Summary Brief El Salvador: Techno-Economic Analysis of Energy Efficiency Regulations for Air Conditioning and Refrigeration Emissions generated by the building sector have been increasing due to the continued use of coal, oil, and natural gas, combined with higher levels of activity where electricity remains carbon intensive.1 For this reason, actions have been promoted worldwide to encourage the incorporation of energy efficiency (EE) measures in buildings. In Latin America, the construction sector is expected to continue growing, doubling in the next decade. Latin America's population is also projected to increase by about one percent annually over the next decade.2 In this context, the construction sector presents a great opportunity to implement EE measures. Sustainable constructions are buildings with superior efficiency in energy and water and construction materials with a reduced carbon footprint. Several studies have shown that most energy-efficient design strategies can be cost- effective; although construction costs increase, the cost is typically recovered in energy and other operational and maintenance savings within three to five years of operation. In addition, many countries face real constraints in terms of availability of energy resources and any effort to reduce energy consumption will be considered highly desirable. The World Bank has a long history of supporting Central American countries in implementing EE standards and measures. The technical assistance program for El Salvador corresponds with previous work with other countries in the Region and responds to the request of the National Energy Council (CNE) for support in the energy sector as part of the National Energy Policy 2020-2050. In line with this request, the Bank has provided support to the government of El Salvador (GoES) by carrying out a techno-economic analysis of the EE standards that are contained in the EE Salvadorian Technical Regulations (RTS). The aim of the analysis was to characterize the El Salvadorian market for air conditioners (AC) and refrigerators with a focus on EE and refrigerants available in the country, to develop a national and consumer analysis of the EE standards consistent with international best practices, and to recommend new EE levels for an update of the RTS as well as criteria for refrigerants that are in line with the Kigali amendment to the Montreal Protocol. This summary brief provides the key highlights of the World Bank Techno-economic Analysis of El Salvador Report (2022). ANALYTICAL FRAMEWORK SCOPE AND CLASSES OF PRODUCTS To analyze the impacts of EE RTS on household air conditioners and refrigerators, the study focused on representative units for each RTS.3 DEFINITION OF ENERGY EFFICIENCY LEVELS The impacts of the entry into force of EE RTSs depend on the mix of efficiencies of currently sold products in the Business-As-Usual (BAU) scenario and on the efficiencies of each improved scenario considered for analysis as shown in Table 1 below. The model represents the current mix of products by level of efficiency from the technical floor defined in the corresponding RTS to the most efficient levels identified in the Salvadorian market or internationally in the case of models of superior efficiency not found in the local market. The following table shows the different efficiency levels and scenarios considered for each representative product class. Table 1:Efficiency levels considered SEER in W/W Domestic Level of Conventi Inverter Central Description Description refrigerators/ efficiency onal split split type freezers NE0 Norm - Inverter4 ACs: least efficient value found in the EER6= 4.39 3.81 1.00 Base Case local market. 2.7 (BAU) - Conventional and central5 ACs: Minimum Efficiency Index as defined in the RTS. 1 2020 Global status report for buildings and construction 2020 Buildings GSR_FULL REPORT.pdf 2 Market Assessment Panama IFC 3 Currently, RTS do not cover ACs with inverter technology 4 An inverter air conditioner uses microprocessors to control the speed of its compressor motor to match the required output. Once the room is cool or warm, an inverter air conditioner lowers the speed of the motor to save energy and maintain the desired temperature. 5 Central air conditioning is a system in which air is cooled at a central location and distributed to and from rooms by one or more fans and ductwork. 