IFC/GEF Efficient Lighting Initiative
DOE, DBP, ELI ink accord for local Energy Service industry
A pact forged between the Department of Energy (DOE), the Development Bank of the Philippines (DBP), and the Soluziona Philippines and International Finance Corporation managed Efficient Lighting Initiative (ELI) hopes to open the doors of opportunity for the growing energy efficiency practitioners such as the budding Energy Service Company (ESCO) industry.
This is according to Alexander Ablaza, Country Director of the ELI program and one of the signatories for the project dubbed DOE-DBPELI/SOLUZIONA Model ESCO Transaction. The goal of this project is to set the terms, conditions and guidelines for the development and promotion of Model ESCO transaction in the country.
"We believe that our collaborative efforts in developing the model ESCO transaction will allow us to tap the banking, finance and ESCO sectors as pro-active agents of sustainable market transformation towards energy efficiency," said Ablaza.
An ESCO or Energy Service Company is a business enterprise that develops, installs, and finances projects designed to improve energy efficiency and reduce operations and maintenance costs for its customers' facilities. ESCOs generally act as project developers for a wide range of tasks and assume the technical and performance risk associated with the project.
ESCOs provide much needed power engineering expertise, enabling power investors to concentrate more on their core business. The ESCOs also assist in budget stabilization, reducing risks in the market while implementing energy efficiency improvements.
A viable opportunity exists for a model ESCO project involving DOE, the DBP and ELI. DOE will lay the groundwork for an ESCO, providing an energy audit of DBP's facilities, which will serve as an industry benchmark. DBP has a secondary responsibility in educating retail banks in energy efficiency project financing. Together with ELI, the consultants are tasked to work with the different parties and to deliver a business plan laying the groundwork for future ESCO transactions in the Philippines. Ablaza stressed that the project will equip the ESCO industry with a tool to replicate other efficient lighting retrofit projects in the commercial, industrial and institutional sector.
ELI is a global advocacy program funded by the Global Environment Fund (GEF) and administered worldwide by the International Finance Corporation (IFC) that seeks to reduce the harmful effects of greenhouse gas emissions through efficient lighting systems, also engages in transaction support activities in conjunction with its other awareness efforts to help the government and the consumer enjoy the benefits of efficient lighting systems.
The partnership which was set in motion during the signing ceremony recently held at the DOE premises, called for the unprecedented cooperation between government and finance sector. The signatories were Simon R. Paterno, President and CEO of DBP; Secretary Vincent Perez of DOE; and Alexander Ablaza, Country Director for ELI Philippines. Witnesses were Edgardo F. Garcia, Jr. COO of DBP; Francisco A. Benito, Assistant Secretary of DBP; and Ruben R. Lambuson, Senior Program Associate of ELI Philippines / Soluziona Philippines.
Senior Program Associate
IFC-GEF Efficient Lighting Initiative - Philippines
Tel. No. 422-0957
Fax no. 421-4577
DOE-DBP-ELI/SOLUZIONA MODEL ESCO TRANSACTION
An ESCO, or energy service company, is a business that develops, installs, and finances projects designed to improve energy efficiency and reduce operations and maintenance costs for its customers' facilities. ESCOs generally act as project developers for a wide range of tasks and assume the technical and performance risk associated with the project. What sets ESCOs apart from other firms that offer energy efficiency improvements is the concept of performance-based contracting. When an ESCO undertakes a project, the company's compensation is directly linked to the amount of energy that is actually saved.
The comprehensive energy efficiency retrofits inherent in ESCO projects typically require a large initial capital investment and may offer a relatively long payback period. The customer's debt payments are tied to the energy savings offered under the project so that the customer pays for the capital improvement with the money that comes out of the difference between pre-installation and post-installation energy use and other related costs.