 16.0 USD/ton of CO 2eq ; for the INDIRECT GHG emission savings cost-efficiency would significantly improve, going down to 2.0 - 3.8 USD/ton CO 2eq
PART III: INSTITUTIONAL COORDINATION AND SUPPORT A. INSTITUTIONAL ARRANGEMENT : UNIDO is the only GEF Implementing Agency involved in this project and no specific arrangement with other GEF Agencies is required.
B. PROJECT IMPLEMENTATION ARRANGEMENT : As GEF Implementing Agency, UNIDO holds the ultimate responsibility for the implementation of the project, the delivery of the planned outputs and the achievement of the expected outcomes. The execution of the project will be primarily and mainly responsibility of the Climate Change Office (CCO) of the Ministry of Environment (MoEN) and the Agency for Energy Efficiency of the Ministry of Economy (MEC) with UNIDO playing a subsidiary role. As agreed with the Government of Moldova and in line with the current legislation, the Climate Change Office of the MoEN will have overall coordination responsibility while the MEC will be responsible for the substantive work to be performed under Project Component 1. UNIDO will be responsible for the overall management and monitoring of the project, and reporting on the project performance to the GEF. UNIDO will be in charge of procuring the international expertise needed to deliver the outputs planned under the three project components, and of providing the supplemental technical expertise to ensure that international teams’ deliverables are technically sound and consistent with the requirements of the project. A Project Management Unit (PMU) will be established within the Climate Change Office of the MoEN. The PMU will consist of the National Project Manager (NPM) and the Project Administrative Assistant (PAA). The PMU will be responsible for the day-to-day management, monitoring and evaluation of project activities as per agreed project work plan. In close collaboration with the Ministry of Economy and the Agency for Energy Efficiency, the PMU will coordinate all project activities being carried out by project national experts and partners. It will also be in charge of the organization of the various seminars and trainings to be carried out under Project Component 2. The PMU will be funded by the GEF budget. During the whole implementation period of the project UNIDO will provide the PMU with the necessary management and monitoring support. A Project Advisory Committee (PAC) will be established for periodically reviewing project implementation progress, facilitate co-ordination between project partners, provide transparency and guidance, and ensuring ownership, support and sustainability of the project results. The PAC will have a balanced representation from key ministries, public institutions, private sector, NGOs, UNIDO and other international organizations partnering in the project or having 27
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relevant ongoing programs, and it will be chaired by the GEF Political Focal Point of Moldova. The final composition of the PAC will be defined during the project implementation start-up phase. The PAC is envisaged to meet twice a year. At the beginning of project implementation a detailed working plan for the entire duration of the project will be developed by UNIDO in collaboration with the PMU, the Ministry of Economy and the international teams of experts. The working plan will clearly define roles and responsibilities for the execution of project activities, including monitoring and evaluation; it will set milestones for deliverables and outputs. The working plan will be used as management and monitoring tool by UNIDO and the PMU and reviewed and updated as appropriate on a biannual basis. Fig.13 shows a diagram of the project implementation arrangement.
GEF
UNIDO
Project Management Unit Project Advisory (PMU) Committee Climate Change Office of Chair: GEF Focal Point MoEN Ministry of Economy UNIDO International Project Manager PMU Project Manager Experts Project Administrative Assistant Members
Project Component 3 Project Component 1 Project Component 2
Agency for Energy National experts National experts Efficiency Equipment vendors Enterprises National experts Agency for Energy Agency for Energy Chamber of Commerce Efficiency Efficiency
Government Chamber of Commerce EBRD MoSEFF
Technical University of Technical University of BAS Program Moldova Moldova SIDA Enterprises
SEMISE EBRD MoSEFF BAS Program SEMISE
Fig.13 Diagram of project implementation arrangement
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PART IV: EXPLAIN THE ALIGNMENT OF PROJECT DESIGN WITH THE ORIGINAL PIF : The final design of the project is in line with the approved PIF. Further context analysis, review of existing barriers, meetings with various stakeholder groups and discussions with newly or soon to be launched industrial energy efficiency programs carried out during the PPG phase, have confirmed the strong relevance of the original UNIDO GEF project and its additionality to ongoing and planned national and international programs to promote and support increased energy efficiency in Moldovan industry. Project Component 1 and 2 have shown to be particularly needed and synergetic to other initiatives that have been and are focusing primarily on making financing available or working with individual enterprises, but that have left in the background institutional strengthening and building capacity and expertise in the market for the provision of state-of-the-art and quality industrial energy efficiency services. As verified during the PPG and highlighted by several international programs on the ground, qualified and experienced national experts/ consultants in energy management and energy efficiency in industry are almost totally missing on the Moldova market at the moment. Considering the above, Project Component 1 (PC1) expected outputs have been slightly modified also to better focus available resources. The design of a mechanism for developing energy efficiency target setting agreements for industry has been found too premature in the view of the existing government resources, institutional capacity and data available on energy consumption and efficiency in industry. The adjective “mandatory” has been removed from the Industrial Energy Manager Certification program output. During the PPG phase it was not possible to conduct the analysis and stakeholder consultations needed to confidently confirm that a mandatory certification program would the best way to go and it would be a realistic and feasible output for the GEF UNIDO project. The current draft Energy Efficiency Law mandates all business entities whose annual energy consumption is more than 500 tons of conventional fuels to appoint an energy manager, but it does not require or mention energy manager certification or qualification. While it is demonstrated that professional certification/ qualification enhances competencies and skills and ensures provision of better professional services, whether the certification program should be made mandatory or not is a dilemma that need further analysis and discussion with stakeholders. At project document submission stage, for PC1 less co-financing than expected have been secured. Discussion about co-financing for the UNIDO GEF Project Components 1 and 2 has been ongoing with the Swedish International Development Agency (SIDA) and the Support to Energy Market Integration and Sustainable Energy in the NIS (SEMISE) project. However, due to the timing of SIDA and SEMISE initiatives, both very recent, it was not possible to secure co-financing commitment. Nevertheless, in the view of the remarkable potential synergies, UNIDO and its Moldovan counterparts will pursue further the possibility of co-financing and collaboration agreements with SIDA and SEMISE. As for Project Component 2 (PC2) , the expected outputs have been modified to include the implementation, in addition to the development, of 40 energy efficiency projects (steam system optimization, energy management and operational improvements) as result of the experts training program. The justification for such more ambitious output rests on the agreed collaboration between the GEF UNIDO project and the EBRD Moldova Sustainable Energy Financing Facility (MoSEFF) and the Moldova Business Advisory Service (BAS) Program. The MoSEFF and BAS programs offer financing for energy efficiency investment (MoSEFF from € 25,000 above, BAS up to € 10,000). The EBRD MoSEFF and BAS project preparation requirements and financing/eligibility criteria will be integrated in the GEF UNIDO training for experts. In this way the pipeline of energy efficiency projects that will be generated the expert capacity building program of the UNIDO GEF project will be ready for submission to the MoSEFF and BAS for financing, if enterprises may not have all the funds needed. With regard to Project Component 3 (PC3), the minimum number of pilot projects has been reduced to reflect the number of enterprises that at the end of the PPG phase have agreed to partner with the GEF UNIDO project and have made co-financing commitments. The funds allocation has not been changed to leave some flexibility in the finalization of the collaboration agreements with the partner enterprises as well as allow for the identification of one additional pilot IEE project. It is envisaged that PC3 funds that at the end of Year 1 of the GEF project implementation will be still not earmarked for a pilot IEE project, will be redistributed between PC1 and PC2. Under Project Component 2 funds 29
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would be used to support the implementation of steam system optimization projects and operational improvements measures developed through the Expert training Allocation of GEF funds to Project Component 4 have been increased to account for the assignment to the Project Implementation Unit of a wider range of project execution activities than initially envisaged, which will require the appointment of 2 full time staff instead of 1 full time and 1 part time, and due to the failure of securing the cash co- financing estimated at the PIF development stage.
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Original PIF Expected Outputs Final Project Design Expected Outputs Observation
PC1 1. Structure and procedures for 1. Structure and procedures for monitoring, The design of a mechanism for monitoring, tracking and benchmarking tracking and benchmarking energy developing energy efficiency target energy consumption in industry are consumption in industry are developed and setting agreements for industry has developed and established. established. been found too premature. 2. National IEE Best Practices 2. National IEE Best Practices information The mandatory nature of the information and dissemination program and dissemination program developed & certification program for industrial developed & established. established. energy manager needs further 3. Mandatory national certification 3. National IEE Best Practices Recognition analysis to state that it is the best program on IEE for industry engineers Program is developed and established. way to go and that it would be a and managers is developed and 4. National Industrial Energy Manager feasible output within the established. Certification Program is developed and timeframe and resources of the 4. A mechanism for developing EE established. project target -setting agreements for industry is Better focus available resources. developed . PC2 1. Industry decision-makers understand 3. Industry decision-makers understand Expected output # 2 in PIF. their potential for EE gains and their potential for EE gains and consequent Slightly rephrased text. consequent environmental and economic environmental and economic benefits.
benefits. 1. A cadre of 40 professionals, comprising Expected output # 4 in PIF. 2. A cadre of at least 40 professionals of energy efficiency consultants and comprising of industry engineers and experts, industry engineers and managers, Included implementation of IEE industrial energy systems/ efficiency industrial equipment vendors and others are developed as result of Expert experts are equipped with the technical trained at an expert level and are equipped training program. capacity and tools required to: a) develop with the technical capacity and tools Increased energy savings based on and implement EE measures in industry, required to: a) develop and implement findings of PPG activities. including system optimization and energy management and energy efficiency energy management; b) provide training projects, focusing on steam system to other industry and energy optimization, in industry; b) provide professionals and offer IEE services. training to industry and energy professionals and offer commercial IEE services. 3. An Energy Management System 4 A Practical Guide to the Implementation Guide ISO9000 and ISO14000 of Energy Management in Industry in compatible is developed. compliance with the EN 16001 and ISO 50001 international standards is developed.
4. At least fifty (50) IEE projects for 2. At least 40 IEE projects for cumulative cumulative 40,000 MWh of potential 213 - 416 GWh of energy savings are economic savings are identified by developed and implemented by industrial industrial enterprises participating in the enterprises as result of their participation in project training and appraised by project the Expert Training program of the project. experts. PC3 1. At least 8 pilot IEE projects for 1. At least 6 pilot IEE projects for Minimum number of pilot projects cumulative 30,000 MWh of energy cumulative 45 – 60 GWh of energy savings reduced from 8 to 6 to reflect letter savings over the investments duration are over the investments duration are of commitments secured and implemented by enterprises, from key implemented by enterprises, from key negotiated. industrial sectors, partnering in the industrial sectors, partnering in the project. Increased energy savings based on project. findings of PPG activities.
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PART V: AGENCY(IES) CERTIFICATION This request has been prepared in accordance with GEF policies and procedures and meets the GEF criteria for CEO Endorsement.
Agency Coordinator, Date Project Contact Agency name Signature (Month, day, year) Person Telephone Email Address Dolf Gielen 0043 1 260 26 [email protected] Dmitri PISKOUNOV 3811 Managing Director Programme Development and Technical Cooperation Division UNIDO
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ANNEX A: PROJECT RESULTS FRAMEWORK
Project Strategy Objectively verifiable indicators Indicator Baseline Target Source of Risks and Assumptions (quantified and time-bound) verification Goal To reduce energy use 1. Incremental CO2eq 1-2. Specific energy Cumulative reduction 1. Agency for A1. Moldova related emissions of emission reduction (tons consumption (SEC) for of SEC by more than Energy Governments remain greenhouse gases of CO2eq) 3 manufacturing sub- 20% over the period Efficiency committed in the produced by Moldova sectors in the focus of 2012-2023 medium and long- manufacturing sector 2. Specific energy the GEF project 2. End of project term to improve activities and growth consumption (energy use Survey national energy per ton/unit of output) for SEC referred to output security and selected manufacturing quantities currently not implement sub-sectors available for any sub- environmental sector. policies. To be defined in Year 1 A2. Energy costs of project reduction becomes a implementation under first priority for PC1 industry. Objective of Improved Energy 1. Incremental direct 1. No direct CO2eq 1. Direct emission 1. Monitoring, A1. Sustained and the project Efficiency of Moldovan CO2eq emission emission reductions reductions: tracking and solid Government Industrial Sector leading reductions (tons of 90,000 tons CO2eq benchmarking support to the project. to reduced global CO2eq) over period 2012-2021 program to be A2. Industry drive for environmental impact and established by energy costs reduction enhanced 2. Incremental indirect 2. No indirect CO2eq 2. Indirect emission the project with and enhanced energy competitiveness. CO2eq emission emission reductions reductions: the Agency for efficiency grows reductions (tons of 400,000 tons CO2eq Energy progressively stronger CO2eq) over period 2012-2023 Efficiency and widens. (AEE) A3. Various 3. Specific energy 3. Values to be 3. SEC average annual international IEE consumption of selected determined during Year reduction of 2% over 2. End of project technical cooperation enterprises 1 of project period 2012-2023 Survey programs achieve implementation through good synergy and Survey results and 3. Final leverage of respective further data collection evaluation complementarities
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Outcome 1 Establishment of policy, 1. Number of IEE policy 1. No IEE specific 1. Three national IEE 1. Agency for A1. Sustained legal and regulatory programs developed and policy program is in policy programs Energy Government support frameworks that promote put in operation place operate and develop Efficiency to agreed project and support sustainable smoothly: IEE Annual Report activities. industrial energy 2. Adoption of regulatory 2. No specific regulation Monitoring, Tracking efficiency and stimulate measures to support IEE to support IEE is in and Benchmarking 2. Final the creation of a national and market place (MTB) Program; IEE evaluation market for IEE products transformation Best Practice and services. Dissemination Program; IEE Best Practice Recognition Program
2. National Industrial Energy Manager Certification Program operates Project Component 1 Output 1.1. Structure and procedures Structures, tools and No structures, tools and 1. Reporting structure 1. Agency for A1. Sustained for monitoring, tracking methodologies to methodologies are in is put in place Energy Government support and benchmarking energy monitor, tracking and place 2. Reporting templates Efficiency to agreed project consumption in industry benchmarking energy are developed and Annual Report activities. are developed and consumption and used 2. Internet/Web established. efficiency in industry 3. Website is created 3. Project reports 4. Benchmarking 4. Final methodology is evaluation developed and tested Output 1.2 National IEE Best IEE information and No IEE Best Practices 1. Two half-day 1. Agency for A1. Sustained Practices information and dissemination seminars, information and seminars per year Energy Government support dissemination program is education and outreach dissemination program is 2. IEE Best Practice Efficiency to agreed project developed and material (articles, in place and will be in Website Annual Report activities. established. brochures, videos, place in the near future. 3. 15 case studies website) developed 2. Internet/Web No IEE seminars held 4. Energy and education and Management 3. Public media outreach material Implementation Guide produced by national 5. Articles & videos 4. Final institutions 6. 500 companies evaluation reached by the end of the project
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Output 1.3 National IEE Best Public recognition events No IEE Best Practice 1. One annual National 1. Agency for A1. Industry values Practices recognition Recognition program is IEE Best Practice Energy public Recognition program is developed and in place and will be in Recognition Award Efficiency programs for good established. place in the near future ceremony/ event Annual Report corporate image and starting from the Year as marketing tool. 2 of project 2. Public media implementation Output 1.4 National Industrial List of professional No national Industrial 1. National IEMC 1. National A1. Article 17 of Energy Manager certification programs Energy Manager program is developed accreditation current draft Law on Certification (IEMC) accredited by national Certification Program is and offered in the institution Energy Efficiency Program is developed and relevant body in place and will be in market will remain in the established. place in the near future 2. Continual enacted law. education/ A2. In the medium professional term industry’s certifying demand for qualified institutions IEE experts and their services increases Outcome 2 Increased adoption by 1. Number of energy 1. Not available. Value 1. 100% increase of 1. Agency for A1. Energy prices Moldovan industries of efficiency projects to be determined during annual number of Energy remain high in the energy efficient implemented annually Year1 of project impl. implemented projects Efficiency medium and long- technologies and energy through Survey results between 2010 and Annual Report term management as integral and further data 2023 (MTB program) A2. Industry drive for part of their business collection energy costs reduction practices. 2. End of project and enhanced energy 2. Number of EN16001 2. Number of EN16001 2. Ten companies get Survey efficiency grows or ISO 50001 certified or ISO 50001 certified certified to EN16001 progressively stronger companies companies or ISO 50001 by 2015 3. Moldova A3. In the medium standard EN 16001 and ISO 3. Number of IEE service 3. Past and near future 3. 400 IEE services authority or 50001 certification contracts stipulated by IEE projects mostly contracts stipulated by certification becomes tool and/or Energy Management and developed and EM and SSO national bodies (TUV and requirement for export Steam System implemented using experts trained by the others) oriented enterprises Optimization national foreign experts GEF project with and for market access experts trained by the Moldova enterprises GEF project between 2013 - 2023 Project Component 2
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Output 2.1 Industry decision-makers 1. Number of companies Few trainings on EE for 1. 300 companies 1. Project A1. Sustained understand their potential participating in the manufacturing and participating in the progress report Government support for EE gains and project seminars commercial enterprises project seminars and to agreed project consequent environmental are planned for 2010 and workshops 2. End of project activities for the and economic benefits. 2. Number of companies 2011 within the Survey National Energy personnel participating in Moldova Business 2. 200 enterprises staff Efficiency Agency the project trainings Advisory Service attend project energy 3. Final A2. Costs reduction Program management and evaluation remains a first priority steam system for companies’ top optimization trainings management. Output 2.2 A cadre of 40 1. Number of energy 1. No energy 1. 20 energy 1. Project A1. Sustained professionals comprising management system management system management system progress report Government support of industry engineers, experts in the Moldova experts in the Moldova experts trained to agreed project industrial equipment market market 2. End of project activities for the vendors and energy 2. No industrial steam 2. 20 steam systems Survey National Energy systems/ efficiency 2. Number of energy system optimization optimization experts Efficiency Agency consultants are trained at system optimization experts in the Moldova trained 3. Final A2. Industry drive for an expert level and are experts in the Moldova market but few evaluation energy costs reduction equipped with the market engineering companies 3. 20-25 seminars and is and will remain technical capacity and provide partial services trainings for strong tools required to: a) 3. Number of IEE 3. IEE seminars and enterprises managers A3. Energy efficiency develop and implement seminars and trainings trainings bound to be and engineers consultants, industrial energy management delivered delivered by delivered by EM and equipment supplier systems and energy international experts SSO national experts and vendors, and efficiency projects, trained by the GEF other relevant entities focusing on steam system project recognize the optimization, in industry; economic potential of b) provide training to the IEE market in industry and energy Moldova professionals and offer commercial IEE services. Output 2.3 An Energy Management Tools available for No tools are and will be 1. An Energy 1. IEE Best A1. Sustained System Implementation supporting energy most likely available Management System Practices Government support Guide in compliance with efficiency in industry during and immediately Implementation Guide dissemination to agreed project EN 16001/ ISO 50001 is after the GEF project in compliance with EN program website activities for the developed implementation period 16001/ ISO 50001 National Energy standards is produced 2. Project report Efficiency Agency in Romanian language 3. Final evaluation
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Output 2.4 At least 40 IEE projects 1. Number of steam Few steam system 1. 20 steam systems 1. Project A1. Companies for cumulative 213-416 system assessments assessments and assessment carried out progress report partnering in the GWh of energy savings carried out optimization projects are expert capacity are developed and likely to be carried out 2. 20 steam systems 2. Companies building program with implemented by industrial 2. Number of steam within the scope of the optimization projects participating in the GEF project enterprises as result of systems optimization EBRD MoSEFF. developed the Expert maintain or improve their participation in the projects developed training their economic Expert Training program No enterprise has, and 3. 20 steam system performance and of the project 3. Number of steam will very likely have by optimization projects 3. Final fulfill their co- system optimization the end of the project, an are implemented. evaluation financing/ projects implemented. energy management participation system in place 4. 20 companies put in commitments 4. Number of companies place an energy putting in place an energy management system management system 4. 20 companies 5. Number of companies implement at least 2 implementing energy energy management management operational operational improvements improvements each Project Component 3 Output 2.5 At least 6 pilot IEE 1. Number of IEE Many companies, 1. 6 IEE projects 1. Companies A1. Companies projects for cumulative projects implemented particularly SMEs, have implemented with partnering in the partnering with the 45-60 GWh of energy with direct support from major potential for direct support from the IEE projects. GEF project maintain savings over the the GEF project economic EE GEF project or improve their investments duration are improvements but not 2. Agency for economic implemented by 2. Energy savings (MWh) the resources (human 2 Cumulative 45-60 Energy performance. enterprises, from key achieved over the project and/or financial) to GWh of energy Efficiency (MTB A2. Companies industrial sectors, lifetime develop and implement savings over the EE Program) partnering with the partnering in the project. such projects. investments lifetime GEF project fulfill 3. Project report their co-financing commitments 4. Final evaluation
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ANNEX B: RESPONSES TO PROJECT REVIEWS (from GEF Secretariat and GEF Agencies, and Responses to Comments from Council at work program inclusion and the Convention Secretariat and STAP at PIF)
UNIDO responses to project reviews at CEO Approval request.
GEF SEC Manager: Alexis Mariani [AM] UNIDO Contact Person:Marco Matteini [MM]
Review Secretariat Comment at CEO Questions Reply to comments Criteria Endorsement (FSP)/ Approval (MSP)
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Review Secretariat Comment at CEO Questions Reply to comments Criteria Endorsement (FSP)/ Approval (MSP) [3-25-2010- AM] [4-14-2010 – MM] 1. The comment at the PIF stage is 1. No reply needed considered to be cleared. The studies 2. No reply needed realized during the PPG allow an identification of the most interesting 3.a. The calendar has been updated sectors to be considered in this project. 3.b. The outcome of Project Component 3 in Table A 2. The CEO endorsement request and the has been reformulated to better reflect the expected PRODOC is sound, clear, and aligned impact of the planned outputs. with the PIF. The project is very 3.c. The co-financing for Project Management has elaborated and well articulated. been increased to 93,000 USD and the GEF financing 3. The project will be recommended has been reduced to 93,000. The Ministry of once some minor comments will have Environment (MoEN) has increased its contribution been addressed: from 10,500 USD to 51,000 USD (please see revised a. please update the calendar MoEN Letter of Resources Commitment in Annex G) b. in table A, the definition of the outcome of component 3 could be It has to be stressed that since PIF approval the more specific. Moldova economy has been heavily hit by the 2009 Usually, the objective of pilot projects global downturn. Real GDP contracted by about 7 % is to demonstrate a feasibility, to in 2009, which means –10% compared to 2008 showcase something etc. forecast (+3%), as result of reduced exports and 9. Is the remittance inflows. Budget deficit in 2008 was close c. the level of cofinancing of the PM project design to 1% and expected to remain stable during 2009. As component is not consistent with the sound, its of February 2010, estimates place 2009 budget deficit GEF general policy. We normally framework at about 7% with forecast for the 2010-2011 Project expect the cofinancing ratio of this consistent & biennium at 6% annual average (Source: Economist component to be in the same range as Design sufficiently Intelligent Unit). The negative 2009 economic the cofinancing ratio of the whole clear (in performance and the relatively poor outlook for project. At least the cofinancing ratio particular for 2010 –2011 have significantly constrained Moldova of this component should be the outputs)? Government and MoEN resources. Under such consistent with the one agreed in the circumstances it is extremely difficult for the MoEN PIF. In this specific case, we feel that to increase more substantially its contribution. the engagement of MoEN is a bit low. Additional 42,000 USD co-financing to Project d. the implementation arrangements are Management have been made available as in-kind fine. contribution of UNIDO experts/staff time to manage But what you describe (with the PMU activities related to some of the project outputs established in the MoEN) is what we (please see revised outline of UNIDO in-kind co- usually call "national execution". We financing in Annex G) suggest that you delete sentences that could be misleading like "the project As mentioned earlier in (PART IV), due to timing will be directly executed by UNIDO... and delays associated with programming of funds UNIDO will be responsible for the among potential co-financiers, the project preparation general management and monitoring team has failed to secure by the time of project of the project...". document submission the cash co-financing envisaged at PIF stage. However, it has to be pointed out that additional co-financing contributions are being sought and are very likely to be secured during project implementation from donors and other energy efficiency programs (please see PART II.E). That would allow moving some of the GEF financing from the PM component to other project components and bring the PM GEF financing further close or back to the level agreed at PIF stage.
