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Case Studies of Successful and Replicable Success Stories of Energy Efficiency Programs on the Municipal Level

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Case Studies of Successful and Replicable Success Stories of Energy Efficiency Programs on the Municipal Level Center for Energy Efficiency (CENEf) SECTION # 4: KIROVSK Case Studies of Successful and Replicable Success Stories of Energy Efficiency Programs on the Municipal Level This report is part of a work plan under The Municipal Network for Energy Efficiency (MUNEE) program – www.munee.org Sponsored by the United States Agency for International Development (USAID) And managed by the Alliance to Save Energy – www.ase.org -- in Washington, DC. SECTION # 4: KIROVSK Population of 1.01.2001 – 34,9 thou. people City housing resources – 921 thou. m2, Official home page: http://www.kirovsk.narod.ru City administration address 16, Lenina Prospect, Kirovsk, Murmansk Oblast, 184230 Head of city administration Boris M. Proplyotin Phone/fax: (81531) 6-84-36, fax: +007 (81531) 9-30-18 E-mail [email protected] 2 1. KIROVSK The city of Kirovsk, Murmansk Oblast, has set up Kolsky Center for Energy Efficiency and Energy Efficiency revolving fund. The revolving fund has financed several energy efficiency projects, and accumulated financial savings generated by these projects to direct them to finance other projects. The table below shows a brief description of the program. Table 5. BRIEF PROGRAM (PROJECT) DESCRIPTION BRIEF PROGRAM Setting up Energy Efficiency Revolving Fund DESCRIPTION: 1. Signing up an agreement on the creation of Revolving Fund 2. Revolving mechanism of the Fund 3. Implementing an energy efficiency project funded by the Fund Sponsor Partners (if any): Name Kola Energy Efficiency Center (consultants, suppliers, local bank, etc.) (KEEC) Status: Non-profit partnership 1. Founders: Kirovsk City Administration and Northern Financial Ecological Corporation (NEFCO) Contact person: Victor Kotomkin, Director 2. Norwegian Group for Energy Efficiency (NGEE) Address: 7, Pr. Lenina, Kirovsk, Murmansk Oblast Mailing address: Post Office Box 237, 184209, Apatity-9, Murmansk Oblast Tel.: (7-81531) 54-761, 32-224 Fax: (7-81531) 94-436 Country: Russia Region: Murmansk Oblast City: Kirovsk Program (project) targets: Energy efficiency Public subsidies restructuring Other project District heating reform Setting up energy conservation fund Water utilities reform Housing reform EFFECT: implementation of demonstration and ordinary energy efficiency projects resulted in energy savings; savings monitoring and accumulation in the Fund Sources of financing (thou. USD): Type of external financing: municipal budget 155 conventional grant conventional grant 280 equity Total 435 loan Program schedule Program lifetime: n/a years Program implementation time: n/a years Start-up time: February, 1997 (day/month/year) 3 Table 5 Cont’d PROGRAM SUCCESS: Projects implemented Heat savings, Savings, thou. Savings, thou. GCal Rbl USD Demonstration project implemented in kindergarten 735 328 11.3 #12 Heat consumption metering and control at public - 3,000 100 buildings PROGRAM MONITORING: Was a local project implementation group created? yes no program is generally monitored by KEEC TARIFF DESIGN AND PAYMENT COLLECTION REFORM Was tariff design system amended? yes no Were new methods of billing and payments collection yes no implemented? PUBLIC SUBSIDIES RESTRUCTURING Were budgetary subsidies restructured? yes no Are budgetary subsidies saved channeled into yes no efficiency investments? SOCIAL EFFECT Creation of jobs: no ENERGY CONSERVATION FUND Was a municipal energy conservation fund created? yes no ADDITIONAL INFORMATION Rbl/GCal USD/GCal Heat tariff for public organizations 447 14.9 1.1. Major provisions of the agreement to set up energy efficiency revolving fund (signed by Kirovsk city administration and NEFCO in 1997) Responsibilities of Kirovsk city administration: Ensure implementation of a municipal energy efficiency program in Kirovsk; Select projects to include in the municipal program in cooperation with Norwegian Energy Efficiency Group (NGEE); Open a special energy efficiency account in a Russian commercial bank for the purposes of this Agreement; Transfer 80 percent of annual savings to the energy efficiency account until the loan is repaid, starting a year after the project completion date, but no later than two years after signing this Agreement; Provide NEFCO with all the necessary documentation and reports, including annual reports on energy savings and efficiency of implemented measures; Use financing provided by the Fund exclusively to accomplish tasks under this Agreement; Accomplish projects in compliance with the legislation, regulations, and standards in force. 