MANILA (Bloomberg): Many prospective investors who won contracts for renewable energy projects in the Philippines had no plans of building them. They were only waiting to sell those rights to someone else for the right price.
That led the Department of Energy to terminate agreements for nearly 18 gigawatts of solar, wind and other clean-power projects, according to Energy Secretary Sharon Garin.
It’s a costly speed bump for the nation that’s ahead of its Southeast Asian neighbors in its push for green energy projects with full foreign ownership and tax incentives. Manila aims to boost the share of renewables in its energy mix to more than a third by the end of the decade from about a quarter now.
"There are companies that are just getting contracts and they’re waiting to sell it to somebody else,” Garin said in an interview. "It’s like bonds or stocks, they’re just waiting for the time when the price rises.”
Excluding the canceled contracts, the country still has more than 130 gigawatts of renewable energy projects in the pipeline, far more than any other nation in Southeast Asia, according to data compiled by Global Energy Monitor.
Garin said that puts the government on track to meet its target of increasing the share of clean power in the country’s energy mix to 35% by 2030 and eventually to 50% after a decade. The contribution of renewables is ahead of natural gas that’s at around 10%, but coal dominates the mix at about 60%.
"Because there are more credible investors that are willing” to get contracts and fill the gap caused by the cancellations, she said. The agency will hold an investment forum on Friday to announce new auctions for the contracts. "This year alone, we’ll probably have about eight auctions compared to only one or two every year previously,” the former lawmaker said.
The Philippines will lead the region’s deployment of battery energy storage systems with 2.6 gigawatts expected to be added this year, according to BloombergNEF, as more clean-power projects are built. Nearly all of the new storage capacity additions will come from the first phase of Manila Electric Co.’s Terra Solar project that has total capacity of 3.5 gigawatts, it said.
Bulk of the solar power contracts terminated by the government belonged to Solar Philippines, with 33 out of its 42 contracts canceled, Garin said, after the company failed to deliver on its commitments and in updating the agency on the status of the projects despite repeated calls to do so.
Congressman Leandro Leviste, who founded the company, referred Bloomberg News to a previous video post on his Facebook account when sought for comment. In that video, he denied delivering only a fraction of the contracts and that he didn’t sell any franchise. Last month, he stepped down as board member of the firm behind the Terra Solar project.
"We will protect the credible and reliable investors, but we will discipline those who are not delivering,” Garin said. "We’re past the infancy stage. Now, different sets of rules have to be established.”
Apart from green energy, the nation of 113 million people is also seeking to prolong the life of its main Malampaya gas field.
President Ferdinand Marcos Jr. last month announced that a Philippine contractor discovered a new gas source near Malampaya, which is estimated to contain around 98 billion cubic feet of gas and would help extend the life of its depleting gas field.
Garin said the new energy source will be connected to the power system by end of the year and that two other areas near the field have also shown potential. But the country will need to continue importing liquefied natural gas to meet its growing energy needs. "The more renewables you have, the more gas you need,” she said.
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