Philippines: Rural Community-Based Renewable Energy Development in Mindanao

Sovereign Project | 44132-012

Summary

The Government of the Philippines asked the Asian Development Bank (ADB) to provide policy and advisory technical assistance (TA) to pilot and develop viable business models for rural community-based renewable energy in Mindanao. The TA will impact investment in renewable energy projects in the Philippines. The outcome will be development of a business model for livelihood development using renewable energy in the Caraga region of Mindanao. The TA will develop the renewable business models through at least five pilot systems, using microhydro, solar photovoltaic, small wind, and other indigenous sources, with an estimated capacity of 200 kilowatts (kW) overall to serve the energy needs of about 1,500 households in the Caraga region of Mindanao.

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Project Name Rural Community-Based Renewable Energy Development in Mindanao
Project Number 44132-012
Country Philippines
Project Status Approved
Project Type / Modality of Assistance Technical Assistance
Source of Funding / Amount
TA 7781-PHI: Rural Community-based Renewable Energy Development in Mindanao
Clean Energy Facility - Asian Clean Energy Fund US$ 2.00 million
Strategic Agendas Environmentally sustainable growth
Inclusive economic growth
Drivers of Change Governance and capacity development
Partnerships
Sector / Subsector

Energy - Energy efficiency and conservation - Renewable energy generation - small hydro - Renewable energy generation - solar - Renewable energy generation - wind

Finance - Inclusive finance

Gender Equity and Mainstreaming Gender equity
Description

The Government of the Philippines asked the Asian Development Bank (ADB) to provide policy and advisory technical assistance (TA) to pilot and develop viable business models for rural community-based renewable energy in Mindanao. The TA will impact investment in renewable energy projects in the Philippines. The outcome will be development of a business model for livelihood development using renewable energy in the Caraga region of Mindanao. The TA will develop the renewable business models through at least five pilot systems, using microhydro, solar photovoltaic, small wind, and other indigenous sources, with an estimated capacity of 200 kilowatts (kW) overall to serve the energy needs of about 1,500 households in the Caraga region of Mindanao. The TA is expected to generate the following outputs: (i) renewable energy resource and demand assessment; (ii) pilot renewable energy projects; (iii) productive use of renewable energy; (iv) establishment of CBOs and revolving fund for livelihood enhancement; and (v) knowledge dissemination.

The TA is estimated to cost $2,400,000 of which $2,000,000 will be financed on a grant basis, by the Asian Clean Energy Fund (established by the Government of Japan) under the Clean Energy Financing Partnership Facility, and administered by ADB. The NEA will be the executing agency for the TA and will collaborate closely with Department of energy, the local electric cooperatives ,and other relevant government agencies. The NEA will assign a project coordinator before contract negotiations and counterpart staff to work with the consultants.

The TA will be implemented over 30 months, beginning 1 March 2011.

Project Rationale and Linkage to Country/Regional Strategy

Although the Philippines achieved 100% of rural electrification in 2009 at the barangay level, there are still about 4.3 million still unenergized households all over the country, particularly in Mindanao. The Government's target is to achieve 90% electrification at household level mostly through development renewable energy by 2017. Development of renewable energy is an effective way to address indigenous peoples' poverty.

ADB's Country Partnership and Strategy 2005-2007, which has been extended to 2010, emphasizes support for removing infrastructure bottlenecks in power, transport and agriculture sectors to increase competitiveness of the country. In particular, supply of secure, affordable electricity is key to promote sustainable growth in the country. ADB's country strategy recognizes the linkage between rural development and access to electricity. The poorest households and communities in the country are found in the far-flung, unelectrified sitios particularly in Mindanao where the poverty incidence is highest. The proposed PATA is part of ADB's Energy for All Initiative to develop innovative approaches to deliver access to affordable, modern energy for the poor and scaling up renewable energy. Access to energy underpins ADB's poverty alleviation mandate and long-term Strategy 2020 objectives of inclusive and environmentally sustainable growth. Maximizing access to energy is one of three pillars of ADB's 2009 Energy Policy, which aims to help ADB's developing member countries (DMCs) provide reliable, adequate, and affordable energy for inclusive growth in a socially, economically, and environmentally sustainable way.