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Review Secretariat Comment at CEO Questions Reply to comments Criteria Endorsement (FSP)/ Approval (MSP) 3.d. While acknowledging that the execution of the project will be mainly responsibility of the Climate Change Office (CCO) of the Ministry of Environment (MoEN) and the Agency for Energy Efficiency of the Ministry of Economy (MEC) with 9. Is the UNIDO in a subsidiary position, it has to be pointed project design out that project execution modalities will not fully sound, its match the “traditional ” national execution model. framework Project consistent & Indeed, UNIDO will play an active role with respect Design sufficiently to the execution of several activities, mostly under clear (in Project Component 2, by providing the supplemental particular for technical and managerial support to ensure the outputs)? technically sound outputs and effective training programs. In the light of the above, text of PART III – B has been modified to acknowledge the Secretariat suggestion for more clarity.
[3-25-2010- AM] [4-14-2010 – MM]
19. Is the GEF Yes, but the cofinancing ratio of this Please see reply above to Secretariat comment on funding level component is not considered to be Question 9. of project sufficient and is not consistent with management what was agreed at the PIF stage. The budget implementation arrangements are fine appropriate? but the wording of part III-B of the CEO endorsement request could be Justification reviewed. for GEF Grant [3-25-2010- AM] [4-14-2010 – MM] 22. Are the The whole cofinancing of the project confirmed co- has been increased, especially the financing cofinancing of the component on pilot amounts projects. adequate for each project The cofinancing of the project Please see reply above to Secretariat comment on component? management component is considered Question 9. to be low.
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ANNEX C: CONSULTANTS TO BE HIRED FOR THE PROJECT USING GEF RESOURCES
$/ Estimated Position Titles person week* person Tasks to be performed weeks** For Project Management Local National Project Manager 300 182 Responsible for the management, monitoring, coordination of all project activities in the countries. Responsible for the organization of some project activities, in particular the organization of the training sessions and workshops to be held under PC2. Full-time assignment for the entire duration of the project, 3.5 yr 1 week= 5 working days; 1 months= 4.3 weeks; Project Administrative 195 182 Responsible for the financial and administrative activities of the Assistant project, tracking and ensure timely disbursement of project funds, assist the NPM in the organization of some project activities, in particular the organization of the training sessions and workshops to be held under PC2. Full-time assignment for the entire duration of the project, 3.5 yr 1 week= 5 working days; 1 months= 4.3 weeks; Project Advisory Committee 750 47 Responsible for supervising project execution progress, members providing advice and whenever needed guidance to the National Project Manager, ensure effective integration of project activities and outputs in Government and country environmental, energy and industrial policies and programs. The Ministry of Environment and Natural Resources in its capacity of GEF Political and Operational Focal Point, and Central Public Authority mandated to coordinate Government and Ministries activities to implement Moldova commitments under international Climate Change agreements such the UNFCCC and of the Kyoto Protocol, will be required the greater resources effort.
Justification for Travel, if any: Small travel budget (1,000 USD) to cover visits to project industrial sites, organization and participation to project seminars and trainings, liaison with project partners.
Supplies: 1,500 USD (paper, telephone services, internet services, etc.) Equipment: 410 USD (a scanner, a digital camera)
International For Technical Assistance Local PC1 - Experts for the national 300 80 In collaboration with and under the guidance of the international Monitoring, Tracking and contractor for PC1, these experts will assist and work with staff Benchmarking program of the Agency for Energy Efficiency to develop, establish and (Business planning, database operate the national MTB program development, energy analyst, statistics, benchmarking methodologies, communication, web-designer, policy and legislation)
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PC1 - Experts for the national 300 60 In collaboration with and under the guidance of the international IEE Best Practices Information contractor for PC1, these experts will assist and work with staff and Dissemination, and of the Agency for Energy Efficiency to develop, establish and Recognition programs operate the national IEE Best Practices Information and (Business planning, training Dissemination, and Recognition programs and communication/media, web-design, video production)
PC1 - Experts for the national 300 45 In collaboration with and under the guidance of the international Industrial Energy Manager contractor for PC1, these experts will assist and work with staff Certification Program of the Agency for Energy Efficiency and the Technical (Professional certification, University of Moldova to develop and establish a national policy and legislation) Industrial Energy Manager Certification Program
PC2 - Energy Management 300 58 After successful completion of the GEF project Expert training (EM) Experts trained by the program, EM national experts will be recruited to: GEF project 1. Provide follow-up technical assistance to Type-A and Type-B enterprises as appropriate to ensure establishment of EMS and implementation of operational improvements measures 2. Deliver training to enterprise engineers and managers on EM 3. Provide technical assistance to enterprises that will request it to the GEF project after their engineers/ managers have attended the 2-day training on EM delivered by the project. PC2 - Steam System 300 58 After successful completion of the GEF project Expert training Optimization (SSO) Experts program, SSO experts will be recruited to: trained by GEF project 1. Provide follow-up technical assistance to Type-A and Type-B enterprises as appropriate to ensure implementation of steam system optimization projects developed 2. Deliver training to enterprise engineers and managers on SSO 3. Provide technical assistance to enterprises that will request it to the GEF project after their engineers have attended the 2-day training on steam system optimization delivered by the project. PC2 - Energy Management 300 16 This expert will work under the supervision of UNIDO‘s (EM) Expert trained by the international EM expert to adapt to the Moldovan context and GEF project translate in Romanian a Practical Guide to the Implementation of Energy Management in SMEs to be developed by UNIDO through a parallel project PC2 – Professional English- 300 8 Proof read and edit translated Guide Romanian translator
PC3 – Industrial Equipment 400 72 Under the guidance and supervision of the international experts, and Technology experts, these experts will provide local technical expertise and services Financing experts for the 6 IEE for the development and implementation of the targeted 6 pilot pilot projects industrial energy efficiency projects to be selected between those identified during the PPG phase and for which enterprises have made a commitment of resources.
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International PC2 - Senior Experts on Energy 3,500 32 These experts will provide the technical expertise and will be Management System responsible for: Implementation in Industry 1. Developing training material and tools for the EM Expert training and User training 2. Guiding the PMU in preparing the EM Expert training 3. Delivering the EM Expert Training, including remote provision of technical advice and coaching to trainees during the development of the EM systems envisaged by the training program. 4. Delivering 2-3 EM User trainings jointly with trained national EM experts 5. Providing technical advice and assistance (mainly remotely with few field missions) to trained EM national experts and enterprises in the implementation of the 20 EM systems and operational improvements developed during Step 3 of the Expert training 6. Providing the technical expertise and supervision of national experts for developing a Practical Guide to the implementation of Energy Management in Industry targeted to the Moldovan context. PC2 - Senior Experts on Steam 3,500 28 These experts will provide the technical expertise and will be System Optimization responsible for: 1. Developing training material and tools for the SSO Expert training and User training 2. Guiding the PMU in preparing the SSO Expert training 3. Delivering the SSO Expert Training, including remote provision of technical advice and coaching to trainees during the development of the SSO systems envisaged by the training program. 4. Delivering 2-3 SSO User trainings jointly with trained national SSO experts 5. Providing technical advice and assistance (mainly remotely with few field missions) to trained SSO national experts and enterprises in the implementation of the 20 SSO projects developed as result of Step 3 of the Expert training PC3 – Industrial Energy 3,500 36 These experts will provide the specific technical expertise Efficiency and Technology required to developing and support implementation of the experts for the 6 IEE pilot targeted 6 pilot industrial energy efficiency projects to be projects selected between those identified during the PPG phase and for which enterprises have made a commitment of resources. PC4 - Evaluation specialist 3,000 5 Independent consultant to carry out final evaluation of the project Justification for Travel, if any: Missions to Moldova and travels within the countries will be required to international and national staff. The following travel budgets over the project implementation duration have been estimated: PC1 – National experts and staff in-country travels (industrial site visits, participation in dissemination events) – 2,000 USD PC2 – International EM and SSO experts missions to Moldova – 54,000 USD PC2 – Logistics of trainings, transport and accommodation allowance for participants to trainings and workshops – 75,000 USD PC2 – National EM and SSO experts in-country travels (trainings and industrial site visits) – 2,000 USD PC3 – International industrial and technology experts missions to Moldova (IEE projects) – 30,000 USD PC4 – International evaluation specialist mission to Moldova – 2,000 USD
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Contracted services Estimated Budget person Tasks to be performed $ weeks** PC1 – Foreign company to 170,000 1 41 The contractor will provide the technical expertise, training and deliver international technical guidance of national experts and AEE staff for the development assistance needed for all and establishment of all PC1 programs . outputs of PC1 * Provide dollar rate per person week. ** Total person weeks needed to carry out the tasks. 1 It includes an estimated travel budget of 26,500 USD for missions to Moldova.
ANNEX D: STATUS OF IMPLEMENTATION OF PROJECT PREPARATION ACTIVITIES AND THE USE OF FUNDS A. EXPLAIN IF THE PPG OBJECTIVE HAS BEEN ACHIEVED THROUGH THE PPG ACTIVITIES UNDERTAKEN .
PPG objectives have been almost fully achieved. i) The project document has been formulated on the basis of further analysis of the policy, legal and regulatory frameworks, capacity building needs assessment and stakeholders consultations at both national as well as bilateral level ii) Co-financing resources envisaged at the PIF stage has been raised and exceeded, although distribution between project components and sources is different from the one foreseen at the PIF stage iii) Direct and in-direct energy savings and GHG emission reduction have been estimated on the basis of more empirical ground (survey between enterprises and energy audits) iv) The project baseline and its trajectory have been better defined through additional information and data collection; energy performance and project impact indicators have been identified but values for the baseline could not be defined. Available statistics do not provide meaningful indicators for energy efficiency of the Moldova manufacturing sector. Given the resources and time available at the PPG stage, it was not feasible to undertake the data mining, collection and analysis needed to provide meaningful indicators. Such exercise deserves significant planning and much more time and human resources; for these reasons it will be carried out during the project implementation as integral part of the Monitoring, Tracking and Benchmarking program of Project Component 1.
The complete analysis and report of the results of the Survey carried out between Moldovan enterprises is still ongoing and it is expected to be completed by mid- February.
The reports of some of the energy-audits carried out are currently being prepared. The delay was due to the long hospitalization of one of the national experts after he visited industrial sites in October and November 2009.
B. DESCRIBE FINDINGS THAT MIGHT AFFECT THE PROJECT DESIGN OR ANY CONCERNS ON PROJECT IMPLEMENTATION , IF ANY :
Findings that might affect project design As it has been explained in PART II, SECTION E above the GEF UNIDO project will continue to seek collaboration and discussing possible co-financing agreement with the Support to Energy Market Integration and Sustainable Energy in the NIS (SEMISE) project as well as the Swedish International Development Agency (SIDA). However, based on initial discussion between UNIDO, SEMISE and SIDA, potential collaboration and co-financing would not bring about significant changes to the design of the project, but they would mainly expand and strengthen the outputs of Project Components 1 and 2. For PC1 an Industrial Energy Auditor Certification Program could be 44
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added as well as further work on benchmarking. For PC2 Expert and User trainings on other energy systems would be added.
Any concerns on project implementation No additional concern beside the risks discussed in PART II, SECTION G.
C. PROVIDE DETAILED FUNDING AMOUNT OF THE PPG ACTIVITIES AND THEIR IMPLEMENTATION STATUS IN THE TABLE BELOW:
GEF Amount ($) Project Preparation Activities Implementation Amount Amount Amount Uncommitted Co-financing Approved Status Approved Spent To date Committed Amount* ($) Policy, legislation and Completed 3,000 3,000 0 17,000 regulatory analysis Assessment of Market Almost 17,000 5,665 6,902 4,433 40,000 Demand for IEE completed Project development and Completed 20,000 11,000 8,000 1,000 23,000 formulation Total 40,000 19,665 14,902 5,433 80,000 * Any uncommitted amounts should be returned to the GEF Trust Fund. This is not a physical transfer of money, but achieved through reporting and netting out from disbursement request to Trustee. Please indicate expected date of refund transaction to Trustee May 2010
As it can be seen from the table above, some GEF PPG funds are still available, uncommitted, as results of synergies achieved and sharing of information with other programs ongoing and planned. However, if allowed by the GEF Secretariat, the left funds could be very effectively used to move forward with pre-feasibility studies for the identified pilot IEE projects and to pursue and secure co-financing from SEMISE.
ANNEX E : CALENDAR OF EXPECTED REFLOWS
Provide a calendar of expected reflows to the GEF Trust Fund or to your Agency (and/or revolving fund that will be set up)
ADDITIONAL ANNEXES
ANNEX F : ESTIMATE OF ENERGY SAVINGS AND GHG EMISSIONS REDUCTIONS
Please see separate file
ANNEX G : LETTERS OF CO-FINANCING
Please see separate file
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Reducing Greenhouse Gas Emissions through Improved Energy Efficiency in the
Industrial Sector in Moldova ______
ANNEX F: ESTIMATE OF ENERGY SAVINGS AND GHG EMISSION REDUCTIONS
SUMMARY OF INCREMENTAL ENERGY AND GHG EMISSION SAVINGS TO BE GENERATED BY THE PROJECT
Summary of DIRECT energy & GHG emission reductions to be generated the project (Table 25)
Energy savings GHG emission savings [MWh] [t CO2eq] Min Max Min Max Energy Management Expert Training 41,450 82,900 11,670 23,340 Steam System Optimization Expert Training 171,960 343,920 34,730 69,460 Pilot IEE Projects 45,000 60,000 16,250 21,670 Total 258,410 486,820 62,650 114,470
Summary of INDIRECT GHG emission reductions to be generated by the project, 2013-2023 (Table 33)
Indirect Energy savings Indirect GHG emission generated by EM and SSO savings attributed to the Description of project outputs impact implementation GEF UNIDO project [GWh] [t CO2eq] Min Max Min Max Training on Energy Management for enterprise energy managers and engineers 50 companies implement EM systems 218.8 364.6 42,954 71,589
Training on Steam System Optimization for enterprise engineers 50 companies implement SSO projects 729.0 1,458 103,109 206,218
IEE Best Practice Dissemination program, Benchmarking, Industrial Energy Manager Certification program and the availability and marketing of energy management and steam system optimization services to industry 150 companies implement EM systems 292.6 487.7 41,141 68,565 250 companies implement SSO projects 780.0 1560.0 78,450 157,610 Total 2,020.4 3,870.3 265,654 503,982
1
Reducing Greenhouse Gas Emissions through Improved Energy Efficiency in the
Industrial Sector in Moldova ______
1. Energy Supply The Republic of Moldova has is heavily dependent on imported energy. Reserves of solid fuels, petroleum and gas are not significant; hydroelectric generation and potential is very low (Table 1). Energy is imported mainly from Russia and Ukraine. During the period 2000-2007 energy import levels varied between 94% and 98% of total energy consumption (Table 1).
Table 1: Energy Balance of the Republic of Moldova (without Transnistria 1), 2000-2007 time series, [ktoe]
2000 2001 2002 2003 2004 2005 2006 2007 Interne sources 72 85 92 87 84 87 92 88 Liquid fuels – – – 2 8 10 7 16 Solid fuels 59 68 65 79 71 70 78 69 Hydroelectricity 13 17 27 6 5 7 7 3 Import 1776 1676 1785 1956 2096 2185 2157 2115 Liquid fuels 416 451 485 577 609 622 603 643 Natural Gases 888 981 977 1062 1083 1205 1201 1110 Solid fuels 66 88 98 166 115 103 105 110 Electricity 406 156 225 151 289 255 248 252 Export 4 2 1 12 42 3 4 7 Stocks variation -9 24 -16 53 -6 -9 -26 36 Intern Consumption from which, for: 1853 1735 1892 1978 2144 2278 2271 2160 Production of electricity and heat 935 810 802 681 783 842 817 767 Technological needs, inclusive in: 918 925 1090 1297 1361 1436 1454 1393 Industry and Construction 104 111 117 124 130 161 163 156 Agriculture 69 68 80 80 71 61 59 52 Transport 171 169 248 279 254 267 285 325 Commerce and Public Service 55 66 86 137 126 120 123 119 Residential (sold to population) 420 429 477 575 656 704 691 598 Other 99 82 82 102 124 123 133 143 Source: National Bureau of Statistics of the Republic of Moldova (2008), Energy Balance of the Republic of Moldova (without Transnistria), 2007: Statistical Book. Chisinau: Statistica, 2008 (Statistica Moldovei), page 9.
1 Transnistria comprises of the administrative territorial units on the Left Bank of Dniester River. Since its declaration of independence in 1990, and especially after the War of Transnistria in 1992, it is governed de facto by the unrecognized Pridnestrovian Moldavian Republic (PMR) , which claims the east bank of the river Dniester and a small land located on the right bank of the Dnestr river (in the historical region of Bessarabia), as the city Bender and its sourrounding localities. The Republic of Moldova does not recognize the secession and considers territories controlled by the PMR to be a part of Moldova's sovereign territory. Transnistria's sovereignty is not recognized by any member of the United Nations and has no official diplomatic relations with any of those states.
2
Reducing Greenhouse Gas Emissions through Improved Energy Efficiency in the
Industrial Sector in Moldova ______
The years of transition brought about changes in the fuel mix of energy supply and consumption. Coal consumption has substantially decreased while natural gas has become the main fuel for electricity and heat generation plants and boiler houses. In 2007, natural gas accounted for 45.3% of Moldovan total energy resources, petroleum products for 27.7% respectively and electricity for 10.8 % (Table 2). 2007 total energy resources amounted to 2,762 ktoe.
Table 2: The Structure of Main Energy Resource in the Republic of Moldova (without Transnistria) 2000-2007 time series, [%]
2000 2001 2002 2003 2004 2005 2006 2007 Total resources, inclusive : 100 100 100 100 100 100 100 100 Coal 5.5 6.3 6.4 9.3 7.7 6.8 6.7 6.6 Diesel oil 10.9 13 14 15 15.3 15.1 15.1 16.6 Residual fuel oil 3.2 3.3 2.4 1.7 1.4 1.1 1.1 0.9 Gasoline 7.3 8.4 9.8 11 10.8 10.6 9.7 10.2 Natural gases 42.9 49.4 45.8 46.2 43.4 47.1 47.7 45.3 Liquefied gases 2.4 3.3 3.1 3.1 2.9 2.8 2.6 2.7 Fuel wood 2.7 2.9 3 3 2.5 2.5 2.9 2.7 Electricity 21.1 9.1 12 7.2 12.3 10.6 10.5 10.8 Other 4 4.3 3.5 3.5 3.7 3.4 3.7 4.2 Source: National Bureau of Statistics of the Republic of Moldova (2008), Energy Balance of the Republic of Moldova, 2007: Statistical Book. Chisinau: Statistica, 2008 (Statistica Moldovei), page 11.
1.1 Electricity
The Republic of Moldova (without Transnistria) is heavily dependant on imports for its electricity needs. Until 2006 electricity was imported in the Republic of Moldova (Right Bank) mainly, if not exclusively, from the Left Bank of the Dniester River (Transnistria). In 2006, total electricity generation in the Republic of Moldova amounted to 2,866.8 GWh: 1,192 GWh produced on the right bank of Dniester River and 1,674.8 GWh produced on the left bank of Dniester. 98% of total generation was from natural gas (Table 4 and Table 5).
In 2007 Moldova started to import electricity from Ukraine because become cheaper than Transnistria 2. In 2008 imported electricity entering in the Moldova grid were 2,931 GWh, equal to 87.1% of total net consumption, which amounted to 3,364 GWh 3
The electricity system of the Republic of Moldova includes one large Thermal Power Plant (TPP) located in the Transnistrian Region; three municipal Combined Heat Power Plants (CHP); 9 CHP plants beside sugar factories; and 2 Hydroelectric Power Plants (HPP). Table 3 shows the installed capacities of the power plants in the Republic of Moldova.
2 According with recently concluded agreements between the Governments of the Republic of Moldova and Ukraine in May 2008 in Kiev, the average price for the electric power supplied from Ukraine starting 01.06.2008 was increased to 4.4 US ¢ for one kWh, with further increase to 7.5 US ¢ for one kWh by 01.07.2009. The price proposed to the Republic of Moldova by the MTPP in 2008 was 5.5 US ¢ for one kWh, however with no guarantees to ensure long term supplies at a stable price, in particular reasoning from the increasingly growing selling prices for natural gas supplied by the Russian Federation (Source: Draft 2 nd National Communication of the Republic of Moldova to the UNFCCC, 2009). 3 Source: Moldova National Bureau of Statistics
3
Reducing Greenhouse Gas Emissions through Improved Energy Efficiency in the
Industrial Sector in Moldova ______
Table 3: Characteristics of Power Plants in the Republic of Moldova
Installed Available Installed electric electric thermal Year of Power Generation Unit Fuel capacity, capacity, capacity, construction MW MW Gcal/h CHP-1 Chisinau 66.0 40.0 254 gas, HFO 1951-1961 CHP-2 Chisinau 240.0 210.0 1,200 gas, HFO 1976-1980 CHP-North, Balti 28.5 24.0 200 gas, HFO 1956-1970 9 CHP of sugar factories 97.5 97.5 0 gas, HFO 1956-1981 HPP Costesti 16.0 10.0 0 (hydro power) 1978 HPP Dubasari* 48.0 30.0 0 (hydro power) 1954-1966 Moldovan Thermal Power Plant (MTPP)* 2,520.0 1,200.0 0 Gas, coal, HFO 1964-1982
Total capacity 3,006.0 1,621.5 1,654
Source: Energy Strategy of Moldova till 2020 * - left bank of Dniester River
The three CHPs in Chisinau and Balti are based on classical steam turbine cycle. The main fuel is natural gas with heavy fuel oil (HFO) as reserve.
The CHPs of the sugar factories serve as seasonal energy sources. They usually function only during the sugar-beet processing season (3-4 months per year) and 60-90% of electricity produced is consumed by the factories themselves.
The Moldovan Thermal Power Plant (MTPP) comprises of: eight energy condensation units with an electric power of 200 MW each on coal (1964-1971, only five energy groups operational); two energy condensation units with an electric power of 210 MW each on residual fuel oil and natural gas (1973- 1974, both operational); and two energy mixed gas-steam cycle groups on natural gas, with an installed power of 245 MW each (1980, both operational). Specific fuel consumption of 380-440 g c.e. 4/ kWh has been reported for the 200-210 MW energy condensation units and 300-350 g c.e./kWh for the combined gas-steam turbine installations. Over the last years the MTTP have been mainly operating only the generating units on residual fuel oil and natural gas with an average specific fuel consumption of circa 360 g c.e./ kWh 5.
Tables 4 and 5 show the development over time of electricity generation on the Right Bank and Left Bank of the Dniester River.
Table 4: Electricity Production on the Right Bank of Dniester River, 1999-2007 time series, GWh 1999 2000 2001 2002 2003 2004 2005 2006 2007 Electricity Production – Total 1134 931 1263 1179 1046 1022 1229 1192 1100 Combined Heat Power Plants 1039 843 1188 1057 977 958 1137 1108 1061 Hydroelectric Power Plants 91 85 73 121 64 59 85 77 33 Other Production Units 4 3 2 1 5 5 7 7 6 Source: UNECE EE21
4 gce= gram of carbon equivalent 5 Source: 2 nd National Communication of the Republic of Moldova to the UNFCCC, 2009
4
Reducing Greenhouse Gas Emissions through Improved Energy Efficiency in the
Industrial Sector in Moldova ______
Table 5: Electricity Production on the Left Bank of the Dniester River, 1998-2006 time series, GWh 1998 1999 2000 2001 2002 2003 2004 2005 2006 Electricity production – Total 3593.4 2973.1 2720.0 3649.9 3228.5 3016.1 3156.6 2995.9 1674.8 Hydroelectric Power Plant 224.0 285.6 256.7 284.1 286.5 223.0 266.1 295.0 275.0 Thermal Power Plant 3369.4 2687.5 2463.3 3365.8 2942.0 2793.1 2890.5 2700.9 1399.8 Source: UNECE EE21
1.1.1 Electricity losses Despite steady downward trend over the recent past technical and commercial losses of Moldova electricity transmission and distribution system remain significantly high compared to levels of western European countries. Table 6 below shows evolution of electrical losses in Moldova distribution network. In 2008 average electricity distribution losses were 14.5%, down from 15.7% of 2007 6 . However, accounting also losses in the transmission network, total electrical losses in 2008 were estimated at about 20-25%. The existing transmission and distribution network infrastructure still requires significant investments for technology and performance upgrade. The average load factor is also relatively low, just about 50 % of nominal capacity. Table 6: Losses Incurred by Electricity Distribution Companies
Losses Admitted at Tariff Calculation (In Electricity Distribution % with respect to the electricity coming Effective Losses (%) Companies into distribution networks) 2004 2005 2006 2007 2008 2004 2005 2006 2007 2008 RED North 16.31 16.0 15.5 15.0 13.6 16.9 14.39 13.17 11.46 10.97 RED North-West 16.31 16.0 15.5 15.0 14.5 25.4 20.07 15.75 13.81 13.59 RED Union Fenosa 14.38 14.38 14.38 14.38 14.0 23.4 21.44 16.92 16.90 15.38 Source: National Agency for Energy Regulation (ANRE)
1.1.2 Future developments of electricity production and supply
The Draft 2nd National Communication of the Republic of Moldova to the UNFCCC analyzes six different scenarios for the development of the electrical power sector on the Right Bank of the Dniester River for the period 2005-2033 (Table 7). The average specific emission factor for electricity production under the different scenarios is reported in Table 8.
