Abstract
In developing countries the implementation of energy efficiency projects has fallen far short of the potential due to a number of institutional and financial barriers. The concept of energy performance contracting (EPC) implemented by energy service companies (ESCOs) has been recognized as a mechanism to overcome some of these barriers. However, despite the fact that the potential for application of performance contracting in developing nations is enormous, the growth of the ESCO industry has been rather slow. In particular, EPC and ESCOs have played a very limited role in implementation of energy efficiency projects in the public sector. This paper identifies barriers to the development of a viable ESCO industry in developing countries and identifies the need for and the potential role of a “Super ESCO” as a means of facilitating large-scale implementation of energy efficiency projects. While there are different definitions of the term Super ESCO, this paper refers to a Super ESCO as an entity that is established by the Government and functions as an ESCO for implementing projects in public facilities and supports capacity building and project development activities of existing private ESCOs. The Government capitalizes the Super ESCO with sufficient funds to undertake public sector performance contracting projects and to leverage commercial financing. The Super ESCO may also act as a financing or leasing organization to provide private ESCOs and/or customers financing for EE projects or leasing for EE equipment. The paper identifies examples of existing and proposed Super ESCOs in developing countries and defines how Super ESCOs may address some of the barriers to large-scale implementation.
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Notes
The Super ESCOs as defined in this paper are being established in China, the Philippines, and India. See, for example, ECO-Asia Clean Development and Climate Program, “Development of a Super ESCO to Implement a 600-MW Energy Efficiency Power Plant,” Report submitted to Power Demand-Side Management Center of Hebei Province, December 2009; Asian Development Bank, “Proposed Loan and Administration of Grant, Republic of the Philippines: Philippine Energy efficiency Project,” Project Number 42001, January 2001; and Ministry of Power, Government of India, “Energy Efficiency Services Limited (EESL) to Promote Energy Efficiency Project” News Release, November 2009.
For additional information on the concept of ESPC, see SRC Global Inc 2005.
SRC Global Inc., “A Strategic Framework For Implementation of Energy Efficiency Projects for Indian Water Utilities,” prepared for The World Bank, Public-Private Infrastructure Advisory Facility, May 2005
These concepts are described in many reports on ESCOs and energy efficiency financing. See, for example, Taylor et al. 2008
For a discussion of some of the barriers to the development of ESCOs, see Vine et al. (1998) and Charles River Associates (Asia Pacific) Pty Ltd, “Energy efficiency Enhancement Project,” prepared for the Asian Development Bank, 2005
Other models for overcoming some of the implementation barriers include a public–private partnership such as the Berliner Energieagentur. See Geissler 2008.
A Super ESCO may also be established by a private sector organization, an NGO, or as a public–private partnership; although to date there are no examples of such Super ESCOs.
Hebei Development and Reform Commission, “The Medium and Long-Term Plan for DSM in Hebei Province (2009–2013),” 2009
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Limaye, D.R., Limaye, E.S. Scaling up energy efficiency: the case for a Super ESCO. Energy Efficiency 4, 133–144 (2011). https://doi.org/10.1007/s12053-011-9119-5
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DOI: https://doi.org/10.1007/s12053-011-9119-5