Philippines raising Renewable Energy ambitions
Recent weeks have been exciting times in the renewable energy sector in the Philippines, with the Department of Energy announcing a moratorium on new coal power plant projects, and that foreign companies are now allowed to fully own large-scale geothermal projects in the country. These announcements were followed by Energy Secretary Alfonso Cusi’s statements on the envisioned targets to have 34,000 MW of renewable energy installed by 2040, which would represent 66 percent of the total generation in the Philippines.
“Coal and oil shares will also continue to decrease due to the use of alternative fuels for transport, among others. This also translates to a power generation mix that shifts from being coal–centered to one where renewable energy, natural gas, and other emerging clean energy technologies will have increased shares,” Secretary Cusi said during the recently held the Association of Southeast Asian Nations Clean Energy Week.
To achieve the low carbon scenario, Secretary Cusi said he has approved the updated Philippine Energy Plan (PEP) 2018-2040, which contains the necessary adjustments that the country must make because of recent global developments, including the impact of the COVID-19 pandemic on the energy sector. The updated sustainable and strategic PEP communicates a clear set of objectives:
- increase the production of clean and indigenous sources of energy to meet the economic development of the country;
- decrease the wasteful utilization of energy through the use of energy efficiency tools and strategies; and
- ensure the balance among the provision of reliable and reasonably priced energy services, support for economic growth, and protection of the environment.
Key private sector players are committed to clean energy future
The Institute for Energy Economics and Financial Analysis (IEEFA) projects the moratorium on greenfield coal projects to attract USD 30 Billion in renewable energy investment in the Philippines (full report here). While major energy producers such as San Miguel and Meralco have a total combined 5.5 GW of new coal power plants in the pipeline which now must be scrapped, both have plans to invest in several gigawatts of renewable energy capacity in the next 5-10 years.
AC Energy Philippines of the Ayala Group announced plans to scale up its renewable energy portfolio from the current the 1,350 MW to 2,500 MW in 2021, as it positions to become the largest listed renewables platform in Southeast Asia.
First Philippine Holdings (FPH) Chairman and CEO Federico Lopez declared back in 2016 that his companies would not invest, develop, or manage any coal-fired power plants, and the Lopez Group has remained committed to renewable energy with a renewables portfolio of over 4 GW.
How can Asian Insiders help your company tap renewable energy opportunities in the Philippines?
With the aggressive plans to develop renewable energy in the country, there is a great opportunity for foreign renewable energy companies to enter the market either as technology suppliers or as developers through joint ventures with local partners. Large local family-controlled conglomerates are dominating the energy sector – these companies are the most potential partners or clients for foreign companies in the sector.
Our group of experienced business development experts has carried out several projects in the cleantech and renewable energy sector in Asia. In one of our assignments we did a ‘Market Test Drive’ for a family-owned European technology company who wanted to understand the market opportunities in Thailand, Malaysia, Vietnam, India and the Philippines: https://asianinsiders.com/portfolio/market-test-drive/.
Together we learned that the project life cycle is long in technology sales, especially when dealing with projects over EUR 100 million. Nevertheless, the company through various phases finally was able to sign a deal with a major state-owned energy company to establish a biorefinery in one of the target. There are also active project negotiations ongoing with several potential customers, which were originally interviewed during the Market Test Drive phase.
Want to know more? Reach out to our Philippines partner Joona Selin for a discussion on your business opportunities.