Energy related expenses such as electricity and fuel costs reflect a significant part of operating and production cost of most businesses. Hotels, tea factories, apparel manufacturers, ceramic industry and other energy intensive businesses can achieve significant cost savings by investing in energy saving measures. Further, reducing the carbon footprint helps create a “green” image about a company and helps in winning more business, especially in highly competitive export markets.  Although investments in energy efficiency improvements have a quick payback time and attractive side benefits, many companies are unable to make the initial investment necessary due to funding and cash flow constraints.

The RERED Project can help alleviate the burden a business has in making the initial capital outlay for energy efficiency investments. The credit component of RERED Project consists of several sub-components, one of which is supporting the private sector in implementing energy efficient solutions (reducing consumption) and switching from non-renewable to renewable sources of energy.

Any business operating in Sri Lanka is potentially eligible for financial assistance under the RERED Project. Finance facilities are available at favourable interest rates with tenures as long as 10 years including a grace period of 2 years.

A business could, for example, use credit funds from RERED Project to convert furnace oil fired boilers or dryers to be fired using biomass or replace them altogether with biomass fired boilers and dryers; install variable speed drives (inverters) to large motors to improve part-load efficiency; install power factor correction circuitry to reduce maximum demand (reactive power); install solar roofs, wind turbines, biomass gassifiers or mini-hydro plants to generate its’ own electricity or for the purpose of net-metering; re-arrange lighting layout within factory or office premises or switch to energy efficient lighting sources to reduce electricity consumption; replace or supplement electric and fuel fired boilers used for water heating with solar water heaters; purchase solar powered water pumps; or to replace inefficient air-conditioning and ventilation units with modern, more efficient units.

Further, installation of waste heat recovery systems (eg. feed water and fuel preheating systems); installation of solar powered lamps to provide perimeter and access road lighting; repairing insulations of chilled water pipes, air-conditioning ducts or steam lines; installing condensate recovery mechanisms and steam traps; and arresting steam or compressed air leaks and replace incorrectly sized or laid-out ducting or piping with optimally sized ducting and piping networks can also be considered for assistance.

Installing smart “Building Management Systems” which minimize energy wastage; incremental costs involved in designing and constructing “Green Buildings”, and any greenfield investment involving the utilization of renewable energy to replace or supplement national grid electricity or fossil fuels qualifies for assistance under the RERED Project. The Project can assist lending institutions in appraising complicated energy efficiency proposals submitted by potential clients to ascertain their financial and technical viability.

A business which does not have inhouse technical capacity to carry out an energy audit within its premises can obtain the services of an Energy Services Company (ESCO) to quantify possible savings and likely costs in implementing energy saving measures. A business may directly implement energy efficiency improvements, or engage a reputed ESCO to do so. If an ESCO is to be employed, it is advisable to select an ESCO that is registered with the Sustainable Energy Authority of Sri Lanka (SEA). Some ESCOs provide risk shared solutions, where energy savings are guaranteed and are paid a share of the realized savings over a period of time instead of an upfront fee. In such instances, the ESCO may borrow under RERED credit scheme to cover the cost of implementation. The current list of ESCOs is available on the RERED Project website www.energyservices.lk.

Either the business itself, or the ESCO, can borrow from the RERED credit scheme in implementing an energy efficiency project. Eligible expenses would comprise of cost of equipment, material, and labour directly identifiable with the project. Cost of the energy audit carried out can be also included into the project cost in case the recommendations therein are carried out using the loan proceeds. Refinance under the RERED credit scheme is available to the lending institution for a maximum of 80% of eligible expenses.

The list of financial institutions extending credit facilities for energy efficiency and demand side management projects can be found here

The list of ESCOs providing Energy Audit Services (EA) and Energy Efficiency Services (EES) out can be found here