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.