Malaysia Debt Ventures Berhad (578113-A)
The Nation’s Leading Technology Financier
MOSTI

Energy Performance Contracting Fund

  1. The Green Technology and Climate Change Council chaired by the Prime Minister early March this year approved the establishment of the Energy Performance Contracting Fund or known as the “EPC Fund” to provide financing for qualifying EPC projects.
  2. The objective of establishing this fund is to overcome the constraints of securing suitable financing for the cost of capital investment in implementing energy saving measures in the Building Sector by Energy Service Companies (ESCOs).
  3. Malaysia Debt Ventures Berhad (MDV) will lead the financing initiative for EE projects by providing a fund of up to RM200 million to facilitate Energy Performance Contracting.
  4. The EPC Fund will be supported by a credit guarantee fund of RM12 million contributed by the Ministry of Energy, Green Technology and Water (KeTTHA) and the JKR-Building Sector Energy Efficiency Project (BSEEP) which is funded by the United Nations Development Program-Global Environment Facility (UNDP-GEF)..
  5. In addition, the Government has injected funds amounting to RM5.8 million to re-profile the financing rate of 8.0% per annum to 7.0% per annum for facilities granted under the fund, to enhance the economics of this financing package.
  6. ESCOs will be able to use the financing to implement the EE project with the building or facility owner.
  7. Once the project commences the savings that will be generated will shared among the parties (i.e. the ESCO and the building/ facility owner). The portion due to the ESCO will be assigned to MDV to service the financing facility.
  8. The surplus from the savings portion due to the ESCO after servicing the MDV financing facility will be paid to the ESCO

The EPC Fund Features, Incentives and Criteria are :
Features

  1. Available via Term, Revolving and Trade Lines
  2. Financing for up to 85% of project costs
  3. Target financing size RM1-15 mil
  4. Target tenure 3-5yrs, Max 7yrs
  5. 7% p.a. financing rate
  6. Main security: assignment of energy savings payments and a debenture

Criteria

  1. Minimum 5 staff and RM100,000 Capital
  2. Project must include an Investment Grade Audit
  3. Project must have Measurement & Verification Plan adherent to general market standards/ protocols
  4. ESCO must have requisite capability to implement the EPC project
  5. EPCs should be for single buildings or building complexes
  6. Targeted buildings are commercial office buildings, Shopping malls, Hotels, Hospitals, Public/Government buildings
  7. Buildings must be located in Malaysia
  8. Preferred measures: Chiller retrofits, Lighting System Efficiency, Air Conditioning & Building Control System upgrades and Passive building features.

Impacts of EPC Fund

  1. With the funds provided, a total of 50 energy efficiency projects through EPC are expected to be implemented.
  2. On the 5th year of this financing program, the estimated electricity savings is 1,050 GWh, which is equivalent to RM 399 million and carbon emissions can be reduced by 728.7ktCO2.

Benefits of EPC Fund

  1. The main benefit is to catalyse ESCO development and create a business ecosystem for the energy services industry (that is expected to grow based on market-based mechanisms) as a new economic growth and accelerate implementation of EE initiatives laid down in National Energy Efficiency Action Plan (NEEAP) which was approved by the Cabinet on 6th January 2016.
  2. This initiative will facilitate financing to ESCO to implement EPC projects and being a stepping stone for increasing the execution rate of EPC projects in Malaysia.
  3. This funding will also open up space for private financial institutions to create more financing opportunities for EPC projects in the future as EPC gets proven to be a viable business model.
  4. Besides, it will also increase investment in the green technology sector which will boost economic growth in line with the Eleventh Malaysia Plan’s Strategic Thrust 4 which is “Pursuing Green Growth For Sustainability And Resilience”.
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