New Publication Outlines Energy Saving Solutions in the Public Sector
January 21 2010
The potential for saving energy in the public sector is enormous, according to a newly released publication by the World Bank’s Energy Sector Management Assistance Program (ESMAP).   Public Procurement of Energy Efficiency Services: Lessons from International Experience says about 50 percent of the energy used to light government facilities in middle-income countries can be saved, plus another 25 percent saved in water supply systems globally, if key barriers in investing in energy efficiency are addressed.  The book presents opportunities and ways to realize large scale energy efficiency projects to yield high economies of scale.

The publication looks at a largely untapped energy efficiency market in developing countries - the public sector.  It examines factors that affect the achievement of large-scale savings in this sector, such as insufficient incentives to lower energy costs, rigid budgeting and procurement procedures, and limited access to financing.

In view of universal concerns about global energy security, competitiveness, and environmental protection, the World Bank’s Director of Energy, Transport, and Water, Jamal Saghir, said, “Energy efficiency remains as important as ever to the World Bank Group and our client countries and we are committed to scaling up impacts globally. A key challenge has been to find practical ways to translate the vast energy efficiency potential into reality and this new publication offers specific solutions to energy efficiency to help us address institutional, regulatory, financial and technical barriers in the public sector.  This book shows it is also possible to save money through energy cost savings in public facilities such as federal and municipal buildings, schools and hospitals, water systems, and street lighting, by investing in energy efficiency improvements.” 

Based on experiences from a number of countries around the world, the book recommends a demand-driven and flexible process in which specific procurement provisions and procedures are tailored to a country or public agency, based on local regulations, market conditions, and client needs. Such tenders would encourage a wide variety of enterprises – from equipment providers to engineering firms to full service energy service companies or ESCOs - to use their expertise to develop financially attractive energy efficiency projects for the public client.  The public client can then select a proposal that offers the best value and package of services.

In particular, the book looks at energy savings performance contracts (ESPCs) as a means of overcoming some of the more difficult hurdles in public facilities.  ESPCs can enable public facilities to outsource the full project cycle to a commercial service provider, including soliciting technical solutions, mobilizing commercial financing, and assigning performance risk to third parties, allowing the agency to pay from a project’s actual energy savings.

Jas Singh, Senior Energy Specialist, ESMAP and the book’s lead author noted, “Our global review identified seven different models for promoting energy efficiency service provisions within public agencies, along with implementation experiences from each which can help other countries decide how to structure their programs.  The book also offers schemes to mix-and-match elements from different programs in order to develop solutions tailored to each country or city.” 

He added, “Such efforts are indeed important to help address climate change but also provide important local benefits in terms of lower future energy and operating costs, upgraded public infrastructure, creation of local jobs, and help create fiscal space for service expansion and other socioeconomic priorities.”

The book targets policy makers and public sector practitioners with the aim to promote bundled public sector energy efficiency tenders and investments.  Over the coming months, ESMAP plans to disseminate the book’s findings to a number of client countries – from South Africa to Armenia to China - in order to help local governments adopt and adapt these approaches to realize these important benefits.



Ivan Jacques


Related Links