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The Global Environment Facility (GEF) is a financing mecha-nism. It is structured as a thrust fund, operating in collaborationand partnership with its three executive agencies - the UnitedNations Development Programme (UNDP), the United NationsEnvironmental Programme (UNEP) and the World Bank, with theaim to achieve global environmental benefits.

The United Nations Development Programme(UNDP) is the UN global network for intro-ducing change and facilitating theexchange of knowledge, experiencesand resources among the states withthe aim to help people build a bet-ter life. UNDP is present in 166states and works jointly withthem for resolution of globalissues and the nationalproblems they stumbleupon. Until they deve-loptheir own local capacitythey may draw on theexperience of UNDPand its numerouspartners.

UNDP/GEF sup-port environmen-tal projects in thefield of biodiver-sity, climatechange, inter-n a t i o n a lwaters, deple-tion of theozone layer inthe atmos-phere, durableorganic pol-luters and soilerosion.

The project is financed by the GlobalEnvironment Facility through the UNDP. It

aims at dissemination among Bulgarianmunicipalities of policies and practices that

can assist them to overcome successfullythe barriers to energy efficiency

improvement and reduction of GHGemissions and other environmental

polluters.

The project comprises two major components:

Local capacity building in Bulgarianmunicipalities in the field of energy

efficiency;

Supporting demonstration projectsin typical energy end-user municipal sites.

The activities incorporated in the first projectcomponent are its core. They comprise

introduction of energy efficiencymanagement in municipalities, training of

local decision-makers and experts andintroduction of financial tools and

mechanisms for implementation of energyefficiency projects.

The demonstrations under the secondproject component aim at supporting the

development of local institutional and humancapacity and consolidating its importance for

and impact on the municipal policy. Theycomprise representative projects in the field

of street lighting, district heating andbuildings. The demonstration projects

illustrate how the local institutions and thenewly acquired knowledge and skills might

be applied under real conditions.

The activities under the two projectcomponents are concentrated in Gabrovo.

This municipality acts as a specificlaboratory in which different management

and technical approaches and solutions areelaborated and tested. In fact, the impact of

the project is spread among all themunicipalities-members of the Municipal

Energy Efficiency Network EcoEnergy andin a number of cases even beyond its

boundaries. The number of municipalitiesinfluenced by the experience of the Energy

Efficiency Demonstration Zone in the city ofGabrovo provides grounds to consider that

the reforms in the field of sustainablemanagement of natural resources are

welcome throughout the country.

Energy Efficiency Strategy to Mitigate GHGEmissions. Energy Efficiency

Demonstration Zone in the city of Gabrovo

Publication of EnEffect

www.eneffect.bg

For contacts:

1606 Sofia, POBox 85

E-mail:

[email protected]

Tel.: (02) 963 1714, Fax: (02) 963 2574

Translator: Anna Dourcheva

Corrector: Nadya Mihaylova

Desktop publishing: Press Product Line Ltd., SolAir Ltd.

Print: Press Product Line Ltd.

Energy Efficiency Demonstration Project in Mehatronika JSC, city of Gabrovo

PARTNERSHIPTO MUTUAL BENEFIT

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STUDYSelection of the site and preliminaryauditEnergy auditTechnical and economic analysis of theenergy conservation measures

Projects in industrial enterprisesThe demonstration siteProject objectives and tasks

INTRODUCTION

PROJECT DESIGN

MONITORING ANDRESULTS

IMPLEMENTATION

CONCLUSION

REFERENCES

4

SUMMARY3

5-6

7-8

9-10

11-12

13

14

Partnership in the process of imple-mentationInstallation and building-and-assemblyworksOpportunities for recovery of invest-ments

MonitoringProject outputsCost-effectivenessEnvironmental impact

TABLE OF CONTENTS

Final set of energy conservation measuresBusiness plan

The energy efficiency demonstration

project in the Mehatronika Joint-stock

Company was initiated and

implemented in the framework of the

project "Energy Efficiency Strategy to

Mitigate GHG Emissions. Energy

Efficiency Demonstration Zone in the

city of Gabrovo, Republic of Bulgaria.

Retrofit of Existing Buildings to Reduce

their Energy Consumption", financed

by the Global Environment Facility

through the United Nations

Development Programme. The project

was managed by the Centre for

Energy Efficiency EnEffect in

partnership with the Ministry of

Environment and Water (MoEW) and

the Municipality of Gabrovo.

The demonstration in Mehatronika JSC

was realized on the basis of a public-

private partnership between the

municipality and the enterprise. It has

turned into a valuable example of the

benefits, which such collaboration may

bring to both the public and the private

sector.

The energy efficiency demonstration project in the building of MehatronikaJSC in the city of Gabrovo had two major objectives: to reduce thecompany's energy costs and to ensure the local authority's support for theimplementation of the project and thus prove the mutual benefit from thispartnership. The project implementation process comprised preliminarystudy, project design, application of measures and monitoring of the results.

The study began with a preliminary ("walk-through") audit of the industrialbuilding, which revealed that there is a considerable potential for energyefficiency improvement. In the course of the next stage of the study - thedetailed energy audit - the major energy consumers in the company wereidentified, an assessment was made of the energy conservation potential,and the possible energy conservation measures were defined and divided,according the field where they would be applied, into measures on thebuilding envelope, measures on the in-house systems and measures on theproduction systems. A detailed list (the so-called "Long list") of the 14possible measures was compiled. The study ended with a technical andeconomic analysis, on the basis of which the possible measures were rankedand an abbreviated ("short") list of the most cost-effective measures,recommended for further consideration, was derived.

