Long term perks urged to attract investments in energy efficiency

Date Published: 
February 14, 2021
  • (Images: PE2, Wikipedia)
    (Images: PE2, Wikipedia)

(PE2 note: The Philippine Star’s Danessa Rivera reports on recent PE2 meetings with BOI and DOST-PCIEERD on EE fiscal incentives and technology roadmap, respectively.)

The energy efficiency (EE) sector is pushing for longer term fiscal incentives to be able to attract local and foreign investments in the nascent energy sector.

Philippine Energy Efficiency Alliance (PE2) – a non-stock, non-profit organization of energy efficiency market stakeholders – recently met with the Board of Investments (BOI) to seek EE guidelines issued under the policy framework of Executive Order 226 or Omnibus Investment Code of 1987 and Republic Act 11285 or Energy Efficiency and Conservation Act which could effectively help the economy mobilize EE capital beyond the capacities of facility owners and financial markets.

This as PE2 President Alexander Ablaza reiterated the group’s position that EE fiscal incentives should be effective in mobilizing a huge portion of the P8 trillion capital mobilization through off-balance sheet modalities such as energy service company (ESCO) performance contracts, public-private partnership transactions, and large-scale government retrofit programs.

“The EE guidelines should be able to mitigate the capital investment, technology, financing and credit risks associated with ESCO investments in EE equipment assets installed in premises that the ESCOs neither own nor lease,” he said.

PE2 made it clear that ESCO investments should not be likened to BOI-registered modernization projects implemented by manufacturers and agribusinesses.

“The final EE guidelines should be able to attract local and foreign investments in this new asset class called energy efficiency.  It is vital that portfolio investors of EE projects are able to gain long-term certainty on the magnitude and availability of tax-based fiscal incentives,” Ablaza said.

“Income tax holidays for ESCO investments should clearly exceed the number of years wherein the ESCO projects remain in the red with net operating losses.  For this reason, the four-year income tax holiday would clearly be inadequate,” he said.

On a pre-Corporate Recovery and Tax Incentives for Enterprises (CREATE) policy scenario, PE2’s call for a fixed six-year income tax holiday – regardless of whether the employed technology is pioneering or not – and coupled with duty-free importation of capital equipment is expected to help improve the commercial viability of ESCO and third-party investments in EE equipment assets installed in commercial, industrial, transport and government facilities.

PE2 likewise expressed hope that the post-CREATE scenario would provide alternative incentives that would be effective in enabling ESCO investments.

The CREATE bill is awaiting Duterte’s signature.

Meanwhile, PE2 also submitted its recommendations for the Energy Efficiency and Conservation (EE&C) technology roadmap being finalized by the Department of Science and Technology (DOST) Philippine Council for Industry, Energy and Emerging Technology Research and Development (PCIEERD).

Ablaza recommended that the roadmap include studies on establishing the link between building COVID-19 resiliency through indoor air quality improvements and energy efficiency, finding a government-owned and controlled corporation that could reduce acquisition costs of EE&C technologies through bulk procurement and distribution across micro, small and medium enterprises (MDMEs), expanding the local customization of cloud-based energy monitoring systems and chilled water plants.

He also suggested the use of local talent to customize energy monitoring systems as building blocks for eventual full energy management system.

The group is also pushing to expand DOST-PCIEERD, research, studies and EE&C technology demonstrations to capture non-electricity forms of energy consumption and use of heat-intensive technologies by MSMEs, as well as expand its role in testing, certifying and promoting energy-saving construction and building materials.

Lastly, PE2 is also seeking to include in the roadmap the possible energy storage impacts of connected electric vehicles to the grid.

DOST-PCIEERD is preparing the call for proposals on low-carbon technologies for MSMEs and conducting industry scoping on EE&C research and development for possible implementation through their EE&C technology roadmap.

Source
The Philippine Star – Business, print
Danessa Rivera

About PE2

Philippine Energy Efficiency Alliance Inc. (PE2), is a non-stock, non-profit organization of energy efficiency market stakeholders.

Learn More

Republic Act 11285

R.A. 11285 - An Act Institutionalizing Energy Efficiency and Conservation, Enhancing the Efficient Use of Energy, and Granting Incentives to Energy Efficiency and Conservation Projects

RA 11285 - Text

RA 11285 - Signed

IRR - Signed

Beyond COVID-19: How governments, ESCOs and innovative financial modalities can mobilize energy efficiency capital through 2040

Working Together to Bridge an Energy Efficiency Financing Gap

Infographics

PE2 Infographics on Energy Efficiency and Conservation Roadmap Targets

Infographics on Roadmap Targets for Energy Efficiency and Conservation

» View | Download

Join PE2 Now!

We would love to have you on board

The Philippine Energy Efficiency Alliance, Inc. (PE2) is a non-stock, non-profit organization of energy efficiency market stakeholders.

Learn More

PE2 Secretariat

  • Philippine Energy Efficiency Alliance, Inc. (PE2)
    19/F Philippine AXA Life Centre 
    Senator Gil Puyat Avenue 
    corner Tindalo Street 
    Makati City, Metro Manila 
    Philippines 1200
  • +63 2 7989 3007 
  • secretariat@pe2.org 
Signup to our newsletter:

To prevent automated spam submissions leave this field empty.