Philippines Urged to Scale ESCO Projects for Green Goals

The Philippines must ramp up its Energy Service Company (ESCO) projects to cut energy costs and meet emissions targets, according to a new global report presented by a leading energy expert.

Alexander Ablaza, president of the Philippine Energy Efficiency Alliance, unveiled the Global ESCO Market 2025 report during the ASEAN Energy Efficiency and Conservation Workshop in Putrajaya, Malaysia on May 21.

The report, developed with the International Energy Agency, positions ESCOs as crucial in achieving national climate commitments and delivering long-term cost savings.

With 71 active ESCO projects, the Philippines is gaining ground in Southeast Asia’s energy efficiency market but trails regional leaders such as Malaysia with 206 projects and Thailand with 100.

“This signals significant growth potential for the Philippines,” said Ablaza, who also serves on the Advisory Board of the Global ESCO Network and co-chairs the Asia-Pacific ESCO Industry Alliance.

ESCOs deliver energy efficiency improvements—such as lighting and HVAC upgrades—with no upfront investment required from clients, who repay the cost through energy savings over time.

In the Philippines, most projects are focused on public buildings and achieve up to 35% energy savings, but often rely on single-technology solutions like lighting replacements.

This narrow focus restricts performance compared to integrated retrofits seen in mature markets, which can yield 35% to 50% savings, according to the report.

“Integrated retrofits offer deeper savings and better returns, especially in public buildings,” the report stated, citing successful models in Europe, including the Czech Republic, Belgium and the United Kingdom.

The report noted that countries like South Korea and Malaysia, which also rely heavily on single-tech approaches, face similar constraints in achieving higher efficiency outcomes.

Financing remains a major hurdle, with most Philippine ESCOs dependent on commercial bank loans with typical five-year payback periods.

Ablaza emphasized that “governments must prioritize energy efficiency as infrastructure,” and called on financial institutions to support innovative financing like guarantees and performance-based models.

Policy uncertainty further hampers growth, in contrast to more advanced markets that enforce mandatory energy audits and emissions reduction targets.

The report aligns with the Philippines’ commitment to reduce greenhouse gas emissions by 43% by 2030 under its nationally determined contribution to the Paris Agreement.

Expanding ESCO deployment, especially in the commercial and industrial sectors, could unlock billions in savings and help drive the country’s transition to a low-carbon economy.

Ablaza concluded by urging ESCOs to move beyond public sector work and pursue wider market opportunities: “ESCOs must innovate and expand.”