Building Investment (November-December 2020)

Figure: During EPC contract period, the client pays the ESCO out of the energy savings achieved. The client may keep a small portion subject to the
percentage ratio agreed in the contract, but retains all savings after the contract ended.
(Source: Energy Performance Contracting Guidebook, 2017)
however ESMs that come with hefty price tags and risks, Energy
Performance Contracting (EPC) is one of the practical options.
EPC has been widely implemented by developed countries to
overcome some of the major barriers to delivering cost-effective
energy efficiency, which includes lack of technical expertise on
assessment of saving potentials and opportunities as well as
constraints on capital investment budgets. The concept is based
on a profit-sharing agreement between the building owner and
the Energy Service Company (ESCO) whereby the initial cost for
the energy efficiency improvement project is borne by the ESCO.
Benefits of Energy Performance Contracting:
• Increase productivity while reducing costs and impact on the
environment;
• Increase shareholder value that improves profits, image and
performance;
• Achieve attractive rates of return on investment;
• Minimise controllable costs ie energy, waste, and equipment
wear and tear, and peak load costs
• Achieve process efficiency improvements right across the
board; and
• Demonstrate the responsiveness of respective industry
sectors and companies to key environmental issues;
Recently, the Ministry has announced a few approaches
taken by the Government to promote energy efficiency such as
50 government buildings will be retrofitted with energy efficiency
lights and appliances through EPC. “Government buildings are no
exception to high energy consumption where the Government
has to bear the ever-increasing cost of energy usage attributed
to the age of the building as well as the rise in users and
equipment,” Mdm Nor Afifah explained. It is hope that through
the Government’s retrofitting exercise coupled with efforts made
by building owners in the private sector, Malaysia will be able
to save up to RM46.9 billion in energy spending by 2030 and
consequently contribute to achieving NEEAP target.
In addition, the EPC Fund has established to spur energy
(Source: energywatch.com.my)
efficiency projects through the EPC business model, and in
addressing some of the issues faced by ESCOs in securing funding.
The Government aims to increase the confidence of private
financial institutions on the viability of EE projects financed
through this fund, while allowing ESCOs that have insufficient
collateral or credible track record to obtain credit facilities are
provided with guarantee cover to access the fund.
ESCOs can now enjoy additional support through the Green
Technology Finance Scheme, which recently started offering
a rebate of 2% on interest/profit to accelerate the expansion
of green investments by providing easier access to funding via
financing from Participating Financial Institutions (PFIs). The
introduction of the new category supporting ESCOs is targeted to
finance investment or assets related to energy efficiency projects
and/or energy performance contracting (subject only to green
technology/component cost finance by FPIs).
Visit http://bseep.gov.my and https://www.gtfs.my/ to learn
how to improve energy efficiency in your building through Energy
Performance Contracting today.
Nov-Dec 2020 | www.b-i.biz 19