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Unofficial Translation

 National Energy Efficiency Action Plan (NEEAP) (2019–2020)  

                                                                                                                                                                        i 

Contents

Executive Summary ........................................................................ 1

Overview of Georgian energy situation ........................................................................ 2

Overview of national energy efficiency targets .............................................................. 4

Measures implementing the EED ........................................................ 9

1. Horizontal measures ................................................................................... 9
2. Energy efficiency measures in buildings .......................................................... 13
3. Energy efficiency measures in public bodies ..................................................... 17
4. Energy efficiency measures in industry ........................................................ 22
5. Promotion of efficient heating and cooling  ....................................................... 2
6. Energy transformation, transmission, distribution, and demand response ............................ 2

List of abbreviations 

                                                                                                                                                                      iii 

Executive Summary 

This document sets out Georgia’s First National Energy Efficiency Action Plan (NEEAP) which establishes  a set of investment and policy measures to be carried out in the coming period (2019- 2020) which can last up to 2022 year. The aim of NEEAP is  at optimizing and reducing the use of energy resources as compared to a Business As Usual (BAU) scenario. The NEEAP has been developed in order to assist in meeting a number of strategic goals of Georgia, including: 

• Setting out energy savings targets for the coming 3 year period and beyond in order to:
  • Improve competitiveness  o Reduce the needs for import of energy  
  • Reduce greenhouse gas emissions in a way that is consistent with Georgia’s commitments, such as the Nationally Determined Contribution (NDC) submission to the UNFCCC in 2015; 
  • Providing a signal to the international and national community on energy efficiency priorities and plans 
  • Laying out a roadmap for implementation of priority measures – including development of the EE Law 
  • Reporting on the plans for implementation of the EU’s Energy Efficiency Directive (EED - 2012/27/EU) which Georgia has committed to under the EU – Georgia Association Agreement and also by signing up to the Energy Community. 

This document is a summary of the full NEEAP report. It lays out targets for savings of primary energy consumption^[1] as well as policy and investment measures to achieve these targets. Measures described include: 

a)  those already underway; 

b)  thosecommitted by various international agreements;    

c)  those being planned for implementation in the coming years which are in-line with national priorities. The measures are sorted by the following categories: 

 9 Horizontal measures which impact more than one sector (e.g. public and private) and / or are consistent with horizontal measures as laid out by the EU’s guidance on developing NEEAPs

• 1 Building measure in private commercial and residential buildings;  
• 9 Public sector measures which will be carried out at the level of central and non-central government
• 6 Industry sector measures which include 1 information gathering and various investment types of measures, which are also related to the horizontal measures;
• Transport sector measures; 
• 8 Energy sector measures related to energy transformation, transmission, and distribution subsectors.  

According to calculations developed for the NEEAP, in 2020 the implementation of the measures mentioned above could lead to 9% of energy saving in primary energy sources and 4% in final energy consumption. 

 In 2025 it could lead to  13% in primary energy sources and 9% in final energy consumption;  In 2030 - 14% in primary energy sources and 11% in final energy consumption, compared to the BAU scenario. 

Those energy-saving measures can have an important contribution to the targets set by Georgian Nationally Determined Contribution (NDC). In December 2015, Georgia determined the  fulfilling of this commitment on COP21Paris conference of the parties for United Nations Framework Convention of the Climate Change. s 

It is also noteworthy, that out of the measures defined within the NEEAP: 

• 5 of them considers the implementation of large public and private sector investments. The implementation is already planned by the Government / private sector; 
• 3 measures  are under development stage, which envisages the policy introduction in different directions;
• 9 measures  envisage introduction of policy directions, committed by the accession of Georgia to the Energy Community Treaty/ signing the Association Agreement (AA) with EU.  / EU; 
• Implementation of 21 measures which envisages policy introduction at the municipal level and relevant investment realizations, are not yet committed; 
• 6 of them are policy measures targeting mostly private sector. 

The process of designing the NEEAP involved significant interaction and consultation with stakeholders, including: 

• Contact with over 100 national-level, municipal, Government and international stakeholders of which the vast majority of them provided inputs into the NEEAP in some way; 
• A total of over 50 people attended 2 workshops carried out for discussions of the NEEAP draft  Written comments provided by 25 different stakeholders on the NEEAP. 