Thee scenarios were analyzed for the development of the electrical power sector on the Left Bank of the Dniester River. For each scenario, average specific emission factors for electricity production are reported in Table 9.
6 Improvements have been primarily achieved with respect to commercial losses. Distribution companies controlled by Union Fenosa in particular have been upgrading the meter cables, thus improving the prevention of electricity theft. 100% of industrial and residential electricity customers have a conventional meter installed.
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Reducing Greenhouse Gas Emissions through Improved Energy Efficiency in the
Industrial Sector in Moldova ______
Table 7: Electrical power sources development scenarios in the Republic of Moldova Scenarios Characteristics of Scenarios BLS (Baseline BLS Scenario serves as a benchmark for comparison with all other scenarios. It implies a Scenario) partial improvement of the cost-effectiveness of the local power plants CHP-1, CHP-2, CHP-North, without building new power plants, except setting into operation the Combined Heat and Power Plant in Ocnita (CHPO), which is to become operational in 2009. Increased demands shall be covered from import. HAS (High HAS Scenario represents a mixed option combining the option to cover the demand Alternative exclusively from own sources of energy, and the option to cover the demand exclusively Scenario) from import.
MRS (Medium MRS is an intermediary option between the BLS and HAS. It implies setting into operation Realistic Scenario) less costly power plants (with the same capacity and in the same timeline as in the HAS), but with a lower efficiency, approximately 42%. This scenario is quite realistic, as it suits putting into operation of gas turbine installation groups, replacing the combined cycle type units.
Scenario A (from Scenario A implies maintaining the existent capacities of the local power plants during the the Energy Strategy entire period of assessment, and concomitantly building mini-CPH with distributed of the RM) generation, with a total installed capacity of 179 MW by 2020.
Scenario B (from Scenario B implies maintaining the existent capacities of the local power plants during the the Energy Strategy entire period of assessment, building mini-CPH with distributed generation, with a total of the RM) installed capacity of 179 MW by 2020, and extension of CHP-1, CHP-2 and CHP-North with 296 MW installed capacity by 2020.
Scenario C (from Scenario C implies maintaining the existent capacities of the plants during the entire period the Energy Strategy of assessment, building mini-CPH with distributed generation with a total installed capacity of the RM) f 179 MW by 2020, and a more intensive extension of CHP-1, CHP-2 and CHP-North by 2020
Table 8: Specific Emission Factor for Electricity Produced on the Right Bank of the Republic of Moldova, 2005-2033 HAS MRS BLS A B C Specific Emission Factor, g CO2eq/kWh 460.1 533.6 569.1 510.8 518.7 484.8
Table 9: Specific Emission Factor for Electricity Produced on the Left Bank of the Republic of Moldova, 2005-2033 Specific Emission Factor, g CO2eq/kWh Scenarios 2005 2010 2015 2020 2025 2030
Baseline Scenario – BLS 593.1 771.0 804.2 819.8 837.5 876.2
High Alternative Scenario – HAS 593.1 588.0 610.3 630.8 634.0 639.3
Intermediate Alternative Scenario - IAR 593.1 669.6 699.4 712.5 721.6 741.1
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Reducing Greenhouse Gas Emissions through Improved Energy Efficiency in the
Industrial Sector in Moldova ______
According with the Draft 2nd National Communication of the Republic of Moldova to the UNFCCC:
“All the above said imply that the amount of the GHG emissions from the Electrical Power Sector of the Republic of Moldova (Right Bank of the Dniester River) will be determined, for at least five year period, by the currently existing electric power sources, and at a level not higher than in present. At the same time, taking into account that the share of import in the covering of electrical power demand is quite big (circa 70% of the total), the country needs to develop alternative sources development scenarios, that would lessen this dependence, and in a more favourable market conditions, would allow their gradual implementation”
However, it has to be pointed out that in 2008, United Energy Moldova, a subsidiary of the Czech J&T Finance Group, announced that it will invest EUR 600 mln into the construction of a new coal power plant in the Ungheni district (Right Bank of Dniester River) with a power and annual energy generation capacity of 350 MW and 735 GWh. The power plant is supposed to be operative by 2011.
This power plant was not included in any of the development scenarios considered for the 2nd National Communication. Comparing such plant capacity to the 2008 power and energy generation on the Right Bank of the Dniester River (Table 10), it would provide a 92% increase of available power generating capacity, a 67% increase of internal energy production and a subsequent 30% reduction of electricity imported from Ukraine.
Table 10: Electricity Market in the Republic of Moldova (the right bank of Dniester River) Generation Electricity market size 3.22 TWh / yr Deficit installed capacity over demand: 500 MW Net Electricity Import 76% from Ukraine, Transnistria Average residual electricity price (2008) per kWh: USD ¢ 10,0 Electricity production 1100 million kWh Electricity consumption 3364 million kWh Electricity exports 0 kWh Electricity imports 2931 million kWh Source: National Bureau of Statistics, 2008
1.2 Natural Gas Local demand of natural gas is covered by imports from Gazprom purchased by a Russian-Moldovan joint venture company called JSC Moldovagaz, whose shareowners are Gazprom (50%), the Republic of Moldova (37%) and the region of Transnistria (13%). JSC Moldovagaz owns upstream pipelines for transporting natural gas on the territory of the Republic of Moldova. Tiraspoltransgaz SRL is the transmission and distribution operator of natural gas on the territory of Transnistria 7. The natural gas supply system consists of about 1’400 km network of upstream pipelines, four compressors stations and 74 distribution stations. The total length of high, medium and low pressure pipelines were about 15’735 km at the end of 2007. The Republic of Moldova is also a transit country for gas deliveries from Russia to central-eastern Europe. International upstream pipelines towards Bulgaria
7 Source: EnCharter PEEREA report, „In-depth review of energy efficiency policies and programmes“, 2004
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Reducing Greenhouse Gas Emissions through Improved Energy Efficiency in the
Industrial Sector in Moldova ______cross the territory of the Republic of Moldova with a length of 100 km. The annual amount of transited natural gas is about 25 bln m 3. In spite of the fact that the natural gas market was officially opened by law, at present it can not be considered a functional market, because the supply of natural gas is limited by a single supplier, i.e.Gazprom. Gazprom controls the transmission networks that provide access to other sources of supply such as those in Middle Asia. This makes it practically impossible to contract natural gas supplies from other sources 8. In 2008, 12 gas distribution enterprises operated in the Republic of Moldova, the biggest of which is Chisinau-gas LLC, with a market share of over 60% of the total final supply in 2008 9. The contractual price for natural gas purchased from GAZPROM increased significantly since 2007, from 170 USD/1000 m3 to 284 USD/1000 m3 in the fourth quarter of 2008. This price increase, together with milder temperatures, led to a decrease in gas consumption in the RM of about 8% in 2008 compared to the previous year. Like for electricity, gas tariffs are determined by the National Agency for Energy Regulation (ANRE). They are based on costs and depend on consumption and consumer types. Social tariffs still exist for the low income households. However, in 2008 tariffs for gas supply were recalculated by ANRE inter alia to also abolish cross-subsidies. Natural gas price ranged between 3,200 and 3,800 MDL.
In 2007, gas distribution losses have been estimated at about 7.8% of total internal consumption 10
1.3 District Heating
In 2006, heat supply in the Republic of Moldova amounted to 309 ktoe, covering around 10.8% of the final energy consumption of the country. Heat is mainly produced by gas (95%). Heat is supplied by large centralized heating systems from combined heat and power and large heat-only plants. Municipal systems powered by large heat-only plants exist in Chisinau, Balti, and four other cities, while six other cities are supplied with heat from the combined heat and power units of the sugar factories. Since the mid-1990s a progressive degradation of the heating networks throughout the country has started. It is estimated that over 15% of the heat produced is lost due to the long distribution lines of the two largest district heating systems in Chisinau and Balti. According to JSC “Termocom”, in 2006 heat distribution losses were as high as 19–21%. Reducing losses of heat supply networks remains a priority for the energy sector and the Government of Moldova. A key issue in this context is energy efficiency regulation, including installation of energy efficient equipment and optimization of heat demand in the residential and building sector. 11 . The number of district heating companies decreased dramatically since 2000 and in 2004 only eight cities were fully or partially supplied with district heat. Decentralized heating systems now meet residential and public sector demands while industry has almost completely disconnected from district heating systems 12 .
8 Source: EnCharter PEEREA report, „In-depth review of energy efficiency policies and programmes“, 2004 9 Source: UNECE EE21, 2009 10 Source: National Bureau of Statistics of the Republic of Moldova (2008), Energy Balance of the Republic of Moldova, 2007: Statistical Book. Chisinau: Statistica, 2008 (Statistica Moldovei), page 47. 11 Source: UNECE EE21, 2009 12 Source: USAID report, “Urban heating in Moldova: Experience from the Transition and future directions”, 2006
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Reducing Greenhouse Gas Emissions through Improved Energy Efficiency in the
Industrial Sector in Moldova ______
2. Energy Demand
The residential sector is the first consumer of primary energy, representing 42.9% of the total consumption. The industry and the transport sectors amount respectively for 10.8% and 23.3% of the total final consumption 13 (Figure 1 and Table 11).
Commerce and Public Services, 8.5%
Agriculture, 3.7% Transport, 23.3%
Industry, 10.8%
Construction, 0.4% Agriculture, 3.7%
Other, 10.3%
Residential, 42.9%
Figure 1: Primary energy consumption by sectors in the Republic of Moldova (without Transnistria) in 2007 (in % of total final consumption)
Table 11: Primary Energy Consumption by Sectors in the Republic of Moldova (without Transnistria), 2000-2007 time series, ktoe
2000 2001 2002 2003 2004 2005 2006 2007 Primary energy consumption for 918 925 1,090 1,297 1,361 1,436 1,454 1,393 technological needs, inclusive: Industry 100 107 113 121 126 157 157 150 Construction 4 4 4 3 4 4 6 6 Agriculture 69 68 80 80 71 61 59 52 Transport 171 169 248 279 254 267 285 325 Commerce and Public Service 55 66 86 137 126 120 123 119 Residential (sold to population) 420 429 477 575 656 704 691 598 Other 99 82 82 102 124 123 133 143 Source: National Bureau of Statistics of the Republic of Moldova (2008), Energy Balance of the Republic of Moldova, 2007: Statistical Book. Chisinau: Statistica, 2008 (Statistica Moldovei), page 10.
13 Source: National Bureau of Statistics of the Republic of Moldova (2008), Energy Balance of the Republic of Moldova, 2007: Statistical Book
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Reducing Greenhouse Gas Emissions through Improved Energy Efficiency in the
Industrial Sector in Moldova ______
With respect to electricity consumption, residential users account for 38.5%, industry for 31.2% and commerce and public services 22.1% 14 (Figure 2 and Table 12). Total final electricity consumption in 2007 was about 3.364 TWh.
Other, 4.3%
Residential, 38.5% Industry, 31.2%
Agriculture, 1.5% Transport, 1.9%
Construction , 0.5% Commerce and Public Services, 22.1%
Figure 2: Electricity Consumption by Sectors in the Republic of Moldova (without Transnistria) (in % of Electricity Final Consumption)
Table 12: Electricity Consumption by Sectors in the Republic of Moldova (without Transnistria), 2000-2007 time series, GWh
2000 2001 2002 2003 2004 2005 2006 2007 Total resources 3,379 3,390 3,781 4,629 4,383 4,196 4,074 4,031 Total electricity consumption 2,244 2,206 2,449 2,527 2,634 2,921 3,215 3,364 Industry 627 648 733 865 871 974 1,026 1,049 Construction 11 10 9 8 10 10 14 15 Agriculture 71 59 63 52 48 51 55 50 Transport 61 60 61 51 47 50 58 65 Commerce and Public Service 393 347 566 581 539 671 753 745 Residential (sold to population) 790 813 774 836 964 1,041 1,154 1,295 Other 291 269 243 134 155 124 155 145 Source: National Bureau of Statistics of the Republic of Moldova (2008), Energy Balance of the Republic of Moldova, 2007: Statistical Book. Chisinau: Statistica, 2008 (Statistica Moldovei), page 13.
14 Source: National Bureau of Statistics of the Republic of Moldova (2008), Energy Balance of the Republic of Moldova, 2007: Statistical Book
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Reducing Greenhouse Gas Emissions through Improved Energy Efficiency in the
Industrial Sector in Moldova ______
Total heat consumption in 2007 was about 2,554 Gcal. The residential sector accounted for 49.9% of consumption, industry for 28.4% and commerce and public services for 18.0% 15 (Figure 3 and Table 13).
Transport, 0.1% Other, 3.1% Commerce and Public Services, 18.0%
Agriculture, 0.3%
Residential, 49.9%
Industry, 28.4%
Construction, 0.2%
Figure 3: Heat Consumption by Sectors in the Republic of Moldova (without Transnistria), in % of Heat Final Consumption
Table 13: Heat Consumption by Sectors in the Republic of Moldova (without Transnistria), 2000-2007 time series, thousand Gcal
2000 2001 2002 2003 2004 2005 2006 2007 Total resources 3,057 3,298 3,217 3,347 3,147 3,591 3,552 3,094 Total heat consumption 2,673 2,809 2699 2,799 2,686 3,084 2,903 2,554 Industry 909 984 987 935 1,011 1,007 932 724 Construction 4 3 3 4 4 5 6 6 Agriculture 38 18 13 11 14 20 10 8 Transport 3 4 4 4 2 2 4 2 Commerce and Public Service 428 582 422 471 436 568 506 460 Residential (sold to population) 1,194 1,128 1,180 1,288 1,129 1,395 1,330 1274 Other 97 90 90 86 90 87 115 80 Source: National Bureau of Statistics of the Republic of Moldova (2008), Energy Balance of the Republic of Moldova, 2007: Statistical Book. Chisinau: Statistica, 2008 (Statistica Moldovei), page 16.
15 Source: National Bureau of Statistics of the Republic of Moldova (2008), Energy Balance of the Republic of Moldova, 2007: Statistical Book
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Reducing Greenhouse Gas Emissions through Improved Energy Efficiency in the
Industrial Sector in Moldova ______
With regard to natural gas, in 2007 residential and industry sectors accounted respectively for 53.2% for 29.8% of the total consumption (Figure 4) which amounted to about 1,209 mln m 3, -8.6 % compared to 2006 16 . In 2008 gas consumption continued to decrease (-6.5% compared to 2007) as result of persistently increasing tariffs and a relatively mild winter 17 .
Transport, 0.8% Commerce and Other, 0.3% Public Services, 15.4%
Agriculture, 0.2%
Residential, 53.3%
Industry, 29.8%
Construction, 0.2%
Figure 4: Gas Consumption by Sectors in the Republic of Moldova (without Transnistria), in % of Gas Final Consumption
3. Baseline scenario and trajectory for industry
The manufacturing sector of the Republic of Moldova is still lagging significantly behind other European industries in terms of energy intensity (energy used/value of output), in some cases 3-4 times higher than the energy intensity of some Western European countries.
If one looks at the available and widely used energy performance indicators for Moldova industry he/she would basically see the trend shown in Fig.5, i.e. a steady reduction of the manufacturing industry energy intensity, which may convey the idea of steady efficiency improvements.
However, using a bit more carefully data available, the trend of Moldova manufacturing industry energy intensity would change in the one shown in Fig.6 where energy intensity is measured in constant prices. Looking at Fig. 6, manufacturing industry energy consumption performance versus output value has remained relatively stable over the last seven years.
16 Source: National Agency for Energy Regulation 17 Source: National Bureau of Statistics of the Republic of Moldova (2008), Energy Balance of the Republic of Moldova, 2007: Statistical Book. Chisinau: Statistica, 2008 (Statistica Moldovei), page 48.
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Reducing Greenhouse Gas Emissions through Improved Energy Efficiency in the
Industrial Sector in Moldova ______
If one looks then at individual manufacturing sectors performance, energy intensity shows even more dynamic trends, both upward and downward (Fig.7 and Fig.8 show two examples).
MJ/MDL Energy intensity of Manufacturing Production (Current prices) MJ/MDL Energy intensity of Manufacturing Production (Constant prices) 2.0 4.5
1.8 4.0 1.6 3.5 1.4 3.0 1.2 2.5 1.0 2.0 0.8 1.5 0.6 1.0 0.4
0.2 0.5
0.0 0.0 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
Fig. 5 Energy intensity of manufacturing production - Fig. 6 Energy intensity of manufacturing production value in current prices. (Source: Moldova National - value in constant prices. (Source: WB, UNIDO) Bureau of Statistics)
Manufacture of other non-metallic mineral products MJ/MDL Manufacture of Food and Beverages MJ/MDL 3.0 14.0
2.5 12.0 10.0 2.0 8.0 1.5 6.0 1.0 4.0
0.5 2.0
0.0 0.0 2000 2001 2002 2003 2004 2005 2006 2007 2000 2001 2002 2003 2004 2005 2006 2007
Specific energy consumption (constant prices):MJ/MDL Specific energy consumption at constant prices: MJ/MDL
Fig. 7 Energy intensity of Food and Beverage sector - Fig. 8 Energy intensity of other non-metallic mineral value in constant prices. (Source: UNIDO and MNBS) products sector - value in constant prices. (Source: UNIDO and MNBS)
Based on the currently available indicators for industry energy performance, it is difficult to say what the real trend with regard to energy efficiency is. In recent past and still now companies ’ attention and resources have been concentrated on upgrading production technology. Despite the steep increase of electricity and gas prices over the last years have raised enterprises ’ attention to energy, only a limited number of companies, mainly large ones, have been able to invest in auxiliary systems renovation and energy efficiency.
Several studies carried out by different agencies, including UNIDO, concur in identifying the following key external barriers to industrial energy efficiency: Inadequate policy and regulatory framework to promote and effect energy efficiency in Moldova economy as well as failure to implement existing policies because of lack of institutional capacity (technical and financial) Lack of information and education on energy efficiency benefits as well as costs
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Reducing Greenhouse Gas Emissions through Improved Energy Efficiency in the
Industrial Sector in Moldova ______
Reliable end-use energy data are not available making more difficult to harvest the benefits of energy efficiency and support both monitoring improvements and orientation of energy efficiency policies There is limited availability of funds for energy efficiency. The banking sector is reluctant and has no knowledge of loans for EE and interest rates are high. Third party financing and performance contracts are still non-existent Lack of private companies, consultancy and specialist active in the area of energy efficiency project development.
At the enterprise level, for the vast majority of companies barriers are: Lack of awareness of their energy efficiency economic potential Insufficient staff technical capacity for the identification, preparation and implementation of EE projects and measures Over-dimensioned and outdated equipment and technological processes which increase specific energy consumption Very limited cash resources that constraint project preparation financing Resistance to change: many managers and engineers are still struggling to grasp market economy functioning and modern and efficient management the production processes
In the absence of the proposed GEF-UNIDO project very little steps, if any, towards the implementation of policies and programs to monitor, promote and support industrial energy efficiency are likely to be made in the short-term (next 5 years). The vast majority of manufacturing enterprises will continue to suffer from lack of energy efficiency information, understanding and technical capacity, missing sizeable opportunities for energy savings and costs reduction through better energy management practices and the implementation of no and low cost operational improvement measures. No significant changes would happen in the market with respect to the provision of energy management and system optimization advisory services. It is very unlikely that the few equipment vendors that are now offering some energy efficiency advice related to their product will broaden the scope of their services to encompass the entire system or factory, unless they clearly see its market potential and they can locally procure the required expertise. Energy service companies (ESCOs) are likely to appear and become operational only in the medium term, considering that according with the current draft Law on Energy Efficiency they will have to work through performance contracts and bear part of projects’ financial risk. Considering that and past experience of OECD countries, ESCOs will almost certainly concentrate in the commercial sector initially and only at a later stage engage with industry. The level of energy efficiency investments in the manufacturing sector will increase compared to the recent past, mainly through the EBRD Moldova Sustainable Energy Financing Facility (MoSEFF); but to what extent is difficult to predict. What seems very likely is that the majority of Moldovan enterprises will not be able to get access to the MoSEFF, SMEs in particular; the same small and medium enterprises that would have the greatest potential for economic energy savings and efficiency improvements. In conclusion, in the short-term, the baseline scenario would not be able to bring about significant mitigation of most infrastructural barriers that are hampering energy efficiency progression in Moldova industry and the creation of a modern industrial energy efficiency service market. Energy efficiency projects and investments will increase compared to the past thanks to the MoSEFF, but they would most
14
Reducing Greenhouse Gas Emissions through Improved Energy Efficiency in the
Industrial Sector in Moldova ______likely remain localized in a relatively small number of companies. The underlying critical problem of the lack of adequate institutional capacity and supporting policy programs for IEE and good technical expertise and skills on the market would remain unresolved. Most enterprises would continue to lack structured approaches to and capacity for energy management and energy efficiency, jeopardizing the sustainability of the efficiency gains that some of them will achieve through EE investments made as well as determining the loss of those major potential energy savings and GHGs emissions that could be reaped by most SMEs through no and low cost energy efficiency measures. The harvest of the major economic energy efficiency improvement potential in Moldova industry would be further delayed and prolonged with consequent GHG emissions that could be otherwise avoided to the global environment. For the purpose of estimating the incremental energy savings and GHG emission reductions to be generated by the GEF UNIDO project, the baseline shift of Moldova industry energy performance is assumed to be defined by an average 1.0 % annual energy efficiency gain until 2023. This value is assumed based on the following considerations: a. The Energy Strategy of the Republic of Moldova to the year 2020 18 sets the target of 1.6-1.7% annual reduction of the Moldova GDP energy intensity through “ … a well-planned and concerted implementation of an energy efficiency program in Moldova …”. b. At the end of 2009 there was no specific Government program in place for the industrial sector. The IEE programs to be developed and established by the GEF UNIDO project under PC1 in collaboration with the Agency for Energy Efficiency would be the first ones. c. The energy intensity (energy/value of output in constant prices) of the manufacturing sector from 2001 to 2007 has not shown significant reduction (Fig. 6) d. The EBRD MoSEFF and the BAS program will compensate to some extent the absence of Government programs to support IEE
Taking the above into account, an average annual energy efficiency improvement of 1.5 % is assumed for the manufacturing sector as result of the baseline shift.
4. Energy savings and GHG emission reduction estimates Estimating detailed energy efficiency and savings potentials for the industrial sectors of Moldova is complicated by a wide range of factors: The lack of available statistics, data and meaningful indicators for the Moldova manufacturing sector The diversity of plants and production processes Traceability of energy sources, i.e. electricity Uncertainty about the consistency of methodologies behind different tools used for projections Some development scenarios have been produced by the Government of Moldova within the scope of different programs (Ministries), with different objectives and using different tools (Industrial Growth Strategy, Medium- and Long-term Planning of the Energy Supply System, etc.), but industrial energy efficiency was never the real focus use. Beside that, the underlying lack of useful and reliable data and statistics would make the results of possible modeling attempts very uncertain. Given the resources and
18 The Strategy was approved in August 2007.
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Reducing Greenhouse Gas Emissions through Improved Energy Efficiency in the
Industrial Sector in Moldova ______time available at the PPG stage it was not even feasible to undertake the data mining, collection and analysis needed to provide meaningful indicators and results. Such exercise deserves significant planning and remarkable time and human resources and for these reasons it will be carried out during the project implementation as integral part of the Monitoring, Tracking and Benchmarking program of Project Component 1.
