PE2 receives LCEP’s ESCO survey results on DBP E2SAVE program
MAKATI CITY, 10 December 2021 – Officers and members of the Philippine Energy Efficiency Alliance (PE2) actively participated in a presentation made by the UK Government’s ASEAN Low Carbon Energy Programme (LCEP) on the energy service company (ESCO) survey findings on E2SAVE Energy Efficiency Savings Financing Program of the Development Bank of the Philippines (DBP).
The forum was held to present the summarized results of the LCEP survey and to allow DBP to respond to the suggestions received from potential E2SAVE borrowers. The event likewise allowed participants to interact with LCEP and DBP.
Josephine Orense of the UK Prosperity Fund Programme formally opened the event, while Laurie B. Navarro, the LCEP-EE Component National Project Coordinator presented the survey results. In response, Rustico Noli Cruz, DBP’s AVP and Head of the E2SAVE Program presented the Bank’s views or proposed action on each point of the LCEP survey results.
LCEP’s general findings include: (i) Only 50% of the respondents were aware of the E2SAVE Financing Program; (ii) Respondents find the distinction between general collateral requirements and specific collateral requirements (public, private, ESCOs) unclear or confusing; and, (iii) DBP’s E2SAVE Financing Program is seen as the most ESCO-friendly financing program available because it accepts the assignment of receivables as collateral, while other local financial institutions do not.
Navarro reported that most respondents find the 20% equity requirement acceptable. However, smaller ESCOs find this too high, and it will be challenging to raise equity for large ticket projects. The survey respondents suggest a 10% equity requirement for private sector EE projects and 0% equity for public sector EE projects undertaken by ESCOs. Respondents also generally find DBP’s interest rate at par with commercial rates.
The LCEP survey also shows that the market finds the availability of short-term loans (that is, with less than 1 year tenor) acceptable to most respondents, but finds the 10-year loan tenor too short for large projects that need longer periods for capital recoupment, such as waste heat recovery and district cooling systems.
ESCOs were generally pleased that DBP accepted Deeds of Assignment of Receivables supported by Purchase Order or Contracts and Chattel Mortgage on the equipment to be procured as collateral to secure the E2SAVE loans. ESCOs typically do not own real estate assets that can be used as collateral.
DBP’s Cruz said that it remains flexible and open to modify the E2SAVE requirements through time, provided the borrowers and the ESCO industry could provide compelling financial models for the Bank to consider.
PE2 president Alexander Ablaza said, “PE2 and its members thanks LCEP for the survey and for DBP’s willingness to flex the E2SAVE framework. PE2 commends DBP for being the most proactive energy efficiency lender that endeavors to understand the ESCO business model and the needs of the ESCO sector.”
Other PE2 participants included vice president for internal affairs Ruth Yu-Owen, vice president for external affairs Theresa Acedillo-Lapuz, and K.K. Ralhan, principal representative of active PE2 regular member, TREES Corporation.
The ASEAN Low Carbon Energy Programme is a $15m aid programme of the UK’s Property Fund. In close collaboration with local and international entities from both the public and private sectors, the programme seeks to hep ASEAN harness the benefits from the deployment of low carbon energy by leveraging the UK’s extensive and proven expertise in green finance and energy efficiency.
The two (2) key pillars are Green Finance and Energy Efficiency and the 4 areas of support are policy support, capacity building, technical assistance and market development in 6 partner countries, namely Indonesia, Malaysia, Myanmar, Philippines, Thailand and Vietnam.