Overview of Georgian energy situation 

Currently Georgian energy sector, energy policy and regulatory framework is in a state of active reforms and development. It should be noted that, in order to regulate field of energy efficiency several draft law are prepared, draft law on Energy Efficiency, draft law on Energy Performance of Buildings and draft law on Energy Labelling, (draft law on Energy Performance of Buildings and draft law on Energy Labelling are submitted to the Parliament of Georgia). Once those are in force, legal base for the mandatory implementation of thetargetedmeasures defined by NEEAP will be established. 

  Reforms are particularly influenced by the Association Agreement signed with the European Union in June 2014. Under the Agreement, Georgia took an obligation of implementing the EU directives in energy sector and will have to comply with the requirements of the third energy package.^[2] Georgia joined the Energy Community as a Contracting Party in July 2017. 

            Based on energy balance dataof 2017, fossil fuels accounted 73% of primary energy consumption in 

Georgia. Almost entire domestic supply of fossil fuels (98%) are imported from neighbouring countries, which means that energy security and independence are significant challenges for the country – especially since there are strained relationships within the region. Moreover, the situation has also been exacerbated by a tendency of an increase in fossil fuels consumption in recent years. (Figure1 and figure 2), Which leads to an increase in imports. The largest increase can be seen/observed in natural gas imports. 

Figure 1: Graphical representation of final energy consumption according to fuel  categories – 2013 and 2017 

Figure 2: Share of economic sectors in energy consumption  Source: GeoStat (2018) Energy balance of Georgia,2017 

countries, the Georgian economy does not have much energy intensive industry. Its 

GDP intensity is still much higher than, for instance, in Turkey, whose economic structure (industrial sector) is characterized by high rate of energy use. This indicates that there is potential for energy efficiency improvements in Georgia.. 

Overview of national energy efficiency targets 

Georgia’s indicative national energy efficiency targets for 2020, are laid out/shown in Table 1. 

The table also outlines expected results of the planned activities for 2025 and 2030,as an additional indicative target period. That target can be reached by implementing all measures of the NEEAP. The given targets are symbolic and are not legally binding. 

Table 1: Georgia’s indicative energy efficiency targets for 2020, 2025, and 2030 Compared to the Business As Usual  (BAU) Scenario 

Note: Figures for energy consumption in 2014 come from Geostat’s Energy Balance (published in 2015). The final energy consumption figures for 2014 do not include 27 GWh of non-energy use consumption of oil products in the energy sector. 

AsTable 1 shows energy efficiency measures described in this NEEAP would have a significant impact on Georgia’s energy consumption.  

The BAU scenario was developed using MARKAL modelling software using inputs developed by the Georgian Government as part of the LEDS project. Assumptions underlying the Business As Usual scenario are as follows: 

• The current population is assumed to be 3,720,400 people^[3] – and would remain constant at this level. 
• GDP growth is projected to be 5.6% annually through 2030. 
• Per capita GDP is projected to grow from ~EUR 3,450 in 2015 to ~EUR 7,660 in 2030.  
• The number of households is projected to remain steady at 955,000 by 2030. 
• The number of families by 2030 will remain the same - 955 000; 
• Growth of energy electricity consumption in industry is projected to grow by 5.6% per year by 2030. 

The impact on energy consumption has been calculated through the use of individual models for each measure – wherein a BAU case was developed in terms of final energy consumption and primary energy consumption, and then the energy efficiency case was developed which entailed a number of potential changes including: 

Use of renewable energy technologies, instead of technologies working on traditional, primary energy sources and energy carriers. – such as full or partially switching from electricity to solar resources for hot water heating . As a result, there is no change of final energy demand, but there is savings of primary energy sources( which is consumed to create electricity). 

• Improvement of energy distribution / transmission / transformation efficiencies – such as reducing electricity losses or natural gas losses on their networks, or improving the efficiency of natural-gas fired power plants by switching to combined-cycle plants.Improving the efficiency of end-use equipment – such as introducing efficient lighting, efficient wood-stoves, improving the efficiency of vehicles, use of efficient pumps, boilers and etc. in industry and other sectors. 
• Switching to more efficient transport means – such as switching from personal cars to buses or metros. This also involves the shift of freight transportation from heavy goods vehicles to railways; 

Reduction of end-user demand – such as reduction of heating losses in building envelopes, reduction in the use of internal-combustion-engine vehicles (ICEV) , improving maintenance of industrial firms, etc.The targets for measures were calculated based considering EE market potentialas much as possible. Also, – with certain assumptions made regarding the market penetration levels or levels of investment which would occur. These are described in details for each measure in the full NEEAP document. The dates of 2020, 2025, and 2030 as the target dates were chosen to be consistent with the planning horizon of the EU and Energy Community – as well as with Georgia’s Intended Nationally Determined Contribution for reduction of greenhouse gases .

