Efficient Business Without Capital
Here’s How to Make Your Business More Energy Efficient Without Capital
Apart from improving energy efficiency, Energy Savings Performance Contracts also help minimize risks for businesses.
By Coni Tejada
Published June 11, 2021
Do enterprises need to spend to make their systems more energy efficient? (PHOTO: iStock)
Is the Philippine economy picking itself up from the wreck brought on by the pandemic?
For the first quarter of 2021, Meralco posted an increase in energy sales in the industrial sector. Sales rose to 3,261 GWh in the first quarter of 2021, an increase of four percent from 3,135 GWh in 2020. The growth was attributed to steel and cement producers running full operations, semiconductor businesses delivering due to the increased demand for gadgets, and manufacturing plants operating at higher capacities.
To keep the momentum going, which would hopefully lead to recovery, what needs to be done is to keep the machines humming while still improving the bottom line. One way to accomplish this is to aim for better energy efficiency.
But with the pandemic still raging on locally and in most part of the world, it is not hard to understand that most enterprises may be wary of investing. They may not be entirely convinced to spend money when no one can tell how economies will behave in the coming months, more so in the next few years.
In times like these, the sound way to invest in one’s business is to enter into Energy Savings Performance Contracts (ESPC).
The U.S. Department of Energy’s Office of Energy Efficiency and Renewable Energy (EERE) describes it as “a financial mechanism used to pay for today’s facility upgrades with tomorrow's energy savings—without tapping your organization’s capital budget.” ESPCs help minimize risks for businesses, whether from poor investments or possible equipment breakdowns.
With this type of financing, a business is enabled to upgrade its facilities to be more energy efficient without having to shell out for the investment. Instead, the business passes on the capital expenditure to the certified energy service company, who will then be paid at the rate of the projected energy savings generated by the upgrades.
Operational costs may then be brought down and revenue would likely go up with the volume output guaranteed. The energy service company would closely monitor the performance of the equipment—with its scheduled maintenance checks, the business is saved from untimely breakdowns.
This type of financing, though, is usually a medium- to long-term contract. A business could be locked in to this agreement for five to twenty-five years, so finding a partner that can be trusted and can be relied on is crucial.
One energy service company that does the job well is Meralco’s very own subsidiary MSERV. Backed by Meralco’s 118 years of experience, MSERV is well versed in energy solutions ranging from electrical equipment, HVAC system, lighting solutions, and energy management sytems and automation. The subsidiary can develop a tailor-fit solution for your organization to help you achieve energy and operational savings through ESPCs.
Read the full Meralco financial and operating results for Q1 2021 here.
To learn more, contact your Relationship Manager, call 16210 or email us at corporatepartners@meralco.com.ph.
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Story originally posted on Power Club.