On the basis of the Short List, during the design phase the final package ofmeasures to be implemented in the framework of this project was compiledand the estimated technical and economic indicators to be achieved throughtheir application were specified. The final package contained organizationaland behavioral measures, low-cost and easy-to-implement technicalmeasures and high-tech measures. Depending on the specifics of themeasures included in the final package, working designs or practicalinstructions for their implementation were elaborated. Upon financial analysisof the package of measures a business plan and work schedule forprocurement of financing and project implementation were drawn up.

The implementation of the project comprises three main types of activities:selection of subcontractors, application of the energy efficiency measuresand training of the company personnel. The subcontractors for the repair andinstallation works were selected through tenders, organized by EnEffect andthe Municipality. The measures aimed at improvement of the buildingenvelope were financed by Mehatronika JsC and comprised replacement ofdoors and windows and fitting of additional insulation on the roof slab. Theinstallation works comprised zoning-type regulation of the heat supply to thebuilding, reconstruction and automation of the substation, improvement of theenergy efficiency of the lighting system, fitting of reflector screens behind theradiators, tuning of the reactive power and regulation of the power factor (cos ϕ). The training of the company operating and maintenance personnel

introduced them to the rules of operation and maintenance of the newequipment. An additional positive effect achieved by the project was that itsimplementation created additional employment for local builders andcraftsmen.

Monitoring of the site started as early as in the course of projectimplementation and continued after its completion. The analysis of the datafor the entire period corroborated the project projections, as well as theresults from the initial metering and calculations, conducted immediately aftercompletion of the repair and installation works.

The estimated results - energy and energy costs savings, reduction of theharmful impact on the environment and other side effects - obtained concreteexpression in the achieved annual savings: 134 MWh in heat, 15 MWh inelectricity and USD 6,903 in costs. The conducted metering revealed that asa result of project implementation the comfort in the building has increasedand the work conditions have improved and the personnel corroboratedthese findings.

Dissemination of the results from the demonstration project in the industrialbuilding in the city of Gabrovo was effected mainly through the MunicipalEnergy Efficiency Network EcoEnergy. The project in the industrial building inGabrovo influenced the attitude of the the local authorities and the companymanagement towards this type of undertaking and raised a positive publicresponse in the city. It demonstrated also a real-life approach to preparationand implementation of a project of this kind, based on public-privatepartnership.

Total amount of investments

Net savings

Payback period

Net Present Value

Internal Rate of Return

Amount of emissions reduced

partnership to mutual benefit 3

SUMMARY

USD 11,099

USD 6,903/year

1.6 years

USD 37,386

61%

626 t CO2 / 7.8 t SO2

M A J O R I N D I C A T O R S O F T H E P R O J E C T

Projects in industrial enterprisesThe demonstration project in Mehatronika JsC isthe sole project in the energy efficiency demon-stration zone in the city of Gabrovo to be imple-mented in a private industrial site. This is the ker-nel of the qualitative difference between it and therest of the demonstrations in the city. The incorpo-ration of this site in the scope of the zone aimed atinvestigating the opportunities for establishing col-laboration between the local authority and the pri-vate sector for improvement of the energy efficien-cy in an enterprise of the local industry. In this wayit was expected to achieve real benefits for boththe industrial enterprise in its capacity of energyend-user, and the local authority in its capacity ofgovernor of the area and defendant of public inter-

ests within its boundaries. Parallel to it, the projecthad to demonstrate the possible environmentalbenefits from reduction of GHG emissions and thesocial benefits from the economic strengthening ofthe industrial enterprise, thus creating employmentfor local residents and contributing to the increaseof taxation revenue.The demonstration project in Mehatronika JSCchose an approach, which takes account of theinterdependence between the building envelopeand the in-house systems, and the industrial equip-ment and production processes, since this is theonly possible way to analyze the entire potential forimprovement of the energy efficiency of the site.The different steps of project implementation wereas follows:

- Study of the baseline state of the site and identi-fication of the cost-effective opportunities forimprovement of the efficiency of energy end-use inthe industrial building.

- Design of the energy-related retrofit of the sitethrough drafting of alternative packages of energyconservation measures and compiling a businessplan for their financing and phased implementation.

- Implementation of the selected package ofmeasures by carefully selected subcontractors;training of the company personnel on how to main-tain correctly the site in order to ensure long-termeffect of the improvements.

- Monitoring of the site after application of themeasures with the aim to establish the real techni-cal, economic and environmental outcomes fromtheir implementation.

INTRODUCTION

energy efficiency demonstration zone in gabrovo4

OBJECTIVES

- To determine the real potential for energy effi-ciency improvement in the industrial building.

- To select and implement cost-effectivemeasures for energy efficiency improvement.

- To create conditions for implementation ofsimilar projects under market-oriented condi-tions in other municipalities with well-devel-oped industry, making use of the lessonslearned by the demonstration project in thecity of Gabrovo.

TASKS

Projects in industrial enterprises. Subject of the demonstration.

Project objectives and tasks

The building of Mehatronika JsC in the city ofGabrovo, which was selected as demonstrationsite, is typical for the medium-sized enterprises inBulgaria of the 1960's, constructed under tradition-al project design solutions and building technolo-gies. Oriented with its longitudinal axis in north-south direction, the 4-stock building has beenerected as a steel-concrete skeleton with brickwalls (25 cm thick), flat roof, metal external doorsand windows with single glazing. The floor area ofthe building is 2,475 m2 and the heated space is9,900 m3.