4 NEFCO responsibilities: Incorporate the project in its energy efficiency program to provide a conditional grant; Provide NK 540 thousand to Kirovsk City Administration to implement pilot project in Kindergarten No. 12; Provide financing on interest-free terms. The rights of Kirovsk city administration: When the grant provided by the Fund in fully repaid, Kirovsk city administration may use the whole amount to re-invest in environmental or energy efficiency projects; Kirovsk city administration may make suggestions on how to use repaid funds to finance future joint projects with NEFCO. In this case, should NEFCO agree, a new Grant Agreement will be signed. 1.2. Work organization The project was developed by Kolsky Center for Energy Efficiency and Norwegian Energy Efficiency Group, who guarantee its quality. The Fund’s governing committee includes Head of Kirovsk city administration, a representative of NGEE (appointed by NEFCO), and Director of Kolsky Center for Energy Efficiency. Municipal budget has a special expense line, “Energy efficiency”, to ensure successful operation of the Fund. Part of allocated financing goes to the Fund, and the rest is provided to large municipal organizations, which sign contracts for energy efficiency projects implementation. 1.3. Decision-making in project financing Kolsky Center for Energy Efficiency proposes a number of energy efficiency measures for the following year. These proposals are discussed in the city administration, a plan of energy efficiency measures implementation is developed, and relevant financing is allocated. Municipal energy efficiency plan is provided to the Norwegian Energy Efficiency Group to see, which measures will be financed from the Fund. Then the city administration selects facilities, where it would like to implement energy efficiency measures in the first place. Kolsky Center for Energy Efficiency makes energy audits at the facilities where energy efficiency projects will be implemented. If external financing is planned for, relevant business plans are developed. Then these business plans are translated into English and submitted to NGEE. With the help of NGEE business plans are finalized and forwarded to NEFCO to make a decision on financing these projects. After NEFCO makes a decision to finance the project, a contract is signed between Kirovsk city administration and NEFCO to allocate funds and identify the way how to use them at each concrete project site. 1.4. Project monitoring Monitoring of energy consumption by facilities, where energy efficiency measures were implemented, is performed by a relevant municipal organization with the help of Kolsky Center for 5 Energy Efficiency. These data are controlled by the communal department, Kirovsk city administration. Because there are serious financial problems, any decision on allocation of funds, or payments for accomplished work, is made by Boris M. Propletin, Head of Kirovsk city administration. Motivation system in Kirovsk, at this point, is based on tough control of the city administration over accomplishment of laid down work and the level of energy consumption, and punishing managers at fault. 1.5. Activities of energy efficiency revolving fund (illustrated by the pilot project) Kirovsk Revolving Fund Troms fylke Norwegian NGEE suppliers Kindergarten#12 Energy Efficiency Project 1 350 000 Norw. Crowns NEFCO Annual Kirovsk City 500 000 crowns energy savings Administration + 150 000 crowns interest Other Sources of Financing Revolving Fund account savings New EE New EE ... New EE project project project 1.6. Projects financing (thou. USD) Table 6 shows financial sources, allocated financing, and costs of energy efficiency projects. 6 Table 6. Financing for energy efficiency projects from Kirovsk energy efficiency fund, thou. USD Investments Project Savings (annual) costs Total Free equipment City Projects NEFCO NGEE delivery and Administrati additional on sources Demo project – Kindergarten #12 58 35 71 16 180 145 11 (1997-1998) Purchase of 20 meters 5* 5 24** 100 (1998-1999) Project in municipal 116 100 216 232** - hospital (2000-2001) - Projects of 2001 34 34 34 111 Total 435 435 174 35 71 155 Shares of participants 40% 8% 16% 36% 100% *) Design and installation **) Including investments saved when first demo project implementing 1.7. Energy efficiency projects implementation The first demonstration project was implemented in Kindergarten No. 12 of Kirovsk city. The following energy efficiency measures were accomplished: Weatherization of doors and windows, installation of heat mirrors; Installation of a heat meter; Insulation of pipes in the basement; Installation of heat exchangers and circulation pumps; water heaters with heating and electric elements; automation of heating and ventilation systems to reduce indoor temperature at nighttime; Installation of balancing valves and thermostats; Installation of water efficient sanitary equipment in the kitchen; Installation of a water treatment system for the swimming pool;
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