Energy Efficiency (EE) project refers to any process, technique or equipment that helps to achieve reduction in energy consumption to perform a designated operation to achieve same or better level of output while maintaining or improving processing time, quality, performance and safety with minimal environmental impact.
Advantages/ Importance of Energy Efficiency The following are major advantages of implementing EE projects:
Reduction in energy consumption, thereby adding directly to the profits or bottom-line of the company.
Lowering the vulnerability to energy prices for unit/corporate that has implemented EE projects.
Reducing the need for investment in newer power plants and import of energy.
Reducing the dependence on conventional resources like oil and natural gas.
Reducing emissions of air pollutants
Challenges of Energy Efficiency Financing Lack of technical knowledge of Bank Officers to evaluate any EE Projects.
Lack of alternative collateral as a condition of loan as no traditional assets such as land, building involved.
Involves new or innovative technologies and thus needs greater scrutiny by loan evaluators.
FI may be skeptical about technical information provided in loan documents.
Furthermore, the financial condition of ESCO’s could affect their loan repayment capabilities.
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