More than 90% of the area of the building are usedfor activities directly related to the manufacture ofautomatic packaging machines and other lightindustrial equipment. Garage cells and a wood-working workshop are situated on the first floor ,and metal processing machine tools and techno-logical equipment on the second floor. The assem-bly section and the test stands are situated on thethird floor. The administration, the canteen and aux-iliary premises occupy part of the 4th floor.

Space heating had been provided by a high-pres-sure local steam boiler (KM12), installed afterdecommissioning of the initially installed boiler yardtogether with some of the buildings of the enter-prise. The space heating system is well preservedand the heating bodies are equipped with radiatorvalves. The technological process itself is not a sig-nificant heat source, although the productioncapacities of the workshops operate under morethan 70% workload.

There are no ventilation systems and heavy-dutywater pumps installed in the building. Air supply iseffected by a screw-type compressor with a motorcapacity of 18 kW at 6-7 atmospheres motor poweroutput.

The domestic hot water system is supplied by threeelectric boilers featuring a total installed powercapacity of 12 kW. It serves the sanitary-hygienicpremises and the canteen.

The city power substation supplies electricity to thebuilding as follows:

- Medium-voltage power supply: 20 kV cable inletand two transformer outlets, one transformer of1000 kVa power output and one transformer of 320kVa power output.

- Low-voltage power supply: low-voltage distribu-tion systems with opportunities for supply from thetwo transformers.

The lighting system features predominantly fluores-cent lamps and is supplied by independent fuseboards, located in the premises on the differentfloors

Some of the more significant power consumers inthe building are the metal processing machine tools(lathes, mills, machine tools with digital programmecontrol), the drying kiln for painted components andthe three aluminium melting furnaces, of which onlyone was in operation at the start of the project.

The demonstration site

- To reduce energy consumption and therelated energy costs and in this way tocontribute to diminishing of production costsand reduction of harmful emissions.

- To improve the comfort of the workenvironment in the building.

- To demonstrate the entire process ofimplementation of a project for energyefficiency improvement in an industrialbuilding through public-private partnership,and thus create a model for implementationof similar projects in other municipalities.

Selection of the site and preliminary audit

A total of 18 municipal, state-owned and privateindustrial enterprises and companies were visitedand surveyed during the initial phase of the proj-ect, however the majority of them did not meet thepreliminary conditions since:

- they were not typical sites, and therefore wouldnot provide sufficient ground for broad dissemina-tion of the project results;

- the ownership rights on the plots were either notsettled or there were too many owners and ten-ants, which would cause problems with the coor-dination during project implementation;

- they featured considerable amounts of non-uti-lized space, which would distort the picture ofenergy consumption;

- their management bodies did not manifest anyinterest in or support for the project.

Following the detailed survey of the sites, theenterprise Mehatronika JsC was selected, since itcomplied to the highest degree with the prelimi-nary set selection criteria.

The Center for Energy Efficiency EnEffect (in itscapacity of Executing Agency of the project) andMehatronika JsC signed a framework agreementfor intentions and joint activities. EnEffect commit-ted itself to carry out an energy audit and a tech-nical and economic analysis of the possible andapplicable energy conservation measures, to workout a financial plan, to perform coordination andcontrol of project implementation and monitoringof the results.

Mehatronika JSC committed itself to ensureaccess to the systems and facilities, to providetechnical assistance in the implementation of theenergy audit and metering inside the building andto nominate a project coordinator, who would keepcontact with the subcontractors. The enterpriseundertook further the responsibility to ensure co-financing to the amount of 50% of the costs of thejointly selected and approved package of energyconservation measures. The company manage-ment gave its consent to these agreements beingvalid for the entire period of project implementa-tion and post-implementation monitoring until thepoint of provision of evidence for the effect of theapplied energy conservation measures.

As a result of the survey it has been found out thatthe existing steam boiler was not operating effi-ciently and features high fuel costs. The companydid not perform control on heat consumptionbecause of the lack of control devices. The lightingwas not efficient either, and the luminaries in themain work premises were depreciated and hadreduced lighting engineering characteristics. Allthis resulted in considerably deteriorated comfortof the work environment and unjustifiably highlevel of company expenditure.

Energy auditSince no systematized data about heat energyconsumption existed in the enterprise, the base-line for each of the spheres was determinedthrough modeling of consumption prior to projectstart. For the boiler system the energy consump-tion by a standard boiler was assumed and for thelighting system - the typical number of hours ofoperation of the lighting per year. For the purposesof introducing corrections of cos ϕ the data fromthe metering conducted with the SIM 50 energyanalyzer and assumptions for potential fines wereused.

The energy audit and analysis of the energy con-servation potential comprised as follows: determi-nation of the thermal engineering characteristics ofthe buildings through on-the-spot metering andrecording of the duty cycle, studies, zoning andmodeling of the energy and mass flows, assess-ment of the energy conservation potential, techni-cal and economic analysis and selection of ener-gy conservation measures. For the purposes of theproject all possible measures for improvement ofthe energy efficiency in the building were investi-gated and the applicable ones were defined. Theyhave been selected in compliance with therequirement for self-sustainability of the project inorder to achieve its demonstration effect - anexample with respect to initiation, developmentand implementation of projects of this kind in othermunicipalities.

Detailed list of energy efficiencymeasures

Measures on the in-house space heating systems

Zoning regulation of heat supply in the buildingsthrough installation of thermostatic control valves

and by-pass valves.

