THE capital market will play an increasing role in funding the country’s renewable energy projects amid falling costs of producing clean energy and improving technology.
Industry officials and experts at The Asset 12th Philippine Forum note that the Philippines continues to lead in renewable energy development in Asia.
“The Philippines is taking lead in renewable energy. It is 15 to 20 years ahead (in terms of development),” said Mason Wallick, managing director at Infunde Development. Currently, the country relies on renewable energy - that includes hydroelectric power, geothermal and solar - for over 30% of its energy requirements.
Kiyoshi Nishimura, CEO at Credit Guarantee & Investment Facility expects the capital market to become a major source of funding for renewable energy going forward. “We would like to see the capital market play an increasing role in financing renewable energy projects,” he says. For example he cites as a major benefit from raising green funding through bond issuance would be addressing interest rate challenges. "By tapping the bond market, you can avoid interest rate issues” he adds.
For Carlos Aboitiz assistant vice president, run-of-river (ROR) hydro business unit at Aboitiz Power, the key to success is “social acceptability”. He notes that projects are hosted in remote areas in the country by local communities that also benefit from clean power.
The Phlippine renewable energy sector took years to develop. Its growth accelerated with the passage of the Renewable Energy Act in 2008 that paved the way for increased private sector participation in clean energy infrastructure development. With improved technology, the cost of clean energy has also gone down. That has helped boost the sector.
“But there is space to go beyond FIT (feed-in-tariff). We still have some ways to go to boost the industry,” says Angela Consuelo Ibay head, climate and energy programme at World Wide Fund for Nature.
Ibay says “renewable energy auctions” could be a way forward for clean energy development. Another idea being floated in the market is creating an ancillary market for renewable energy, adds Aboitiz.
Banks also need to incorporate sustainable lending, they note. For now, challenges to renewable energy development remain.“Reliable grid and competitive pricing are some of these challenges,” note Wallick. A more stable power grid should support the fall in renewable energy cost.
