Transcript 9 - R2e2

“Business Plan for the improvement of competence of
industries producing energy efficient building materials for
Armenia”, AM 31
Building Materials and Buildings’
Energy Efficiency in EU Countries
Thomas Filippou, Stavros Mantzanakis, Artak Ter-Torosyan
Energy Engineer MSc.
MBA, PhD cand.
Environmental Engineer , PhD
presented by
INOGATE-SEMISE
September 2011
1
Outline of presentation
1. Introduction
2. SWOT analysis
3. Strategic Recommendations
4. Market projections - Scenarios
5. With a few words
2
1. Introduction
• At present the sector in Armenia producing energy efficient (EE)
materials for buildings, is smaller than the national needs.
• The aim of this project is to assess the feasibility of encouraging
the improvement of this sector
• Objectives of the study:
 To perform a market SWOT analysis;
 Market short projections and long term trends;
 To develop some strategy recommendations of the EE buildings
materials;
• Tools in contacting the study:
 Primary research
Secondary research
 Methodology
3
Strengths
2.
SWOT Analysis
Weight
Of EE materials Market
Significance
(1 less, 10 more)
Total Rate
2. Educated, experienced, with tacit
knowledge entrepreneurs
25%
7
1.8
5. Production capacity could cope with
immediate demand
15%
8
1.2
3. Young – educated people step in & try to
modernize family businesses
25%
6
1.5
4. International institutes finance EE
activities in the market
15%
9
1.4
1. Government is emphasizing in EE
activities
20%
10
2.0
4
2. SWOT Analysis
Weight
Significance
(1 less, 10 more)
5. Lack of financial resources, expensive
financing
10%
7
1. Lack of certification capacity: Materials
are rarely certified or labelled for thermal
quality, while imported lack labels or are
labelled inconsistently.
20%
Weaknesses
of EE materials Market
Total
Rate
0,7
8
1,6
4. No association
10%
7
0,7
4. Small market :the relatively small number of
materials in the market
10%
6. Old machinery in many cases
5%
7
0,7
8
0,4
3. No R&D activity
2. Absence of EE culture: Lack knowledge
and willingness of housing owners, planners,
architects, operators in adopting ee practices;
2. No or little control of construction laws
from the government - under staff departments
15%
8
1,2
10
1,5
10
1,5
15%
15%
5
2. SWOT Analysis
Opportunities
Importance
(1 low - 10 high)
Economy
Depends a lot on construction sector - Economy has managed to grow after the crisis - High percentage of industrial
GDP & Educated industrial work force (industrial culture)
7
Energy / Electricity - Gas:
Dependency on oil & gas (importing almost 2/3 of consumption) - Prices of Gas & Electricity have gone up the last
decade with a tendency to rise more - There are no price subsidies any more - Both markets are monopolies – prices
are not affected by competition
9
Construction market:
Construction is a large % of local GDP - A great number of apartments with bad insulation - Possibility of raise the
comfort level - Severe winters along with hot summers
8
EE material sector
exports potential (fe to Georgia),
increase of sales in the country, in old & new buildings, as well as in industry, public buildings, new houses in
earthquake area, etc
New products in buildings as well as near sectors fe plastic
Thermal insulation is only a fraction in the cost of whole building,
New customer – new “green” concept
New laws regarding buildings and materials
6
9
5
7
8
9
Financial sector:
A number of eeducated & experienced personnel in banks and other organizations - Armsef’s budget and services for
EE activities mainly in industrial projects (construction, manufacturing, commercial etc), and less in residential areas
and buildings - commercial projects with stable and sound effectiveness could be used as sound promotional projects People understand the win – win situation when invest in EE
8
Government
Government commits to promote (EE) and has vastly improved the economic EE use through improved regulation
of energy utilities (e.g. highly subsidized energy tariffs have been largely removed in Armenia, adopts a time-bound
EE action plan etc).
