energy districts in colombia - united nations …...energy districts in colombia – phase ii 2...

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Energy Districts in Colombia – Phase II

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UNITED NATIONS INDUSTRIAL DEVELOPMENT ORGANIZATION

Project Title: Energy Districts in Colombia - Phase II

Project ID Number: 190085

Area/Location/Countries: Latin America - Colombia

RMB code: HC3 – Safeguarding the Environment

HC31 RECP & Low Carbon Production

Thematic code: Energy and Environment

Planned Start – finish date: 1 September 2019 – 31 August 2023

Duration: 4 years

Project site: Republic of Colombia

Donor: Switzerland State Secretariat for Economic Affairs (SECO)

Government co-ordinating

agencies and main

counterparts & Executing

agency/ cooperating agency:

Ministry of Environment and Sustainable Development

(Minambiente)

Ministry of Mines and Energy (Minenergía)

Planning Unit Energy Mining (UPME)

Other counterparts &

executing agency/ cooperating

agency:

City administrations and subnational institutions

Association of Air Conditioning and Refrigeration

(ACAIRE)

Other private/public/academia energy districts stakeholders

UNIDO Budget CHF

Total Project Budget 4,195,216

Support Costs (13%) 545,378

Total Budget incl. support costs 4,740,594

Execution coordination levy (1%) 47,406

Total Donor Contribution 4,788,000

Project Counterparts in-kind inputs:

4,500,000

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Brief description:

The project aims to foster and promote sustainable urban development by further promoting

and supporting the development of Energy Districts in Colombian cities, thus improving energy

efficiency and reducing greenhouse gases (GHG) emissions and the usage of ozone depleting

substances (ODS) of cooling and heating utility services in buildings and cities infrastructure.

The project will consolidate and scale up the results of the first phase of “Energy Districts in

Colombia Cities” project, which was implemented by the Switzerland State Secretariat for

Economic Affairs (SECO) together with Colombian counterparts in 2013-2019. The second

phase of the project will work closely with national and city-level authorities and stakeholders

to:

1. Improve and implement the national and subnational policy and regulatory frameworks

to promote further development of Energy Districts.

2. Reinforce knowledge and capacities for Energy Districts of all market players and

facilitate collaboration among relevant actors in the value chain for Energy Districts.

This will include the establishment of a Competence and Know-how Center for Energy

Districts.

3. Technically assist 7-10 selected cities to include Energy Districts into their

territorial/urban planning and support the realization of 2-3 near-future mature projects.

The project will be funded by SECO to an overall level of CHF 4,988,000, of which CHF

4,788,000 to UNIDO. In-kind contributions will be provided by the project’s main counterparts

as well as public and private partners to an estimated overall level of approximately 4,500,000

CHF.

The project will be executed jointly with the Ministry of the Environment and Sustainable

Development (Minambiente), the Ministry of Mines and Energy (Minenergía) and the Energy

Mining Planning Unit (UPME) Minenergía of Colombia. Another key execution partner will be

the Association of Air Conditioning and Refrigeration (ACAIRE) who will have both an

operational and a strategic role as identified host of the project-planned Competence and

Knowhow Center for Energy Districts.

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Approved:

Date: Signature: Name and title:

On behalf of the Republic of

Colombia:

____________ _______________________

____________ _______________________

On behalf of UNIDO: ____________ _______________________

As a witness of honor

On behalf of SECO: ____________ _______________________

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TABLE OF CONTENTS

Page

A. CONTEXT ............................................................................................................................................................ 5

A.1. PROJECT PURPOSE ............................................................................................................................................ 5

A.2. BASELINE SCENARIO ........................................................................................................................................ 5

A.3. STAKEHOLDERS .............................................................................................................................................. 16

A.4. SYNERGY ........................................................................................................................................................ 17

B. UNIDO APPROACH ......................................................................................................................................... 19

B.1. RATIONALE ..................................................................................................................................................... 19

B.2. COMPARATIVE ADVANTAGE ........................................................................................................................... 20

B.3. PROJECT KICK-OFF PHASE .............................................................................................................................. 21

B.4. SUSTAINABILITY STRATEGY ........................................................................................................................... 22

B.5. GENDER MAINSTREAMING STRATEGY ............................................................................................................ 23

B.6. ENVIRONMENTAL AND SOCIAL ASSESSMENT.................................................................................................. 24

C. THE PROJECT .................................................................................................................................................. 25

C.1. PROJECT DEVELOPMENT OBJECTIVE AND INTERVENTION STRATEGY ............................................................. 25 C.1.1. Outline of project activities ................................................................................................................ 37

C.2. RISKS AND MITIGATION MEASURES ................................................................................................................ 41

C.3. INSTITUTIONAL ARRANGEMENTS AND COORDINATION MECHANISMS ............................................................ 42

D. INPUTS ............................................................................................................................................................... 45

D.1. COUNTERPART INPUTS .................................................................................................................................... 45

D.2. UNIDO INPUTS ............................................................................................................................................... 45 D.2.1. UNIDO HQs Staff ............................................................................................................................... 45 D.2.2. International expertise ........................................................................................................................ 46 D.2.3. National staff ...................................................................................................................................... 47 D.2.4. Sub-contracts ...................................................................................................................................... 48

E. BUDGET ............................................................................................................................................................. 48

F. MONITORING, REPORTING AND EVALUATION .................................................................................... 50

G. PRIOR OBLIGATIONS AND PREREQUISITES ......................................................................................... 51

H. LEGAL CONTEXT ............................................................................................................................................ 51

ANNEX 1 – TENTATIVE WORK PLAN .............................................................................................................. 52

ANNEX 2 – PROJECT BUDGET BY OUTPUT, YEAR AND BUDGET LINE ............................................... 53

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A. CONTEXT

A.1. Project Purpose

The project aims to foster and promote energy efficient and sustainable urban development by

further promoting the development of Energy Districts in Colombian cities.

Energy Districts offer cities a cost-effective solution to reduce greenhouse gases (GHG)

emission and primary energy demand through cleaner and more energy efficient provision of air

conditioning (A/C) and/or heating services. They also allow for a reduction or elimination of

A/C-related emissions of ozone depleting substances (ODS). The project will therefore

contribute to Colombia’s international commitments in the framework of the Paris Agreement

and the Montreal Protocol and to the country’s Program for the Rational and Efficient Use of

Energy and Unconventional Energy Sources (PROURE). The project is also well-aligned to

contribute to the implementation of Colombia’s National Circular Economy Strategy

The first phase of the “Energy Districts in Colombia” was implemented between 2013 and June

2019 by the Switzerland State Secretariat for Economic Affairs (SECO) in cooperation with the

Ministry of Environment and Sustainable Development (Minambiente) and the Public Utility of

Medellín (Empresas Publicas de Medellín - EPM). This first phase has successfully contributed

to creating enabling conditions at institutional and market level and has achieved initial results

in boosting Energy Districts infrastructure in Colombian cities.

The purpose of the second phase of the projects is to further accelerate the diffusion of Energy

Districts as an innovative and efficient urban infrastructure, especially for air conditioning

services. It will consolidate and scale up the results achieved in the first phase, through

interventions that aim to:

i. facilitate the implementation of policy and regulatory framework improvements at

national and subnational level,

ii. spread knowledge, strengthen capacities and promote the interaction among key

stakeholders, so that Energy Districts can unleash their full potential in terms of energy

efficiency and urban planning, and

iii. impulse the development of the Colombian Energy Districts market and support the

realization of 2-3 near-future mature projects with public and/or private developers; and

with a special attention to solutions making also use of renewable energy resources.

A.2. Baseline Scenario

Air conditioning (A/C) in buildings is one of the main sources of energy consumption in

Colombia. Colombian cities are expected to play a major role in efforts to fight climate change,

given the very high share of the country’s population and economic activity they host (around

70% of the population is urban). After transport, the building sector is second in triggering

significant greenhouse gas emissions stemming from the use of non-renewable and fossil energy

sources. Within the existing building stock, as well as in future construction projects, A/C has

the largest share.

The renewal and updating of A/C systems in buildings offers significant opportunities for

increasing energy efficiency, reducing CO2 emissions and eliminating the use of ozone-

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depleting substances. Most A/C systems in Colombian cities are outdated and are operating

under very poor energy efficiency standards. It is estimated that the use of air conditioning

contributes with 23% to the final use of electricity in the commercial and public sector. In

addition, the demand of these systems will increase about 3% annually until the year 2030, with

an estimated consumption close to 4,500 GWh only for A/C. At the same time, as many of the

existing applications have been operating for many years and are not always properly

maintained, they often release ozone depleting substances.

One way of making the provision of cooling cleaner and more efficient is to build Energy

Districts (EDs). Energy Districts are composed of a centralized collective thermal generation

plant and pipelines of hot/cold water, which supply thermal energy to one or more buildings of a

district. EDs allow important economies of scale, use of different established technologies and

locally available (renewable) resources (e.g. gas, water, earth temperature, industrial waste heat).

Without sacrificing comfort or profitability as a business, Energy Districts offer a solution for

the sustainable and efficient air conditioning of cities. It is estimated that EDs can generate

savings of between 30% and 50% in primary energy consumption, according to studies of the

United Nations in more than 45 cities around the world. These substantial energy efficiency

gains can be realized, in comparison to decentralized solutions, thanks to:

Replacement of old equipment with new, more efficient equipment;

Bigger, centralized equipment that is more efficient than smaller, decentralized

equipment;

A centralized solution that can be located in a way that allows for the usage of residual or

renewable energy;

The optimization of life cycle costs (i.e. not only of the capital expenditure, but also of

the costs of operation and maintenance) by the investor and operator of the equipment

(who coincide),

Operation and maintenance being provided by professionals, incentivized to operate the

ED at optimum conditions,

More innovative solutions, also being more energy efficient, are often implemented, as

the investor and operator strives to optimize the provision of A/C to its clients.

It is to mention that additional energy efficiency gains on the side of the clients can also be

realized, as clients often undertake measures to increase energy efficiency before or after

connecting to an ED. This is also the case in the Energy District La Alpujarra (EDLA) that has

been implemented in Medellin as a result of the first phase of the project.

Due to the enormous challenges that Colombian cities face in providing A/C services, Energy

Districts of different sizes are considered, both globally as well as in Colombia, a strategic

infrastructure to be implemented.

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Energy Districts have spread in Europe (e.g. Switzerland, Denmark, France, Poland, Russia),

Canada and the United States, as a priority in the transition towards sustainable cities.

Penetration is still limited in developing countries despite the significant benefits they entail.

At the global level, the ability of Energy Districts to combine energy efficiency improvements

with renewable energy has brought new relevance to this technology, but bottlenecks remain.

Several countries and international organizations, such as the United Nations Environment

Programme (UNEP), have recognized the usefulness of promoting this infrastructure in cities.1

They have successfully developed targeted measures and policies to support district energy

systems, and international initiatives have emerged to accelerate this trend. Common bottlenecks

to further promote Energy Districts in cities include market barriers, lack of awareness about

technology applications and their multiple benefits and savings, lack of integrated infrastructure

and land-use planning, lack of knowledge and capacity in structuring projects to attract

investments and a focus on short-term financing, among others.

Industrial Energy Districts

Residual heat can be recovered as an energy source for both district heating, through heat

exchangers or heat pumps, and/or for district cooling through the use of absorption chillers.

Surplus heat form industrial processes can therefore be utilized through Energy Districts systems

to provide thermal energy services to neighbouring industries, for instance within an industrial

park, and/or to nearby communities. These “energy symbioses” offer significant opportunities to

increase energy efficiency and optimize resources use in industrial or urban-industrial energy

systems.

In terms of end-uses, Energy Districts are more commonly implemented for public, commercial

and residential buildings, and less for industrial buildings or processes. This is due, among other

factors, to the long lifetime of EDs, compared to the shorter lifecycles of industry and to the

variety of thermal energy provision needs of industrial processes. However, the following

conditions can make industrial EDs a viable and beneficial solution compared to other options:

Availability and access to a primary energy source that can only be harvested centrally

(e.g. residual heat);

Availability of an anchor client, to whom a big quantity of energy (A/C, cold, heat,

steam, other gases) can be delivered and who can serve as a centre for the expansion of

the ED to neighbouring industries;

Industrial parks focusing on certain industries with similar energy provision needs. These

parks also already provide for a centralized administration that could be responsible for

the ED;

New industrial developments, in which the ED infrastructure is envisaged since the be-

ginning.