The achievement of the indicative targets of this NEEAP is particularly dependent on three factors: 

1. The implementation of an ambitious policy agenda for energy efficiency: 
   1. Implementation of an overall project identification, technical assistance, and grant distribution scheme by the Ministry of Economy and Sustainable Development of Georgia   

(H-1)  

1. Incentivizing energy efficiency in industry (H-2) 
2. In buildings, implementation of the EPBD including energy audit rules (H-9) and building up  energy auditors’ expertise (H-5). 
3. In industry, building up knowledge and capacity amongst decision-makers on energy efficiency issues (H-3),  adopting energy audit rules  and assisting increase of expertise amongst energy auditors (H-6) 
4. The introduction of energy efficient public procurement practices (P-8) 
5. A regulatory mechanism to increase the share of the market for efficient light bulbs (B-1 , 

P-3 and investments in industry ); and 

g. A technical inspection programme of vehicles (T-2) 

1. The availability of technical assistance for implementation: Many measures are contingent upon the availability of technical assistance within the various sub-sectors  in planning energy efficiency investments.  
2. The availability of investment funds for implementation of projects: The availability of lending funds at a reasonable rate  and grants  for implementation of measures.

Figure 3 shows the /distribution of the amount of energy savings per sector while Figure 4 shows the percentage breakdown of energy savings according to sectors. It should be noted that the savings are fairly well spread across the sectors, with the  energy sector and transport sectors having a large impact on  savings. Savings targets were not calculated for some horizontal measures, as their impact will be mostly related to stimulation of energy efficiency development and investments in other sectors.  

Figure 2: Primary energy savings according to sector for 2020, 2025, and 2030 (GWh) 

Figure 3: Primary energy savings targets in percentage  for 2020, 2025, and 2030 (%) 

The Table 2 below shows the key priority policy measures planned  as part of the NEEAP – which are directly related to facilitating investment in EE and also to implementation of measures reflected in a 3-year long DCFTA Action Plan. The most critical measures as far as energy saving and /or facilitation of investments have a light blue background. 

Table 2 

Measures implementing the EED 

This section is aimed at bringing together information on all important energy efficiency measures  planned to be adopted in Georgia to implement the EU’s Energy Efficiency Directive (EED - 2012/27/EU). The analysis and presentation of the measures planned for the NEEAP was developed by Ministry of Economy and Sustainable Development with the assistance of a consortium of local and international experts. Significant inputs from a variety of national-level and municipal stakeholders have been incorporated into the action plan. Overall responsibility for the implementation and monitoring of the NEEAP is on the  Government of Georgia. A number of other national and sub-national entities (including municipalities) will play a significant role as well. These are outlined in detail within the description of the measures in the full NEEAP document.  

The section below outlines the measures planned broken down by the sector impacted – as consistent with EU guidance for NEEAP development.  

1.      Horizontal measures 

1.1. Energy efficiency obligation scheme / alternative measures 

Article 7 of the EED requires EU member states to set up an energy efficiency obligation (EEO) scheme or to achieve the same amount of savings with alternative measures. The EEO scheme requires energy distribution companies to achieve energy savings of at least 1.5% of annual sales to final consumers. For Energy Community Contracting Parties, the target for EEOs was set at 0.7% each year from 1 January 2019 to 31 December 2022 . A country can opt to introduce the above 0.7% target gradually (i.e., 0.5% in 2019 and 2020; 0.7 % in 2021 and 2022), and such and other alternative calculation measures should  notify  to 

Energy Community Secretariat by the end of  2019. In order to achieve above mentioned target, as a result of consultations, Georgian government  has opted to implement  alternative policy measures, To achieve this, implementing  capital investments and a number of technical measures in various sectors of the economy will be needed.  Therefore, the EEO target will not be used for Georgia’s NEEAP. Instead of implementing an EEO scheme, Georgia plans to implement a set of alternative policy measures linked with technical/financial measures which reduce final energy consumption.  

