Conventional wisdom often paints the power sector as a “game for the big boys” – but in the country’s lofty ‘energy transition’ goal, even the “David-like players” are leading the way.
They may not be as gigantic as their counterpart-conglomerates in terms of track record and longevity, financial muscle and even human resources, but several start-ups or emerging companies in the renewable energy (RE) sector are equally razor-sharp and passionate about advancing their blueprinted projects to commercial developments. And on the bigger facet of business goalposts, there is that fervent desire for these companies to become part of the country’s elusive quest for energy security and sustainability that are heavily anchored on protecting the environment.
One of these firms is CleanTech Global Renewables, a company founded by Salvador Antonio R. Castro Jr., a former team manager of the country’s basketball team Gilas and a well-entrenched sportsman before the corporate world pulled him back into the fold – this time, on the sphere of energy project development.
Armed with a BS Chemical Engineering degree from the University of the Philippines, Castro – who is mostly known to peers and colleagues in sports and corporates as “Aboy” (his nickname), first worked with state-run National Power Corporation then moved to work as an engineer for a multinational corporation before he delved into sports.
His detour from sports tugged him again into the corporate orbit in 2015; and that’s when his company CleanTech pushed for the commercial development of its first utility-scale solar installation of 15 megawatts in San Ildefonso, Bulacan, a venture that made it to the feed-in-tariff (FIT) incentive scheme, a policy dangled by the government until 2016 to whet investors’ appetite in RE developments.
Then from that initial venture, CleanTech gained traction on its other projects – including the 22MW expansion of the San Ildefonso solar installation that is now under completion; the 20MW OneManaoag solar facility being developed in Santa Barbara, Pangasinan; the proposed 100MW CleanTech Renewable Energy 4 Corp (CTREC 4) venture in Lal-lo, Cagayan province; and it also cast a wind farm installation.
While the initial successes pulled off by the company are already manifest, Castro professed that “for an emerging player like CleanTech to co-exist with the energy giants and make its mark in the capital-intensive world of RE, it is very difficult.”
He further enthused “it is not for the faint of heart. Some people try it and are not able to do it, they cannot take the challenge.”
Nevertheless, Castro conveyed that there’s a bigger and more noble vision he wants to embed why he ventured into the RE sector: it’s about “seeing the Philippines someday being powered by almost 100% renewables,” with him stressing that “we know that the future of our children and the many generations after them depends heavily on our success of making this 100% RE-powered society a reality.”
Once the company’s solar plants are fully operational, these are estimated to produce over 330.632 million kilowatt-hours of electricity for the grid in 25 years; and will also displace 183,005 metric tons of carbon dioxide (CO2) emissions – which is equivalent to planting more than 8.4 million trees.
The firm’s targeted 200-MW wind farm installation will generate more than 507.588 million kwhs and will have CO2 displacement of 280,950 metric tons.
Even if he had seen some of CleanTech’s smaller-player colleagues leave the investment game for various reasons (i.e. difficulty in securing project permits or financing, lack of incentives, risky partnership milieu, etc.), Castro noted that those exodus had not disheartened him to pursue the implementation of their projects– notwithstanding the tricky road ahead or even the brute force they would need to confront versus corporate giant-peers.
“If I have seen farther, it is because I have stood on the shoulders of giants,” Castro asserted, as to the pearl of wisdom he had always held on to in facing up with the challenges in pursuing their RE projects.
Riding out project development hurdles
In the array of projects already advanced by the company, CleanTech sets premium on at least three parameters for its organization: first is: carefully selecting an organic team and providing them with the right training and skill sets; second is: embracing agility which could be an advantage for leaner corporate organizations because it becomes easier for it to pivot, adjust and be proactive in market conditions; and third, to train the company’s sights on attracting, engaging, retaining and working with world-class partners -- including the entities to be engaged for joint ventures, project financing as well as for engineering, procurement and construction (EPC) contracting.
Permitting in RE projects alone, he indicated, could be a very patchy and tough process for developer-firms to deal with – it’s like the road less travelled, that if the company does not have the patience and the resources, this could be the sharp end that will flip them to defeat.
But parallel to his experience in basketball, Castro narrated that he would always remember the insights imparted by one of the basketball coaches he worked with when they had to go on a grueling six-month training journey for Gilas team (in China, Spain, France and the United States) which was then part of their preparation for the 2014 World Cup in Seville, Spain – and it was conveyed to him in this wise: “you have to prepare yourself as this is going to be one of a roller coaster ride…so be prepared and keep your keel even. As long as you are not too up, or not too down, then you will be okay. And it will allow you to ride out all of the fluctuations.”
At this stage, he indicated that RE project developers are still adjusting to the streamlined permitting processes being introduced via the Energy Virtual One-Stop Shop (EVOSS) system; and one of their wish list is to get all the relevant agencies getting fully interfaced with the system so project approvals could be genuinely hastened.
There are also the hurdles of securing approvals from the National Commission on Indigenous Peoples (NCIP); the often-snagged land conversion process with the Department of Agrarian Reform (DAR) which is seen as the longest task in the entire development process; and the desire of most RE developers for easier grid integration of their generated capacities.
“If the energy transition is to happen in the next 10-20 years in the Philippines, then the increase in grid capacity has to happen today, not 5 to 20 years from now,” Castro opined.
Playing the long term game
Being the ‘David’ in the dominion of corporate Goliaths, one advice he can give to emerging players is for them “to be comfortable with failures, and use these as learning opportunities.”
He stressed “if you can come back better, then you will be one step closer to your goal.”
Whether in sports or in corporate investments, Castro contended that “losing is part of the process,” because even in championship games wherein rivals are in close contest, even the winner could lose some of the games and it just needed a one up against the competitor to be declared the ‘champion’.
“Life – and the renewable energy industry, is not a game of perfect. It is a game of imperfection wherein losses are used as stepping stones and learning events,” he asserted.
Castro added that for smaller companies like CleanTech, the key perspective to keep in mind is the “law of compounding,” with him qualifying that “while we may start small, if we continue moving towards our goals, our growth will not be linear. After a while, it will surprisingly be exponential.”
But that will happen, he noted, “only if we commit to and proceed with the journey,” and “we need to be patient and play the long term game.”
In the projects implemented by CleanTech, he emphasized that these are undertakings inherently linked with a choice about pursuing change – it’s about decision to help create jobs and growing the economy while protecting natural resources.