DOE taps PE2 as reactor to PEP EE&C strategy

Date Published: 
August 24, 2020
  • Screenshots from DOE’s Virtual Public Consultation on the draft PEP 2018-2040 update on 24 August 2020. Top row (L-R): PE2 president Alexander Ablaza delivering PE2’s reaction; and DOE-EPPB Director Jesus T. Tamang, concluding the Day 1 sessions with wrap-up remarks. (Image: PE2)
    Screenshots from DOE’s Virtual Public Consultation on the draft PEP 2018-2040 update on 24 August 2020. Top row (L-R): PE2 president Alexander Ablaza delivering PE2’s reaction; and DOE-EPPB Director Jesus T. Tamang, concluding the Day 1 sessions with wrap-up remarks. (Image: PE2)

TAGUIG CITY, 24 August 2020 – The Department of Energy (DOE) invited Philippine Energy Efficiency Alliance (PE2) president Alexander Ablaza to serve as reactor during Session 3 of the two-day public consultations on DOE’s draft Philippine Energy Plan (PEP) 2018-2040 update, which kicked off via virtual conference earlier today. Energy Undersecretary Felix William B. Fuentebella issued the invitation to the PE2 head last week, when DOE publicly released the draft PEP document. DOE specifically requested PE2 to review Chapter VII of the draft PEP 2018-2040, which contains the updated medium- and long-term strategies for energy efficiency and conservation (EE&C).

On behalf of PE2 and its Policy Committee, Ablaza commended DOE for bolstered EE&C strategies. He explained that the PEP plans for EE&C are responsive because the updated PEP now:  [a] seeks full enforcement of EE&C Act (e.g. IEC, PELP, MEPP, LGUs, Building Code, ESCOs, end-users etc.);  [b] broadens EE&C scope to cover supply-side efficiency, role of DUs in DSM and smart grids;  [c] implicitly recognizes EE&C as infrastructure and welcomes private sector participation;  [d] expands financing models to include new financial modalities; and,  [e] strengthens ESCO sector with a business tool kit. On the last point, PE2 clarified that the ESCO sector will also need enhanced access to project capital and human resource capacities beyond the development of business tools related to performance contracting.

Ablaza delivered PE2’s constructive recommendations for PEP enhancements for its EE&C chapter. The Alliance recommended that the: [a] long-term strategy should position EE&C as a primary resource in the energy mix;  [b] EE&C roadmap should target quantifiable outcomes by 2040;  [c] PEP’s expanded financing models should articulate the need to mobilize both on-balance sheet and off-balance sheet capital for EE&C as infrastructure;  [d] EE&C incentives should be preserved in a way to make third-party investments viable; and,  [e] PEP should position EE&C as economic stimulus in any economic recovery.

The PE2 reaction explained the need to mobilize some PHP 8 trillion of the PHP 12 trillion EE&C capital gap through 2040 through innovative financing modalities such as scaled-up ESCO performance contracting, public-private partnership transactions, joint venture agreements with government corporations, large-scale Government-implemented forced obsolescence of low-efficiency technologies and other mechanisms that are able to deploy new EE&C technologies outside the balance sheet of the energy end-user.

Ablaza also highlighted the need for a responsive and predictable tax-based fiscal incentive package that would be sustained through 2030 and beyond, amid attempts to rationalize fiscal incentives, to ensure that long-term portfolio investments by the private sector are able to secure a commercial-grade return.

The PE2 head proposed that the PEP position EE&C as an economic stimulus in any economic recovery through the next two decades, whether or not the downturn is driven by a crippling pandemic. Ablaza explained that PE2 studies show that EE&C is able to generate 45% more jobs than the Build, Build, Build infrastructure program for the same amount of stimulus funding or investment.

Director Jesus T. Tamang of the DOE Energy Policy and Planning Bureau (EPPB) gave a comprehensive synthesis of the first three sessions, citing among others, the need to position EE&C as a primary resource in the country’s energy mix, the imperative to broaden strategies related to EE&C financing modalities and acknowledging the ability of EE&C to effectively generate new jobs for economic recovery and growth.

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