Fitting of insulation reflector screens behind theheating bodies.

Measures on the boiler yard

Introduction of a system for automatic control andtuning of the diesel-fired boiler.

Measures on the domestic hot water system

Construction of a solar installation for domestic hotwater.

Measures on the system for electricity supply

Compensation of the reactive power and regula-tion of the power factor cos j through installation ofa microprocessor regulator.

Switching of the supply from Transformer I-1000 kVAto Transformer II-320 kVA.

Measures on the lighting system

Replacement of the luminaries in the tools-and-devices workshop, the turner's and assemblyworkshops, by luminaries with electronic switchingand regulation, and in the factory yard - by high-pressure sodium lamps.

Measures on the industrial installations

Replacement of the existing drying kiln for paintedcomponents.

Measures for retrofit of the building envelope*

Replacement of doors and windows by aluminiumjoinery.

Fitting of additional thermal insulation on the roofslab.

General measures

Establishment of a system for energy manage-ment.


STUDY

Selection of the site and preliminary audit. Energy audit. Technical and economic

analysis of the measures

* The measures on the building envelope were financed entirelyby the owner of the building and for that reason the savingsresulting from these measures are not included in the resultsfrom the demonstration project.


Technical and economic analysis ofthe energy conservation measures

The measures from the detailed list were subject-ed to technical and economic analysis, wherebyeach of them was evaluated in terms of the totalcosts for its implementation, the expected energysavings from it, the payback period on the invest-ments for its application, its Net Present Value, itsinteraction with the rest of the measures and theopportunities for its application in other sites of thesame type.

Table 1. Technical and economic analysis of the energy conservation measures

Energy conservation measures (ECM)

Measures

Investments Net savings Payback period

USD USD/year KWh/year. years

Coefficient of NetPresent Value

USD/USD

Shifting of electricity supply from Transformer I-1000kVA to Transformer II-320 kVA

Compensation of the reactive capacities and regula-tion of the power factor cos ϕ - Proposal B

Partial replacement of luminaries - in the factory yard

Compensation of the reactive power and regulation ofthe power factor cos ϕ - Proposal A

Introduction of a system for automatic control and con-struction of a superstructure on the diesel-fired boiler5.

4.

3.

2.

1.

6. Zoning regulation of the heat supply to the building -thermal regulation valves and by-pass valves

7. Partial replacement of the luminaries in the turner'sworkshop and in the factory yard

8.

10.

Fitting of reflector screens behind the radiators

Replacement of luminaries in the tools-and-devicesworkshop, the turner's workshop and the factory yard

9. Replacement of luminaries in the tools-and-devicesworkshop, the turner's workshop and the factory yard

11.Partial replacement of luminaries in the tools-and-devices workshop, the turner's workshop and theassembly workshop

12. Construction of a solar system for production ofdomestic hot water

13. Replacement of the existing drying kiln for paintedcomponents

14. Replacement of the joinery by aluminium joinery andfitting of thermal insulation on the roof slab

50

804

900

3 750

7 349

1 270

2 452

428

13 900

5 507

4 607

4 890

75 272

210

700

586

1 650

3 131

413

766

131

2 079

1 167

581

558

7 552

6 000

0

11 708

0

87 297

11 515

15 321

3 642

33 28214 570

23 347

11 629

9 300

210 536

0.24

1.15

1.54

2.27

2.35

3.07

3.20

3.28

6.69

4.72

7.92

8.76

9.97

28.50

5.12

3.57

2.09

1.99

1.28

1.19

1.14

0.05

0.49

-0.11

-0.20

0.06

Beyond the technical assignment note for the audit

Retrofit measures (economic life cycle 20 years)

Taking into consideration the possible amount of investments (up to 15 000 USD), Set S2 was recommended for implementation - Net Present Value USD 23148, Internal Rate of Return 40% and payback period 2.77 years.


PROJECT DESIGN

Final set of energy conservation measures.Business Plan

Table 2. Sets of energy conservation measures

Table 3. Final list of energy conservation measures

Combinations of Energy conservation measures¹

Net savings Coefficient of NetPresent ValuePayback periodInvestment

USD USD/year KWh/year years USD/USD

Set 1 - measures 2, 3 and 5 (minimum investments)

Set 2 - measures 2, 5, 6, 7 and 8

Set 3 - measures 4, 5, 6, 8 and 9

Set 4 - measures 4, 5, 6, 8, 9 and 10 (maximum invest-ments and energy savings)

Set 2, combined with retrofit measures

S1

S2

S3

S4

R2

9 053

12 303

18 304

32 204

87 575

4 417

5 047

6 492

8 557

12 599

99 005

115 163

125 801

154 461

325 699

2.05

2.44

2.82

3.76

6.95

2.43

1.88

1.49

0.87

0.01

Energy conservation measuresECM

Net savingsCoefficient of Net

Present ValuePayback periodInvestment

USD USD/year KWh/year

The enterprise has replaced with equity fundsthe single-glazed doors and windows by alu-minium joinery with glass package and inter-rupted thermal bridges, and installed additional

thermal insulation of foam-polystyrol (5 cm) onthe roof slab. These retrofit measures resulted insignificant heat savings. Although these meas-ures were not related to considerable cashflow

size, they contributed to substantial improve-ment of the quality of the indoor climate in thebuilding.

