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Philippines Attracting European Green Energy Investment Interest

Business Opportunities | November 27, 2023

It is nearly a year since the Philippines’ Department of Energy announced it would allow foreign ownership for certain renewable energy resources, in an effort to speed up the nation’s transition to clean energy. 

Disappointingly, despite a national target of 35% of renewable energy by 2030, and 50% by 2040, the Philippines had actually been headed in the opposite direction, falling from 34% in 2008 down to 21% in 2021. 

The DOE responded, making its announcement by issuing Circular No. 2022-11-0034, which amended the Renewable Energy Act of 2008.  When this new policy came into effect on 8 December 2022, it removed the previous need for exploration, development, and utilization of wind, solar, hydro, and wave or tidal energy resources, to involve Filipino-ownership.  Previously, the requirement was that such enterprises had to be at least 60% Filipino-owned. 

The Renewable Energy Act includes incentives such as:

  • A seven-year corporate income tax “holiday”, followed by a low 10% corporate income tax rate thereafter
  • Tax exemptions for carbon credits generated from renewables
  • A 1.5% realty tax cap on the original cost of equipment and facilities used to produce renewable energy
  • VAT exemptions for certain costs relating to the transmission and connection of electricity generated from renewable sources

Growing interest from Germany

A high-profile visit to Manilla by Germany’s climate envoy, Jennifer Morgan, in April 2023, was followed just a few months later by reports that green energy firm Wpd AG, from Bremen, is “eyeing up” potential wind and solar investments worth nearly €1 billion; these projects, located in Aklan, Ilocos Norte, Ilocos Sur, Abra, Antique and Bulacan, have a planned capacity of 565.6 MW in total.  The Department of Trade and Industry in Manilla has also confirmed WPD’s investment for 1,300 MW of offshore wind energy capacity, potentially located in Cavite, Batangas, Negros Occidental and Guimaras, with an estimated investment of €6.69 billion.

In an official statement, the DTI said, “Wpd’s investment accounts for around 78 percent of the total BOI-approved projects as of April 2023. For the first quarter of 2023, 91 percent of all the total approved foreign investments into the Philippines were accounted for by Germany”.

Streamlined approvals

The Manilla government’s online EVOSS (Energy Virtual One-Stop Shop) system streamline key approvals processes.  EVOSS allows the coordinated submission and synchronous processing of all required data and information; it provides a single decision-making portal for actions on applications for permits or certifications, related to new power generation, distribution or transmission projects.

It’s a bold strategy that seems to be paying off, as major green energy players look to invest substantially in the region.  That will be good for the economy, for long-term energy security, and for the environment.  And it’s opening up a great opportunity for businesses in green energy supply chains to get involved.

Melchers in the Philippines

Established in 1806, and with more than 150 years of experience in East Asia, Melchers is trusted by many international brands and producers to be their “feet on the ground” in this region’s diverse markets, drawing on deep local networks and knowledge, and combining them with dynamic business services and trade infrastructure, to create powerful synergies that deliver results for your business.

The Melchers Group has been doing business in the Philippines since the late 1980’s. Since then, Melchers Philippines has grown in step with the Philippine economy, and is trusted by many western manufacturers as their strong and reliable partner for business within the Philippine archipelago.

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