Melbourne, Australia – What does it take for us to disrupt the wind stream in our oceans, especially when so many projects in major markets are delayed, renegotiated, or scrapped before they even set sail?

That’s the formidable puzzle that steered debates at the recently concluded APAC Wind Energy Summit: how to finance projects, slash capital costs, and unlock viable investment opportunities through strategic risk-sharing in an industry where the winds of change are still anything but predictable.

Across the Asia Pacific, all eyes are on the Philippines, with regional peers looking to it as a potential leader in advancing offshore wind projects. Others, like Australia, are playing it safe by deferring their first offshore wind project. It’s a flattering spotlight, but beneath that shine lies a mountain of challenges the Philippines will need to scale head-on if it hopes to lead the charge on this tricky investment terrain.

Financing and setting reasonable tariffs for offshore wind are front and center for developers, particularly for investors eyeing the Philippine market. There, the Department of Energy (DOE) is fast-tracking a 3.3-gigawatt green energy auction (GEA) by year's end. With high risks at play, bids won’t just be tied to the GEA Reserve (GEAR) or the reserve price to be set by the Energy Regulatory Commission (ERC), but will also hinge on non-price criteria that will weigh heavily on social and environmental impacts.

Currently, the major hurdle for both the government and private investors is figuring out how to bring down tariffs to make them acceptable to ratepayers. A study by the Asian Development Bank (ADB) for the ERC showed that rates for fixed-bottom offshore wind installations in the Luzon grid could soar to ₱12–₱15 per kilowatt-hour (or $21–26 cents). This is a cost that could raise red flags for lenders and spark backlash when it shows up on consumers’ electric bills. It would also directly clash with President Marcos' promise to lower electricity rates in his latest State of the Nation Address (SONA).

During a panel discussion at the summit, Energy Undersecretary Rowena Cristina Guevara indicated that the final terms of reference (TOR) for the offshore wind capacity auction would be released by the end of the month. This would give the ERC just 30 days to recalculate and release tariffs that will either drive or deter investment decisions from sponsor-firms in the upcoming tender process.

Sharon Montaner, director of Market Operations at the ERC, admitted that regulators still face roadblocks in setting the green energy auction reserve (GEAR) price for offshore wind. However, she clarified that recalculations would be on the table once the DOE releases the final TOR.

“For the ERC, our mandate is to set reasonable rates for consumers and at the same time, rates that will allow investors to recover their just and reasonable costs,” she explained. “The challenge we have right now for offshore wind is the parameters that we will have to put into the financial model, including making sure that the methodology will enable investors to capture all the costs that are necessary to develop their projects.”

At this stage, a host of critical deliverables—chiefly port support facilities, grid connection infrastructure, as well as final and comprehensive marine spatial planning (MSP)—remain unresolved. This prompts a fundamental question: will the government apply 'force majeure' clauses given that these factors are beyond the control of the developer-firms?

When the conversation mainly boils down to affordability and if we temporarily strip away that 'save the world' narrative, Matthew Carpio, head of Transaction Advisory for Singapore-headquartered Climate Smart Ventures (CSV), bluntly pointed out that if offshore wind can't stand by itself economically, it will be outpaced by other technologies in the energy mix.

“If offshore wind is not competitive on its own, then it may lose out to other technologies; and that is a fact of life, that’s how economics work,” he stressed.

Given the high-risk nature and hefty upfront capital required for offshore wind projects, Carpio highlighted that the tough spot lies in untangling the complex web of risk-sharing between public and private stakeholders, primarily on “who can absorb that kind of risk and who is willing to absorb that kind of risk,” in a way that they would be able to take control of the desired outcomes.

In its study on risk-sharing for offshore wind, the Global Wind Energy Council (GWEC)-Philippines has outlined three key recommendations to boost commercial viability for projects in the sector: ramping up public sector financial participation; stronger government coordination on offshore wind activities; and improvement of financing packages and project bankability through better risk-sharing frameworks between public and private stakeholders.

“Despite the Philippines being tagged as needing low levels of ‘concessionality’ by MDBs (multilateral development banks) and DFIs (development finance institutions) due to its income status, more specialized financing should be provided at a larger scale for pioneering sponsors and their projects,” GWEC emphasized.

Concessionality, in particular, refers to the provision of loans or financial assistance on more favorable terms than those available in the market, typically with lower interest rates, longer repayment periods, or both. This is often used in the context of development financing, where governments or international financial institutions offer concessional loans to support projects that may not be commercially viable under regular market conditions.

A key part of the proposed strategy is for the public sector or government to tap into concessional financing and technical assistance for early-stage activities. Developers, meanwhile, are urged to maximize every international program available to accelerate offshore wind developments.

GWEC also called on the national government to rally government-owned and controlled corporations (GOCCs) to dive into offshore wind investments throughout the entire project lifecycle, particularly for projects that have secured winning bids in the DOE-administered GEAs.

The study similarly proposed that the government must actively engage with export credit agencies (ECAs) from countries providing key components and competencies, such as those on turbines, masts, and ports, as well as Operations and Maintenance (O&M). The government must also clear the path for the private sector to kick-start discussions on broadening financing options.

For delayed projects, it was recommended that beyond the terms stipulated in the Renewable Energy Payment Agreements (REPAs) and GEA contracts of the developers, they must have the right to recover costs from the government or be reimbursed through automatic rate adjustments or extended contract tenors. This is especially true when the delays stem from the government's failure to meet or slow delivery of its own commitments.

To enhance financial packages, a major parallel recommendation is for the Securities and Exchange Commission (SEC), Bangko Sentral ng Pilipinas (BSP), and the Insurance Commission (IC) to launch targeted renewable energy (RE) programs. This would push banks, insurance companies, and other financial institutions to actively invest in offshore wind projects, particularly alongside the special RE programs being pushed by the DOE.

Offshore wind could be one of the Philippines’ most daring investment bets in the coming years. While other major markets are hitting the brakes or pulling out entirely, the real challenge is how the country will navigate this wild ride without ravaging consumers’ pockets or decimating investors’ balance sheets. And more crucially, how to make this high-risk energy gamble tolerable and irresistible to every stakeholder on board.