SOLAR POWER

OPPORTUNITIES IN THE

PHILIPPINES

RUTH P BRIONES

Chairman/CEO, Greenergy Solutions Inc.

TOPICS Assessment of Philippines’s solar energy potential

Best practice examples of solar generation and investment

returns in the Philippines

Outlining the project application process to secure approval

Foreign investment opportunities and project finance

PART I: Assessment of the Philippine

Solar Energy Potential

Solar Energy Potential in Asia

PHILIPPINES: 4.5-5.0 kWh/m2/day

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The Renewable Energy Map Potential in the Philippines

MINDANAO

VISAYAS

LUZON

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Sites/ Areas

with solar

energy

Potentials in

the Philippines

792,147,408 MWhr/year

Rank No 68 globally, 2008

Second country in Southeast

Asia in terms of irradiation

and insolation.

Solar irradiation: 1900

kilowatts a square meter

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PHILIIPPINES

SECOND COUNTRY IN ASIA-

IRRADIATION AND ISOLATION

Has all the foundation to become a renewable

energy leader in the region owing to the strong semi-

conductor industry and the manpower base

Most comprehensive

Renewable Energy Law in Asia

Solar Energy

Investment

Potential

for the

Philippines

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Solar Energy projects registered under

DOE as of December 2013

AWARDED SOLAR PROJECTS

GRID USE 56

OWN USE 5

POTENTIAL

CAPACITY

Grid use

Own use

1,012.0 MW

1.594 MW

PENDING PROJECTS UNDER RE LAW

GRID USE 4

POTENTIAL

CAPACITY

33.0 MW

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PART II.

Best practice examples of solar

generation and investment

returns in the Philippines

Best practice examples of solar generation

and investment returns in the Philippines

Asian Development Bank Rooftop Project

Funded by Asian Development Bank

Commissioned in 2012

574-kW capacity located in its

Ortigas headquarters;

Installed by Suntech with integration

by Propmech

About 600 MWhr/year of solar

electricity.

Largest rooftop installation in the

country.

•

CEPALCO 1.1 MW Photovoltaic Power Plant

Installed in 2003

133rd largest solar power plant

worldwide , 2008

Consist of 6,480 Sharp

ND-Q7E6Z Photovoltaic modules

Designed to provide 1,500 MWhr

of electricity annually

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• Starbucks , St. Charge store, Quezon City,

Philippines

1. Size: 20.58 kWp solar PV System designed

with 84 Monocrystalline panel;

2. Produced 3,671 kWh displacing 10.6% of

electricity sourced from grid – ten months

operation;

3. Savings of Php 34,000.00 in ten months

4. The system has a 25-year year economic

life;

5. Installed to replace expensive electricity

sourced from grid and as cooling the

temperature of the roof and interior;

6. Promotes green advocacy of Starbucks

Best practice examples of solar

generation and investment returns in the

Philippines

Source: www.tuscsolar.com

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PART III.

Outlining the project application

process to secure approval of a

Solar Renewable Energy Project

Outlining the project application process to secure approval

of a Solar Renewable Energy Project

The Development Stages

I. Site and project

assessment

II. Design and

optimization

III. Procurement

IV. Installation and

commissioning

V. Operation and

maintenance

VI. Customer

enablement

Technical and Regulatory Requirements

• Track Record/Experience

• Work Program

• Key Personnel Experience

• List of Existing company owned

equipment available for RE projects

operations

Financial Requirements:

i. Audited Financial Statement

ii. Bank Certification to substantiate

the Cash Balance

iii. Projected Cash Flow for two

years

iv. List of existing company owned

equipment for the project

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The Department of Energy Renewable

Energy Developer License Processes DOE DC2009-07-0011)

Pre-development Stages

• Preliminary Assessment

• Feasibility Study

• Financial Closing

• Declaration of Commerciality

RE Developer procure permits

• Environmental Compliance Certificate

• Free and Prior Informed Consent

• Certificate of Non-Overlap

• Local Government Endorsements

• Other government permits

Service contract as RE Developer

• Individual Filipino

• Corporation: 60% Filipino; 40 % Foreign

• 100% Foreign owned – shall register under the Philippine Laws for Technical and Financial Assistance

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PART IV.

