The Philippine government, through the intensifying capital-enticements being pursued by the Department of Energy (DOE), sees an influx of foreign direct investments (FDIs) in the country’s flourishing renewable energy (RE) sector, largely offshore wind projects -- currently the ‘rising star’ in the clean technology space.
According to Atty. Marissa Cerezo, director of the DOE’s Renewable Energy Management Bureau (DOE-REMB), “We currently have over 1,000 contracts in different stages, so it’s possible they will all finish simultaneously.”
She emphasized that on the sphere of offshore wind installations, in particular, “there’s a lot of interest from foreign companies, so we have to prepare for the influx of more investments.”
The energy official added the department is currently in discussions with array of foreign investors, including those from Denmark, Japan, Spain and the United Kingdom. The DOE has also been wooing the potential investors to firm up their interest in the country’s RE sector.
Cerezo stressed “offshore wind energy is a key focus for REMB in cornering fresh capital investments, as underpinned by a World Bank study which measured up to a potential 178GW (gigawatts) the Philippines could generate on this ‘next frontier’ in RE resource development.”
She sounded off the agency’s excitement “to debut offshore wind energy in the Philippines – the first power plant in the sea,” adding that targeted investments are seen eventually capacitating the country on such technology installations.
The targeted flow of investment-dollars for green energy ventures is highly considered by REMB as anchor to the Philippine ‘energy transition agenda’ – that in turn will accelerate the share of RE in the power mix by 35-percent in 2030; and for its ramp up trajectory to 50-percent by 2040.
Fundamentally, the country will need to accelerate developments from RE’s current share of 29-percent in the power mix; and 22-percent fraction in the pie if reckoned on the overall generation mix.
In revving up the interest of investors, the DOE has been placing its bet on a recent policy improvement institutionalized by the DOE via the issuance of Department Circular No. (DC) 2022-11-0034 signed by Energy Secretary Raphael P.M. Lotilla in November last year. That circular effectively opened up the RE sector to 100 percent foreign ownership, primarily for solar as well as onshore and offshore wind developments.
The modified policy, which relaxed foreign equity restriction on RE projects, had taken its cue from Department of Justice (DOJ) Opinion No. 21, series of 2022, which rendered that the Constitutional limitation on ownership of natural resources by foreign entities “only covers things that are susceptible to appropriation, thus excluding the sun, the wind and the ocean.”
Cerezo, nevertheless, admitted that there are still stubborn challenges yet to be addressed to facilitate investments’ entry – not just for the foreign firms but even for the long-established players already in the country’s energy sector.
To complement the efforts of the DOE, Gaspar G. Escobar, Jr., division chief for Technical Services and Management Division of the National Renewable Energy Board (NREB), indicated that “we are always looking for ways to refine policies and guidelines to make them conducive to investors and RE developers, and to help those projects that are in the pipeline or indicative stages to advance into commercial operation.”
He acknowledged that one major collaboration greatly aiding the country on having favorable outcomes on attracting investments is the Development for Renewable Energy Applications Mainstreaming and Sustainability (DREAMS) project, which is the government’s partnership with the United Nations Development Programme (UNDP) and the Global Environment Facility (GEF), with key support from the DOE.
Specifically, the DREAMS undertaking delves with 17 sites across the Philippines – and the goal is to scale up local RE investments “by accelerating the deployment of RE systems and enhancing the local capacity to innovate, create, and maintain RE facilities.”
Escobar highlighted that “the success of the DREAMS Project is positive proof that RE works, not only for power generation, but also for productive use and social impact.”
He cited that one model project under DREAMS has been the Iloilo Provincial Hospital – which by far, had already concretized “the impact of a 24/7 operating room, the improvement of hospital services and the benefit to the patients, and the hospital’s savings that can be put to use for other purposes, like hiring more medical workers or even installing another facility in the area.”
He thus qualified that the DREAMS initiative “opened up RE to LGU partners, not just in welcoming RE developers, but also in capacity building, as well as investing in RE,” with him noting that “LGUs are learning to prepare and develop a local RE plan, and are realizing the advantages and incentives, especially in providing better public services for their constituents, and savings for their LGUs.”