As an alternative (or supplement) to setting up an energy efficiency obligation scheme, the Article 7 of EED allows to take other policy measures to achieve energy savings among final consumers.  

• The alternative measures included in  Georgia’s first NEEAP are as follows: Financing schemes for energy efficiency (H-1) 
• Incentivising /mandatingng energy efficiency in industry (H-2) 
• Training and education, including energy advisory programmes (H-3) 
• Standards and norms and labelling schemes in appliances (H-4)^[4]

The above measures will not achieve direct savings equivalent to the impact of the EEO scheme, however they will make it possible to achieve savings through the specific technical/investment measures described 

later in this section  It is possible to achieve more savings through implementation of  sector-specific measures  than through implementation  of an EEO scheme.Additional Horizontal measures include: 

• Qualification, accreditation, and certification schemes in Buildings impacting the buildings and public sector (H-5) 
• Qualification, accreditation, and certification schemes in industry (H-6) 
• Energy audits and management system, as well as boiler inspection requirements for large industrial companies  (H-7) 
• Consumer information programmes and training  (H-8) 
• EPBD Transposition and Enforcement: Standards and norms and energy performance certification schemes in buildings impacting the buildings and public sector (H-9) 

Table 3: Overview of individual horizontal measures 

1.3 Energy Services 

Information on measures related to energy performance contracting (EnPC)^[5] and energy services are not yet applicable as the market does not exist – nor are there concrete plans to promote them yet. 

 Based upon analysis carried out in preparation of this NEEAP, the scope for the potential market for Energy Performance Contracting are as follows related to specific sectors in which EnPCs are common: 

• Industry: There is a large market potential for EnPC implementation in the industrial sector, with potentially over EUR 200 million in investment opportunities available with IRRs over 30%. However, there are significant market barriers which would inhibit the growth of such a market – notably lack of awareness of savings opportunities, and lack of stability within the industry sector leading to risk-averse behaviour related to capital investments (i.e. industries are not willing to invest or implement energy efficiency measures due to concern about the basic health of the business).Public sector buildings: There is limited scope for EnPC implementation in the public building sector due mostly to low IRRs related to heating of buildings (typically 1 – 10% at a maximum). This is primarily due to low energy consumption in existing buildings and low energy prices – particularly natural gas.
• Public sector lighting: There is a large market potential for EnPC implementation in public sector lighting – with potentially over EUR 90 million in investment required and typical IRRs of over 30%. Specific steps will need to be taken to establish this market.

The types of companies which could provide these services include national engineering and construction firms – likely linked with international firms interested in the Georgian market. An additional potential implementing company could be the energy distribution companies – who could set up separate companies to implement energy efficiency measures via an EnPC modality. 

Actions which should / could be taken to develop the market for energy services in Georgia include: 

• Addressing specific regulatory and non-regulatory barriers – Review of public procurement legislation issues (see P-8 – Energy Efficient Public Procurement); 
• Development and publication of model contracts for energy services providers and best practices for energy performance contracting; 
• Assignment of a national point of contact to provide consumers with information on energy services; 
• Development of an independent mechanism such as an ombudsman to ensure the handling of complaints on energy service contracts; 
• Steps to enable independent market intermediaries to play a role in stimulating market development of the demand and supply sides; and 
• Steps to ensure that energy distributors, distribution system operators and retail energy sales companies refrain from activities that may impede the demand for and delivery of energy services, or hinder the development of markets for such services. 

In addition to those Horizontal measures describe above, in the coming period, Georgia also plans to undertake the following activities/measures to encourage energy efficiency: 

• Defining changes in existing regulations for simplifying  investments in multi-family apartment buildings 
• Improving public procurement regulations  (See measure P-8 Energy efficient procurement); and Transposing the EU’s Energy Performance in Buildings directive in the coming years (see H-9 below). 

2. Energy efficiency measures in buildings 

Policy and investment measures linked together and  are closely connected to to buildings and to public bodies. This is because public sector measures are often linked to EE in buildings and also because the policy framework bringing about investments in the private building sector and public sector are closely linked. 

