Indonesia - Chiller Energy Efficiency Project

Page 1 INTEGRATED SAFEGUARDS DATA SHEET CONCEPT STAGE Report No.: AC5359 Date ISDS Prepared/Updated: 12/27/2010 I. BASIC INFORMATION A. Basic Project Data Country: Indonesia Project ID: P121003 Project Name: ID - Chiller Energy Efficiency Project Task Team Leader: Johannes Heister GEF Focal Area: Climate change Global Supplemental ID: Estimated Appraisal Date: September 26, 2011 Estimated Board Date: December 15, 2011 Managing Unit: EASIS Lending Instrument: Specific Investment Loan Sector: General energy sector (50%);District heating and energy efficiency services (50%) Theme: Climate change (70%);Other environment and natural resources management (30%) IBRD Amount (US$m.): 0.00 IDA Amount (US$m.): 0.00 GEF Amount (US$m.): 3.66 PCF Amount (US$m.): 0.00 Other financing amounts by source: BORROWER/RECIPIENT 0.00 GERMANY: KREDITANSTALT FUR WIEDERAUFBAU (KFW) 18.00 Montreal Protocol Investment Fund 1.00 19.00 B. Project Objectives [from section 2 of PCN] 1. The project development objective is to reduce the ODS consumption and greenhouse gas (GHG) emissions by replacing inefficient ODS chillers with energy efficient non-ODS chillers. C. Project Description [from section 3 of PCN] 2. The proposed project will facilitate the replacement of about 160 ODS-based chillers with energy efficient non-ODS-based chillers over a period of five years. The project proposes to facilitate the replacement of existing ODS-based chillers by: (i) converting part of the grant funds provided by GEF to concessional loans to chiller owners; (ii) providing part of the GEF grant funds to support costs of bank guarantees on the concession loans drawn from GEF and from the government#s environmental fund financed by KfW; and (iii) providing the MLF grant Page 2 funds to support implementation of technical assistance, energy consumption measurement and monitoring, and project management activities. 3. The proposed project will be supported by the MLF and GEF on a grant basis.The MLF funding of US$1.0 million will be drawn from the grant fund approved by the ExCom of the MLF for the Global Chiller Replacement Project (ExCom Decision 47/26). An additional grant fund of US$3.66 million will be provided by GEF. The GEF Project Identification Form (PIF) with the funding request of US$6.0 million including an agency#s support cost has already been approved by the GEF Council on March 17, 2010. Component 1. Concessional Loans for Investment in Energy Efficient Chillers (US$20.0 million: US$2.0 million from GEF, and US$18.0 million from the Government#s Industrial Efficiency and Pollutions Control Environmental Fund which is financed by KfW) 4. Financial support will be provided in the form of concessional loans. This GEF concessional loan component will complement the existing Industrial Efficiency and Pollution Soft Loan Program (IEPC) from the Governments of Germany through KfW. Under the IEPC program, concessional loans are channeled through the following banks: BNI, BEI, Bank Niaga, and 5 BPD (Yogyakarta, Kaltim, Kalbar, Jarteng). The Project will explore possibility of using one or more of these existing financial intermediaries to channel the GEF resources. Terms and conditions of concessional loans offered under the IEPC program will be employed by this project. The replacement cost is about US$200,000 per unit. The concessional loans will be provided up to 80% of the replacement cost. The balance will have to be self-financed by chiller owners. Component 2. Bank Guarantees (US$1.66 million from GEF) 5. Based on the experience of implementing the Government#s IEPC program, the limited uptake of concessional loans for replacement of chillers is due in part to the cost of accessing the concessional loans from the channeling banks mentioned above. Chiller owners who do not have an established business relationship with these channeling banks would have to provide bank guarantees in order to access the concessional loans. Additional costs to cover the bank guarantees make the IEPC program unattractive. Since chiller owners normally have other investment priorities to consider, chiller replacement, which is subject to other investment barriers (e.g., perceived technology risks, lack of awareness, and etc.), has not been taken up. 6. To overcome this particular barrier, costs of issuing bank guarantees, which are normally borne by chiller owners, will be financed by GEF on a grant basis. This would allow chiller owners, who do not have existing collateral with the financial intermediaries of the Project, to participate without incurring additional costs. The cost of bank guarantees is about 2 # 3% of the loan amount. Component 3. Measurement and Monitoring (US$500,000 from MLF) 7. Part of the grant funds provided by the MLF will cover initial costs of baseline power measurement and monitoring of actual energy savings of a representative number of chillers to be replaced under the Project. This component will also cover the costs of data loggers as well as the monitoring of data generated by these devices. The objective of this project component is Page 3 to systematically measure the impact of the project in terms of energy savings achieved by the new technology. Component 4. Technical Assistance (US$ 300,000 from MLF) 8. Technical assistance will consist of the following activities: # Market development # Technical workshops will be conducted in order to familiarize chiller owners with the global concerns regarding climate change and ozone layer depletion, and to introduce life-cycle analyses as a tool for making replacement decisions. Existing tools and software developed under other Bank-funded energy efficiency project will be used. Only slight modifications to incorporate the local context may be required. # Refrigerant Management Plan # Technical workshops will be conducted for all participants of this Project. This will ensure that ODS from the retired equipment will be properly recovered. Environmentally-sound recovery and handling of ODS in accordance with ANSI/ASHRAE 15 # 1994 Safety Code for Mechanical Refrigeration will be mandated for all equipment suppliers participating in the Project. Technical workshops will be conducted to inform participants of potential revenues from carbon emission credits from ODS disposal activities to ensure that any unwanted ODS refrigerants will be properly disposed of. The ODS disposal protocol and criteria of Climate Action Reserve and Voluntary Carbon Standard Association will be addressed. Moreover, participants will be informed of measures to minimize leakage of refrigerant from new chillers, and measures or good practice to ensure optimum performance of new chillers. # Public Awareness # Annual chiller energy efficiency awards will be awarded to recognize chiller owners that properly maintain their chillers and achieve high energy savings. The purpose of this event is to create an incentive for building owners to maintain and improve energy performance of their chillers. Successful experience of chiller replacement under the Project will be documented and disseminated through various media and publications, as well as, through workshops for chiller owners not covered under the Project. The public awareness activities will serve as a showcase for the success and benefits from energy efficiency products in large buildings. Other government agencies and stakeholders will be addressed by this project component. Component 5. Project Management (US$200,000 from MLF) 9. The Project will support establishment of a project management unit under the Ministry of Environment. The Project Management Unit will be responsible for carrying out technical assistance activities, undertaking market development of chiller replacement, liaising with potential chiller owners and suppliers, monitoring and implementing the project, and providing required reports to the World Bank, GEF, MLF, and the Environmental Fund under the IEPC Program. D. Project location (if known) 10. Nation wide E. Borrower