The World Bank said its board approved an $800-million loan to support the Philippine government’s efforts to expand the adoption of clean energy technologies.
“Focusing on renewable energy sources and using energy more efficiently can help the country reduce electricity costs, improve energy security, and cut down on pollution,” said Zafer Mustafaoğlu, World Bank division director for the Philippines, Malaysia and Brunei.
“Using more affordable renewable energy in the energy and transport sectors is crucial for the Philippines to build a strong economy,” Mustafaoğlu said.
The Philippines, one of East Asia and Pacific’s most dynamic economies, faces challenges to long-term growth, including increasing dependence on imported energy, high electricity costs, and natural disasters, despite rebounding from the COVID-19 pandemic.
The World Bank said investing in local renewable energy, energy efficiency and other clean energy sources can lower electricity generation costs and increase energy security. Expanding consumer choice for electricity suppliers and improving renewable energy procurement frameworks will also increase competition and lower prices, it said.
“To accelerate energy transition and keep electricity affordable for all Filipinos, the Philippines needs reforms to ensure achieving the government’s renewable energy and energy efficiency targets, improving grid capacity and flexibility, and enhancing competition in electricity markets,” said Feng Liu, World Bank senior energy specialist and task team leader.
“These reforms can help lower power supply cost and improve the reliability and resilience of the power system, thereby making electricity more affordable and reliable for Filipino households and businesses,” said Liu.
The First Energy Transition and Climate Resilience Development Policy Loan aims to increase the share of renewable energy in installed generation capacity from 30 percent in 2023 to 42 percent by 2027, support the procurement of 1,000 megawatts of new offshore wind capacity and implement energy efficiency measures saving 5 gigawatt-hours annually.
Electrification of public sector vehicles and improved electricity market reforms are also included.
The program will also support improved governance and coordination in the water sector through policy reforms for water resources management, water supply and sanitation, the bank said.
“These reforms in the water sector are expected to increase access to safely managed water supply and sanitation services; raise funding and financing for water and sanitation projects; and improve the financial sustainability of local government-run water service providers,” said Maria Fiorella Fabella, World Bank senior water supply and sanitation specialist.
The $800-million Development Policy Operation (DPL) is a rapidly disbursing financial support operation to help member countries address development financing needs through policy and institutional actions, promoting sustainable growth and reducing poverty.