The Department of Energy (DOE) has registered 44 Energy Service Companies (ESCOs) and is hoping that more would sign up with the agency.
An ESCO is a business enterprise that develops, installs, and finances projects designed to improve energy efficiency and reduce operations and maintenance costs for its customers’ facilities. These generally act as project developers for a wide range of tasks and assume the technical and performance risk associated with the project.
They provide much needed power engineering expertise, enabling power investors to concentrate more on their core business. The ESCOs also assist in budget stabilization, reducing risks in the market while implementing energy efficiency improvements.
According to Energy Undersecretary Jesus Cristino Posadas, the role of ESCOs is considered essential especially at this point in the implementation of the Energy Efficiency and Conservation Act (EE&C).
“Some may view this is a burgeoning industry within the energy sector, where at the moment we have 44 registered ESCOs that have shown their enthusiasm in promoting EE&C projects and practices across the country and we expect to have more ESCO applications once the potential in energy efficient projects are realized.
It is our sincere hope that our ESCOs do not lose sight of the vision of having fully compliant and energy efficient industries leading the country to economic recovery and prosperity,” he said during the Energy Efficiency Day 2021 meeting.
Republic Act 11285 or the Energy Efficiency and Conservation Act was signed into law in May 2019.
Since the passing of this law, the DOE has collaborated with other government agencies to stimulate investment particularly in the use of energy efficient technologies in designated establishments.
The culmination of DOE’s partnership with the Board of Investments (BOI) will be in the finalization of the Department Circular on the recommendation of Energy Efficiency Projects to the BOI, which will be held later this week.
“We have seen that with any EE&C government-initiated program in other countries, the government has taken the lead by granting fiscal and non-fiscal incentives alike. The BOI has determined a healthy income tax holiday (ITH) must be put in place to lower the cost of capital-intensive projects especially when done at a time of a worldwide economic slump,” said Posadas.
He added that the DOE has launched an ongoing national information campaign meant to encourage Filipinos to practice EE&C measures.
“We are also encouraging the private sector to take the necessary steps in enjoying the full benefit of becoming the early adopters of EE&C projects. As pioneers, you stand to reap greater rewards especially in terms of immediate lowered operational costs and the possibility of short term cost recovery for upgrading systems with energy efficient technology.
In addition to this, industry wide participation can greatly reduce greenhouse gas emissions especially when done at a large scale,” said the DOE official.
In the draft circular, energy efficiency projects must be certified by the DOE and registered with the BOI. These projects include installation of equipment or system for new construction facility, plant or establishments; and retrofit projects that shall involve the installation of equipment, devices or system.
Other projects include: modifications or expansions of an existing plant, facility or establishment that shall involve the installation of equipment, devices or system; ventures of which energy savings and project cost must meet the minimum project boundary as prescribed under the DOE Circular; pioneering energy efficiency projects for new construction facility, plants or establishments subject to Article 17 of Executive Order 226 or the Omnibus Investment Code of 1987; and energy efficiency projects that are initiated by ESCOs.
For energy efficiency projects to be endorsed for BOI incentives, these must be “able to meet the minimum 15-percent boundary and a minimum project investment cost of P10 million.”
According to the DOE, “the 15-percent boundary refers to the absolute value of energy savings computed from the reference energy consumption to the new consumption or after the efficiency project has been installed and on its full commercial operation.”