PE2’s Ablaza showcases PH EE solution at the Climate Week NYC

Date Published: 
September 21, 2021
  • Screenshot image captures the speakers during the virtual Climate Week NYC event held on 21 September 2021. Left to right, starting from top row: Alexander Ablaza of PE2, APEIA and Climargy, Poonam Pande of EESL-CESL (India), Mehar Jauhar of ISC, Mohammed Zahidul Haque of IDCOL (Bangladesh), Vivek Adhia and Amit Singh, both of ISC, Jon Respati of MASKEEI (Indonesia) and Markus Bissel of GIZ-Vietnam. (Image: PE2)
    Screenshot image captures the speakers during the virtual Climate Week NYC event held on 21 September 2021. Left to right, starting from top row: Alexander Ablaza of PE2, APEIA and Climargy, Poonam Pande of EESL-CESL (India), Mehar Jauhar of ISC, Mohammed Zahidul Haque of IDCOL (Bangladesh), Vivek Adhia and Amit Singh, both of ISC, Jon Respati of MASKEEI (Indonesia) and Markus Bissel of GIZ-Vietnam. (Image: PE2)

NEW YORK CITY, 21 September 2021 –Philippine Energy Efficiency Alliance (PE2) president Alexander Ablaza, who concurrently serves as founding convenor and co-chair of the 10-country strong Asia-Pacific ESCO Industry Alliance (APEIA) and CEO of Climargy, was invited by the Institute for Sustainable Communities (ISC) and P4G Partnerships to share a scalable and replicable solution for energy efficiency in the renowned Climate Week New York City conference "Paving the Way Forward for Industrial Energy Transition in South & Southeast Asia." Held virtually earlier today, the webinar brought together key players in the energy and industrial ecosystem in South and Southeast Asia to examine the challenges, potential innovative solutions and green partnerships required to accelerate the take-up of sustainable manufacturing practices at scale. 

Hosted annually by international non-profit The Climate Group in conjunction with the United Nations, and in partnership with the COP26 and the City of New York, Climate Week NYC is a global opportunity to come together to accelerate climate action and assess progress ahead of COP26. This year, Climate Week NYC takes place from 20-26 September 2021, and focuses on fulfilling and increasing commitments made by businesses, governments, and organizations. The annual event is where the world gathers to showcase leading climate action and discuss how to do more, fast.

ISC president and CEO Deeohn Ferris, with the assistance of ISC colleague Mehar Jauhar, opened the event, while ISC Program Officer for Energy & Environment Amit Singh presented their projections of energy consumption, which is expected to increase by 1.6 times in the next two decades, accompanied by a possible 11% reduction in the regional GDP due to climate change. Singh also quoted Ablaza’s USD 892 billion estimate of energy efficiency (EE) investments that will need to be mobilized in Southeast Asia by 2040. The ISC program officer identified a few opportunities for both South Asia and Southeast Asia: (1) holistic coupling of on-ground demonstrations and policy interventions; (2) innovative, accessible and affordable financing mechanisms including the demand aggregation of energy service company (ESCO)-based capital investments; (3) strengthening the local ecosystem and development of the ESCO market; and, (4) enabling local institutions to provide technical assistance for long-term capacity-building and training approaches.

Asia Clean Energy Partners managing partner Mark Lister said that there is some commonality in the issues around the region. While describing the region, he zoomed in the Vietnam experience. Lister said, “We're talking about some very large and rapidly growing economies here. The need for decarbonization in these economies is very high –

driven by high indigenous resources but also by a slow transition to new technologies as well as high vulnerability to climate change.” He explained that while there are regional energy targets, 54% of the energy transition efforts in Vietnam should be targeted at industries. He noted that the effective enforcement of the EE programs remains a challenge in many markets, including Vietnam. Listed added that the ESCO sectors are very underdeveloped, and awareness of the different players in the industry remains very low.

