PE2 invited to share PH experience with Indonesian ESCO market and policymakers

JAKARTA, 16 June 2021 – Philippine Energy Efficiency Alliance (PE2) president Alexander Ablaza presented earlier today the Philippines’ experience in removing energy efficiency (EE) and energy service company (ESCO) market barriers through aggressive EE policy reform and innovative financing modalities. Ablaza was invited by the Indonesian Energy Conservation and Efficiency Society (MASKEEI) to be one of the international speakers of the ESCO session of the 3rd Indonesia Energy Conservation and Efficiency Conference & Exhibition (IEECCE 2021).

Ablaza reported to the virtual audience that, before the passage of Republic Act No. 11285, the persistent EE and ESCO market gaps included: (i) EE is a non-core activity for large end-users; (ii) ESCOs have limited access to debt finance; (iii) ESCO accreditation system needed to be strengthened; (iv) ESCO sector need to build technical and financial capacities; and, (v) ESCO project investments need access to fiscal incentives; and, (vi) Government procurement disallows ESCO contracts. He explained that the Energy Efficiency and Conservation (EE&C) Act, its subsequent implementing guidelines, and PE2 market interventions collectively provide barrier removal interventions:

• Promotes off-balance sheet EE capital flows to C&I and other end-users, especially through ESCO-financed EE projects.
• Defines the role of Third-Party Project Developers (TPPD) and Project Special Purpose Vehicles (PSPV) to flow equity capital outside the balance sheet of ESCOs and end-users.
• Transitions toward a two-tier ESCO registration and certification system.
• Government now regulates training and certification of Certified Energy Conservation Officers (CECO), Certified Energy Managers (CEM) and Certified Energy Auditors (ESCO sector: CMVP training and template contracts)
• Government guidelines for the endorsement and registration of EE projects for fiscal incentives now recognize ESCO-financed and TPPD/Project SPV investments as project proponents to benefit from incentives.
• Inter-Agency EE&C Committee now studying how Government Energy Management Program (GEMP) Guidelines could mainstream solicited and unsolicited ESCO procurement, PPP transactions and JV agreements.

The PE2 head offered the conclusions that EE and ESCO markets need an ambitious and comprehensive policy framework aimed at strengthening the ESCO sector; that, policies should enable, if not incentivize, self-financed, debt-financed, ESCO-financed and third-party investments in EE projects; and that Government and the ESCO industry should forge a long-term collaborative partnership working toward removal of scale-up barriers.

PE2 president Alexander Ablaza delivering his presentation on ESCO market barrier removal during the ESCO session of IEECCE 2021. (Image: IEECCE 2021)

Joining Ablaza in the panel discussion entitled “ESCO Business Prospects and Challenges in Indonesia” were: Dadan Kusdiana, Director-General for Renewable Energy and Energy Conservation of the Ministry of Energy and Mineral Resources of the Republic of Indonesia (MEMR); Thomas K. Dreessen of MASKEEI and EPS Corporation; Donald Gilligan, President of the National Association of Energy Service Companies (NAESCO, USA); Andreas Widodo, CEO of Energy Management Indonesia (EMI); and, Luh Nyoman Puspa Dewi, Director of Energy Conservation of MEMR.

MASKEEI organized the third edition of IEECCE, after holding successful EE&C events in 2017 and 2018. IEECCE 2021 was held in collaboration with the Center for Sustainable Transportation Technology of the Bandung Institute of Technology (ITB). The Conference was designed to showcase the current issues and latest market developments relating to EE&C technologies, policies and best practices in Indonesia and the global market. Anchored on the core philosophy that EE&C efforts are the strategic building blocks of clean energy development toward achieving low-carbon development under the Sustainable Development Goals (SDG), IEECCE 2021 will particularly highlight the decarbonization pathway toward the attainment of “Net Zero” aspirations. Aside from the decarbonization opportunities in the ESCO, industrial, building and residential sectors, the conference tackled the electrification of the transport sector through market shifts away from internal combustion engine technologies.