Compensation of the reactive power and regulationof the power factor cos ϕ - Proposal B

Introduction of a system for automatic control andconstruction of a superstructure on the diesel-firedboiler

Zoning regulation of the heat supply to the building -thermal regulation valves and by-pass valves

Improvement of the energy efficiency of the lightingsystem - replacement of the luminaries in the turner'sworkshop and in the factory yard

Fitting of insulation reflector screens behind the radiators

years USD/USD¹

2

5

6

7

8

804

7 349

1 270

2 452

428

700

3 131

413

766

131

0

87 297

1 1515

15 321

3 642

1.15

2.35

3.07

3.20

3.28

5.12

1.99

1.28

1.19

1.14

Final set of energy conservation measuresSeveral sets of cost-effective measures (Table 2) were compiled on the basis of the Long List. As a resultof the comparative analysis of these sets, including the retrofit measures, it was assumed that the aver-age life cycle of the project would be 10 years.


Part of the energy audit team discusses the possible energy efficiency measures.

Financial PlanThe collected package of quotations from manu-facturers and suppliers served as the basis foradditional financial analysis of the package of

measures. The result was drafting of the projectimplementation schedule. Since the project was tobe financed through a combination of grant andequity funds - without bank loan - some of the typ-ical sections of the Business Plan were not fully

elaborated. For this reason the Business Plan israther a financial plan for implementation of theundertaking, outlining the major economic param-eters of the project.

The total volume of investments in the project inreal terms amounts to USD 11,099 and has beenprovided by GEF/UNDP and Mehatronika JsC. Thecontribution of each of the parties is shown inTable 4 below.

Amount (USD) Funding source

Delivery of equipment for the systemof automatic control and constructionof a superstructure on a diesel-firedboiler

Installation of thermostatic valves andby-pass valves

Delivery and fitting of reflector screensbehind the radiators

Delivery and fitting of luminaries in theproduction workshops and the factoryyard

Delivery and commissioning of amicroprocessor power factor regulator

Distribution of the investments loadbetween the parties

Total amount of investments

¹

1

2

3

4

5

2 173

3 995

GEF / UNDP Mehatronika JSC




GEF / UNDPMehatronika JSC

858

300

273

130

2 179

413

753

25

6 236

4 863

11 099

Table 4. Amounts and sources of funding for implementation of the ECMs

Computer modeling of the site.

Measurements and energy analysis ofTransformer I.

Energy conservation measure


Partnership during implementation

The implementation of the project started in 2001with the signing of an agreement for joint actionsbetween Mehatronika JsC and the Project Co-ordi-nator EnEffect. A joint team of representatives ofthe two parties reviewed the results from the ener-gy audit of the building and the technical and eco-nomic analysis of the proposed set of energy con-servation measures. The collected package ofquotations for equipment supply for the needs ofthe project was reviewed as well. Agreement wasreached on the distribution of responsibilitiesamong the parties and a financial plan for imple-mentation of the dismantling and installation workswas approved. Some of the activities were imple-mented by the enterprise for its own account as anin-kind contribution to project implementation.

The equipment suppliers were selected after atender on the basis of comprehensive review andevaluation of alternative quotations. The deliveryand installation of all specified equipment andmaterials was implemented within two months andcompleted at the end of October 2001.Specialized subcontractors were engaged for theinstallation and commissioning of the power factorregulator and the tuning and commissioning of theboiler system and the energy control system. Theremaining installation works were performed bypersonnel of Mehatronika JsC.

The Chief Energy Engineer of the enterprise, aswell as part of the management and auxiliary per-sonnel, participated actively in the performance ofthe audits, the negotiation of the energy conserva-tion measures and the implementation of themeasures and follow-up monitoring. They gotfamiliar with all technical data of the equipmentsubject to monitoring and the requirements for cor-rect operation and maintenance of the equipmentand facilities. The experts, who participated in theimplementation of the project, acquired knowl-edge and skills in the elaboration of energy effi-ciency projects, which will assist them in theirfuture activities on implementation of projects ofthis kind.

Installation and construction works

Installation work and commissioning were execut-ed together for the integrated system for diagnos-

tic automation and program control of the boilerand burner, three-way valves, temperature sen-sors for heat carrier, air and combustion gases,installation of thermostatic valves for zone regula-tion of heat supply, heat reflecting screens,replacement of lighting fixtures in turner's work-shop and in the factory yard, installation of auto-mated power factor regulator combined withreconstruction, adjustment and prophylactic ofcapacitors fields and capacitance unit.

Opportunities for recovery ofinvestments

Prior to the start of implementation of the project,Mehatronika JsC has planned and even launched

9

IMPLEMENTATION

Partnership during implementation. Installation and construction works.

Opportunities for recovery of investments

partnership to mutual benefit

Triple loop diesel boiler and burner with automatic control.

Old and new lighting fixtures in the yard.

A group of circulation pumps, three-way mixingvalves and sensors.

implementation of certain activities for energy effi-ciency improvement, such as measures for retrofitof the building envelope. Co-financing on the partof the project assisted the company in applyingmore efficient solution (this applies particularly tothe selection of the boiler) and implementing amore comprehensive package of energy conser-vation measures.

Thanks to the energy efficiency retrofit the heatconsumption of the building of Mehatronika wasreduced by 40%. The achieved savings will allowthe company to recover the invested equity fundsfor a period of less than 2 years. The GEF grant willremain to the benefit of the company. It will helpcompensate part of its substantial expenditure forthe retrofit of the building envelope, which wasconducted beforehand and created the necessaryconditions for implementation of the demonstrationmeasures.

