The potentials of energy service industry in
the form of investment opportunities and
the creation of new jobs is
enormous which can contribute significantly to the growth of our economy. With
the potentials valued at billions of dollars at regional markets which will be
more opened with the upcoming ASEAN Economic Community(AEC) introduction and the implementation of Trans Pacific
Partnership Agreement(TPPA), Malaysia could not afford to just ignore it and
not participating.
Like any other industry, energy service
industry where energy efficiency is the core part of it, a holistic approach is
required to ensure all efforts to be place will bear fruits in long term and
able to be sustained to create more opportunities in the way forward.
In this last part on this topic, let us
examine on what is exactly expected from key stakeholders in this country in
terms of roles and responsibilities that need to be played by each of them to
grow and sustain the energy services industry. The more we delay in tapping
opportunities from this industry, more we are going to lose its economic
opportunities that could benefits us in short and long terms especially in the
current challenging economic climate.
The Figure 1 below illustrates that overall
framework, key elements, thrusts needed and process flow to grow the energy
efficiency industry where energy service is the core feature where big scale
investments and new jobs creation is concern.
Figure 1: The
schematic framework, thrusts and process flow of the holistic approaches to
grow energy efficiency industry at the national level.
For energy service or energy efficiency
industry players, what is needed is a clear platform with a conducive business
ecosystem for them to play their roles to tap the already available and newly
created business opportunities. Like any other industry, there are factors that
will contribute to the industry growth such policies, institutional framework
for administration and regulatory supports, availability of funding and
financial supports for loans, fiscal incentives, awareness and etc. All these
factors require involvement of all stakeholders to play their specified roles
that will enable industry players to step out and explore existing and new
opportunities that will be created with the growth of the industry.
At the national level, Malaysia requires and
clear and well national energy efficiency policy with its own policy goals and
targets to be achieved at stipulated period. This policy will serve as the
common goal for all sectors to refer and figure out ways on how they can play
their roles to achieve that national targets according to their sector.
To grow the industry in more sustainable
manner, there are thrusts that need to be established which will involve all
stakeholders with defined roles. These thrust could also be seen as tools to
achieve the national policy targets. On top of that, inclusiveness in policies development and reviews is also required to
ensure goals and targets established to be well understood and accepted with
commitment by all stakeholders.
Firstly, for the government, there is an
urgent need to build a strong governance for energy efficiency administration
and effective and comprehensive regulatory frameworks. In the same time, the
government need to look and act on energy efficiency measures or
programs holistically and urgently for prioritized targeted groups and not with
project-based approaches which often no further efforts to sustain and improve
performances beyond the project period.
Secondly, there must be a commitment for funding because there is need to
establish as sustainable sources of fund to finance big scales energy
efficiency projects implementation. The government should play its roles in
getting the financial institutions to be involved more in energy efficiency
industry like other types of industry. The fund can be in the form of a
revolving fund with loan facilities administered and managed by the government
appointed entity. To add the availability of fund for energy efficiency projects
investments, commercial financial institutions need to be roped into the
picture.
The fund or loans facilities established can be utilized by parties
involved to implement such projects among large energy users themselves and
industry players such as Energy Service Companies (ESCOs) who are mainly
involved in energy performance contracting projects that require large amount
of fund.
The mechanism to distribute the fund should
also made as business-friendly possible to attract large energy users and industry
players to use it with assessment criteria for the eligibility to suit the
energy service business models such as energy performance contracting type of
projects and if the fund to be sourced as loans by the large energy users
themselves.
The inputs from industry associations
representing both sides from large energy users
from various sectors such as manufacturing, healthcare, hotels and etc.
and industry players such Malaysia Energy Service Companies Association can be
sought to establish the financial and technical assessment criteria that will
be adopted by the administrator of the fund and financial institutions.
Thirdly, there is a need for some consistency, uniformity and accountability in implementing energy
efficiency programs by any agency empowered and made responsible by the
government. This agency can be a one-stop-center for all parties especially
investors and industry players to refer for energy efficiency related matters
that will finally resulted in more big scale energy efficiency projects to be
implemented in faster mode.
The last two thrusts that also need to be made available to support the
growth of energy efficiency industry which are the continuous dissemination of
information, awareness creation and education for targeted sectors and the
initiative to have more research and development in energy efficiency
technologies and applications.