9
6
2. SWOT Analysis
Risks
Importance
& Possibility
Economy:
Continuing financial crisis will cause more unemployment and make people focus on prices in buying
decisions
High fiscal deficits and High interest rates
9
Energy
Producing energy from nuclear and hydro plants (low cost – low price)
7
Construction market:
A big % of empty apartments in multi apartment buildings
Most land lords don’t stay in old apartments
Lack of management of building maintenance
Relatively families with small income live in old apartments
8
EE material sector
A war possibility
Corruption
Legislation is not clear
5
7
9
Financial sector
No credit history of families will continue due to crisis
Little knowledge and experience of lending for EE activities from the banks will continue due to fear of
bad credit
High interest rates will increase the total construction costs
Weak economy will decrease possibilities of EE invest in commercial and residential buildings
Financial crisis will continue and affect the economy, resulting in pure construction and tighter credit
policies, higher rate etc
9
Government
Existing legal framework needs to be implemented and enforced (e.g. thermal quality building standards)
immediatle
9
7
2. SWOT Analysis
8
3. Strategic Recommendations
The strategic axes that could help build a stronger market are:
1. Ecological and environmental product design
2. Innovation and R&D potential
3. Mining & Export potential
4. Awareness
5. Regulation: building codes / certified materials
6. Initiating a private - public Armenian cluster
• Having a very small, weak enough sector, one of the most important policy – tool (besides law
enforcement) would have been to initiate a PP cluster, so all infrastructure, capital, expertise,
knowledge etc to develop at a synergetic network, that could have immediate results.
• Although it’s methodologically correct to have the private sector lead such action, for the
first steps that role could be played by a public organization, until private sector gets
stronger. This is a very common and effective tool in countries with small or medium size
companies, with of course an increased level of difficulty.
9
3. Strategic Recommendations
Initiating a private - public Armenian cluster
Cluster’s main goals could be:
1. Tackle “First buyer” challenges
2. Increase the need for performance verification & Develop pilot projects to
demonstrate building best-practice
3. Help enforce laws dealing with construction, buildings, certification etc
4. R&D networking and investment
5. Promote ΕΕ and aware people
6. Provision of studies for financial incentives, tax incentives in EE,
innovative financial mechanisms (Venture capital, revolving funds etc)
10
3. Strategic Recommendations
Initiating a private - public Armenian cluster
Universities
Lightin
g
Energy
producer
s
Cemen
Insulatio
t
n
Industry
IT
Education
Networking
Promotion
Block
cement
R&D
Government
& other Public
organizations
R&D
Modeling,
simulation
Incubation
Banks
Internation
al donors
R2E2
Funding
organization
s
Architect
s
Testing
Service
providers
PP Armenian
EE Cluster
ESCO’
s
Testing
Constructio
n
Demonstration
VC’s
Associations
End
Customers
Union
Building
union
Media,
Press, TV
etc
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3. Strategic Recommendations
Cluster’s first low budget activities
Workshops and other targeted events to construction companies to
show them specific ways to use EE materials with better results
Creating a forum where the main discussion will be the difficulties in
law enforcement and solutions
Creating contest in fe the best low or zero energy consuming building
or contests between fe public buildings that consume less energy
Develop easy to read leaflets on introduction and explanation of EE
benefits for different targets
Educate engineers and architects in universities with presentations
12
1
Scenario 2
4. Market Scenario
projections
- Scenarios
a/a
Assumption
1
Name
Renovation
with
only
thermal
insulation and some repair work
Renovation with thermal insulation,
windows replacement and some repair
work
2
Buildings
Old and new
Old and new
2.1
Old buildings
