ADB extends $31-million loan to RP for energy-efficient project

The Asian Development Bank (ADB) will extend a $31.1-million loan to the Philippines to establish an energy-efficient project, including the distribution of 13 million compact fluorescent lamps (CFLs).

The loan will have a 25-year repayment period and an interest rate determined in accordance with the bank’s Libor-based lending facility.

Likewise, the Asian Clean Energy Fund, established by the Japanese government, will provide a grant of $1.5 million under the Clean Energy Financing Partnership Facility.

State-owned Philippine National Oil Co. (PNOC) will establish the energy service company (ESCO) using a $7.5-million loan provided by the government and under a subsidiary loan agreement approved by the ADB.

The project, according to the ADB, will result in savings for the country of about $100 million every year in fuel costs and the deferral of an investment of $450 million in power generation and associated network capacity.

The Philippine Energy Efficiency project will distribute the CFL to customers nationwide in exchange for their incandescent bulbs. Each CFL is expected to save customers P400 each year for the next seven to 10 years.

The project will also retrofit government office buildings and public lighting systems with other efficient lighting options and establish an ESCO that will provide financial and technical support to companies planning to reduce energy consumption. The ESCO will act as a one-stop-shop for energy efficiency for the public (hospitals, schools and government buildings) and private (industries, hotels, malls) enterprises.

Only 20 percent of the electricity used by an incandescent bulb produces light, with the remaining 80 percent wasted as heat. In contrast, a CFL uses all of its electricity input to produce light.

While an average incandescent bulb’s life is only about 800 hours, CFLs have a life span of 10,000 hours with two-year warranty.

“CFL distribution program is like building virtual power stations,” said Sohail Hasnie, senior energy specialist in ADB’s Southeast Asia Department. “Put simply, if one million incandescent bulbs are replaced with CFLs at a cost of about $1.5 million, the electricity demand will be reduced by about 50 megawatts (MW). The impact on the power system will be the same as building a new 50 MW power station, which costs at least $50 million, another $2 million–$3 million each year to operate, and three to four years for construction.”

Hasnie added that the project would create carbon credits for the Philippines under the Clean Development Mechanism as a result of lower greenhouse gas emissions. The success of the project will encourage private sector participation in energy-efficiency investment.

Over the past 30 years, the ADB has provided about $2.9 billion in loans and around $15 million in technical assistance to the Philippines power sector.