MANILA, Philippines — Energy efficiency project developer Climargy Inc. has entered into a co-financing partnership with a United Nations agency to prepare energy efficiency investments in the Philippines.
Climargy and the United Nations Office for Project Services (UNOPS) are collaborating under a grant support agreement for the Southeast Asia Energy Transition Partnership (ETP), in which proceeds of the three-year grant program will be used to subsidize the upfront costs of investment-grade energy audits (IGA) as a means to prepare energy efficiency investments in the commercial and industrial sectors of the Philippine energy end-use market.
“We are thrilled with this co-financing partnership for IGA support to enable energy efficiency investments in the Philippines. By de-risking IGA studies, we remove an upfront barrier to the preparation of investment-ready energy efficiency projects,” Climargy CEO Alexander Ablaza said.
Climargy expects the ETP grant program to support the IGA of a portfolio of 11 to 15 energy efficiency projects, initially estimated to require P1 billion in project capital expenditures.
The company will co-finance the effort with its corporate resources to identify project opportunities, engage multiple energy service company partners and industrial or commercial end-use customers, implement the IGAs, and present IGA results to host entities and equity partners for investment decisions.
Climargy said energy savings of 457 million tons of CO2 equivalent in greenhouse gas emission reduction through 2040 and around P6.7-billion in total energy savings could be achieved should the energy efficiency projects supported by ETP-funded IGAs succeed in attracting equity capital and eventually be completed.
According to Climargy, IGAs are required by providers of capital before energy efficiency projects qualify for any form of financing as they determine reliable estimates of the energy savings, capital expenditure, and other opportunities or risks arising from a given project.
“In an IGA, an energy service company measures baseline energy consumption and load profile information from the host entity and proposes a detailed program of specific capital investments in technologies and systems to deliver the energy savings and ultimately the cash flows that would allow full recovery of the EE investments,” Climargy head of investment operations said Mikhael Fiorello Llado said.
“Typically, the decision to conduct an IGA is oftentimes delayed by the inability of either the ESCO or end-use customer to finance or assume the risks associated with this project preparatory task,” Llado said.
Climargy in December last year entered into a joint development partnership with Pi Energy of the Lopez-led First Philippine Holdings Corp. to pursue a pipeline of energy efficiency projects hosted by commercial and industrial designated establishments.
Climargy’s unique model of mobilizing off-balance sheet capital toward energy service company-led projects is intended to accelerate energy efficiency capital flows in Asian growth markets, initially the Philippines.