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In developing countries the implementation of energy efficiency projects has fallen far short of the potential due to a number of institutional and financial barriers. The concept of energy performance contracting (EPC) implemented by energy service companies (ESCOs) has been recognized as a mechanism to overcome some of these barriers. However, despite the fact that the potential for application of performance contracting in developing nations is enormous, the growth of the ESCO industry has been rather slow. In particular, EPC and ESCOs have played a very limited role in implementation of energy efficiency projects in the public sector. This paper identifies barriers to the development of a viable ESCO industry in developing countries and identifies the need for and the potential role of a “Super ESCO” as a means of facilitating large-scale implementation of energy efficiency projects. While there are different definitions of the term Super ESCO, this paper refers to a Super ESCO as an entity that is established by the Government and functions as an ESCO for implementing projects in public facilities and supports capacity building and project development activities of existing private ESCOs. The Government capitalizes the Super ESCO with sufficient funds to undertake public sector performance contracting projects and to leverage commercial financing. The Super ESCO may also act as a financing or leasing organization to provide private ESCOs and/or customers financing for EE projects or leasing for EE equipment. The paper identifies examples of existing and proposed Super ESCOs in developing countries and defines how Super ESCOs may address some of the barriers to large-scale implementation.

This book explores energy savings performance contracts (ESPCs) as a means of overcoming some of the more difficult hurdles in promoting energy efficiency in public facilities. ESPCs represent a very attractive solution to many of the problems that are unique to public agencies, since they involve outsourcing a full project cycle to a service provider. From the detailed audit through implementation and savings verification, ESPCs can relieve public agencies of bureaucratic hassles, while service providers can secure the off-budget project financing and be paid from the actual energy savings, thus internalizing project performance risks. ESPC bidding also allows public agencies to select from a range of technical solutions, maximizing the benefit to the agency. Global experience suggests that ESPCs have been more effective at realizing efficiency gains than many other policy measures and programs, since the service providers have a vested interest in ensuring that a project is actually implemented. Many of the country governments interviewed for the study also saw enormous potential in bundling, financing, and implementing energy efficiency projects on a larger scale in the public sector, a method that increases the rate of efficiency gains and creates further benefits through economies of scale.

Overwhelming evidence indicates that climate change, caused in large part by human activities, is already adversely impacting all people, with the very real prospect of worse to come. Nevertheless, a global treaty to curb carbon emissions remains elusive. In East Asia, all middle-income countries have set national targets for energy efficiency and renewable energy, and some even have targets for carbon reduction. This report focuses on recent experiences in applying public financing instruments and tries to draw the lessons to date: when and how to use the instruments, which instrument to select, and how to design and implement them. The wide range of financial instruments designed to support and catalyze clean energy investment over the last decade is truly remarkable. Such instruments include credit lines and risk guarantees designed to increase both the capacity and confidence of commercial banks for clean energy lending; dedicated funds and concessional financing mechanisms to kick-start new technologies; mezzanine and equity financing targeted at start-ups; small and medium enterprises and energy service companies; and various consumer financing instruments designed to lower the upfront costs of clean energy equipment. This report systematically reviews the successes and failures of innovative interventions and distills the lessons of applying them. This report is organized in following four parts: part one gives overview; part two focuses on financing energy efficiency; part three focuses on financing renewable energy; and part four focuses on clean energy financing case studies.

This book explores energy savings performance contracts (ESPCs) as a means of overcoming some of the more difficult hurdles in promoting energy efficiency in public facilities. ESPCs represent a very attractive solution to many of the problems that are unique to public agencies, since they involve outsourcing a full project cycle to a service provider. From the detailed audit through implementation and savings verification, ESPCs can relieve public agencies of bureaucratic hassles, while service providers can secure the off-budget project financing and be paid from the actual energy savings, thus internalizing project performance risks. ESPC bidding also allows public agencies to select from a range of technical solutions, maximizing the benefit to the agency. Global experience suggests that ESPCs have been more effective at realizing efficiency gains than many other policy measures and programs, since the service providers have a vested interest in ensuring that a project is actually implemented. Many of the country governments interviewed for the study also saw enormous potential in bundling, financing, and implementing energy efficiency projects on a larger scale in the public sector, a method that increases the rate of efficiency gains and creates further benefits through economies of scale.