MAKATI CITY, August 26, 2022 – Energy efficiency project developer Climargy Inc. and the United Nations Office for Project Services (UNOPS) are collaborating under a Grant Support Agreement for the Southeast Asia Energy Transition Partnership (ETP) Energy Efficiency Innovation Window. 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 (EE) investments in the commercial and industrial sectors of the Philippine energy end-use market.
Climargy expects this ETP grant program to support the IGAs of a portfolio of 11-15 energy efficiency projects, initially estimated to require PHP 1 billion in project capital expenditures. Climargy will be co-financing the effort with its corporate resources to identify project opportunities, engage multiple energy service company (ESCO) partners and industrial or commercial end-use customers, implement the IGAs, and present IGA results to host entities and Climargy equity partners for investment decisions.
Should the EE projects supported by ETP-funded IGAs succeed in attracting equity capital and eventually be completed, the achieved energy savings could lead to 457 million tons of CO2 equivalent in greenhouse gas emission reduction through 2040 and around PHP 6.7 billion in total energy savings.
Alexander Ablaza, CEO of Climargy, said, “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.”
Before EE projects qualify for any form of financing, IGAs are required by providers of capital as they determine reliable estimates of the energy savings, capital expenditure, and other opportunities or risks arising from a given EE project. “In an IGA, an ESCO 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. 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,” explains Mikhael Fiorello Llado, Head of Investment Operations of Climargy.
Climargy is one of the world’s pioneer private-sector aggregators of ESCO project assets in emerging markets. Climargy’s unique model of mobilizing off-balance sheet capital toward ESCO-led projects is intended to accelerate energy efficiency capital flows in Asian growth markets, initially the Philippines. In December 2021, Climargy entered into a joint development partnership with Pi Energy of the Lopez-led First Philippine Holdings Corporation to pursue a pipeline of EE projects hosted by commercial and industrial designated establishments, in the shared objective of enabling and advancing the impacts of Republic Act 11285, better known as the Energy Efficiency and Conservation Act.
The Southeast Asia Energy Transition Partnership (ETP) is a multi-stakeholder partnership between government and philanthropic partners aimed towards accelerating sustainable energy transition, as guided by the United Nations Sustainable Development Goals and Paris Agreement. The Energy Efficiency Innovation Window is one of the ETP’s channels for providing early-stage grant financing for innovations in Southeast Asia which help solve the persisting under-investment in energy efficiency.
UNOPS is a United Nations agency dedicated to providing infrastructure, procurement and project management services to support the achievement of the Sustainable Development Goals, while responding to its partners’ needs and helping to increase the effectiveness of peace and security, humanitarian and development projects around the world.