For the GEF-UNIDO project, estimates of targeted direct and indirect energy savings and relevant GHG emission reductions have been made using the following resources: Energy Balances of the Republic of Moldova Second National Communication of the Republic of Moldova to the UNFCCC, 2009 Projections of future energy supply and demand developed using the Energy and Power Evaluation Program (ENPEP) of the International Atomic Energy Agency and the Long-range Energy Alternatives Planning (LEAP) system program Energy management and consumption survey of manufacturing enterprises carried out by UNIDO and the Ministry of Ecology during the PPG phase Conduction of walk-through and detailed energy audits in a small number of factories International experience and literature on system optimization and energy management programs Expert’s judge
4.1 Methodology used In defining a methodology for estimating direct and in-direct energy savings of the GEF-UNIDO project in Moldova two aspects have to be considered: 1. Energy efficiency technologies such as system optimization and energy management are cross- cutting to all industrial sectors and processes 19 2. The project focuses on removing several barriers to IEE, in particular the lack of technical capacity in the market and in enterprises to implement and continually improve energy efficiency and performance In designing the methodology, the guidance provided in the GEF Manual for calculating GHG benefits of GEF energy efficiency and renewable energy projects as well as in other relevant documents has been taken into account. The methodology used combines bottom-up and top-down approaches. It uses available data from national statistics and international literature as well as data collected through a survey and energy audits carried out between a limited number of companies during the PPG phase. The methodology consisted of 4 steps.
Step 1 : Profiling industrial manufacturing sectors Using available data from national statistics the manufacturing sectors and some sub-sectors have been profiled and ranked based on a set of criteria that includes: Total energy consumption End-use energy consumption (electricity, heat, process, transport) Source of energy (electricity, commercial heat, gas, oil, coal, etc, but exclusive of feedstock)
19 IPCC 4 th Assessment Report, Chapter 7- Industry, page 455.
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Reducing Greenhouse Gas Emissions through Improved Energy Efficiency in the
Industrial Sector in Moldova ______
Number of enterprises in the sector/ sub-sector Size of the enterprises in terms of employees General economic performance and prospective growth rate Fig. 9 and 10 below show total energy consumption and sector population for some manufacturing sectors.
Energy consumption in Moldova manufacturing sectors - 2005 Enterprise population of manufacturing sectors - 2005 TJ # of companies 7,000 350
6,000 300 Heat
5,000 Electricity 250
4,000 200
3,000 150
2,000 100
1,000 50
0 0 15 17 20 21 24 26 29 15 17 20 21 24 26 29 ISIC Code ISIC Code
Fig. 9 Energy consumption in Moldova manufacturing Fig. 10 Enterprise population of manufacturing sectors sectors – 2005. (Source: MNSB) – 2005. (Source: MNSB)
Based on this initial profiling exercise it was decided to primarily focus on the manufacture of food products and beverages and the manufacture of other non-metallic mineral products sectors (Table 14).
Table 14: Ranking manufacturing sectors for the GEF-UNIDO project Primary focus 15 - Manufacture of food products and beverages 26 - Manufacture of other non-metallic mineral products
Secondary focus 17 - Manufacture of textiles 18 - Manufacture of wearing apparel; dressing and dyeing of furs 19 - Manufacture of leather, leather products and manufacture of footwear 21 - Manufacture of paper and paperboard 24 - Manufacture of chemicals and chemical products 20 - Manufacture of wood and wood products Note: The Third revision of the International Standard Industrial Classification (ISIC) has been used to codify the manufacturing sectors
In 2005 the food products and beverages and the other non-metallic mineral products sectors accounted for about 50% of total electricity consumption in industry. In the same year, the food and beverage sector alone accounted for 79% of total industrial heat consumption and the non-metallic mineral products sector for about 90% of total industrial natural gas consumption. The number of enterprises in each manufacturing sectors and sub-sectors has also represented an important input in defining the current focus of the project, since it will have an impact on the replication potential and scaling-up of energy savings. Table 15 lists the number of enterprises for some sectors and sub-sectors, the correspondent number of employees as well as annual electricity and heat consumption.
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Reducing Greenhouse Gas Emissions through Improved Energy Efficiency in the
Industrial Sector in Moldova ______
Table 15: Indicators for some industrial sectors and sub-sectors
Number of 20 Average total Annual Annual Annual Annual industrial Annual Electricity Heat Fuels Total Energy enterprises consumption Number of consumption consumption consumption employees TJ TJ TJ TJ 2005 2005 2005 2005 2005 2005 Industry – total 702 92,700 3,506 4,209 5,518 13,233
Manufacture of food products and beverages 316 34,600 994 3,327 560 4,881 Percentage of Industry Tota l 45.0% 37.3% 28.3% 79.0% 10.1% 36.9% Production, processing and preserving of meat and meat products 14 1,500 Processing and preserving of fruits and vegetables 35 3,700 Manufacture of vegetable and animal oils and fats 2 1,000 Manufacture of dairy products 15 2,700 Manufacture of products of flour-milling industry, of starches and 13 300 starch products Manufacture of prepared animal feeds 4 700 Manufacture of bakery products 50 4,300 Manufacture of sugar 7 1,600 Manufacture of cocoa, chocolate and sugar confectionery 3 1,300 Manufacture of distilled alcoholic drinks 13 2,300 Manufacture of wine 129 12,500 Manufacture of beer 5 1,000 Production of mineral water and freshener beverages 13 700 Manufacture of tobacco products 10 1,500
20 According with the Moldova Bureau of Statistics and the Ministry of Economy enterprises counted here have at least 20 employees.
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Reducing Greenhouse Gas Emissions through Improved Energy Efficiency in the
Industrial Sector in Moldova ______Number of 20 Average total Annual Annual Annual Annual industrial Annual Electricity Heat Fuels Total Energy enterprises consumption Number of consumption consumption consumption employees TJ TJ TJ TJ 2005 2005 2005 2005 2005 2005
Manufacture of other non-metallic mineral products 31 5,600 745 54 4,481 5,280 Percentage of Industry Tota l 4.4% 6.0% 21.2% 1.3% 81.2% 36.9% Manufacture of glass and glass products 5 2,400 Manufacture of tiles and bricks in baked clay 4 700 Manufacture of cement, lime and gypsum 3 700 Manufacture of articles of concrete, gypsum & cement 15 1,400 Cutting, shaping and finishing of stone 2 100
Manufacture of textiles, leather, leather products and manufacture of 71 18,800 144 171 footwear
Manufacture of publishing, printing and reproduction of 25 1,100 173 385 informational materials
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Reducing Greenhouse Gas Emissions through Improved Energy Efficiency in the
Industrial Sector in Moldova ______
Step 2: Study of energy efficiency potential in the Moldovan wine sector During the PIF development phase, special attention was initially given within the food products and beverages sector, to wine sub-sector. UNIDO in collaboration with the Ministry of Ecology conducted a study to estimate the potential for energy and water efficiency improvements in the Moldovan winemaking sector. Wine production is one of Moldova's most important industries. In 2005 it contributed more than 20% of national industrial production value added 21 . In 2005, the Moldovan winemaking sector consumed 325 TJ of electricity, 424 TJ of natural gas and 665 TJ of oil products, equating to about 10.5% of the total industrial energy use. In 2006 and 2007 the wine industry experienced a significant slow down due to a ban to Moldova wine imposed by Russia in March 2006 and lifted only at the end of 2007. Production of wine fell by 50% in 2006 and by a further 30% in 2007. Its share in total industrial output shrank from 17% in 2005 to 6% in 2007. The industry is slowly recovering but it is still far from the production and export levels antecedent the Russian ban. The study was carried making use of the BEST Winery software program 22 adapted for use in Moldova. In order to adapt the program to the Moldova context meteorological data were collected and a survey was carried out between 22 wineries. The study estimated that the potential technical energy savings in the Moldova wine industry amount to: 23 188 TJ of electricity corresponding to 21,208 tons of CO 2eq 24 400 TJ of fuels corresponding to 22,460 tons of CO 2eq
Step 3: Conduction of a Survey on energy consumption, management and efficiency in Moldovan manufacturing enterprises
The purpose of this Survey was to collect data and information on energy consumption, energy management practices and energy efficiency of enterprises in different industrial sectors in Moldova with the objective of: Provide some insight of industrial energy management and efficiency performance in order to better define baseline conditions
21 Statistical Year Books of the Republic of Moldova for 2002 and 2005 22 The BEST-Winery (Benchmarking Energy and Water Efficiency Savings Tool - BEST) is a software program for Excel ® developed by the Lawrence Berkeley National Laboratory. The program is designed to evaluate the energy and water efficiency at a winery, and to help assess the environmental and financial impacts of potential improvement strategies. Given the necessary data, BEST-Winery calculates energy intensity and water intensity indexes, performance indicators that compare the user's winery to a benchmark or reference facility. BEST Winery also allows the user to evaluate preliminary opportunities for energy and water efficiency improvement, to assess the impact on the performance of the facility, and to evaluate operation costs and benefits. For more information please see http://best-winery.lbl.gov/ 23 Emission factor used for electricity is 406.28 g CO2eq/kWh (see Appendix 1 for details) 24 The simplifying and conservative assumption that these fuels savings would entirely consist of natural gas has been made. The emission factor used for natural gas is 56.152 tons CO2eq/TJ (see Appendix 1 for details)
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Identify potential indicators to measure energy savings and performance improvements to be generated or promoted by the project. Such indicators will be fully defined at the beginning of project implementation and they will be integral part of the Monitoring, Tracking and Benchmarking program to be established under Project Component 1 Mapping and prioritize areas offering greater potential for both energy efficiency interventions and GEF project impact (breakdown of energy consumption by end use, operation improvements, sub-metering, energy systems to optimize, barriers to energy efficiency, etc.) Raise awareness about the GEF project as well as energy efficiency and energy management in industry
After a reviewing location, size and economic activity of enterprises in the focus sectors identified, 70 companies belonging to the following sectors/sub-sectors 25 were selected for the Survey. 151 - Production, processing and preservation of meat, fish, fruit, vegetables, oils and fats 152 - Manufacture of dairy products 154 - Manufacture of other food products 155 - Manufacture of beverages 171 - Spinning, weaving and finishing of textiles 21 - Manufacture of paper and paper products 242 - Manufacture of other chemical products 261 - Manufacture of glass and glass products 269 - Manufacture of non-metallic mineral products n.e.c.
The survey questionnaire was sent to companies in August 2009. As of end of November 2009, 20 questionnaires were returned to the Ministry of Ecology and Natural Resources. Six companies answered that they were not interested in participating in the GEF project. Forty four enterprises did not return the questionnaire even after follow up from the project national expert through emails and telephone calls. Some companies declared not to have the human resources for completing the questionnaire. Some companies from the manufacture of beverages sub-sector, in particular wineries, reported of being temporarily not active as result of prolonged difficulties in distributing on the Russian market.
It has to be pointed out that due to the limited resources and time available the Survey was not carried out with the intention to be statistically representative of the entire Moldovan industry. The sampling of the enterprises to receive the survey questionnaire was carried out employing what may be termed as “purposive stratified sampling”26. The sample was stratified in terms of enterprises sub-sector, location (province) and size. Yet it was “purposive” in that UNIDO relied on the contacts made with enterprises during the project preparation missions and the networks of the Ministry of Ecology and National Resources to identify enterprises more willing to participate in the project. This has led to a sample comprising of many companies that are between, if not the, best performers in their respective sub-sectors in terms of economic performance as well as energy conservation and efficiency.
25 Sub-sector codes are from the 3 rd Revision of the International Standard Industrial Classification (ISIC) 26 “Greener plants, Grayer Skies? A report form the front lines of China’s energy sector”, E. S. Steinfeld et alia, China Energy Group, MIT Industrial Performance Center, August 2008
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Table 16 below provides the distribution by sub-sector of the enterprises that returned the survey questionnaire.
Table 16: Distribution of Survey respondents by sub-sector
Sub sector - ISIC 3 Code 151 152 154 155 171 21 242 261 Number of respondents 5 4 4 2 1 1 2 1 Enterprise index 1-5 6-9 10-13 14-15 16 17 18-19 20
Table 17 below shows the distribution of the survey respondents by size.
Table 17: Distribution of Survey Respondents by company size
Size Sub-sector Small Medium Large Tot Definitions of company sizes 151 0 2 3 5 Small 0 < # employees ≤ 50 152 0 3 1 4 154 0 0 3 3 Medium 50 < # employees ≤ 250 155 0 2 0 2 Large 250 < # employees 171 0 0 1 1 21 0 0 1 1 242 0 2 0 2 261 0 0 1 1 Tot 0 9 11 20
The total energy consumption of the surveyed enterprises represents 12.8% of the total energy consumption of the Moldova manufacturing sector in 2007. Table 18 below provides a breakdown by source of energy.
Table 18: Surveyed enterprises share of total industry energy consumption
Surveyed Manufacturing Share Energy source enterprises a sector b % [TJ] [TJ] Total annual electricity consumption 308.8 3,776.4 8.2% Total annual fuel consumption 1,354.7 6,280.2 18.8% Total annual commercial heat consumption 10.3 3,026.3 0.3% Total annual energy consumption 1,673.9 13,082.9 12.8% Notes: a 2008 data b 2007 data
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Fig 11 and 12 below show the total annual energy consumption for the 20 surveyed companies and the break-down by end-use. The “Other ” category includes fuels consumed for purposes other than electricity and heat production. Looking at these figures it is evident that heat accounts for the single biggest share of primary energy consumption in the majority of surveyed enterprises and in particular in enterprises belonging to the food products and beverages sector, and the non-metallic mineral products sector.
TJ Annual Energy Consumption by End-Use 400
350
300 250 200
150
100 50 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Enterprises Electricity Heat Other
Fig.11 2008 total energy consumption and break-down by end-use for each surveyed enterprise.
Annual Energy Consumption by End-Use 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20
Enterprises Electricity Heat Other
Fig. 12 Break-down by end-use of 2008 total energy consumption of surveyed enterprises
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Fig 13 and 14 below show the break-down by type of fuel of total fuels consumption and for heat production respectively in surveyed enterprises. The “Other ” category in Fig. 13 includes wood and oils.
LPG, 0.6% Fuel oil, 1.9% Other, 0.1% Fuel oil, 2.3% Petrol, 5.3% Diesel, 6.0%
Natural Gas, Natatural Gas, 86.1% 97.7%
Fig. 13 Break-down by type of fuel of total Fig. 14 Break-down by type of fuel of fuels fuels consumption in surveyed enterprises consumption for heat generation in surveyed enterprises
The analysis of the survey data is still ongoing.
Step 4: Conduction of a limited number of walk-through and detailed energy audits The objectives of these energy audits were to Complement survey data with inspections and experts assessment of energy management and efficiency performance of some of the surveyed enterprises Provide experts’ estimates of potential energy savings for various energy efficiency measures, including energy systems optimization and energy management operational improvements Identify areas and type of energy efficiency interventions that would have greater relevance and replication potential Identify energy efficiency projects to be further developed and supported under Project Component 2 and 3
Ten (10) walk-through energy audits and five (5) detailed energy audits have been carried during the PPG phase. The first 4 walk-through energy audits were carried by a team of three experts consisting of one international industrial energy efficiency expert and two national energy efficiency experts with some experience of audits in industry. The remaining 6 walk-through and 5 detailed energy audits have been carried out by the two national experts on the basis of protocols developed by and agreed with the international expert. As of December 2009, the results of two walk-through and three detailed energy audits carried out by one of the national experts had not been submitted yet to UNIDO and the Ministry of Ecology due to the hospitalization of the subject expert.
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One page summary of the main findings of the energy audits for which reports have been prepared is reported for each enterprise in the following pages. As for the energy savings measure categories indicated in the “Type of investment ” column, the definitions in the below Table PP apply:
Table 19: Definitions of energy savings categories with respect to investment requirements Savings Category / Definition Type of investment These energy savings opportunities will involve no investment cost. They are No Cost usually operational or maintenance adjustments These opportunities have a simple payback of less than one year, i.e. they can Low Cost normally be paid for out of operating budgets
Medium Cost These opportunities have a simple payback of less than 3 years These opportunities have a simple payback of greater than 3 years and are High Cost often larger projects sometimes of a strategic or infrastructural nature though not always.
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Page 1 of 8
Company: FRANZELUTA Category: Bread and Pasta Producer Electricity emission factor Walk-through by L. McLaughlin, Prof. A. Gutu, V. Raileanu kg CO2eq/MWh Audit type carried out: More-detailed by Prof. A. Gutu 406.28
2008 Totals Total Annual Electricity Use 26,779 MWh p.a. Fuel (natural gas) emission factor Total Annual Fuel Use 40,114 MWh p.a. kg CO2eq/MWh Total Current GHG Emissions 18,983 tonnes p.a. 202.00
Annual savings identified NOTE 1 The annual savings identified do not include savings from the Total Electricity Savings Identified 2,912 MWh p.a. 10.87% of total implementation of an energy management system Total Fuel Savings Identified 4,859 MWh p.a. 12.11% of total GHG Savings identified 2,165 tonnes p.a. 11.40% of total
Annual Electr. Annual Electr. Annual Fuel Annual Fuel Annual GHG Type of Selected identified Energy Efficiency measures Consumption Saving Consumption Saving Savings Remarks investment [MWh] [MWh] [MWh] [MWh] [tons CO2eq] 1. Reduce steam pressure as much as possible. It should be No cost 0 0 8,489 255 51 approximately 20 degrees C above temperature of hottest user. 2. Improve insulation of all hot pipes and associated fittings (especially Annual cost savings > Low cost 0 0 8,489 424 86 steam) as well as casing of all operational boilers 15,000 USD
3. Replacing of electric stove for bread cooking by a gas fired stove Medium cost 1,056 1,056 0 -1,130 201 In letter of Commitment
4. Heat recovery from gases evacuated from bread baking ovens Medium cost 6,541 535 3,788 376 293 Ranked 1st by Prof. Gutu without vapor condensation
5. Restoring condensate pipes and using condensate enthalpy Medium cost 0 0 8,489 740 149
Total Annual GHG Savings, tons CO2eq 780
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Page 2 of 8 Company: NATUR BRAVO - C. Category: Fruit and Vegetables Processing/Canning Electricity emission factor Walk-through by L. McLaughlin, Prof. A. Gutu, V. Raileanu kg CO2eq/MWh Audit type carried out: More-detailed by V. Raileanu, but results still due 406.28
2008 Totals Total Annual Electricity Use 2,446 MWh p.a. Fuel (natural gas) emission factor Total Annual Fuel Use 24,404 MWh p.a. kg CO2eq/MWh Total Current GHG Emissions 5,923 tonnes p.a. 202.00
Annual savings identified NOTE 1 Total Electricity Savings Identified 262 MWh p.a. 10.71% of total The annual savings identified do not include savings from the Total Fuel Savings Identified 5,927 MWh p.a. 24.29% of total implementation of an energy management system GHG Savings identified 1,304 tonnes p.a. 22.01% of total
Annual Electr. Annual Electr. Annual Fuel Annual Fuel Annual GHG Type of Selected identified Energy Efficiency measures Consumption Saving Consumption Saving Savings Remarks investment [MWh] [MWh] [MWh] [MWh] [tons CO2eq] 1. Reduce steam pressure to 8 bar or less. It should be approximately No cost 0 0 20,439 613 124 20 degrees C above temperature of hottest user. 2. Improve insulation of all hot pipes and associated fittings (especially Low cost 0 0 20,439 1,022 206 steam) as well as casing of all operational boilers 3. Fit automatic TDS control with heat recovery, Oxigen trim and High cost 0 0 20,439 2,248 454 combustion control to boiler 1 All relevant to project proposed in Letter of Commitment 4. Fit VSD to motors of force draft and exhaust draft fans Medium cost 315 158 0 0 64
5. Fit VSD to motors of cooling tower fans and circulation pumps Medium cost 207 104 0 0 42
6. Recover steam condensate where possible Medium cost 0 0 20,439 2,044 413
7. Several opportunities for heat recovery exist. Consider to carry out Medium cost ----- PINCH analysis of apple juice evaporation/distillation plant
Total Annual GHG Savings, tons CO2eq 1,303
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Page 3 of 8 Company: LACTIS Category: Dairy Electricity emission factor Walk-through by L. McLaughlin, Prof. A. Gutu, V. Raileanu kg CO2eq/MWh Audit type carried out: More-detailed by V. Raileanu, but results still due 406.28
2008 Totals Total Annual Electricity Use 1,041 MWh p.a. Fuel (natural gas) emission factor Total Annual Fuel Use 5,944 MWh p.a. kg CO2eq/MWh Total Current GHG Emissions 1,624 tonnes p.a. 202.00
Annual savings identified NOTE 1 Total Electricity Savings Identified 387 MWh p.a. 37.22% of total The annual savings identified do not include savings from the Total Fuel Savings Identified 1,122 MWh p.a. 18.88% of total implementation of an energy management system GHG Savings identified 384 tonnes p.a. 23.66% of total
Annual Electr. Annual Electr. Annual Fuel Annual Fuel Annual GHG Type of Selected identified Energy Efficiency measures Consumption Saving Consumption Saving Savings Remarks investment [MWh] [MWh] [MWh] [MWh] [tons CO2eq] 1. A room designed to be at 12degC operated at 5degC. This roughly Recommendation for No cost 44.7 9 0 0 4 uses an additional 20% of energy. taking action was made 2. Optimization of refrigeration systems, including improved insulation of Low&Medium 446.8 179 0 0 73 Complementary to Letter cold pipes and automated control cost of Commitment 3. Improve insulation of all hot pipes and associated pipe fittings Low cost 0 0 3,400 170 34 4. Recover heat from boiler blowdown Low cost 0 0 3,400 68 14 5. Insulate the boiler feed water tank and maintain its temperature at Medium cost 0 0 3,400 34 7 about 85degC 6. Fit an economiser to one boleir Medium cost 0 0 3,400 272 55
7. Recover steam condensate where possible Medium cost 0 0 3,400 340 69
8. Automatic boiler combustion and TDS control High cost 0 0 3,400 238 48
9. Retrofitting of compressed air supply system Medium cost 421.6 199.8 0 0 81 In Letter of Commitment
10. Replacement of cooling system equipment (from NH3 to Freon) Medium cost 494.6 370.5 0 0 151 In Letter of Commitment
Total Annual GHG Savings, tons CO2eq 384
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Page 4 of 8 Company: JLC Category: Dairy Electricity emission factor Walk-through by L. McLaughlin, Prof. A. Gutu, V. Raileanu kg CO2eq/MWh Audit type carried out: More-detailed by 406.28
2008 Totals Total Annual Electricity Use 3,551 MWh p.a. Fuel (natural gas) emission factor Total Annual Fuel Use 18,003 MWh p.a. kg CO2eq/MWh Total Current GHG Emissions 5,079 tonnes p.a. 202.00
Annual savings identified NOTE 1 Total Electricity Savings Identified 195 MWh p.a. 5.48% of total The annual savings identified do not include savings from the Total Fuel Savings Identified 3,211 MWh p.a. 17.84% of total implementation of an energy management system GHG Savings identified 728 tonnes p.a. 14.33% of total
