PE2 supports LCEP study on DBP’s EE financing

Date Published: 
October 7, 2021
  • Screenshot of the LCEP focus group discussion with PE2 officers on 7 October 2021 shows (clockwise from upper left) Laurie Navarro of LCEP, Theresa Acedillo-Lapuz, Ruth Yu-Owen and Alexander Ablaza, all three officers of PE2. (Image: PE2)
    Screenshot of the LCEP focus group discussion with PE2 officers on 7 October 2021 shows (clockwise from upper left) Laurie Navarro of LCEP, Theresa Acedillo-Lapuz, Ruth Yu-Owen and Alexander Ablaza, all three officers of PE2. (Image: PE2)

MAKATI CITY, 7 October 2021 – The Philippine Energy Efficiency Alliance (PE2) actively participated in a focus group discussion organized by the UK Prosperity Fund’s ASEAN Low Carbon Energy Programme (LCEP) related to the latter’s ongoing technical assistance for the Development Bank of the Philippines (DBP) aimed at looking into the terms and conditions of its Energy Efficiency Savings (E2SAVE) Financing Program.

LCEP was represented by its Philippines energy efficiency (EE) country coordinator Laurie B. Navarro and Fritizie Reyes-Vergel. PE2 was represented by its president Alexander Ablaza, vice president for internal affairs Ruth Yu-Owen and vice president for external affairs Theresa Acedillo-Lapuz. The PE2 officers were supported by Luigi G. Eusebio and Hazel T. Planco of the PE2 secretariat.

The LCEP technical assistance to DBP aims to enhance the features of DBP’s E2SAVE program in support of the Department of Energy (DOE)-led enforcement of the Energy Efficiency and Conservation Act (RA 11285) which mandates government financial institutions (GFIs) like the DBP to set aside lending funds for energy efficiency projects at concessional rates of interest to attract public and private sector borrowers.

While the enhanced E2SAVE program is expected to benefit both the public and private sectors, LCEP explained that its survey is limited to the private sector and that the government is considering other financing options other than the traditional general appropriations modality to support the broadened implementation of the Government Energy Management Program (GEMP). Since these other financing options will need the approval of the Inter-Agency Energy Efficiency and Conservation Committee (IAEECC) prior to implementation, LCEP has opted to exclude public sector respondents in the survey.

The LCEP study seeks to understand the difficulties or apprehensions, if any, of E2SAVE’s private sector target clients such as energy service companies (ESCOs) and private project hosts in availing of the financing program. The results of the survey will be used as inputs to enhance the terms and conditions of the E2SAVE Financing Program to better respond to the clients’ needs and capabilities.

Ablaza said, “PE2 believes that among the four financial institutions lending for EE projects, DBP worked hard to understand ESCOs as a distinct borrower class with limited access to project capital and narrow the gap of its loan and collateral requirements for this sector.”

The PE2 team also shared the ESCO industry’s perspective of the top 3 barriers that continue to impede access of ESCOs to E2SAVE lending includes: (1) requirement for host entity consent to re-assign equipment assets to DBP in cases of loan default; (2) lack of ESCO internal funds for equity participation in each EE project loan; and, (3) DBP may need to reduce its risk spread or cost of funding to reduce loan pricing for ESCOs to absorb cost of financing.

The UK Prosperity Fund through its Foreign and Commonwealth Office has awarded the implementation of the 3-year LCEP program to Ernst and Young with Carbon Trust, a UK consulting company, as one of the LCEP delivery partners.

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: [1] Capacity building of government, institutions and business; [2] Policy reform of energy frameworks and standards; [3] Market development by strengthening connections between project developers and investors; [4] Raising awareness of available technologies to increase the uptake of energy efficient products and services; and, [5] 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.

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

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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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