In a seminar dubbed Improving SME Competitiveness through Energy Efficiency held in Clark, Pampanga on 11 August 2017, the Institute of Electrical Engineers in the Philippines together with the Institute for Small-Scale Industries introduced the adoption of high efficiency motors that would possibly reduce electricity costs of micro, small and medium enterprises.
Citing the “Scoping Study on Opportunities for High Efficiency motors in Philippine Industries,” Marvin Bathan, project manager of the European Union-funded Switch to High Efficiency Motors (HEMs) Project, disclosed the huge savings potential of replacing old and standard motors with more efficient electric motor and drive systems, thus improving the competitiveness of mSMEs.
The scoping study was commissioned by the International Finance Corporation in 2010 and 2011 as part of its Sustainable Energy Finance Program. The study sought to “identify sustainable energy opportunities in the Philippines and to design a sustainable energy financing project that promotes collaborative efforts between [and among] IFC, banks, industry players and energy management companies”.
In an actual audit of 20 companies from 15 different industries for the replacement of standard and rewound motors to HEMs done in the Study, it was found that a total investment of 8,326,306 US dollars would be required to replace the motors. However, this investment was projected to be recovered in less than two years, with internal rate of return of 48 to 76 percent. Furthermore, the study revealed that the initial purchase price of HEMs corresponded to only 1.3 percent of the motor’s total 13-year life-cycle cost, while 98.3 percent represented electricity costs; the remaining 0.4% was maintenance expenditures. With these figures, a total savings of 4.6 million US dollars is projected if standard motors were replaced with high efficiency motors.
Despite the promising figures, Bathan lamented the barriers in HEMs adoption which he attributed to the lack of available financing and policy mechanisms, lack of awareness among MSMEs and financial institutions, lack of technical capacity of energy services companies or ESCOs and equipment and service providers, and absence of an industry alliance.
The HEMs project was initiated in 2014 with funding from EU to contribute in addressing and overcoming these barriers. It was launched to increase the deployment of more efficient motors and drive systems in the Philippine industries. Apart from awareness campaigns to end users, the project reached out to financing institutions and government agencies to address knowledge and policy gaps.
In so doing, financing programs are now being offered to end-users wishing to adopt HEMs by various private and public lending institutions including the Development Bank of the Philippines, Bank of the Philippine Islands, Landbank of the Philippines, and Philippine National Bank under the wider umbrella of “green financing.” The Department of Trade and Industry Bureau of Product Standards has likewise issued a new Philippine National Standard that adopted an international standard on energy efficiency classifications of electric motors.