Final Review of the Energy Efficiency in Building Sector Project

Report Cover Image
Evaluation Plan:
2017-2023, Iran
Evaluation Type:
Final Project
Planned End Date:
06/2022
Completion Date:
03/2022
Status:
Completed
Management Response:
Yes
Evaluation Budget(US $):
35,000

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Title Final Review of the Energy Efficiency in Building Sector Project
Atlas Project Number: 00063735
Evaluation Plan: 2017-2023, Iran
Evaluation Type: Final Project
Status: Completed
Completion Date: 03/2022
Planned End Date: 06/2022
Management Response: Yes
Focus Area:
  • 1. Poverty
  • 2. Others
Corporate Outcome and Output (UNDP Strategic Plan 2018-2021)
  • 1. Output 2.1.1 Low emission and climate resilient objectives addressed in national, sub-national and sectoral development plans and policies to promote economic diversification and green growth
SDG Goal
  • Goal 13. Take urgent action to combat climate change and its impacts
SDG Target
  • 13.2 Integrate climate change measures into national policies, strategies and planning
Evaluation Budget(US $): 35,000
Source of Funding:
Evaluation Expenditure(US $): 35,000
Joint Programme: No
Joint Evaluation: No
Evaluation Team members:
Name Title Nationality
Dalibor Kysela Lead International Evaluator
Ali Arvahi National Evaluator
GEF Evaluation: Yes
GEF Project Title: Policy Reforms and Market Transformation of the Energy Efficient Buildings Sector of the I.R. Iran
Evaluation Type: Terminal Evaluation
Focal Area: Climate Change
Project Type: FSP
GEF Phase: GEF-4
GEF Project ID: 3800
PIMS Number: 4018
Key Stakeholders:
Countries: IRAN (ISLAMIC REPUBLIC OF)
Lessons
1.

The National Consultant visited seven pilot projects that included residential, governmental, educational, economical, low energy buildings and a disaster management site. The following lessons resulted from the visit of the pilots and interviews with their representatives.

The actual savings in the governmental building pilots can be higher, as the cooling and heating smart control system were bypassed because of staffs’ claim, provide services for managers and guards in bedding time, low knowledge on EE, energy cost paid by the government and Covid-19 protocols. It is advisable to develop the capacity of governmental staff in advance of the demonstration projects and deploy different EE measurements for the permanent and temporary spaces in the pilot buildings.

The EE and RE measures deployed under the project provided modest energy savings up to 25 % due to the limited budget and time as well as to ESCOs obligations to implement those permitted EE/RE technologies as reflected in their contracts. As a result, demonstration of more effective and modern technologies capable of reductions in the energy consumptions more than above rate was not possible. Flexible contracting with ESCOs combined with documenting the findings from the pilot project could bring more cost-effective EE and RE solutions with participation of governmental organizations, ESCOs, beneficiaries, knowledge based companies and start-ups.

The high upfront cost of deployment of EE and RE technologies is definitely an issue worth of consideration, in particular for owners of residential buildings who cannot afford to pay such costs. Moreover, developers of huge buildings believed much more investment on low energy buildings is not profitable at the current Iran market due to lack of incentives, inadequate supplier knowledge and low trust of customers. This issue could be resolved only by enhancing the incentives through allocation of the subsidies to the EE/RE equipment and technologies instead of energy consumption. Creation of a building valuation system with inclusion of low energy buildings in higher value levels would inform building developers about the associated benefits and raise public awareness.

Powerhouse supervisors were extremely resistant to deployment of EE measures and easily discouraged the building managers due to the lack of knowledge/ skills/ trust and also concerns about investment reimbursements and their job security. Training events on energy efficiency for building managers and power-house supervisors is therefore important part of such initiatives and participation in such training should be considered for issuance of work permits for building managers and powerhouse supervisors.

The share-based business model motivated residential building owners to make financial contributions and thus facilitated the deployment of energy efficiency measures and technologies in the buildings. However, implementation of the model revealed risks of financial losses for ESCOs due to the devaluation of national currency, increased inflation rate, economic insecurity, and delayed or missing reimbursement of the building owners’ portions to the ESCOs. If possible, modification of the share-based business model should be considered, e.g. through purchase by the Government of the saved energy from ESCOs with the real energy prices through the energy efficiency and environment market (EEEM).

