PE2 pushes ESCO, PPP contracts for EE&C projects of Luzon LGUs

Date Published: 
October 2, 2020
  • PE2 president Alexander Ablaza (larger inset) explains to Luzon LGUs the various innovative financing modalities for public sector EE&C projects on 2 October 2020. (Smaller insets) Diana G. Connett of ADB and Theresa Acedillo-Lapuz of PE2 listen to the presentation. (Screenshot images: EU-ASEP, PE2)
    PE2 president Alexander Ablaza (larger inset) explains to Luzon LGUs the various innovative financing modalities for public sector EE&C projects on 2 October 2020. (Smaller insets) Diana G. Connett of ADB and Theresa Acedillo-Lapuz of PE2 listen to the presentation. (Screenshot images: EU-ASEP, PE2)

MAKATI CITY, 2 October 2020 –Philippine Energy Efficiency Alliance (PE2) president Alexander Ablaza, who serves as international energy efficiency expert of the Asian Development Bank (ADB), presented earlier today innovative financing modalities available to Luzon-based local government units (LGUs) and other public entities for the implementation of energy efficiency and conservation (EE&C) projects in the public sector during the two-day Virtual Luzon Energy Efficiency and Conservation Forum For Local Development co-organized by the Department of Energy (DOE), the EU-funded Access to Sustainable Energy Programme (EU-ASEP), the ADB and the ASEP Clean Energy Living Laboratories (ASEP-CELLs).

Ablaza was invited again as a resource person in the third session dedicated for financing options for EE&C projects. The session was chaired by Diana G. Connett of ADB, and opened by Usec. Epimaco Densing III, Operations and Energy Efficiency and Conservation Officer, Department of Interior and Local Government (DILG). Co-panelists included Von Merene Losloso of the Board of Investments (BOI) and Rustico Noli D. Cruz, SAVP, Development Bank of the Philippines (DBP).

During the financing session, the PE2 head highlighted the imperative for the economy to position EE&C not only as a primary energy resource and infrastructure development, but also as a stimulus activity in a post-COVID economic recovery, citing the demonstrated ability of EE&C to generate 45% more jobs than the Build, Build, Build (BBB) infrastructure program for the same amount of investment or stimulus funding. Ablaza explained that an estimated PHP 8 trillion in energy efficiency capital will have to be mobilized in the next two decades through non-business-as-usual financing modalities such as energy service company (ESCO) performance contracting, public-private partnerships (PPP) and joint venture (JV) agreements enabled under the EE&C Act.

Ablaza also shared estimates of EE&C potential in the public sector that could be supported by government financial institutions (GFIs). He said, “A recent ADB market assessment reveals that GFIs in the Philippines can lend up to PHP 97.1 billion in the next 10 years to bridge the capital gap of public building air conditioning and lighting retrofits, public building rooftop solar plants, water district pump efficiency improvements and LGU-led LED street lighting projects, and up to 27% of this debt capital can actually flow through ESCOs and PPP proponents.”

Aside from Ablaza, PE2 vice president for external affairs Theresa Acedillo-Lapuz, PE2 treasurer Raymond A. Marquez, and PE2 member services and communications manager Luigi G. Eusebio attended the forum.

Among the 200+ participants were representatives from PE2 member firms ABB, Climargy, Concepcion-Carrier Air Conditioning, EconoServ Solutions International, Engie Services Philippines, European Chamber of Commerce of the Philippines, Green Bay Energy Solutions, Filairco Technical Services (Trane Philippines), Hi-Cool Engineering, iControlTech and Meralco Energy (MServ).

DOE-EUMB Director Patrick T. Aquino (top row, leftmost), ADB energy specialist Diana G. Connett (top row, 4th from right) and PE2 president Alexander Ablaza (top row, 3rd from right) join other speakers and participants during the Luzon EE&C Forum on 1-2 October 2020. (Screenshot images: EU-ASEP)

DOE-EUMB Director Patrick T. Aquino (top row, leftmost), ADB energy specialist Diana G. Connett (top row, 4th from right) and PE2 president Alexander Ablaza (top row, 3rd from right) join other speakers and participants during the Luzon EE&C Forum on 1-2 October 2020. (Screenshot images: EU-ASEP)

The first Local Government Unit (LGU) Forum for Energy Efficiency Projects held from 11 to 12 November 2019 through a partnership with the DOE, EU-ASEP, and ADB focused on Metro Manila local governments. The inaugural forum gathered around 100 participants, composed of LGUs, financing institutions, national agencies, and other energy key players. The event also highlighted LGUs’ best practices such as Santa Rosa City’s portfolio of low-carbon initiatives, and Mandaluyong City’s green building ordinance.

This was followed by a Visayas Energy Efficiency and Conservation (EE&C) Forum, organized with the generous support of the ASEP-CELLs Project, from 27 to 28 February 2020. The Forum gathered more than 100 energy and local government stakeholders in Mandaue City, Cebu. The forum also featured a side visit to Mandani Bay, 20-hectare mixed-use development which boasts of energy efficiency features.

COVID-19 did not stop the organizers from holding the Mindanao EE&C Forum which was hosted virtually via Microsoft Team from 23 to 24 July 2020. The Mindanao leg took a different approach as it incorporated a pre-forum LGU workshop to clarify specifics on the DOE’s Local Energy Efficiency and Conservation Plan template and a journalist bootcamp to capacitate Mindanao-based journalists about RA 11285. The Forum proper gathered around 180 key players in the Mindanao region composed of local governments, national government agencies, the private sector, energy service providers, and academic and industry experts. The participants hailed from the entirety of Mindanao – Zamboanga Peninsula, Northern Mindanao, Caraga and Davao regions, Soccsksargen, and the Bangsamoro Autonomous Region in Muslim Mindanao – facilitating robust and wide-ranging conversations around EE&C within the context of the region.

Support to the three events were provided by EU-ASEP, ADB and ASEP-CELLS.

EU ASEP assists the Philippine Government in reaching its electrification objectives and promote the Sustainable Energy for All Agenda. The EU has committed a grant of over PHP 3 billion to support the Philippine Government on realizing its rural electrification targets based on renewable energy and to promote energy efficiency. The EU has also earmarked a grant of EUR 66 million for ASEP out of the total Project cost of PHP 4.89 billion. ASEP is closely coordinating with its main partner, DOE, to effectively implement its activities.

ADB has been a long-time development partner in the Philippines with contributions to milestone energy sector restructuring and efforts toward financial reform of the power sector, among others. Through its renewable energy and energy efficiency programs completed from 2010 to 2015, ADB has contributed to a reduction in GHG emissions of 173,789 tons of CO2e per year in the Philippines. ADB is likewise actively identifying further areas to support, especially in energy efficiency, island electrification, and multi-sector investments.

ASEP-CELLs is a project funded by the European Union and implemented by the Ateneo School of Government (ASoG) in partnership with Manila Observatory (MO), ICLEI-SEAS, Xavier University (XU) and University of San Carlos (USC). The project supports the DOE and EU in achieving 100% rural electrification through renewable energy, thus increasing the share of renewable energy in the Philippines’ energy mix, and promoting energy efficiency towards sustainable and inclusive growth. From 2019 to 2022, ASEP-CELLs’ contributions to the energy sector shall focus on its three pillars: knowledge management, capacity-building and advocacy.

About PE2

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

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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

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

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