The proposed program has been put out to consultation with the authorities estimating it could generate $2 billion in clean energy investment.

Public tenders will feature a maximum price for the renewable electricity generated by tendered projects the program will be administered by the Philippines Department of Energy, according to a report published by the Institute for Energy Economics Financial Analysis (IEEFA). The research institute added, off-grid electrification projects will be included in the proposed tender system.

“Global capital could come from China’s Belt Road initiative clean energy funding programs initiated by the Asian Infrastructure Investment Bank the Asian Development Bank,” the IEEFA report stated. “Philippine banks such as BDO Unibank Inc are also well positioned to take the lead in green financing.”

Cheaper electricity

IEEFA analysts said auctions could improve the Philippines’ renewable energy market by introducing more transparency price competition by securing large volumes of capacity to meet energy dem in several areas of the nation.

The paper noted the proposed auction system could deliver final clean electricity prices of less than PHP3/kWh ($0.059), a useful development in a country IEEFA reports has the third highest power prices in Asia, behind only Singapore Japan.

If the regime is introduced, the first round of auctions could consider projects which missed out on the expired deadline for securing feed-in tariffs (FITs), according to IEEFA.

The institute reported solar  supplied 4% of the Philippines’ electricity at the end of March, with fossil fuel imports supplying 69%. Of those imports, coal made up 37%, oil 18% natural gas 14%.

The Philippines had 886 MW of installed solar generation capacity at the end of 2018, according to International Renewable Energy Agency figures. Most of the nation’s solar facilities were secured under the previous FIT regime, local utility auctions  net metering, which is available for rooftop PV systems with a generation capacity of up to 100 kW.

The government aims to install 15 GW of clean energy capacity by 2030.