1 Among the most effective solutions to decarbonize dense areas are the District Heating & cooling networks: Energy Districts allow greenhouse

gas emission reductions, air pollution reductions, energy efficiency improvements, use of local and renewable resources (UNEP). Finally, for the cities, Energy Districts also help reducing costs stemming from the consumption of energy and provide important benefits like the improvement

of air quality, living standards, and urban development.

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Financing of Energy Districts

In Colombia, there is high institutional interest and a solid policy base for the promotion of

Energy Districts, as well as an increasing interest from the private sector. Energy districts,

especially district cooling, contribute to the elimination of old and inefficient A/C units, strongly

backing the country’s effort in eradicating ozone-depleting substances and lowering GHG

emissions. Those measures have been defined as strategic to contribute to the fulfilment of the

Colombian commitments taken in the framework of the Vienna Convention, the Montreal

Protocol, the UN Convention on Climate Change, the Kyoto Protocol and the Paris Agreement,

including the Nationally Determined Contributions. The private sector has demonstrated an

increased interest in Energy Districts due to the energy efficiency potential for cooling

provision, environmental benefits and the innovative service offer that could be provided to

clients, resulting in also economically interesting projects. Moreover, the A/C market has a large

potential, considering that most Colombian cities have an elevated need for air conditioning due

to their high temperatures.

Energy Districts typically require an investment in the range of 5 to 100 mio USD. In Europe,

they are usually financed through a public-private partnership, where often the public utility of

the respective city takes the lead. More modern ED projects are also financed by private entities,

in cooperation with the relevant public institutions that are responsible for the favourable

framework conditions. The recent experience of the first phase of the project shows that there is

potential for this to become the typical model in Colombia, too. Different national and

international investors have shown interest in financing EDs in Colombia and banks have

expressed interest in providing loans for these projects. Most probably, many of the projects will

be financed under a project finance scheme, in which the investors provide the needed equity,

whereas the banks provide the debt, and the project serves for its securitization. A first ED in

Colombia has already been successfully implemented under this scheme. Prerequisite for project

finance to become a more widespread solution is that the banking sector understands the logic of

EDs, for which additional capacity building will be needed.

Overall, besides the energy and environmental benefits, an ED offers several advantages

compared to individual solutions, such as:

Lower or equal costs for the clients,

Liberating the clients from the obligation to operate and maintain a complex technical

system in their building,

Professional operation and maintenance, resulting in higher quality of A/C in terms of

availability and temperature,

Often usage of environmentally friendly primary energy (residual or renewable energy)

and cogeneration,

Reduced risk for the client to be exposed to future costs due to environmental liabilities

(CO2-tax, ODS-tax),

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In the clients’ buildings, more productive space is available, if the A/C equipment and

the cooling towers are eliminated,

In new developments, the building construction cost (e.g. need for less cables with

smaller diameter) and the cost of the electric connection can be reduced, as these are

transferred to the Energy District.

Energy Districts in Colombia Phase I – Results and lessons learnt

Colombia is the pioneer country in the South American region in promoting this technology,

with the conviction that they will be one of the key pieces for the configuration of more

sustainable cities.

In 2013, SECO started the first phase of the Energy District Program to promote the

development of Energy Districts in Colombian cities and unleash their energy saving potential.

The main partners were the Ministry of Environment and Sustainable Development

(Minambiente) and the utility of the city of Medellin (EPM). The first phase of the Energy

District Program (2013-2019) combined the construction of a pilot Energy District located in the

administrative district of Medellin with an “institutional & cites” component. The latter had the

objective of promoting the replication of further Energy Districts in other cities by improving

the regulatory framework conditions and providing technical assistance for the development of

technical, institutional, legal and financial tools and mechanisms. Knowledge exchange with the

Swiss expertise (many Swiss cities have had Energy Districts for over 80 years) was facilitated

by a Backstopping Consultancy.

The first phase of the Energy District Program has been successful and made an important step

in creating favorable framework conditions for Energy Districts in Colombia. It has contributed

to the establishment of enabling conditions at institutional and market level, and achieved initial

results in boosting this infrastructure in Colombian cities. This has been confirmed by a project

partner feedback analysis done by the SECO in Bogota and by the SECO WE Independent

Evaluation of Energy-Efficient Cities (2018), in which the Energy District Program was a case

study. The results of the first phase can be summarized as follows.

Component 1: Energy District of La Alpujarra, Medellín

The Energy District of La Alpujarra (EDLA) currently supplies cold water for the air

conditioning systems of the following buildings:

- Gobernación de Antioquia and Asamblea Departamental,

- Alcaldia de Medellín and Consejo Municipal,

- Dirección de Impuestos y Aduanas Nacionales (DIAN),

- Empresa de Desarrollo Urbano.

Figure 1 shows the EDLA plant and some of clients who are connected to the thermal district.

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Figure 1: EDLA (left) and some clients connected to it (right). Source: EPM

As shown in Figure 2 below, the EDLA has two energy sources, electricity and natural gas. A

natural gas-based electricity generation system (5 mircroturbines with 200 kW capacity each)

produces part (60% at full load) of the electricity required by the plant, while the public grid

provides the remaining fraction. This electricity is the power source of three electric chillers,

pumping systems, cooling towers and other electrical systems required by the system for optimal

operation. A natural gas burner increases the temperature of the hot gases, product of the power

generation system, to the required temperature. These hot gases are the power source of one

absorption chiller.

The electric chillers run on ammonia (NH3) and the absorption chiller runs on lithium

bromide/water solution -Br/H2O-. Both refrigerants are natural, their ozone-depleting potential

is zero and their global warming potential is lower than 10 CO2 eq.

Figure 2. Technical Configuration of the EDLA. Source: EPM

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At present, approximately 60% of the total capacity installed in the district (7 MW) is contracted

with clients. The owner of the plant (EPM) is currently working on a commercial plan to

connect more customers to the EDLA and thus be able to sell all installed capacity within the

next few years.

In 2018, this new infrastructure led to 34% energy savings, compared to the baseline scenario,

and has enabled a total reduction of 2,586 tCO2/year (i.e. -56% compared to the business as

usual scenario). It also substituted traditional and outdated A/C systems and units, giving way to

the elimination of ODS in the user buildings.

Positive economic development spill-overs also emerged - the evidence and exposure that the

SECO project has brought to the issue of A/C has catalyzed the development of a new sub sector

of the energy value chain. The operating Energy District in Medellin now represents a new line

of business for the public utility of the city and several public and private utilities have started to

build their business cases for the development of their own Energy District service portfolio.

The following lessons learned were identified with respect to Component 1:

a. Including the engineering works and the construction of EDLA in the same tender was not

the best option. For future similar projects, the option should be considered to first develop

the detailed engineering and, based on the results, assess the attractiveness of the project.

Then, based on the detailed engineering, the construction can be tendered, which generates

more competition and ultimately important economic savings.

b. The commissioning and operation of EDLA was much more complex than EPM expected.

EPM is accustomed to carrying out large infrastructure works, but not so much to

commissioning and operating technically complex plants that also depend on the specific

needs of the connected customers.

c. A/C demand of the connected buildings was overestimated (see point d.). In addition, the

construction of the ED was started before the A/C sales contracts with the customers had

been concluded. This resulted in an over dimensioning of the ED.

d. Customers consume less A/C than they originally indicated. It is important to monitor actual

consumption well in order to be able to estimate demand based on actual data and not just

theoretical data. It is important to determine demand in detail, check the compatibility of the

customer's existing systems with the ED and, if necessary, find out whether the ED operator

can finance the adaptation of internal equipment, with the customer reimbursing it.

e. It is important to accompany and support the client in all technical and commercial matters

in order to be able to guarantee a successful connection to the district. The establishment of

commercial contracts for the provision of the service also represented a challenge for the

Project since it was required to train future clients of the EDLA from an accounting and

administrative point of view. This accompaniment is an important lesson learned for EDLA's

future negotiations in the country.

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f. It is important to implement a business plan with the connection dates defined for each

client. These have to be agreed with the client by means of a contract.

g. While it is true that natural refrigerants represent a higher cost, Colombia's commitments to

the Montreal Protocol and Climate Change will seek to ensure that these projects continue to

consider low environmental impact refrigerants and more energy efficient systems. Possibly,

additional financing mechanisms can be identified for the financing of the use of these

natural refrigerants within the framework of the Montreal protocol (ODS emissions

reductions) or the Paris accords (CO2 emissions reductions).

h. To achieve a certain profitability, EDs have to be evaluated and planned as a particular

industrial/urban project. If additions to the project "for the city or the community" are

required, for example to address urban planning issues, these need to be compensated

separately by the public authorities.

i. An ED must have access to primary energy that is cheap, accessible and sustainable in

accordance with the conditions of the area where the project is developed.

j. It is economically more attractive and less complex to develop EDs in areas with new urban

developments.

Component 2: Promotion of Energy Districts in Colombia

Awareness was raised in cities with various stakeholders (utilities, public entities, private sector)

on the environmental, technical and economic benefits of Energy Districts, which in turn

generated interest and buy-in for this technology by both policy makers and practitioners.

Concrete interest was sparked in 7 cities (Bogotá, Medellin, Bucaramanga, Cali, Cartagena,

Monteria and Villavicencio) that are now keen to implement Districts. Additionally, other

countries in the region have expressed interest in learning more about the Colombian experience

in developing Energy Districts.

Technical, institutional and financial barriers for the implementation of Energy Districts in

Colombia were identified and started to be tackled by the project. The framework conditions

necessary for the development of Energy District projects have been improved through the

development of policy and regulatory instruments such as the architecture of the National

Appropriate Mitigation Action (NAMA)2 on air-conditioning, fiscal benefits and technical

regulation for thermal installations in buildings (RETSIT), among others. Additionally, the

project elaborated an initial information database of the thermal energy market in Colombia,

characterized by regions and types of buildings.

2 This NAMA aims at facilitating public and private investments in infrastructure and technology and other actions such as revision

and development of policies, regulations and regulations; promotion of education and awareness, with the purpose of eliminating the ozone depleting substances and Greenhouse gas emissions generated by the air conditioning sector. Energy Districts are targeted as key infrastructure intervention within the proposed NAMA.

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With respect to component 2, the following lessons learned and issues to be resolved were

identified:

Institutional strengthening and strengthening of strategic actors

a. Non-taxed thermal energy service: In Colombia, public services (electricity, water, etc.) are

exempt from VAT. The same should apply for the supply of thermal energy supplied by the

EDs. In addition, the possibility of it being considered as a public service should be

analyzed.

b. RETSIT (Reglamento Técnico de Sistemas e Instalaciones Térmicas): In Phase 1, this

regulation has been developed and is currently in the consultation process of the Regulatory

Impact Analysis (RIA). The adoption and entry into force of this regulation is important to

guarantee users that the equipment complies with certain minimum standards and minimum

benefits, such as comfort, air quality, energy efficiency, security of supply and low

environmental impact. Strengthening the capacities for conformity assessment of thermal

installations will be necessary.

c. Energy Maps: The energy maps, which have been developed for the seven cities under the

Project, are quite diverse. In order to systematize energy mapping, integrate it as a planning

instrument and apply it in other cities, it is important to develop guidelines for the

institutional elaboration and regular updating of energy maps that will be useful for the

national and Colombian cities' empowerment. It will also be necessary to improve capacities

to collect, process and use relevant information.

d. Institutional base: As turnover of staff in municipal public entities, especially directors or

other decision-makers, is high, it is very important to integrate EDs into municipal planning

instruments, for example, in the urban planning instrument (POT, plan de ordenamiento

territorial), climate change policies or similar instruments, to ensure their continuous

consideration.

