Partial risk guarantee fund for ESCO business – an innovative support system for energy efficiency business

摘要

Energy service companies (ESCOs) could accelerate the adoptionrate of energy efficiency investment measures. The ESCOswith their technical competence in energy issues and theirpotential to bear the financial risks associated with energy efficiencymeasures could play an important role in the diffusionof such measures in various sectors. The ESCOs have existedfor several decades, but still operate only in niche markets,especially in developing countries. There are several barriersto ESCO business in developing countries, including lack ofESCO credibility, high transaction costs, lack of baseline data,insufficient information and awareness about energy performancecontracting and financing issues. Accordingly, in suchcountries ESCOs are able to capture only a very small percentageof their potential business.The Government of India considers promoting ESCO businessas one strategy to increase the energy efficiency of itseconomy. Financial institutions’ lack of interest to fund energyefficiency projects is a major barrier to the diffusion ofthe ESCO business model. Accordingly, the National Missionfor Enhanced Energy Efficiency calls for the establishment of aPartial Risk Guarantee Fund for energy efficiency (PRGFEE).PRGFEE, by providing guarantees to financial institutions,could in the short run reduce banks risks while in the long runis expected to improve their confidence in energy efficiencyand the ESCO business. The guarantee scheme could providea risk cover up to 50 % of debt in an energy efficiency project.PRGFEE will enter into guarantee framework agreements withfinancial institutions that originate the relevant transactions. Inthe union budget (2011–2012) an amount of 20 million USDhas been allocated for PRGFEE. The Government of India hasassigned Bureau of Energy Efficiency the task of setting up thePRGFEE. The Ministry of Power has recently (April 2012) approvedthe guidelines for implementation of PRGFEE. Thispaper broadly discusses the implementing rules and the institutionalstructure of PRGFEE.