Clean energy projects in the Philippines are significantly increasing but lack of access to funding is hampering the efforts of startup companies to successfully pursue their goals.
The Philippines currently has 91 clean energy and climate startups, representing a six-fold increase from 15 since 2020, according to a new report,
Some startups, however, require substantial upfront investment, and many are not ready to meet the demand of managing large capital injections.
Support from the private sector, the government and nonprofits is, thus, critical. Beyond early-stage funding, star-tups need to access venture capital and growth-stage funding in order to scale and access new markets.
“The Filipino clean energy innovation ecosystem has shown huge progress and promise in the past years, but the nascent space runs the risk of stalling because of lack of access to networks, funding, testing facilities, and skills training,” said Brenda Valerio, country director at NEX Philippines.
“Local entrepreneurs are best placed to understand how to deploy solutions in their communities and transition our economy more equitably to clean energy. It really does take a village to build and deploy these solutions,” she said.
New Energy Nexus (NEX) is an international organization that strives towards a 100 percent clean energy economy for 100 percent of the population.
Since 2019, its programs in the Philippines have supported almost 1,000 entrepreneurs through accelerator programs, training, and networking opportunities.
The NEX study found that while startups are mostly in Metro Manila (34.1 percent), entrepreneurs from Northern Mindanao (14.5 percent) and CALABARZON (16.5 percent) are carving up space in the industry.
Nearly half of startups (49 percent) are in the renewable energy generation sector, while others are in the sustainable transportation/e-mobility sector, energy access sector (both at 8 percent), and waste management (7 percent).
These developments are due in part to more opportunities for clean energy businesses to scale, with over 100 national energy policies and incentives easing the burden on entrepreneurs, increasing opportunities in the private sector, and incubator and accelerator programs run by organizations, such as New Energy Nexus—which is still the only non-profit clean energy accelerator in the country.
New Energy Nexus has directly supported over 90 percent of these startups since 2019.
Despite significant progress, the report outlines how public, private, and advocacy stakeholders can build an innovation ecosystem to support more thriving startups and accelerate the adoption and deployment of clean energy innovation.
Among the gaps seen are in the public sector. Unstreamlined bureaucratic processes, lack of resources at the local level and potential policy changes make it tough for many entrepreneurs to access the funding and incentive programs that the government provides.
There is also a lack of research, testbeds and facilities in the country that could accelerate the development of clean energy technologies.
Another concern is private investments. Of the US$1.3 million in funding, only 13 percent came from private loans and investments.
“In my observation, most startups are not yet ready for the type of funding that’s currently available. We have to recognize that many of these companies are still at an early stage in their development,” said Rachel Santiago-Sacro of venture fund Clime Capital, which invests in sustainability and clean energy ventures.
“It’s crucial that we provide support at every stage of a startup’s journey, not just when they’re ready for significant investment,” she added.
On the scarcity of capital, the report recommends experimenting with diverse funding mechanisms and de-risking strategies to create a more investor-friendly environment for both institutions and innovators.
These include public-private partnerships, venture capital, and crowdfunding, which could boost financial support for energy innovation in the country.
Furthermore, the report calls for streamlining regulatory processes for ease of business, enhanced support on market access, integration of energy innovation and entrepreneurship topics in academic curricula, and fostering a community of various stakeholders to facilitate mutual learning.
“Many of these gaps could be filled by addressing fragmentation in the clean energy sector,” Valerio said. “Instead of working independently, government agencies, think tanks, and non-government organizations must collaborate to make processes more efficient for startups and to catch up with the country’s growing startup space.”
