In the Age of Sustainability: Does the Philippines Offer Prime Investment Opportunities?

Over the week, the Philippines has largely been defined by the apparent lack of supply in its energy capacity. Particularly in Luzon, where the National Grid Corporation of the Philippines (NGCP) placed the island’s grid on red alert for days and advised residents to be prepared for potential rotational blackouts. This is the first red alert to be implemented since June 2019.

Now more than ever, transitioning to sustainable energy has become all the more relevant in order to meet the country’s growing energy demands. The country is filled with natural resources that could serve as highly viable alternative sources of power. Herein lies the fact that there is great potential for the Philippines’ renewable energy (RE) sector which remains untapped.

In this regard, the government has urged investors — both local and foreign — to usher in the growth and development of the RE industry in the country while fostering economic growth and protecting the environment. Hitting multiple birds with just one stone. The country is targeting its total energy capacity to have 35% RE share by 2030 and 50% by 2050.

At the moment, wind and solar power combine for only around 0.3% of the country’s Total Primary Energy Supply (TPES). The Department of Energy (DOE) hopes to substantially increase this figure, especially with the National Renewable Energy Program (NREP). This will serve to comprehensively outline sectoral roadmaps for biomass, geothermal, solar, hydropower, ocean, and wind (BiGSHOW) sources to draw investors in.

The current state of the RE market is also geared to support countless investment opportunities, more particularly with the key mechanisms that are largely available — or will become available in the near future.

The Green Energy Auction Program (GEAP), for instance, is set to roll out this month and will promise to make the procurement of RE supply a more competitive process to maintain healthy market conditions. Through this program, the DOE plans to put an initial 2,000 megawatts (MW) of renewable energy capacity up for auction and allotting for an increase in capacity if necessary.

Auction programs similar to the GEAP have been known to present excellent investment opportunities, especially for international bidders and larger industry players.

Another key mechanism that should be noted is the Renewable Portfolio Standards (RPS). This is primarily a market-based policy that mandates power distribution utilities (DUs), electric cooperatives, and retail electricity suppliers (RES) to source an agreed-upon portion of their energy supply needs from RE facilities.

The RPS program guarantees a large and constantly growing market for developers and investors who are looking to enter the Philippines’ RE industry.

Not to mention, there are also plenty of incentives that promise to make RE investments more appealing. Included in these incentives is the decreased corporate tax rate at 10%, largely thanks to the Corporate Recovery and Tax Incentives for Enterprises or CREATE law. There is also duty-free importation for materials and equipment as well as tax exemption on proceeds from carbon credits.

Additionally, energy efficiency is also a fundamental driver in the country’s shift to sustainability. In 2010, the government launched the Energy Efficiency and Conservation Act which sought to institutionalize exactly these two components.

This has been accomplished through the implementation of compliance guidelines and incentivized initiatives that have — and will — help to further expand efficiency and conservation. Investing in energy efficiency also promises to present substantial returns, particularly in an energy-efficient landscape like the Philippines.

Ultimately, the urgency of shifting to sustainable energy is more vital than ever. Not just to meet the country’s energy demands but also to address the worsening climate crisis. There doesn’t necessarily have to be a trade-off between environmental gains and economic losses — or vice versa — on the road to greener pastures. The prime investment opportunities that the Philippines’ sustainable energy industry offers should stand as a testament to this fact.

To know more about all things related to the growing sustainability transition in the Philippines, consider taking a look at Verne Energy Solutions.

Reference: Verne Energy Solutions, Rappler