Public private partnerships on energy efficiency projects are a good way to increase the pace of reduction of the energy intensity of an economy, reduce costs of energy efficiency to the public sector and add commercial value to public sector assets, according to a report by the International Energy Agency.
PPPs can help with these factors as the private sector may have better capacity to deliver the needed services than government bodies, according to Joint public-private approaches for energy efficiency finance.
PPP structures can also transfer benefits of public-sector involvement in the market, without what the IEA calls “the market distortion” effects caused by other government initiatives, the report says.
The report sets out a “policy pathway” to develop PPPs such as dedicated credit lines, risk sharing facilities and energy savings performance contracts that have recently proved popular with the federal government.
The “policy pathway” separates the creation of PPPs to finance energy efficiency into four major sections: plan, implement, monitor and evaluate (pictured).
A recent report released by the American Council for an Energy-Efficient Economy said that America is thinking too small when it comes to energy efficiency.
The country is also making the mistake of “crowding out” economically beneficial investments in energy efficiency by focusing on riskier and more expensive bids to develop new energy sources, the report said.