The Department of Energy or DoE is expecting to generate more investments in the power sector after the Bangko Sentral ng Pilipinas or BSP allowed banks to expand financing for sustainable energy projects, including transition financing for decarbonization.

Energy Secretary Raphael P.M. Lotilla said on Wednesday that the move will "entail big investments where private sector funds, including equity investments, green bonds or loans would be needed."

"We are therefore pleased with this development noting that clean energy investments over the next decade will be carried out by the private developers," Lotilla said.

Green loans grow

The BSP increased the Single Borrower's Limit or SBL for green loans by 15 percent and cut gradually the applicable reserve requirement for green bonds from the current 3 percent to 0 percent over two years.

The BSP's initiatives fall under its 11-point Sustainable Central banking Strategy to mainstream sustainable finance as well as support the achievement of the country's climate commitments and sustainable development goals.

The central bank's decision supports the DoE's aggressive stance to accelerate the Philippine Energy Transition Program.

Relatedly, Lotilla also welcomed the earlier action of the Board of Investments or BoI for providing income tax holidays or ITH incentives for its own use of renewable energy or RE and energy efficiency projects.

Duty exemption

The BoI also enforced a duty exemption on the importation of capital equipment, raw materials, spare parts, or accessories for RE developments.

"This would certainly aid energy efficient projects which will ultimately redound to the benefit of consumers. The tax incentives will result in increased economic activity and the potential to generate more jobs," Lotilla said.

To date, renewable energy accounted for 29 percent of the country's installed capacity and 22 percent of its gross power generation.