BDO keen on funding ETM projects

MANILA, Philippines — BDO Capital Investment Inc. is open to finance coal transition and nuclear energy developments as the country shifts to cleaner power sources, its top official said.

The investment banking arm of Sy-led BDO Unibank Inc. has positioned strongly in backing renewable energy projects but is also exploring coal retirement and nuclear financing to support the country’s energy transition, BDO Capital president Eduardo Francisco said during the virtual Energy Investment Forum hosted by the Department of Energy (DOE) last week.

“There is a current initiative of the Asian Development Bank (ADB) for the coal transition…So that’s something the banks have not really appreciated yet,” he said.

He was referring to Energy Transition Mechanism (ETM) being established by the ADB. ETM is a transformative, blended-finance approach that seeks to retire existing coal-fired power plants on an accelerated schedule and replace them with clean power capacity.

To understand and participate in this initiative, the company will start discussions with the Manila-based multilateral lender to facilitate the smooth transition to coal.

“If it means lengthening the tenors so that they can get financing or if there’ll be subsidies from the ADB or IFC (International Finance Corp.), we will always be there to try to study that and help those in coal and want to transition and shift to renewables,” he said.

Last month, the ADB launched the ETM Southeast Asia Partnership, the first of its kind in Asia and the Pacific, which aims to help accelerate Southeast Asia’s clean energy transition.

Under the partnership with Indonesia and the Philippines, ADB will work with government stakeholders to pilot ETM by jointly conducting a thorough feasibility study focusing on the optimal business model for each pilot country; bringing together concessional resources from donor governments and philanthropies, in close coordination with global climate change-focused funds; and leveraging large amounts of commercial capital to trigger a decisive shift toward decarbonization.

Meanwhile, BDO Capital is open to funding nuclear power projects once it is approved for development in the country.

The DOE has been pushing for the inclusion of nuclear power in the country’s energy mix. However, the country has yet to adopt a national policy for nuclear development.

In December 2020, the DOE-chaired Nuclear Energy Program Inter-Agency Committee (NEP-IAC) submitted to the Office of the President its initial report endorsing the adoption of a National Position for a Nuclear Energy Program.

While waiting for the decision, the NEP-IAC and the DOE-Nuclear Energy Programme Implementing Organization (NEPIO) continues to conduct activities, studies, and research programs that seek to address the 19 infrastructure issues on nuclear power development program in the country, in compliance with the policy guidelines set by the IAEA, the world’s “Atoms for Peace” organization within the United Nations framework.

For one, Manila Electric Co. (Meralco)—the country’s largest power distributor—is open to adding nuclear power using small modular reactors in its supply mix within the second decade covering 2031 to 2040 of the company’s three-horizon energy transition plan.

Meralco president and CEO Ray Espinosa earlier said nuclear power would address the need for baseload capacity amid the push in renewable energy development and the phaseout of fossil-based supply.