Low-interest financing models under study for offgrid power

THE Department of Energy (DoE) said it is exploring new low-interest financing schemes for renewable energy (RE) developers to accelerate the rollout of hybrid off-grid power projects served by the Small Power Utilities Group (SPUG).

In a statement on Thursday, the DoE said it held discussions with government agencies and the industry to advance hybridization efforts in off-grid and missionary areas served by SPUG.

Hybrid projects integrate renewable energy into SPUG power plants, which typically employ diesel generators.

The department is aiming to implement a hybridization project for SPUG power plants through private-sector participation.

“With our partners from the government and financial institutions, we aim to identify viable financing structures and determine new potential collaborations so that we can collectively bring RE solutions to SPUG areas and accelerate our energy transition goals,” Energy Undersecretary Rowena Cristina L. Guevara said.

At present, the true cost of generation in SPUG areas averages about P18 per kilowatt-hour (kWh) and can go as high as P62 per kWh in some locations.

However, consumers in these off-grid areas pay only around P7–8 per kWh because of subsidies funded by charges collected from all electricity consumers.

“We are here to explore a bold possibility of enabling low-interest financing for renewable energy developers without sovereign guarantees and without the usual required power supply agreements,” Ms. Guevara said.

“As we enter retail competition and open access, where contracts are shorter, this might seem ambitious — but it is possible and would surely help transform how we scale RE in the Philippines,” she added.

Created by the Electric Power Industry Reform Act of 2001, SPUG is responsible for generating power and operating associated systems in areas not connected to the national transmission grid.

National Power Corp. President and Chief Executive Officer Jericho Jonas Nograles said the state-run company is ready to work with the DoE, development partners, and the private sector “to accelerate hybridization and ensure that no community is left behind.” — Sheldeen Joy Talavera