While warning that the country braces for energy transition that will be expensive, Energy Secretary Raphael P.M. Lotilla has appealed to banks and other financial institutions for longer tenor on loans that will be funneled to power projects across technologies as a way to soften cost impact on consumers.

During a knowledge exchange forum on the Philippine Energy Transition Program convened by the Bangko Sentral ng Pilipinas (BSP), Lotilla forthrightly cited “the need for longer-term financing for high capital expenditure power infrastructure projects.”

The energy chief fleshed out that the key projects direly needing financing with stretched payback duration would include transmission facilities; pump storage hydro and other relatively new technologies in the renewable energy (RE) sector like floating solar and offshore wind; energy storage systems as well as the forthcoming nuclear power plants that are already integrated in the updated Philippine Energy Plan (PEP).

He thus posed a challenge to the lenders “to design mechanisms that would allow future generations, who would benefit from these investments in infrastructure, to share with the current generation the burden of transition,” emphasizing that such project financing track “is another form of multi-generational or intergenerational equity.”

The DOE secretary said “identifying the ingredients needed to unlock longer term financing would tremendously help in lowering the upfront cost of the transition faced by the current generation of consumers, while ensuring that necessary projects come to fruition for the equal benefit of future ones.”

Lotilla was also circumspect in admitting that “the transition is not going to be cheap. It is going to be expensive.”

He therefore emphasized that on the country’s energy infrastructure buildup,  “what we don’t want is a transfer of burden to our people, who are already paying among the highest power rates in ASEAN.”

And while the country remains half-hearted on ditching coal in its energy mix in the near to medium-term, Lotilla highlighted the “genuine demand for renewable energy.”

Nevertheless, he still acknowledged “the considerable challenges of this journey, particularly in financing all of these initiatives in a manner that does not transfer the burden to the Filipino people.”
Despite series of pronouncements from Philippine banks that they will no longer bankroll the construction of new coal-fired power projects, Lotilla noted that rollout of additional capacities on this technology would still be in the country’s development equation moving forward.

“While the PEP accounts for a decreasing share of fossil fuels, coal-fired power plants that are not covered by the coal moratorium (that were decayed in 2020) are still slated to come online in the next few years,” he stressed.

On the RE development terrain, Lotilla expounded that the government’s plan “was designed to be flexible in order to allow us to adapt to the changing energy landscape and rapid advancements in technology.”

He added “at the heart of our energy's transition is a strong commitment to developing and maximizing our renewable energy resources, not from a tree hugger standpoint but because these are indigenous and practically inexhaustible, and in the long run, they will contribute to energy security and affordability.”