PE2: ESCO model can speed up energy efficiency upgrades in hospitality sector
PASAY CITY, 11 September 2024 – Philippine Energy Efficiency Alliance (PE2) president and Climargy CEO Alexander Ablaza told hospitality sector stakeholders earlier today that the energy service company (ESCO) business model can accelerate the timelines of energy efficiency upgrades in hotel buildings by providing an alternative to hotels’ own capital sources. Ablaza explained this during a panel session, “Harmonizing Energy Supply and Demand: Collaborative Strategies for Electric Companies and the Hospitality Sector in the Philippines” of the Hotel Investment Summit, an integral part of the 7th Hospitality Philippines Conference held in the Manila Marriot Hotel.
Ablaza updated the hospitality industry stakeholders with recently reduced minimum consumption thresholds for obligations of commercial designated establishments under Republic Act 11285, and how these have captured smaller businesses in the hospitality sector. He also elaborated on how innovative financing modalities such as ESCO performance contracting can serve to mobilize more off-balance sheet capital and technical expertise for energy efficiency upgrades in commercial buildings such as energy-intensive hotels. Many hotels are still busy ramping up their occupancy to pre-pandemic levels, which may make programming of budget allocations for non-core activities like energy efficiency upgrades lower in priority versus business recovery expenditures.
Joining Ablaza in the energy panel were First Gen Corporation Vice President for Power Marketing Carlos Lorenzo Vega, Meralco Vice President and Head of Enterprise and National Government and MSpectrum President and CEO Ma. Cecilia M. Domingo, and GreenMan founder and panel moderator Matthias Gelber. The panelists examined the current dynamics of energy supply and demand in the Philippines, with a specific focus on how distribution utilities, retail electricity suppliers, rooftop solar developers and ESCOs can partner with the hospitality sector to address challenges and leverage opportunities.
The panel threshed out the policy, regulatory and market conditions influencing power supply and demand, discussing the unique energy requirements and gaps faced by hotels and resorts in managing their power consumption. The session included discussions on sector-specific issues such as peak demand periods, fluctuating energy costs, and the need to deploy innovative technologies and strategies such as energy-efficient cooling, smart grids, energy storage solutions, and renewable energy integration. Drawing close to the theme of the Hotel Investment Summit, the panel also announced that off-balance sheet solutions, such as ESCO performance contracts and third-party project developers, free up limited capital budgets of hotels and resorts to achieve their energy-saving, emission reduction and sustainability objectives.
During the parallel Hotel Design Summit, a separate panel discussion “Energy Efficiency and Renewable Energy Solutions for the Hospitality Industry” took place with Gelber as moderator and GenWATT Energy Solutions Founding Director and CEO Conrado I. Generoso, and PE2 Trustee and Stratcon Power Services Philippines Chief Sustainability Officer Colin Steley as panelists.
Steley, as one of the few energy transition services and solutions providers with several large hotel brands in the country and overseas, shared some experiences on how to get started and provided some insights to what can be realistically achieved which he believed is at least 60% renewable energy mix for 20 years under a power purchase agreement.
PE2 is an Association Partner of the 7th Hospitality Philippines Conference 2024.
