ENERGY EFFICIENCY USING SOLAR AIRCON IN THE

PHILIPPINES

Inter-regional Workshop on Energy Efficiency Investment Project Pipeline

UNCC, Bangkok, Thailand April 23-24, 2014

Presented by : Felix Richard A. Cordova, President & CEOMaria Miranda C. Cordova, EVP & COO

Location of the Philippines

REPUBLIC ACT 9513Renewable Energy Act of 2008

AN ACT PROMOTING THE DEVELOPMENT, UTILIZATION

AND COMMERCIALIZATION OF RENEWABLE ENERGY

RESOURCES AND FOR OTHER PURPOSES

RE TYPE

SOLARWIND BIOMASSRIVER HYDRO

PROPOSEDFIT RATE (Peso)

17.95 10.37

7.00 6.15

APPROVED FIT RATE (Peso)

9.688.536.635.90

TARGET MW IN 3YRS

50 MW200 MW250 MW250 MW

FEED-IN TARIFF IN PHILIPPINES

No Approved rate for Ocean energy, but target installation was set at 50MW

Note : Average power rate in the Philippines is Ps 12.00 or 0.28 USD per kwhr

1.Regulatory delays in the implementation of the law

2.FIT rates are lower than proposed rates3.Limiting target installation vs service contracts

already awarded4.Huge risk on the part of RE developers which is

required to put up the plant first before FIT awarding

5.Uncertainty with regards to FIT payment and unclear collection guidelines

Challenges of RE in Philippines:

ENERGY EFFICIENCY & CONSERVATION POLICIES

ADMINISTRATIVE ORDER NO. 110 - DIRECTING THE INSTITUTIONALIZATION OF A GOVERNMENT ENERGY The Government shall aim to reduce its monthly consumption of electricity (in kilowatt-hours) and petroleum products (in liters) by at least ten percent (10%)

EXECUTIVE ORDER NO. 123 (September 8, 1993) INSTITUTIONALIZING THE COMMITTEE ON POWER CONSERVATION AND DEMAND MANAGEMENT The Committee on Power Conservation and Demand Management, hereinafter referred to as theCommittee, is hereby established as a regular and permanent body with the Chairman of the Council ofAdvisers on Energy Affairs as its Chairman and at least one representative from each of the followingagencies as members: Department of Energy; Department of Education, Culture, and Sports;Department of Trade and Industry; Department of Interior and Local Government; Department of Labourand Employment; Metro Manila Authority; National Power Corporation; Philippine National OilCorporation and the National Electrification Administration.

EXECUTIVE ORDER NO. 472 – Institutionalizing the Committee on Fuel conservation and Efficiency in Road Transport signed on 25 March 1998. It aims to disseminate information on efficiency utilization of fuel through the local chapters created for the purpose. The program targets a 10% reduction in fuel consumption.

DEPARTMENT CIRCULAR – 93-03-05To all Industrial, Commercial and Transport Sectors: Establishments consuming 1 million LOE annually are required to submit Quarterly Energy Consumption Report (QECR) to DOE. In addition, establishments consuming 2 million LOE, apart from the QECR are required to submit an Annual Energy Conservation Program Report (AECPR)

SENATE BILL NO. : 3321 Introduced by: HON. SERGIO R. OSMEÑA ENERGY EFFICIENCY AND CONSERVATION ACT OF 2012 (Filed November 5, 2012)

“AN ACT INSTITUTIONALIZING ENERGY EFFICIENCY AND CONSERVATION, ENHANCING THE EFFICIENT USE OF ENERGY, AND GRANTING INCENTIVES TO ENERGY EFFICIENCY AND CONSERVATION PROJECTS, AND FOR OTHER PURPOSES”.

SENATE BILL NO. :2027 Introduced by: HON. EDGARDO J. ANGARA ENERGY EFFICIENCY AND CONSERVATION ACT OF 2010

AN ACT PROMOTING THE ENHANCEMENT OF ENERGY EFFICIENCY AND CONSERVATION THROUGH THE DEVELOPMENT OF ENERGY EFFICIENT TECHNOLOGIES, STRENGTHENING ORGANIZATIONAL RELATIONSHIPS AND REINFORCEMENT OF RELATED LAWS AND OTHER STATUTORY PROVISIONS ON ENERGY.

