The Department of Energy sought the assistance of the Bangko Sentral ng Pilipinas and multilateral lenders for concession financing to support pumped storage hydro, geothermal and smart grid projects.
“We have requested the help of our central bank and multilateral development banks to figure out concession financing, and even longer loan periods for PSH, geothermal and the smart grid,” DOE Undersecretary Rowena Guevara said in her intervention during the 15th session of the International Renewable Energy Agency (IRENA) assembly and related meeting.
Guevara underscored the critical importance of reducing capital costs for renewable energy developers and emphasized that an affordable energy transition is essential for ensuring a just and equitable shift to renewables.
“At the end of the day, in order for the energy transition to be just, we need to afford the electricity generated from renewable energy,” Guevara said.
“But in order for that to happen, we hope our partners would be able to address the financing gap,” she said.
Guevara said accelerating renewable energy (RE) development and utilization is one of the six energy transition strategies of the Philippine government.
“The other five strategies are building a smart and green grid, building ports for offshore wind, voluntary early retirement or repurposing of coal-fired power plants, energy efficiency and conservation, and decarbonization our transport sector,” Guevara said.
She said the Philippines set a 35-percent RE share target in the generation mix by 2030 and 50 percent by 2050.
“To achieve our RE target, 52.8 gigawatts of new RE installed capacity is needed by the Philippines in the next 20 years, with investment coming from the private sector,” Guevara said.
She said the government had allowed 100-percent foreign ownership of RE projects since November 2022 which resulted in an increase in the applications for service contracts.
“We now have over 1,400 service contracts for over 150GW of RE. Since we are visited by 22 typhoons each year and we have earthquakes and volcanic eruption every now and then, we have learned to build resilient infrastructure, including RE facilities,” Guevara said.
“Together with RE developers, we have faced the challenges of permitting, consenting, ECC [environmental compliance certificate] for offshore wind, and other issues that cause delays in RE development,” she said.
Guevara said the DOE is starting a de-risking facility for geothermal sites to encourage exploration.
“While we are confident that RE developers will be able to get financial closure for their projects, the next hurdle would be the price of RE such as floating solar, OSW and WTE [waste to energy],” she said.
“We are considering energy transition trading to connect our coal plant retirement with replacement RE power at affordable price. We are confident that our RE developers have the technical ability to build plants,” Guevara said.