In terms of its characteristics the retrofit of thebuilding was isolated as an independent overhaul,combined with the application of energy efficiencymaterials and technologies. The energy savedthrough these measures allows payoff of theinvestments for a period of about 10 years at 7.8%Internal Rate of Return. If this project is viewed asa project for energy efficiency improvement, underthe current circumstances in Bulgaria it may beevaluated neither as winner, nor as loser. However,in combination with the urgently necessary recon-

struction of the building it turns into a profitableproject, bringing positive results for the enterprise.The combination of a project for building retrofitwith an energy efficiency project has highlightedthe existence of a broad range of possible energyefficiency measures with favorable cost-recoveryindicators.


Representatives of EnEffect, UNDP andMehatronika JsC check the tuning of the pro-grammable controller for diagnostics and controlof the heat supply.

New lighting fixtures.

New roof water proof insulation, funded by Mehatronika JsC, out of the project.

Old lighting fixtures.

Microprocessor regulator for compensation of the reactive power and regu-

lation of the power factor cos ϕ, 12 channel, PROPHI.

Zone regulation through thermostatic radiator valves and

reflecting screens


MonitoringUpon completion of the repair and installationworks the new systems were commissioned inregular operation. It is at that point that the moni-toring started and continued during two heatingseasons after project termination and had theobjective to find out the actual results of theapplied measures. Sets of out-door and in-doorsensors for temperature and meteorological datawere used. The fuel supplies and daily operationof the boiler burner were tracked with the use of asystem of integrated diagnostics. This has helpedto specify the duty cycle of the space heating sys-tem and to introduce corrections in the pro-gramme of the controller in compliance with theduty cycle of the enterprise and the thermal engi-neering characteristics of the building.

It has been found that the indoor climate in thebuilding did not deviate from the figures laid downin the model. The data from the meteorologicalsensor were used for establishing the real heatingday/degrees for the time when the system hadbeen in operation and for calibration of the data.With the help of the company personnel all devia-tions from the normal duty cycle of the enterprise,which might cause deviations from the plannedconsumption and distort the estimated energysavings or the data collection, were tracked. Allthe installed equipment was found to operate nor-mally and no problems have been detected in theoperation and maintenance of the units.

Project outcomesAs a result of the implementation of the project thefuel consumption in the enterprise has beenreduced by 11.5 t/year on the average, and theenergy savings amount to an average of 133.7MWh/year (Tables 5 and 6). This has producedmonetary savings to the amount of USD4,797/year for the two heating seasons duringwhich monitoring has been performed.

The electricity savings amount to 14.5 MWh andthose of electricity costs - to USD 1,406/ year.

The savings from avoided fines for low capacityfactors amount to USD 700.

Monitoring. Project outcomes. Cost-effectiveness. Environmental impact

MONITORING ANDRESULTS

Per heating season

Starting situation - baselineconsumption

After application of ESMs -forecast with ASEAM 3.0

After application of ESMs -2001/2002

After application of ESMs -2002/2003

(t / year)

28.767

20.137

16.6981

18.563

(kWh/year)

332 819

232 977

193 187

214 456

(kWh/DD)

120.72

84.50

74.61

69.80

(t / year)

-

8.630

10.987

12.133

(kWh/year)

-

99 842

127 114

140 375

(%)

-

30

38

42

Annual consumption of heat ener-gy (kWh/year) in the building ofMehatronika JSC

Table 5. Fuel savings

Real fuel con-sumption

Real heat con-sumption

Specific con-sumption for

realday/degrees

Fuel savingscompared tobaseline con-

sumptionAfter calibration

Heat savingscompared tothe baselineconsumption

Savings com-pared to the

baseline con-sumption

Starting situation - baseline consumption After application of ESMs - forecast with ASEAM 3.0

After application of ESMs - 2001/2002 After application of ESMs - 2002/2003

The assumed baseline for heat consumptionrefers to a heating season, during which a con-ventional boiler with coefficient of efficiency up to90%, without integrated control system2, has beenused as a heat source. (The fuel consumption dur-ing the 2001/2002 heating season is lower, since itstarted with a certain delay - on 10 November

2001, when the new boiler was commissioned inregular operation). The specific heat consumptionreflects also the meteorological conditions duringthe respective heating season and provides themost accurate idea about the real heat consump-tion rates.

1 During the 2001/2002 heating season the boiler operation started on 10 November 2001.2 The baseline consumption has been modeled with ASEAM 3.0.

350 000

300 000

250 000

200 000

150 000

100 000

50 000

0

332 819

232 997205 705 192 444

Cost-effectiveness of the projectThe net annual savings achieved as a result of the project amount to USD 6 903 at investments totalto the amount of USD 11 099. The Net Present Value is USD 37 386 and the Internal Rate of Return- 61% (Table 7).


Table 6.Forecast and real heat savings as a result of project implementation

After application of energy conservation measures - forecast withASEAM 3.0

After application of energy conservation measures - 2001/2002- real savings after calibration

After application of energy conservation measures - 2002/2003- real savings after calibration

Average annual savings after calibration

8.630

10.987

12.133

11.560

3 581

4 557

5 035

4 797

Fuel savingsPer heating season

(t / year) (USD / year)

Cost savings

Investments total

Net savings

Payback period - PB

Payoff period - PO

Net Prevent Value - NPV

Net Present Value Quotient - NPVQ

Internal Rate of Return - IRR

USD

USD/year

Years

Years

USD

USD / USD

%

12 303

5 047

2.44

2.77

23 148

1.88

40

11 099

6903

1.61

1.76

37 386

3.37

61

Unit ForecastParameters of cost-effectiveness Forecast

Annual savings

Energy savings·

Heat ·

Electricity

Project life cycle

Payback period

Internal Rate of Return

Investments total

Host-party contribution

Reduced emissions

SÎx

Nox

CO2 equivalent

USD/year.

