Philippines has untapped potential of 27 GW of power

MANILA, Philippines — The Philippines has an untapped renewables potential of at least 27 gigawatts (GW) requiring financial closing to  help achieve the country’s 2030 goal of 35 percent renewable energy (RE) share in the power generation mix.

The country is rich with RE sources, but the bankability of small scale RE projects has been a challenge for developers, National Renewable Energy Board (NREB) chairperson Monalisa Dimalanta said in a webinar.

“The beauty of RE is it can be deployed in smaller scale. The challenge, however, is what will make smaller scale RE deployment financeable for institutions, banks, and other groups? What will make it more attractive?” she said.

Dimalanta said data from the Department of Energy (DOE) showed there are only 897 megawatts (MW) of committed RE projects or those that have commenced construction, or secured certificate of confirmation of commerciality.

However, the potential capacity from the DOE-issued service contracts is over 27 GW.

“That’s quite telling, we have only 897 MW committed and yet we have that potential of 27 GW in the pipeline. The challenge for us (is)… how do we convert, migrate these indicative projects to committed projects, how do we bridge where these projects are at the moment to get them to reach financial closing. That has always been the challenge,” Dimalanta said.

The  country’s RE generation corners 20 percent of the total power mix. This has gone down from the 34 percent RE share when the RE Act was enacted in 2008.

In the same webinar, Cleantech Global Renewables Inc. CEO Salvador Antonio Castro said  there’s a healthy pipeline of RE potential in the country.

“It’s converting this pipeline into bankable projects so that these may eventually commissioned (that’s the challenge),” he said.

Cleantech, an independent RE developer, has set an aspirational target of 1 GW RE assets by 2025. So far, it has developed a 15-MW solar farm in Bulacan, which is eligible to receive feed-in tariff (FIT) rates. It is also completing a 22-MW solar farm expansion in Bulacan and is constructing a 20-MW solar project in Pangasinan.

Castro said the lack of conducive regulatory framework in  the Philippines since 2016 has become a challenge for independent RE developers.

He was referring to the FIT system, which details the perks for power developers for a period of 20 years to invest in the more expensive renewable sector.

To qualify for FIT incentives, renewable energy projects need to start commercial operations within the given timeframe.

After reaching the installation targets for solar and wind, the FIT system has been discontinued by the DOE, as Energy Secretary Alfonso Cusi said this adds burden to consumers and runs against the agency’s goal of bringing down the power rates.

Other challenges being faced by small developers to get their projects to financial close is their credit rating and the tedious banks’ loan processes – which is stringent especially for first time borrowers and takes up to more than a year, Castro said.

Despite the discontinuation of FIT, Castro said developers are now banking on the various opportunities presented by government’s push for RE development and the moratorium on coal plants. Among these opportunities are presented under the Renewable Portfolio Standards (RPS), Green Energy Option Program (GEOP), Green Energy Auction Program (GEAP), and Net metering reform.

“We know the DOE, NREB, Energy Regulatory Commission (ERC) are working to get these new regulatory frameworks out there and ready to move forward,” he said.

To be able to reach the 35 percent goal by 2030, Dimalanta said the implementation of RPS is critical. RPS is a market-based policy that mandates power distribution utilities, electric cooperatives, and retail electricity suppliers to source an agreed portion of their energy supplies from renewable energy facilities.

“If RPS is not in the picture...we are going to see not an increase in RE share from where we are at 20 percent... to a continuous decrease.  Without RPS, we see only 12 percent RE by 2030 and 6.7 percent by 2040.”

But keeping the RPS target at one percent is not enough to expand the RE share in the generation mix.

“Currently, RPS is at one percent. If RPS is kept at one percent, we will still see a decrease of that RE share from the current 20 percent to 17 percent by 2030, and 15.5 percent by 2040,” Dimalanta said.

The NREB official said the one percent RPS target can be kept until 2022, which should be increased to at least two percent starting 2023.

“Based on our calculation, we will need to increase the RPS to 2.52 percent moving forward, all the way from 2023 to 2040. That gets us to an RE share of 37 percent by 2030 and around 55 percent or more than by 2040,” Dimalanta said.