Lifetime of savings

After deciding what amount of energy savings is to be attributed to each individual action, the next step is to establish over what period this action will continue to deliver energy savings. The concept of the ‘lifetime’ of an individual energy-saving action refers to the fact that savings may be obtained not only in the year of implementation, but also in future years. The ‘lifetime’ is therefore the period for which the action will continue to deliver measurable savings. In accounting for the lifetime of energy efficiency improvements, Member States are able to attribute the real saving that each action will achieve between the year of its implementation and 2030.

In attributing the lifetime, several different methods can be used, based on the Guidelines:

  • Straightforward method: the Member States may: – attribute to each action the ‘real’ savings that it will achieve between the year of its implementation and the end of the second obligation period (i.e. 31 December 2030) – this is referred to as the ‘straightforward’ method. The attribution of savings beyond 2030 is not permitted. Member States may count savings from policy measures introduced before 2030 for the energy savings obligation post-2030 only if those measures result in a new individual action in the subsequent obligation period;
  • Index value method: apply an ‘index value’ that reflects the expected lifetime, meaning an action that only runs for one year could be given an ‘index value’ of 0.25, while an action that lasts up until 2020 could be given an ‘index value’ of 6. If each of these actions saves 1 toe per year, then the saving attributed to the action that last a year would be (1 x 0.25) = 0.25 toe. The saving attributed the action that lasts till 2020, would be (1 x 6) = 6 toe.
  • The cap method: To ‘cap’ the lifetimes attributed to individual actions. For example, a ‘cap’ of 5 years could be chosen. Under this method, the saving attributed to an action that lasts one year would be 1 toe. The saving attributed to an action that runs for 5 years to 2030, would be (1 x 5) = 5 toe.
  • Discounted full lifetimes method: For example, a discount rate of 10% per year could be chosen. Under this method, the saving attributed to an action that runs for one year would be 1 toe. The saving attributed to an individual action with a lifetime of 4 years, saving 1 toe each year, would be 10% less each year it is implemented. The saving attributed to action with a lifetime of 25 years, whatever the year of implementation, would be 9.28 toe.

With all of these alternatives, the MS must ensure that the result is not higher than the one given by the ‘straightforward’ approach.

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