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Energy Access & Affordability: Residential households of ARMENIA energy tariffs and prices; social safety net measures/programs; poverty characteristics,

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Presentation on theme: "Energy Access & Affordability: Residential households of ARMENIA energy tariffs and prices; social safety net measures/programs; poverty characteristics,"— Presentation transcript:

1 Energy Access & Affordability: Residential households of ARMENIA energy tariffs and prices; social safety net measures/programs; poverty characteristics, energy use and housing; poverty risks of increased energy bills. Astghine Pasoyan Program Manager Armenia – Municipal Network for Energy Efficiency

2 Summary Slide Housing: policy, status, social issues, cross cutting Heat and Electricity: Costs and Tariffs ASE Work in this Sector: Energy Efficiency Primary Barriers: Residential Energy Efficiency Addressing Barriers: - Technical-Economic, Institutional, Information, Financing Considerations & - Policy and Legal Reform Ongoing Research: Energy Efficiency & Urban Utility Affordability Study

3 Armenia: Housing Policy Legislation: 2002 National Assembly of Armenia adopted the Law on Management of Multi-apartment Buildings and new Law on Condominiums; The Civil Code; Government Decision N1625, 2002 on Mandatory Norms on Maintenance and Conservation of the Common Shared Property in Multi-apartment Buildings. Building Management Bodies (condominiums) Registered: In 2005, total of ~830 registered, 40-45% active

4 Status of Armenias Housing Sector Common Problems & Issues: Poor condition of common spaces (roofs, staircases, entrances and basements) Absence of centralized heating Low awareness and consciousness by residents of building conservation needs and opportunities Empty apartments Aging building stock Radically different levels of affluence among households

5 Social Features of Population: Poverty Reduction Strategy Program (PRSP) Year Poverty Level Extreme Poverty % no data %16.0 % Projected by PRSP %14.2 % %10.6 % %4.1 %

6 Social Features of Population: Alliance Survey Findings Out of 363 respondents - social condition of the residents surveyed in multi- apartment buildings in 4 cities of Armenia (Yerevan, Hrazdan, Charentsavan and Sevan): 49% of those surveyed were identified as poor based on their expenditure levels, presence of pensioners, and other indicators; 83% of the respondent families spent about 50% of their family income on food; 37% of respondents spent 50% or more on utility services; 45% of respondents have financial debts, and 98% have borrowed for basic survival needs; 20% of the respondents have family poverty benefit as a sole source of income; and 18.7% of the surveyed families were receiving some kind of social benefits, and only two of those families had employed members.

7 Cross Cutting Issues - Health Illness During the winter of , about 71% of urban multi- apartment households experienced illnesses due to under heated dwellings - over 14 % of population had colds of various origins; - over 60 % had influenza, etc. Indicators 2002 survey found that fuel combustion smoke exposure related health problems, such as upper respiratory diseases, headaches, sore eyes, swelling of extremities and blood circulation problems, are especially pronounced among poor households. - 3,467 annual life years are lost per 100,000 children under five life years lost per 100,000 women, due to indoor urban smoke exposure.

8 Other Cross Cutting Issues Safety: Deaths, injuries and damage to buildings caused by gas and CO poisonings, fires and explosions (in heating season at least 50 fatal cases registered). Education: Due to the lack of appropriate heating, many schools either do not function during the winter months (idle time in urban schools in 2004 was 1 month) or classes are held in cold (8 o C) or polluted classrooms. Environmental: The extensive use of wood for heating purposes contributes significantly to deforestation and has detrimental health implications particularly for the young and the old. Social: During the winter months, up to 50% of family expenditures are used for heating purposes.

9 Correlation Between Illness & Heat Availability Source: WB household survey 2005

10 N Category of Benefit in Recipient Households Average annual income (USD)* 1Family329 2Child413 3Disability459 4Orphans177 5War victims324 6War veterans527 7Unemployed- 8Religious groups169 9Public groups- Average Income of Families Receiving Social Benefits

11 Heating expenditures in a multi-apartment building (AMD) Number of rooms in apartment Without centralized heating With centralized heating Potential monthly savings from weatheri- zation* Electric heating Wood 1-room16,000-10,0003,500 2-room22,00018,00015,0004,000 3-room26,50024,00020,0004,500 4-room28,500-25,0005,000 * Based on experience from demonstration projects

12 Anticipated Price Changes On April 10, 2006, the gas price will be raised: - from 59,000AMD to 90,000AMD for under 1,000 m 3 consumers (from $56 to $110) - from $79.1 to $ for consumers of over 10,000 m 3 The rise in gas price in Armenia will cause at least 3 AMD increase in the price for electric power (Current day-time el. tariff is 25AMD, night-time –15AMD) - Armenias TPPs generate only 25% of energy generated in the country, - Hrazdan thermal-power plant (TPP) has applied to the Commission for revising the current prices for electric power, - The current day-time price for electric energy for Armenias population is AMD 25, and the night-time price is AMD 15, - Hrazdan TPP already applied for a tariff raise from AMD to AMD per 1 KW/h, Yerevan TPP and Electric Networks to follow