6 EER - Energy Efficiency Ratio. Describes the efficiency of the system at peak usage - Refrigerators and freezers: Minimum Efficiency SEER7= Index as defined in the RTS. 3.1 NE1 Intermediate - Conventional and inverter ACs: value proposed 3.52 4.68 4.10 1.20 Scenario 1 efficiency 1 in the Central American Technical Regulation (E1) (RTCA). - Central ACs: first level of medium efficiency identified in the market. - Refrigerator and freezer: first level of medium efficiency identified in the market; equivalent to the technical standard of the United States (USDOE, 2011) and Mexico (SEGOB, 2018). NE2 Inverter - Conventional ACs: consideration of inverter 4.68 5.30 5.27 1.40 Scenario 2 technology technology as a goal, at the level of RTCA8 for (E2) RTS3. - Inverter ACs: second level of medium efficiency identified in the market. - Central ACs: first level of medium efficiency identified in the market. - Refrigerator and freezer: second level of medium efficiency identified in the market; equivalent to the technical standard of the United States (USDOE, 2011). NE3 Max Tech - Conventional and inverter ACs: most efficient 7.92 7.92 6.15 1.60 Scenario 3 inverter product found in the US market. (AHRI, 2021). (E3) technology - Central ACs: most efficient technology in the analysis of the United States Department of Energy (USDOE, 2016). For refrigerator and freezer: the level considered by the US (USDOE 2021). MARKET ASSESSMENT ANALYSIS OF IMPORT AND EXPORT FLOWS From 2010 to 2019, there has been an annual growth rate of 19% in the import volume of ACs. A small slowdown in imports can be observed in 2020 which may be attributed to the COVID-19 pandemic. However, from 2010 to 2019, there has been an annual growth rate of 19% in the import volume of this equipment. As shown in Figure 2, 84% of the unitary- type ACs9 marketed in El Salvador are imported from China, whereas almost half Figure 1: Quantity and value of AC imports to El Salvador of central-type ACs are imported from the from 2010 to 2020. United States (48%), followed by China with 27% of imports. From 2010 to 2019, the total imports of refrigerators and freezers grew at an annual rate of 6% (see Figure 3). Over the years, although import of refrigeration equipment continues to grow, compression refrigerators10 were displaced by freezer refrigerators11 with separate exterior doors. From 2010 to 2019, imports of compression refrigerators decreased by 7%, while imports of freezer refrigerators with separate exterior doors grew 17% annually. 7 SEER-Seasonal Energy Efficiency Ratio. This is the ratio of the cooling output of an air conditioner and heat pump over a typical cooling season, divided by the energy it uses in Watt-Hours. 8 Reglamento Técnico Centroamericano (Central American Technical Regulation). 9 A unitary or package air conditioning system uses equipment where most or all the basic components have been assembled in the factory, e.g., room air conditioner. 10 Refrigerators with a single compressor, cold air circulates from the one compressor throughout the entire unit, including the refrigerated compartment and the freezer compartment. 11 Refrigerators with dual compressors have separate units and air flow for the refrigerated and freezer compartments. 2 Figure 2: Origin of imports of unitary ACs (left) and central ACs (right) in 2019 Figure 3: Quantity and value of refrigerator imports Figure 4: Origin of imports of refrigerator to El Salvador from 2010 to 2020 freezers in 2019 As shown in Error! Reference source not found. above, 41% of the refrigerators and freezers sold in El Salvador are imported from Mexico followed by Colombia and China with 26% and 25% of imports, respectively. EQUIPMENT STOCK Data was extracted from the Salvadorian Energy Efficiency Regulation System (SRTSEE) and UN Participation according to (United Nations) Comtrade. Figure 5 shows that SRTSEE and UN Comtrade 61% of ACs in the market are split-type equipment (2019) with inverter technology. The site visits to sales retailers and websites further validated that the split 0 20 40 60 ACs with inverter technology dominated the market; it found that 79% air conditioners on the market are Split Inverter AC Conventional split AC split-type equipment with inverter technology. The same exercise for central-type air conditioners with Figure 5: Split AC units sold in El Salvador by technology conventional and inverter technology. As illustrated (estimate, % of total) in Figure 6, central AC with inverter technology accounted for 82 % of the market. However, based on the data of equipment available on the market, it was observed that 57% of central-type air Participation conditioning equipment is of conventional type and according to SRTSEE 43% are inverters. This may change over time, as and UN Comtrade conventional central type equipment is consumed (2019) and subsequently is removed from stock. Based on a survey carried out in 2018 with AC suppliers on end-user equipment consumption, it