ENERGY EFFICIENCY USING SOLAR AIRCON IN

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 & CEO
                  Maria Miranda C. Cordova, EVP & COO

Location of the Philippines

REPUBLIC ACT 9513
Renewable Energy Act of 2008

  AN ACT PROMOTING THE
 DEVELOPMENT, UTILIZATION
AND COMMERCIALIZATION OF
    RENEWABLE ENERGY
 RESOURCES AND FOR OTHER
         PURPOSES

FEED-IN TARIFF IN PHILIPPINES

RE TYPE              PROPOSED             APPROVED             TARGET MW IN
                     FIT RATE (Peso)      FIT RATE (Peso)      3YRS

SOLAR                17.95                9.68                 50 MW
WIND                 10.37                8.53                 200 MW
BIOMASS               7.00                6.63                 250 MW
RIVER HYDRO           6.15                5.90                 250 MW

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

Challenges of RE in Philippines:

1. Regulatory delays in the implementation of the
   law
2. FIT rates are lower than proposed rates
3. Limiting target installation vs service contracts
   already awarded
4. 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

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 the
Committee, is hereby established as a regular and permanent body with the Chairman of the Council of
Advisers on Energy Affairs as its Chairman and at least one representative from each of the following
agencies as members: Department of Energy; Department of Education, Culture, and Sports;
Department of Trade and Industry; Department of Interior and Local Government; Department of Labour
and Employment; Metro Manila Authority; National Power Corporation; Philippine National Oil
Corporation 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 – 93-03-05
To 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)

ENERGY EFFICIENCY BILLS PENDING IN SENATE

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.

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

 SOLAR-ASSISTED AIRCON
   SAVE 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   • Temp Setting at 22degrees C
           • Conducted in 15 days
 STUDY

ACTUAL DATA (15 DAYS OBSERVATION)

                                    OPERATION STARTED        OPERATION ENDED
                          AVE.
            AVE.LOAD
AC TYPE                 VOLTAGE
            CURRENT
                        READING                  INITIAL                 INITIAL
                                  DATE   TIME            DATE   TIME
                                                READING                 READING

                                   4-                      19-
BRANDX
             17.72        233     AUG- 2:30PM    2111     AUG- 2:30PM    3367.5
(3TR, CS)
                                   11                      11

 SEDNA                             20-                      4-
  AIRE        11.57       233     AUG- 3:10PM    3396.9   SEPT 3:10PM    4122.2
(3TR, CS)                          11                      -11

Actual KWH Consumption
      1400         1256.5
      1200
      1000
       800                                725.3
KWH

       600
       400
       200
        0
             BRAND XX (Conv. AC)      SEDNA AIRE

                   531.2 KWH/15days
  $AVE:           or 1,062KWH/month           Or 42%

ENERGY          1,062KWH/month x PHP12/KWH

  COST               PHP12,744

   COST of
Sedna Aire 3TR     PHP 185,000

RETURN ON INVESTMENT
     185,000÷12,744

     14.5months

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

3
MILLION
                  OLD UNITS WHICH ARE
                  CONVENTIONAL AIRCON INSTALLED
                  IN THE PHILIPPINES

APPROXIMATE COST TO REPLACE

 Ps 185,000 x 3M = Ps 555,000,000,000.00 or
 (Project cost)

                  USD 12.6B

With   3M    Units

POTENTIAL   1,062KWHRS X 3M
 ENERGY
 SAVINGS    3.18B KWHRS/MO

1%

                                   Potential
                                   Target

          99%

POTENTIAL MARKET:        TARGET:

   3Million          ONLY 40,000

TARGET in
          5     Years

      40,000 units 3TR x $4,204.54/unit

            USD 168.1M

$168M

           We get leasing lines from banks for 3yrs.
Leasing?   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 Php
   12 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 acceptability
4. Everything is imported, we don’t own the technology.
5. High Upfront Cost
6. No available 3rd party testing facility for Solar Aircon
7. Promotion of the technology lacks government
   support
8. High Cost of Financing
9. 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

THANK YOU FOR YOUR ATTENTION

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