The Department of Energy (DOE) welcomes the latest report from the Board of Investments (BOI), which highlights a record-breaking P1.35 trillion worth of investments in the country approved from January to date, surpassing last year’s total of P1.26 trillion.
The DOE is particularly encouraged by the energy sector’s pivotal role in driving this growth which accounts for P1.29 trillion or 95 percent of the total investments attributed to renewable energy. This surge underscores the government’s sound policies initiated by President Ferdinand Marcos Jr. administration, that have created a favorable business environment for investments.
Notable among these policies is the lifting of foreign ownership restrictions of most renewable energy projects, alongside measures and mechanisms to accelerate their development. A key initiative in this effort is the Green Energy Auction Program (GEAP), which promotes transparent and competitive pricing for renewable energy and enhances project bankability through a 20-year offtake guarantee.
The government has also simplified the application process for renewable energy development and duty-free importation incentives. Additionally, it has created new opportunities for new investments within existing contract areas, allowing them to apply for additional renewable energy contracts. This could lead to extended contract terms and incentives for capacity-increasing investments.
Investments registered under the BOI enjoy a wide range of incentives, including income tax holidays, a preferential tax rate on gross income, zero value-added taxes (VAT) rating, as well as tax- and duty-free importation of capital equipment, raw materials and supplies.
“The DOE is committed to work with the private sector and our partner agencies in the national government and local government units (LGUs) to ensure that these approved investments will ripen into beneficial and tangible energy infrastructure for our people,” Energy Secretary Raphael P.M. Lotilla said.
Additionally, “with banks and financial institutions playing a vital role in our quest for the accelerated development of renewable energy projects, we are working closely with banks and financial institutions, through the Bangko Sentral ng Pilipinas (BSP), to align the needs of developers with the objectives of financial institutions to effectively support these projects”, the Secretary added.
Recently, the BSP convened a forum on “Financing the Philippine Energy Transition Program. This maiden session of the BSP Knowledge Exchange Series on Inclusive Sustainability was held in coordination with Citi Philippines and the DOE. The forum put a spotlight on the opportunities and challenges around financing renewable energy projects.
Interest in the country’s renewable energy sector has grown since the implementation of the Renewable Energy Act of 2008. As of March 2024, the DOE has awarded a total of 1,327 renewable energy service contracts, with 5.8 gigawatts already installed and a further potential capacity of about 137.8 gigawatts. The majority of the renewable energy potential capacities are from solar, hydro and wind accounting for almost 90% of the total renewable energy contracts awarded.
To further accelerate renewable energy projects, the third round of GEAP is scheduled for this year, covering capacities for impounding and pumped storage hydropower as well as geothermal technologies. The fourth round will focus on Integrated Renewable Energy and Energy Storage Systems (IRESS) and natural gas technologies. ###