The pilot projects showed challenges for ESCOs to find skilful technicians and support staff. This appears to be a serious weakness and barrier to replication and upscaling of the pilot projects that has to be addressed by continuation of the EEEB project training programme by all relevant stakeholders (in particular INSO, IFCO, Municipality of Tehran, ICEO, BHRC, TVTO, Iran Association of ESCO, EE laboratories of Amir Kabir and Sharif Universities for diverse target groups.

Deployment of solar water heater systems and on-grid/off-gird solar photovoltaic systems in the eight Disaster Management Sites was not completed due to the limited time, unsuitable roof material for installation of solar PV panels, time-consuming procurement and importing processes, as well as complicated procedures for getting approval by the Iranian Electricity Distribution Company. Purchasing the same or similar equipment from the Iran market and deploying a hybrid system instead of separate off-grid and on-grid would shorten the time necessary for deployment of the EE/RE installations.

Discussions with the EEEB pilot experts and participating ESCOs identified the cost of EE technologies and lack of information, skills, awareness, and trust of building owners as the main challenges in the development of the pilots. The visited owners of the pilot buildings expressed their satisfaction with the energy savings and cost reductions. Smooth management, easier troubleshooting by the monitoring web-based software, possibility to simply oversee the powerhouses’ staff performance, better maintenance and reduction of periodic services and costs were amongst the benefits cited by the visited building owners. Thus, reforming IR policies on EE subsidies and intensives and developing the capacity of all EE players and public seems to be essential.


Findings
Recommendations
1

The Government of Iran should consider institutionalisation of the EEEB Project Steering Committee and its continued functioning after the operational closure of the project

2

The Government of Iran and the Tehran Municipality should ensure necessary human and financial resources are provided for enforcement of the revised Article 19 and standards

3

UNDP CO should assist the GoI to identify multilateral and/or bilateral funding sources to finance provision of further international expertise on implementation of technologies for energy efficiency in buildings

4

The GoI should ensure on-line connection and uploading of data on electricity and gas consumption in buildings that are in possession of organisations belonging to the Ministry of Petroleum and the Ministry of Power

5

UNDP CO  in cooperation with the GoI should ensure continuation of the M&V activities in the pilot buildings after the project operational closure

6

The UNDP CO and GoI should ensure resources for continued training programmes of civil engineers, builders, and municipality inspectors so that they can effectively implement and enforce the energy efficiency regulations and standards throughout the country.

7

The GoI should consider developing a system of incentives for participation of ESCOs in EE projects, e.g. establishment of a Help Desk for provision of information and advice to building owners on contracting ESCOs, such as list of qualified ESCO companies for M&V of EE measures in buildings with contact details and technical advice on rules of energy performance contracting

8

The GoI should address several barriers related to ESCOs, including certification and selection of ESCOs and mainstreaming of approval of legal documents for implementation of EE measures through ESCOs. It should also explore possibilities for establishment of a Super ESCO for EE in public buildings.

9

The Government should continue public awareness campaign for energy efficient buildings using the channels of delivery established under the project. It should also consider establishment of a publicly accessible repository of all relevant documents and knowledge products resulting from the project

10

For preparation of future projects on EE in buildings, the UNDP project development teams should carefully consider development of consistent sets of indicators and their targets compliant with the SMART criteria.

11

The project team should finalize the exit strategy and submit it to the Government for further consideration and planning of post-project activities

12

The GoI should accelerate implementation of the adopted Energy Efficiency & Environment Market (EEEM) mechanism with special emphasis on removal of barriers to participation in the EEEM scheme and facilitation of coordination between different players in the energy efficiency market

1. Recommendation:

The Government of Iran should consider institutionalisation of the EEEB Project Steering Committee and its continued functioning after the operational closure of the project

Management Response: [Added: 2022/06/18] [Last Updated: 2022/06/19]

The recommendation is well noted and the Government of Iran has taken up this suggestion.