Methodology for the identification and selection of EDs

a. Renewable or residual energy sources: The EDs that have been developed in Colombia until

today have used natural gas or electricity as an energy source. At the international level,

successful EDs use cheap and, if possible, renewable or residual energy sources. It is

important to continue promoting the identification and quantification of these alternatives in

order to develop even more sustainable and competitive EDs that are fully adapted to the

context of the planned location.

b. Capacity (MW) required by the clients: When no detailed data on the energy demand of the

clients are available, there is a tendency to use theoretical values or literature to develop the

business plan of the ED. Many times, these theoretical values are overestimated and can lead

to an over-dimensioning of the ED. It is therefore important to use real values in the design

of the ED.

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c. System of tariffs, costs: In the feasibility studies of the seven EDs, quite different tariff

structures were proposed for the different cities. It is important to analyze in more detail the

reasons for these differences and then propose a transparent tariff structure for future

customers.

d. Transition from conceptual design and business plan to implementation: For the different

models of cooperation between public and private entities, concrete processes have to be

established for the transition from conceptual design and business plan to concrete

implementation of an ED (public, public-private, private). These processes should be tested

in pilot cases.

e. Accompaniment of the different actors: There is considerable interest on the part of national

and international private actors to invest equity and from the banking side to invest debt in

the implementation of EDs in Colombia. There is also support from public actors who adapt

the regulatory framework so that it is favorable for the implementation of EDs. However,

several issues still to be resolved in order to implement more EDs. It is important to

accompany public and private actors in this process.

NAMA for the air conditioning sector in Colombia (still in progress)

Coherent and consistent results: For the detailed formulation of the NAMA, it is important to

analyze the different components in an integrated manner in order to obtain a consistent and

coherent proposal. In other words, the description of the actions, the scopes (limits), the

calculation of their mitigation potential, the methodology for the ex-post calculation of GHG

reductions and the development of the baseline for the ex-post calculation, the Monitoring,

Reporting and Verification (MRV) system and the financial structure of NAMA have to be

developed together in order to obtain a consistent and coherent result. As part of the architecture

of the NAMA, four Catalyst Actions were identified, together with nine prioritized activities

within three Cross-cutting Actions (Fig. 3).

Figure 3. Structure of the NAMA A/C for Colombia

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Capacity building needs

a. National public authorities: The national authorities within the relevant ministries have been

regularly informed and have participated in the development of concrete policies and

adaption of regulations during phase 1. The level of knowledge on EDs is therefore

relatively high already. During phase 2, the most relevant stakeholders at national level are

partners in the Steering Committee and other stakeholders will be partners in the Advisory

Committee. Where needed, topics are elaborated in collaboration with the respective national

authority, resulting in the adaption of a regulation. Additional capacity building measures

may not be necessary.

b. Urban public authorities: On a technical level, awareness about EDs could be raised within

the urban planning and environmental authorities in the 7 cities of phase 1. Accompanying

the conceptual design and the financial planning and being part of the city-level working

groups, allowed to increase understanding and support for EDs. On a political level, due to

the many changes, it was much harder to achieve this goal. Centralized capacity building

courses could be a solution to train the members of urban public authorities. In addition, a

focus of capacity building measures for institutional actors in cities, where actual

development of EDs is taking place, is crucial and should therefore be foreseen in phase 2.

c. Developers: Often, developers and investors are part of the same organization. With

“developers” we refer here to the consulting companies that usually support the

investor/developer in the development of EDs. During phase 1, several national and

international consulting companies were hired by the project, to execute all the activities

needed for the conceptual design and the financial modelling in the 7 cities. The need and

opportunity has been identified to offer targeted capacity buildings to these “developers”

during phase 2, to update their knowhow and to broaden the knowledge.

d. Investors: Investors in EDs need to meet certain characteristics, i.e. being long-term

oriented, financially sound and focusing on the infrastructure space. Most of the relevant

national and international investors have been contacted during phase 1 and have been part

of the business roundtables in the 7 cities. Letters of intent with around 10 possible investors

could be signed during phase 1. Specific capacity building initiatives are therefore not

needed, but there is the need to actively partner with investors in further development and

implementation of EDs.

e. Engineering, procurement and construction (EPC) companies: Detailed engineering,

procurement and construction are often offered by one company that is using the support of a

consulting company for the engineering. In addition, EPC companies are often the ones to

initiate retrofit or new urban development projects. In the EDs that were realized until today

in Colombia, very few EPC companies have been involved. Therefore, it is crucial to

broaden the expertise within this sector of companies. During phase 2, specific training for

members of EPC companies on project management and capacity building for decision-

makers should be provided.

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16

f. Banking sector: During phase 1, several information meetings for the development and

business banking sectors have been conducted. In addition, one of the ED projects has been

realized with national banks, utilizing the project finance scheme. In phase 2, technical

assistance to banks will build on phase 1’s experience and knowledge, with an anticipated

greater effort to capture opportunities for standardization and efficiency (factsheets and

alike) and to integrate tailored training into actual/concrete pilot projects.

A.3. Stakeholders

The project will engage with key stakeholders in the value chain for ED projects in Colombia

through tailored project activities. The main stakeholders groups targeted by the project are

following:

i. National policy makers, including the main project partners, as well as subnational

governments and municipal authorities (e.g. environmental, urban planning, urban

renovation).

They will benefit from enhanced knowledge and capacity, targeted support for further

development and implementation of policy, normative and planning instruments, as well

as technical assistance for advancing new Energy District projects.

ii. Other national and subnational actors, including: utilities, ED project developers,

investors, energy service companies (ESCOs), banking sector including local

development banks (Findeter, Bancoldex, other), business associations including

CAMACOL (Chamber of the Colombian construction sector), CCCS (Consejo

Colombiano de Construcción Sostenible), the National Business Association of

Colombia (ANDI) and the Association of Air Conditioning and Refrigeration

(ACAIRE), as well as final users of the future Energy Districts.

They will benefit from increased awareness, knowledge and capacities and strengthened

collaboration in order to accelerate the development of the market for energy district

projects. They will also receive targeted assistance to overcome identified gaps/barriers

and facilitate realization of developed projects.

iii. National universities and research centers.

They will benefit from support to develop and/or adjust knowledge modules and

curricula, as well as from know-how exchange with international and Swiss academia

and other international research institutions.

Ultimately, the final beneficiaries of project interventions are the inhabitants of the Colombian

cities that will develop Energy District projects. They will benefit from equal or lower energy

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17

costs and higher comfort and security of A/C submission in those buildings served by the energy

district infrastructure and overall cleaner, more sustainable living and working conditions3.

A.4. Synergy

The project is fully in line with national- and city-level needs, challenges and strategic priorities

in terms of low-carbon urban development, energy efficiency and renewable energy, and

especially the Colombian strategy on green growth. The Program is also fully consistent with

Colombia’s international commitment to reduce its GHG emissions and Ozone Depleting

Substances (ODS) in the framework of the Paris Agreement and the Montreal Protocol.

Possible synergies have been identified with the following ongoing technical assistance

projects/initiatives in the field of energy efficiency and sustainable urban development:

SECO Energy Cities initiative (2018-2021): This initiative funded by SECO and

developed together with the Energy Mining Planning Unit (UPME), as main counterpart

of this initiative, seeks to improve the quality of energy management in Colombian

cities that were selected as pilot cities (Pasto, Fusa and Montería). This will be done

through the introduction to Colombia of the "energy city" tool (Energiestadt4), originated

in Switzerland 25 years ago, which has been successfully adapted in 21 countries of

different latitudes. Monteria is included in the 7 cities prioritized within the ED second

phase project. ED’s are recognized within the Energy local strategy developed for

Monteria under the Energy Cities initiative. Therefore, a clear synergy must continue to

be developed.

UPME-UNIDO project “Promotion of Industrial Energy Efficiency (IEE) in

Colombian Industries project” (2015-2019). The project has been funded by the GEF,

implemented by UNIDO during 2016-2019 with UPME as main executing partner. It has

supported the transformation of Colombia’s market for IEE and scaling-up of key IEE

measures. The opportunity exists for the EDs Project to benefit from and, where

possible, lever the IEE project’s experience in supporting development and adoption of

EE standards and technical regulation, in piloting the use of ESCOs models for the

implementation of EE measures in industry, and promoting financing mechanism for IEE

projects. The project can also benefit from the existence of a network of Universities that

are actively promoting EE in industries, and from the availability of a cadre of qualified

UNIDO national experts in energy management systems/ISO 50001 and optimization of

industrial motors, pumps and steam systems.

SECO-UNIDO Global Eco-Industrial Parks Programme (2019-2023). The EIP

Programme’s objective is to demonstrate the viability and benefits of Eco-Industrial Park

3 SECO WE Independent Evaluation of Energy-Efficient Cities (August 2018) found that users of the La Alpujarra

ED reported lower energy costs, more comfortable working conditions, more reliable temperatures, additional space

since the transition to ED-generated cooling. 4 For more information: https://www.local-energy.swiss/programme/energiestadt.html#/:

https://www.local-energy.swiss/programme/energiestadt.html#/

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18

approaches in scaling up resource productivity and improving economic, environmental

and social performances of businesses. A country-level intervention in Colombia is

envisaged to start in the second half of 2019. Synergies between the projects will be

explored, including potential direct linkages of energy district infrastructure to eco-

industrial parks for efficient and environmentally friendly provision of heating and

cooling services to industries.

The SEforAll-UN Environment District Energy in Cities Initiative. The District

Energy in Cities Initiative is a multi-stakeholder partnership coordinated by

UN Environment. It supports local and national governments to build local know-how

and implement enabling policies that will accelerate investment in modern – low-carbon

and climate resilient – district energy systems. Colombia joined the Initiative in 2018 as

a replication country, with a focus on and the addition of Medellin and Cartagena. Its

participation is coordinated through Minambiente. Synergies and coordination

opportunities will be explored, in order to avoid overlaps, and ensure that the results of

both projects can benefit from mutual interactions and the added value to Colombian

cities is maximized.

GIZ Proklima Programme. The Programme actively promotes environmentally

friendly air conditioning and refrigeration in all sectors through the use of natural

refrigerants and energy efficient applications. The programme will also look at raising

awareness and implementing pilots in the field of environmental cooling and

refrigeration for sustainable industrial parks or Eco Industrial Parks.

Ozone Technical Unit of the Minambiente, ODS Phase out Program - HPMP phase

I and phase II. More than 85 projects have been implemented to fulfil the Montreal

Protocol commitments, resulting in the elimination of 1936 tons of ODS in the country.

The projects have improved the national institutional framework and promoted

alternatives in relevant productive sectors, mainly polyurethane foam, refrigeration and

air conditioning. The final stage of HPMP II is currently being implemented. It

envisages activities in institutional and regulatory strengthening, capacity building, waste

management of ODS and demonstration projects with the end users of ODS, especially

for cooling systems. A domestic refrigeration NAMA is being implemented, which aims

to achieve the complete transformation of the domestic refrigerator sector to climate

friendly, energy efficient appliances, including proper end-of life management. Together

with the Energy Districts Phase 1, it is part of the Low Carbon Development Strategy

(LCDS) and the Program For The Rational And Efficient Use Of Energy And

Unconventional Energy Sources (PROURE) and is aligned with the Policy for

Sustainable Production and Consumption, the Environmental Policy for the

Comprehensive Management Of Hazardous Waste and the Policy for the Comprehensive

Management Of Electrical And Electronic Equipment Waste (WEEE).

SECO – ONUDI GQSP Global Quality and Standards Programme. Global trade is

growingly embedded within value chains and is increasingly governed by quality and

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19

standards requirements. The GQSP addresses challenges faced by exporters from

developing countries, to meet and prove conformity with those requirements.

Cooperation with some of these initiatives was already promoted during phase 1 of the project.

During the kick-off phase of Phase 2 project, meetings will be held with management teams of

these projects/initiatives to further discuss opportunities for cooperation, in order to avoid

overlap and exploit synergies. Additionally, synergies with existing green credit lines of local

development banks (Bancoldex, Findeter) as well as regional development finance institution

(e.g. Inter-American Development bank) will be explored.