was found that 0 50 the residential sector consumes mostly room and Central Inverter AC Conventional Central AC split ACs, while the commercial sector is the largest Figure 6: Central AC units sold in El Salvador by technology consumer of central type ACs. (estimate, % of total) The certifications granted by CNE between August 100% 2020 and August 2021 for each equipment type was 5 % Residential analyzed (Figure 9). Refrigerator-freezers with one 61 Sector door and refrigerator-freezers with a top freezer 50% 95 dominated the market. Figure 8 shows the annual 39 % changes in the sale of refrigerators and freezers, 0% Commercia according to which refrigerator-freezers with l Sector separate doors have increased their market share, Split AC Type Central AC Type displacing single-door refrigerators. It was thus concluded that refrigerator-freezers are the Figure 7: AC units sold in El Salvador by type and end-use representative type for the RTS. sector. Source: Supplier surveys conducted in 2018 3 100% 6 8 9 11 14 11 14 15 12 13 10 90% 80% 27 10% 70% 46 14% 30% 47 43 60% 52 53 61 59 68 67 68 50% 11% 40% 65 35% 30% 20% 47 44 45 35 36 10% 24 26 20 20 22 Refrigerator-freezer one door 0% Refrigerator-freezer with freezer on top Refrigerator-freezer with side freezer Refrigerator- freezer with freezer at the bottom Refrigerator Refrigerator-freezer Freezer Freezers Figure 9: Market share by refrigerator type. Figure 8: Annual sales of refrigerators and freezer (%) Source: Estimates based on CNE certifications. REFRIGERANTS • More than 80% of the equipment in the database • ACs: 99% of equipment uses R-410a and only one has information about the refrigerant they use. specific model uses R-32. • Refrigerators: 90% of the sample uses R-600a • With exception of R-600a, all refrigerants found on and the remaining 10% uses R-134a. the market are hydrofluorocarbons (HFCs). TECHNO-ECONOMIC ANALYSIS The techno-economic analysis combines RTS data for current products found in the market (empirical method), engineering data developed by the Department of Energy (DOE) program in the United States, and data from superior efficiency products found in the North American market. This method is appropriate for the case of El Salvador since there is a wide range of efficiencies that are available in the market, but no devices of superior efficiency were found. Additionally, the empirical method has its limits and uncertainties, since prices do not only reflect the EE of the designs, which generates distortions in the price vs. efficiency. The distortions are limited by combining the two methods of analysis: engineering analysis and statistical analysis. The database allowed for the determination of various levels of efficiency in the market and to compare the levels of efficiency with international standards and studies. The baseline is the minimum efficiency required by the EE RTS in force to date. DETERMINATION OF ENERGY EFFICIENCY LEVELS I. Split type air conditioners: The SEEER values for split ACs in the market varied from 3.20 W/W (10.93 Btu/Wh) to a maximum level of 6.00 W/W (20.5 Btu/Wh), corresponding values of equipment using inverter technology. The average value of efficiency in the entire database was 4.44 W/W (15.16 Btu/Wh); this average value represents a 27% improvement over the average value found in 2018. Based on the sample, it was identified that none of the models found on the market has a level of EE lower than that established in the RTS. Figure 10 shows the distribution of efficiency values for split ACs with conventional technology found in the market. It is evident that the largest number of Figure 10: EE distribution for conventional split AC models are between the efficiency levels NE1 and NE2, which represent 84% of the total database for this equipment. 4 Figure 11 shows the distribution of efficiency values for split ACs with inverter technology found in the market. Most models are between the efficiency levels NE1 and NE2, which represent 94% of the total database for this equipment. It is important to note that the NE3 level was not found available in the local market, but in the US market. II. Central type air conditioners: The SEEER values for central ACs vary between 3.81 W/W (13 Btu/Wh), a value that corresponds to conventional equipment; and 5.27 W/W (18 Btu/Wh), a value that corresponds to equipment with Figure 11:EE distribution for inverter split AC inverter technology. The average value of efficiency in the entire database was 4.39 W/W (14.96 Btu/Wh), which represents a 15% improvement in the average efficiency value with respect to the data collected in 2018. All the equipment within the database