2.1 Addressing the requirements of the recast EPBD (2010/31/EU) 

In 2014 the EU and Georgia signed the Association Agreement (AA), The Association Agreement recognizes 

Georgia’s commitment to implementing and promoting energy efficiency in the buildings sector under the EPBD. Georgia is obligated to align its national laws with the EU legislation and is at the beginning of the EPBD transposition process. Support for reforms in the field of energy outlined in the EU-Georgian Association Agreement for building sector improvement is currently being planned within the framework of the Danish Neighbourhood Program launched by the Ministry of Foreign Affairs of Denmark and Ministry of Economy and Sustainable Development of Georgia as well as with the Energy Community supported technical assistance under EU4 Energy entitled “Gap analysis of Georgian legislation in relation to energy performance of buildings and development of Draft Energy Performance of Buildings Law”. 

2.2 Building renovation strategy 

The EED requires that the NEEAP present a long-term strategy for mobilising investment in the renovation of buildings and that it is included in the NEEAP. However, there is currently no national building renovation strategy in place and very limited information on the sector available (in particular, on the building stock).Public sector buildings 

The inventory of the building stock in Georgia is not available and thus providing reliable information on the entire public building stock will not be possible. Related to fuels used, electricity is used for lighting, appliances, and cooling. The typical fuels used for Central Government buildings are natural gas for heat, and some electric space heaters. Central, District heating is not used.  

Non-Central Government buildings represent a large part of public buildings. In Georgia there is not yet an inventory of public buildings and their energy performance – nor have minimum energy performance requirements been established. Information on public buildings not owned and occupied by the Central Government is partially available based on the SEAPs developed by specific municipalities – Tbilisi, Kutaisi, Batumi, Rustavi, Zugdidi, Gori, and Telavi. Additionally, information on schools is available from the Ministry of Education, Science, Culture and Sport of Georgia . It is likely that schools, kindergartens, and administrative buildings are the predominant type of public building not owned and occupied by the Central Government.  

• Schools heat using a mix mostly of natural gas and wood logs with some electricity as follows.Total number of schools: 2,200 
• Total number of schools with central heating – electricity: 72  
• Total number of schools with heating – natural gas: 536  
• Total number of schools with heating – wood: 377 
• Total number of schools with unknown heating source – 1,215 

Technologies typically used in other publicly-owned building are natural gas boilers, natural gas space heaters for smaller spaces, electricity based air conditioning/heating units, and highly inefficient wood stoves for area heating. 

There are number of barriers complicating the wide implementation of energy efficiency in this sub-sector. The most important are: 

• Lack of pipeline of good energy efficiency projects 
• No legal requirements about the minimum energy performance 
• An absence of incentives for implementing agents (administrators)         Lack of Awareness of options and impacts. 

Commercial sector buildings – private 

There is no official information on private commercial buildings sector. It is noteworthy that most hospitals and medical centres are privately owned. The typical fuels used in these buildings varies, but in general, natural gas is used for heating in more urban areas, while wood (and sometimes electricity) is used in more rural areas. Energy consumption in these buildings is not generally known in any systematic way – though some energy audits have been conducted for hospitals/medical centres and large supermarkets and generally have high energy consumption (e.g. Specific heating and hot water demand of 250 kWh/m² in hospitals). There are severe data limitations in this sector, so development of the building stock will be an important first step in developing a strategy. 

Special features in energy consumption for the private commercial buildings sector include: 

• A significant amount of under-heated buildings meaning there is suppressed demand; 
• Very poor energy properties of the external building envelopes; 
• The use of inefficient wood or electric space heaters in many instances which only heat parts of the buildings. 

Key barriers to investment are mostly related to finance and awareness of potential energy savings from implementing measures. 

Residential sector buildings 

There is no official information on residential buildings sector related to area, number of dwellings, or number of buildings. The results of the recently carried out census will likely have information on the residential sector. It is noteworthy that the vast majority of residential buildings are privately owned by the families living in them. 

The typical fuels used in these buildings varies, but in general, natural gas is used for heating in more urban areas, while wood is used in more rural areas. Energy consumption in these buildings is not generally known in any systematic way – though some energy audits have been conducted which show that they generally have high energy consumption (e.g. Specific heating demand of 200 kWh/m² in houses and 170 kWh/m² in apartments). There are severe data limitations in this sector, so development of the building stock will be an important first step in developing a strategy. 

