Philippines renewable energy sector catching wind

Philippines renewable energy sector catching wind

Philippines renewable energy sector catching wind

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According to the Department of Energy (DOE)’s Power Development Plan 2017-2040, the Philippines’ electricity demand is projected to grow by about 5% annually and will reach a total of 49,287 MW by 2040. To meet this demand, a total of 43,765 MW additional capacities must come online. The DOE has a technology-neutral position, meaning that all types of technologies are welcome as long as they are efficient, reliable, and able to provide the least-cost option and flexibility in the system.

What does this mean from the renewables perspective? The Philippine Energy Plan outlines a target of 20,000 MW installed capacity in Renewable Energy by 2040, which means that there will be a significant new investment into renewable energy in the Philippines. President Duterte has communicated his administration’s commitment to renewables in his most recent state of the nation address in July 2019, giving DOE Secretary Cusi a clear mandate: “We recognize the urgent need to ensure the sustainability and availability of resources and the development of alternative ones. In this regard, I trust that Secretary Cusi shall fast-track also the development of renewable energy sources, and reduce dependence on the traditional energy sources such as coal.”

In its recently published study, the US-based think tank Institute for Energy Economics and Financial Analysis (IEEFA), offers a ‘conservative estimate’ of a USD20 billion investment opportunity in renewable energy and energy efficiency over the next ten years. Paving the way for this investment pipeline is the Green Energy Tariff Program, which is expected to be introduced this year, targeting 2,000 megawatts (MW) of new installed capacity, an investment value equivalent to USD2 billion (generation only, excluding transmission, distribution, and storage) in its first phase.

Private sector leading the way

The private sector is leading the way in making the future greener and driving the surge in new investment into renewable energy in the Philippines. For instance: 

  • AboitizPower, the 2.5 billion USD power business is of the Aboitiz family, is expanding its renewable-energy portfolio which already includes over 600 MW generating capacity through four hydropower plants together with Norwegian SN. AboitizPower President and Chief Executive Officer Emmanuel Rubio: “We estimate that 65 percent of all new capacity investments we will be making will be in renewables in the next 10 years because of opportunities in Renewable Portfolio Standards and Green Energy Option Program, and investment overseas”. https://businessmirror.com.ph/2020/02/14/aboitizpower-gearing-up-for-expanded-re-portfolio/
  • AC Energy, part of the Ayala group, is one of the fastest-growing power companies in the region, with a generating capacity of over 1,600 megawatts across renewable and thermal platforms. Its strategy is to focus on renewable energy, with a target to assemble five gigawatts in capacity across solar, wind, and geothermal technologies by 2025. AC Energy has a pipeline of renewable projects in the Philippines, Vietnam, Australia, and Indonesia, which it has identified as priority markets.
  • Solar Philippines, dubbed as the largest solar company in the Philippines, and largest solar microgrid company in the world, has an ambitious 5,000 MW rollout plan for solar energy. As of this writing, Solar Philippines has more than 100 locations and an installed capacity of 300-megawatt peak. Solar Philippines has a module manufacturing factory that is equipped with an annual capacity of 800MW and ships high-quality & fully certified PV modules to domestic and international customers. The factory also provides OEM services to tier 1 PV module manufacturers in the world aside from producing PV modules for Solar Philippines’ projects.
A photography of solar panels in the Philippines.

Opportunities galore 

The companies mentioned above are large local family-controlled groups driving the development of the renewable energy sector and as such, prime examples of potential partners or clients for foreign companies looking at entering the market, either as technology suppliers or as developers through joint ventures. Strategic partnerships are the way to go not only because of the 40% ownership restriction on foreign RE developers but also because of access-to-market and understanding of the local operating environment that can be gained through partnering.  

In addition to the crucial role of the industry stalwarts in new investment into renewable energy in the Philippines, it is worthwhile to keep in mind that the Manila-headquartered Asian Development Bank (ADB) has an annual pledge to invest 2 billion USD into renewable energy in Asia-Pacific. Adding to the mix of exciting opportunities, ADB recently launched a venture-fund called ADB Ventures to invest in impact technology startups, with the vision to become the region’s largest impact technology platform, crowding in more than 1 billion USD of risk capital to achieve the UN Sustainable Development Goals by 2030. 

Joona Selin
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