B. UNIDO APPROACH

B.1. Rationale

The promotion of Energy Districts in Colombia is well aligned with the increased interest of the

country in moving towards a green growth model and a low-emission economy as demonstrated,

among others, by its recent National Circular Economy Strategy. In this context, Energy

Districts as a cooling (or heating) solution allow introducing mechanisms that close cycles of the

urban metabolism, increase energy efficiency, integrate renewable energies, and reduce

emissions of greenhouse gases and ozone-depleting substances. Energy Districts are included

among the measures to mitigate GHG emissions in Colombia’s nationally Determined

Contribution to fulfil the country’s commitments vis-à-vis the Paris Agreement, and in

Colombia’s strategies to phase out the use of ODS given its obligation under the Montreal

Protocol. They are also part of the energy efficiency measures formulated in the "Indicative

Energy Efficiency Action Plan PAI - PROURE 2017-2022" adopted by the Colombian Ministry

of Mines and Energy.

Through its first phase, the Energy Districts Program promoted Energy Districts as sustainable

urban infrastructure and an innovative business model for the provision of air conditioning. Yet,

some gaps still need to be filled in order to consolidate the results achieved. In this perspective,

the second phase of the project will be strategically oriented to:

Promote the adoption and implementation of the policy and regulatory instruments

elaborated in the first phase, in order to establish the enabling conditions for further

development of Energy District business cases.

Impulse the Energy District market by enhancing knowledge, capacity and collaborations

among key stakeholders, by ensuring that more players enter the Energy District value

chain.

Accompany already identified and new Energy District projects towards implementation.

The project will do so by identifying knowledge/competency gaps and capacity needs of key

stakeholders across the value chain for the development and implementation of ED projects in

Colombia (Fig. 3), and addressing those gaps through a tailored mix of capacity building and

technical assistance activities. A strong focus on generating, aggregating and disseminating

_________________________________________________________________________________________________________________________________________________________________________________________


20

know-how, also through the establishment of a Competence and Know-How Center, will ensure

sustainability of project results and help unlock replication and upscaling of ED projects.

During project kick-off phase, the scope of interventions (in terms of types of EDs models to

promote, specific actors to engage and resources to develop, others) will be refined, based on the

replication and scalability potential and the identified areas with higher complexity and greater

need for assistance to demonstrate viability. Possible “niche markets”, i.e. specific commercial

application for Energy Districts such as industrial parks, shopping malls, new real estate

conglomerates, will be also explored to identify priority areas for technical assistance and

promotion activities.

Figure 4. Value chain for the development and implementation of ED projects in Colombia

B.2. Comparative Advantage

UNIDO has been identified by SECO as the implementing partner/agency for the second phase

of the Energy Districts in Colombia project in view of its wide-ranging in-house technical

expertise, type of technical cooperation activities carried out on the ground, and strong and

effective field presence in Colombia.

For nearly 30 years, UNIDO has been promoting and supporting energy efficiency in industry as

a tool to increase competitiveness and reduce GHG emissions and other negative environmental

impacts. Through its global programmes on energy management systems and standards and on

optimization of industrial energy systems, UNIDO interventions has benefited and started to

expand to other sectors such power generation, public and commercial buildings, water utilities,

transport and even city level energy management system programmes. The implementation of

these programmes in over 20 countries during the last 10 years has equipped UNIDO with a

wealth of knowledge and expertise in international best practices and technologies for energy

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21

efficiency, as well as in the institutional frameworks and capacities needed to increase their

uptake.

Overall, UNIDO has a long-standing experience in building up value-chains, enhancing

knowledge and promoting technology transfer to support long-term market development.

Besides the strong energy efficiency focus, UNIDO can further contribute its strong Montreal

Protocol expertise and experience to maximize impact and benefits to Colombia’s sustainable

development.

The project also aims to promote sustainable urban development in a way that is fully aligned

with UNIDO’s strategic approach to the issue, since it supports the integration of low-emission

and energy efficient infrastructure and services into urban planning. The project will in fact

demonstrate integrated solutions and systemic approaches for energy efficient cooling and

heating networks for buildings and other infrastructures, and showcase the central role cities can

play in the energy transition and climate actions.

UNIDO is also uniquely positioned to facilitate collaboration and synergies between Colombia’s

ongoing leading work on Energy Districts and relevant international initiatives by other UN

entities and/or international organizations, to enhance impact, benefits and visibility of

sustainable development programmes in Colombia and the region.

B.3. Project Kick-off Phase

During the project Kick-off Phase, which is envisaged to have duration of 3-4 months, the

following activities will be carried out:

Establishing the project core management team, with clearly defined roles, functions and

competences profiles;

Meetings and discussion with main counterparts and key stakeholders to refine project

interventions and to detail activities. It is to mention in particular:

o Meetings with ACAIRE to details activities for the establishment the ED

competence and knowhow centre.

o Workshop(s) with key stakeholders of the Energy Districts’ value chain to

review/ validate gaps and opportunities, both at national and city levels.

Defining the prioritization criteria (maturity and quality of ED’s business case, required

ratio of developers’ co-financing, level of city commitment, etc.) for the selection of

pilot projects to be supported by the project and refining technical assistance scope and

collaboration modalities at cities level;

Meetings and discussion with management teams of other relevant ongoing technical

assistance projects to identify synergies and discuss possible cooperation and joint

activities;

Conduct a Gender Analysis, including the development of a gender strategy and action

plan to effectively integrate and mainstream gender dimensions in project interventions.

The gender analysis and strategy will build on existing information and relevant

documents available;

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22

To develop a detailed Monitoring and Evaluation framework for the project in

consultation with Government counterparts and donor, in accordance with national MRV

guidelines and aligned with the National Climate Change Information Systems;

To conduct a deeper analysis of the project’s environmental and social risks and

appropriate mitigation measures, and to develop an Environmental and Social

Management Plan (ESMP), also through consultations with project counterparts, partners

and stakeholders;

Develop a detailed work plan and budget for the first year of project implementation, and

a more general work plan and budget distribution for the whole project duration with

clear definition of roles and responsibilities of project partners in the execution of project

activities, and set milestones for deliverables and outputs.

B.4. Sustainability Strategy

The main challenges for the sustainability of the project outputs is that the know-how generated

during the first and second phase of the project does not spread sufficiently and that the different

stakeholders do not cooperate to build up further energy districts.

Overall, the design of project interventions has incorporated the lessons learnt in the first phase

and addressed the recommendations made in the final evaluation. Further support to the effort by

government actors to improve the regulatory framework for a more rapid deployment of Energy

Districts is envisaged in this second phase with the intention to generate medium- and long- term

results.

The project will focus on building up the value chain for EDs projects, by working with and

strengthening capacity of different stakeholders at different levels, collaborating closely with

existing Colombian associations, and facilitating collaboration and knowledge transfer during

and after the project through the establishment of a EDs Competence Center. The key partner in

this regard will be ACAIRE. This will allow consolidating the conditions for the long-term

establishment of an Energy District market, so that further energy districts are developed after

project completion.

To guarantee the implementation of other successful examples of Energy Districts and to

demonstrate the business case for the ED solutions, the project will technically assist 7-10 cities

(the 7 cities from Phase I and 3 envisaged new cities yet to be identified) to include Energy Dis-

tricts into their territorial/urban planning and support the realization of 2-3 ED projects (yet to be

identified). While the technical assistance to be provided to the 2-3 selected cities and ED pro-

jects will largely focus of addressing each project specific technical, legal, commercial and/or

financial barriers, by doing that a set of methodologies and tools will be also developed, in order

to help more cities and developers close the gap between project development and realization

and accelerate replication after project completion. Mechanisms for the updating of information

and dissemination of knowledge will be consolidated. Additionally, mechanisms such as a call

for proposals to co-finance studies to support the realization of mature projects will be offered to

interested stakeholders as incentive, and will contribute to enhancing sustainability of market

development results.

_________________________________________________________________________________________________________________________________________________________________________________________


23

Additionally, efforts will be made to communicate beyond direct project stakeholders (e.g. by

participating in national, regional and international fora) and to capitalize on the experience and

information generated though the projects in order to increase the likelihood of generating long-

term change and to facilitate replication and broader project spillovers in the country and the

region.

B.5. Gender Mainstreaming Strategy

The project has been formulated considering the UNIDO guide on gender mainstreaming in

energy and climate change projects. The gender dimension will be a cross-cutting issue

throughout the project.

An initial gender desk-analysis has shown that:

Colombia has ranked 40th in the Global Gender Gap Index 2018, with a score of 0.729,

Colombia has ranked 90th in the Global Gender Inequality Index 2017, with a score of

0.383.

According to the World Bank, labour force participation rate of women was

approximately 43% in 2017, compared to global average of 23.4%,

Colombia ranked 5th

is the IPU-UN Women’s “Women in Politics 2019 map”, with 53%

female ministers (9 out of 17). Women however occupy only 18% of seats in the

Colombian Parliament, compared a global average of almost 24% (World Bank, 2018).

In the business sector, studies have placed Colombia 2nd

in the global ranking for women

in managerial positions, with over 52%. However, gender gap in the STEM field remains

wider, with only 33% of Science, Technology, Engineering and Mathematics (STEM)

jobs held by women according to DANE, Colombia’s official statistics agency.

Despite some encouraging indicators, gender stereotypes and perceptions are still

relatively common in Colombia, and a relatively clear division of labor in Colombia still

persist between jobs traditionally accomplished by men (e.g. in productive industries)

and other activities reputed to be more appropriate for women.

Infrastructure development can act as a key enabler for women economic empowerment

(WEE) in both urban and rural settings5

Taking the needs of women and men into consideration during consultations and project

planning can reduce conflicts and make energy infrastructure projects more inclusive and

efficient (USAID, IUCN 2018). In order to ensure good participation of women in

consultations well-targeted communication, provision of information about the project

and well-timed scheduling of events are all important factors to consider.

5 http://www.sddirect.org.uk/media/1332/icedinfrastructurefull-paper-20161130173941.pdf; https://idl-

bnc-idrc.dspacedirect.org/bitstream/handle/10625/57162/IDL-57162.pdf?sequence=2&isAllowed=y;

http://www.sddirect.org.uk/media/1353/infrastructure-womens-economic-empowerment-scoping-

report.pdf

https://www.usaid.gov/sites/default/files/documents/1865/IUCN-USAID-Making_the_case_for_INFRASTRUCTURE.pdf

http://www.sddirect.org.uk/media/1332/icedinfrastructurefull-paper-20161130173941.pdf

https://idl-bnc-idrc.dspacedirect.org/bitstream/handle/10625/57162/IDL-57162.pdf?sequence=2&isAllowed=y

https://idl-bnc-idrc.dspacedirect.org/bitstream/handle/10625/57162/IDL-57162.pdf?sequence=2&isAllowed=y

http://www.sddirect.org.uk/media/1353/infrastructure-womens-economic-empowerment-scoping-report.pdf

http://www.sddirect.org.uk/media/1353/infrastructure-womens-economic-empowerment-scoping-report.pdf

_________________________________________________________________________________________________________________________________________________________________________________________


24

The mainstreaming of gender in the project will be pursued by ensuring a good representation of

both women and men within the project team as well as on the side of project counterparts,

stakeholders and beneficiaries (also at different levels: participants, trainers, organizers, experts,

etc.). During the project kick-off phase a gender analysis for the project will be carried out in

order to define the project-relevant gender baseline and understand how to integrate the gender

dimension and the principles of gender equality and empowerment of women in the project

activities and project deliverables, whenever feasible. Based on the gender analysis, a gender

strategy and action plan will be developed. The advice and guidance of the UNIDO Gender team

in Vienna will be sought in preparation of the gender analysis and implementation of the gender

strategy and action plan.