Decision makers from financial institutions and business owners among
large energy users are the most important target groups that require strategic
approaches for them to look at business and investment potentials in energy
efficiency industry. This will require a well-planned strategy to educate and
create the awareness among them and this role is expected to be played by
energy service industry players with the assistance and facilitation by the
government.
Awareness creation and education among business
leaders on potentials of investments in energy service industry must be an
on-going process through seminars, dialogues and conferences facilitated by the
government.
All the five key thrusts will serve as a very strong platform for the
whole energy efficiency industry to grow where energy service industry players
will have to play their roles to tap the opportunities created in the process
and in the way forward as the industry keep growing in the future.
With the inclusion of the
preparation of a strategic national plan for the demand side or the energy
users’ side of the energy sector in the 11th Malaysia Plan between
2015 and 2020 by the government, all the above five thrusts are strongly
recommended to be included in the plan.
The inclusion of initiatives for the demand side management is mentioned in the
11th Malaysia Plan document, Chapter 6 under the title of Pursuing Green
Growth for Sustainability and
Resilience.
The
initiative which is led by the Economic Planning Unit under the Prime
Minister’s Department is from adopting the sustainable consumption and
production concepts where managing the demand side is one of the key criteria as illustrated in the Figure 2
below. The formulation of the strategic national plan for the demand side is
expected to come in the form of a comprehensive master plan which will include
types of energy consumption which are electrical, thermal and transport energy
sectors.
Energy efficiency measures for the demand side
will be focused according to different types of users which are industrial,
buildings and households.
For ESCOs in Malaysia, the biggest potentials to be exploited from the
energy efficiency growth the possible adoption of energy performance contracting
business model by large energy users the new strategic business strategies for
business sustainability. More efforts are needed to sell the idea among key
decision makers from all sectors to consider other alternatives of funding to
implement big scale energy efficiency projects that are already available and
proven in developed and developing markets such as in USA,Europe and Thailand
and China.
What are needed to stimulate the growth of the investments in the
energy efficiency industry through energy performance contracting projects is illustrated
in the Figure 3 below. Energy service companies who will play the key roles to
promote and to ensure the successful adoption of energy performance contracting
business model need supports from other stakeholders which are the designated
government agency, financial institutions and professional bodies to provide
the supporting measures covering the financing, technical assessment, fiscal
incentives and performing the independent energy performance measurement and
verifications works.
These supports measures are not only required by ESCOs as the industry
players but also by each stakeholder in order for them to play their roles
effectively. For example, banks will required an independent and competent
party to assess technical proposal on loan applications for energy performance
contracting projects investments by energy service companies and companies with
large energy consumption.
Another example is, fiscal incentives provided by the government in the
form of tax exemptions or investment tax allowance for large investments in
energy efficiency projects implementation will attract more companies to
consider to invest with their own internal fund or from commercial loans.
Figure 3:
Support measures required from stakeholders to stimulate the take-up of EPC
model by large energy users and ESCOs.
THE CONCLUSIONS
Despite its enormous
potentials, the investments and business opportunities in energy service
industry in Malaysian market is still relatively very much “untapped” due to
factors that have been discussed this article and my last two articles in this
topic. It means there are so much more need to be done by all stakeholders to
stimulate the growth of the industry that will benefit all in many ways.
Energy performance
contracting model has been proven as a viable and effective business model for
faster big scale energy efficiency projects implementation for large energy
users. However, with the lacking of national level holistic approach to
implement energy efficiency programs and also the lacking support measures to
implement energy performance contracting projects have been main barriers.
More successful energy
performance contracting projects are required to attract more attention of
business owners from large energy users, financial institutions and other investors
to look at energy service industry as another attractive platform to invest
their money for more profits to grow their businesses.
In the same time ESCOs must
have and continue to develop their competency and capability to ensure
successful EPC projects implementation to who more success stories to the
market and all stakeholders. The upcoming AEC implementation for ASEAN
countries and TPPA to be implemented in markets in participating countries,
Malaysian ESCOs must also look at these markets to expand their investments and
sell their expertise.
All stakeholders must work
hand in hand to grow and stimulate the energy service industry from the holistic
approach of energy efficiency implementation for Malaysia to benefit from its
potentials as the new source of economic growth for the current and future development to become a greener nation
for our future generations.
Note:
The contents of this article is also featured in my column in the Green Plus magazine.
