A snowballing campaign spearheaded by the Authority for Electricity Regulation Oman (AER) in support of energy efficiency is expected to create opportunities for the growth of Energy Service Companies — better known by their acronym ESCOs — in the Sultanate.
ESCOs specialise in the development, design, construction and finance of projects that help customers save energy and reduce energy costs, while making their operations energy efficient. Through energy-efficiency retrofits and renewables-based initiatives, ESCOs help their customers slash overall energy consumption. ESCOs get remunerated based on performance targets achieved in reducing energy costs — a business model that is driving the growth of such companies in markets that place the accent on energy efficiency.
The potential for an ESCO-based industry taking off in the Sultanate was highlighted at a recent seminar on Renewable Energy and Energy Efficiency, hosted by the Embassy of the Netherlands in Oman. In attendance were more than 80 representatives from government, the private sector, including Dutch and Omani SMEs, knowledge institutions and entrepreneurs.
Present at the event was a representative of a leading Dubai-based ESCO, which has been contracted by the Dubai government to help implement its ambitious energy efficiency strategy with the goal of reducing energy consumption by around 30 per cent by 2020. The ESCO is currently retrofitting over 30,000 buildings in the Emirate in the first phase of an energy management and efficiency enhancement project.
Also in support of this objective, authorities in the Emirates are promoting green-building standards, district cooling, wastewater reuse, energy-efficient street-lighting, and the installation of photovoltaic panels on rooftops to offset consumption of gas-powered electricity.
“We are eager to help Oman achieve its energy conservation goals,” the executive said, noting that the ESCO market in the UAE has grown from three companies at the start of the Dubai government’s energy efficiency drive to around 25 firms presently.
Also participating in the forum was an executive representing one of the world’s largest lighting system brands. The company, he said, has offered a complete proposal to Muscat Municipality for the retrofit of all street-lights in the capital region.
“This comes as part of our ‘Lights As A Service’ philosophy, with the government having to pay nothing as capex, as well as on the operation and maintenance of the system. We get involved in the project together with some financial firms to finance the project. We enter into energy saving contracts and energy performance contracts in return for a percentage of the cost savings that we commit to achieving,” the executive said.
Speaking at the event, the representative listed a number of criteria that he said are critical to the goal of achieving energy efficiency. “Governments have promote energy efficiency. This can happen only if the right awareness is there. Enforcing regulations on energy efficiency will allow ESCOs to establish operations while also creating jobs in the process. Removing subsidies is also very important. In this region, we see a lot of streetlights left burning throughout the night because cheap energy is taken for granted. By removing subsidy on energy supply, ESCOs can contribute to a culture of energy conservation,” he added.
Conrad Prabhu
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