By Victor V. Saulon

THE Philippine Energy Efficiency Alliance (PE2) will have to bolster its partnership with the government for at least four priority tasks, including making the organization the sector voice of market stakeholders as the Energy department crafts the implementing rules and regulations (IRR) of Republic Act No. 11285.

These tasks are among the immediate action plans of PE2, which claims to be the biggest group involved in energy efficiency in the country, after the passage of RA No. 11285 “An Act Institutionalizing Energy Efficiency and Conservation, Enhancing the Efficient Use of Energy, and Granting Incentives to Energy Efficiency and Conservation Projects.”

In an e-mail interview, PE2 President Alexander Ablaza said his group seeks to be the sectoral voice of energy efficiency market stakeholders — whether energy efficiency end-users, investors or providers of energy efficiency technology, solutions or services.

RA No. 11285 was signed on April 12, 2019, with the Department of Energy (DoE) tasked to issue an IRR in the next four months.

Congress, for its part, has expanded the scope of the Joint Congressional Power Commission (JCPC) to reflect the expansion of its oversight powers to the entire energy sector. JCPC will be renamed the Joint Congressional Energy Commission (JCEC) in line with the passage of RA No. 11285.

“Next, PE2 would have to complement government’s efforts in increasing awareness of the law among market players, especially those which now have new obligations under the law,” Mr. Ablaza said.

“Third, it would have to assess the baseline market competencies and mobilize resources toward building capacities in the energy service company (ESCO) sector, and toward the training and certification of professionals tasked to perform energy management, measurement and verification and other ESCO specialists,” he added.

Lastly, Mr. Ablaza said PE2 would need to ensure that the new law will be implemented and enforced without delay and that the intent of legislation would have to be preserved through the next decade and beyond.

He said the market would be catching up with the new law and its IRR through the first two years.

“After switching back to mandatory implementation from a 29-year voluntary market regime, stakeholders will be adjusting to the obligations under the new law, staffing up with energy efficiency expertise, identifying energy efficiency project opportunities and seeking sources of capital to finance these new projects,” he said.

He expects the first “real market momentum” to be experienced only from years three to five after the passage of the law, even though several, smaller, and “lower-hanging” project opportunities could be accelerated for implementation in the first two years.

Mr. Ablaza said PE2 believes that two-thirds of the P12-trillion capital requirement for energy efficiency investments for the country to meet the DoE’s energy efficiency and conservation roadmap targets by 2040, would have to be mobilized from non-traditional self-financed or debt-financed means.

He said about P8 trillion would have to flow through off-balance sheet channels such as ESCO performance contracts, public-private partnership transactions and other large-scale bulk procurement and distribution programs for the government and residential sectors.

“PE2 hopes that the [IRR] will effectively make such non-traditional capital flows commercially viable, as Government is not expected to afford to bridge the capital gap through its annual budget appropriations,” he said.

He said PE2 hopes that fiscal incentive guidelines would fully respond to the needs of third-party investors, and allow an unrestricted range of technologies and solutions backed by detailed energy audits to be performed by DoE-accredited ESCOs.

“PE2 is likewise hopeful that the IRR would open the doors for more innovative procurement guidelines for the public sector to allow private capital and energy savings to finance energy efficiency retrofits in government facilities through multi-year performance contracts,” he said.