1. BEST PRACTICES AND POLICIES SHARING OF GREEN ENERGY FINANCE IN THE PHILIPPINES
Conference on APEC Green Energy Finance
Taipei, Chinese Taipei/ August 18-19, 2016
PAUL D. LAZARO
First Vice President
Development Bank of the Philippines

2. Presentation Outline Our Profile Philippine Laws (RE and Bio-fuels)
Financing Assistance
Best Practices
Challenges
Summary

3. 1. Our Profile
A premier development financial institution dedicated to support the national government’s thrusts
7th Largest Bank: Total Asset as of 2015 – US$10.8 Billion or P508 Billion (BSP)
Committed to triple bottom line - Social, Environment and Economics
1st Local Bank to be ISO Certified
Recipient of national and international awards (ADFIAP, Karlsruhe Awards, etc.)
Strength is on medium and long-term financing

4. 1. Our Profile Priority Thrusts Infrastructure and Logistics
Environment Initiatives
Social Services & Community Devt.
Micro, Small and Medium Enterprises

5. Contribution in RE Development (operational & under construction)
1. Our Profile
Contribution in RE Development (operational & under construction)
LUZON MW
VISAYAS MW
MINDANAO MW
. . . total capacity of MW

6. Funded Renewable Energy Projects
1. Our Profile
Funded Renewable Energy Projects
Beneficiary
Luzon Grid
KWH Generated
73,687,000 KWH
CO2 avoided
33, Tons
Fuel oil equivalent
139, barrels
FOREX Savings
US$ 8.81 Million
50 MW Solar Power Plant
Tarlac City, Tarlac

7. Funded Renewable Energy Projects
1. Our Profile
Funded Renewable Energy Projects
Beneficiaries
3 Municipalities
San Fernando, Magdiwang & Cajidiocan
Consumers Savings
USD 0.029/KWH
Savings in UCME (Est.)
USD 306,180.00
Service reliability
24 hours
KWH Generated
5,438,860 KWH
CO2 avoided (Est.)
4,350 Tons
Fuel oil equivalent
10,264 Barrels
FOREX Savings
US$1.32 Million
900 KW Cantingas Mini-hydro Plant
Sibuyan Island, Romblon

8. Funded Renewable Energy Projects
1. Our Profile
Funded Renewable Energy Projects
Beneficiary
Negros Island
KWH Generated
3,251,576 KWH
Production Capacity
100,000 liters per day
CO2 avoided
1,476 Tons
Fuel oil equivalent
6,136 barrels
FOREX Savings
US$ Million
8 MW Bio-ethanol Cogeneration Plant
San Carlos, Negros Occidental

9. Funded Renewable Energy Projects
1. Our Profile
Funded Renewable Energy Projects
Beneficiary
Visayas Grid
KWH Generated
120,790,000 KWH
CO2 avoided
62,206 tons
Fuel oil equivalent
227,948 barrels
FOREX Savings
US$25.9 Million
54 MW San Lorenzo Wind Farm
Guimaras Island

10. Funded RE Contributions
1. Our Profile
Funded RE Contributions
ENVIRONMENT
Avoided 1,252,630 tons of CO2 emissions
SOCIAL
Provided employment to 6,600 workers. Implemented strict compliance to relevant social and environmental laws (NCIP, ECC, etc.)
ECONOMIC
Avoided annual importation of Million barrels of fuel; FOREX Savings of US$ Million; Savings on Govt. Subsidy of US$ Million per annum

11. Renewable Energy Act of 2008
2. Philippine Laws
Biofuels Act of 2006
(Republic Act No. 9367)
Provides fiscal incentives and mandates the use of biofuel-blended gasoline (10% bio-ethanol) and diesel fuels (2% biodiesel)
Renewable Energy Act of 2008
(Republic Act No. 9513)
Provides fiscal and non-fiscal incentives to private sector developers and manufacturers

12. INCENTIVES UNDER RENEWABLE ENERGY LAW
2. Philippine Laws
INCENTIVES UNDER RENEWABLE ENERGY LAW
Fiscal Incentives
Non-Fiscal Incentives
7-Year Income Tax Holiday
Renewable Portfolio Standards
Duty-free Importation
Feed-In Tariff on Emerging Technologies
VAT-free Importation
Renewable Energy Market & Certificates
Special Realty Tax Rate = 1.5 %
Green Energy Options
Net Operating Loss Carryover
Net Metering
10% Corporate Tax Rate after Income Tax Holiday
Government waives share of proceeds on RE micro-scale Projects <= 100 kW
Accelerated Depreciation
Exemption from Universal Charge
Zero Percent VAT on RE Sales & Purchases
Tax Rebate for RE Components
Cash Incentive = 50% of UC for Missionary Electrification
Financial Assistance Program
Tax Exemption on Carbon Credits
Incentives for Host Communities
Tax Credit on Domestic Capital Equipment & Services

13. 3. Financing Assistance DBP’s Policy Based Financing Programs
Financing Utilities for Sustainable Energy Development (FUSED) Program
Green Financing Program (GFP)

14. 3. Financing Assistance 1. Program Features 2. Products and services
Eligible purposes : capital expenditures, working capital, interest during construction and consultancy services
Term : based on cash flows, maximum of 15 years inclusive of up to 5 years grace period on principal
Interest rate : prevailing market rate, fixed or variable
2. Products and services
Project Financing with technical assistance on environmental projects
Project Preparation for small scale renewable energy projects (up to 10 MW)
Loan Syndication
Transaction and Financial Advisory

15. 4. Best Practices Enactment of laws
Provision of long-term financing/project preparation assistance
Need for lender’s engineer
Higher project success rate under an EPC Contract than construction by administration
Development of renewable energy in off-grid areas is more inclusive
Technical, environment and social safeguards due diligence to ensure community acceptance and sustainability
Capacity building on the different green energy technologies

16. 5. Challenges
Renewable Energy project is site specific and capital intensive
Limited long-term funds to support green energy projects
Technical constraints (e.g. transmission lines, ancillary services, ROW)
Market constraints in an island grid due to limited off-takers

17. 6. Summary Government policy directions and laws are key drivers
Financing plays a major role in the sustainable development of green energy projects
As a bank, due diligence should not only focus on the borrower’s capacity but more so on the project
Long-term financing is necessary in the development of green energy projects
Programs and project impacts and outcomes should be aligned with the country’s development goals (e.g. PDP, SDG)

18. Thank you. Development Sector For more information, please contact:
DBP Head Office, Makati City, Philippines
(632) to 20