ADB eyes up to $-1B loan to boost power grid

SINGAPORE — The Asian Development Bank (ADB) is considering providing financing support to modernize the Philippines’ power transmission grid and enable the integration of new technologies to support the national energy transition push.

ADB Senior Director for Energy Priyantha Wijayatunga said the investment for the proposed transmission system upgrade could reach “up to about a billion dollars” due to the scale of work required to upgrade the grid.

Strengthening Phl’s national grid

“We are looking at strengthening your national grid. The grid has not been strengthened in recent times adequately, particularly to absorb renewable energy (like) offshore wind,” Wijayatunga said in an interview on Wednesday.

Wijayatunga, however, noted that the ADB is still studying the appropriate financing structure, given the National Grid Corporation of the Philippines’ (NGCP) private status.

“If we are talking of sovereign financing, it will have to be through the Department of Energy because obviously, sovereign financing cannot go into the private sector. But it can be both sovereign and non-sovereign,” he said.

Because of this setup, he acknowledged that negotiations could take time, as the project would require agreements between the NGCP and the government.

“There may have to be certain contractual discussions between the grid operator and the government,” he said.

Essential for

renewable integration

A stronger grid is essential for renewable integration, but without new transmission lines and substations, renewable energy produced through new technologies cannot reach consumers.

Beyond transmission, ADB is also preparing support for energy efficiency projects, starting with government buildings, and may extend assistance to decentralized power systems in off-grid islands.

However, Wijayatunga said funding is not the country’s biggest hurdle.

“The projects are there but…”

“One of the biggest issues we have is that the projects are there but they are not ready for financing,” he said, pointing to missing feasibility studies and incomplete permits.

He added that ADB provides technical assistance and concessional funding to help prepare project studies “when requested.”

Raising RE share in power mix to 35%

The Philippine Energy Plan targets to raise the renewable share in the power mix to 35 percent by 2030, 50 percent by 2040, and over 50 percent by 2050.

As of September, renewables accounted for 26 percent of total generation.

Coal’s share rose from 50.6 percent to 55.1 percent, hydro increased to 13.5 percent due to heavy rains, natural gas fell from 22 percent to 17 percent, and oil-based generation slipped to 0.5 percent.