Special features in energy consumption for the residential buildings sector include:⁶

• A significant amount of under-heated buildings meaning there is suppressed demand. This is particularly prevalent amongst single houses; 
• Very poor energy properties of the external building envelopes; 
• The use of inefficient wood, electric, or natural gas space heaters in many instances which only heat parts of the buildings. 

Key barriers to investment are mostly related to finance and awareness of potential energy savings from implementing measures. 

It should also be noteworthy, that the survey on energy consumption in household sector was conducted by the National Statistics Office of Georgia in 2017 with the methodological support of Energy Institute of Croatia. The survey gives detailed picture in terms of energy efficiency of households. It’s planned, that the same survey should be conducted once per 5 years.

Steps in the coming 3-year period to develop a strategy 

In the coming 3-year period, the following steps should be carried out to develop a full strategy for improvement of energy efficiency in the building sector: 

1. Adoption of the legislative framework and it’s harmonization with European directives; 
2. Define upon reference building types to be examined 
3. Establish a system for tracking the inventory of buildings. This should be linked to Measure P-1 Develop a national energy efficiency information system for publicly owned buildings  
4. Conduct energy audits and building inventories for the various sub-sectors throughout the country – first of all, focus should be made on the cities. (in particular, municipalities, which are the signatories to the Covenant of Mayors) Energy audits can be conducted and filed as a part of training programmes under H-5: Qualification, accreditation, and certification schemes - Buildings. When an energy audit is performed as a part of a training course, it can be filed in the national energy information system.

In parallel to these steps, there should be an energy efficiency programme set up for the various subsectors which stimulate investment in each of them. Energy audits and lessons learned as a part of these 

⁶ Multiple surveys in various parts of Georgia have been carried out related to this topic, including:  

SDAP (2013) Technical Report 21: Energy Analysis of Lower Alazani-Iori Pilot Watershed Area (Dedoplistskaro Municipality, Kakheti Region) 

SDAP (2013) Technical Report 22: Energy Analysis of Lower Rioni Pilot Watershed Area (Khobi and Senaki Municipalities, Samegrelo and Zemo Svaneti region) 

SDAP (2013) Technical Report 23: Energy Analysis of Upper Alazani Pilot Watershed Area (Akhmeta and Telavi Municipalities, Kakheti Region) 

SDAP (2013) Technical Report 24: Energy Analysis of Upper Rioni Pilot Watershed Area (Ambrolauri and Oni Municipalities, Racha-Lechkhumi and Kvemo Svaneti region) and 

VTT (2016) Market Assessment of the Residential Sector in Georgia: Policy, Legal, Regulatory, Institutional, Technical and Financial Considerations (Phase I) 

investments can be filed with the national energy information system. Particular measures which can be implemented in parallel to data-gathering include: 

• B-1: Regulations leading to improved efficient lighting systems in residential and commercial buildings 
• P-2: Pilot project for low energy public sector buildings 
• P-3: Efficient lighting systems in public buildings 
• P-5: Improvement of the energy efficiency in schools 
• P-6: Improvement of the energy efficiency of non-central government-owned public buildings - kindergartens 

The following additional measures, which haven’t been considered within the NEEAP but can be revisited in the coming years, are: 

• Improvement of energy efficiency in existing private houses 
• Improvement of energy efficiency in multi-family apartment buildings  Improvement of the energy efficiency in existing commercial buildings. 

B-1 considers energy saving measures, replacement of inefficient incandescent light bulbs or other Halogen lamps with high-efficient models, like fluorescent or LED bulbs. The implementation of the said measure is  possible by adoption of the relevant regulations.

Table 4 Describes approximate assumptions regarding the cost of implementing the measures

3. Energy efficiency measures in public bodies 

A number of measures defined for the public sector are mandatory and recommended to implement  as part of the EED.  

As per the Energy Community’s adoption of the EED, Contracting Parties to the Energy Community must ensure that, as from 1 December 2017, 1% of the total floor area of heated and/or cooled buildings owned and occupied by their central government is renovated each year to meet at least the minimum energy performance requirements set out in the recast EPBD. Georgia has a commitment to carry out renovations on 1% of the public building stock each year starting from 2019. However, the number of buildings and useful floor area are not yet known in Georgia. Additionally, the national minimum energy performance requirements have not been established.  