complies with the current RTS. In addition, most of the models are between the NE1 and NE2 level, which represents 79% of the entire database (see Figure 12). III. Refrigerator-freezers: All equipment found complies with the efficiency established in the current RTS. Figure 13 shows that most equipment iS between levels NE0 and NE2. Figure 14 shows the distribution of the efficiency of the refrigerator-freezers collected, using the indices. Most computers are between level NE0 and NE1, which represent 74% of the entire database. The NE3 level corresponds to the maximum level of EE Figure 13: EE distribution for central type AC (MaxTech) found in the local market. Figure 14: Distribution of the energy consumption of refrigerator-freezers with automatic defrost and freezer Figure 12: EE ratio per refrigerator-freezer with respect to mounted on top, without ice dispenser adjusted volume DETERMINATION OF PURCHASE PRICES AND EFFICIENCY SCENARIOS The market assessment found that air conditioners and refrigerators for home use are sold through different distribution channels. Price information was collected from stores, vendor catalogs, and web pages to obtain current purchase prices for such equipment. For central type air conditioners, data was obtained only through quotations to contractors. Technical specifications of the products were also collected, such as: certified efficiency, cooling capacity of air conditioners and the volume of refrigerators. With the data collected, the average price of all products covered within the corresponding regulations was calculated for each efficiency level. To compare prices within the same category, prices 5 are adjusted for the same representative unit of capacity. The average capacity was determined with the database of models found in the market. To carry out the impact analysis of the various levels of efficiency for each representative product class, efficiency scenarios based on these levels were also defined. The BAU scenario will have an efficiency value equal to the average efficiency value of the products between NE0 and NE1 and so on for the following scenarios. In efficient scenarios other than the BAU, it will be assumed that products that do not meet the higher efficiency level will move to that level of efficiency. RESULTS Table 2 shows the prices calculated for each efficiency level and for each representative product class considered in the analysis. Table 2: Average purchase prices by efficiency level Product class Purchase price (US$) NE0 NE1 NE2 NE3 Conventional Split AC 446 480 702 1,764 Split Inverter AC 685 702 730 1,764 Central AC 1,478 1,549 2,010 2,345 Refrigerator-freezer 580 622 645 777 With the price and efficiency scenarios for each product class, the following graphs were constructed, which show the cost curve12. The starting point of each graph corresponds to the NE0 level to the efficiency level established in the RTS; except for inverter split type AAs, for which the NE0 level corresponds to the least efficient value found in the market, since there is still no regulation for this technology. Figure 15: Cost curve for conventional split type air Figure 16: Cost curve for inverter split type air conditioners conditioners (5,274 W o 18,000 Btu/h) (5,274 W or 18,000 Btu/h) In the case of conventional split air conditioners, there is no significant difference between efficiency levels NE0 and NE1. The difference between these is only 20%. Likewise, in this segment, the cost of the devices varies proportionally to the efficiency and does not show significant differences between these levels (Figure 15). Similarly, for split type air conditioners with inverter technology between levels NE0 and NE2 there is an increase in efficiency but the increase in cost is minimal (Figure 16). As for the NE4 level, it is observed that it is quite far from the other levels, which highlights the technical potential of the EE of the best technologies ( MaxTech) for each product. 12 Shows the relationship between cost and efficiency. 