RP seeks investors in wind power sector

The Department of Energy (DOE) launched last Friday the country’s First Philippine Wind Power Contracting Round, offering promising wind sites for development.

Energy Secretary Vincent S. Perez expressed optimism that the Wind Power Contracting Round will gather strong interest from local and foreign companies to further develop the country’s wind potential sites.

With great wind potential as confirmed in numerous studies, the country aims to become the leading wind energy producer in Southeast Asia.

Two wind power projects are already in the pipeline. The 25MW wind farm by NorthWind Power Development Corp. and the 40MW plant by PNOC-Energy Development Corp. (EDC).

According to Perez, the NorthWind project is expected to be completed in April 2005.

Perez said a 118 kiloWatt wind hybrid project located in Batan Island in the northern province of Batanes is already in commercial operation.

In December 2004, the DOE awarded five pre-commercial contracts (PCC) for wind projects.

Three were given to Philippine Hybrid Energy Systems, Inc. for wind projects in Marinduque; Baleno, Masbate; and Tablas, Romblon with a combined 30MW of capacity.

Trans-Asia Renewable Energy Corp were awarded contract to explore, assess, harness and develop wind potential in Sual, Pangasinan for 30MW of capacity; and San Carlos Wind Power Corp. in San Carlos City, Negros Occidental for another 25MW.

The outgoing energy chief said the DOE is also finalizing negotiations with EDC for the development of wind potential in Abra de Ilog, Mindoro Oriental.

Perez said the DOE will accept applications for wind power projects for the said Wind Contracting Round up to October 31, 2005.

A foreign-owned company that is interested to apply for a wind power project contract must form a joint venture or consortium with a Filipino-owned company/companies.

Such that the foreign-owned company will only have a maximum 40 percent participating interest in the consortium.

Whether in joint venture or consortium, the designated operator shall be a Filipino owned or controlled company.

The DOE, in June 2004, launched the Philippine Wind Energy Program by offering 16 wind sites for private sector participation. Details of the country’s wind energy program as well as prospects and opportunities for the development, utilization and commercialization of wind power were summed up in a wind investment kit.

Various incentives await investors willing to look at the Philippines wind potential. These incentives include waiver of production bonus on the first project and payment of production bonus to the government only after the project has fully recovered pre-operating expenses as stated under Executive Order 462, the law encouraging private sector participation in the exploration and development of ocean, solar and wind energy resources.

Other incentives include income tax holiday, reduced duty rates for imported capital equipment and other Board of Investments (BOI) mandated incentives.

"Investors can also avail of financial assistance from lending agencies such as the Development Bank of the Philippines (UNDP), United Nations Development Programme-Global Environment Facility (UNDP-GEF) and Philippine Export and Import Bank (PhilEXIM)," Perez said.

DBP has identified several financing packages under its Wind Energy Financing Program, RE Project Preparation revolving Fund, Rural Power Project for Type A Beneficiaries, Rural Power Project for Type B Beneficiaries and CDM Initiatives.

The UNDP-GEF, on the other hand, offers assistance in the project preparation and loan guarantee for the project. PhilEXIM, for its part, provides loan guarantees to selected wind power projects.