The 11th Five-Year Plan of the People’s Republic of China (PRC) aimed to reduce energy intensity from 2005 levels by 20% nationwide and by 16% in Guangdong Province by 2010. The 12th Five-Year Plan set an even more ambitious target for Guangdong, requiring an 18% reduction from 2010 levels by 2015.
To support these goals, the Asian Development Bank (ADB) approved in June 2008 a $100 million multitranche financing facility (MFF) for the Guangdong Energy Efficiency and Environment Improvement Investment Program. The investment program, comprised of three tranches, aimed to achieve demand-side energy efficiencies that would create a “virtual expansion” of power generation capacity equivalent to 107 megawatts (MW), and annual energy savings of 532 gigawatt-hours (GWh). Using the financial intermediation loan (FIL) modality, it was to achieve the energy savings through the provision of subloans for retrofitting existing power consumption systems with more efficient equipment, or the use of modern technologies to recover waste energy in consumer operations. By allowing the revolving use of loan proceeds, the investment program supported the implementation of more energy saving and emission reduction projects than would otherwise have not been possible under each loan tranche.
The program had improved energy security and environmental conditions in Guangdong as expected impact, and improved energy efficiency in the province’s industrial and commercial sectors as intended outcome. Its planned outputs were (i) establishment of the efficiency power plant (EPP) model for implementing energy efficiency projects, (ii) development of the energy service company (ESCO) sector in Guangdong, (iii) capacity development for promoting and assessing energy efficiency projects, and (iv) replication of the EPP model in other provinces.
This report covers tranche 3 of the investment program, approved by ADB in September 2015 for a loan of $42.94 million. As with the previously completed tranche 1 and 2 projects, the tranche 3 project engaged the Guangdong Finance Trust Company as the financial intermediary. At completion, it delivered EPP capacity of 77 MW and annual energy savings of 385 GWh, exceeding the targets of 65.9 MW and 329 GWh, respectively. The energy savings, measured and verified by third-party agencies, were realized through six subprojects implemented by six sub-borrowers, two of which were ESCOs. The subloans efficiently eased the shortage of funds of these two ESCOs thus contributing to the development of the ESCO sector as planned.
The project also supported seminars and workshops to promote the EPP program, and trainings to strengthen the executing agency’s (EA) capacity to financially manage and evaluate energy efficiency projects in line with energy efficiency regulations. The EA also trained subborrowers in EPP investment, procurement, and disbursement.
Because of the energy savings achieved by the project, consumption of 126,919 tons of coal equivalent per year was avoided and emissions were reduced by 299,991 tons per year (t/y) for carbon dioxide, 3,461 t/y for sulfur dioxide, 769 t/y for nitrogen oxide, and 1,346 t/y for total suspended particulates. Savings in electricity costs from the subprojects could amount to $27 million annually from 2014.
As with the previous MFF projects, the tranche 3 project thus fully achieved its expected results. The Guangdong provincial government (GPG) was the executing agency. The GPG established the EPP project management to take charge of day-to-day implementation.