Annual Electr. Annual Electr. Annual Fuel Annual Fuel Annual GHG Type of Selected identified Energy Efficiency measures Consumption Saving Consumption Saving Savings Remarks investment [MWh] [MWh] [MWh] [MWh] [tons CO2eq] 1. Reduce boiler steam pressure. Currently at 6 bar, but the hottest user is 99 degC and could be served with medium pressure hot water No cost 0 0 9,045 181 37 (MPHW) 2. Use internal air for combustion all year round, i.e. do not change over No cost 0 0 9,045 90 18 to outside air in the winter 3. Improve insulation of all hot pipes and associated pipe fittings Low cost 0 0 9,045 452 91 4. Improve boiler shell insulation, temperature is about 75degC Low cost 0 0 9,045 362 73 5. Recover steam condensate as much as possible Medium cost 0 0 9,045 362 73 6. Use waste heat for space heating in all areas rather than steam Medium cost 0 0 9,045 1,131 228 7. Automatic boiler combustion control, including oxygen trim Medium cost 0 0 9,045 452 91 8. Use waste heat to preheat boiler combustion air High cost 0 0 9,045 181 37 9. Fit VSD to cooling water pumps Medium cost 223 112 0 0 45 10. Fit VSD to boiler fans Medium cost 166 83.0 0 0 34
Total Annual GHG Savings, tons CO2eq 728
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Page 5 of 8 Company: BUCURIA Category: Confectionery Electricity emission factor Walk-through by Prof. Aurel Gutu kg CO2eq/MWh Audit type carried out: 406.28
2008 Totals Total Annual Electricity Use 4,920 MWh p.a. Fuel (natural gas) emission factor Total Annual Fuel Use 27,346 MWh p.a. kg CO2eq/MWh Total Current GHG Emissions 7,523 tonnes p.a. 202.00
Annual savings identified NOTE 1 Total Electricity Savings Identified 207 MWh p.a. 4.22% of total The annual savings identified do not include savings from the Total Fuel Savings Identified 2,503 MWh p.a. 9.15% of total implementation of an energy management system GHG Savings identified 590 tonnes p.a. 7.84% of total
Annual Electr. Annual Electr. Annual Fuel Annual Fuel Annual GHG Type of Selected identified Energy Efficiency measures Consumption Saving Consumption Saving Savings Remarks investment [MWh] [MWh] [MWh] [MWh] [tons CO2eq] 1. Reduce boiler steam pressure. It should be 20 degC above the No cost 0 0 25,669 513 104 temperature of the hottest user. 2. Improve insulation of all hot pipes, steam and water, and associated Low&Medium 0 0 25,669 1,283 259 pipe fittings. Improve insulation of boiler shell. cost
3. Improve insulation of concrete panel walls High cost 0 0 2,355 707 143
4. Automatic switching on and off of lighting Low cost 100 2 0 0 1
5. Introduction of automatic control and management system of Medium cost 4,920 98 0 0 40 electricity consumption
6. Fit VSD to boiler fans Medium cost 535 107 0 0 43
Total Annual GHG Savings, tons CO2eq 590
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Page 6 of 8 Company: ZORILE Category: Footwear made of natural leather Electricity emission factor Walk-through by Prof. Aurel Gutu kg CO2eq/MWh Audit type carried out: 406.28
2008 Totals Total Annual Electricity Use 3,400 MWh p.a. Fuel (natural gas) emission factor Total Annual Fuel Use 2,556 MWh p.a. kg CO2eq/MWh Total Current GHG Emissions 1,898 tonnes p.a. 202.00
Annual savings identified NOTE 1 Total Electricity Savings Identified 13 MWh p.a. 0.37% of total The annual savings identified do not include savings from the Total Fuel Savings Identified 1,973 MWh p.a. 77.21% of total implementation of an energy management system GHG Savings identified 404 tonnes p.a. 21.28% of total
Annual Electr. Annual Electr. Annual Fuel Annual Fuel Annual GHG Type of Selected identified Energy Efficiency measures Consumption Saving Consumption Saving Savings Remarks investment [MWh] [MWh] [MWh] [MWh] [tons CO2eq] Very interesting. Avoided emission of CH4 and other ladfill gases not 1. Use waste from production process to generate heat Medium cost 0 0 2,328 1,857 375 considered. Further analysis is recommended
2. Thermal insulation of building envelope High cost 0 0 2,328 116 24
3. Replacement of electric boilers for domestic hot water with solar High cost 12.7 12.7 0 0 5 collectors
Total Annual GHG Savings, tons CO2eq 404
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Page 7 of 8 Company: GLASS FACTORY Category: Manufacturer of glass jars and bottles Electricity emission factor Walk-through by Prof. Aurel Gutu kg CO2eq/MWh Audit type carried out: 406.28
2008 Totals Total Annual Electricity Use 16,626 MWh p.a. Fuel (natural gas) emission factor Total Annual Fuel Use 74,477 MWh p.a. kg CO2eq/MWh Total Current GHG Emissions 21,799 tonnes p.a. 202.00
Annual savings identified NOTE 1 Total Electricity Savings Identified 914 MWh p.a. 5.50% of total The annual savings identified do not include savings from the Total Fuel Savings Identified - MWh p.a. 0.00% of total implementation of an energy management system GHG Savings identified 371 tonnes p.a. 1.70% of total
Annual Electr. Annual Electr. Annual Fuel Annual Fuel Annual GHG Type of Selected identified Energy Efficiency measures Consumption Saving Consumption Saving Savings Remarks investment [MWh] [MWh] [MWh] [MWh] [tons CO2eq]
1. Reconstruction of compressors' cooling system Medium cost 831 416 0 0 169
2. Introduction of automatic control and management system of Medium cost 16,626 499 0 0 203 electricity consumption
Total Annual GHG Savings, tons CO2eq 371
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Page 8 of 8 Company: DRANCOR Category: Frozen semi-finished products and ice-cream Electricity emission factor Walk-through by Prof. Aurel Gutu kg CO2eq/MWh Audit type carried out: 406.28
2008 Totals Total Annual Electricity Use 453 MWh p.a. Fuel (natural gas) emission factor Total Annual Fuel Use 2,170 MWh p.a. kg CO2eq/MWh Total Current GHG Emissions 622 tonnes p.a. 202.00
Annual savings identified NOTE 1 Total Electricity Savings Identified 54 MWh p.a. 11.96% of total The annual savings identified do not include savings from the Total Fuel Savings Identified - MWh p.a. 0.00% of total implementation of an energy management system GHG Savings identified 22 tonnes p.a. 3.54% of total
Annual Electr. Annual Electr. Annual Fuel Annual Fuel Annual GHG Type of Selected identified Energy Efficiency measures Consumption Saving Consumption Saving Savings Remarks investment [MWh] [MWh] [MWh] [MWh] [tons CO2eq]
1. Replacement of old strips (ice cream devices) with new ones Medium cost 113 45 0 0 18
2. Fitting variable frequency drives to pumps Medium cost 45 9 0 0 4
3. Replacement of old refrigerating plant using Freon R12 Medium cost ----- Need further analysis
Total Annual GHG Savings, tons CO2eq 22
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Table 20: Summary of Energy Audits Results
GLASS Company name FRANZELUTA NATUR BRAVO LACTIS JLC BUCURIA ZORILE DRANCOR FACTORY
Annual Electricity Use MWh 26,779 2,446 1,041 3,551 4,920 3,400 16,626 453 Annual Fuel Use MWh 40,114 24,404 5,944 18,003 27,346 2,556 74,477 2,170 Current GHG Emissions tonnes CO2eq 18,983 5,923 1,624 5,079 7,523 1,898 21,799 622
MWh 2,912 262 387 195 207 13 914 54 Electricity Savings Identified % of Annual Use 10.9% 10.7% 37.2% 5.5% 4.2% 0.4% 5.5% 11.9% MWh 4,859 5,927 1,122 3,211 2,503 1,973 0 0 Fuel Savings Identified % of Annual Use 12.1% 24.3% 18.9% 17.8% 9.2% 77.2% 0.0% 0.0% tonnes CO2eq 2,165 1,304 384 728 590 404 371 22 GHG Savings identified % of Annual Use 11.4% 22.0% 23.6% 14.3% 7.8% 21.3% 1.7% 3.5%
Direct GHG emission reductions vs Indirect GHG emission reductions
NOTE - The implementation of the GEF/UNIDO project for Moldova is planned to last 3.5 years. Three are the categories of GHG emission reductions defined by the GEF 27 : A. Direct GHG reductions – Emission reductions achieved by demonstration projects that are planned and implemented as part of the project as well as energy efficiency investments leveraged as result of the project during the project’s supervised implementation period. B. Direct Post-Project GHG reductions - Emission reductions achieved through GEF-sponsored/ established mechanisms (i.e. credit guarantee facilities, risk mitigation facilities) after project’s supervised implementation period. C. Indirect GHG Emission Savings – Emission reductions achieved after project completion as result of the enabling environment for EE practices and investments created by the GEF project through capacity building, policy framework, standards and other catalytic actions for replication.
27 “Manual for Calculating GHG Benefits of GEF Projects: Energy Efficiency and Renewable Energy Projects,” GEF/C.33/Inf.18 April 16, 2008
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Direct GHG reductions In the case of the GEF/UNIDO project in Moldova, direct GHG reductions will be generated by Project Component 2 and 3. Under Project Component 2 , two groups of 20 professionals each, comprising of enterprises’ engineers and energy managers, and national energy systems and efficiency experts will be trained at an expert level in the areas of energy management (EM) and energy system optimization (SO), focusing on steam systems. Table 21 below summarizes the steps the EM and SO Expert Training programs will consist of. Table 21: Steps of Expert Training Program – Energy Management
Preparation for capacity building program - selection of trainees and participating enterprises, Step 1 training sites, equipment, classroom logistics 1st training period – international experts provide classroom + measurement training at industrial Step 2 sites; group exercises to test assessment skills Trainees a ppl y knowledge, skills and tools provided to develop a basic energy management Step 3 system and identify and develop operational improvement measures (with remote international experts coaching) 2nd training period – international experts observe application of trainees skills in plants and Step 4 training of factory personnel, provide advanced training Implementation of energy management system and operational improvement measures developed Step 5 by trainees in participating enterprises and reviewed by international experts (with international experts coaching)
Step 6 Reporting of energy savings by trainees and enterprises and development of case studies
The EM and SO Expert training will have two different types of participation for manufacturing enterprises: Type A: The enterprise has a staff member between the trainees. This type of participation has been and will be offered to a limited number of enterprises, preferably with more than a production site Type B: The enterprise does not have a staff between the trainees but it participates by agreeing to receive the visit of and work with one of the trainees during Steps 3, 5 and 6. In this way, by the end of the GEF project implementation and as integral part of expert training program on EM, 20 enterprises will have an energy management plan/system in place compliant with EN 16001 and ISO 50001 and will have implemented initial operational improvement measures (leaks repair, steam traps maintenance, control of refrigeration condensing pressure, improvement of energy monitoring and measuring infrastructure, energy efficient procurement and purchasing, etc.). The evaluation of the impact of national industrial energy efficiency programs hinged on the adoption and implementation of energy management standards in Sweden, Denmark, the Netherlands and more recently in Ireland, have shown that industrial enterprises that implemented energy management systems achieved greater energy intensity reduction than enterprises without an EM system. The differential ranged from 1.0% up to 5-6% in certain cases, with an average of 1.5-2.0% on annual basis28 . It is important to
28 “EMS as a policy instrument for energy efficiency in Ireland, Sweden and Denmark,” E. Gudbjerg, A. Persson, J. O’Sullivan, Proceedings of EEMODS 2009 Conference, 14-17 September 2009, Nantes, France
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Reducing Greenhouse Gas Emissions through Improved Energy Efficiency in the
Industrial Sector in Moldova ______highlight that such incremental energy intensity reductions were achieved by large companies that paid already attention to energy consumption and had some energy efficiency programs in place. Table 22 in the next page lists the twenty enterprises that have responded to the UNIDO Survey. Ten of them have received energy audits. Five of them have already agreed to participate in the EM Expert training and signed letters of commitment of resources, in-kind and cash, towards the implementation of operational improvement projects. Similar type of agreement will be sought with those enterprises that will not have a staff member between the trainees (Type B enterprises). UNIDO and its Moldovan counterparts will work to ensure that Type B participating enterprises include some of the surveyed and audited enterprises listed in Table 22, in particular those with bigger annual energy consumption. It is worth mentioning that according with the current draft of the Moldovan Energy Efficiency Law, manufacturing companies with total annual energy consumption above 1000 tons of conventional fuel will be mandated to put in place an energy efficiency programs. Nine of the surveyed enterprises, including four of the five enterprises that have already agreed to implement an energy management system under PC2, would have to abide to the prospective Law requirement. Considering that, the GEF UNIDO Project Component 2 will be extremely timely and beneficial for enterprises by helping them to better prepare to comply with the future Law; for the government by creating the conditions for a more successful EE policy implementation and Law enforcement; and for the environment by anticipating, increasing and accelerating the impact that the EE Law. Average energy efficiency performance of Moldova manufacturing sector is still well below efficiency levels of Western European industry levels. Considering that in the light of the above mentioned energy efficiency gains achieved by western European companies through the implementation of energy management systems, the expected potential energy efficiency gains for Moldovan enterprises are much higher. Based on the results of the energy audits and the survey, and on the fact that most audited enterprises are between the best performing in their sectors, it has been estimated and assumed that the implementation of an energy management system would bring about annual energy efficiency gains of 3.0-4.0% as aggregate average for the whole Moldova industry for the next 10 years at least. Deducting the assumed 1.0% baseline shift mentioned before, the incremental average annual energy efficiency improvement that enterprises would obtain by implementing an energy management system would be in the range of 2.0-3.0%. However, for the purpose of estimating the direct GHG emission reductions to be generated by the GEF UNIDO project as result of the Expert training on Energy Management (EM) and implementation of relevant projects, the conservative assumption of a 1.0-2.0% incremental average annual energy efficiency improvement is made for the group of enterprises participating in the EM Expert training to reflect the fact it will include some of the best energy performing enterprises. Table 22 shows the range of annual energy and GHG emission savings that would be achieved if all the 20 surveyed enterprises would implement an energy management system.
36
Reducing Greenhouse Gas Emissions through Improved Energy Efficiency in the
Industrial Sector in Moldova ______Table 22: Potential incremental 2008 energy and GHG emission savings through implementation of EMS in surveyed enterprises
Annual Energy Savings due Annual GHG reduction due Letter of Total Energy b, Company to EMS, [MWh] to EMS , [tons CO2eq] Commitment Use, [MWh] 1% 2% 1% 2% CARMEZ YES 10,532 105.3 210.6 28 55 NB - CUPCINI YES 26,856 268.6 537.1 71 141 NB - FLORESTI 3,709 37.1 74.2 10 20 ORHEI-VIT 29,117 291.2 582.3 77 153 SUDZUCKER YES 90,325 903.3 1,806.5 238 476 DRANCOR 2,622 26.2 52.4 7 14 INLAC 8,128 81.3 162.6 21 43 a JLC PENDING 21,519 215.2 430.4 57 113 LACTIS YES 7,369 73.7 147.4 19 39 Bred BALTI 7,736 77.4 154.7 20 41 BUCURIA 32,262 322.6 645.2 85 170 FRANZELUTA YES 66,905 669.1 1,338.1 176 352 PURATOS 450 4.5 9.0 1 2 AROMA 4,432 44.3 88.6 12 23 VISMOS 2,031 20.3 40.6 5 11 ZORILE 5,957 59.6 119.1 16 31 MOLDCARTON 33,114 331.1 662.3 87 174 SANIN 2,238 22.4 44.8 6 12 VIORICA-COSMETIC 2,221 22.2 44.4 6 12 GLASS FACTORY 107,444 1,074.4 2,148.9 283 566 Total 464,967 4,649.7 9,299.3 1,224 2,448 Note a Signature of the letter of resources commitment is pending due to change of company’s management b It is assumed that the energy savings break-down is 30% electricity and 70% fuels. Emission factors used are 406.28 g CO2eq/kWh for electricity and 202 gCO2eq/kWh for fuel savings (natural gas)
37
Reducing Greenhouse Gas Emissions through Improved Energy Efficiency in the
Industrial Sector in Moldova ______
With regard to the “lifetime of the impact” of the implementation of an energy management system, it has be pointed out that the purpose of an energy management system is to provide industrial facilities with an organizational framework to integrate energy efficiency into their management practices, including fine- tuning production processes and improving the energy efficiency of industrial systems. An energy management system is needed to influence and guide how energy is managed in an industrial facility, thus realizing immediate energy use reduction through changes in operational practices, as well creating a favourable environment for adoption of more capital-intensive energy-efficiency measures and technologies. Likewise quality and environmental management systems, energy management systems are based on and promote a culture of continual improvement, of the system and of the energy performance. Considering that, one could argue that once an energy management system is in place, as long as it is properly used it will deliver energy savings. However, for the purpose of estimating the GHG emission reductions generated by the GEF UNIDO the implementation of an energy management system (EMS) and related projects, an “impact lifetime” of 10 years is assumed.
The full lists of assumptions made for estimating the direct GHG emission reductions to be generated by the GEF UNIDO project as result of the Expert training on Energy Management (EM) and implementation of relevant projects is then the following:
Number of enterprises implementing EMS as result of Expert training = 20 Average 29 annual total energy consumption per enterprise at Year 1 30 [MWh] = 15,000 Average annual energy consumption growth rate of enterprises [%] = 7 31 Average annual energy efficiency gain per enterprise [% of total annual consumption] = 1.0 – 2.0 Break-down of energy savings by source [%] = 30 electricity, 70 natural gas Electricity transmission and distribution losses [%] = 15 Electricity Emission factor [t CO2eq/ MWh] = 0.406 Natural Gas Emission factor [t CO2eq/ MWh] = 0.202 Lifetime of EMS impact [yr] = 10
These assumptions led to the following estimated values for Average annual energy savings per enterprise [MWh] = 207 – 414 Average annual GHG emission savings per enterprise [t CO2eq] = 54 – 108
Total cumulative energy savings [MWh] = 41,450 – 82,900 Total cumulative GHG emission savings [t CO2eq] = 11,670 – 23,340
29 Average value assumed on the basis of the total energy consumption of the surveyed enterprises. 30 2012 for most enterprises 31 It has to be noted that a 9% constant energy consumption growth rate has been used in the 2 nd National Communication of Moldova to the UNFCCC for projections of future industrial energy consumption over the period 2006-2030. While 9% was the average growth rate from 2000 to 2005, it has to be noted that industrial energy consumption in 2006 remained stable compared to 2005 and in 2007 decreased by 4.5% compared to 2006, mainly because of the negative impact of the Russian ban on Moldova wine and a mild winter. The 7% growth rate represents a more conservative assumption.
38
Reducing Greenhouse Gas Emissions through Improved Energy Efficiency in the
Industrial Sector in Moldova ______
Likewise to the Expert training EM, by the end of the GEF project implementation and as integral part of Expert training program on Steam System Optimization (SSO), 20 enterprises will have developed and implemented steam system optimization projects and measures. Based on the experience of many OECD countries as well as previous UNIDO projects, steam system optimization projects can usually deliver energy savings in the range of 15-30% of energy consumption for steam generation. The International Energy Agency has estimated at 10% the average fraction of steam system energy usage that could be saved in OECD countries manufacturing sector (Table 23). Table 23: Global Steam System Savings Potential
39
Reducing Greenhouse Gas Emissions through Improved Energy Efficiency in the
Industrial Sector in Moldova ______
Looking at the results of the energy audits carried out, the range of steam system efficiency improvement measures identified, and bearing in mind that most of the audited enterprises are between the best performing in their sector, it is expected and assumed for Moldova manufacturing enterprises average potential steam system energy savings to be in the range of 20-30%. Looking at Table 20, annual fuel savings identified by the walk-through energy audits ranged from 0 to 5,927 MWh. It is evident that the amount of potential energy savings directly depends on the size of the company and the share of energy consumption for steam and heat generation. The amount of attainable energy savings is dependent on the investment capacity of the enterprise, since some optimization interventions require investments, although usually not high. The energy audits carried out have shown that several and significant No-Cost and Low-Cost steam system optimization measures exist. Investments needed for steam system optimization (SSO) measures implementation are expected to be provided by participating enterprises (Type A and Type B) as part of their co-financing commitment agreed with the GEF UNIDO project before the beginning of the training program. Five enterprises have already agreed to participate in the SSO Expert training and signed letters of commitment of resources, in- kind and cash, towards the implementation of steam system optimization projects. Similar type of agreement will be sought with those enterprises that will not have a staff member between the trainees (Type B enterprises). In order to minimize the risk that system optimization projects developed through the Expert training are not implemented, the selection of the enterprises participating in the training program (in particular Type B enterprises) will be of critical importance. The GEF project will coordinate such selection with colleagues of the EBRD MoSEFF and EBRD BAS program to ensure that selected enterprises meets the eligibility criteria for accessing credit under these two financing schemes for energy efficiency projects. It is worth noting that steam system optimization projects are eligible for financing under both EBRD programs. While the GEF UNIDO project does not plan, at the moment, to provide any investment support for the implementation of these system optimization measures, small resources might be granted on an ad-hoc basis provided that some funds are available under Project Component 3 allocation. Considering all the above, with regard to the estimate the direct GHG emission reductions to be generated by the GEF UNIDO project as result of the Expert training on Steam System Optimization and implementation of relevant projects the following assumptions have been made: Number of enterprises implementing SSO projects as result of Expert training = 20 Average 32 annual total energy consumption per enterprise at Year 1 33 [MWh] = 15,000 Average share of total energy consumption used for steam generation [%] = 50 34 Average annual growth rate steam energy consumption of enterprises [%] = 3 Average lifetime of steam system optimization project [yr] = 10 Type of fuel used for steam production = Natural Gas 35 Natural Gas Emission factor [t CO2eq/ MWh] = 0.202
32 Average value assumed on the basis of the total energy consumption of surveyed enterprises and the assumption that Type-B enterprises participating in the Expert training will be selected between medium and large companies. 33 Value assumed on the basis of the energy breakdown of surveyed enterprises and the assumption that Type-B enterprises participating in the Expert training will be from manufacturing sub-sectors with relatively higher energy consumption for steam and heat generation. 34 2012 for most enterprises 35 Simplifying and conservative assumption
40
Reducing Greenhouse Gas Emissions through Improved Energy Efficiency in the
Industrial Sector in Moldova ______
These assumptions led to the following estimated values for Average annual energy savings per enterprise [MWh] = 860 – 1,720 Average annual GHG emission savings per enterprise [t CO2eq] = 173 – 346
Total cumulative energy savings [MWh] = 171,960 – 343,920 Total cumulative GHG emission savings [t CO2eq] = 34,730 – 69,460
Under Project Component 3 , the project plans to support the implementation of at least 6 36 pilot industrial energy efficiency (IEE) projects through the provision of specific technical assistance for project preparation and/or investment co-financing. It has to be pointed out that these pilot projects are not meant to be and will not be exclusively steam system optimization and energy management projects. This is because the objective of Project Component 3 is to generate a broader set of case studies on IEE best practices. On the basis of energy audits carried out as well as discussion with Moldovan industrial experts and equipment suppliers, and bearing in mind the key manufacturing sectors of Moldova, refrigeration and compressed air systems offer significant opportunities for energy efficiency improvements and they would be very relevant. However, other energy efficiency and GHG emission reduction projects might be implemented, especially where enterprises may be keener to invest. At the end of the PPG phase, the project has identified a number of potential pilot projects and other potential projects have been proposed by few enterprises. Letters of co-financing commitment have been secured from 5 37 enterprises. Table 24 below summarizes the pilot IEE projects identified by the energy audits and projects proposed by enterprises that have been indicated in the commitment letters.
