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LESSONS:

MFF: Guangdong Energy Efficiency and Environment Improvement Investment Program – Tranche 1

sector: Energy | country: China, People’s Republic of

1. The financial intermediary loan modality was adopted, and the loan proceeds were relent to support implementation of more energy saving and emission reduction projects. Separate evaluations of technical feasibility of the subprojects and the financial viability of the candidate subborrowers were conducted by the efficiency power plant project management office and Guangdong Finance Trust Company independently to ensure that the technical merits and financial status of each subproject were assessed.

2. The actual energy savings achieved of the tranche 1 project are much higher than the anticipated energy savings at appraisal. More elaborate methods of energy saving estimates should have been used. The key is to establish an accurate baseline and design a customized measurement and verification method for verifying the energy savings achieved at the outset. It is also important to consistently use the same methodology for ex ante and ex post energy saving calculations.

3. Measurement and verification. ADB Independent Evaluation Department’s report noted that the Guangdong provincial government had incorporated appropriate measurement and verification (M&V) of energy savings for the multitranche financing facility investment program implementation. Third-party M&V agencies ensured fair assessment of achievements of energy savings and emission reduction. The measured and verified results of each subproject provided a solid basis for computing the energy efficiency benefits and achievement of the project.

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