Key Actions:

Key Action Responsible DueDate Status Comments Documents
To promote and encourage the Government to have a mechanism for inter-sectoral coordination and cooperation over energy efficiency.
[Added: 2022/06/19]
The project team 2022/03 Completed Required action has been taken and the Government is having its inter-sectoral mechanism however, it may not meet as regular as it was during project implementation.
2. Recommendation:

The Government of Iran and the Tehran Municipality should ensure necessary human and financial resources are provided for enforcement of the revised Article 19 and standards

Management Response: [Added: 2022/06/18] [Last Updated: 2022/06/19]

After ratification of the 4th revision of conservation building code (code 19 of building national regulations), the checklist for practical implementation of the code 19 has been developed by the associated committee - within the Municipality of Tehran - which will facilitate enforcement of the code 19.

Key Actions:

Key Action Responsible DueDate Status Comments Documents
After ratification of the 4th revision of conservation building code (code 19 of building national regulations), the checklist for practical implementation of the code 19 has been developed by the associated committee - within the Municipality of Tehran - which will facilitate enforcement of the code 19.
[Added: 2022/06/19]
Government of Iran 2022/03 Completed
3. Recommendation:

UNDP CO should assist the GoI to identify multilateral and/or bilateral funding sources to finance provision of further international expertise on implementation of technologies for energy efficiency in buildings

Management Response: [Added: 2022/06/18] [Last Updated: 2022/06/19]

UNDP CO welcomes the recommendation and will try to mobilize resources however, donor landscape is not that favorable given the geopolitics and the need for technology transfer which may make it more difficult.

Key Actions:

Key Action Responsible DueDate Status Comments Documents
UNDP CO prepares concept notes and proposals to attract donor funding and to ensure energy efficiency/renewable energy initiatives will continue and get to scale.
[Added: 2022/06/19]
UNDP Iran CO 2022/06 Completed The CO has developed at least two proposals and submitted to donors for funding.
4. Recommendation:

The GoI should ensure on-line connection and uploading of data on electricity and gas consumption in buildings that are in possession of organisations belonging to the Ministry of Petroleum and the Ministry of Power

Management Response: [Added: 2022/06/18] [Last Updated: 2022/06/19]

The project team has welcomed the recommendation and communicated the idea with relevant ministries.

Key Actions:

Key Action Responsible DueDate Status Comments Documents
Promotion of the idea and communication of the subject matter with relevant ministries by the project team.
[Added: 2022/06/19]
Project team and the Government of Iran 2022/03 No Longer Applicable [Justification: The project and the Government has provided the required platform but the final decision to implement the recommendation by relevant ministries is out of the scope of the project. Government entities are following up on this but it takes time to materialize. ]
5. Recommendation:

UNDP CO  in cooperation with the GoI should ensure continuation of the M&V activities in the pilot buildings after the project operational closure

Management Response: [Added: 2022/06/18] [Last Updated: 2022/06/19]

The recommendation is well taken by UNDP and the Government.

Key Actions:

Key Action Responsible DueDate Status Comments Documents
UNDP continues its support to M&V activities of the project and makes sure required knowledge, facilities and equipment are transferred to M&V energy efficiency laboratories.
[Added: 2022/06/19]
UNDP and the project team 2022/03 Completed
6. Recommendation:

The UNDP CO and GoI should ensure resources for continued training programmes of civil engineers, builders, and municipality inspectors so that they can effectively implement and enforce the energy efficiency regulations and standards throughout the country.

Management Response: [Added: 2022/06/18] [Last Updated: 2022/06/19]

The recommendation is under consideration by building required capacities and equipping HR in relevant entities to make sure enforcement of energy efficiency will continue after the lifespan of the project.

