Energy Efficiency Gaining Traction in Asia

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Recently, the IFC has used the lack of demand for products because of the recession to make its case. "We try, at IFC, to raise awareness that energy efficiency can contribute to the bottom line by cutting costs," he said.

The IFC and Local Banks

To do this, the IFC is eager to work with local banks. "We are working to build their loan capacity to support clean-energy projects," he says. The IFC normally finances large projects; its smallest tranche size in these types of projects would be in the $5 million range, according to Beloe. However, he points out that the banks themselves will determine the nature of their portfolio. "All we do is to try to make the banks comfortable, maybe offer financial instruments," he says. Some will be more comfortable putting money in energy efficiency, some in renewable energy, he adds. The IFC is working in the Philippines with banks like the Bank of the Philippine Islands (BPI:PM) and Metrobank for renewable energy and energy efficiency loans.

For his part, Metrobank Vice-President Edgar Esguerra points out that one of the major hurdles for most banks is the limited experience dealing in this area. "This is a new space, especially since the projects are small," he says. According to Esguerra, entities need to step in to offer a credit guarantee resource. "We are willing to go to smaller amounts" such as $1 million, he says. As the banks get more experience loaning to these small ventures, eventually the guarantees will no longer be needed, he believes.

Energy efficiency is a relatively inexpensive and proven way to contribute to climate-change mitigation, and at the same time contribute to the bottom line. We should expect it to share the limelight with its more visible cleantech partner, renewable energy. Until a way can be found to help businesspeople and investors visualize what energy efficiency is and its viability as an investment vehicle, it will always remain the less exciting of the two. The challenge is to make efficiency power plants—just like windmills and solar farms—sexy enough to merit attention.

Dennis Posadas is the author of Jump Start: A Technopreneurship Fable (Singapore: Pearson Prentice Hall, 2009) and Rice & Chips: Technopreneurship and Innovation in Asia (Singapore: Pearson Prentice Hall, 2007). He blogs at http://jumpstartfable.blogspot.com.

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