Foreign investment

opportunities and project

finance for solar power

Legal and Regulatory Institutional Frameworks For

Foreign Investments in Solar Projects in the Philippines

• Republic Act No 9513 -Renewable Energy Law

• Executive Order No. 226-Omnibus Foreign Investment

Code of 1987

Republic Act No. 7042- Foreign Investment Code of 1991

Republic Act No.7721- Foreign Banks Act

Republic Act No.7652 – Investors Lease Act

Republic Act No. 7718- Build- Operate- Transfer Law

Investment Priority Projects of 2014

Philippine Millennium Development Goals

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Sources and Manner of Financing

A. Public Sector Loans – Government Banks ( Land Bank of the Philippines,

Development Bank of the Philippines)

B. Private Sector Loans ( World Bank, International Financing Corporation,

Asian Development Bank)

C. Short Term Loans

D. Domestic Borrowings – local banks

E. Other Financing Institutions – international and local

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Solar electric power has a great deal of appeal for investors looking

at opportunities in the renewable energy market in the Philippines

Easy to assess and forecast the availability of the resource.

No variability associated with the cost of the main fuel,

sunshine.

Compared to other renewable sources of energy, solar PV

is quick to deploy.

A utility scale solar PV plant can be developed in 1.5 years as

compared to an average of 2 years for onshore wind and up

to 7 years for a geothermal power plant.

Rapid deployment makes solar an attractive solution in the

Philippines in order to meet the country’s renewable portfolio

standards and keep up with increasing energy demand.

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INVESTMENT PROPOSAL

AND APPROVAL

• Any investment proposal

shall comply with certain

requirements under

Philippine laws.

Merger - must comply with the legal requirements under the Corporation Code of the Philippines;

Acquisition - must comply with Section 40 of the Corporation Code and subject to the restrictions regarding foreign equity ownership under the 1987 Constitution.

Management Contract - must comply with Section 44 of the Corporation Code.

Joint Venture - may be entered into without legal restriction on registration unless the parties thereto form another business organization requiring registration such as a corporation or partnership

Project Funding

Scheme

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INVESTMENT PROPOSAL AND APPROVAL

BASIC INFORMATION USUALLY

SOUGHT BY AN INVESTOR/FUNDER

• Name of proponent, Physical address, Postal address, Telephone number, Fax Number, E-mail address, name of contact person, Mobile Phone Number of contact person.

• Brief description of investment proposal

• Proposed Value of Investment

• Proposed Corporate status of the proponent

• Proposed capital of investment entity and timing of capital take up

• Name and references of the EPC contractor

PROJECT INFORMATION

REQUIRED

• Site of proposed investment

• Basis of access to site

• Proposed duration of investment

• Anticipated rate of return on investment

• Environmental Impact of the investment

• Amelioration and remediation of environment

impact

• Proposed employment impact

• Number, grades and source of any proposed

expatriate staff and proposed duration of their

employment

• Anticipated benefits of the investment to the

economy and infrastructure

• Audited balance sheet for proponent

organization

• Due diligence certificate for proponent

• Company profile of proponent

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The Solar

Power

investment

bankability

challenge

Technology: is it proven?

Can the EPC provide references and has capability to deliver the project on time?

What is the anticipated ROI?

Will it be viable commercially with the Feed-in-tariff rate of Php9.68 per kWhr?

When is the facility generate a good return?

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KEY DRIVERS IN

SOLAR PROJECT

FINANCE

Project Analysis — Completion

Risk Contractors

Manufacturers Transmission

Construction Contract Terms

Construction Technology

Risk

Project Analysis — Operation

Risk

Operator Operating

Costs

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FOREIGN INVESTMENT OPPORTUNITIES AND

PROJECT FINANCE

Solar projects can be complex and funding sources fickle.

It is important for developers to complete the solar project

while funding is still available and to ensure investors the

project will operate as planned.

Foreign investment

Opportunities and

Project finance

Foreign and local solar technology developers are pushing for a massive installation of solar panels on rooftops of households, commercial establishments and buildings in the country.

Potential market for solar industry players : estimated at about $450 million, or P19 billion, yearly. Based on the 50,000 households (representing 10 per cent of the half a million constructions yearly) that can install solar panels with a capacity of 2 kilowatts.

To produce a kilowatt of solar power from these rooftop panels, one would need to invest about $4,500 for the actual components and installation works.

Investment can be recovered in about seven years;

Solar panels usually last for at least 25 years.

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Please Contact: • Ruth P Briones • Email: hrpbriones@gmail.com

• Phone Nos: +632 430 1725

• Mobile No: +63 916 627 0910

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