The Philippine Energy Efficiency Alliance (PE2) said Friday the energy efficiency market may start to see the property sector engage energy service companies (ESCOs) to provide cooling-as-a-service for shopping malls, hotels and office buildings in 2025.
“These long-term projects are likely to become pioneer beneficiaries of energy efficiency fiscal incentives under the CREATE MORE Act,” PE2 president Alexander Ablaza said.
He said PE2 also anticipates more proactive development of energy efficiency projects in the public sector by the Department of Energy this year as it expects climate funding to target public building retrofits at both the national and local government levels.
“PE2 also remains hopeful that the evolving implementing rules and regulations of the New Government Procurement Act would enable life-cycle cost-based procurement of cooling and lighting efficiency solutions for government buildings through ESCO performance contracts,” Ablaza said.
He said the year 2024 was a period of enabling further policy reforms and market conditions to deepen and widen the reach and impacts of the Energy Efficiency and Conservation Act, now on its fifth year of implementation.
“Responding to government and private sector calls to reverse thinning power reserves threatening the grid every summer, PE2 declared that 3,340 megawatts of additional generation and transmission capacities were needed to provide supplemental cooling and refrigeration services to compensate for the rise of ambient temperatures and heat indices from the coolest month of January 2023 to the summer months of April-May of the same year,” he said.
Ablaza, however, questioned why the Philippines is planning additional generation and transmission capacities ahead of peak demand management.
“We should aspire to flatten our daily and annual peak demand curves, especially through permanent peak shaving through cooling efficiency or load-shifting to off-peak hours through energy storage systems,” he said.
He said mid-day peak demand could be shaved permanently through cooling efficiency improvements by a massive market wash-out of low efficiency air conditioners, the upgrading of chiller plants through the ESCO business model or by building and operating district cooling systems.
Efficiency upgrades for non-cooling systems include motors, drives, compressors, indoor lighting, controls, and other commercial and industrial loads, he said.
Ablaza said early evening peak can be shaved primarily through efficiency improvements in HVAC/cooling systems, lighting and through higher-efficiency household appliances and other residential loads.
Meanwhile, thermal, kinetic and battery energy storage systems can effectively shift peak loads to off-peak hours.
He recommended that the Energy Regulatory Commission (ERC) review and widen the Time-of-Use (TOU) tariff differentials between those of peak and off-peak hours to incentivize private sector investments in load-shifting technologies.
Ablaza said the recently-enacted Republic Act 12066, or the CREATE MORE Act, is expected to catalyze more private sector EE investments under Republic Act 11285, or the Energy Efficiency and Conservation Act.
He said the improved incentive package under CREATE MORE would be more effective in attracting more ESCO- and third-party project developer (TPPD)-led EE projects to secure DOE endorsement and Board of Investments (BOI) registration.
“Beyond own-use solar photovoltaic (PV) projects, we hope that third-party investments in EE projects involving space cooling, refrigeration, compressors, motors, drives, lighting and energy management technologies could grow with the catalytic effect of the CREATE MORE law,” he said.