With regard to gender, throughout the project cycle the overarching goal will be to ensure that

women and men have equal opportunities to contribute to and benefit from the project. Good

practices in gender mainstreaming in this project will be demonstrated, wherever possible, and

negative impacts on women and men will be avoided. In practical terms this means that:

i. Efforts will be made to ensure gender balance in the Project Steering, Advisory and

Technical Committees;

ii. Equal participation of women and men in training activities as participants and

facilitators will be encouraged and supported. At the project implementation stage the

needs of involved trainers and trainees will be assessed, including gender dimensions

and, wherever possible, addressed;

iii. Existing and new project staff will be trained on gender mainstreaming and sensitized

about project relevant gender dimensions;

iv. Gender dimensions will be considered in all decision-making processes.

v. At the level of project activity implementation, an effort will be made to consult with

stakeholders promoting gender equality and women's empowerment, such as gender

focal points of stakeholders and associations.

vi. All knowledge products and publications, as well as communication and advocacy

materials will be developed incorporating gender mainstreaming considerations,

whenever relevant, in order not to perpetuate prejudiced gender roles.

vii. When data collection or evaluation will be carried out as part of project implementation,

monitoring and evaluation, gender dimensions will be considered. This will include the

collection of data disaggregated by sex whenever possible.

viii. Sex-disaggregated indicators and targets have been set where relevant, and will be

verified and updated based on the results of the Gender Analysis and on the gender

strategy and action plan.

B.6. Environmental and Social Assessment

Energy Districts have been identified as a key strategic infrastructure in Colombia’s climate

change mitigation strategies and plans, due to their potential to increase energy efficiency and

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25

favor integration of renewable and residual energy sources. They also play an increasingly

crucial role in phasing out the use/consumption of ODS through the adoption of low

environmental impact refrigerants for A/C purposes.

Besides energy savings and reduction of GHG and ODS emissions, Energy Districts offer

further local social and environmental benefits, including improved local air quality and more

comfortable living and working conditions (for instance, through the optimization of ambient

temperature and more secure supply of A/C services), with consequent productivity gains.

Reducing the growing energy demand for A/C in cities also translates in reduced pressure on the

electricity grid and in freeing up power supply capacity (especially during peak power demand

periods), and therefore it allows to defer investments in additional power generation.

The environmental and social screening was conducted during the preparatory phase of the

project. Most of the project activities and outputs are related to policy support as well as

knowledge and capacity development. One of the project outputs aims at creating tools, business

models, etc. in order to support market development of energy districts. Hence, even though the

project itself will not implement any systems as such it does fit into Category B of the UNIDO

ESSPP6.

To address the risks identified during the project design in relation to such business models for

EDs, a more detailed analysis of the E&S risks and appropriate mitigation measures and related

criteria will be carried out during the project kick-off phase and an Environmental and Social

Management Plan (ESMP) will be prepared, also through consultations with project

counterparts, partners and stakeholders. The ESMP will be based on UNIDO’s templates and in

line with UNIDO’s Guidance on Undertaking an Environmental and Social Management Plan

(ESMP) for Category B Projects.

In addition, as ED projects to be supported by the project will be identified, a separate E&S

screening in line with UNIDO’s ESSPP will be conducted and more detailed assessments of the

environmental and social risks will be carried out for each ED project. The assessments will also

look at the environmental and economic benefits that ED projects bring to territories, businesses

and end-users over the projects’ lifespan. A methodology will be developed as result of these

real-life assessments and disseminated to encourage the development of future project following

standardized socio-economic and environmental criteria.

C. THE PROJECT

C.1. Project Development Objective and Intervention Strategy

6 Category B projects are likely to have less adverse impacts on human populations or environmentally

important areas than those of Category A projects. Likely impacts will be few in number, site-specific, and few if any will be irreversible. An ESMP will need to be completed as per UNIDO and donor requirements.

_________________________________________________________________________________________________________________________________________________________________________________________


26

The project’s objective is to foster and promote energy efficient and sustainable urban

development by further promoting the development of Energy Districts in Colombian cities. The

project aims to improve energy efficiency and reduce emissions of greenhouse gases (GHG) and

ozone-depleting substances (ODS) of cooling and heating utility services in buildings and

infrastructure of the cities that will develop Energy District projects.

In order to achieve these objectives, interventions will be structured around three project

components (PCs):

PC 1 – Institutional support: Improve and implement the regulatory framework at

national and city level in order to promote Energy Districts as a solution for an efficient

and better use of energy for cooling (or heating) and for a sustainable urban

development.

PC 2 – Knowledge and capacity development: Consolidate and disseminate the

knowledge related to the development of Energy Districts, as well as strengthening the

capacities and encouraging the collaboration of different stakeholders, including the

private sector.

PC 3 – Market development: The project will also deliver technical assistance to

selected cities to advance market maturity for the implementation of Energy Districts.

The three components are interlinked and expected to feed into each other. In this way, the

project will provide the final push for the diffusion of the Energy Districts as an innovative and

efficient infrastructure for utility services in Colombian cities, especially with regards to the air

conditioning market.

Figure 4 below shows the project’s theory of change. Table 1 shows the project’s Logical

Framework (LogFrame). It is to mention that the Logical Framework is closely based on the

LogFrame of the SECO’s Credit Proposal supporting the implementation of this project.

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27


Figure 5. Project‘s Theory of Change

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28


Table 1. Project Logical Framework.

Outcome Output KPI' s Means of verification Assumptions

Impact: Inhabitants of Colombian Cities benefit from cleaner and more sustainable living conditions.

a. No. of inhabitants benefiting from sustainable urban development projects (SECO std.21); sex-disaggregated

b. No. of cities with urban development measures (including for improving governance) in the sectors of energy efficiency (SECO std. 22)

c. GHG emissions saved or avoided in t CO2eq (SECO std. 23) Target: >3000 t CO2eq (over ED projects lifetime)

d. Energy saved (MWh) Target: >3000 MWh (over ED projects lifetime)

e. Compliance with ODS reduction targets

Information from territorial or city planning instruments including Energy Districts as a sustainable measure

City and national environmental official reports

Reporting of ED in operation and in implem./planning

EE and environmental agenda remain high in national and city-level priorities.

Economic crisis and public budget cuts do not undermine the prioritization of EDs in private and public sector agenda.

____________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________

29



C - Institutional component

Outcome C1.1. National level: Energy Districts are integrated in relevant policy, regulatory and normative instruments, and some of these instruments become operational.

a. # of proposals for reforming measures in energy policy, related to Energy Districts, implemented and integrated. Target: 1

b. Improved rules and regulations and enhanced competitiveness for facilitating market access (SECO std. 14)

c. Measures for improving capacity development (SECO std. 3)

Ministerial statistics on no. of firms applying/benefiting from regulatory instruments in place

Public list of national urban and environmental policies and instruments set in place, especially VAT exemption.

Reports from Ministry on no. of new policies under review

Ministry and consultant report on capacity levels (on energy efficiency)

Political will to adapt institutional and legal framework remains strong.

____________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________

30



Output C1.1. National level: Energy Districts considered in different policy, regulatory and normative instruments either under develop-ment or used. .

a. Instruments developed in Phase I are implemented and used by stakeholders.

b. # of proposals for new/amended rules (laws, decrees, regulations) developed and submitted for adoption processes Target: 2

c. # of RETSIT demonstrative projects in public buildings Target: 2

d. # of involved staff from relevant national institutions ; sex-disaggregated

Official publications by Minambiente, Minenergía and UPME

Publications at city level (newspapers, websites)

Projects’ reports

The cooperation between Minambiente, Minenergía and UPME and other involved entities is efficient. National priorities remain positive towards EE/RE.

Outcome C1.2 Energy efficiency re-quirements for public procurement and public buildings have been inte-grated in relevant legislation.

a. No. of proposals for reforming measures developed and integrated Target: 1

b. Improved rules and regulations and enhanced competitiveness for facilitating market access (SECO std. 14)

Public list of national laws set in place

Political will to adapt institutional and legal framework remains strong.

____________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________

31



Output C1.2. Propositions made for integrating EE requirements for public procurement and public buildings.

a. No. of proposals for new/amended rules (laws, decrees, regulations) developed and submitted for adoption processes

Target: 1

Reports National priorities remain positive towards EE/RE.

Outcome C1.3. City level: Energy districts integrated in relevant territorial and city planning instruments.

a. No. of city planning instruments with

Energy Districts included

Target: 5

b. Measures for improving capacity

development (SECO std. 3)

c. National plan for the implementation of

Energy Maps on city level

Territorial development plans (POT), Energy Maps or the Municipal Development plans.

Public List of new regulatory instruments

City and consultant report on levels for EE capacity

Cities and public utilities remain interested in promoting and adopting new technologies

Output C1.3. City level: Energy districts considered in territorial and city planning

a. No. of incentives proposals elaborated by Cities to promote Energy Districts. Target: 5

b. # of trainings/ workshops/ working groups held Target: 10

c. # of studies/analyses conducted

Target: 2 d. # of city-level energy maps piloted

Target: 2

Publications at city level (newspapers, websites)

territorial planning instruments (POTs)

Studies published

City Administration is interested in promoting Energy Districts Sufficient time and know-how within city administration.

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32



C2 - Knowledge and capacity development component

Outcome C2.1. The “Competence And Knowhow Center” has become the reference point for all questions related to Energy Districts

a. No. of ED-related requests sent to the Center per year Target: 100 (by the end of the project)

b. Measures for improving capacity development (SECO std. 3)

Registry of individuals and firms supported by the center

Guides, website, informative factsheets and other type of knowledge products

Trained staff from ACAIRE on Energy Districts

ACAIRE commitment remains high Sufficient capacities within ACAIRE in order to continue operation of the center after project termination

Output C2.1. Spreading Energy District knowledge: the “Competence And Knowhow Center” has become the reference point for all questions related to EDs

a. No. of cooperations (MoU) signed between relevant stakeholders (e.g. cities, developers, investors, final users) Target: 7

b. No of studies carried out by the Center Target: 1

c. No. of knowledge products disseminated Target: 10 (gender-responsive)

d. No. of staff/personnel trained; (sex-

disaggregated and at least 40%7 of whichever gender is underrepresented within the relevant targeted stakeholder group)

Consultants Reports

MoUs

Studies and reports by the Center

Sufficient capacities (time and know-how) at ACAIRE Private sector is interested in Energy Districts and makes use of the center

7 This threshold will be reviewed during the project kick-off phase in the light of the findings of the project’s Gender baseline analysis.

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33



Outcome C2.2. The human capital needed for Energy Districts has grown

a. Measures for improving capacity development (SECO std. 3)

University curricula and other knowledge modules offered (website)

Employment statistics in the EE/RE sector

Consultant reports on seminars, Conferences and Study trips conducted

Universities and other training entities are interested in the topic of Energy Districts

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34



Output C2.2. Capacity development: the human capital needed for Energy Districts has grown

a. No. of persons/entities undergoing training or continuing education Target: 100 (at least 40%8 of whichever gender is underrepresented within the relevant targeted stakeholder group)

b. No. of knowledge modules created Target: 5 (gender-responsive)

c. No of seminars, conferences and other type of workshops held Target: 59 (at least 40%7 participants and facilitators of whichever gender is underrepresented within the relevant targeted stakeholder group)

d. Number of study trips including a stock-take workshop upon return Target: 18 (at least 40%7 participants and facilitators of whichever gender is underrepresented within the relevant targeted stakeholder group)

Consultant reports Surveys

Private, academic and public sector are interested

C3 - Market development component

8 This threshold will be reviewed during the project kick-off phase in the light of the findings of the project’s Gender baseline analysis.

9 These will be additional to the seminars and events indicated in C 1.3

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35



Outcome C3.1 Maturity of the market: further Energy Districts in Colombia developed

a. No of mature Energy Districts projects starting/having started to be implemented Target: 10

b.Greenhouse gas emissions saved or avoided in t CO2eq (SECO No. 23) Target: >3000 t CO2eq (over ED projects lifetime)

Kilowatt hours saved through energy-efficiency measures (SECO std. 24) Target: >3.000.000 kWh (over ED projects lifetime)

Kilowatt hours additionally produced from renewable energy (SECO std. 24) Target: >1.000.000 kWh (over ED projects lifetime)

Number of work groups established in cities

Number of stakeholders related with Energy Districts reached

Field visits MoU, letters of intention or

contracts signed between the Energy District project owner and final users.

Statistics of energy use in buildings

Sufficient technical know-how is available.

The public sector is interested in promoting Energy District as a urban development measure

The private sector is interested in energy-efficient technologies.

