With the harsh effects of climate change posing a threat to economic development, the Philippines is increasingly harnessing renewable energy (RE), with the help of a forthcoming $600-million (nearly P35-billion) loan from the World Bank.
The Washington-based multilateral lender disclosed that its board will approve the Philippines First Energy Transition and Climate Resilience Development Policy Loan (DPL) on Dec. 12 this year.
Under this program, the Philippine government aims to "scale up adoption of clean energy technologies; increase the security, flexibility, and competition of electricity markets; and improve water management across water uses," the document read.
It will be jointly implemented by the departments of Energy (DOE) and of Environment and Natural Resources (DENR) as well as the Energy Regulatory Commission (ERC).
"Climate change poses major development challenges in the Philippines. It requires development policy reforms to address the new or elevated threats to inclusive growth and prosperity aspirations," the World Bank said, pointing to climate-induced disasters and stresses, dependency on fossil fuel imports, as well as high power cost among these "considerable" challenges and risks.
While the Philippines already has "substantial" solar and wind resources to support the bigger energy demand needed to sustain strong economic growth, the RE sector remains the least developed and underutilized, the World Bank lamented.
"The total onshore and offshore wind technical potential is estimated at 76 gigawatts (GW) and 178 GW, respectively. The abundant solar insolation translates into potential power generating capacity of 4.5 to 5.5 kilowatt-hour (kWh) per square meter (sqm) per day," the bank cited, compared to the country's 29.23-GW total installed generation capacity last year.
"Despite having introduced the Renewable Energy Act in 2008, the country lags behind regional leaders such as Vietnam and Thailand in installed solar and wind capacity by a significant margin. Without deliberate efforts to accelerate the deployment of RE, particularly solar and wind, much of the surging demand in electricity will be met by fossil fuel-based generation, locking in carbon-intensive technologies, and increasing energy-security risks," the lender added.
Also, "climate resilience through adaptation and mitigation in water is critical for the Philippines" due to its archipelagic nature that presents challenges to water management, the World Bank noted.
As such, the upcoming World Bank loan will specifically bankroll initiatives to hike the share of private sector-led RE projects, especially offshore wind, in the energy-generation mix; increase the government's energy savings; and use more electric vehicles (EVs) in public transportation.
This financing will also be spent to enhance the availability of reserve and ancillary services generation capacity, plus slash electricity costs among consumers who participate in the Green Energy Option and Retail Aggregation programs, the World Bank said. It will be done through reforms addressing what the lender described as "critical gaps in the electricity markets that restrict greater integration of RE or weaken competition among electricity suppliers."
Part of this loan will likewise be disbursed into projects that shall improve agriculture and marine ecosystem resilience, increase funding for water-sector investments, and strengthen the institutions that oversee water resources management as well as sanitation services, particularly in impoverished and vulnerable communities, according to the World Bank.