Table 24: Pilot IEE projects for which commitment has been made by partner enterprises Estimated Estimated Annual Annual Company Pilot IEE projects identified or proposed Savings Savings [MWh] [t CO2eq] Installation of OSMOS reversible system for the heat pla nt NA NA CARMEZ 38 Reconstruction of air conditioning system of production site NA NA Retrofitting of compressed air supply system 379 154 Retrofitting of the heat plant by replacing of boilers E1/9 by NA NA LACTIS modern one Retrofitting of cooling system wi th replacement of ammonia 370 151 equipment with modern Freon equipment Replacing of electric stove for bread cooking by a gas fired FRANZELUTA 2,340 39 201 stove NATUR BRAVO Optimization of steam supply system 2,248 454
36 Reduced from 8 (as indicated in the PIF) to 6. 37 A sixth letter of commitment of resources for participation in the EM and SO Expert training programs and implementation of a pilot IEE project is expected from the enterprise JLC, a dairy, in January/February 2010, after the new management will have taken office. 38 Results of detailed energy audit not available yet 39 Primary energy saved upstream the enterprise’s fence by avoided generation and transmission of electricity
41
Reducing Greenhouse Gas Emissions through Improved Energy Efficiency in the
Industrial Sector in Moldova ______
Improving process heat efficiency NA NA 40 SUDZUCKER Replacing of pumps and installing of frequency changing NA NA system
Under Project Component 3 , the project will work with the above mentioned enterprises to develop and implement at least one IEE project per enterprise between those listed in Table 24. In case some of the funds allocated to Project Component 3 (200,000 USD) should remain available after closing detailed agreements for the development and implementation of the 6 pilot IEE projects, the project will take steps to use left funds to support the implementation of other IEE projects developed under Project Component 2. Considering the estimated savings quoted in Table 24 above, with regard to the estimate of the direct GHG emission reductions to be generated by the GEF project as result of Project Component 3 the following assumptions have been made: Number of pilot industrial energy efficiency projects = 6 Average 41 annual primary energy savings per enterprise [MWh] = 750 – 1,000 Break-down of energy savings by source [%] = 60 electricity, 40 natural gas Electricity Emission factor [t CO2eq/ MWh] = 0.406 Natural Gas Emission factor [t CO2eq/ MWh] = 0.202 Electricity transmission and distribution losses [%] = 15 Average lifetime of pilot IEE project [yr] = 10
These assumptions led to the following estimated values for
Total cumulative energy savings [MWh] = 45,000 – 60,000 Total cumulative GHG emission savings [t CO2eq] = 16,250 – 21,670
Table 25: Summary of DIRECT energy & GHG emission reductions to be generated the project Energy savings GHG emission savings [MWh] [t CO2eq] Min Max Min Max Energy Management Expert Training 41,450 82,900 11,670 23,340 Steam System Optimization Expert Training 171,960 343,920 34,730 69,460 Pilot IEE Projects 45,000 60,000 16,250 21,670 Total 258,410 486,820 62,650 114,470
40 Results of energy audit not available yet 41 Average value over 10 years and across the six enterprises partnering in the IEE pilot projects
42
Reducing Greenhouse Gas Emissions through Improved Energy Efficiency in the
Industrial Sector in Moldova ______
Indirect GHG Emission Savings Indirect GHG emission savings produced by the GEF UNIDO project will be the result of the outputs generated by Project Component 1 and 2. These outputs aim and will contribute to create an enabling environment for a steady growth of energy efficiency performance in industry and stimulate the creation of a national market for industrial energy efficiency products and services. Indirect GHG impact of Project Component 1 outputs The planned national IEE Best Practices Dissemination (BPD) program will play a major important role in determining the growth rate of IEE projects implementation during and after completion of GEF project implementation. It is expected to generate the level of awareness of and confidence in what can be cost-effectively needed to boost the interest in and demand for IEE services and projects. The BPD program will see the involvement and active participation of Government institutions as well as private sector organizations (such as industrial associations and the Chamber of Commerce and Industry of Moldova) which can rely on well established networks and platforms widespread on the national ground. The planned national Monitoring, Tracking and Benchmarking (MTB) program of industrial energy consumption and efficiency will provide a key “infrastructural” element for more effective IEE policy initiatives. It will better inform the design and measure the impact of targeted short- and medium- term policies and programs aimed to support IEE, including target-setting agreements. The development of energy benchmarks will be particularly beneficial also to enterprises, which would have the opportunity to better understand their energy performance and identify areas for improvements and/or further analysis. Based on the results of the IEE survey carried out by the project team during the PPG phase, 100% of surveyed enterprises believes that energy benchmarks would be vey useful in identifying EE opportunities and improve performance. The planned national Industrial Energy Manager Certification (IEMC) program will provide another key infrastructural IEE policy element considering that the current draft Moldova Energy Efficiency Law at Article 17 mandates all business entities that consume annually energy resources equivalent to more 500 tons of conventional fuels to appoint an energy manager. Combined together, the IEE Best Practices Dissemination program, the Monitoring, Tracking and Benchmarking program and the Industrial Energy Manager Certification program to be developed and established by the GEF UNIDO project will provide three key pillars of a new and robust IEE policy framework capable to ensure sustainability and continual improvement of performance achieved and support increased implementation of IEE projects.
Indirect GHG impact of Project Component 2 outputs The creation of a group of industrial energy efficiency experts highly skilled and fully equipped in the development and implementation of steam system optimization and energy management projects, provision of training on these subjects and other IEE services, is expected to play the most important role in generating and implementing new IEE projects during and after the completion of the GEF project implementation. During the GEF project implementation period the trained steam system optimization (SSO) and energy management (EM) experts not coming from one of the participating enterprises will become a resource of the GEF project and will work to deliver most of the ½-day workshops and 2-day trainings on EM and SSO to engineers and managers of industrial enterprises. The awareness and capacity built through these “User Trainings” will stimulate the development and implementation of new IEE projects and generate additional and indirect energy and GHG emission savings.
43
Reducing Greenhouse Gas Emissions through Improved Energy Efficiency in the
Industrial Sector in Moldova ______
It is important to note that all enterprises participating in the 2-day trainings on EM and SSO will be required to register/subscribe to the project/national Monitoring, Tracking and Benchmarking program. After the completion of the GEF project implementation trained steam system optimization (SSO) and energy management (EM) experts coming from public and private sector institutions such as the Agency for Energy Efficiency and the Chamber of Commerce and Industry will raise awareness, provide training and technical assistance as part of their mandate and/or portfolio of services to their clients. For instance, the Chamber of Commerce has 10 offices in as many districts, where industrial engineers and experts provide advisory/ consultancy services to enterprises, particularly SMEs, on technology upgrade, business and investment planning, as well as training. Trained independent SSO and EM experts are expected to continue offering and providing steam system optimization, energy management and IEE services to industry as result of increased demand and to push for the growth of a national market for IEE product and services. Table 26: Summary of expected impact of PC1 and PC2 outputs on project outcomes
Expected impact of Project Component 1 and 2 outputs on During GEF After GEF Indirect GHG Emission Savings implementation implementation
PC1 IEE Best-Practice Dissemination Program High High
PC1 Monitoring, Tracking and Benchmarking Program Significant Significant
PC1 Industrial Energy Manager Certification Program Moderate Significant
PC2 Capacity Building Program High High
Assumptions for Indirect Energy Savings Estimates Under Project Component 2 , a number of 2-day trainings on energy management and steam system optimization will be delivered to enterprises managers and engineers mainly by the national EM and SSO experts trained by the GEF project. The target number of enterprises to be reached by these trainings is 100 for EM and 100 for SSO. It is then assumed that 50 companies will decide after the training to implement an energy management system and 50 companies will develop and implement steam system optimization projects. In 2005 702 was the number of industrial enterprises with more than 20 employees. The 2008 total energy consumption of the 20 companies that answered to the Survey accounted for 12.8% of total energy consumption of the manufacturing sector in 2007. Considering that and the fact that the GEF UNIDO project aims and will work to reach and impact the biggest possible share of industrial energy usage, it is assumed that each of these two sets of 50 companies will account for 20% of the total energy consumption of the Moldova manufacturing sector. It is assumed that indirect energy and GHG emission savings deriving from these EM and SSO trainings will start to be generated in 2013. It is assumed that total industrial energy usage in 2013 will be 19,000 TJ (5,278 GWh).
44
Reducing Greenhouse Gas Emissions through Improved Energy Efficiency in the
Industrial Sector in Moldova ______
It is assumed that industrial energy consumption will grow over the period 2013-2023 at an average annual growth rate of 7%42 . It is assumed that the implementation of an energy management system will generate incremental average annual energy efficiency gains in the range of 1.5-2.5% of total annual energy consumption. The assumption of a higher value for the incremental annual energy efficiency gain compared to estimate of the direct energy and GHG emission savings is based on the fact that the average energy performance baseline for this second group of companies will be less efficient than that of the group of companies participating in the Expert training. It is worth noting that all these enterprises will be provided with the Practical Guide to the Implementation of Energy Management that will be developed by the GEF UNIDO project. It is assumed that the average breakdown by energy source of energy savings to be generated by the implementation of an energy management system will be 30% electricity and 70% fuels. This assumption is made on the basis of Survey and audits results, structure on Moldova industry and Moldova projections of the future breakdown by energy sources of industrial energy consumption. Table 27 below shows the envisaged development of the industrial energy consumption mix 43 . Considering that natural gas will continue to account for more than 80% of industry fuels consumption, the simplifying and conservative assumption that fuels savings will be natural gas savings is made .
Table 27: Projection of industry energy consumption mix
2006 2015 2020 Energy source/ carrier % % % Natural gas 69.6% 67.5% 70.1% Electricity 22.3% 16.3% 13.0% Oil products 6.3% 10.0% 10.0% Coal 1.6% 4.9% 5.0% Other 0.2% 1.3% 1.9% Total 100.0% 100.0% 100.0%
Considering that Project Component 2 trainings for enterprises will continue to target sub-sectors and companies with major share of total energy consumption for steam and heat generation, based on the results of the UNIDO survey and audits as well as projects reported in Table 27, it is assumed that on average steam and heat production will account for 50% of total enterprise energy consumption. It is assumed that the implementation of steam system optimization projects will generate average savings of fuel consumption for steam and heat generation between 10-20%.
42 It has to be noted that a 9% constant value has been used in the 2 nd National Communication of Moldova to the UNFCCC for projections of future industrial energy consumption over the period 2006-2030. While 9% was the average growth rate from 2000 to 2005, it has to be noted that industrial energy consumption in 2006 remained stable compared to 2005 and in 2007 decreased by 4.5% compared to 2006, mainly because of the negative impact of the Russian ban on Moldova wine and a mild winter. The 7% growth rate represents a more conservative assumption. 43 Projections have been made by the Moldovan Academy of Science – Institute of Energy using the Long-range Energy Alternatives Planning System (LEAP) program.
45
Reducing Greenhouse Gas Emissions through Improved Energy Efficiency in the
Industrial Sector in Moldova ______
It is assumed that the emission factor for natural gas will remain constant at 0.202 g CO2eq/kWh while for electricity it will vary as shown in Table 28 below as result of a reduction of imported electricity from Ukraine, primarily nuclear based, and increasing internal generation based on natural gas 44 . Table 28: Electricity emission factor values over time 2010-2015 2015-2020 2015-2020 Electricity EF, g CO2eq/kWh 406.28 417.13 427.99
It is assumed that average electricity transmission and distribution losses over the period 2013-2023 will be 11%. For these EM and SSO projects deriving from training delivered to enterprises by the GEF project, it is assumed a causality factor of 0.7. For calculation purposes , it has been assumed that all 50 energy management systems and steam system optimization projects will start to be implemented in 2013. This will not necessarily be the reality since some enterprises may take longer to develop and start implement EMS and SSO projects. However, the assumption made it is of the conservative type one. Table 29 shows the calculation of the indirect GHG emission reduction generated by EM in 50 companies. Table 30 shows the calculation of the indirect GHG emission reduction generated by SSO in 50 companies.
44 Please see Appendix 1 to this Annex.
46
Reducing Greenhouse Gas Emissions through Improved Energy Efficiency in the
Industrial Sector in Moldova ______
Table 29: Indirect GHG emission reduction generated by 50 companies implementing Energy Management Systems
Total Annual Energy Annual Energy Savings Annual GHG emission Annual Indirect GHG Consumption of 20% of TAECI due to EM reduction due to EM Causality emission reduction due to EM Year Industry (TAECI) [GWh] [GWh] [tons CO2eq] factor [tons CO2eq] [GWh] 1.5% 2.5% 1.5% 2.5% 1.5% 2.5%
2013 5,278 1,056 15.8 26.4 4,383 7,304 0.7 3,068 5,113 2014 5,647 1,129 16.9 28.2 4,689 7,816 0.7 3,283 5,471 2015 6,043 1,209 18.1 30.2 5,018 8,363 0.7 3,512 5,854 2016 6,466 1,293 19.4 32.3 5,439 9,065 0.7 3,807 6,345 2017 6,918 1,384 20.8 34.6 5,820 9,699 0.7 4,074 6,790 2018 7,402 1,480 22.2 37.0 6,227 10,378 0.7 4,359 7,265 2019 7,921 1,584 23.8 39.6 6,663 11,105 0.7 4,664 7,773 2020 8,475 1,695 25.4 42.4 7,129 11,882 0.7 4,991 8,318 2021 9,068 1,814 27.2 45.3 7,727 12,878 0.7 5,409 9,015 2022 9,703 1,941 29.1 48.5 8,268 13,779 0.7 5,787 9,646 Total 72,920 14,584 218.8 364.6 61,362 102,270 0.7 42,954 71,589
47
Reducing Greenhouse Gas Emissions through Improved Energy Efficiency in the
Industrial Sector in Moldova ______
Table 30: Indirect GHG emission reduction generated by 50 companies implementing Steam System Optimization projects
Annual GHG emission Annual Indirect GHG Total Annual Energy 20% of Heat Annual Energy Savings reduction due to SSO emission reduction due to SSO Consumption of TAECI generat. due to SSO [GWh] Causality Year [tons CO2eq] [tons CO2eq] Industry (TAECI) share 50% factor [GWh] [GWh] [GWh] 10% 20% 10% 20% 10% 15%
2013 5,278 1,056 528 52.8 105.6 10,661 21,322 0.7 7,463 11,194 2014 5,647 1,129 565 56.5 112.9 11,407 22,815 0.7 7,985 11,978 2015 6,043 1,209 604 60.4 120.9 12,206 24,412 0.7 8,544 12,816 2016 6,466 1,293 647 64.7 129.3 13,060 26,121 0.7 9,142 13,713 2017 6,918 1,384 692 69.2 138.4 13,975 27,949 0.7 9,782 14,673 2018 7,402 1,480 740 74.0 148.0 14,953 29,906 0.7 10,467 15,700 2019 7,921 1,584 792 79.2 158.4 15,999 31,999 0.7 11,200 16,799 2020 8,475 1,695 847 84.7 169.5 17,119 34,239 0.7 11,984 17,975 2021 9,068 1,814 907 90.7 181.4 18,318 36,636 0.7 12,822 19,234 2022 9,703 1,941 970 97.0 194.1 19,600 39,200 0.7 13,720 20,580 Total 72,920 14,584 7,292 729 1,458.0 147,299 294,597 0.7 103,109 206,218
48
Reducing Greenhouse Gas Emissions through Improved Energy Efficiency in the
Industrial Sector in Moldova ______
AFTER COMPLETION OF THE GEF PROJECT IMPLEMENTATION , as combined result of the IEE Best Practices Dissemination, Benchmarking and Industrial Energy Manager Certification programs, and the availability and marketing of energy management and steam system optimization services to industry by the national experts trained by the GEF UNIDO project, it is assumed that other 150 companies will decide to implement an energy management system over the period 2014-2023 and other 250 companies will decide to implement steam system optimization projects. The reason for different replication numbers for EM and SSO is that the implementation of EM system will be applicable by a lower number of enterprises than steam system optimization. Available national experiences with energy management system standard implementation show that small and small-medium enterprises are less keen to implement EMS due to their limited human resources. The evidence is that special support is needed. The size of the companies will have much smaller impact on the replication of steam system optimization projects. Small and medium-small companies will be equally if not more sensitive to increasing natural gas prices and significant energy savings will be achievable with no-cost and low- cost efficiency improvement measurements. It is assumed that each of these 150 companies set implementing energy management systems will account for 25% of the total energy consumption of the Moldova manufacturing sector. It is assumed that each of the 250 companies set implementing steam system optimization projects will account for 25% of the total energy consumption of the Moldova manufacturing sector. It is assumed that for the sample of enterprises implementing SSO projects, the average steam and heat production will account for 40% of total enterprise energy consumption to reflect the inclusion of enterprises from sub-sectors in which steam and heat generation are progressively less important than in the food and beverage sector. For these EM and SSO projects resulting from activities of the policy programs established and the technical capacity built in the market by the GEF project, it is assumed a causality factor of 0.5.
Besides assumptions made immediately above, all other assumptions made for estimating indirect energy and GHG emission savings generated as outcome of the EM and SSO trainings to be delivered by the GEF UNIDO project to enterprises managers and engineers hold. Table 31 shows the calculation of the indirect GHG emission reduction generated by EM in additional 150 companies. Table 32 shows the calculation of the indirect GHG emission reduction generated by SSO in additional 250 companies. Finally Table 33 summarizes the total estimated indirect GHG emission reduction to be generated by the UNIDO-GEF project .
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Reducing Greenhouse Gas Emissions through Improved Energy Efficiency in the
Industrial Sector in Moldova ______
Table 31: Indirect GHG emission reduction generated by additional 150 companies implementing Energy Management Systems
Total Annual Energy Annual Energy Savings Annual GHG emission Annual Indirect GHG Consumption of 25% of TAECI due to EM reduction due to EM Causality emission reduction due to EM Year Industry (TAECI) [GWh] [GWh] [tons CO2eq] factor [tons CO2eq] [GWh] 1.5% 2.5% 1.5% 2.5% 1.5% 2.5%
2014 5,647 1,412 21.2 35.3 5,862 9,770 0.5 2,931 4,885 2015 6,043 1,511 22.7 37.8 6,272 10,453 0.5 3,136 5,227 2016 6,466 1,616 24.2 40.4 6,799 11,331 0.5 3,399 5,666 2017 6,918 1,730 25.9 43.2 7,275 12,124 0.5 3,637 6,062 2018 7,402 1,851 27.8 46.3 7,784 12,973 0.5 3,892 6,487 2019 7, 921 1,980 29.7 49.5 8,329 13,881 0.5 4,164 6,941 2020 8,475 2,119 31.8 53.0 8,912 14,853 0.5 4,456 7,426 2021 9,068 2,267 34.0 56.7 9,659 16,098 0.5 4,829 8,049 2022 9,703 2,426 36.4 60.6 10,335 17,224 0.5 5,167 8,612 2023 10,382 2,596 38.9 64.9 11,058 18,430 0.5 5,529 9,215 Total 78,025 19,506 292.6 487.7 82,283 137,138 0.5 41,141 68,569
50
Reducing Greenhouse Gas Emissions through Improved Energy Efficiency in the
Industrial Sector in Moldova ______
Table 32: Indirect GHG emission reduction generated by additional 250 companies implementing Steam System Optimization projects
Annual GHG emission Annual Indirect GHG Total Annual Energy 25% of Heat Annual Energy Savings reduction due to SSO emission reduction due to SSO Consumption of TAECI generat. due to SSO [GWh] Causality Year [tons CO2eq] [tons CO2eq] Industry (TAECI) share 40% factor [GWh] [GWh] [GWh] 10% 20% 10% 20% 10% 20%
2014 5,647 1,412 565 56.5 112.9 11,407 22,815 0.5 5,704 11,407 2015 6,043 1,511 604 60.4 120.9 12,206 24,412 0.5 6,103 12,206 2016 6,466 1,616 647 64.7 129.3 13,060 26,121 0.5 6,530 13,060 2017 6,918 1,730 692 69.2 138.4 13,975 27,949 0.5 6,987 13,975 2018 7,402 1,851 740 74.0 148.0 14,953 29,906 0.5 7,476 14,953 2019 7,921 1,980 792 79.2 158.4 15,999 31,999 0.5 8,000 15,999 2020 8,475 2,119 847 84.7 169.5 17,119 34,239 0.5 8,560 17,119 2021 9,068 2,267 907 90.7 181.4 18,318 36,636 0.5 9,159 18,318 2022 9,703 2,426 970 97.0 194.1 19,600 39,200 0.5 9,800 19,600 2023 10,382 2,596 1,038 103.8 207.6 20,972 41,944 0.5 10,486 20,972 Total 78,025 19,506 7,802 780 1560 157,610 315,220 0.5 78,805 157,610
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Table 33: Summary of Indirect GHG emission reductions to be generated by the GEF project, 2013-2023
Indirect Energy savings Indirect GHG emission generated by EM and SSO savings attributed to the Description of project outputs impact implementation GEF UNIDO project [GWh] [t CO2eq] Min Max Min Max Training on Energy Management for enterprise energy managers and engineers 50 companies implement EM systems 218.8 364.6 42,954 71,589
Training on Steam System Optimization for enterprise engineers 50 companies implement SSO projects 729.0 1,458 103,109 206,218
IEE Best Practice Dissemination program, Benchmarking, Industrial Energy Manager Certification program and the availability and marketing of energy management and steam system optimization services to industry 150 companies implement EM systems 292.6 487.7 41,141 68,565 250 companies implement SSO projects 780.0 1560.0 78,450 157,610 Total 2,020.4 3,870.3 265,654 503,982
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Appendix 1: Calculation of emission factors for electricity and natural gas
ELECTRICITY The emission factors for electricity production (Specific Emission Values) reported in Table A below for the Right Bank and Left Bank of the Dniester River are the average values over the period 2005-2030 (Source: Draft 2 nd National Communication of the Republic of Moldova under the UNFCCC, 2009). The emission factor for Ukraine is the 2004 value (Source: Climate Analysis Indicators Tool, 2008, World Resource Institute) BLS: Baseline Scenario HAS: High Alternative Scenario MRS: Medium Realistic Scenario IAS: Intermediate Alternative Scenario
Table A Scenario Right Bank of the Dniester River Unit HAS MRS BLS Specific Emission Values (SEV) g CO2eq/kWh 460.1 533.6 569.1
Left Bank of the Dniester River - Transnistria Unit HAS IAS BLS Specific Emission Values (SEV) g CO2eq/kWh 620.5 708.8 821.7
Ukraine Unit BLS Specific Emission Values (SEV) g CO2eq/kWh 352.0
Table B below shows the assumed projections of future shares of electricity internal generation and import for the Republic of Moldova (Right Bank of the Dniester River). These projections are a UNIDO approximation based on projections of the Draft 2 nd National Communication of the Republic of Moldova under the UNFCCC. Table B
2007 2010-2015 2015-2020 2020-2025 2025-2030 Right Bank Generation, % 27.0% 25.0% 30.0% 35.0% 40.0% Imported, % 73.0% 75.0% 70.0% 65.0% 60.0%
It has to be pointed out that there is some inconsistency between available sources of information about the origins of electricity currently imported in the Republic of Moldova, i.e. exclusively Ukraine or Ukraine and Transnistria.
For the purpose of estimating the GHG emission savings of the GEF UNIDO project, the conservative assumption that all electricity is and will be imported from Ukraine has been made. In Table C the emission factors used for the GEF UNIDO project are shown.
Table C: Electricity emission factor used (EFu) 2010-2015 2015-2020 2020-2025 2025-2030 Emission factor for electricity, g CO2eq/kWh 406.28 417.13 427.99 438.84
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Formula used for calculating EFu within each time period is the following:
EFu = BSL Right Bank SEV * Share Right Bank Generation + Ukraine SEV * Share Right Bank Electricity Import
Average electricity transmission and distribution losses over the period 2010-2023 have been assumed to be 11%.
NATURAL GAS The following Table D lists values referenced and used for calculating the natural gas GHG emission factors for the GEF UNIDO project. Table D
Referenced IPCC 2006 Used for project Net Calorific Value, TJ/kt 33.86 1 48 33.86 Emission Factor, t C/TJ 15.3 1 15.3 15.3 Fraction of carbon oxidized 11 1 1 Default CO2 emission factor, t CO2/TJ 56.1 56.1 Default CH4 emission factor, t CH4/TJ 0.001 0.001 Default CO2 emission factor, t N2O/TJ 0.0001 0.0001 Global Warming Potential_100 of CO2 11 1 1 Global Warming Potential_100 of CH4 21 1 21 21 Global Warming Potential_100 of N20 310 1 310 310 Density 2 of Natural Gas kg/m3 0.7-0.9 - 0.8 Notes: 1 Draft 2 nd National Communication of the Republic of Moldova under the UNFCCC, 2009 2 At Standard Temperature and Pressure conditions
Based on the above values, the following emission factor has been assumed for natural gas energy savings. Table C: Natural gas emission factor used (EFng) 2010-2015 2015-2020 2020-2025 2025-2030 Emission factor for natural gas, t CO2eq/TJ 56.152 56.152 56.152 56.152 Emission factor for natural gas, g CO2eq/kWh 202.15 202.15 202.15 202.15
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ANNEX G: LETTER OF CO-FINANCING TOWARDS THE IMPLEMENTATION OF THE PROJECT
This annex includes the letters of resources commitment towards the implementation of the GEF UNIDO project of the following counterparts and partners:
I. Ministry of Economy Romanian original version Un-official English translation II. Ministry of Ecology and Natural Resources Romanian original version Un-official English translation III. Technical University of Moldova Romanian original version Un-official English translation IV. Carmez - Enterprise Romanian original version Un-official English translation V. Franzeluta – Enterprise Romanian original version Un-official English translation VI. Lactis - Enterprise Romanian original version Un-official English translation VII. Natur Bravo - Enterprise Romanian original version Un-official English translation VIII. Sudzucker Moldova – Enterprise Romanian original version Un-official English translation IX. UNIDO In-kind co-financing X. EBRD Letter of Collaboration Intent
EXPLANATORY NOTE With regard to the Letter of co-financing from enterprises, for the purpose of calculating the co- financing figures indicated in the GEF CEO Endorsement Template, only resources committed by each enterprise towards the implementation of activities 1 to 4 of the Resource Sheet have been accounted for. The value of additional projects (planned or considered) proposed by the enterprises for which resources have been committed has not been included in the co-financing calculation. While the GEF UNIDO project intends to further discuss with enterprises these projects, considering the relatively limited amount of funds allocated to Project Component 3, it might be not advisable to spread project resources over too many IEE pilot projects.