MWh/year

MWh/year

years

years

%

USD

USD

t/year

t/year

t/year

6 903

133

15

10

1.6

61

11 099

4 863

0.78

0.063

62.63

69 030

1 337

150

10

1.6

61

11 099

4 863

7.8

0.6

626.3

5 047

100

15

10

2.4

40

12 303

6 000

0.76

0.051

55.01

Results Real achievementResults Total for the

project life cycleForecast

After project implementation - forecast

Real emissions saved for one year - monitoringdata

Total for the project life cycle - forecast

Total for the project life cycle - real values

55.01

62.63

550.07

626.3

0.76

0.78

7.60

7.80

0.051

0.063

0.51

0.63

CO2 equivalent(t) SOx(t)Reduced emissions NOx(t)

The real savings have been calculated at fuelprice (gas oil for industrial applications) BGN830/t and USD exchange rate BGN 2/USD. Theaverage fuel savings have been calculated onthe basis of the real savings for the 2001/2002and 2002/2003 heating seasons after calibration.

Assumptions: economic life cycle 10 years; realinterest rate 7%

Note:

The project envisages application of energy con-servation measures with different economic lifecycle (10 years and 15 years). For the purposesof unification and facilitation of calculations acommon life cycle of 10 years has beenassumed for the entire project. The value of themaintenance costs has been taken into accountin the process of calculation of the Net PresentValue and the Internal Rate of Return.

The project leads also to reduction of harmfulemissions of local significance. Sulphur, nitricand other oxides and particles, which are themain cause for acid rains, are emitted in theatmosphere during combustion of industrial gasoil. As a result of the project the emissions ofCO2 shall be reduced by 626.3 t, SOx emissionsby 7.8 t and NOx - by 0.63 t. The cost of 1t avoid-ed CO2 equivalent for the total project life cycle(10 years) is USD17.7 / t.

The results from the demonstration project havebeen presented at numerous workshops, semi-nars and at the annual conferences of theMunicipal Energy Efficiency Network EcoEnergy.A special seminar, devoted to presentation ofthe results from the demonstration projects andaimed at capacity upgrading, was held for 40building managers, energy managers and man-agement staff of municipal and other sites in thecity of Gabrovo. This demonstration project wasused also as an example in the process of train-ing on how to develop energy efficiency proj-ects. As a result of it, numerous new projects forretrofit of existing buildings in other member-municipalities of the EcoEnergy Network havebeen initiated.

Table 7. Cost-effectiveness of the project

Table 8. Reduction of harmful emissions

Table 9. Summary results

Environmental impactThe avoided emissions of greenhouse and other gases during the 2001/2002 and 2002/2003 heatingseasons are shown in Table 8.


After the series of projects in municipal buildings,the project in Mehatronika JSC introduced aninnovative element to the Energy EfficiencyDemonstration Zone in the city of Gabrovo. Itdemonstrated how the public funds, invested in itby an international development programme,might successfully leverage additional privateinvestments.

Public-private partnership in implementation ofenergy efficiency projects provides an opportunityfor the public sector to obtain a higher valueagainst its investments, and for the private sector -to get access to a broader range of resources.

For Mehatronika JSC the benefits from the projectcomprise diminishing of energy costs, improvedwork conditions and broader access to resources(financing, technologies and information). For theMunicipality of Gabrovo the benefits comprise theestablishment of a model for leveraging privateinvestments for implementation of energyefficiency projects.

The project has contributed also for increase ofthe labour productivity and reduction of theproduction costs in the enterprise thanks to theimproved work environment in the building.According to report data of Mehatronika JSC, theincrease of the production output of the companyin 2003 as compared to 2001 is more than 80%,while the number of employees under fixed labourcontract has increased by 8%.

The direct interest of the municipality inestablishing public-private partnership relations isto provide conditions for sustainable andprogressive development of the enterprises on itsarea, thus alleviating the unemployment burden inthe region, growing into good employers andgood tax-payers, therefore the partnership will beto mutual benefit. The comfortable and healthywork environment for the workers leads also tominimizing of the rate of acute and professionalillnesses, which is a problem nationwide.

The reduction of energy costs, which is one of thesignificant expenditure items in the budget ofindustrial enterprises, as well as the reduction ofharmful emissions, achieved as a result of theproject implementation, comes to illustrate the fact

that multiplication of projects of this kind will leadto improvement of the business climate and thestate of the environment everywhere where theyare realized.

The access to information and technologies,which the project could ensure to MehatronikaJSC (for instance the ASEAM modelingprogramme, which compensates the lack of dataabout heat and electricity consumption andassists the selection of energy conservationmeasures), allowed the company to make theright decision, namely to review its original plansfor conventional repair and expansion and toresort to the implementation of a comprehensiveenergy efficiency project.

The project corroborated also some of theconclusions made as a result of theimplementation of the other demonstrationprojects. A carefully compiled and well-designedpackage of energy conservation measures mayproduce very good results with even moderateinvestments. In the case of energy efficiencyprojects in industrial buildings it is important tonote that the higher the involvement of thecompany in project preparation and financing, themore successful the project outcome will be. Inthis particular case, the project life cycle is 10years and the intervention of the contractor(namely EnEffect in the framework of theGEF/UNDP-funded international project) was

limited to a period of two years (application of themeasures and monitoring). Therefore, the overallresults from the project depend above all on theuser.

