World Bank extends $800-million loan for Philippine energy transition

The World Bank's Board of Executive Directors approved a $800-million loan to support the Philippine government’s efforts to scale up the adoption of clean energy technologies, increase the security, flexibility and competition of electricity markets, and improve water management, according to a report by Philippine News Agency.

In a statement Wednesday, the World Bank said the First Energy Transition and Climate Resilience Development Policy Loan will help accelerate energy transition and increase resilience to climate in the Philippines.

It is expected to increase the share of renewable energy in installed generation capacity from 30 percent in 2023 to 42 percent by 2027; support the procurement of 1,000 megawatts of new offshore wind capacity; and implement energy efficiency measures saving 5 GWh annually.

“Focusing on renewable energy sources and using energy more efficiently can help the country reduce electricity costs, improve energy security, and cut down on pollution,” said World Bank Division Director for the Philippines, Malaysia, and Brunei Zafer Mustafao%u011Flu.

“Using more affordable renewable energy in the energy and transport sectors is crucial for the Philippines to build a strong economy,” Mustafao%u011Flu added.

The World Bank noted that investing in energy transition by focusing on local renewable energy (RE) sources, energy efficiency (EE), and other clean energy sources can help lower electricity generation costs while increasing energy security.

It added that expanding the proportion of consumers that can choose their electricity supplier and improving the framework for competitive procurement of renewable energy will help lower electricity prices.

"To accelerate energy transition and keep electricity affordable for all Filipinos, the Philippines needs reforms to ensure achieving the government’s renewable energy and energy efficiency targets, improving grid capacity and flexibility, and enhancing competition in electricity markets," said Feng Liu, World Bank Senior Energy Specialist and Task Team Leader of the operation.

“These reforms can help lower power supply cost and improve the reliability and resilience of the power system, thereby making electricity more affordable and reliable for Filipino households and businesses,” Liu added.

The loan from World Bank will also be used to improve governance and cohesiveness in the water sector by introducing policy reforms for water resources management and water supply and sanitation by promoting better coordination between national and local governments.

“These reforms in the water sector are expected to increase access to safely managed water supply and sanitation services; raise funding and financing for water and sanitation projects; and improve the financial sustainability of local government-run water service providers. Ultimately, the DPL, a first for the Philippine water sector is a move toward more effective coordination, planning and management across sectors and levels of government,” said World Bank Senior Water Supply and Sanitation Specialist Maria Fiorella Fabella.