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36



Output C3.1. Maturity of the market: further Energy Districts in Colombia implemented or under development.

a. Tools (e.g. methodological guide) are used by stakeholders.

b. Models for transition from development to implementation developed Target: 3

c. Models successfully applied in pilot cities Target: 2

d. No. of proposals handed in for each call for proposal Target: 3

e. Number of consultancies provided Target: 10

Consultant reports Tender documents call for

proposal

Private and public actors actively participate in the working groups in cities and continue their work in order to further enhance project maturity. Developers, investors and final users interested in Energy Districts.

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37


C.1.1. Outline of project activities10

Component 1 – Institutional support

During phase 1, support was given to national and subnational institution to integrate Energy

Districts into policy, regulatory and normative instruments. This component is designed to

ensure that this support is continued and to advance an integral approach to the promotion of

Energy Districts as a strategic infrastructure for an efficient and better use of energy and for a

sustainable urban planning, in close engagement with city-level actor and institutions.

Outcome C1.1. National level: Energy Districts are integrated in relevant policy, regulatory

and normative instruments, and some of these instruments become operational.

Output C1.1. National level: Energy Districts considered in different policy, regulatory and

normative instruments.

Activities under this output will focus on:

i) Supporting the operationalization of fiscal benefits, e.g. VAT exemption, for the provi-

sion of ED-based thermal energy services,

ii) Supporting the approval, adoption and implementation of the technical regulation for

thermal installations in buildings (RETSIT) developed with and issued by the Ministry

of Mines and Energy. Support to the implementation of the new technical regulation will

be provided within the scope of the ED projects brought to implementation stage by the

Phase 2 project.

iii) Further developing and harmonizing guidelines and tools for the elaboration and

institutionalization of urban energy maps, as well asother studies on the market for

Energy Districts in Colombia (e.g. analysis of solutions to address market barriers, full

market value assessment, methodology to assess financial, environmental and social

benefits of EDs);

iv) Revising current and/or identifying further normative frameworks that may be strategic

for the development and deployment of Energy Districts in order to complement or

propose adjustments to them;

v) Providing national authorities with close engagement with and strong visibility on the

EDs projects supported by the project.

Outcome C1.2. Energy efficiency requirements for public procurement and public buildings

have been integrated in relevant legislation.

Output C1.2. Propositions made for integrating Energy efficiency requirements for public

purchases and public buildings.

10

For reasons of consistency with the SECO Credit Proposal supporting the implementation of this project,

outcomes set in this UNIDO project document are based on the SECO Credit Proposal. Outcome 3.1. has been

isolated in an additional component, as agreed during the fact-finding mission (13-15 May 2019).

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38


Under the overall coordination of Minambiente and in collaboration with other relevant donors,

activities under this output will continue supporting the work for the implementation of the

NAMA on air-conditioning (energy efficiency requirements for public purchases and public

buildings) initiated during Phase I, to promote EDs and other efficient A/C services and

strengthen the enabling conditions for their diffusion. Phase 2 project’s inputs will include

support to cross-cutting methodological aspects such as actions design, calculation of GHGs

emission mitigation potential, methodology for the ex-post calculation of GHG emission

reductions, Monitoring, Reporting and Verification (MRV) system and the financial structure.

In addition, activities under this output will also aim to support implementation of the two

pillars of the Air-conditioning NAMA with the biggest relevance and potential impact on a

future EDs market, i.e. the “Energy Districts” and the “A/C in Sustainable Public Procurement”

pillars.

Outcome C1.3. City level: Energy districts integrated in relevant territorial and city planning

instruments.

Output C1.3. City level: Energy districts considered in territorial and city planning.


i) Promoting and support piloting the adoption by 7-10 cities of energy maps as an urban

planning instrument, with a focus on ensuring strong ownership, institutionalization and

regular updating by the municipalities;

ii) Strengthening the institutional working groups established in the first phase with a focus

on distilling a “EDs core team” of authorities, departments and other EDs interested

parties that can act as champion to push/support the realization of specific Energy

District project(s), as well as facilitating interactions between public and private

stakeholders in the local Energy Districts value chain. In distilling local/city EDs core

teams special attention will be given to the institutional mandates, roles, responsibilities

and interests of the identified members, in order to ensure as much as possible long-term

relevance and commitments;

iii) Technically supporting 7-10 participating cities to include Energy Districts as

environmentally friendly urban/infrastructure measures into their short/medium/long-

term territorial planning and designing normative instruments and incentives to promote

Energy Districts.

The target beneficiary cities include the 7 Phase I beneficiary cities (Bogotá, Medellin,

Bucaramanga, Cali, Cartagena, Monteria, Villavicencio) and 3 new cities yet to be identified.

Component 2 - Knowledge and capacity development

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39


Building up competences and knowledge within academia and the key stakeholders in the value

chain is essential to ensure that Energy Districts can be promoted sustainably. At the same time,

the successful implementation of Energy Districts requires different stakeholders with technical,

commercial, financial, urban planning and environmental expertise to interact closely. This

component is designed to consolidate and disseminate knowledge related to the development of

Energy Districts, as well as strengthening the capacities and encouraging the collaboration

among more public and private stakeholders.

Outcome C2.1. The Competence and Know-how Center has become the reference point for all

questions related to Energy Districts

Output C2.1. Spreading Energy District knowledge: the “Competence and Knowhow Center”

has become the reference point for all questions related to Energy Districts.

Activities under this output will focus on supporting the establishment of a Competence and

Knowhow Center on Energy Districts (hereinafter simply referred as the EDs Center). The ED

Center will gather and make available information on Energy Districts, will produce market

reports and other specialized studies, will provide specialized training, will connect interested

parties and specialized actors, and will facilitate collaboration among relevant stakeholders

along the Energy District value chain as well as South-South knowledge transfer in the Latin

American region.

ACAIRE has been identified by government counterparts, SECO and UNIDO as the best

institution to host the EDs Center and ensure its sustainability, due to ACAIRE’s unique and

highly relevant mandate, expertise, regional representation, networks and constituency.

ACAIRE is in the process of creating a R&D Center for Air Conditioning and Refrigeration

(CIDARE from its name in Spanish) with several thematic research and service areas, including

energy districts and energy efficiency of refrigeration and air conditioning. The CIDARE offers

an ideal platform for the establishment and sustainability of the EDs Competence and Knowhow

Center planned by the project.

The project engagement with ACAIRE will be structured in two phases:

- Phase 1 (tentatively project years 1 and 2): The project will technically assist ACAIRE

to reinforce its capacity and services offer with regards to Energy Districts.

This will include working in two main categories: 1) Knowledge consolidation and

dissemination and 2) Development of a services portfolio. This first category includes

supporting the development of curricula and targeted/specific training modules, the

production of tools and studies, maintaining knowledge dissemination mechanisms

(HUB), ideating technical competitions, promoting collaboration among relevant

stakeholders, among others. Opportunities to partner with academia and linkages with

Output C 2.2. will be leveraged. The second category includes the development of a

portfolio of professional, technical and administrative services, for public and private

entities. This will include the development of training and knowledge transfer

activities, the development of certification schemes for personnel and products to

support implementation of and compliance with new regulations, among others. It is

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40


envisaged that the project will support the secondment of 1-2 consultants/experts to

ACAIRE as well as the subcontracting of some project activities.

- Phase 2 (tentatively project years 3 and 4): ACAIRE is expected to progressively take

over the full responsibility for operating the EDs Competence and Know-how Center

and become a Strategic partner of the project. By integrating the activities and services

offer of the Competence and Know-how Center into those of CIDARE, by promoting

regulatory improvements and compliance, and by promoting the execution of projects

with cities, public and private actors, ACAIRE will play a key role in ensuring continu-

ity and sustainability of project results beyond project duration, and in encouraging fur-

ther market development and investments in energy districts.

Due to its strategic role, ACAIRE will be expected to provide strategic support to all

three components of the project.

Outcome C2.2. The human capital needed for Energy Districts has grown

Output C2.2. Capacity development: the human capital needed for Energy Districts has grown.

The activities under this output will be intertwined with and coordinated across all other

project’s outputs, with particular close synergies with Output C.2.1, and the establishment and

operation of Center.


i) raising awareness of different key stakeholders about Energy Districts

ii) creating specialized knowledge/competencies/skills development learning and training

modules targeted to the different actors along the Energy District value chain, both at

national and city level;

iii) organizing innovative workshops, seminars, competitions and study trips.

iv) engaging with the financing and banking sector to fully understand existing barriers for

more investments in ED projects and work together to the development and

implementation of mitigating measures with a focus on competencies and tools for ED

investments

v) engaging with universities and working with them to the integration of project-developed

EDs curricula, knowledge material and tools into formal high-education/university

under-graduate and post-graduate courses.

vi) facilitating knowledge exchanges with Swiss Academia and research institutions as well

as within the Latin American region.

Component 3 – Market Development

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41


This component has been designed to provide concrete, targeted support to city stakeholders

(public and private) with the goal of advancing the realization of high-potential Energy District

projects and unlocking a self-sustaining market for Energy Districts in Colombia.

Outcome C3.1 Maturity of the market: further Energy Districts in Colombia developed

Output 3.1. Maturity of the market: further Energy Districts in Colombia implemented or under

development.

Concrete support needs to be given to national and city stakeholders (public and private) with

the goal of advancing the maturity of actual Energy District projects and closing the gap

between project development and implementation. Activities under this output will focus on:

i) Developing a set of quantitative and qualitative criteria for the selection of the cities to

be supported in the development of EDs projects. It is anticipated that criteria such cost-

effectiveness, energy and environmental benefits, potential market replication and cities’

sustainability framework readiness will be considered and work will start during the

project kick-off phase.;

ii) Closely accompanying through tailored technical assistance 2-3 pilot cities (yet to be

identified) to bring their developed Energy Districts projects to realization. The technical

assistance will respond to the individual project’s specific barriers, be it of legal,

technical, commercial and/or financial nature. The provision of the technical assistance

will be also closely coordinate with the cities’ EDs core teams in order to maximize the

learning benefits. The project will also ensure that such tailored technical assistance and

its related deliverable will be properly documented in order to contribute to developing

methodologies and tools to be used by other cities, EDs developers and stakeholders;

iii) Producing a set of methodologies and tools to facilitate the realization of Energy

Districts (e.g. guidelines to realize the energy district network in public ground, for

M&V of energy savings, for comprehensive environmental and social impact assessment

of ED projects);

iv) Supporting early stage EDs project developers in all 7-10 cities in strengthening quality

of their ED project proposals and advancing faster towards the implementation stage. It

is anticipated that project support will be made available through Call(s) for Technical

Assistance Requests/Proposals for which EDs project developers will have also to

present a co-financing contribution. Technical assistance activities subsidized/supported

will include review of business model and analysis of the technical or economic concept;

characterize prospective clients; carry out a deeper energy audit of final clients; tariff

structuring analyses; demand connection and demand energy efficiency optimization;

environmental and social impacts assessment; and others

C.2. Risks and Mitigation measures

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42


Table 2: Project risks and mitigation measures

Risks Rating Mitigation Measures

Policy and

Institutions

Political changes

(incl. municipal

elections in 2019)

will impact

priorities within

cities according to

new local

government

agendas.

Medium-

Low

This risk has partially already been and will be mitigated by:

(i) Ensuring regular interaction with potential candidates for the

local administration in order to position Energy Districts as a

key infrastructure to promote energy efficiency and improve

urban planning.

(ii) Giving continuity to the importance of the topic through a

programmatic approach with a large number of cities, as well

as close cooperation with institutional counterparts, the

technical level within the local public entities and with

relevant private sector associations.

(iii) Putting emphasis on and facilitating the implementation of

policies, beyond commitments.

Policy and

Institutions

Commitment of

project counterparts

diminishes during

project

implementation, due

to competing agenda

priorities

Low This risk will be mitigated by:

(i) Involvement closely both project counterparts (Minambiente,

Minenergía, UPME and ACAIRE) in all important project

steps.

(ii) Ensuring close alignment of the project’s goals and objectives

with their mission and objectives.

