PE2 defends ESCO-MSME program proposal before technical panel of DOST-PCIEERD
MAKATI CITY, 25 June 2021 – The Philippine Energy Efficiency Alliance (PE2) presented today to the Technical Panel (TP) of the Department of Science and Technology – Philippine Council for Industry, Energy and Emerging Technology Research and Development (DOST-PCIEERD) PE2’s Grants-in-Aid Research and Development (R&D) Proposal entitled “Transitioning MSMEs through Low-Carbon and Energy-Efficient Technologies.”
Composed of independent experts from the academe and research communities, the TP was led by Dr. Aldrin D. Calderon of Advancing Sustainability and Clean Energy Technologies (ASCENT). He was supported by other experts which included Prof. Neil Stephen A. Lopez of De La Salle University (DLSU), Engr. Apollo Victor O. Bawagan of Industrial Technology Development Institute (ITDI), Jan Ralph Ebora of New Energy Nexus, and Jian Carlo Zapata of EDGE Electrons and DLSU. Supporting the TP were DOST-PCIEERD senior representatives Nonilo Peña, Patrick Montero and Julius Mayorga.
Leading the presentation and justification of the project was PE2 president Alexander Ablaza, followed by representatives of participating PE2 member firms, Raymond A. Marquez, Managing Director of EconoServ Solutions International, Elmer F. Lapeña, President and COO, NextGen Innovations Phils, John Charles A. Altamonte, CEO of Verne Energy Solutions and, Mikhael Fiorello C. Llado, Investment Advisor, Climargy. The 3 ESCOs propose to deploy efficient refrigeration, energy recovery, high-efficiency motors, variable frequency drives, HVAC optimization, LED lighting, solar PV, smart meters, and facility-wide energy monitoring systems in facilities of MSMEs involved in food manufacturing, ice manufacturing and logistics, while Climargy is taking the lead in preparing the proposal and providing program and portfolio management services to PE2 through the proposed 2-year program.
Ablaza explained to the TP experts that PE2’s primary purpose is to partner with government and the development community “to organize, encourage, and promote advocacies, initiatives, studies, projects, programs, policy directions, financing strategies, best ethical practices and sources in energy efficiency, energy conservation and renewable energy; thus, to assist the Philippines in achieving its long term targets of energy intensity reduction, increasing energy productivity, greenhouse gas emission reduction and increasing energy security.”
To be supported by a PHP 60 million grant from DOST-PCIEERD, the PHP 71 million R&D program of PE2 is intended to jump-start MSME market shift toward EE technologies through ESCO-led deployment. The PE2 program is proposed to demonstrate the market deployment of EE technologies through two distinct MSME sectors, the MSME ESCOs and MSME end-users. Ablaza highlighted the additionality of the DOST-PCIEERD grant, because MSME ESCOs are: (a) a young, nascent sector still awaiting full enforcement of ESCO and incentive provisions of Republic Act No. 11285; (b) across global and regional ESCO markets, ESCOs are reluctant to take customer credit risk of MSMEs; (c) practically all MSME ESCOs do not have suitable access to debt finance or project capital to fully pursue ESCO contracting pipeline; and, (d) the start-up operations of MSME ESCOs were severely affected by the COVID19 economic slowdown.
The PE2 head also explained that MSME end-users: (a) are far less energy-efficient than corporate end-users; (b) are not prioritizing EE as a core business activity; (c) are typically outside the market radar screen of ESCOs largely because of long-term uncertainty of business continuity; and, (d) have smaller overhead budgets, thereby limiting ability to maintain in-house resources for engineering or energy management.
PE2 seeks DOST- PCIEERD support the implementation of a portfolio of ESCO-led projects such as refrigeration efficiency improvement for an MSME food manufacturer, high-efficiency motor and VFD solutions for an MSME ice plant, and EE upgrades for an MSME logistics facility. By mobilizing PHP 60 million in DOST-PCIEERD grant funding and PHP 10.95 million in counterpart PE2, ESCO and end-user resources to enable a portfolio of at least 3 ESCO projects in the MSME sector, the program hopes to achieve 941 MWh/year in annual program energy savings and 643 tCO2e/yr in annual program GHG emission reduction. PE2 also aims to invest a portion of the grant funding to install facility-wide energy monitoring systems for future energy load-profiling research and studies in at least 3 MSME end-users.
The TP experts recommended that the PE2 program and its participating ESCOs include a comparative review of alternative equipment and suppliers locally and internationally for those particular equipment types that will be procured in the project. The panel also suggested that PE2 include a cost-benefit analysis for each EE project boundary or system based on the expected energy savings, ROI, and accessibility to supplier. The TP also recommended that the ESCOs provide a risk management plan and an energy audit plan and a post-program sustainability plan.
PE2 told the panel that it proposes to submit to DOST-PCIEERD a Program Completion Report which includes a summary of project outcomes and recommendations for science and technology (S&T) policy and other market barrier removal interventions to scale up ESCO-led EE technology deployment in the MSME sector. The report is expected to include ESCO technology replication opportunities in the MSME sector.
