Shanghai has made 300 million yuan (US$39 million) available in bank loans to finance projects to upgrade energy efficiency.

The money is ready for small and medium-sized businesses and factories as long as they participate in a government-sponsored energy-conservation program, which aims to save having to build a medium-sized power plant.

"It's to solve the financing problem, a major bottleneck in promoting energy efficiency technologies among small firms," Xie Zhonghua, vice chief of the Shanghai Contract Energy Management Commission's administrative office, said yesterday.

The commission, backed by the Shanghai Economic Commission - the city's overall economic operation watchdog - oversees projects of contract energy management, a market-driven energy-saving practice imported from overseas in 2002.

In the practice, energy-service providers sign contracts with a company on savings goals, with technology upgrading, new equipment and regular maintenance to ensure targets are met. Their profits benefit from savings on energy bills.

But as it calls for a considerable amount of initial investment and takes years before any benefits are generated, the practice has not been well received by SMEs.

So far there are 76 firms providing such a service in the city, and they have completed more than 300 projects that saved 130,000 kilowatt-hours of electricity and reduced sulfur and carbon emission.

The 300-million-yuan bank credit, shared equally by three banks including the nation's biggest lender, the Industrial and Commercial Bank of China, will be used in more than 100 projects over the next five years.

Upon completion, the saved demand will be equal to the generation capacity of a 600,000-kilowatt power plant, officials said.

(Shanghai Daily June 12, 2007)