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Overestimation of actual savings in supplier obligation schemes

Panel: 7. Monitoring and evaluation

This is a peer-reviewed paper.

Author:
Simon Moser, Energy Institute at the Johannes Kepler University Linz, Austria

Abstract

The Energy Services Directive 2006/32/EC proposes white certificates or negotiated agreements of the same value as a policy instrument to increase energy efficiency. Recently, a political agreement on the draft Energy Efficiency Directive between the European Parliament and the Council has been reached. Supplier obligations schemes are already implemented in some European countries. The designs of these obligation schemes differ significantly. An evaluation was conducted by Mundaca and Neij (2007) and the latest comprehensive report was published by Bertoldi et al. (2010).

In most of the existing European schemes methods of measurement are arbitrary, i.e. parties implementing energy efficiency improvement (EEI) measures may use, first and foremost, either a standardised/deemed or a measuring/monitoring approach. This paper looks at the bargaining power of suppliers and the incentives they underlie in connection with the definition and the application of standardised saving values. Methods applied include simple mathematics and assumptions based on literature review and expert interviews conducted in order to evaluate existing European supplier obligation schemes. Moreover, the total effectiveness of supplier obligation schemes in general is assessed based on a stage-to-stage model comparing the individual steps from policy objectives to policy outcomes.

It is argued that, in practice, real savings are probably smaller than calculated savings (overestimation of actual savings) although the applied methods of measurement are eligible and enforced in the obligation scheme. Interviews suggest that the overestimation is tolerated in order to minimise administration costs. Thus, other options of compensation are proposed.

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