The Philippines’ energy sector is heavily reliant on fossil fuels, and is the largest contributor to national greenhouse gas (GHG) emissions. The Distributed Solar Power NAMA Support Project (NSP) is embedded in the Philippines’ Intended Nationally Determined Contribution (INDC), which targets a 70% reduction of GHG emissions below business as usual (BAU) (projected from 2000) by 2030 and identifies the energy, transport, waste, forestry, and industrial sectors as key contributors to reaching this goal. The RE Renewable Energy Act 2008 is to support Renewable Energy (RE) development through feed-in tariffs (FIT), a renewable portfolio standard (RPS), as well as net metering (NEM) for RE installations up to 100kW. The NEM rules were approved in 2013, but the uptake has been rather slow.
Barriers for higher penetration levels of distributed generation (DG) photovoltaic (PV) under NEM or self-supply include banks and leasing companies being reluctant to offer reasonably priced, reasonably termed, standardized, financing products due to perceived market and technology risks, and the perception that the market is too small, in particularly outside the Metro Manila. NEM projects also must undergo complicated permitting processes from grid operators and Local Government Units (LGU). The absence of technology certification and installer accreditation programs leads to higher risks, transaction costs, and lower safety for grid operators and consumers.
The NSP aims to accelerate the penetration of new distributed Solar Power by reducing technology risks, lowering transaction costs, and creating financing options for DG PV customers and third parties. Planned activities include: streamlining the permitting process, accrediting installers, creating a technology certification program, and supporting the development of an initial pipeline of projects to help low grid-impact projects to come online. A Financing Support Fund (FSF) will reduce the perceived risk by local financial institution and facilitate the flow of commercial debt to the distributed RE sector. The NSP will also build the financial sector capacity to evaluate distributed PV projects and bring a variety of financing options for DG PV customers.
Direct financial leverage: The FSF will leverage approximately €75 million in private sector and directly lead to financing 50 MW in DG PV installations. The lower DG PV technology risks, lower soft costs, faster approval processes and available financing products will catalyze the growth of the distributed solar market.
Mitigation potential: The NSP will accelerate development of DG PV market estimated at over 3000 MW. The NSP is expected to lead to 1.8 million tons CO2e in direct reductions over 25 years and cumulative long-term indirect reductions of 47 million tons CO2e by 2040.