Solar Park - Bolbok 1

Decarbonizing Philippines with Solar Energy: A catalyst for change

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In 2021, the Philippines committed to a projected greenhouse gas (GHG) emissions reduction and avoidance of 75% by 2030, one of the most ambitious targets among Southeast Asian countries. This commitment is not just a promise but a call to action. It recognizes the urgency of addressing climate change and the nation's responsibility to contribute meaningfully to global efforts. The Asian Development Bank (ADB) reported a staggering 139% increase in emissions from 1990 to 2018, with the energy sector responsible for 59% in 2018. As of August 2023, coal-fired power plants still dominated the Philippines’s power generation, at 46%, with renewable sources, such as solar, wind, and hydropower plants representing only 20% of the mix. Faced with this challenge, the Government of the Philippines (GoP) has taken decisive action, imposing a moratorium on new coal-fired capacity and mandating distribution utilities to procure a defined share of energy from renewables. To specifically follow through on this call to action, the Philippines’ Department of Energy (DOE) presented a target to increase the share of renewable energy to 35% by 2030  and to 50% by 2040.

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As the agency in charge of the country’s shift to sustainable energy, the DOE has been pushing initiatives to drive more investments and developments in renewable and alternative energy sources. At the forefront of this green revolution is the game-changing Green Energy Auction Program (GEAP). Citicore Renewable Energy Corporation (CREC) took part in the second round of the GEAP, securing 917MW of green energy commitments from the government.  CREC, in line with government aims to expedite and reach renewable energy targets, has also committed to rolling out 1GW of renewable energy every year in the next five years. Among the projects intending to meet that goal are two Solar PV farms by CREC, financed through a Mezzanine Construction Green Loan Facility structured by Pentagreen Capital; namely Bolbok 1 and 2, located in Barangay Bolbok, Batangas Province. Both are shining stars within this program and are set to sell energy to distribution utilities and electric cooperatives, with TransCo acting as the direct off-taker. This strategic approach ensures a widespread impact, with the energy reaching registered distribution utilities (DUs) and electric cooperatives (ECs) nationwide.

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These Solar PV farms stand out for their innovative offtake structures, fostering collaboration between state-linked off-takers and direct Power Purchase Agreements (PPAs) with both local and international corporations. This approach supports the national agenda and drives commercial and industrial decarbonization. To enhance stability in the energy grid, the projects support later-stage integration of a Battery Energy Storage System (BESS), which CREC is also developing. This forward-thinking enhancement ensures a more reliable and consistent green energy supply. The projects also introduce a unique, financing structure led by Pentagreen Capital, that contributes to the market creation of mezzanine debt for greenfield assets in emerging Asia. Pentagreen’s financial innovation is crucial for facilitating rapid decarbonization and providing the necessary financial support for groundbreaking projects. This partnership between CREC, the only pure renewable energy developer and operator in the Philippines, and Pentagreen Capital, acting as a premiere sustainable infrastructure catalyst, is a direct response to the Government of Philippines call for concrete action in the fight against climate change.