# Presentation: 184178

## Demand-Side Management Strategic Plan for Jiangsu Province, China: Economic, Electric and Environmental Returns from an End-Use Efficiency Investment Portfolio in the Jiangsu Power Sector

**Barbara Finamore**
**Natural Resources Defense Council**
**John Plunkett**
**Green Energy Economics Group, Inc.**
**ACEEE Summer Study**
**August 14, 2006**

**www.nrdc.org**
**www.chinacleanenergy.org**

## Overview

**Overview**

- Jiangsu Province is China’s industrial heartland
- Experiencing explosive economic growth
- Under China’s 11th 5-Year Plan (2006-2010):
- Jiangsu expecting continued rapid annual growth in electricity requirements
- 7.4% in electric energy
- 8.5% in peak demand
- Coal-fired generation is predominant source of new supply

## Overview

**Overview**

- National Development and Reform Commission (NDRC) goal is to reduce energy intensity by 20% by 2010 (Energy consumption per GDP)
- Jiangsu one of two provinces developing Efficiency Power Plants (EPP)
- Cooperative efforts of the Natural Resources Defense Council (NRDC), the Jiangsu Economic and Trade Commission (ETC), State Power Corporation DSM Instruction Center, Energy Foundation, the China-U.S. Energy Efficiency Alliance and The Regulatory Assistance Project
- Analysis of economically achievable potential in key markets begun in 2004, completed then updated end of 2005

## Energy Efficiency ResourceCriteria for Initial Markets

- Opportunities offering the largest potential savings (such as industrial motor systems improvement)
- Opportunities that are particularly time sensitive, and if not captured would be lost for a long time (such as new building construction)
- Markets and end-uses that are driving Eastern China’s unrelenting load growth (such as commercial and residential new construction, and new industrial loads)
- Technologies and markets that have high value in terms of system peak demand reductions (such as commercial and residential cooling and lighting)
- Markets where China has built some momentum and created market transformation opportunities through the use of standards and labeling (such as residential lighting and appliances)
- Markets where DSM experience elsewhere has demonstrated proven strategies for success

##  Markets addressed by DSM Strategic Plan 

- Industrial efficiency opportunities (all end-uses including motor-drive systems, non-motor process, and building end uses)
- Industrial and commercial transformers
- Residential and commercial new construction
- Existing residential and commercial building cooling, heating and lighting
- Residential appliances

**Notes:**
We saw the disastrous effects of electricity shortages in 2000-2001.
.

## Programs considered two distinct types of market transactions 

- “Market-driven” investments involve upgrading efficiency choices in transactions already underway as part of normal market events
- Discretionary “retrofits” involving the early retirement of existing equipment and systems before they would otherwise naturally be replaced, purely to capture efficiency benefits

**Notes:**

Tech’s are ALREADY cost effective

## Recommended Programs 

- Industrial Motor Drive Systems
- Industrial Non-Motor Efficiency
- Transformers
- Residential and Commercial Market-Driven Cooling and Heating
- Commercial Market-Driven Lighting
- Commercial Comprehensive New Construction
- Residential and Commercial Cooling, Heating and Lighting Retrofit
- Residential Lighting and Appliances

**Notes:**
We saw the disastrous effects of electricity shortages in 2000-2001.
.

## Jiangsu Program Impacts

## Jiangsu Portfolio Cumulative Annual Energy and Peak Impact 

## Jiangsu Program Cost Effectiveness

## Jiangsu Program Costs 

## Jiangsu Environmental Benefits 

## Conclusions from Portfolio Analysis 

- Full-scale implementation of entire portfolio in Jiangsu over 10 years would
- Offset just over 10 percent of forecast growth in electric energy requirements
- Help maintain Jiangsu’s global competitive position in the face of rising labor, energy, and environmental costs
- Alleviate huge pollution problems associated with expansion of coal-fired generation

**Notes:**
We saw the disastrous effects of electricity shortages in 2000-2001.
.

## Essential Elements for DSM Implementation 

- The DSM mechanism should be an integral part of a power sector reform plan
- The funding mechanism must be sustainable over the long term
- The funding mechanism and level should place efficiency and conventional power supply on an equal footing
- A funding mechanism should remove disincentives for utilities to purchase efficiency
- The DSM organizational structure should develop and enhance natural market mechanisms for efficiency service delivery capability
- The DSM organizational structure should be free of disincentives to the aggressive pursuit of efficiency resources
- The DSM organizational structure should be capable of serving all sectors and markets throughout the province or municipality

**Notes:**
We saw the disastrous effects of electricity shortages in 2000-2001.
.

## Types of DSM Funding 

- EPP expenditures recovered as part of cost of service, or
- Systems Benefit Charge (SBC), AND
- Clean Development Mechanism (CDM) under Kyoto Protocols
- Sale of Certified Emission Reductions (CERs) could offset major portion of program implementation costs

**Notes:**
We saw the disastrous effects of electricity shortages in 2000-2001.
.

## DSM Organizational Structure 

- OPTIONS UNDER CONSIDERATION
- Utility implementation
- Government implementation
- Use of Energy Service Companies (ESCOs)

**Notes:**
We saw the disastrous effects of electricity shortages in 2000-2001.
.

## Next Steps 

- Electric power sector reform that allows for appropriate economic choices between efficiency and conventional electric supply
- A permanent and adequate efficiency services funding mechanism
- The development and expansion of an energy service infrastructure
- First-stage implementation of an initial set of programs

**Notes:**
We saw the disastrous effects of electricity shortages in 2000-2001.
.

## Current and Planned Activities

- ETC has earmarked 100 MM RMB (US$12 million) annually to fund first-stage implementation of industrial motor/drive retrofits and commercial cooling/lighting retrofits
- ETC has just completed independent analysis confirming  findings of large, economical industrial efficiency potential
- Energy Foundation has funded NRDC consultants to work with ETC on implementation planning for first-stage retrofit projects
- Currently assisting with technical and economic assessment, project management of first-round projects
- NRDC and RAP have begun discussions with of possible rate adjustment mechanism to fund program costs, recover lost utility revenue, and provide for utility performance incentive
- Will assist with program design and planning for full-scale lost-opportunity programs

**Notes:**
We saw the disastrous effects of electricity shortages in 2000-2001.
.