Philippines 4th largest foreign RE host in developing Asia

MANILA, Philippines — The Philippines ranks among the top host economies of international renewable energy (RE) investments in developing Asia and Oceania, according to a recent report by the United Nations Conference on Trade and Development (UNCTAD).

Figures from the UNCTAD’s World Investment Report 2023 showed that the Philippines was the fourth largest host of international RE investments in Developing Asia and Oceania from 2015 to 2022.

“The top host economies for international renewable energy projects in the region are India, Vietnam and Taiwan which attract more than 40 percent of the projects,”the UNCTAD said.

The report also highlighted the Philippines’ adoption of a feed-in-tariff (FIT) scheme for RE investors in 2012.

“The Philippines, for instance, adopted FITs in 2012 with impressive results. Five years after the start of the program, the country’s capacity in solar, biomass and wind energy had been multiplied by eight.This success shows that policy design and implementation are as crucial as rates. Indeed, project developers give a lot of importance to factors such as administrative processing times, grid access and legal security,” the UNCTAD said.

“The Government of the Philippines followed a list of best practices, by adopting a long-term framework and associating FITs with financial incentives. The extra cost implied by FITs was put on the consumers,”the report said.

The UNCTAD report highlighted that international investment in renewable energy has nearly tripled since the adoption of the Paris Agreement in 2015, adding that these investments have been concentrated in developed countries.

“In developing regions, the growth of international project finance and greenfield projects has been much more gradual. It has outpaced GDP growth, but only marginally,”the UNCTAD said.

The organization called for urgent support to developing countries to enable them to attract significantly more investment for their transition to clean energy.

The report emphasized that developing countries need renewable energy investments of about $1.7 trillion annually but attracted foreign direct investment in clean energy worth only $544 billion in 2022.

It said  that total funding needs for the energy transition in developing countries are much larger and include investment in power grids, transmission lines, storage and energy efficiency.

“A significant increase in investment in sustainable energy systems in developing countries is crucial for the world to reach climate goals by 2030,” UNCTAD secretary-general Rebeca Grynspan said.

The report proposes a compact setting out priority actions ranging from financing mechanisms to investment policies to enable developing countries to attract investments to build sustainable energy systems.

“On financing, the report calls for the de-risking of energy transition investment in developing countries through loans, guarantees, insurance instruments and equity participation of both the public sector – through public private partnerships and blended finance – and multilateral development banks,” the UNCTAD said.

In addition,  partnerships between international investors, the public sector and multilateral financial institutions can significantly reduce the cost of capital for clean energy investment in developing countries, according to the UNCTAD.

UNCTAD also emphasizes the need for debt relief to offer developing countries fiscal space to make the investments necessary for the clean energy transition and to help them attract international private investment by lowering country risk ratings.

The report also shows that the growth of investment in renewable energy slowed down in 2022, as international project finance deals declined.