Energy Efficient Procurement – Examples and Lessons

Learned

Paul SchwengelsEnvironmental Protection Agency

Workshop on Public Sector Energy Efficiency ProcurementMumbai, India

September 20, 2005

Why Energy Efficiency Procurement In the Public Sector?

Situation • Government is biggest buyer of energy-using

products • Product choices not driven by life cycle cost • Results in significant energy waste

• Successful international program models and technology specifications available

Program Examples: Buying Energy-Efficient Products

• China– phased procurement program tied to energy labels

• South Korea – requirements for 55 product types• Japan – “Law Promoting Green Purchasing” (2000)

for office equip., appliances, A/C, lighting• Australia – government purchasing of Energy Star

and low-standby products, “Managing Energy in Local Govt.,” ICLEI Green Purchasing

• Mexico – ICLEI municipal purchasing• U.S. – Federal purchasing (FEMP); State/local

Energy Star® purchasing

Public Procurement Opportunity

• Lower government energy use and operating costs quickly reduces capacity shortages, local pollution and

greenhouse gases

• Opportunity to lead the rest of the market

• Market transformation response to government demand volume + competition lower prices

• Pull the market for energy efficient products

RD&D

Government Leadership HelpsTransform the Market

Original Distribution

Efficiency

Nu

mb

er

of

Un

its

New Distribution

“Market-pull”: Information, Rebates,

Public Sector Leadership

Efficiency standards

India/Mumbai Situation

• Electricity Shortages – pressure to reduce government energy use

• Government building stock Many have no central HVAC purchased equipment – lighting, fans, room AC,

etc., may be largest energy uses • Opportunity to save energy

No current energy performance specs Variations in equipment energy use, quality and

cost• BEE is moving forward with national labeling

and standards for equipment

US Federal Energy Management Program

• U.S. Federal Government is the nation’s single largest user of energy.

• $9.7 billion Federal annual energy bill

– 500,000 facilities at 8,000 locations nationwide

– Vehicles & Equipment: $5.0 billion

• Estimated savings $1.4 billion to date

– 2003 data show reduced energy use by 25%;

Building Retrofits

New Construction

Partnerships++

EquipmentProcurement

Management, Maintenance,& Operations

Utility & Load

Management

FEMP’s Portfolio of Services

FinancingTechnical

AssistanceOutreachPolicy

Targeted Opportunities: Customer NeedsFEMP Program Elements

FEMP - Procurement

• Energy Policy Act of 1992 --“guidelines to encourage acquisition and use by all federal agencies of energy-efficient products.”

• The Federal government spends about $10 billion annually on energy-using products and services for its buildings, operations, and transportation.

• Energy-efficient products save 10%-50% Energy Star and FEMP purchasing criteria can save US$ 1

billion/ year (all public agencies including state, local) Reduce greenhouse gases: 4+ million tons C/yr.

Setting Priorities for Government Purchasing

• Significant energy use• Large government purchasing volume• Potential energy/cost savings

range of efficiencies (lowest to highest)

• Energy testing and rating method• Product efficiency data available

product lists energy ratings/labels “quality-mark” (e.g., Energy Star™)

• Several suppliers price, availability, domestic sources (?)

• Consistency with other programs

FEMP Product Purchasing Recommendations

• 45 energy-efficient product purchasing recommendations, ranging from large chillers and boilers to exit signs and fluorescent ballasts Coordination with ENERGY STAR®

program Low Standby Power Products List Rating systems based on significant DOE

Research

China - Government Procurement Program

• Managed by NDRC and Min of Finance Many other government Agencies involved

• Implemented by China Certification Center for Energy Conservation Products (CECP)

• Technical support from PEPS, USEPA, Energy Foundation, and other international sponsors

Background

• Recognized as a priority during “Energy Conservation Week” 2001

• Survey of energy consumption of products and equipment, procurement procedures 3 Central govt and 12 local Agencies Representative range of scale, location, level of

development, type of Agency

• Estimated government energy use 5% of total, 13% government finance budget

Policy

Issued Dec 2004 – Phased implementation January 2005 – central government offices

in Beijing and provincial facilities in each provincial capitol.

By the end of 2006 – • all levels of government including central,

provincial, and local. • “government” sector also includes

schools and hospitals as well as offices

Products

• Initial list includes energy and water saving equipment already covered by CECP’s endorsement label

• Refrigerators• Room Air Conditioners• Double Capped Fluorescents for General Lighting

Service• Self-ballasted Fluorescents for General Lighting Service• Televisions• Computers• Printers• Toilets• Faucets

Expected Results

• Preliminary analysis by Lawrence Berkeley National Laboratory

• “Technical potential” assumes successful implementation of current requirements

• 2015 Annual savings 4.6 TWh electricity 2.9 Billion Yuan energy savings 4 Million Metric Tonnes CO2

Annual Energy Savings (kWh)

Linear Fluorescents

67%

Refrigerators1%

AC8%

Printers1%

PCs2% Televisions

0%

CFLs21%

Lessons Learned: Purchasing Programs

1) Need clear policy and regulations/laws communicated repeatedly to buyers (and sellers)

2) Make the efficient product the easiest to buy: efficiency as the default choice use first-cost to choose among efficient products

3) Keep the guidance simple: levels, lists, labels !4) Coordinate purchasing with other programs:

(Product testing/ labels, construction spec’s, rebates, tax credits – and “green purchasing”)

5) Seek active private sector involvement Manufacturers, vendors, ESCOs, architects Clear, consistent efficiency requirements (lead-time

when updating)

Life-Cycle Cost Barriers

• Information (energy savings vs price)• Staff time, effort, expertise• Procurement rules

(or “perceived” rules, common practice!)• Budget constraints• Safest choices:

replace-in-kind or lowest-price

• NIMB (= “Not In My Budget”!)

Life-Cycle Cost Solutions

1) Clear information, easy to find 2) Make $ savings more obvious;

simplify LCC calculations3) Lower the cost of efficient products:

volume + competition common technical specs

4) Finance the first-cost; capitalize future savings

5) Reverse the burden of proof!

Energy-Efficient Purchasingand Energy Labels

Labels make it easier for buyers to select efficient products

Government purchasing encourages private sector support for energy labels

(adds value to labeled products!)

Thank You!

Paul Schwengels

US Environmental Protection Agency

schwengels.paul@epa.gov