430.000 total apartments in multi
apartment buildings
430.000 total apartments
apartment buildings
2.2
New buildings
1.000 new apartments per year
1.000 new apartments per year
3
Area
Mainly urban areas in the whole
country
Mainly urban areas in the whole country
4
Thermal
insulation
materials
internally applied solution (materials
like perlite, polystyrene, mineral wool
etc, coatings, painting etc)
internally applied solution (materials
like perlite, polystyrene, mineral wool
etc, coatings, painting etc)
5
Windows
6
Finance
7
Interest rate
8
Target market
in
multi
-
double glazed windows with thermal
break
Subsidies for old apartments
Subsidies for old apartments
12,5%
12,5%
Only multi buildings, Potential: Public,
Industry & commercial buildings, roof
insulation, increase in air-conditions
sales , other uses fe pipes etc
Only multi buildings, Potential: Public,
Industry & commercial buildings, roof
insulation, increase in air-conditions
sales , other uses fe pipes etc
13
a/a
Assumptions
Data
4. Market projections – Scenario
1
80
Data
notes
m2/aprt
1
Average space per apartment, new or old
2
Average thermal insulation coverage - inside
3
Insulation material cost
from 8
to 12
€/m2
4
Labor and other costs
from 8
to 12
€/m2
5
% of old apartments that will participate / % of all new apartments that
will be insulated
15% / 100%
number of renovated old apartments / number of new apartments
64.500 / 1.000
6
64
m2/aprt
7
Utility - life time of insulation materials, in years
30
8
yearly energy use per old apartment per m2 in kwh
320
9
average annual energy /m2 in a new 9th building in kwh
165
10
percentage for heat &cold energy use
60%
11
average cost per kwh in €
0,08
12
total energy cost for heat/ cold per year per old apartment in ADRM
632.832
1.288,00 €
13
total energy for heat/cold cost per year per new apartment in ADRM
326.304
633,60 €
14
Increase in yearly energy cost
5% for years 2- 5
10% until 30th year
Save energy from solution
20% for the first
10 years
15% for the
next 10 after that
15
And 10%
for
the
rest
14
a/
a
4. Market projections – Scenario 1
Scenario 1 main findings
€ From
€ To
1.024,00
1.536,00
1
Total cost per apartment
2
Total capital invested (total cost)
67.072.000,00
100.608.000,00
3
Total insulation materials market created
33.536.000,00
50.304.000,00
4
Total savings per old apartment in 30 years
(pv)
3.239,19
3.239,19
5
IRR (internal rate of return)
30%
22%
6
pay back period in years
5/7
7/9
7
Total savings in 30 years (pv)
210.597.703,86
210.597.703,86
Total net present Value
143.525.703,86
109.989.703,86
8
15
4.Assumptions
Market projections
– Scenario
2
Data
Data
a/
a
1
Average space per apartment, new or old / Average
thermal insulation coverage – inside / Insulation
material cost / Labor and other costs / % of old
apartments that will participate / % of all new
apartments that will be insulated / number of renovated
old apartments / number of new apartments / Utility life time of insulation materials, in years / yearly
energy use per old apartment per m2 in kwh / average
annual energy /m2 in a new 9th building in kwh /
percentage for heat & cold energy use / average cost
per kwh in € / Total energy cost for heat and cold per
year per old & new apartment / Save of energy from
thermal insulation solution / Increase in yearly energy
cost
notes
Same as
scenario 1
2
Save of energy from windows
10%
3
Average windows replacement cost
from 150
to 250
€ /m2
4
Labor cost
from 10
to 25
€/m2
5
Other costs
from 10
to 15
€/m2
6
Average windows coverage
16
m2/aprt
16
4. Market projections – Scenario 2
a/a
Scenario 2 main findings
€ From
€ To
3.824,00
6.176,00
1
Total cost per apartment
2
Total capital invested (total cost)
250.472.000,00
404.528.000,00
3
Total insulation materials market
created
190.736.000,00
312.304.000,00
Total savings per old apartment
in 30 years (pv)
4.858,78
4
5
IRR (internal rate of return)
15%
10%
6
pay back period in years
8/13
11/18
7
Total savings in 30 years (pv)
315.896.555,79
315.896.555,79
8
Total net present Value
65.424.555,79
-88.631.444,21
17
5. With a few words
I. Regulation enforcement
II.Cluster / network creation
III. Awareness
18