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RELATED ARTICLES: World Bank approves Indian chiller project | US deal with local chiller specialist | World Bank lists top ME countries for construction
The World Bank has approved US$10.9 million financing for a project in the Philippines that aims to replace 375 chillers used in establishments nationwide with a technology that is more energy-efficient and environment-friendly.
In a statement, the World Bank said the Philippines ‘Chiller Energy Efficiency Project’ will provide financial incentives to chiller owners to encourage them to replace old chillers, which consume around 50% more energy than the new ones.
A chiller is a primary component in refrigeration and air-con systems. Old chillers use chlorofluorocarbons (CFCs) and hydrofluorocarbons (HCFCs) as refrigerants, and emit greenhouse gases into the atmosphere, which cause ozone depletion and global warming. Old chillers also use up 50% to 70% of the total energy requirements in buildings.
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“Replacing old and inefficient chillers will reduce greenhouse gas emissions as well as improve energy efficiency in the refrigeration and air-con sector,” said Environment Secretary Horacio Ramos. “The project will illustrate to building owners that investing in environment-friendly technologies brings energy efficiency and thus makes good business sense.”
According to the World Bank, the project will be financed by a US$2.6 million grant from the Global Environment Facility (GEF) Trust Fund, a US$1-million grant from the Multilateral Fund (MLF) for the implementation of the Montreal Protocol, and a US$7.3-million Clean Development Mechanism financing with KfW (German Reconstruction Bank) as the carbon buyer.
Despite the benefits of using non-CFC, energy-efficient chillers, business owners have put chiller replacement low in their priority list because new chillers are expensive and many are not aware of the benefits and urgency of replacing their old equipment.
Under the Chiller Energy Efficiency Project, chiller owners can get an upfront grant subsidy of 15% of the cost of new non-CFC-based energy efficient chillers, or opt for future carbon finance revenues to be generated by energy savings from the replacement of their chillers. In addition, these new energy-efficient chillers substantially reduce operating cost.
To cover the remaining 85% of chiller cost, owners may secure financing from commercial banks, government financial institutions, energy service companies, leasing companies and chiller manufacturers and suppliers, which offer financing on attractive terms. Financing options available to chiller owners include corporate loans, leasing, financing from energy service companies and supplier credits.
The carbon emission reductions (CERs) that are expected to be generated in replacing the estimated 375 old chillers will amount to more than US$7 million worth of carbon credits, depending on the market price of carbon dioxide tons of emissions avoided through the chiller replacements.
There are four components to the project. The first is investment to chiller replacement. This component will provide financial incentives to accelerate the replacement of inefficient chillers. The second is measurement, monitoring and verification.
As per the methodology approved by the Executive Board of the Clean Development Mechanism, the programme is required to measure and monitor data related to the power-output function of the inefficient chiller to be replaced, electrical consumption of the new chiller and cooling output. It necessitates a database to be established to keep track of all the data generated from the individual replacement activities and to be used to generate the reports that would support the CER claims.
The third component of the project is performance standards and technical assistance. This aims to enhance the knowledge and build capacity of project participants (chiller owners, government regulators, chiller manufacturers/suppliers/contractors), on the significant rate-of-return on investment of chiller replacement and other potential low-cost and/or no-cost energy conservation measures in large buildings, the total ban of CFC consumption as from 1 January 2010, and replacement and maintenance of new chillers to remove chiller owners’ perceived technology risks.
The fourth component is project management. The procedures of project implementation, requisite institutional framework for implementation and monitoring of project activities, the formats for monitoring and reporting, and funds management and disbursements are delineated in an implementation plan and an operating manual. All financial data and disbursements under the project will be managed by the Department of Environment and Natural Resources through a database.
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