Triple Win for Jordan – Achieved Results and Impacts

  • Improved electricity network reliability through reduced electricity demand of the water sector
  • Reduced financial deficit of the water sector through reduced electricity costs (GHG emission reduction)
  • New business opportunity for the local private sector

The IEE Programme has demonstrated that energy performance contracting (EPC) based approaches in the water sector can reduce operating costs with no up-front cost and limited risk for the facility owner. With the institutional innovation to introduce EPC in the Jordanian water sector, the IEE Programme is achieving long term sustainable energy efficiency improvements and has a beacon effect for the Water Sector in Jordan and beyond. With an estimated electricity saving potential of approx. 25% the IEE Programme is one cornerstone in Jordan’s strive to become more energy efficient and reduce the burden on an already over-stretched electricity production sector. It will help reduce the costs for the Water Authority of Jordan by more than 3 million JOD/a, and the CO2 emissions of the country by approx. 40’000 tons.

The DPP Pilot Project – a cooperation between WAJ, WILO and GIZ

 

  Water pumped
in m3
Addition. water
in m3
Electricity consumed
(kWh)
Efficiency improved
(%)
April 276,000 44,000 315,000 36
May 207,000 10,000 225,000 48
June 216,000 (11,000) 241,000 35
July 244,000 22,000 277,000 39
Aug 244,000 23,000 268,000 31
Sept 180,000 (8000) 203,000 51
Oct 210,162 17,793 243,625 6
Nov 194,707 30,841 224,838 6
Dec 187,170 36,643 213,764 26
Jan 204,296 61,271 239,020 29
Feb 236,527 31,642 293,675 29
Mar 231,679 19,010 279,265 34
Apr 209,121 (22,839) 252,740 32
May 236,527 38,962 249,298 40
June 183,333 (43,347) 216,843 31

Table 2: Results of the Pilot Project

The results confirm an increase in average energy efficiency of more than 35%, which translates into cost recovery improvements of approx. 110’000 JOD per year, very low maintenance efforts for the enhanced equipment and an overall reduction of pumping station downtime.

Based on these very encouraging results, WAJ was highly interested to repeat the success story of the pilot project with a full scale EPC and further projects within the framework of developed institutional and operation models.

Programme Results and Impacts

The initial baseline studies and energy audits predicted an electricity saving potential of approx. 25%. The main reasons for the low predictions were the use of wrongly designed and low-cost equipment. This is because the cost optimisation focused on the lowest procurement costs instead of the lowest life-cycle costs (LCC). An LCC approach for pumping equipment favors procurement of higher quality equipment, since over the whole life cycle, operation (including electricity), maintenance and repair costs account for more than 90% of the total costs, while procurement costs represent only approximately 10%.

In addition to this, it was revealed that beside the negligence of LCC that also the operational approach was deficient. Due to the limited water resources available in Jordan, the operational focus lies on the maximization of the pumping of water and therefore water availability and  not the lowest possible cost for pumping. Because of lack of automation and regular maintenance this results in high electricity and hence operational costs and frequent pump replacements. Finally, it was shown that in the whole process starting from pump design/selection to operations, maintenance and repair, a large number of divisions and actors are involved. This fragmented organisational structure reduces the effectiveness of an overall optimisation process when it comes to electricity consumption.

The initial energy audit of the IEE Programme had identified already a cost reduction potential for WAJ of almost 1 Mio. Euro per year, and CO2 emissions of approximately 16’000 tons in the initial 11 selected pumping stations alone.

Pumping Station Pot. saving (%) Pot. saving (Euro/a) Pay-back period (years) Reduced CO2 (t/a)
Zarqa Desal Plant 65 18,000 10 298
Hallabat 19 32,000 11 539
Azraq 18 152,000 13 2,344
Khaw 38 302,000 4 5,103
Yazedieh 17 40,000 22 684
Azraq Spring 27 18,000 9 306
Share’a 35 103,000 8 1,747
Naqab Al Daboor 10 10,000 2 168
Madaba 95 178,000 23 3,007
Wala 4 22,000 6 379
Lib 13 70,000 2 1,172
Grand Totals   935,000   15,579

Table 1: Results of the Energy Audit (GIZ 2009)

The energy saving potential can partially be reaped by installing new and more efficient pumps as well as equipment. However, in order to have sustainable solutions,  the procurement of new pumps alone is not sufficient. Therefore, a focus on LCC for the procurement as well as a change in the organisational processes is required. In that regard the IEE Programme has developed a comprehensive optimisation process, which is introduced in the form of the four institutional and operational models (EPC models) to support WAJ in the full cycle of pumping station operations. These models create strong incentives for the ESCo to deliver the predicted energy savings while creating the framework in contractual terms. It further supports better cooperation between the private and public sectors. The particular challenge for developed EPC models and their implementation in the water sector is the allocation of project risks. The water sector in one of the most water scarcest countries of the world is obviously a sector of decisive strategic and political importance. When talking about private sector involvement in the Jordanian water sector, a successful approach was needed, which took into accont project risks and allocated them to the project partner, who is better equipped  to control them. Some of the risks (eg. the variability of water availability over time or the involvement of seconded staff from the water utility) are clearly specific to the sector and the project partners. For these reasons, our EPC models allow for a variable involvement of the private sector depending on the actual financial validity of the individual case especially with regard to investment and energy saving potentials of the pumping facility.

Achieved Changes in the Sector

The Programme is successfully steering change in the water through its concepts and legal documents regarding the involvement of the private sector in the financing and operation of pumping facilities. The tendering of the first full scale EPC contract based on the experiences of the DPP took place in autumn 2011. Via the development of EPC models, the IEE Programme has created a new market in the water sector, in which specialised companies in the field of energy management will cooperate with traditional water companies to actively promote more innovation in the sector.

Triple Win for Jordan

The IEE Programme combines demand-side energy improvements with institutional innovations in the Jordanian water sector. The advantages of EPC based private sector involvement have been proven by the IEE Programme and the implementation is ongoing. The implementation of measures runs along the EPC model, by which a triple win situation is created:

  • firstly cost savings are shared between WAJ and the private sector, which implies also the generation of additional business opportunities for the local private sector;
  • secondly WAJ acquires new infrastructure at no cost, which is also important measure for more infrastructure reliability in the face of the impacts of climate change;
  • and thirdly a reduction in greenhouse gas emissions, which besides generating the classical environmental benefits also relieves some stress from the Jordanian energy production sector.

The fact that electricity accounts for a major share in the operation costs of WAJ, highlights the importance of cost recovery. Improved energy efficiency does not only reduce costs, but also makes cost recovery more likely. It further shows the dedication of WAJ to optimise operational processes and hence avoid an unnecessary financial burden to their customers thereby making discussions about tariffs to cover costs more acceptable for the public.

Improved cost recovery through energy efficiency is a key issue for WAJ. EPC is seen as a promising way since there are no up-front costs and on top of that limited risks for WAJ. The IEE Programme has demonstrated the feasibility of combining private investment and operations in a new way. All of these results imply that the IEE Programme is one cornerstone in Jordan’s endeavour to become more energy efficient and reduce the burden on the already over-stretched electricity production sector. This Programme was able to have a beacon effect beyond Jordan and has shown that taking care of the environment can also have economic advantages. It is an example for sustainable solutions that the German Government supports in its cooperation activities with Jordan.

 Bundesministerium für Umwelt, Naturschutz und Reaktorsicherheit Development Coooperation: Hashimite Kingdom of Jordan -  Feredal Republik of Germany Germany's Clilmate Initiative - Climate protection pays off! Jordan Water Authority Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) GmbH