COPENHAGEN - The government, through the Department of Energy (DOE), is seen pushing for "state financing" to fast track grid integration of large-scale renewable energy and other power projects that must be developed within the  Marcos administration. In his speech at the WindEurope 2023 conference before global investors, Energy Secretary Raphael P.M. Lotilla noted that once the government has the fiscal space, it will "revisit and reevaluate state financing investment in transmission.” The energy chief indicated that the rollout and installation of transmission facilities must judiciously correspond to the development of power plant projects, primarily the new capacities being pushed in the RE sector, including those in the nascent offshore wind (OSW) industry because these can generate gigawatt-scale capacities that could eventually support the economic growth aspirations of the country. Lotilla acknowledged that “building green and smart transmission systems that will match the capacity of renewable energy projects to be built from 2024 to 2040 is a concern of OSW investors.” Lotilla specified that under the Philippine Development Plan (PDP) 2023-2028, "the government will facilitate the upgrading and modernization of transmission and distribution lines to support the efficient transition to cleaner energy.” That critical step to be taken by the State, he said, “will resolve transmission congestion, especially between Luzon and Visayas grids, whether by adding transmission lines or avoiding subsidies that cause the build-up of excess capacity.” The DOE chief stressed that the "energy transition pathway" of the country is an overarching policy direction that President Ferdinand Marcos Jr. is strongly advocating for, especially when it comes to RE developments that will usher in an “energy future that is affordable, reliable, resilient, clean/climate-centered and accessible.” Separately, the DOE secretary emphasized in an exclusive interview that “where fiscal space allots, it recognizes that transmission is an important element in the energy sector, especially for power; and therefore, the government has to consider investing in transmission,” adding that such would entail “separating the rate-setting from the investment part.” He highlighted that “the pace and scope of the transmission lines that are needed to bring into line the renewables, in accordance with the targets set, would require the concessionaire to invest the needed amounts and according to the pace that these require. But then, we have seen that the private concessionaire has not always been able deliver that.” With the manifest delays in required transmission projects, he stated “let’s be fair, that we don’t want the national interest to be held hostage to the ability or inability of the concessionaire to roll out the investments required.” The modalities of state financing that can be explored for warranted transmission projects would include those from government-financing institutions like the Development Bank of the Philippines (DBP); official development assistance (ODA) loan packages; as well as outright state financing where there is financial space for the government to allow it. Lotilla pointed out that any financing tapped by the government or injected by third parties “should not form part of the capital assets of the concessionaire – so these should be separated within the context of the concession agreement, it means therefore that (the concessionaire) can charge for operating.” He added that state financing for transmission projects would also be one way to bring down electricity rates for consumers, as the government has that leeway to extend loan repayments for a longer period versus the current arrangement where cost recoveries are being enforced immediately. Government-underpinned investments in transmission projects, he expounded, can be done either through a public-private partnership (PPP) scheme and other ways of recovering like tolling fees, especially in cases where loan availments will be restructured over longer duration. Under the present arrangement, he explained, the concessionaire has to pass on the rates through the consumers, creating an almost immediate impact. "Now, looking at it from intergenerational equity standpoint, transmission infrastructure will benefit not only the present generation but future generations, therefore, there must be a way of allocating equitably that burden that it should fall not only on the present generation, but also future generations,” he added The DOE chief similarly qualified that “the private sector does not have the mechanism to extend commercial loans from 15-18 years to a longer one – a longer one would be at least 20 years, so if it’s going to be three generations, how do you do that? It is only the state that can provide the mechanism for restructuring those loans and spread the burden.”