Conclusions and Recommendations
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Recommendations As much of the recent literature on the subject has confirmed, energy efficiency is a powerful resource to be exploited but a very difficult one to tap. Developing sustainable markets requires significant government involvement, supportive policies, public incentive and financing schemes, and strong information and outreach initiatives. Perhaps more important, it requires perseverance and patience. Before officials plunge into the details of the procurement process, it may often be necessary to determine the most viable business and contractual models for ESPs to operate in a particular country. As described in chapter 3, a number of business models have already been developed, and these can provide a useful reference to see which aspects may make sense in a given market. Often it is advisable to begin with simpler models and introduce more complex transactions only as the market develops and supporting systems evolve. ESPC and ESP models developed in the Western countries can be important in understanding the range of options, but they may need to be adapted, and many incremental changes made, before they are workable in many developing countries. Where local ESPs already exist, efforts may be needed to build on successful transactions and to institutionalize the aspects that have worked well. Bundling projects to reduce transaction costs and make the projects more attractive to larger companies, including international ESPs, may also be an approach worth considering. Working through the procurement process becomes more straightforward once the most viable ESPC models in the local market are known, permitting a clearer idea of the level of sophistication, the ability of ESPs to access financing, their willingness to take on project risks, and so on. Designing the right process will take time, but it is important to get it right. As the market develops, ESPs and the models developed and promoted in the public sector are likely to have significant ripple effects in the private sector, as private firms observe what the public sector is doing and participating ESPs begin to market the services and skills they have refined in public projects. The following are some key steps for consideration: 1. Conduct an upfront market survey of ESPs. Such a survey should be cast broadly to include all types of entities that could serve as ESPs. It should gauge their level of interest in serving the large public sector market and capacity to do so; assess their willingness and ability to take on ESCO-type project risks; evaluate their ability to access