Support to the development of demonstration projects by ESCOs

EXPERTISE : , Project Implementation
SECTOR : , Public


Ministère de l’Énergie et des Mines

projeCt Description

The law No. 27345, “Law for the Promotion and Use of EE”, promulgated in 2000 established that the “competent State authority for the promotion of efficient use of energy is the Ministry of Energy and Mines”. According to this law, MEM is the competent organization to promote the constitution of Energy Management Companies (EMSEs) that are the equivalent of Energy Service Companies (ESCOs). For MEM it is necessary to offer support for the development of demonstration projects to new ESCOs. This support strengthens their sustainable development and eliminates the existing barriers related to distrust in the market and especially in financial institutions.


MEM selected Econoler to assist them in the development of demonstration projects implemented by local ESCOs. The IDB financed this study. Econoler International assisted the local ESCOs in preparing bankable proposals, informed the local ESCOs’ clients and financial institutions about the benefit of the ESCO approach. By working at those three levels, the ESCO concept should better penetrate the market.

The main activities of the study included:

  •  Detailed preparation of the study.
  • Call for proposal for the selection of the projects to be presented by local ESCOs.
  • Preselection of four best projects (two energy efficiency projects and two cogeneration ones).
  • Support the implementation of energy audits and investment grade audits by local ESCOs.
  • Selection of the three final projects (two energy efficiency projects and one cogeneration project) and proposal documents for financial support (bankable) for these projects.
  • Elaboration of a procedure guide for the development of ESCO type projects to be used by ESCOs and to help MEM promote the concept.

After the finalization of the project, the local ESCOs would be able to:

  • Get self-organized as an ESCO
  • Sell the ESCO concept to clients.
  • Perform investment grade audits.
  • Elaborate a proposal document (bankable) in accordance with the requirements of the financial institutions.
  • Mitigate risks to assure the profitability of projects.

The clients understood the concept of ESCO type projects and performance based contracts. They were able to evaluate the technical proposals and negotiate with the local ESCOs.

Financial institutions were more open to the ESCO project concept and performance based contracts. They also increased their knowledge on the opportunities energy efficiency and cogeneration projects could offer. Some banks are already organizing themselves to finance ESCO type projects. They will be able to participate in the partial or total financing of identified projects, which could be developed during the second phase of the project.

This study and support was successful since:

  • Local ESCOs were interested to convert into the first Peruvian ESCOs.
  • Three out of four local ESCOs have developed bankable projects.
  • The three clients of those local ESCOs were very interested in the implementation of their project under an ESCO approach.
  • There was an interest in those projects from the financial institutions.


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