Based on some assumptions, the NEEAP expert team estimates that 1% of the total area would be 6,446 m² to be renovated per year. While this number is indicative, it does provide a sense of scale of the needs for renovation to comply with the Energy Community requirements. The NEEAP includes a number of measures related to central Government-owned buildings to:

• The development of National Energy efficiency information system for public buildings/Evaluate current energy consumption and potential savings (P-1) 
• Implement a pilot project (P-2) 
• Implement EE lighting in all public buildings as replacements become necessary (P-3) 
• Improvement of Energy efficiency in public buildings(P-4) 

The EED also requires that public bodies that are not owned and occupied by the central government should be encouraged to demonstrate their exemplary role in buildings energy efficiency. Measures to be implemented related to this sub-sector involve EE measures in schools (P-5) kindergartens (P-6) and in other non-central Government-owned buildings (P-7). 

In addition, The EEDrequires that central governments purchase products, services and buildings with high-energy efficiency performance and that all public bodies should be encouraged to do likewise. Green public procurement leads the market by example, by creating demand of EE goods, reducing the market prices, enhancing the sustainability and diversity of the market for EE goods and services. The implementation of this measure is included in measure P-8. 

An additional measure which is in the public sector but not related to buildings is improvement of efficiency in street-lighting / outdoor lighting. The measure is to be carried out in: Tbilisi, Kutaisi, Batumi, Rustavi, Zugdidi, Gori, Telavi, and potentially others. To some extent, this measure is already underway in a number of the municipalities, but will be scaled up. Additionally, lighting improvements can be made for inter-city roads. 

Table 5 describes approximate assumptions regarding the cost of implementing the measures

4. Energy efficiency measures in industry 

4.1. Characteristics of industry in Georgia 

Georgian industrial sector is not a large consumer of energy. However, the 10.5 TWh of energy consumed in industry in 2014 (for both energy and non-energy use) represents 22% of finalenergy consumed in Georgia that year.  

Historically, Georgia was a much larger energy consumer; Industrial sector consumed nearly 3 times more energy in 1990 than in 2013/2014. However, there it has been  a large reduction of industrial (and other sectors) development since 1990, after the break-up of the Soviet Union.  

 Ministry of Economy and Sustainable Development of Georgia developed the MARKAL model,, that predicts annual growth of energy consupmtion (4.94% per year) in 2016-2030, , that is – directly linked to GDP growth. While the preparation of NEEAP the MARKAL projected growth figures have been used. This level of growth would involve doubling of production between 2016 and 2030.  

The predominant energy consuming sub-sectors in industry are: 

• Non-metallic minerals with 26% of  final energy consumption;  
• Chemicals (including petrochemical) with 26% of final energy consumption, even if nonefficient use of natural gas is included; and 
• Cast Iron and steel with 25% of final energy consumption 

Additionally, it is assumed that energy consumption in Food, beverages and tobacco does not fully reflect energy consumption in the energy balance.   

Number of large industries and number of SMEs 

There are  170019industrial enterprises, 421 “large, 1851 “medium” and 162452 “small” industrial organisations registered in Georgia according to Geostat Data. There are also 5295 enterprises, the size of which, according to Geostat, is unknown at this stage. 

Comparisons of the energy intensity (energy consumption per tonne of output) for other industrial processes with the EU are difficult as there is not disaggregated/detailed available information on exact products and processes for production in Georgia and their energy consumption. For this reason, the measure “I-1: Industry data disaggregation” ”  is necessary to improve the information available and allow for meaningful comparisons. 

Special features in energy consumption 

Based on reviews of energy audits and reports composed after sites visits conducted during the preparation of the NEEAP, it turned out that industry energy savings will come from 4 main routes:

No/low cost energy-saving, good energy management and control, which is an enabling step to identifying and eliminating poor behaviour/ bad practice. These include: 

• Understanding site energy consumption patterns, through suitable sub-metering and software; 
• Identifying and eliminating poor-practices, “good-housekeeping”, behavioral changes;   Careful development of theplanning and scheduling for optimum efficiency;  Identifying and financially assessing low-cost technical opportunities. 

