Having jettisoned coal on its loan portfolio for new wave of power plant developments, Yuchengco-led Rizal Commercial Banking Corporation (RCBC) said it will be focusing project lending to at least 1,600 megawatts of renewable energy (RE) ventures in the next two years.

In a media webinar, RCBC Corporate Banking Group Head Beth Coronel noted that the bulk of the projects they will be financing would be solar farm installations while the balance will bankroll wind, geothermal and hydropower ventures.

“It’s mostly solar, so we have some wind and some hydro, but the majority is solar. It’s about 70 percent solar,” she told reporters when pressed on the breakdown of RE projects that the bank will be funding.

Coronel explained that the bank will typically “fund up to 70 percent of the project cost, the balance of which is taken up by the equity partners.”

The RCBC executive added “the loan tenor can be assured as five years to as long as 15 years; and that includes a reasonable, pre-agreed grace period on the principal,” noting further that the loan “is priced based on a spread over an accepted benchmark which is reflective of market conditions.”

On the never-ending grumble of project developers that banks would typically refuse financing power projects on ‘merchant basis’; or those without underwritten power supply agreements (PSAs),” Coronel pointed out that “when we started funding renewable energy projects, the requirement has to be fully contracted – so 100% contract.”

Nevertheless, she expounded that when the feed-in-tariff (FIT) system of incentive was enforced in the 2014-2016 wave of project developments, “we started funding partially contracted projects.”

Coronel maintained though that “as to fully merchant plants, I’m not saying it is impossible, it may be possible as long as we are able to address all the risks. So in short, let’s talk and see how we can arrive at a mutually acceptable structure.”

She emphasized “there are risks which we believe has to be shared amongst the various players in the transaction,” with her emphasizing that such concerns can be fleshed out when a project developer will be applying with the bank for project financing.

Fresh batch of investments in the RE sector has been emerging as the ‘biggest game int town’ – not just for the energy sector’s “big boys” but even their David-like or start-up counterparts.

The major policy anchor enticing RE project developers is the green energy auction program (GEAP) that the Department of Energy (DOE) will be administering this year – and that will warrant the development of at least 2,000MW RE projects to be covered with PSAs via the Renewable Portfolio Standards (RPS) policy of the government.

The RPS-underpinned capacity off-take will take the form of an alternative market for generated electricity from RE technologies that will serve as a replacement to the FIT subsidy scheme.