PE2 meets UK Prosperity Fund ESCO mission
PASIG CITY, 29 July 2019 – The Philippine Energy Efficiency Alliance (PE2) met earlier today a visiting mission of UK Prosperity Fund’s ASEAN Low Carbon Energy Programme (LCEP) to help the 5-country project design the appropriate policy interventions related to removing persistent market barriers impeding the growth of the energy service company (ESCO) industry in the Philippines.
Thomas K. Dreessen, a seasoned international ESCO expert, and Laurie B. Navarro, represented the LCEP mission. PE2’s Alexander Ablaza, Richard A. Uy and Bernard E. Pacia met the visiting team of Carbon Trust, a UK-based technical implementation partner of Ernst & Young for LCEP.
Echoing his message to William Hudson of Carbon Trust during the initial meeting with PE2 on 10 April 2019, Ablaza told Dreessen and Navarro that the LCEP should consider market interventions intended to develop the capacities and business tools of the ESCO sector. PE2’s Pacia and Uy explained the other ESCO market barriers and updated the group on the progress of the DOE focus group discussions on Government energy efficiency projects.
PE2 was pleased to learn that LCEP was interested in removing persistent policy barriers that prevented ESCO performance contracting and public-private partnership (PPP) transactions for energy efficiency projects implemented in the public sector. PE2 also suggested that LCEP study the possibility of enabling a guarantee facility which should cover not only customer credit risks, but more importantly, ESCO energy performance guarantee risks of small and medium-sized ESCOs. Such guarantee cover, among other financial market interventions, would improve access of ESCOs to debt and equity capital for pipeline performance contracts.
Ablaza said, “Understanding that LCEP desires to demonstrate a replicable pioneering energy efficiency project, PE2 prefers that the emphasis be shifted from a pioneering technology to a pioneering financing or business model that would clearly mobilize off-balance sheet capital through an ESCO from either debt or equity sources.”
The UK Prosperity Fund through its Foreign and Commonwealth Office has awarded a 3-year program called the ASEAN Low Carbon Energy Programme (LCEP) to Ernst and Young with Carbon Trust, a UK consulting company as one of the subcontractors.
Carbon Trust informed PE2 that LCEP will provide policy support, capacity building and technical assistance to facilitate green finance flows and improve the regulatory, policy and practical conditions for energy efficiency measures in Southeast Asia. It will support five broad types of activity:
- Capacity building of government, institutions and business;
- Policy reform of energy frameworks and standards;
- Market development by strengthening connections between project developers and investors;
- Raising awareness of available technologies to increase the uptake of energy efficient products and services; and,
- Partnership coordination and commercial ventures.
The Carbon Trust is leading the delivery of the energy efficiency component of the LCEP across five countries: Malaysia, Myanmar, the Philippines, Thailand and Vietnam. The work will be carried out in two phases: the 6-month Inception Phase, focusing on market assessments, the design of the interventions and the overall strategy of the programme, and the subsequent multi-year Implementation Phase.