6 Figure 17:Cost curve for central type air conditioners. (12.663 W or 43.234 Btu/h) Figure 18: Cost curve for refrigerators –freezers domestic use Correspondingly, for central air conditioners, although there is an increase in efficiency between level NE0 and NE1, a significant increase in price is not reflected (Figure 17). In the case of refrigerators – freezers for domestic use, there is a significant increase in efficiency from level NE0 to NE2 although there is no notable change in cost. The 0.4-point increase in the efficiency index equates to an approximate $100 increase in cost. However, the NE3 level does have a significant increase in its cost. Based on the information presented, efficienciesError! Reference source not found.weighted prices, associated with market shares, were generated for each scenario of the representative product classes (see Table 3 and 4). Table 5 shows the annual energy consumption of the efficiency levels considered for each product class representative of this analysis. Table 3: Efficiency distribution for conventional and inverter split ACs Equipment Conventional split AC Inverter split AC Scenarios BAU E1 E2 E3 BAU E1 E2 E3 NE0 16% 2% NE1 84% 100% 22% 24% NE2 0% 0% 100% 42% 42% 66% NE3 0% 0% 0% 100% 34% 34% 34% 100% Average efficiency 3.44 3.48 4.68 7.92 6.03 6.04 6.18 7.92 Average price $ 474 $ 480 $ 702 1,764 $ 1,075 $ 1,075 $ 1,082 $ 1,764 Table 4: Efficiency distribution for central ACs and refrigerator-freezers (domestic use) Equipment Central AC Refrigerator-freezer domestic use Scenarios BAU E1 E2 E3 BAU E1 E2 E3 NE0 23% 29% NE1 46% 69% 58% 87% NE2 31% 31% 100% 13% 13% 100% NE3 0% 0% 0% 100% 0% 0% 0% 100% Average efficiency 4.40 4.46 5.27 6.15 1.19 1.23 1.44 1.60 Average price $ 1,675 $ 1,692 $ 2,010 $ 2,345 $ 613 $ 625 $ 645 $ 777 Table 5: Annual energy consumption of each product class Product class kWh/year NE0 NE1 NE2 NE3 Conventional Split AC 1,359 1,342 998 590 Inverter Split AC 773 773 755 589 Central AC 3,333 3,283 2,780 2,383 Refrigerator – two-door freezer 353 337 288 259 LIFE CYCLE COST ANALYSIS Efficient technologies increase production costs, which are passed on to the buyer through higher sales prices. The Life Cycle Cost (LCC) calculation looks at the trade-offs between this initial increase in costs and subsequent savings in the form of lower electric bills. This section outlines the key results of the analysis. 7 Results The following tables present the results of the analysis of the LCC analysis and the recovery period (payback period) under the different efficiency scenarios proposed in this study. 13 Split AC – conventional Standard Average Average LCC15 Savings in Recovery Efficiency UEC14 Scenario purchase electricity average the LCC period Level (SEER kWh/year price (US$) bill (US$) (US$) (US$) (years) in W/W) BAU 3.20 474 1,359 217.5 2,025 - - NE1 3.48 480 1,342 214.7 2,010 15 1.9 NE2 4.68 730 998 159.7 1,840 185 3.9 NE3 7.92 1,764 590 94.3 2,437 -412 10.5 Split AC-Inverter Standard Average Average LCC Savings in Recovery Efficiency UEC Scenario purchase electricity average the LCC period Level (SEER kWh/year price (US$) bill (US$) (US$) (US$) (years) in W/W) BAU 4.39 1,075 773 123.7 1,957 - - E1 4.68 1,075 773 123.6 1,956 1 2.7 E2 5.30 1,082 755 120.7 1,942 14 2.4 E3 7.92 1,764 589 94.3 2,436 -480 23.4 13 In this study, an average electricity price was calculated for all appliances based on the General Superintendence of Electricity and Telecommunications (SIGET) entire structure of the tariff specifications and the values in force in April 2022. 14 Unit Energy Consumption 15 Life Cycle Cost 8 AC central type Standard Efficiency Average Average LCC Savings in Recovery UEC Scenario Level purchase electricity average the LCC period kWh/year (SEEER in price (US$) bill (US$) (US$) (US$) (years) W/W) BAU 3.81 1,478 4,000 653.3 8,392 - - E1 4.10 1,549 3,940 643.5 8,308 84 1.7 E2 5.27 2,010 3,337 545 7,612 779 3.1 E3 6.15 2,345 2859 467 7,146 1,246 3.6 Refrigerator-Freezers (domestic use) Standard Efficiency Average Average LCC Savings in Recovery UEC Scenario Level purchase electricity average the LCC period kWh/year (SEEER in price (US$) bill (US$) (US$) (US$) (years) W/W) BAU 1.04 613 353 60.3 1,215 - - E1 1.20 625 337 59.4 1,210 4 4.4 E2 1.44 645 288 56.4 1,188 26 2.6 E3 1.60 777 259 51.3 1,179 36 5.4 SALES ANALYSIS AND PROJECTIONS To determine the national impacts of RTS, it is necessary to predict the total number of products operating in the country each year and the rate of old and inefficient products that are replaced by new and efficient ones. Therefore, product sales forecasting and inventory are important components of the national impact model. 