Developers of gigawatt-scale floating solar farm projects are in a bind on their project finance-raising activities because of the programmatic environmental compliance certificate (ECC) that may turn out not acceptable as requirement to lenders, especially to foreign banks.

In an interview, Philippine Solar and Storage Energy Alliance Chairperson Tetchi Cruz-Capellan indicated that for major floating solar projects that are already at implementation phases, it will be the Laguna Lake Development Authority (LLDA) that will be securing the programmatic ECC on behalf of the developers.

Then after securing that permit from the Department of Environment and Natural Resources (DENR), the LLDA will just have to issue certificate of conformity to the project sponsors.

Nevertheless, Capellan noted that will present major problem to the project sponsors, especially in raising much needed funding to bankroll their projects.

“Our dilemma is: the banks might not accept that – because a ‘certificate of conformity’ by its very nature is not an ECC, so that’s our hurdle with a programmatic ECC,” she stressed.

For local banks, she conveyed that the solar project sponsors already had discussions with the Board of Investments (BOI) that the remedy is to ask the Bangko Sentral ng Pilipinas (BSP) to issue a Circular that shall “confirm that the certificate of conformity issued by LLDA to the developers, is valid.”

Capellan, however, emphasized that the predicament will not stop there – because the non-ECC version of a permit may not satisfy the requirements of foreign lenders, “so that has to be addressed also.”

She qualified “financing from foreign banks will be crucial because the local banks cannot fully finance floating solar projects that are as big as 2,000 megawatts.”

On initial discussion that PSSEA had with Environment Secretary Maria Antonia Loyzaga, Capellan shared that what is being considered as a remedy is to elevate the matter to the Department of Finance (DOF) so the agency can help resolve this concern with the foreign lenders.

“We can do that as a next step, but for now, we have to deal with our dilemma with the local banks first. The BOI already told us that it will make representation to the BSP; but our organization (PSSEA) will also lodge a separate letter with the BSP to resolve that particular concern,” she said.

Apart from financing, Capellan stated that a ‘programmatic ECC’ will also bring more problems to the developers, “because if one of the proponents will under-perform, the overall project risk for everybody will become higher – so it becomes a case that: the sin of one is the sin of all.”

And on the sphere of the actual application for ECC, if one of the developers will be delayed in meeting all the requirements for the filing, then all the projects will be delayed because we will just be relying on a single ECC to be secured by LLDA.

“We will just have one application for ECC – so if one project-developer is delayed, then all of us will be delayed, because we tend to wait for each other on when our peers could complete their requirements, so it becomes a common risk for everybody,” Capellan expounded.