The recently completed energy sector assessment, strategy and roadmap (ASR) has clearly identified Mindanao as a geographical focus for ADB assistance given the substantial progress in the power sector reforms that have attracted private sector investments in Luzon and Visayas. Moreover, the current power shortages experienced in Mindanao call for urgent actions in developing sustainable renewable energy resources to diversify the energy mix meet the growing demand in Mindanao.

The formulation and design of the proposed PATA has benefited from the lessons learnt form the recently completed Renewable Energy for Negros Occidental Project financed by JFPR particularly in terms of livelihood activities and revolving fund operated by the Community Based Organizations (CBOs) established under the Project. The CBOs can play an active role in the implementation of the project and will ensure long term sustainable benefits of the renewable energy facilities. In this context, gender and indigenous people issues will be identified and addressed under the PATA. Moreover, PATA will formulate appropriate business models that will involve public and private partnership (PPP) for developing renewable energy in Mindanao. In this regard, it is noted that the cost of the renewable energy and the affordability to consumers will be a key issue for the design of business model and successful PPP.

Impact Business models developed for scale-up of renewable energy projects in the Philippines.
Project Outcome
Description of Outcome Households in Caraga, Mindanao provided with affordable renewable energy.
Progress Toward Outcome Completion of TA Consultant's report on rapid assessment of RE resources. Aside from Caraga Region, Davao Region was included in the assessment. Micro hydro power will be used for livelihood development of community based organizations in Don Marcelino Municipality, Davao del Sur and Bayugan City, Agusan del Sur.
Implementation Progress
Description of Project Outputs

1. Rapid assessment of RE resources, review of RE technologies and models, existing infratructure and socioeconomic profiles of target areas.

2. Design and installation of at least 6 RE projets with aggregated capacity of 200 kW with local spare parts.

3. Productive use of RE based electricity.

4. Revolving fund is set up.

5. Investment plan and preparatory work for replication and scaling up RE development for other areas is completed.

6. Development of Knowledge kit.

Status of Implementation Progress (Outputs, Activities, and Issues)

The TA completion date is changed from 28 February to 30 September 2015.

Activity 1 - Initial project scoping was conducted by TA consultants and presented during the TA Inception Workshop in November 2011. Location covered are Davao and CARAGA region. TA Consultants report on initial project scoping submitted in Feb 2012.

Activity 2 - Technical feasibility study, engineering designs of three Micro Hydropower plants (MHPPs), financial ananlysis, and the capacity building assessment for the community livelihood development were completed in September 2013. The procurement of MHPPs was completed in Setember 2014 and the installation of MHPPs is on going.

Activity 3-6 - The consulting firm was engaged in January 2014. The stakeholder's meeting was held in March 2014 for facilitating the project implementation. NGO/Micro financing institutes were engaged in August 2014 for initial operation of revolving fund for the livelihood development. The implementation of remaining outputs is on going.

Geographical Location Mindanao, Philippines
Summary of Environmental and Social Aspects
Environmental Aspects
Involuntary Resettlement
Indigenous Peoples
Stakeholder Communication, Participation, and Consultation
During Project Design
During Project Implementation
Business Opportunities
Consulting Services 22 person-months international and 30 person months national consulting services
Responsible ADB Officer Choon Sik Jung
Responsible ADB Department Southeast Asia Department
Responsible ADB Division Energy Division, SERD
Executing Agencies
National Electrification AdministrationD & E Bldg.
1050 Quezon Ave.,
Quezon City, Phil.
Timetable
Concept Clearance 20 Aug 2010
Fact Finding 19 Oct 2010 to 22 Oct 2010
MRM -
Approval 16 Feb 2011
Last Review Mission -
PDS Creation Date 19 Jul 2010
Last PDS Update 11 Mar 2015

TA 7781-PHI

Milestones
Approval Signing Date Effectivity Date Closing
Original Revised Actual
16 Feb 2011 27 Apr 2011 27 Apr 2011 31 Aug 2013 30 Sep 2015 -
Financing Plan/TA Utilization Cumulative Disbursements
ADB Cofinancing Counterpart Total Date Amount
Gov Beneficiaries Project Sponsor Others
0.00 2,000,000.00 400,000.00 0.00 0.00 0.00 2,400,000.00 16 Feb 2011 909,664.45
Title Document Type Document Date
Rural Community-Based Renewable Energy Development in Mindanao Technical Assistance Reports Jan 2011

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