APP Boosting Energy Efficiency through PPP’s

Ethos Public Policies Lab Ethos is a Think Tank dedicated to transform research projects into public policy proposals. Our mission is to address the most relevant and innovative issues that can contribute to reach economic growth and social development in Mexico and Latin America. Research areas Innovation and Competitiveness Public Finance and Fiscal Management Gender Poverty Democracy and Governance capacity Security and Urban Development

Importance of Energy Efficiency - National Context Energy Efficiency is : do more with less... Low applied cost of implementation. High GHG reduction potential. High cost-benefit ratio. High energy and cost savings measures. Relatively easy to implement vs other GHG reductions measures (e.g renewables). High positive environmental impacts. National Programs on Energy Efficiency Energy Efficiency spending in Mexico 2014: MUSD $150. In 2009 - 2016: Average of total electricity savings: 5,473 GWh. Average of GHG emissions mitigation: 2.48 Mton de CO2eq Average total savings: MUSD $174 Programs include: Public lighting, federal buildings retrofit, water pumping systems, solar heating systems, illuminations systems substitutions.

¿What are PPPs? Legal instrument to develop projects in a responsible and result oriented manner, in topics including energy efficiency. Provision of public services or infrastructure assets. Backgrounds: United Kingdom, 1990. Long term period (From 3 to 40 Federal Normativity) Co-investment (Shared investment) Admits third party investment No subsidies scheme Proved economic and social rentability

¿What are PPPs? PPP legislation PPP in a holistic view (PPP law) Contract under PPP Law or similar PPP in a holistic view these notions often are confused PPP legislation (PPP law) Any form of collaboration between the public sector and the private sector concessions licenses joint-venture procurement It is not a privatization Does not create a new legal entity

Characteristics of PPP in Energy Efficiency Contractual relationship between a public entity and a private organization; Risk allocation between the parties, in line with their capacity to tackle or reduce the potential risks; We look forward to foster the private investment in EE projects; It has a payment scheme in which the private partner is payed given the services offered to the public sector.

Technical Studies- Social Profitability To ensure the technical and financial feasibility of the project. Cost-Benefit Cost Convenience analysis Socioeconomic Evaluation to a feasibility level índice de elegibilidad Análisis de riesgos CB: para determinar la conveniencia men términos monetarios de los costos y beneficios asociados a la ejecución. El análisis de conveniencia se coompone de tres herramientas:el índice de elegibilidad, el análisis de riesgo y el comparador del sector público que busca demostrar que el esquema de APP es mas redituable frente a otros sisttemas de contratación (O.P, fideicomisos, Ley de Adquisiciones). El resultado es el valor por dinero: demostrar que se genera mayor valor con el dinero invertido en el proyecto. Comparador del sector público VfM

Ethos experience in PPPs Methodology to evaluate PPP legislation. Methodology to evaluate projects with potential to be PPPs Medicine Research Institute in Jalisco Mexico. PPP project in EE in Jalisco.

Conclusions of Energy Efficiency through PPP´s Overcome fiscal and political cycles. Due budgetary constraints private sector can make all the investment. Energy Efficiency projects promote important energy and money savings. Reduce debt and budget constraint. Long term contracts.