Low-cost technical opportunities which naturally follow good energy management andsome of the more importantmeasures are the following: : 

• Thermal insulation on steam/ hot-water/ refrigerant gas pipes; 
• Attention to steam leaks, steam traps, maximum condensate returns, etc.;  Compressed air leak detection, water traps, etc. 
• Upgrades to building fabric: glazing, roof and wall insulation; 
• Lighting: replacing HID (High Intensity Discharge), incandescent or old style T8 tubes with EE LED lighting. 

Sector specific technical investment opportunities: Traditionally, this is what  emerging economy nations focus upon. There are several excellent sector-specific opportunities within Georgia. Details of two of these sectors – steel and cement – are provided in the list of measures of NEEAP. 

Cross-sector investment opportunities, that are common to several industrial sectors: Four of the more important are also provided in the list of measures:

• Boilers and Steam/ hot water systems: combination of no/low cost EE actions combined with replacing old (inefficient, over-sized) boilers with new, correctly sized EE boilers  
• Refrigeration compressors and distribution systems – similar comments related to replacing old (inefficient, oversized) refrigeration units with new, correctly sized ones. 
• Motors: replacing old (inefficient and over-sized) motors with new, correctly sized IE3 or better motors, where applicable with Variable Speed Drive (VSD) controls.  
• Lighting: concerted effort to upgrade, particularly incandescent lights with LED equivalents. 

Key barriers and drivers /stimulations of investments 

There are several key barriers to investment in the industry sector. These include: 

Technology & Equipment: Historically, there has been little or no investment in energysaving equipment; In some industries, this is a step backwards in decades.

Mentality and awareness: The mind-set of industry is still production driven, a historic mind-set and not entirely due to the poor state of the economy. There is limited awareness of modern energy management techniques and EE technologies relevant to the site.  

Energy Management: There is limited understanding of where energy is consumed across each site. This is true for electricity consumption and secondary energy consumption such as steam, hot water, or compressed air. For example, the consumption at the boiler may be known but where this heat is used is not known. 

ESupport and skills/ expertize: Unlike EU Member States, there is very little amount of independent energy-efficiency expertize that Georgian industry can draw-on, including generic / cross-sector technologies and sector-specific technologies. 

Limited funds or opportunity to borrow: The Georgian industrial sector has had significant market-based problems, particularly in the past 2 years. Many long-standing export markets: Russia, Ukraine and other Regional countries – have been directly or indirectly affected by conflicts or embargos, which has reduced export demand hence production. Issues, such as EE, are a long way down the priority list. Even when good EE investment opportunities are identified by site managers or by external consultants, there is limited opportunity to borrow for investment.  

Low energy costs: Although unit costs have been rising substantially in recent years and are now approx. 50 – 70 EUR/MWh (electricity) and 20 to 25 EUR/MWh (natural gas), they are still only around 50% (electricity) to 70% (natural gas) of the unit costs for EU industry. 

High cost for investment in EE technologies: There is no local production of EE equipment in Georgia: boilers, furnaces, motors, etc. As such, Georgian industry has to pay international prices for any EE equipment plus transport and any import levies.  

Lack of incentives, covering several areas: There are currently no incentive-based mechanisms to encourage energy efficiency or renewable energy in industry. 

4.2. Industry measures: Energy savings and financing  

The following measures can be carried out in the industry sector. They are directly linked with the following horizontal measures: 

• H-2: “Alternative policy measures – Incentivising / mandating energy efficiency in industry” – which will stimulate interest and improve the financial case for investment even beyond the strong financial parameters present; 
• H-3: “Alternative policy measures – Training and education, including energy advisory programmes” – which will educate industry’s decision-makers on investment options; 
• H-6: Qualification, accreditation, and certification schemes in industry”, will increase the level of certified expertise in the industry sector to better enable investment planning and implementation; 
• H-7: „Energy audits and management systems, boiler inspections in the industry sector“ – which will require energy audits/energy management in large industries and encourage them in SMEs. 

The implementation of these measures would involve the following key aspects: 

• Improvement of the statistical data on industry production and energy consumption  
• A programme of technical assistance;  
• Energy audits from the horizontal measures (H-7) would also be linked to investments in this sector – which has technical assistance requirements; 
• nvestment  toindustry – via a credit line, bank financing, or other financing sources in 2019 – 2020.   

T 

Table 6Overview of estimated prices of individual measures.