Market

Financial

sustainability of

future energy

district cases could

be difficult to reach

and may affect the

development of

more energy

districts.

Medium-

Low

This risk will be mitigated by:

(i) Supporting the exemption from VAT for the provision of

thermal energy services, thus enhancing the financial

competitiveness of EDs.

(ii) Creating proper enabling conditions for future energy

districts from the beginning, based on the lessons learned

from energy districts on an international level and with the

pilot energy district of the first phase.

(iv) Targeting through project activities the awareness and

interest of the clients and final users.

(v) Providing close assistance for the realization of mature

Energy District projects.

C.3. Institutional Arrangements and Coordination Mechanisms

UNIDO holds ultimate responsibility for implementation of the project and delivery of planned

outputs. The key Government counterparts will be the Ministry of the Environment and

Sustainable Development (Minambiente), the Ministry of Mines and Energy (Minenergía) and

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43


the Planning Unit Energy Mining (UPME). They will provide strategic advice from technical

and political perspectives, they will ensure project alignment with national priorities, strategies

and goals, and play a critical role in achieving the pursued project’s outcomes.

The project will work closely with the Colombian Association of Air Conditioning and

Refrigeration (ACAIRE) as execution and strategic partner. Initially (tentatively in years 1 and

2), the project would technically assist ACAIRE to strengthen the necessary expertise, services

offer and capacity to host the “Competence and Knowhow Center” on Energy Districts.

Subsequently (tentatively in years 3 and 4), ACAIRE will be expected to progressively take over

the execution of all activities related to the “Competence and Knowhow Center” on Energy

Districts, and act more as key strategic partner in the project.

UNIDO will be responsible for the overall management and monitoring of the project, and

reporting on the project performance to the donor, i.e. the Switzerland State Secretariat for

Economic Affairs (SECO). UNIDO’s Energy Systems and Infrastructure Division

(PTC/ENE/ESI) will serve as the project implementing lead. Internally, PTC/ENE/ESI will

coordinate with UNIDO’s Montreal Protocol (PTC/ENV/MP) Division during project

implementation.

A Project Steering Committee (PSC) will be established to provide strategic guidance and

monitoring of the progress towards established objectives and outcomes set out in the Project. It

will comprise high level officials of the Minambiente, Minenergía, UPME and a representative

each of SECO and UNIDO. It will also comprise of a representative of ACAIRE,once ACAIRE

will cease to receive technical assistance from the project (e.g. to be a sub-contractor) and will

take on the role of strategic partner (tentatively from year 3). However, ACAIRE might be

invited to PSC sessions before year 3 when strategically needed. Additional high-level members

may be invited to attend the PSC meetings to discuss specific issues. The PSC will meet once a

year to approve the annual working plan and budget. The Project Management Unit will act as

Secretariat of the PSC. Detailed terms of reference for the PSC will be prepared and agreed on

during the project kick-off phase.

A Project Advisory Committee (PAC) will be responsible for providing feedback and advice to

the implementation of the project, especially on aspects of technical nature. It will include

middle management officials as well as technical officers from a broad selection of project

stakeholders, from both the public and private sector. The PAC will be solicited ad-hoc by the

PSC to advise on specific technical and implementation aspects as required by the PSC. It will

also advise on adaptations/changes at the strategic level, if needed. The Project Management

Unit will act as Secretariat of the PSC. Detailed terms of reference for the PAC will be prepared

and agreed on during the project kick-off phase. The PAC will not have decision-making power.

A Project Technical Committee (PTC) will be established to provide operational support,

guidance and monitoring of project interventions. The PTC will comprise technical/operational

officials of Minambiente, Minenergía, UPME, ACAIRE, SECO and UNIDO that are directly

engaged and involved in the implementation of the project. SECO will participate in the PTC

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44


through their Swiss Project Backstopper and occasionally through their program managers. The

PTC will meet once a month, convened by the Project Management Unit, and whenever

necessary to facilitate coordination between executing partners, monitor implementation of

project activities, and decide on corrective actions to address technical and operational execution

issues. Detailed terms of reference for the PTC will be prepared and agreed on during the project

kick-off phase.

A Project Management Unit (PMU) will be established in Bogota` and will be responsible for

the day-to-day management, monitoring and implementation of project activities as per agreed

project work plan. In close collaboration with the Project Technical Committee, the PMU will

support and ensure the overall coordination and implementation of project activities carried out

on the ground. The PMU will consist of a National Technical and Strategic Coordinator within

the Ministry of Environment and Sustainable Development, a National Project Manager and a

National Project Assistant within the UNIDO Office in Bogotá. The PMU will be funded by the

project; in-kind contributions to its operations will be provided by Minambiente. The PMU will

be responsible to act as Secretariat for the Project Steering Committee, the Project Advisory

Committee and the Project Technical Committee, and will be in charge of summoning the

meeting, preparing the Committees’ meeting minutes and collecting signatures.

A Project Backstopper will be in charge of assisting the implementation of the project by

providing broad technical expertise and advice on/for Energy Districts and facilitating transfer

of knowledge between Switzerland and Colombia. The Program Backstopper will be recruited

directly by SECO and he/she will work in close coordination with the Project Technical

Committee, the PMU and the UNIDO teams in Bogotà and Vienna. The Project Backstopper

will report to SECO.

Figure 5 shows a diagram of the envisaged project implementation arrangements.

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Figure 6. Project Implementation Structure

D. INPUTS

D.1. Counterpart inputs

The Minambiente will provide in-kind contributions, mostly in the form of time of specialized

personnel at managerial and operational level, for the execution of project activities and, in

particular, for:

- Technical implementation support,

- Diffusion, raise awareness and communications,

- Contribution on strategic issues to the project.

The value of this contribution is estimated to be CHF 450,000.

Additional in-kind contributions for the execution of project activities are expected from other

counterparts (Minenergía - CHF 100,000, UPME – CHF 3,378,000, ACAIRE – CHF 300,000),

beneficiary cities (an average of CHF 100,000/city has been estimated) and other public/private

stakeholders (CHF 300,000 has been estimated). These contributions will be reviewed during

project kick-off phase and then on an annual basis to reflect project plans. In-kind contributions

will be reported at the stages of project mid-term review and final independent evaluation.

It is also to mention that the cost of the technical assistance/studies and ED projects

development work envisaged under Component 3 will be shared with private and/or public

actors and ED project developers, also through a Call for Proposals mechanism. The modalities

for the Call(s) for Proposals will be structured during project kick-off phase and regularly

reviewed during the course of the project to ensure that they serve the achievement of the

intended project’s objectives.

D.2. UNIDO inputs

D.2.1. UNIDO HQs Staff

UNIDO staff at Headquarters (HQs) that will directly support the implementation and execution

of the project will consist of part-time Project Manager and Project Assistant, services from

Procurement, Finance, Legal and HRM departments. UNIDO staff at HQs will work in close

collaboration with the UNIDO Office in Bogotà, the Project Technical Committee and the

Project Management Unit (PMU) in Colombia.

The Project Manager will be in charge of the overall managerial supervision of project

implementation, the initiation and technical evaluation of procurement processes, the

identification and selection of international experts, the quality checks of technical deliverables

and reports, and the monitoring missions to the country. The Project Manager will be

responsible for mobilizing the required services from the relevant technical, administrative and

financial departments at UNIDO Headquarters. The Project Manager will also provide direct

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46


expert advice on the thematic areas of the project and ensure alignment of technical components

with international best practices and, where appropriate, standards.

The Project Assistant will i) provide administrative support to the Project Manager, ii) act upon

all/most project related transactions, including: processing of personnel recruitments, initiation

and follow-through of procurement actions, monitoring and follow-up with UNIDO HQs

services and PMU as needed, monitoring and reviewing project’s expenditures, processing of

budget revisions, initiate, review and/or closure of travel requests, establishment and

maintenance of proper project documents and records archives.

Procurement Services will provide direct support to all centralised procurement actions by

processing and managing request for proposals preparation and announcement, communication

with bidders/potential suppliers, ensuring compliance with UNIDO procurement rules and

established procedures. They will also provide support on decentralized procurement actions, as

when needed or appropriate.

Finance Services will provide direct support to the processing of project’s financial obligations,

experts and contractor’s payments, preparation of periodic as well as ad-hoc budget and/or

expenditure reports.

Human Resource Management Services will provide guidance on and direct support to

recruitment and administration of project personnel and of national and international

experts/consultants, including actions related to: fee recommendation, administration of ISA

contract issuance and amendments, travel documents, security clearance, others.

Legal Services will provide expert advice and guidance on possible contractual issues that might

have an impact or relevance to the existing terms and conditions and privileges of UNIDO as

Specialized Agency of the United Nations.

UNIDO colleagues from the Montreal Protocol (MP) Division will be also consulted and will

provide advice on refrigerants and other specific technical matters as appropriate and needed.

It is to mention that the cost of the above UNIDO HQs Staff will be covered by UNIDO’s 13%

Project Support Costs (PSC), in line with the standard Letter of Agreement between UNIDO and

SECO.

D.2.2. International expertise

A part-time junior international energy consultant will be recruited at UNIDO HQs to provide

technical and managerial support to the project implementation in the role of Project Associate/

Project Administrator11

. Under the supervision of the Project Manager, the Project

11

Project Associate and Project Administrator is UNIDO’s standard terminology for international consultants based

at UNIDO HQs. Depending on the technical projects and/or divisions/departments to support, different substantive

education and qualification requirements apply.

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47


Associate/Administrator will be responsible for providing technical advice, expertise and

research support on cost-benefit analysis, methodological approaches for energy and

environmental performance measurement, energy efficiency and other areas. He/she will

provide technical and managerial support to the development, maintenance and monitoring of a

robust evaluation framework of project outputs, outcomes and impacts, including SECO and

UNIDO key performance indicators. He/she will also provide technical and managerial support

for drafting project related documents and revisions, supporting monitoring of project

implementation and drafting progress reports, reviewing deliverables, contributing to project’s

communication strategy and initiatives, support coordination with UNIDO HQs services and

other tasks.

Short-term international specialists with expertise on gender, energy efficiency, renewable

energy or other fields may be recruited to provide direct advice, training and/or other services as

needed for the execution of project activities12. Additional international specialist expertise will

be procured for setting up a strong project monitoring and evaluation framework, and carrying

out the independent project mid-term review and final evaluation.

D.2.3. National staff

The following national staff will be recruited:

- Project Management Unit personnel, consisting of a National Technical and Strategic

Coordinator, a National Project Manager and a National Project Assistant. They will be

all issued Regular Individual Service Agreement (ISA) contracts13

;

- National Technical Experts with expertise of technical and legal aspects of energy

districts, city planning, skills development, communication and/or other fields as

identified during project kick-off and following phases. These experts will be recruited

for specific deliverable-based time-bound assignments as well as for assignments with

long-term relevance for the project. These experts will be contracted through different

contractual arrangements: issuance of short-term or long-term When Actually Employed

(WAE) ISA contracts14

or sub-contracts with consultancy companies.

12

The project will strive to source as much expertise as possible from Colombia, whenever available. In case next

ED projects to be implemented with project’s support should be first-of-its-kind for Colombia, the advice of

specific technology experts or experts with direct implementation experience could be required or highly beneficial.

In any case, assignments are envisaged to be of limited working duration, likely distributed over longer calendar

periods.

13 “Regular” ISA contracts are issued to individuals (physical persons) whose services are required in/for a UNIDO

office or project location on a continuous full-time basis throughout the contract period. The maximum duration of

a single ISA contract is 12 months, with no limit to the number of renewals with a project’s duration

14 “When Actually Employed” ISA contracts are issued when a set of specific assignments or tasks within a given

period of time are not required on a continuous basis. The duration of WAE ISAs is expressed in working days over

a certain calendar period.

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48


Detailed terms of reference for the PMU members and key national technical experts will be

prepared during the project kick-off phase.

