THE Makati Business Club (MBC) urged the government to apply the build-operate-transfer (BOT) model to the power grid industry to prepare the grid for the entry of renewables.
In a statement on Thursday, the MBC called for the issue of an executive order allowing BOT grid projects.
“This would allow third-party investors, whether private sector, or government-owned and -controlled corporations, to build needed transmission infrastructure, and accelerate grid development, both of which are critical to achieving reliable, affordable, renewable energy (RE),” it said.
A BOT scheme allows a project proponent to finance, construct, and operate a project for a fixed term, for later transfer to the government at the end of the period.
The MBC said that grid infrastructure is one of the main issues in achieving “reliable, affordable and renewable power.”
Under the Philippine Energy Plan, the government aims to increase the share of RE in the power generation mix to 35% by 2030 and 50% by 2040.
According to the 2024 Climatescope report by BloombergNEF, the Philippines ranked as the second-most attractive emerging market for RE investment.
However, investment remains a challenge, with the funding gap in RE estimated at $328 billion as of 2023, the MBC said, citing a study by BMI.
“Increased investments in grid infrastructure improve the development of renewable energy, and reduce long-term cost, by improving transmission efficiency. These improvements need to happen at a faster pace given the growing interest of investors in the Philippine renewable energy industry,” the MBC said.
It also called for increased public-private partnerships in off-grid solutions to help achieve 100% electrification, which is the government is targeting for 2028.
Asked to comment, Undersecretary Rowena Cristina L. Guevara said that the DoE has proposed a BOT scheme before.
Under such a setup, the grid operator, the National Grid Corp. of the Philippines (NGCP), remains the system operator and transmission network operator, she said.
Ms. Guevara said the best application of executive orders is “advancing the construction of transmission assets by RE developers or third party to assist NGCP.”
These assets will be turned over to NGCP to operate, she said.
“Timely construction of transmission assets is necessary for RE projects to connect and inject to the grid,” she told BusinessWorld.
Renewables topped the list of energy projects set to go online this year, with total capacity of over 4,800 megawatts (MW), the DoE reported as of Jan. 31.
The NGCP reported available transmission capacity at 10,260 MW, sufficient to allow the integration of new power generation assets.
Upcoming power plants can supply electricity of up to 6,573 MW to the Luzon grid, 2,281 MW to the Visayas grid, and 1,406 MW to Mindanao grid.
The NGCP had yet to reply to BusinessWorld’s request to comment at the deadline. — Sheldeen Joy Talavera