9 Figure 19: Total sales and projections: ACs Figure 20: Total sales and projections: Refrigerators From 2010 to 2019, we calculated an average growth rate of 36% per year for central ACs, 38% per year for split inverter ACs, and 10% per year for conventional split ACs (Figure 19). From 2010 to 2019, we calculated an average growth rate of 6% per year for refrigerators (Figure 20). These rates were used to project sales for each type of product, until 2040. The stock was then calculated using sales projections and the useful life of the appliances: Figure 21: Split and Central AC projections Figure 22: Refrigerator projections NATIONAL IMPACTS The study considers not only the financial impacts on individual users, but also the magnitude of the efficiency impacts on the nation, which is where sales and stock of air conditioning and refrigerators are considered. Table 6: National Energy Savings and Cumulative National Energy Savings for Air Conditioners and Refrigerators under Different Efficiency Scenarios in 2030 and 2040 Year National Energy Savings Cumulative National Energy Savings Efficiency Scenarios (GWh) E1 E2 E3 E1 E2 E3 AC Split "Conventional" 2030 2.4 49.8 105.9 9.3 191.3 407.3 AC Split "Inverter" 0.2 4.0 39.6 0.6 15.5 152.4 AC Central 8.5 93.8 161.3 31.6 350.8 603.2 Refrigerators 18.7 76.9 110.9 72.8 299.6 431.7 Total 29.8 224.5 417.7 114.3 857.2 1,594.6 AC Split "Conventional" 2040 5.3 109.3 232.6 50.8 1,049.8 2,235.0 AC Split "Inverter" 0.4 8.9 87.0 3.5 85.2 836.1 AC Central 26.0 288.3 495.7 209.5 2,325.1 3,998.5 Refrigerators 44.3 182.5 263.0 412.3 1,696.5 2,444.6 Total 76 589 1,078.3 676.1 5,156.6 9,514.2 As shown in Table 6, under national energy savings scenario E1 results in final electricity consumption savings of 29.8 GWh in 2030 and 76 GWh in 2040. To put these results in context, if the price of electricity remained constant 10 until the years in question (i.e., 16 ct/kWh), these savings could translate into 4.7 and 12 million USD$ annually, respectively. Although there is higher market participation for split inverter ACs than conventional split ACs, the latter represents greater energy savings because the change in efficiency between levels is higher. Regarding the cumulative savings, in the E1 scenario, 114.3 GWh and 676.1 GWh would be saved in 2030 and 2040, respectively. Table 7:National Primary Energy Savings and Net Present Value for Air Conditioners and Refrigerators under Different Efficiency Scenarios in 2030 and 2040 Year National Primary Energy Net Present Value Savings Efficiency Scenarios (Mtoe) E1 E2 E3 E1 E2 E3 AC Split "Conventional" 2030 0.00 0.06 0.13 AC Split "Inverter" 0.00 0.00 0.05 AC Central 0.01 0.11 0.19 Refrigerators 0.00 0.1 0.1 Total 0.01 0.27 0.47 AC Split "Conventional" 2040 0.02 0.33 0.70 2.2 23.5 -94.8 AC Split "Inverter" 0.00 0.03 0.26 0.1 3.2 -142.7 AC Central 0.07 0.72 1.24 10.3 80.9 118.2 Refrigerators 0.01 0.5 0.8 0.6 21.9 -99.7 Total 0.10 1.58 3.00 13.2 129.5 -219.0 Regarding primary national energy savings, under E1, 0.01 Mtoe and 0.10 Mtoe would be saved in 2030 and 2040, respectively. In terms of net present value, all analyzed technologies produce a positive NPV (Net Present Value) in the first two efficiency scenarios, while only central ACs present a positive value for the most efficient scenario. Figures 23 - 26 represent the financial impact of RTS in each year between 2024 and 2040, considering in detail the standards that are already approved or proposed (Scenario E1). The results are shown in terms of additional costs and economic savings, comparing the BAU scenario with the E1 scenario. In the standard scenario, more efficient units replace less efficient ones, resulting in additional costs at the time of purchase and greater savings over the life of the appliances. When the decrease in energy costs over the life of the appliance exceeds the increase in non-energy costs, standards have a positive impact on users; otherwise, the impact of the rules would be negative. In the case of the 3 AC standards, we found a net positive impact only 5 years after the standard came into force. In the case of refrigerators, the standard also has a net positive impact 5 years after the standard comes into force. This result is consistent with the calculated return period of around 5 years for refrigerators. These results show several significant impacts for El Salvador. However, it is important to note the uncertainties that pertain to a projection-based impact analysis. Figure 23:Annual costs and benefits in the standard scenario (E1) – "Conventional" split AC 11 Figure 24:Annual costs and benefits in the standard scenario (E1) – "Inverter" split AC Figure 25: Annual costs and benefits in the standard scenario (E1) – Central AC Figure 26:Annual costs and benefits in the standard scenario (E1) – Refrigerators ENVIRONMENTAL IMPACTS The environmental impact analysis quantifies the environmental effects of RTS for the products covered in this study. The main environmental effects of RTS would be reducing emissions from power plants due to reduced electricity consumption. The analysis focuses on CO2 emissions. Table 8 presents the environmental impacts in terms of carbon dioxide CO2 emissions saved under the three efficiency scenarios. In the case of the RTS proposed by the CNE, the savings would be respectively 0.01 and 0.32 million tons of CO 2 until 2030 and 2040. Those avoided emissions are equivalent to emissions of 2,155 and 68,950 passenger vehicles in one year, respectively 16. 