Key Actions:

Key Action Responsible DueDate Status Comments Documents
Continue capacity building measures to ensure required resources are available to enforce energy efficiency activities after operational closure of the project.
[Added: 2022/06/19]
Project team and GoI 2022/03 Completed
7. Recommendation:

The GoI should consider developing a system of incentives for participation of ESCOs in EE projects, e.g. establishment of a Help Desk for provision of information and advice to building owners on contracting ESCOs, such as list of qualified ESCO companies for M&V of EE measures in buildings with contact details and technical advice on rules of energy performance contracting

Management Response: [Added: 2022/06/18] [Last Updated: 2022/06/19]

The importance of ESCOs is very well considered during the project implementation. The number of ESCOs active in this sector in the country increased significantly as a result of project implementation. Barriers and gaps for further development of ESCOs has been identified and actions proposed to the Government.

Key Actions:

Key Action Responsible DueDate Status Comments Documents
Propose actions for removal of barriers and fill the gaps for further expansion and development of ESCOs in the sector.
[Added: 2022/06/19]
The project team 2022/03 Completed
8. Recommendation:

The GoI should address several barriers related to ESCOs, including certification and selection of ESCOs and mainstreaming of approval of legal documents for implementation of EE measures through ESCOs. It should also explore possibilities for establishment of a Super ESCO for EE in public buildings.

Management Response: [Added: 2022/06/18] [Last Updated: 2022/06/19]

The importance of ESCOs is very well considered during the project implementation. The number of ESCOs active in this sector in the country increased significantly as a result of project implementation. Barriers and gaps for further development of ESCOs has been identified and actions proposed to the Government.

Key Actions:

Key Action Responsible DueDate Status Comments Documents
Propose actions for removal of barriers and fill the gaps for further expansion and development of ESCOs in the sector.
[Added: 2022/06/19]
The project team 2022/03 Completed
9. Recommendation:

The Government should continue public awareness campaign for energy efficient buildings using the channels of delivery established under the project. It should also consider establishment of a publicly accessible repository of all relevant documents and knowledge products resulting from the project

Management Response: [Added: 2022/06/18] [Last Updated: 2022/06/19]

All the relevant documents and awareness materials have already been transferred to Department of Environment, Ministry of Roads and urban Development, Municipality of Tehran, etc. to makes sure facilitated access to those materials produced by the project.

Key Actions:

Key Action Responsible DueDate Status Comments Documents
Make sure all relevant documents transferred to relevant documents.
[Added: 2022/06/19]
The project team 2022/05 Completed
10. Recommendation:

For preparation of future projects on EE in buildings, the UNDP project development teams should carefully consider development of consistent sets of indicators and their targets compliant with the SMART criteria.

Management Response: [Added: 2022/06/18] [Last Updated: 2022/07/26]

The recommendation is accepted and already been taken into account by UNDP team. The matter was also communicated with the Government and the necessity of having SMART indicators and targets is well taken by the Government as well.

Key Actions:

Key Action Responsible DueDate Status Comments Documents
To provide relevant guidelines on development of EE SMART indicators for future uses.
[Added: 2022/06/19] [Last Updated: 2022/07/26]
UNDP and the project team 2022/03 Completed Guidelines on development of SMART indicators (RBM Booklet of UNDG and PME guidebook of UNDP) have been shared with UNDP team and project office again. History
11. Recommendation:

The project team should finalize the exit strategy and submit it to the Government for further consideration and planning of post-project activities

Management Response: [Added: 2022/06/18] [Last Updated: 2022/06/19]

The recommendation is well noted and required action will be taken.

Key Actions:

Key Action Responsible DueDate Status Comments Documents
Develop project exit strategy and hand it over to the Government
[Added: 2022/06/19]
The project team supported by UNDP CO 2022/03 Completed
12. Recommendation:

The GoI should accelerate implementation of the adopted Energy Efficiency & Environment Market (EEEM) mechanism with special emphasis on removal of barriers to participation in the EEEM scheme and facilitation of coordination between different players in the energy efficiency market

Management Response: [Added: 2022/07/26] [Last Updated: 2022/07/26]

The recommendation is accepted and the matter has been already communicate with the Government.

Key Actions:

Key Action Responsible DueDate Status Comments Documents
To communicate the recommendation with the Government and provide technical and advocacy support to facilitate the task through the project team.
[Added: 2022/07/26]
Project team 2022/05 Completed

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