Super ESCO : the promising approach for african countries

Over the past decade, the Energy Service Company (ESCO) and the Super ESCO model have been emerging globally and playing pivotal roles in global efforts to enhance energy efficiency (EE) markets and reinforce the sustainability and green path. ESCOs do have the expertise and skills to provide a full range of energy-efficient solutions and services with the aim to reduce energy consumption and operating costs. These companies often operate under Energy Performance Contracts (EnPCs) scheme, where energy savings and project performance are guaranteed to the clients.

The Super ESCO model has gained momentum – to drive the ESCO market and play a catalyst role for EE market development and reinforce the government environmental responsibility. Super ESCOs are typically established by government to develop and implement large-scale EE projects and programs, however, private-sector-led Super ESCOs start also emerging. Leveraging expertise and resources to drive EE in public and private sectors and create a sustainable market require the involvement of different public and private stakeholders. Creating this partnership between the private sector (ESCO) and public sector (Super ESCO) with adequate legal, technical and financial resources, is one of the best strategic approaches to address the leadership gap in the EE space and provide more extensive and coordinated efforts to address the challenges related to EE projects development and implementation. The Super ESCO approach is leading to have in place a more robust, comprehensive and centralized approach to tap in the EE savings potential in the government facilities with an optimized and guaranteed financial and technical performance.

and catalyst role to support countries meeting their EE objectives and reduce climate impact, this model represent an effective approach to promoting and introducing, among others: (i) EE best practices through efficient technologies and systems optimization; (ii) risk mitigation through a performance-based contracting approach and guaranteed energy savings and performance; (iii) resource leveraging through building capacities and expertise, and providing technical and financial resources; (iv) large-scale impact, through operating on a national and regional scale for wider impacts; (v) energy security and resilience by reducing dependence on energy imports and energy cost fluctuation with more reliable and resilient energy supply network; and (vi) increased public awareness and EE behaviour adoption through partnerships with the different government stakeholders and clients under the assistance of dedicated agencies and authorities to raise awareness about the EE importance, fostering a culture of sustainability and embracing the environmental responsibility.

Despite the great benefit of the ESCOs model, EnPC market development and demand growth have not been at the level of the exiting savings potential. Most noticed attention and traction registered in the various parts of the world for the ESCO and Super ESCO development were mainly result of putting in place the EE market central pillar for EE, “Leadership”. To have significant results on environmental sustainability, energy cost reduction, and reduce emissions reduction (Paris Agreement, Sustainable Development Goals, Nationally Determined Contributions, etc.) leadership, and notably government leadership, is crucial. To illustrate this leadership, few countries champion the ESCO/Super ESCO model:

1 – The US government, through various agencies such as the Department of Energy (DOE) and the National Renewable Energy Laboratory (NREL) have been actively promoting and supporting EE/ ESCO programs and EnPC at a national level with the Federal Energy Management Program (FEMP).

2 – China’s ESCO market rapid expansion have been supported by government initiatives to reduce energy consumption. Through the establishment of China Energy Conservation Investment Corporation (CECIC) and the China Energy Conservation and Environmental Protection Group (CECEP), the government played a central initial role for a private sector sustainable EE market development.

3- In the Middle East, the adopted Super ESCO model in the United Arab Emirates and Saudi Arabia led to an improved EE performance not only in government facilities but also in the commercial and industrial sectors. The Super ESCOs, Etihad and Tarshid, are playing in Dubai and Saudi Arabia, respectively, an important role in buildings EE retrofit and facilitating the development of commercial ESCOs and EnPC market in the region.

4 – In India, the Energy Efficiency Services Limited (EESL), the larget Super ESCO in the region plays a central role in implementing EE projects and drove EnPC market and particularly efficient lighting and street lighting programs implementation.

Where we are in Africa?

The activities toward the development of Super ESCO models in African countries are intensified in line with the efforts made for the promotion of energy efficiency in the continent. EE is gaining interest in some countries’ agendas; however, efforts are still needed from governments for program implementation. The African continent is facing unique energy challenges– some of these challenges are related to limited energy access and reliability, financing allocation, capacity building, policy and regulation and notably planning and awareness. These are generally a part of the EE barriers and should be tackled in a holistic approach rather than separately where all invested efforts in the continent during the last decades, brought a little change without significant transformation in the EE space. The Super ESCO model hold significant potential for translating government engagement and partnership with private sector for EE projects implementation.

Under this partnership, several EE related issues will be addressed with a more enabling environment for market transformation including notably:

1 – Investing in capacity building for local professional to develop skills and expertise needed.

2 – Strengthening policy and regulations to incentivize EE measures and initiatives (standards, incentives, results-based contracting frameworks, etc.)

3 – Strengthening public-private partnerships fostering collaboration between governments, Super ESCOs, agencies and the private sector. This can help mobilize resources: technology and attract international investments.

4 – Creating financing innovative mechanisms evolving with market maturity and needs

5 – Developing data collection and monitoring to track performance and assess the impact of energy of energy efficiency measures.

6 – Increasing awareness and involvement of different governments facilities manager in the implementation and monitoring of EE projects

7 – Implementing benchmarking systems, to assess the effectiveness and impact of the Super ESCO projects.

8 – Introducing and adopting innovative technologies and energy efficiency best practices

9 – Facilitating cross-sectoral collaboration– health, energy, education, industry by exploiting synergies and opportunities in a holistic way.

The African Development Bank (AfDB) has been leading initiatives aimed at promoting Super ESCOs and ESCOs on the continent, given the need for governments to lead by example by investing in EE investment projects and programs targeting public buildings and infrastructures.

Using the resources of the Sustainable Energy Fund for Africa (SEFA), the AfDB is supporting Kenya Power and Lighting Company(KPLC)) through a dedicated technical assistance to establish and operationalize an utility based Super ESCO. Another Super ESCO model was also initiated earlier with a TA to the Société d’Investissements Energétiques(SIE) in Morocco to establish their Super ESCO.

Earlier this year, the AfDB put in place the Africa Super ESCO Acceleration Program (ASAP) – a technical assistance facility with the overarching objective of catalysing public sector investment in energy efficiency through the establishment and operationalization of a Super ESCO and create a framework for public private partnership for EE market development and d implementation. The ASAP already started supporting Senegal to identify best structure for their Super ESCO, while other countries are listed as potential candidates such Rwanda, South Africa and Uganda. Other opportunities assessment for Super ESCO implementation are already initiated for Cote d’Ivoire and Burkina Faso, while others are in the identification stage. The program will also provide the sustainable energy centres of the regional economic communities with TA support for the development of harmonized certification schemes for ESCOs and energy efficiency professionals.

The AfDB is committed to support all RMCs in increasing resource and energy efficiency, improving quality of electricity supply, promoting energy conservation, and stimulating the transition to more sustainable and greener economies.