The Philippines is known for its hot weather, and it's only getting hotter due to the rising rate of climate change.

Sure, air conditioning and other cooling systems are a way to beat the heat. However, this comes with a cost that is also affecting consumers and the environment.

Earlier this year, tight supply conditions were observed as power grids in Luzon and Visayas reached high peak demands due to extreme heat over the summer.

The Department of Energy (DOE) reported last May that peak demand in Luzon was higher than forecast for this year, bumping to approximately 14,016 megawatts in the region alone. In turn, 2024 sustained fluctuating yellow and red alert notices across Luzon, Visayas, and Mindanao that persisted even until August.

Additionally, the Philippine Atmospheric, Geophysical, and Astronomical Services Administration (PAGASA) recorded its hottest temperature this year at 40.3 degrees Celsius.

While it is understandable that the hot season calls for excessive use of air conditioners, the demand and supply for energy have yet to see a balance during this period. Without addressing supply concerns, residents, along with other industries that require heavier cooling systems, may face electrical dilemmas in the future.

But why wait for the next wave of El Niño to start preparing for energy efficiency (EE) based improvements? Incoming EE advancements, coupled with the Corporate Recovery and Tax Incentives for Enterprises to Maximize Opportunities for Reinvigorating the Economy (CREATE MORE) Act, would be just what we need to lessen the concern in the overall power supply.

Upgrading air conditioning systems

The Philippine Energy Efficiency Alliance (PE2) is anticipating an improvement in air conditioning technologies, especially in large-scale industries that require massive cooling.

This could mean shopping malls, hospitals, hotels, and office buildings would enjoy a cooler atmosphere while minimizing their contribution to the country's power demand, as they are often the ones with higher electricity consumption.

"Cooling or air conditioning technologies will continue to be the initial target for energy efficiency improvement of commercial, industrial, government, and even residential energy end-use sectors," Alexander Ablaza, president of PE2, told Manila Bulletin.

According to PE2, the government has encouraged companies to adopt energy-saving technologies by offering financial assistance, particularly if they collaborate with an energy service company (ESCO). With the implementation of the CREATE MORE Act, PE2 expects that ESCOs and third-party project developers (TPPDs) will play a key role in retrofitting large chiller plants and district cooling systems, making these incentives more accessible.

"Investments will flow through centrally cooled buildings with chiller plants and district cooling systems through either the ESCO business model, especially if CREATE MORE incentives will need to be deployed, or through the more traditional self-financed model which may not enjoy the same access to fiscal incentives for this type of energy efficiency project," Ablaza elaborated.

While residential users and smaller businesses may not be included in this fiscal incentive, PE2 highly recommends consumers look into upgrading their air conditioners to those that are energy-saving and cost-efficient. The DOE has imposed guides or labels on these products, requiring room air conditioners to be at a minimum energy efficiency ratio (EER) of 9.1.

Therefore, when a resident decides it's time to switch out their indoor cooling, the EER must be within that ratio or higher; the higher the EER is, the lower the cost will be on their electricity bill.

"Investments will have to be made by the end-users themselves unless a developer aggregates the several small energy efficiency measures in a common portfolio," the PE2 chief stated.

Aside from cooling, Ablaza added that EE investments will also involve "lighting, waste heat, boilers, motors, drives, compressors, pumps, and energy management systems. Process machinery replacements and cleaner fuel retrofits will also be a focal area for larger industries."

Successful EE adoption takes time

Although CREATE MORE would mean positive outcomes for EE investments, PE2 emphasized that eco-friendly initiatives take time to sprout positive outcomes for the environment and for consumers' wallets.

"The EE market will, of course, need to wait for the implementing rules and regulations (IRR) of CREATE MORE to be crafted in the next 90 days. While this is happening, the ESCO market will also need a couple of years to get commercial and industrial establishments to become comfortable with the ESCO business model," Ablaza explained.

If successful, the PE2 sees about five years for larger-scale industries in the country to efficiently save energy.

"The EE market will, of course, need to wait for the implementing rules and regulations (IRR) of CREATE MORE to be crafted in the next 90 days. While this is happening, the ESCO market will also need a couple of years to get commercial and industrial establishments to become comfortable with the ESCO business model," he said.

"Even further down the road, say five years, we hope that government entities would have developed sufficient in-house capacities to procure ESCO performance contracts for energy efficiency improvements in public facilities and services."