16 EPA calculates 4.73 Metric Tons CO2E/vehicle/year https://www.epa.gov/energy/greenhouse-gases-equivalencies-calculator-calculations-and-references 12 Table 8: CO2 emissions avoided (cumulative) under different scenarios until 2030 and 2040 CO2 Emissions Year Efficiency Scenarios (Mt) E1 E2 E3 AC Split "Conventional" Until 0.00 0.09 0.19 AC Split "Inverter" 2030 0.00 0.01 0.07 AC Central 0.01 0.16 0.28 Refrigerators 0.00 0.10 0.20 Total 0.01 0.36 0.74 AC Split "Conventional" Until 0.02 0.49 1.04 AC Split "Inverter" 2040 0.00 0.04 0.39 AC Central 0.10 1.08 1.85 Refrigerators 0.20 0.80 1.10 Total 0.32 2.41 4.38 IMPACTS ON ELECTRICITY GENERATION DEMAND By adopting policies to improve the efficiency of household appliances in the market, the Government of El Salvador could reduce future growth in average peak daily electricity demand, while still allowing consumers to benefit from energy services. Investments in generation, transmission and distribution capacities could be postponed, reduced, or eliminated through the adoption of energy efficiency policies. The purpose of the impact analysis on electricity generation demand is to quantify the generation capacities avoided by the RTS for the products covered in this study. Table 9 presents the impacts on the electricity sector in terms of generation capacity saved under the three efficiency scenarios. In the case of RTS, the savings would be 12.3 and 31.4 MW in 2030 and 2040, respectively. Table 9:Capacity saved under different Efficiency Scenarios in 2030 and 2040 Capacity year Efficiency Scenarios Saved E1 E2 E3 (MW) AC Split "Conventional" 2030 1.0 20.6 43.8 AC Split "Inverter" 0.1 1.7 16.4 AC Central 3.5 38.7 66.6 Refrigerators 7.7 31.8 45.8 Total 12.3 92.8 172.6 AC Split "Conventional" 2040 2.2 45.1 96.1 AC Split "Inverter" 0.2 3.7 36.0 AC Central 10.7 119.1 204.8 Refrigerators 18.3 75.4 108.7 Total 31.4 243.3 445.6 In addition to the financial savings identified, the RTS will achieve financial savings of approximately $246 billion in 2030 and $62.8 million in 2040 by avoiding new power plant construction. CONCLUSIONS These results show that the RTS program considering the levels defined in the RTCA (analyzed in scenario E1) will achieve annual national energy savings of 76 GWh (gigawatt hours) per year until 2040 (electricity site) with a positive VPN of US$ 13.2 million. Additionally, the program demonstrates that the program has significant benefits on the environment and on El Salvador's electricity infrastructure, supporting the country to achieve its climate and clean energy goals. Finally, this analysis has allowed us to study in detail the design of El Salvador's RTS program in combination with a baseline determination and an estimate of the impacts resulting from the RTS program, offering new perspectives and recommendations for the future, such as: 1. The design of any market transformation program should consider the baseline, the impact on consumers and the benefits at the national level. 2. Continue to conduct impact analyses in parallel with program design to report adequate EE levels. 13 3. To increase the impact of the RTS in relation to ACs, we recommend merging conventional split and inverter standards into a single standard to accelerate the transition to more efficient products. This action will achieve annual national energy savings of 109.3 GWh per year until 2040 (electricity site) with a positive VPN of US$ 18.4 million (E2 scenario for the conventional split category). 4. In future reviews of the program, the levels of the E2 scenario could be considered as a minimum efficiency index given the positive impacts for all products. 5. Consider a maximum GWP (Global Warming Potential) criterion for refrigerants. Best practices consider a limit of 750 for split ACs and 20 for refrigerators. 6. Consider add-on programs such as an "Energy Star" label, wholesale purchase programs, rebate programs, and other complementary instruments to accelerate the penetration of super-efficient, low-GWP appliances. Acknowledgement: This study would not have been possible without generous financial K’ R A RA Disclaimer: This work is a product of the staff of The World Bank with external contributions. The findings, interpretations, and conclusions expressed in this work do not necessarily reflect the views of The World Bank, its Board of Executive Directors, or the governments they represent. The World Bank does not guarantee the accuracy of the data included in this work. 14