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Reducing Greenhouse Gas Emissions through Improved Energy Efficiency in the
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I. Ministry of Economy
Romanian Version
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3
Reducing Greenhouse Gas Emissions through Improved Energy Efficiency in the
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4
Reducing Greenhouse Gas Emissions through Improved Energy Efficiency in the
Industrial Sector in Moldova ______
5
Reducing Greenhouse Gas Emissions through Improved Energy Efficiency in the
Industrial Sector in Moldova ______
6
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Un-official English translation of Ministry of Economy Letter of Resources Commitment
27.01.2010 nr. 06/3-356 La nr.______din ______2010
Mr. Dolf Gielen, PhD Chief, Energy Efficiency and Policy Unit United Nations Industrial Development Organization Vienna International Centre, P.O. Box 300 A-1400 Vienna, Austria E-mail: [email protected] Tel: 0043 1 26026 3811
Attn: Mr. Marco Matteini E-mail: [email protected]
Subject: Letter of resources commitment towards the implementation of the GEF/UNIDO Project “Reducing Greenhouse Gas Emissions through Improved Energy Efficiency in the Industrial Sector in Moldova”
Dear Mr. Gielen, Herewith, the Ministry of Economy of the Republic of Moldova expresses its commitment of resources allocation towards implementation of activities in the framework of GEF/UNIDO Project “Reducing Greenhouse Gas Emissions through Improved Energy Efficiency in the Industrial Sector in Moldova” to be implemented in 2010-2013 periods. Ministry of Economy of the Republic of Moldova is fully supportive of the project and committed to actively participate in its execution. The Government of the Republic of Moldova will contribute resources in-kind for the equivalent of US$ 111,975. The attached ANNEXE “Explanation Notes on Government Co-finding to Project Component 1” provides detailed description of resources that are offered by the Ministry of Economy of the Republic of Moldova. The Ministry of Economy wishes to point out that expected outputs and planned activities of Component 1 of the GEF/UNIDO Project are perfectly in line with the mandate and the scope of work of the Agency for Energy Efficiency to be created within the Ministry, as well as with the objectives of the draft Law on Energy Efficiency. It is worth noting that according with the latest estimates, in 2010 there will be allocated financial resources in volume of 50,000 Euro to support the work of the Agency for Energy Efficiency. Considering that, the Ministry of Economy is confident in pledging to continue working beyond the GEF /UNIDO project completion to ensure that results and outputs accomplished under the Component 1 of the GEF/UNIDO Project are further developed and built upon by the Agency for Energy Efficiency.
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The Ministry of Economy looks forward to the start of the GEF/UNIDO "Reducing emissions of greenhouse gases by improving energy efficiency in the industrial sector of Moldova.
ANNEX: “Explanation Notes on Government Co-finding to Project Component 1 - 3 pages
Vice Prim - Minister, Minister Valeriu Lazar
Ex. Galina Parsian, Tel. 233267
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ANNEX: Explanation Notes on Government Co-funding to Project Component 1
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10
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II. Ministry of Ecology and Natural Resources
Romanian Version
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Un-official English translation of Ministry of Ecology Letter of Resources Commitment
Nr.______
Mr. Dolf Gielen, PhD Chief, Energy Efficiency and Policy Unit United Nations Industrial Development Organization Vienna International Centre, P.O. Box 300 A-1400 Vienna, Austria E-mail: [email protected] Tel: 0043 1 26026 3811
Attn: Mr. Marco Matteini E-mail: [email protected]
22 of January 2010
Subject: Letter of resources commitment towards the implementation of the GEF/UNIDO Project “Reducing Greenhouse Gas Emissions through Improved Energy Efficiency in the Industrial Sector in Moldova”
Dear Mr. Gielen,
Herewith, the Ministry of Environment of the Republic of Moldova, in its quality of National Executing Agency, expresses its commitment of resources allocation towards implementation of activities in the framework of GEF/UNIDO Project “Reducing Greenhouse Gas Emissions through Improved Energy Efficiency in the Industrial Sector in Moldova” to be implemented in 2010-2013 periods. In this aspect the Ministry of Environment of the Republic of Moldova will contribute resources in-kind for the equivalent of US$ 10,500 (the attached Annex nr. 1 “Description of resources” provides detailed description of resources that are offered). The Ministry of Environment wishes to point out that the planned activities within the GEF/UNIDO Project are perfectly in line with the mandate and the areas of interest determined by its quality of the Central Public Authority of the Republic of Moldova responsible for implementation the commitments of the country under the United Nations Framework Convention on Climate Change (UNFCCC). Considering that, the Ministry of Environment is confident in pledging to continue working beyond the GEF /UNIDO project completion to ensure that results and outputs accomplished under the project are further developed and built in order to accomplish the Republic of Moldova’s commitments under the UNFCCC.
ANNEX: Description of Resources – 1 page
Vice-minister Corneliu MÂRZA
______9, Cosmonautilor St., Chi in ău MD 2005, Republic of Moldova Tel (+ 373 22) 20 45 07 Fax (+ 373 22) 22 68 58 E-mail: [email protected]
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ANNEX nr.1
Explanation Notes on Government/Ministry of Environment Co-funding to GEF/UNIDO Project “Reducing Greenhouse Gas Emissions through Improved Energy Efficiency in the Industrial Sector in Moldova”
Equivalent total Description of in- # of units per # of project Action money value kind contribution project year years (USD)
The Ministry of Environment will insure the necessary facilities for a day by day functionality of the Project Furnished office Implementation Unit, local space and staff and project international insurance of experts and the GEF maintenance 250 USD x Implementation Agency’s costs (i.e., 12 months = 3.5 10,500 (UNIDO) missions during electricity, heat, 3 000 USD and beyond GEF/UNIDO water, etc.) Project “Reducing Greenhouse Gas Emissions through Improved Energy Efficiency in the Industrial Sector in Moldova” duration.
______9, Cosmonautilor St., Chi in ău MD 2005, Republic of Moldova Tel (+ 373 22) 20 45 07 Fax (+ 373 22) 22 68 58 E-mail: [email protected]
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III. Technical University of Moldova
Romanian Version
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English version of Letter of Resources Commitment agreed with the Technical University of Moldova
Technical University of Moldova Avenue tefan cel Mare, 168 Chi in ău, Republic of Moldova, Tel.: (37322) 23-78-61 Fax: (37322) 23-54-41, E-mail: [email protected] Web: www.utm.md
Mr. Dolf Gielen, PhD Chief, Energy Efficiency and Policy Unit United Nations Industrial Development Organization Vienna International Centre, P.O. Box 300 A-1400 Vienna, Austria E-mail: [email protected] Tel: 0043 1 26026 3811
Attn: Mr. Marco Matteini E-mail: [email protected] Date: 18 December 2009
Dear Mr. Gielen,
Subject: Letter of resources commitment towards the implementation of the GEF MENR UNIDO project “Reducing Greenhouse Gas Emissions through Improved Energy Efficiency in the Industrial Sector in Moldova”
Herewith, Technical University of Moldova expresses its commitment of resources allocation towards implementation of activities in the framework of GEF/UNIDO project “Reducing Greenhouse Gas Emissions through Improved Energy Efficiency in the Industrial Sector in Moldova” to be implemented in collaboration with the Ministry of Ecology of Moldova in partnership with Technical University of Moldova. Technical University of Moldova is fully supportive of the project and committed to actively participate in its execution. The Technical University of Moldova will contribute resources in-kind for the equivalent of US$ 10830. The attached ANNEXE 1 “Resources description” and ANNEXE 2 “Costs of in-kind contribution” provides detailed description of resources that are offered by Technical University of Moldova. The Technical University of Moldova looks forward to the start of the GEF MENR UNIDO project implementation.
Rector Ion Bostan
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ANNEXE 1. Resources Sheet The present Resources Sheet provides a description of the in-kind resources that the Technical University of Moldova (TUM) commits to make available as contribution towards the implementation of the GEF/UNIDO project “Reducing Greenhouse Gas Emissions through Improved Energy Efficiency in the Industrial Sector in Moldova”. 1. Participation of TUM staff in the Steam System Optimization Expert Training The Technical University of Moldova commits to participate in the Expert Training and to make available two (2) of its most suitable staff for the complete training program. For this purpose are offered resources of staff time as follows: 6 man*days for the two residential sessions of the training to be organized in Chisinau city 6 man*days for identifying and developing system optimization measures in one enterprise participating in the GEF project during the period separating the two residential sessions to be organized in Chisinau city 12 man*days for providing technical assistance to the same enterprise in implementing one system optimization project 3 man*days for working with enterprise staff to monitor and verify energy savings achieved 3 man*days for reporting to the GEF project of energy savings and results achieved The Technical University of Moldova (TUM) commits to make available its facilities at (buildings, furniture, and equipment) to host two classroom sessions of the Expert Trainings. The venue of classrooms of the building nr.2 of TUM on the street 31 august 1989, nr.78 offers the following studying conditions for Expert Trainings sessions: total area XX m2; workplaces for study – XX; tables with computers connected to the internet – XX; projector – 1; printer – 1; (classroom is equipped for training of 15-20 experts) The University facility will be made available for two training sessions by 3 days long each, as total 6 days. The cost of lunches and coffees breaks for the trainees will be covered by the GEF/UNIDO project.
2. Participation of TUM staff in the Energy Management Expert Training The Technical University of Moldova commits to participate in the Expert Training and to make available two (2) of its most suitable staff for the complete training program. For this purpose are offered resources of staff time as follows: 6 man*days for the two residential sessions of the training to be organized in Chisinau city 18 man*days for providing technical assistance to one enterprise participating in the GEF project to implement an energy management system (EnMS) in compliance with ISO 50001
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4 man*days to assist the enterprise appointed energy manager in the first two annual reviews of the EnMS performance and verify energy savings 2 man*days for reporting to the GEF project of energy savings and results achieved on emissions reductions by one enterprise participating in the GEF project as a result of implementation of an energy management system (EnMS) in compliance with ISO 50001 The Technical University of Moldova (TUM) commits to make available its facilities at (buildings, furniture, and equipment) to host two classroom sessions of the Expert Trainings. The venue of classrooms of the building nr.2 of TUM on the street 31 august 1989, nr.78 offers the following studying conditions for Expert Trainings sessions: total area XX m2; workplaces for study – XX; tables with computers connected to the internet – XX; projector – 1; printer – 1; (classroom is equipped for training of 15-20 experts) The University facility will be made available for two training sessions by 3 days long each, as total 6 days. The cost of lunches and coffees breaks for the trainees will be covered by the GEF/UNIDO project.
3. Contribution towards the organization of other 6 Training Sessions of one day each for the experts from food processing industry of which 3 for the Steam System Optimization and other 3 for Energy Management Expert Training The Technical University of Moldova (TUM) commits to make available its facilities at (buildings, furniture, and equipment) to host 6 classroom sessions (on one day each) of the Expert Trainings, of which 3 for the Steam System Optimization and other 3 for Energy Management Expert Training. Training sessions are for energy engineers and managers of manufacturing enterprises. The venue of classrooms of the building nr.2 of TUM on the street 31 august 1989, nr.78 offers the following studying conditions for Expert Trainings sessions: total area xx m2; workplaces for study – XX; tables with computers connected to the internet – xx; projector – 1; printer – 1; (classroom is equipped for training of 15-20 experts) For this purpose are offered resources of staff time as follows: 15 man*days of the experts from TUM for the 6 sessions of the training to be organized by UNIDO/GEF project, of which 3 for the Steam System Optimization and other 3 for Energy Management Expert Training. TUM will also contribute to preparation and ongoing of mentioned courses. The cost of lunches and coffees breaks for the trainees will be covered by the GEF/UNIDO project.
4. Contribution towards the development of an Industrial Energy Manager Certification (IEMC) Program The Technical University of Moldova
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The Technical University of Moldova is willing to work with the international and national experts of the GEF-MENR-UNIDO project and relevant Moldovan institutions to structure, develop and establish a national Industrial Energy Manager Certification Program. To that end, the Technical University of Moldova commits to provide the following resources: 30 man*day over a period of two years for GEF project and work with international experts and relevant Moldovan institutions to develop and establish a national IEMC Program The Technical University of Moldova also pledges to include the IECM program, once it will have been established, in its portfolio of continual education and professional certification programs offered on the Moldova market.
ANNEXE 2. Reference unit costs for estimating value of in-kind contribution Cost item Quantity Unit cost used by Total US $ TUM Activity 1. Staff time 30 man/day 50 US $ / day 1,500 US $ Training room equipped with PC 6 room/day 250 US $ / day 1,500 US $ Projector 6 units/day 60 US $ / day 360 US $ Sub-total: 3,360 US $
Activity 2. Staff time 30 man/day 50 US $ / day 1,500 US $ Training room equipped with PC 6 room/day 250 US $ / day 1,500 US $ Projector 6 units/day 60 US $ / day 360 US $ Sub-total: 3,360 US $
Activity 3. Staff time 15 man/day 50 US $ / day 750 US $ Training room equipped with PC 6 room/day 250 US $ / day 1,500 US $ Projector 6 units/day 60 US $ / day 360 US $ Sub-total: 2,610 US $
Activity 4. Staff time 30 man/day 50 US $ / day 1,500 US $ Sub-total: 1,500 US $
Total 10,830 US $
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IV. Carmez - Enterprise
Romanian Version (Original with Ministry of Ecology and Natural Resources)
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Un-official English translation of Carmez Letter of Resources Commitment
Mr. Dolf Gielen, PhD Chief, Energy Efficiency and Policy Unit United Nations Industrial Development Organization Vienna International Centre, P.O. Box 300 A-1400 Vienna, Austria E-mail: [email protected] Tel: 0043 1 26026 3811
Attn: Mr. Marco Matteini E-mail: [email protected] Date: 24 November 2009 Nr. 150/01
Dear Mr. Gielen,
Subject : Letter of resources commitment towards the implementation of the GEF /UNIDO project “Reducing Greenhouse Gas Emissions through Improved Energy Efficiency in the Industrial Sector in Moldova” Herewith, CARMEZ JSC expresses its commitment of resources allocation towards implementation of activities in the framework of GEF/UNIDO project “Reducing Greenhouse Gas Emissions through Improved Energy Efficiency in the Industrial Sector in Moldova” to be implemented by UNIDO and the Ministry of Ecology. Commitment of resources will be considered for the case if CARMEZ JSC will be one of partners of the above mentioned project. CARMEZ JSC fully supports the project and expresses its committed to actively participate in its implementation. The company will contribute with in-kind resources of US$ 16460 equivalent and with resources in cash of 689270 US$. The attached ANNEXE 1 “Resources description” provides detailed description of resources that are offered by CARMEZ JSC. CARMEZ JSC looks forward for the beginning of activities of the GEF/UNIDO project “Reducing Greenhouse Gas Emissions through Improved Energy Efficiency in the Industrial Sector in Moldova”.
ANNEXE: “Resources description” – 3 pages
Director General Anatolie Cislaru
Executor: Igor Merenco, tel. (+373 22) 554215
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ANNEXE 1 RESOURCES DESCRIPTION Description of the in-kind and cash resources that CARMEZ JSC commits to make available towards the common implementation of the GEF/UNIDO project “Reducing Greenhouse Gas Emissions through Improved Energy Efficiency in the Industrial Sector in Moldova”
1. Type-A: Participation of CARMEZ JSC in Steam System Optimization Expert Training CARMEZ JSC commits to participate in the Expert Training and to make available its most suitable staff for the complete training program. For this purpose are offered resources of staff time as follows: • 7 man*days for two training sessions organized in Chisinau • 5-7 man*days for identifying and developing system optimization measures of the steam system of the company, between the two training sessions • 7-15 man*days for implementing one system optimization project at the company CARMEZ JSC commits to make available US$ 12000 for implementation of one project of steam system optimization. Considering that the prospective system optimization project will be implemented during 2010-2012, the committed cash amount might be revised, subject to the economic and financial performance of the company at the time of project implementation of steam system optimization. However, the total cost will be not less than US$ 10000.
2. Type-B: Participation of CARMEZ JSC in Steam System Optimization Expert Training CARMEZ JSC commits to participate in the Expert Training by making available its factory to receive a steam system assessment from an eternal expert. The company commits to make available the needed support of such assessment as well as the financial resources for implementation of at least one system optimization project identified by external expert. For this purpose are offered resources of staff time as follows: • 5-7 man*days to assist the external expert in the preparation and execution of the steam system assessment • 7-15 man*days for implementing one system optimization project CARMEZ JSC commits to make available US$ 26000 for one system optimization project. Considering that the prospective system optimization project will be implemented during 2010-2012, the committed cash amount might be revised, subject to the economic and financial performance of the company at the time of project implementation of steam system optimization. However, the total cost will be not less than US$ 10000.
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3. Implementation of Energy Management System in compliance with European and International Standards (EN 16001 and ISO 50001) CARMEZ JSC commits to work with implementation unit of the GEF/UNIDO project to establish and implement an Energy Management System in compliance with European and International Standards (EN 16001 and ISO 50001). For this purpose are offered resources of staff time as follows: • 15-20 man*days to work with GEF project implementation unit to establishing the Energy Management System • 7-10 man*days to implement 2 operational improvement projects • 7-15 man*days for implementing one system optimization project CARMEZ JSC commits to make available US$ 11000 for one project of Energy Management System. Considering that the prospective system optimization project will be implemented during 2010-2012, the committed cash amount might be revised, subject to the economic and financial performance of the company at the time of project implementation of steam system optimization. However, the total cost will be not less than US$ 10000. 4. Implementation of pilot Energy Efficiency project Based on the results of the detailed energy audit carried out by the GEF/UNIDO project experts, CARMEZ JSC agree to undertake during 2010-2012 the implementation of the project “Installation of OSMOS reversible system for the heat plant” with support from GEF/UNIDO project. Installation of OSMOS reversible system is for water treatment of steam boilers. The implementation of such equipment will totally exclude the draining of steam boilers and will allow saving of US$ 89000 per year. The payback period of the investment is 11 months. The total cost of the project is US$ 85000. If the GEF/UNIDO project will offer a financial support in cash from US$ 25000 to 40000 to be provided in the form of grant towards the project investment costs and in addition the technical assistance for project documentation, then CARMEZ JSC commits for financing towards the pilot project investment costs by making available the following resources: i. Working time of staff: 15-20 man*days to project development, preparation, implementation based on audit result 8-10 man*days to monitor and track energy savings and performance improvements according with UNIDO guidance for two years after the implementation of the project 4-5 man*days for bi-annual reporting of energy savings and performance improvements to the GEF/UNIDO project for two years after the implementation of the project ii. Up to US$ 55000 towards the project investment costs.
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Table 1: Commitment of Resources in kind and in cash offered by CARMEZ JSC
Resources Quantity Value (US$) In-kind: Staff time of company 131 man*days 16460 personnel for GEF/UNIDO Project; buildings and offices; materials and equipment Total in-kind 16460
In-cash: Co-financing in the framework of 4 Projects 104000 GEF/UNIDO Project (Projects of activities 1-4) Other projects on energy efficiency improving that are planned for implementation during 2010-2013. Walls isolation of the administrative 1361 m2 95270 building Replacing of the windows of 400 m2 40000 administrative building Reconstruction of air conditioning 450000 system of production site Total in-cash 689270 TOTAL 705730
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V. Franzeluta - Enterprise
Romanian Version (Original with Ministry of Ecology and Natural Resoruces)
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Un-official English translation of Franzeluta Letter of Resources Commitment
Mr. Dolf Gielen, PhD Chief, Energy Efficiency and Policy Unit United Nations Industrial Development Organization Vienna International Centre, P.O. Box 300 A-1400 Vienna, Austria E-mail: [email protected] Tel: 0043 1 26026 3811
Attn: Mr. Marco Matteini E-mail: [email protected] Date: 02 December 2009 Nr. 93-240
Dear Mr. Gielen,
Subject : Letter of resources commitment towards the implementation of the GEF MENR UNIDO project “Reducing Greenhouse Gas Emissions through Improved Energy Efficiency in the Industrial Sector in Moldova”
Herewith, Franzeluta JSC expresses its commitment of resources allocation towards implementation of activities in the framework of GEF/UNIDO project “Reducing Greenhouse Gas Emissions through Improved Energy Efficiency in the Industrial Sector in Moldova” to be implemented by UNIDO and the Ministry of Ecology, in partnership with our company. Franzeluta JSC fully supports the project and expresses its committed to actively participate in its implementation. The company will contribute with in-kind resources of US$ 2300 equivalent and with resources in cash of 314000 US$. The attached ANNEXE 1 “Resources description” provides detailed description of resources that are offered by Franzeluta JSC. Franzeluta JSC looks forward for the beginning of activities of the GEF/UNIDO project “Reducing Greenhouse Gas Emissions through Improved Energy Efficiency in the Industrial Sector in Moldova”.
ANNEXE 1: “Resources description” – 3 pages
Director General Eugen Baleca
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Reducing Greenhouse Gas Emissions through Improved Energy Efficiency in the
Industrial Sector in Moldova ______
ANNEX 1. RESOURCES DESCRIPTION Description of the in-kind and cash resources that Franzeluta JSC commits to make available as contribution towards the implementation of the GEF-MENR-UNIDO project “Reducing Greenhouse Gas Emissions through Improved Energy Efficiency in the Industrial Sector in Moldova”.
1. Type-A: Participation of Franzeluta JSC in Steam System Optimization Expert Training Franzeluta JSC commits to participate in the Expert Training and to make available its most suitable staff for the complete training program. For this purpose are offered resources of staff time as follows: • 7 man*days for two training sessions organized in Chisinau • 5-7 man*days for identifying and developing system optimization measures of the steam system of the company, between the two training sessions • 7-15 man*days for implementing one system optimization project at the company Franzeluta JSC commits to make available US$ 2000 for implementation of one project of steam system optimization. Considering that the prospective system optimization project will be implemented during 2010-2012, the committed cash amount might be revised, subject to the economic and financial performance of the company at the time of project implementation of steam system optimization.
2. Type-B: Participation of Franzeluta JSC in Steam System Optimization Expert Training Franzeluta JSC commits to participate in the Expert Training by making available its factory to receive a steam system assessment from an eternal expert and to make available the resources needed to support such assessment as well as the implementation of at least one system optimization project identified. For this purpose are offered resources of staff time as follows: • 5-7 man*days to assist the external expert in the preparation and execution of the steam system assessment • 7-15 man*days for implementing one system optimization project Franzeluta JSC commits to make available US$ 2000 for one system optimization project. Considering that the prospective system optimization project will be implemented during 2010-2012, the committed cash amount might be revised, subject to the economic and financial performance of the company at the time of project implementation of steam system optimization.
3. Implementation of Energy Management System in compliance with European and International Standards (EN 16001 and ISO 50001)
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Industrial Sector in Moldova ______
Franzeluta JSC commits to work with the experts of the GEF/UNIDO project to establish and implement an Energy Management System in compliance with European and International Standards (EN 16001 and ISO 50001). For this purpose are offered resources of staff time as follows: • 15-20 man*days to work with GEF project implementation unit to establishing the Energy Management System • 7-10 man*days to implement 2 operational improvement projects • 7-15 man*days for implementing one system optimization project Franzeluta JSC commits to make available US$ 2000 for one project of Energy Management System. Considering that the prospective system optimization project will be implemented during 2010-2012, the committed cash amount might be revised, subject to the economic and financial performance of the company at the time of project implementation of steam system optimization.