Indonesian Energy Conservation and Efficiency Society (MASKEEI) chairman Jon Respati presented the challenges and prospects of the young ESCO market in Indonesia. He explained that government support by the existing regulation passed in 2009 is rather ambiguous, as the national target for EE efforts are far from mandatory across the sectors. Respati said, “There was relatively little awareness among the stakeholders, especially the SMEs, about the potential benefits of energy saving for its business.” He added that the lack of awareness of EE benefits is accompanied by doubts concerning the ability of the technologies and measures to really deliver the promised energy savings. Additionally, ESCOs in Indonesia face serious challenges in securing adequate funding to implement the projects because mainstream financial institutions fail to understand EE cash flows and project risks. Respati also explained that there is a serious lack of professional skills among ESCO players to grow their portfolios of EE projects implemented through the ESCO business model.

Infrastructure Development Company Limited (IDCOL, Bangladesh) Industrial & Energy Efficiency Finance senior vice president Mohammed Zahidul Haque highlighted the financing barriers such as the lack of availability of funds, low market awareness, high project development and transaction costs, lack of in-house capacities related to risk assessment and management, lack of capacity development initiatives and the need for new financial products and appraisal tools.

Poonam Pandi of Convergence Energy Services Limited (CESL, India) shared that its parent firm Energy Efficiency Services Limited (EESL) has been supported with co-financing by the Global Environment Fund under its fifth period (GEF-5) for its approved project “Promoting Market Transformation for Energy Efficiency in Micro, Small & Medium Enterprises in India.” She reported that the project has covered more than 700 units and identified 24 replicable EE technologies for the selected sectors, out of which 7 technologies have been successfully demonstrated with demonstrated savings ranging from 15% to 35%.

Offering a scale-up solution on behalf of the Philippines, Alexander Ablaza of PE2, APEIA and Climargy showed  how Asia's pioneer equity vehicle for EE upgrades can scale-up ESCO projects in the industrial sector. Ablaza lamented, “While we struggle to address the market failure for energy efficiency portfolio finance, private capital is moving at a steadily growing velocity toward 20,000MW renewable energy projects but not toward the USD 243 billion capital gap in 45,900MW of potential EE investments in the Philippines.” He strongly believes that in most markets, the capital requirement for renewable energy would almost always be at least double that of energy efficiency.

Ablaza said, “Up to 98% of ESCOs across developing Asia do not have suitable access to bank lending to pursue their long-term pipeline of ESCO-financed performance contracts.” He added, “ESCOs can grow their performance contracting pipeline without worrying about credit limits or recapitalizing and can just focus on what they do best - deliver energy savings. With a third-party investor, commercial and industrial building owners can preserve their capital budgets and credit lines for core business priorities.”

Ablaza said that Climargy has kicked off capital raising for its initial USD 108 million investment tranche for the Philippine market. He estimates that this initial tranche would be able to deliver up to 3 TWh in avoided generation or 55 MW in avoided generating capacity additions in the grid, up to 2 gigatons CO2 in greenhouse gas emission reductions and generate 2,100-3,900 green jobs for the local economy. He however complains, “It remains several times more difficult to attract interest from corporate investors for EE as an energy asset class distinct from renewable energy.” Respati joined Ablaza in declaring that EE does not have the same investment and end-user appeal as renewable energy.

With the objective of building partnerships with the development community, Sarbinder Singh of P4G Partnerships, Anjana Seshadri of Neev Fund, Shalabh Tandon of the International Finance Corporation, Siddarthan Balasubramania of the ClimateWorks Foundation and Markus Bissel of Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) took turns in sharing their reactions to the presented solutions.

ISC concluded, “Hearing all these recommendations, we can now paint a window of opportunity for the implementation of innovative and comprehensive business models – presently limited in number - that can effectively persuade and support the industries to undertake the shift towards sustainable manufacturing and enable the ecosystem to drive the energy transformation for the region. Such models, successfully demonstrated within the regions of South Asia and Southeast Asia, shall also leverage the current global crisis of COVID-19 and combat its tremendous economic fallout by enabling the industrial sector to build back better and stronger through making the shift to greener, and more energy-efficient as well as clean energy practices.”

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