Commitment of the host-party from the verybeginning of the process and its conviction in thebenefits from the project ensure the success ofthe application of the energy conservationmeasures.

From a social point of view, the measures forimprovement of energy efficiency, like for instancethe use of more efficient luminaries, lead toimprovement of the work environment and thecomfort for the building occupants. One shouldnot neglect measures, which, although appearingto be economically not very attractive (for instancereplacement of doors and windows and fitting ofinsulation), might lead to improvement of theconditions of work. Such measures should beconsidered as part of the overall package ofenergy conservation activities.

CONCLUSION

The implementation of the project proved thatpublic money can raise private investments for

energy efficiency and environment protection


Energy Efficiency Strategy for Mitigation of GHG Emissions.Energy Efficiency Demonstration Zone in the City of Gabrovo

Municipal Energy Efficiency Policy

Specialized Training on Energy Efficiency in Municipalities

Overcoming Financial Barriers to Energy EfficiencyImprovement in Municipalities

Demonstration Project to Improve Energy Efficiency in OtetsPaisii School

Demonstration Project to Improve Energy Efficiency at DistrictHeating End-use

Energy efficiency demonstration project at the Dr. TotaVenkova Regional Hospital in the city of Gabrovo

Demonstration Project to Improve Energy Efficiency in a LargePanel Residential Building

Demonstration Project to Improve Energy Efficiency in theAdministrative Building of the Local Authority

Demonstration Project to Improve Energy Efficiency of theStreet Lighting in Gabrovo

In the series of publications on the Energy Efficiency Demonstration Zone in Gabrovo YOU WILL BE ABLE TO FIND ALSO:

Zlatareva, R. et al. Energy Audit of an Existing Industrial Building at MEHA-TRONIKA JSC, city of Gabrovo, and Measures for Energy Efficiency Retrofit,September 2001

Norms for Design of HVAC Systems ( Architecture and Construction Bulletin)Vol. 6,7,8 and 9 of 1986; amendments and addendum Vol. 6-7 of 1991, Vol. 10of 1993 and Vol. 4-5 of 1994)

Stoyanov S. et al. Handbook on Energy, Vol. 8, ABC Tehnika, 1999

ASHRAE Handbook of Fundamentals, Atlanta, GA : ASHRAE, 2001

ENSI Economy Software, Oslo, ENSI, 2000

ASEAM 3.0 Software Users guide, Third edition, 1991, Washington DC,Department of Energy, 1991

Methodology for calculation under the balance methods of harmful emissions(polluters) emitted in the atmosphere, Sofia, MoEW, June 2000

Stamov, S.and A. et al., Handbook on HVAC, Part I, Sofia: Tehnika, 1990

Tchervilov, L. and A. Stoykov, Retrofit of Existing Buildings to Reduce EnergyConsumption. Results from a Demonstration Project for Energy EfficiencyRetrofit of an Industrial Building at Mehatronika JsC, Business meeting withenergy managers of buildings, 27 November 2002, Gabrovo.

sources

EnEffect is a non-profit NGO, founded in 1992, with the aim to support the efforts of the central and local authori-ties for attainment of sustainable development of the country through more efficient energy use.

To contribute to the formulation of a policy for efficient use of energy resources at all management levels.

To support local institutional and human capacity building as a prerequisite for initiation, developmentand implementation of energy efficiency programs.

To promote the development of a local market for energy saving technologies, products, materials andservices.

To assist the exchange of experience and information aimed at improvement of energy efficiency.

Overcoming of all barriers to energy efficiency in Bulgarian municipalities and creation of incentivesfor energy conservation.

Development and management of investment and demonstration projects for energy conservation.

Development of municipal and regional energy efficiency programs.

Provision of education and training in the field of rational use of energy.

Collection, processing and distribution of information on energy efficiency.

EnEffect is acting as Secretariat of the Regional Network for Efficient Use of Energy and WaterResources in Southeast Europe (RENEUER). Members of RENEUER are municipalities, NGOs andcompanies from Albania, Bosnia and Herzegovina, Bulgaria, Chroatia, Macedonia, Moldova,Romania and Serbia and Montenegro.EnEffect is acting as Secretariat of the Municipal Energy Efficiency Network EcoEnergy, whose mem-bership by 2003 comprises 159 municipalities as member minicipalities or associated members.EnEffect is part of a network of similar energy efficiency centers in Poland (FEWE), the CzechRepublic (SEVEn), Russia (CENEf), China (BECon) and Ukraine (ArenaECO).

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PARTNERS AND DONORS

OBJECTIVES

PR IOR I T I ES

State bodies, local authorities, research and training centers, univerities, companies and NGOs inBulgaria. Consultancy companies, institutes and NGOs from Europe and the USA. The GlobalEnvironment Facility, the US Agency for International Development, the European Commission, theUN Economic Commission for Europe, the United Nations Development Programme, the RegionalEnvironmental Centre, West European governments.

NATIONAL AND INTERNATIONAL NETWORKS

For contactsCenter for Energy Efficiency EnEffect

www.eneffect.bg

Tel. (+359 2) 963 1714, 963 0723, 9632169; Fax (+359 2) 963 2574

E-mail:[email protected]

Mailing address:1606 Sofia, P.O.Box 85

Office: 1164 Sofia, 1, Hristo Smirnensky Blvd., fl. 3

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