4. Implementation of pilot Energy Efficiency project Based on the results of the detailed energy audit carried out by the GEF/UNIDO project experts, Franzeluta JSC agree to undertake the implementation of the project “Replacing of electric stove for bread cooking by a gas fired stove” with support from GEF/UNIDO project. Replacing of electric stove for bread cooking by a gas fired stove will contribute to reduction of GHG and expenditures of the company. If the GEF/UNIDO project will offer a financial support in cash of up to US$ 25000 to be provided in the form of grant towards the project investment costs and in addition the technical assistance for project documentation, then Franzeluta JSC commits to for financing towards the pilot project investment costs by making available the following resources: iii. Working time of staff: 15-20 man*days to project development, preparation, implementation based on audit result 8-10 man*days to monitor and track energy savings and performance improvements according with UNIDO guidance for two years after the implementation of the project 4-5 man*days for bi-annual reporting of energy savings and performance improvements to the GEF/UNIDO project for two years after the implementation of the project iv. US$ 308000 towards the pilot project investment costs.
Table 1: Commitment of Resources in kind and in cash offered by Franzeluta JSC
Resources Quantity Value (US$) In-kind: Staff time of company 131 man*days 2300 personnel (Projects of activities 1-4)
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Total in-kind 2300
In-cash: Co-financing in the framework of 4 Projects 314000 GEF/UNIDO Project (Projects of activities 1-4) Total in-cash 314000 TOTAL 316300
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VI. Lactis - Enterprise
Romanian Version (Original with Ministry of Ecology and Natural Resoruces)
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Industrial Sector in Moldova ______
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Un-official English translation of Lactis Letter of Resources Commitment
Mr. Dolf Gielen, PhD Chief, Energy Efficiency and Policy Unit United Nations Industrial Development Organization Vienna International Centre, P.O. Box 300 A-1400 Vienna, Austria E-mail: [email protected] Tel: 0043 1 26026 3811
Attn: Mr. Marco Matteini E-mail: [email protected] Date: 25 November 2009
Dear Mr. Gielen,
Subject : Letter of resources commitment towards the implementation of the GEF /UNIDO project “Reducing Greenhouse Gas Emissions through Improved Energy Efficiency in the Industrial Sector in Moldova” Herewith, “Lactis” Riscani JSC expresses its commitment of resources allocation towards implementation of activities in the framework of GEF/UNIDO project “Reducing Greenhouse Gas Emissions through Improved Energy Efficiency in the Industrial Sector in Moldova” to be implemented by UNIDO and the Ministry of Ecology. Commitment of resources will be considered for the case if “Lactis” Riscani JSC will be one of partners of the above mentioned project. “Lactis” Riscani JSC fully supports the project and expresses its committed to actively participate in its implementation. The company will contribute with in-kind resources of US$ 5640 equivalent and with resources in cash of 185940 US$. The attached ANNEXE 1 “Resources description” provides detailed description of resources that are offered by Lactis JSC. “Lactis” Riscani JSC looks forward for the beginning of activities of the GEF/UNIDO project “Reducing Greenhouse Gas Emissions through Improved Energy Efficiency in the Industrial Sector in Moldova”.
ANNEXE 1: “Resources description” – 3 pages
Director General Gheorghe Angeluta
Executor: Gh. Angeluta, tel. (+373 256) 23551
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Reducing Greenhouse Gas Emissions through Improved Energy Efficiency in the
Industrial Sector in Moldova ______
ANNEXE 1 RESOURCES DESCRIPTION Description of the in-kind and cash resources that “Lactis” Riscani JSC commits to make available towards the common implementation of the GEF/UNIDO project “Reducing Greenhouse Gas Emissions through Improved Energy Efficiency in the Industrial Sector in Moldova”.
1. Type-A: Participation of “Lactis” Riscani JSC in Steam System Optimization Expert Training “Lactis” Riscani JSC commits to participate in the Expert Training and to make available its most suitable staff for the complete training program. For this purpose are offered resources of staff time as follows: • 7 man*days for two training sessions organized in Chisinau • 7 man*days for identifying and developing system optimization measures of the steam system of the company, between the two training sessions • 15 man*days for implementing one system optimization project at the company “Lactis” Riscani JSC commits to make available US$ 10000 for implementation of one project of steam system optimization. Considering that the prospective system optimization project will be implemented during 2010-2012, the committed cash amount might be revised, subject to the economic and financial performance of the company at the time of project implementation of steam system optimization. However, the total cost will be not less than US$ 10000. 2. Type-B: Participation of “Lactis” Riscani JSC in Steam System Optimization Expert Training “Lactis” Riscani JSC commits to participate in the Expert Training by making available its factory to receive a steam system assessment from an eternal expert. The company commits to make available the needed support of such assessment as well as the financial resources for implementation of at least one system optimization project identified by external expert. For this purpose are offered resources of staff time as follows: • 7 man*days to assist the external expert in the preparation and execution of the steam system assessment • 15 man*days for implementing one system optimization project “Lactis” Riscani JSC commits to make available US$ 10000 for one system optimization project. Considering that the prospective system optimization project will be implemented during 2010-2012, the committed cash amount might be revised, subject to the economic and financial performance of the company at the time of project implementation of steam system optimization. However, the total cost will be not less than US$ 10000. 3. Implementation of Energy Management System in compliance with European and International Standards (EN 16001 and ISO 50001)
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Industrial Sector in Moldova ______
“Lactis” Riscani JSC commits to work with implementation unit of the GEF/UNIDO project to establish and implement an Energy Management System in compliance with European and International Standards (EN 16001 and ISO 50001). For this purpose are offered resources of staff time as follows: • 10 man*days to work with GEF project implementation unit to establishing the Energy Management System • 10 man*days to implement 2 operational improvement projects • 15man*days for implementing one system optimization project “Lactis” Riscani JSC commits to make available US$ 300 for implementation of one project of Energy Management System.
4. Implementation of pilot Energy Efficiency project Based on the results of the detailed energy audit carried out by the GEF/UNIDO project experts, “Lactis” Riscani JSC agree to undertake the implementation of the project “Reduction of energy consumption” with support from GEF/UNIDO project, by the following means: a) Retrofitting of compressed air supply system; b) Replacing of cooling system on ammonia by installation of modern equipment on Freon with automatic control, for the butter storing room; c) Instalation of reactive power compensation system; The project will be implemented during period of 2010 –2012. a) For compressed air supply system the company use today a compressor BU-3/9 made in 1983 that have 22kWh electricity consumption and two compressors AV-100 made in 1971 and 1973 for ammonia compressing and retrofitted later for producing compressed air, with a electricity consumption of 55kWh each. These compressors are very old and have very low efficiency and the quality of compressed air do not corresponds to technical requirements. Two compressors working 15-16 hours daily have an electricity consumption of 1000 kWh/day. In the framework of this project we plan to replace compressors AV-100 by a modern one of BOGE trademark – SDF24-2-750 with 18.5 kWh energy consumption, or by 60-70% less energy consumption. b) Nowadays, for cooling of the butter storing room it is used the ammonia system with compressors AU-200 made in 1972, and compressor BX-350-2-1 made in 1977, as well as ammonia pump that is working together with compressors. The total energy consumption of the system is 135.5 kWh (75+55+5.5). It is proposed to replace this system by installing of an autonym equipment of model HAX34P/380-4 with Freon that will have the energy consumption of only 20 kWh. The energy consumption will decrease by 75%. c) At the moment, “Lactis” Riscani JSC pay the fee for reactive power of 80000 lei per year. In the framework of present project it is proposed to replace the scheme of electricity supply and installation of reactive power compensation system. This update can reduce the reactive power by 98%.
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Industrial Sector in Moldova ______
If the GEF/UNIDO project will offer a financial support in cash from US$ 25000 to 40000 to be provided in the form of grant towards the project investment costs and in addition the technical assistance for project documentation, then “Lactis” Riscani JSC commits to for financing towards the pilot project investment costs by making available the following resources: v. Working time of staff: 30 man*days to project development, preparation, implementation based on audit result 8 man*days to monitor and track energy savings and performance improvements according with UNIDO guidance for two years after the implementation of the project 4 man*days for bi-annual reporting of energy savings and performance improvements to the GEF/UNIDO project for two years after the implementation of the project vi. Up to US$ 25000 towards the project investment costs.
Table 1. Commitment of Resources in kind and in cash offered by Lactis JSC
Resources Quantity Value (US$) In-kind: Staff time of company personnel for 141 man*days 5640 GEF/UNIDO Project Total in-kind 5640
In-cash: Co-financing in the framework of GEF/UNIDO 2 Projects 45300 Project (Projects of activities 1-4) Other projects on energy efficiency improving that are planned for implementation during 2010-2013. Retrofitting of the heat plant by replacing of 110000 boilers E1/9 by modern one. Installation of the autonomic equipment with 25000 Freon for cooling room of butter storing and replacing cooling system with ammonia. Total in-cash 180300 TOTAL 185940
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VII. Natur Bravo - Enterprise
Romanian Version (Original with Ministry of Ecology and Natural Resoruces)
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Industrial Sector in Moldova ______
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Un-official English translation of Natur Bravo Letter of Resources Commitment
Mr. Dolf Gielen, PhD Chief, Energy Efficiency and Policy Unit United Nations Industrial Development Organization Vienna International Centre, P.O. Box 300 A-1400 Vienna, Austria E-mail: [email protected] Tel: 0043 1 26026 3811
Attn: Mr. Marco Matteini E-mail: [email protected] Date: 25 November 2009 Nr. 304
Dear Mr. Gielen,
Subject : Letter of resources commitment towards the implementation of the GEF /UNIDO project “Reducing Greenhouse Gas Emissions through Improved Energy Efficiency in the Industrial Sector in Moldova” Herewith, NATUR BRAVO JSC expresses its commitment of resources allocation towards implementation of activities in the framework of GEF/UNIDO project “Reducing Greenhouse Gas Emissions through Improved Energy Efficiency in the Industrial Sector in Moldova” to be implemented by UNIDO and the Ministry of Ecology. Commitment of resources will be considered for the case if NATUR BRAVO JSC will be one of partners of the above mentioned project. NATUR BRAVO JSC fully supports the project and expresses its committed to actively participate in its implementation. The company will contribute with in-kind resources of US$ 5950 equivalent and with resources in cash of 299700 US$. The attached ANNEXE 1 “Resources description” provides detailed description of resources that are offered by NATUR BRAVO JSC. NATUR BRAVO JSC looks forward for the beginning of activities of the GEF/UNIDO project “Reducing Greenhouse Gas Emissions through Improved Energy Efficiency in the Industrial Sector in Moldova”.
ANNEXE: “Resources description” – 3 pages
Director General Vadim Scorobogatco
Executor: R. Gudim, tel. (+373 22) 212928
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Reducing Greenhouse Gas Emissions through Improved Energy Efficiency in the
Industrial Sector in Moldova ______
ANNEXE 1 RESOURCES DESCRIPTION Description of the in-kind and cash resources that NATUR BRAVO JSC commits to make available towards the common implementation of the GEF/UNIDO project “Reducing Greenhouse Gas Emissions through Improved Energy Efficiency in the Industrial Sector in Moldova”
1. Type-A: Participation of NATUR BRAVO JSC in Steam System Optimization Expert Training NATUR BRAVO JSC commits to participate in the Expert Training and to make available its most suitable staff for the complete training program. For this purpose are offered resources of staff time as follows: • 7 man*days for two training sessions organized in Chisinau • 5 man*days for identifying and developing system optimization measures of the steam system of the company, between the two training sessions • 15 man*days for implementing one system optimization project at the company NATUR BRAVO JSC commits to make available US$ 12000 for implementation of one project of steam system optimization. Considering that the prospective system optimization project will be implemented during 2010-2012, the committed cash amount might be revised, subject to the economic and financial performance of the company at the time of project implementation of steam system optimization. However, the total cost will be not less than US$ 10000. 2. Type-B: Participation of NATUR BRAVO JSC in Steam System Optimization Expert Training NATUR BRAVO JSC commits to participate in the Expert Training by making available its factory to receive a steam system assessment from an eternal expert. The company commits to make available the needed support of such assessment as well as the financial resources for implementation of at least one system optimization project identified by external expert. For this purpose are offered resources of staff time as follows: • 5 man*days to assist the external expert in the preparation and execution of the steam system assessment • 10 man*days for implementing one system optimization project NATUR BRAVO JSC commits to make available US$ 14000 for one system optimization project. Considering that the prospective system optimization project will be implemented during 2010-2012, the committed cash amount might be revised, subject to the economic and financial performance of the company at the time of project implementation of steam system optimization. However, the total cost will be not less than US$ 10000. 3. Implementation of Energy Management System in compliance with European and International Standards (EN 16001 and ISO 50001)
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Reducing Greenhouse Gas Emissions through Improved Energy Efficiency in the
Industrial Sector in Moldova ______
NATUR BRAVO JSC commits to work with implementation unit of the GEF/UNIDO project to establish and implement an Energy Management System in compliance with European and International Standards (EN 16001 and ISO 50001). For this purpose are offered resources of staff time as follows: • 10 man*days to work with GEF project implementation unit to establishing the Energy Management System • 10 man*days to implement 2 operational improvement projects • 15 man*days for implementing one system optimization project NATUR BRAVO JSC commits to make available US$ 11000 for one project of Energy Management System. Considering that the prospective system optimization project will be implemented during 2010-2012, the committed cash amount might be revised, subject to the economic and financial performance of the company at the time of project implementation of steam system optimization. However, the total cost will be not less than US$ 10000. 4. Implementation of pilot Energy Efficiency project Based on the results of the detailed energy audit carried out by the GEF/UNIDO project experts, NATUR BRAVO JSC agree to undertake during 2010-2012 the implementation of the project “Optimization of steam supply system of Cupcini Conservation Factory” with support from GEF/UNIDO project. In the framework of the project it will be totally updated an existing steam boiler of a capacity of 20 steam tones/hour and pressure of 13 atmospheres. As a result of boiler updating the following benefits are expected: (i) the consumption of natural gas will be reduced by at least 10%; (ii) reduction of electrical energy consumption at least by 20%; (iii) the emissions of CO will be reduced considerable; (iv) the environmental emissions of N2O will be reduced substantially. The estimated period of the project implementation is the end of 2010. If the GEF/UNIDO project will offer a financial support in cash from US$ 25000 to 40000 to be provided in the form of grant towards the project investment costs and in addition the technical assistance for project documentation, then NATUR BRAVO JSC commits to for financing towards the pilot project investment costs by making available the following resources: vii. Working time of staff: 30 man*days to project development, preparation, implementation based on audit result 8 man*days to monitor and track energy savings and performance improvements according with UNIDO guidance for two years after the implementation of the project 4 man*days for bi-annual reporting of energy savings and performance improvements to the GEF/UNIDO project for two years after the implementation of the project viii. Up to US$ 47900 towards the project investment costs.
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Industrial Sector in Moldova ______
Table 1: Commitment of Resources in kind and in cash offered by NATUR BRAVO JSC
Resources Quantity Value (US$) In-kind: Staff time of company personnel for 119 man*days 5950 GEF/UNIDO Project Total in-kind 5950
In-cash: Co-financing in the framework of GEF/UNIDO 84900 Project (Projects of activities 1-4) Other projects on energy efficiency improving that are planned for implementation during 2010-2013. Retrofitting of water recycling system steam 90000 autoclave (Cupcini Factory) Automatic control system for sterilizer of 14 97500 steam autoclave; (Cupcini Factory) Capital reparation of water pit nr 2 for water 27300 supply of the factory (Cupcini Factory) Total in-cash 299700 TOTAL 305650
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VIII. Südzucker - Enterprise
Romanian Version (Original with Ministry of Ecology and Natural Resoruces)
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Un-official English translation of Südzucker Letter of Resources Commitment
Mr. Dolf Gielen, PhD Chief, Energy Efficiency and Policy Unit United Nations Industrial Development Organization Vienna International Centre, P.O. Box 300 A-1400 Vienna, Austria E-mail: [email protected] Tel: 0043 1 26026 3811
Attn: Mr. Marco Matteini E-mail: [email protected] Date: 10 December 2009 04/3-732
Dear Mr. Gielen,
Subject : Letter of resources commitment towards the implementation of the GEF /UNIDO project “Reducing Greenhouse Gas Emissions through Improved Energy Efficiency in the Industrial Sector in Moldova” Herewith, Sudzucker-Moldova JSC expresses its commitment of resources allocation towards implementation of activities in the framework of GEF/UNIDO project “Reducing Greenhouse Gas Emissions through Improved Energy Efficiency in the Industrial Sector in Moldova” to be implemented by UNIDO and the Ministry of Ecology. Commitment of resources will be considered for the case if Sudzucker-Moldova JSC will be one of partners of the above mentioned project. Sudzucker-Moldova JSC fully supports the project and expresses its committed to actively participate in its implementation. The company will contribute with in-kind resources of US$ 30000 equivalent and with resources in cash of 4232000 US$. The attached ANNEXE 1 “Resources description” provides detailed description of resources that are offered by Sudzucker-Moldova JSC. Sudzucker-Moldova JSC looks forward for the beginning of activities of the GEF/UNIDO project “Reducing Greenhouse Gas Emissions through Improved Energy Efficiency in the Industrial Sector in Moldova”.
ANNEXE 1: “Resources description” – 3 pages
Member of Steering Committee Member of Steering Committee Dr. Dandar Richard Victor Hropotinschi
Executor: Andrei Bocancea, tel. (+373 252) 28019
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Reducing Greenhouse Gas Emissions through Improved Energy Efficiency in the
Industrial Sector in Moldova ______
ANNEXE 1 RESOURCES DESCRIPTION Description of the in-kind and cash resources that Sudzucker-Moldova JSC commits to make available towards the common implementation of the GEF/UNIDO project “Reducing Greenhouse Gas Emissions through Improved Energy Efficiency in the Industrial Sector in Moldova”
1. Type-A: Participation of Sudzucker-Moldova JSC in Steam System Optimization Expert Training Sudzucker-Moldova JSC commits to participate in the Expert Training and to make available its most suitable staff for the complete training program. For this purpose are offered resources of staff time as follows: • 7 man*days for two training sessions organized in Chisinau • 5 man*days for identifying and developing system optimization measures of the steam system of the company, between the two training sessions • 15 man*days for implementing one system optimization project at the company Sudzucker-Moldova JSC commits to make available US$ 650000 for implementation of one project of steam system optimization. Considering that the prospective system optimization project will be implemented during 2010-2012, the committed cash amount might be revised, subject to the economic and financial performance of the company at the time of project implementation of steam system optimization. However, the total cost will be not less than US$ 10000.
2. Type-B: Participation of Sudzucker-Moldova JSC in Steam System Optimization Expert Training Sudzucker-Moldova JSC commits to participate in the Expert Training by making available its factory to receive a steam system assessment from an eternal expert. The company commits to make available the needed support of such assessment as well as the financial resources for implementation of at least one system optimization project identified by external expert. For this purpose are offered resources of staff time as follows: • 5 man*days to assist the external expert in the preparation and execution of the steam system assessment • 10 man*days for implementing one system optimization project Sudzucker-Moldova JSC commits to make available US$ 360000 for one system optimization project. Considering that the prospective system optimization project will be implemented during 2010-2012, the committed cash amount might be revised, subject to the economic and financial performance of the company at the time of project implementation of steam system optimization. However, the total cost will be not less than US$ 10000.
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3. Implementation of Energy Management System in compliance with European and International Standards (EN 16001 and ISO 50001) Sudzucker-Moldova JSC commits to work with implementation unit of the GEF/UNIDO project to establish and implement an Energy Management System in compliance with European and International Standards (EN 16001 and ISO 50001). For this purpose are offered resources of staff time as follows: • 10 man*days to work with GEF project implementation unit to establishing the Energy Management System • 10 man*days to implement 2 operational improvement projects • 15man*days for implementing one system optimization project Sudzucker-Moldova JSC commits to make available US$ 100000 for one project of Energy Management System. Considering that the prospective system optimization project will be implemented during 2010-2012, the committed cash amount might be revised, subject to the economic and financial performance of the company at the time of project implementation of steam system optimization. However, the total cost will be not less than US$ 10000.
4. Implementation of pilot Energy Efficiency project Based on the results of the detailed energy audit carried out by the GEF/UNIDO project experts, Sudzucker-Moldova JSC agree to undertake the implementation of the project “Reconstruction of production site” with support from GEF/UNIDO project. In the framework of the project will be replaced vacuum equipment for products I, II and III. After implementation of the project the following benefits will be obtained: • Increasing of the processing capacity and as a result decreasing the period of processing by 11 days roughly; • Decreasing of steam consumption of Product II by 5%, this accounts to 15 kWh/t of sugar beat; • Decreasing of steam consumption of Product III by 2.5%, this accounts to 8 kWh/t of sugar beat; The project will be implemented during period of 01.03.2010 – 31.08.2011. If the GEF/UNIDO project will offer a financial support in cash from US$ 25000 to 40000 to be provided in the form of grant towards the project investment costs and in addition the technical assistance for project documentation, then Sudzucker-Moldova JSC commits to for financing up to US$ 1210000 in cash towards the pilot project investment costs.
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Table 1: Commitment of Resources in kind and in cash offered by Sudzucker
Resources Quantity Value (US$) In-kind: Staff time of company personnel for 1630 man*days 30000 GEF/UNIDO Project Total in-kind 30000
In-cash: Co-financing in the framework of GEF/UNIDO 4 Projects 2320000 Project (Projects of activities 1-4) Other projects on energy efficiency improving that are planned for implementation during 2010-2013. Automatic system control for stove for lime 432000 drying Automatic control system for CHP 520000 Reconstruction of condensing tower 360000 Replacing of pumps and installing of frequency 600000 changing system Total in-cash 4232000 TOTAL 4262000
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IX. UNIDO In-kind co-financing
The table below provides a description of UNIDO in-kind co-financing to the project. Estimated Project In-kind co-financing value Component USD Contribution to the National Monitoring, Tracking and Benchmarking (MTB) PC1 45,000 program of international studies on benchmarking in industry being produced by UNIDO within the scope of a parallel project (Industrial Development Report 2011) Contribution of UNIDO Statistics Unit expertise in establishing the MTB PC1 7,000 program. This contribution will consist of time of the experts of the UNIDO Statistics Unit for: • Provision of expert advice and technical inputs for the design of the MTB program • Reviewing and commenting the MTB program designed • Advisory services to national staff during MTB program implementation and operation Contribution to the National IEE Best Practice Dissemination (BPD) program of PC1 25,000 IEE case studies being produced by UNIDO within the scope of two ongoing parallel projects (Industrial Development Report 2011 and Global Energy Assessment) The estimated value corresponds to the money value of the experts’ time dedicated to the development of the IEE case studies that will be then use for the BPD program in Moldova. Participation of Moldovan experts and counterparts to expert group meetings PC1 5,000 being organized by UNIDO within the scope of International Expert Working Group (IEWG) on Energy Management Implementation in industry. Two professionals (1 from the Agency for Energy Efficiency and 1 of the PC2 5,000 independent national EM experts trained by the GEF UNIDO project) will travel to Vienna once in 2011, once in 2012 to attend meetings of the IEWG. Contribution of “Practical Guide to the Implementation of Energy Management PC2 63,000 in compliance with ISO 50001 for SMEs” to be developed by UNIDO by 2 nd - 3rd quarter 2011 within the scope of its global program to promote and support adoption of energy management system in industry. The estimated value corresponds to the cost of the experts’ time dedicated to design, develop and produce the Practical Guide. Contribution of UNIDO Evaluation Unit expert time and participation in the PC4 8,000 project final evaluation This contribution will consist of: • Time of UNIDO Evaluation Unit professional for preparing, supervising and participating in the final independent evaluation of the project • Cost of mission to Moldova UNIDO expert/staff time contributed to managing activities related to the PC5 42,000 following project outputs: • National Benchmarking Program • Case studies for the National IEE Best Practice Dissemination Program • Practical Guide to the Implementation of Energy Management in compliance with ISO 50001 for SMEs Total 200,000
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Industrial Sector in Moldova ______
X. EBRD Letter of Collaboration Intent
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