D.2.4. Sub-contracts

It is anticipated that one or more subcontract(s) will be issued to ACAIRE to contribute to and

ensure the best possible provision of expertise, services and support to the execution of project

activities under Output 2.1 and others where relevant. As described earlier in this document, the

Colombian Association of Air Conditioning and Refrigeration (ACAIRE) has been identified,

selected and agreed by project counterparts and SECO as primary execution partner for hosting

and taking over the “Competence and Knowhow Center for Energy Districts” to be established

under Project Component 2. ACAIRE has unique mandate, expertise, regional representation,

networks and constituency to ensure the most effective operations of the Center and its

sustainability beyond the project duration.

Other subcontracts will also be issued for the provision of goods and services necessary to the

execution of project activities (communication advocacy, trainings, feasibility studies,

engineering studies, etc.).

E. BUDGET

The budget that will be made available by SECO to UNIDO for the project will be CHF

4'788'000, including project support costs. Table 3 shows the indicative project budget broken

down by year and output. Annex 2 shows the budget breakdown by year, output and budget line

(cost item) in CHF (currency of the funds that will be transferred to UNIDO) and the

corresponding budget in EURO at the UN Rate of Exchange for August 2019. The use of funds

under the Contingencies component will be agreed through emails exchange between the

UNIDO Project Manager and the SECO Project Manager. Finally, it is to mention that SECO

has also allocated additional CHF 200,000 for the recruitment of an international expert for the

role of Project Backstopper. The recruitment and management of the Project Backstopper will

be carried out directly by SECO.

____________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________

49


Table 3. Project budget by year, component and output

Year 1 (CHF)

Year 2 (CHF)

Year 3 (CHF)

Year 4 (CHF)

TOTAL (CHF)

1. Institutional Support 456,000 342,000 246,000 118,000 1,162,000

1.1. National level: Energy Districts considered in different policy, regulatory and normative instruments.

170,000 120,000 60,000 40,000 390,000

1.2. Propositions made for integrating Energy efficiency requirements for public purchases and public buildings

49,000 50,000 29,000 5,000 133,000

1.3. City level: Energy districts recognized and integrated in territorial and city plan-ning

237,000 172,000 157,000 73,000 639,000

2. Knowledge and Capacity Development 315,000 295,000 197,000 127,000 934,000

2.1. Spreading Energy District knowledge: the “competence and knowhow center” is established as reference point for all questions related to Energy Districts

200,000 180,000 85,000 60,000 525,000

2.2. Capacity development: the human capital needed for Energy Districts has grown

115,000 115,000 112,000 67,000 409,000

3. Maturity of the market 483,000 401,000 226,000 96,000 1,206,000

3.1. Maturity of the market: further Energy Districts in Colombia start implementa-tion.

483,000 401,000 226,000 96,000 1,206,000

Project Management 152,000 163,000 163,000 162,000 640,000

Monitoring & Evaluation 33,000 50,000 25,000 50,000 158,000

Contingencies 25,216 25,000 24,000 21,000 95,216

Total Project Budget 1,369,216 1,276,000 881,000 574,000 4,195,216

UNIDO Support Costs (13%) 545,378

TOTAL Budget incl. support costs 4,740,594



_________________________________________________________________________________________________________________________________________________________________________________________

50


F. MONITORING, REPORTING AND EVALUATION

Standard indicator(s): Measures for improving capacity development

Number of persons/entities undergoing training or continuing

education (entrepreneurs, producers, staff)

Number of cities with urban development measures (including for

improving governance) in the sectors of public transport, energy

efficiency and natural disaster risk management

Number of inhabitants benefiting from sustainable urban

development projects

Greenhouse gas emissions saved or avoided in t CO2eq

Kilowatt hours saved through energy-efficiency measures and

kilowatt hours additionally produced from renewable energy

A detailed monitoring and evaluation plan for tracking and reporting on project time-bound

milestones and accomplishments will be prepared by SECO and UNIDO in collaboration the

Project Management Unit (PMU) and project partners during the project kick-off phase, and will

be periodically updated. The monitoring and evaluation plan will be developed taking into

account the impact and performance indicators defined in the Project Logical Framework and

findings and recommendations of the Phase 1 project final evaluation. The detailed monitoring

and evaluation plan will be prepared also with inputs from an evaluation consultant.

The National Project Manager will be responsible for continuous monitoring of project activities

execution, performance and to track progress towards milestones and targets.

The UNIDO project manager will be responsible for tracking overall project milestones and

progress against its Logical Framework and Theory of Change. The UNIDO project manager

with support of the PMU will be responsible for the preparation of the annual and semi-annual

project implementation progress reports.

Reporting will be done in line with the provisions of the SECO-UNIDO framework agreement.

An annual narrative report (progress achieved, main problems, risks identified and remedial

measures, work-plan, logical framework and budget estimate for the next period, description of

financial implementation.) and an annual financial statement will be submitted to SECO.

Additionally, UNIDO will submit a semi-annual narrative report on progress that will be

discussed by SECO and UNIDO in a half-yearly conference call. Annual and semi-annual

reports will be produced in English and Spanish. In case of any ambiguity or discrepancy

between the two versions, the English version will prevail.

A final narrative and financial statement will be submitted by UNIDO to SECO within six

months of termination or expiration of the letter of agreement.

According with UNIDO policies and fiduciary standards for technical cooperation programmes,

the project will be subject to the organization’s evaluation policy. Considering the project’s size,

a mid-term review and a final independent evaluation will be required. Both the mid-term

review and the final evaluation will aim at determining the relevance, impact, effectiveness,

_________________________________________________________________________________________________________________________________________________________________________________________

51


efficiency and sustainability of the project interventions, with the mid-term review further

oriented to provide recommendations to UNIDO and the project’s counterparts for corrective

actions as well as possible adjustments. UNIDO will consult with SECO colleagues during the

preparation of the terms of reference for both mid-term review and final independent evaluation;

the participation of SECO representative(s) in both mid-term review and final evaluation is also

envisaged.

G. PRIOR OBLIGATIONS AND PREREQUISITES

No prior obligations and prerequisites apply to the project.

H. LEGAL CONTEXT15

The Government of the Republic of Colombia agrees to apply to the present project, mutatis

mutandis, the provisions of the Standard Basic Assistance Agreement between the United

Nations Development Programme and the Government, signed on 29 May 1974 and entered into

force on 23 January 1975.

15

This Project Document has been produced in English and Spanish languages (each of which is deemed equal in content and validity). In the event of any ambiguity or discrepancy between the two versions, the English version shall prevail.

52

Annex 1 – Tentative Work Plan

Year 1 Year 2 Year 3 Year 4

Activities Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

Kick-off phase

Output 1.1. National level: Energy Districts considered

in different policy, regulatory and normative

instruments.

Output 1.2. Propositions made for integrating Energy

efficiency requirements for public purchases and public

buildings

Output 1.3. City level: Energy districts recognized and

integrated in territorial and city planning

Output 2.1. Spreading Energy District knowledge: the

“competence and knowhow center” is established as

reference point for all questions related to Energy

Districts

Output 2.2. Capacity development: the human capital

needed for Energy Districts has grown

Output 3.1. Maturity of the market: further Energy

Districts in Colombia start implementation.

Project Management

Monitoring & Evaluation

53

Annex 2 – Project Budget by output, year and budget line

Output-based project budget in Swiss Francs (CHF)

Year 1 Year 2 Year 3 Year 4 TOTAL


1.1. National level: Energy Districts considered in different policy, regulatory and nor-

mative instruments. 170,000 120,000 60,000 40,000 390,000

1500 Local Travel 5,000 5,000 5,000 5,000 20,000

1700 Nat.Consultants/Staff 160,000 110,000 50,000 30,000 350,000

5100 Other Direct Costs 5,000 5,000 5,000 5,000 20,000

1.2. Propositions made for integrating Energy efficiency requirements for public pur-

chases and public buildings 49,000 50,000 29,000 5,000 133,000

1700 Nat.Consultants/Staff 45,000 45,000 24,000 114,000


1.3. City level: Energy districts recognized and integrated in territorial and city plan-

ning 237,000 172,000 157,000 73,000 639,000

1100 Int. Consultants/Staff 10,000 10,000 10,000 10,000 40,000

1500 Local Travel 7,000 7,000 7,000 7,000 28,000


2100 Contractual Services 55,000 30,000 20,000 13,000 118,000



2.1. Spreading Energy District knowledge: the “competence and knowhow center” is

established as reference point for all questions related to Energy Districts 200,000 180,000 85,000 60,000 525,000


1500 Local Travel 5,000 5,000 5,000 5,000 20,000


4500 Equipment 15,000 20,000 15,000 50,000


54

2.2. Capacity development: the human capital needed for Energy Districts has grown 115,000 115,000 112,000 67,000 409,000


1500 Local Travel 5,000 5,000 5,000 5,000 20,000

3000 Train/ Fellow./ Study 50,000 50,000 50,000 20,000 170,000



3.1. Maturity of the market: further Energy Districts in Colombia start implementation. 483,000 401,000 226,000 96,000 1,206,000


1500 Local Travel 6,000 6,000 6,000 6,000 24,000



3000 Train/ Fellow./ Study 20,000 20,000 20,000 60,000

4500 Equipment 30,000 20,000 20,000 70,000




1500 Local Travel 5,000 8,000 8,000 8,000 29,000

1600 Staff Travel 10,000 10,000 10,000 10,000 40,000


4300 Premises 20,000 20,000 20,000 20,000 80,000



1100 Int. Consultants/Staff 8,000 25,000 0 25,000 58,000


1500 Local Travel 5,000 5,000 5,000 5,000 20,000

1600 Staff Travel 5,000 5,000 5,000 5,000 20,000

Contingencies 25,216 25,000 24,000 21,000 95,216

55


1500 Local Travel 3,000 3,000 2,000 2,000 10,000

1600 Staff Travel 2,000 2,000 2,000 2,000 8,000






TOTAL Budget incl. support costs 4,740,594



Output-based project budget in Euro (EUR) 16

Year 1 Year 2 Year 3 Year 4 TOTAL


1.1. National level: Energy Districts considered in different policy, regulatory and nor-

mative instruments. 156,893 110,748 55,374 36,916 359,931

1500 Local Travel 4,615 4,615 4,615 4,615 18,458



1.2. Propositions made for integrating Energy efficiency requirements for public pur-

chases and public buildings 45,222 46,145 26,764 4,615 122,746

1700 Nat.Consultants/Staff 41,531 41,531 22,150 0 105,211


1.3. City level: Energy districts recognized and integrated in territorial and city plan-

ning 218,727 158,739 144,895 67,372 589,733


16

UN Rate of Exchange (August 2019) 1 CHF = 0.9229 EUR

56

1500 Local Travel 6,460 6,460 6,460 6,460 25,841





2.1. Spreading Energy District knowledge: the “competence and knowhow center” is

established as reference point for all questions related to Energy Districts 184,580 166,122 78,447 55,374 484,523


1500 Local Travel 4,615 4,615 4,615 4,615 18,458


4500 Equipment 13,844 18,458 13,844 0 46,145


2.2. Capacity development: the human capital needed for Energy Districts has grown 106,134 106,134 103,365 61,834 377,466


1500 Local Travel 4,615 4,615 4,615 4,615 18,458

3000 Train/ Fellow./ Study 46,145 46,145 46,145 18,458 156,893



3.1. Maturity of the market: further Energy Districts in Colombia start implementation. 445,761 370,083 208,575 88,598 1,113,018


1500 Local Travel 5,537 5,537 5,537 5,537 22,150



3000 Train/ Fellow./ Study 18,458 18,458 18,458 0 55,374

4500 Equipment 27,687 18,458 18,458 0 64,603




57

1500 Local Travel 4,615 7,383 7,383 7,383 26,764

1600 Staff Travel 9,229 9,229 9,229 9,229 36,916


4300 Premises 18,458 18,458 18,458 18,458 73,832



1100 Int. Consultants/Staff 7,383 23,073 0 23,073 53,528


1500 Local Travel 4,615 4,615 4,615 4,615 18,458

1600 Staff Travel 4,615 4,615 4,615 4,615 18,458

Contingencies 23,274 23,075 22,152 19,373 87,874


1500 Local Travel 2,769 2,769 1,846 1,846 9,230

1600 Staff Travel 1,846 1,846 1,846 1,846 7,384






TOTAL Budget 4,375,094



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