SENATE BILL NO.: 1602 Introduced by: HON. MIRIAM DEFENSOR SANTIAGO

AN ACT TO SUPPORT THE RESEARCH AND DEVELOPMENT OF NEW INDUSTRIAL PROCESSES AND TECHNOLOGIES THAT OPTIMIZE ENERGY EFFICIENCY AND ENVIRONMENTAL PERFORMANCE, UTILIZE DIVERSE SOURCES OF ENERGY , AND INCREASE ECONOMIC COMPETITIVENESS.

ENERGY EFFICIENCY BILLS PENDING IN SENATE

ANOTHER INNOVATION IN SOLAR THERMAL AND AIR CONDITIONING TECHNOLOGY…..

SOLAR-ASSISTED AIRCONSAVE 30 –50% ON POWER

SPLIT TYPE AC SYSTEMS

PARTIAL LIST OF CLIENTS

CEBU IWAKAMI CORPORATION

GTZ – DENR OFFICE

POWER CONSUMPTION COMPARATIVE STUDY

( CONDUCTED BY A TELECOM COMPANY)

SCOPE OF STUDY

• Temp Setting at 22degrees C

• Conducted in 15 days

ACTUAL DATA (15 DAYS OBSERVATION)

AC TYPEAVE.LOAD CURRENT

AVE. VOLTAGE READING

OPERATION STARTED OPERATION ENDED

DATE TIMEINITIAL

READINGDATE TIME

INITIAL READING

BRANDX(3TR, CS)

17.72 2334-

AUG-11

2:30PM 211119-

AUG-11

2:30PM 3367.5

SEDNA AIRE

(3TR, CS)11.57 233

20-AUG-

113:10PM 3396.9

4-SEPT

-113:10PM 4122.2

1256.5

725.3

0

200

400

600

800

1000

1200

1400

BRAND XX (Conv. AC) SEDNA AIRE

KW

HActual KWH Consumption

$AVE:531.2 KWH/15days

or 1,062KWH/month Or 42%

ENERGY COST

1,062KWH/month x PHP12/KWH

PHP12,744

COST ofSedna Aire 3TR PHP 185,000

185,000÷12,744

14.5months

RETURN ON INVESTMENT

THE BUSINESS POTENTIAL FOR SOLAR AIRCON:REPLACEMENT OF OLD 3 TONNER UNITS IN THE

PHILIPPINES

MILLION

APPROXIMATE COST TO REPLACE

Ps 185,000 x 3M = Ps 555,000,000,000.00 or

OLD UNITS WHICH ARE CONVENTIONAL AIRCON INSTALLED IN THE PHILIPPINES

3

(Project cost)

USD 12.6B

POTENTIAL ENERGY SAVINGS

1,062KWHRS X 3M

With 3M Units

3.18B KWHRS/MO

POTENTIAL MARKET:

ONLY 40,0003Million

TARGET:

99%

1%

Potential

Target

TARGET in Years540,000 units 3TR x $4,204.54/unit

USD 168.1M

$168M

Leasing? We get leasing lines from banks for 3yrs. And offer subleasing to clients for 5-6 yrs with O & M contract

FINANCING AVAILABLE

SUSTAINABLE ENERGY

FINANCE

Solar Aircon - Success Factors

1. The Philippines is a tropical country enjoying the sun in most parts of the year

2. The electricity tariff is among the highest in the region (at Php12 or .28USD for residential and small commercial)

3. As much as 50% of energy cost is used for cooling purposes, not only in households but across industries in commercial and industrial nature

4. The public awareness on climate change is high especially with the series of unprecedented natural disasters in recent months

5. Solar aircon is energy efficient at the same time renewable energy

6. Increasing acceptance among users since its introduction in 2009

7. Promotes demand side management by reducing large portion of energy used for cooling

8. Reduces CO2 production

Solar Aircon – Barriers

1. Solar Thermal technology was not considered in RE law, hence not covered by incentive

2. New technology means “wait-and-see” attitude among prospective clients although installations are working since 2009

3. Mainstream market acceptability4. Everything is imported, we don’t own the technology.5. High Upfront Cost 6. No available 3rd party testing facility for Solar Aircon7. Promotion of the technology lacks government

support8. High Cost of Financing9. 100% of risks is borne by the project developer since

we get leasing from the bank

WAY FORWARD ….

• Establish ESCO Company• Establish local assembly • Strengthen technical capability• Source low cost financing

www,edwardmarcsphil.com

Manila : +632 9112371; +632 9221658Cebu : +6332 2381972; +63325120684Davao : +6382 2962907; +6382 2862162Web : www.edwardmarcsphilinc.comEmail : rickycordova@edwardmarcsphilinc.com

THANK YOU FOR YOUR ATTENTION