23.07.10 16:05 Age: 16 yrs
A new departure for Energy Service Companies in China
Energy Service Companies in China are expected to receive expanded official incentives and support, in accordance with new policies on encouraging energy saving and an environmental-friendly society.
On April 2 2010, the State Council’s Opinion on Accelerating the Implementation of Energy Management Contracting to Promote the Development of Energy Saving Service Industry (the Opinion) was issued. Promises have been made on Energy Service Companies (Escos) and their customers’ enjoying clarified preferential benefits. Implementing rules will be issued by four major governmental institutions in the near future.
An Esco is notable for engaging in Energy Management Contracting (EMC), which entails contracting to reduce a customer’s energy consumption in return for payments designed to be made from the customer's resulting expense reductions. “EMC has lived up to its function of inducing energy-reduction since its first came into being in China in 1998,” said Edward E. Lehman, Managing Director of Lehman, Lee & Xu. Statistics reveal that its capability of energy conservation has grown up to as much as 1,350 tons standard coal in 2009. “Yet non-standard growth, insufficiency of governmental support and difficultly financing have slowed further development,” Lehman added.
Aiming at clearing the above obstacles, phase goals have been set in the Opinion. Goals include, a more active energy service market by 2012 and making EMC one of the major models for China energy-consumption retrofitting by 2015. In accordance with this, policies and measures will be implemented including income tax deductions, value-added tax (VAT) and Business Tax (BT) exemptions, government-encouraged financing, and direct government subsidies.
The prospects for Escos and EMC in China appear particularly bright under this trend. In the meantime, their contribution to China’s movement to an energy saving and environmental-friendly society will be multiplied. “It is not only a new departure for Energy Service Companies in China, but also the one for China,” concluded Lehman.