13 Other Factors Affecting Price Growing demand for energy carriers - Armenias demand for electric power increases by 4-5%, annually - Industrial gas demand is increasing 10% annually - Armenia may consume up to bln cubic meters of gas yearly in the future

14 ASE Work in this Sector: Energy Efficiency is Key Improve utility efficiency for residential and municipal consumers Promote building energy efficiency in low-income housing Conduct a household surveys on household (HH) heating needs and low-income household assistance preferences for heating rehabilitation investments Hold a workshops and focus group discussions with stakeholders to reveal preferences on low-income household assistance schemes for heating rehabilitation investments Propose a mechanism for providing grants to low-income Build consumer capacity for improved efficiency of energy use Leverage municipal funding for EE investments in vulnerable HHs Consequently, bring down investment and operating costs and loan burden on all households

15 Primary Barriers for Residential Energy Efficiency Financial barriers: Existing loan terms are not applicable for EE projects due to high commercial interests rates and short repayment periods Commercial financing is not available for EE projects Low bill collection/payment rate affects the cost-effectiveness of EE projects. Legal, regulatory, institutional, and political barriers: Absence of targeted heating social assistance schemes for low- income Fragmented/chaotic municipal efforts to subsidize or co-finance heating projects Lack of appropriate price formation policies for the communal services e.g. electricity, drinking water and sewage service, garbage removal, etc. Monopoly of energy suppliers.

16 Barriers ( continued ) Consumer barriers: Insufficient metering which leads to lack of awareness of energy cost and usage Lack of control over energy usage for some consumers. Information barriers: Lack of trust in mass media Information on EE options is unavailable Lack of information on success stories available to public.

17 Technical-Economic Considerations Techno-economic benefits of energy efficiency are obvious: both on supply and demand-side - Need to define the product, the benefit, the recipient and the responsible party A variety of experiences and diverse models available throughout the region Need to be accumulated and shared through networks of experts/organizations - a lot to be shared! - no single model fits all!

18 Institutional Issues Enforce market mechanisms to provide opportunity to housing owners/renters to choose utility service providers Eliminate subsidies and calibrate utility tariffs so as not to worsen payment discipline. Combine with targeted social assistance Utilize the power of partnerships: Municipalities and public groups (NGOs), public/private, ESCOs, etc. Strengthen the role of the home OWNERS and RECIPIENTS of utility services

19 Information Barriers & Recommendations Low awareness of the population on: - low cost energy efficiency measures - available financing mechanisms for EE measures and housing renovation projects Recommendation: - Organize support, training and information flow and advisory services assisting the residents on (1) legal, (2) economic, (3) financial, and (4) technical issues, and (5) best practices of project design, investment and business planning, fund-raising, energy- and project management, operation and repayment. - Strengthen the capacity of the housing sector parties to participate in the housing market - Encourage adequate media coverage of above issues

20 Financing Mechanisms Grants (phase out to allow for market acceleration, and use just to trigger the market forces) Housing renovation/modernization loans - ASE works on micro building energy efficiency loan mechanism in Armenia Municipal funds (linked to municipal official awareness of benefits of such investments Energy efficiency revolving funds Social/subsidy funds State Housing Development, Repair and Maintenance funds Mortgage lending Credits from commercial banks Leasing Vendor credits Guarantee funds Carbon finance Funds of construction companies, etc. While targeting EE Assistance to Vulnerable Households

21 Policy Recommendations to Address Legal Gaps Fill legal gaps in ownership, management and assignment of responsibilities in multi-apartment housing, utility services and building maintenance entities Legislative, technical-normative developments needed to: Updated technical building codes Building energy passportization Appliance standards and labelling to affect property market Energy auditing procedures and licensing Energy services Legal framework allowing borrowing by housing associations and housing maintenance companies Legal framework enforcing liabilities and minimizing risks for loan residential EE and housing renovation loan repayment

22 Innovative Policy Design and Reform Law on Energy Saving and Renewable Energy Design State Energy Efficiency and Renewable Energy Fund Development of EE Ordinances Elaboration of National Energy Efficiency Program

23 Energy Efficiency & Urban Utility Affordability Study Seeking to answer similar questions in the region Assess impact that reforms and restructuring in essential utility services will have on the affordability of heat, electricity, water & wastewater. Present the policy case for energy efficiency vs. traditional approaches Identify policy, legal, institutional, commercial, and other impediments to using energy efficiency to provide an energy social safety net among vulnerable households. Link the Energy Community for Southeast Europe and energy efficiency Reach a broad audience: Governments, NGOs, development banks and financiers Document utility affordability problems and residential efficiency experiences

24 For More Information Astghine Pasoyan Alliance to Save Energy

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