THE PHILIPPINES can become a leader in developing renewable energy (RE) due to the resources it has at its disposal, openness to foreign investment, and flexible grid network, consulting firm Bain & Co. said.
“We are seeing countries like Vietnam and the Philippines lead the way in deploying renewable energy and transforming their power generation systems in parallel,” it said in its Southeast Asia’s Green Economy 2023 report.
The report noted the Philippines’ “abundance of natural resources” for solar, wind resources, and battery components like nickel.
“Countries like Indonesia, Vietnam, the Philippines, and Thailand all have high energy demand and acceptable offtaker quality compared to less-developed SEA countries where local offtaker risk is high due to poor credit history,” Bain & Co. said.
The Philippines’ open market structure will also work in its favor, Bain & Co. said.
Last year, the government allowed 100% foreign ownership in renewable energy projects.
Bain & Co. also noted the Philippine grid’s flexibility in terms of accommodating renewable energy.
The report also noted that the Department of Energy is working on streamlining approvals for renewable energy permits, which would improve the ease of doing business.
On the other hand, Bain & Co. said that Southeast Asia remains “heavily dependent” on fossil fuels.
“Indonesia, Brunei, Malaysia, and the Philippines still subsidize some fossil fuel use,” it added.
Archipelagoes like the Philippines also face “complicated interconnection challenges.”
Bain & Co. estimated that under 3% of the Philippine and Indonesian populations still lack access to electricity.
The higher cost of capital will also make it difficult to bring in renewable energy projects, it said, noting that banks in the Philippines do not finance renewable energy projects from smaller developers.
Meanwhile, Bain & Co. said that the Philippines is “unlikely to be on track” to deliver its 2030 climate targets.
“(There is) some progress in decarbonization supported by the right incentives and regulatory frameworks,” it said.
“Nationally determined contribution (NDC) commitments are modest, the government supports grid infrastructure development, but more needs to be done for electric vehicles and nature,” it added.
It also noted the need for more inter-island grid connectivity and investment in renewables. — Luisa Maria Jacinta C. Jocson
