Safeguards sought on BOI perks for energy efficiency projects
The Board of Investments (BOI) is being asked to firmly set safeguards on the set of incentives being dangled to energy efficiency (EE) projects, so such provision in the 2017 Investment Priorities Plan (IPP) shall not be misused and wrongly applied.
In a letter to Department of Trade and Industry Undersecretary and BOI Managing Head Ceferino S. Rodolfo, the Philippine Energy Efficiency Alliance, Inc. (PE2) has offered help to the government to “ensure that the incentives are not abused by proponents of projects or commercial activity,” primarily those that are not in keeping with the Energy Efficiency Roadmap set forth by the Department of Energy.
PE2 President Alexander Ablaza said their group “would be willing to help BOI craft special implementing guidelines relating to the evaluation and approval of energy efficiency projects.”
Primarily, the group recommended that an investment-grade energy audit report by a DOE-accredited energy service company (ESCO) “be among the requisite submissions of the investor-applicant for BOI registration.”
PE2 similarly proposed that the BOI shall develop “special definitions for project boundaries,” so such shall not just include pure greenfield EE projects located in semi-greenfield sites; but must also cater to greenfield retrofit projects in existing brownfield sites.
For the second category, the projects may include importation and installation of brand new high efficiency equipment technologies such as those on cooling, refrigeration, chillers, compressors, pumps, motors, drives, controls, building management systems, boilers, LED lighting, process equipment, and building envelope solutions. Often, these are intended to replace older or the low-efficiency equipment.
The so-called “pure greenfield” EE projects, on the other, could cover construction of district cooling systems, waste heat recovery cogeneration plants; and biomass power generation plants.
Ablaza noted that the incentives for EE ventures would be extremely vital if the country is bent on mobilizing the estimated US$180 billion capital for energy efficiency projects in the next 14 years.
“The need for non-debt-based capital is highlighted by the fact that over 98-percent of ESCOs in developing Asia have no reasonable access to bank lending to be able to scale up their project portfolios,” he stressed.
It is for this reason, Ablaza said that the government “should be able to incentivize and accelerate capital flow from third party investors to energy efficiency assets.”
He thus reiterated that “tax-based and non-tax-based incentives are clearly necessary to enable equity returns of energy efficiency technologies and services to hurdle viability thresholds expected by third party investors.”
Ablaza qualified “the notion that ‘energy savings should be incentive enough’ is severely flawed,” emphasizing that this is the same line of reasoning that actually stagnated spending in energy efficiency projects and initiatives in the last 26 years.
