Japanese group may invest in RP’s renewable energy sector

A Japanese group has expressed keen interest to invest in the country’s renewable energy sector particularly in wind power generation, the country’s top energy official said.

"We have been talking with a Japanese investor. This is the first time that they will invest in wind power," Energy Secretary Raphael P.M. Lotilla said.

Lotilla said the group, which is apparently forging a partnership with businessman Philip Romualdez will not only be dealing with renewable sources of power but will also be interested in investing in the country’s mining sector. He declined to identify the Japanese group.

But Lotilla admitted that there are still some issues that the government should resolve to encourage more investors to pour in much-needed capital to develop the renewable sources of energy in the country.

Among the major concerns, Lotilla said, include the tariff. "They believe that the power rates where renewable energy sources may be explored are low.  They want a fair return," he said.

The energy secretary cited the reference rate in Mindanao of P2.14 per kilowatthour which is below the real cost of generation.

The Department of Energy (DOE) has been encouraging investors to take a look at the wind energy potential of the country.

Early this year, the DOE launched the country’s First Philippine Wind Power Contracting Round, offering promising wind sites for development.

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).

A 118 kilowatt (kW) 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.

PNOC-Energy Development Corp. will be developing wind potential in Abra de Ilog, Mindoro Oriental.

Under the wind contracting round, 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.

Other incentives include income tax holiday, reduced duty rates for imported capital equipments 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).

State-owned government financial institution Development Bank of the Philippines (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.