The Philippines is a geothermal hotspot. Developing this natural resource will help meet the country's growing demand for power with low-carbon energy and reduce fuel imports.

The Tiwi and MakBan Geothermal Power Green Bonds Project, the first green bond issue in the Philippines, is helping AP Renewables Inc. refinance its capital expenditure and ongoing operations and maintenance at Tiwi and Makiling-Banahaw, the 7th and 4th largest geothermal facilities in the world. Considered a landmark transaction, this new financing mechanism offers an alternative to bank financing and seeks to expand private sector interest in long-term investments for renewable energy development.


"MakBan is the 4th largest geothermal plant in the world. Tiwi and Makban, together, are about 15% of the grid of Luzon, the biggest island market in the Philippines," Scott Roberts, Senior Investment Specialist, Asian Development Bank.

The Philippines is a geothermal hotspot. 9% of the country’s installed power capacity is geothermal. By 2030, the government wants to boost this capacity by 70%. 

Developing this natural resource would reduce fuel imports and help meet surging energy demand without creating harmful greenhouse gases. Participation of the private sector is critical to making this happen. 

In 2008, Aboitiz Group acquired the Tiwi and Makiling-Banahaw (MakBan) assets from the government. 

"The first concern of the organization was how to bring it up to, I would say acceptable standard that we work towards building the facilities safely and soundly and that –everybody benefits from this enterprise," Lino Bernardo, President and COO, AboitizPower Renewables, Inc. 

ADB lent AboitizPowers Renewables, Inc. $37.7 million to help finance the plant’s operations, maintenance, and expansion. 

"So these funds that are available to us will help us maintain our facilities and also expand. It certainly renders credibility to a renewable energy generation company. It also gives a template for other generators to follow, hopefully, because we want people to know about it. Working with ADB helps us also get our A-game in play because ADB has a high set of standards in working with the community, working with regulators, working with the banks," Lino Bernardo, President and COO, AboitizPower Renewables, Inc. 

The project also introduced a new financing mechanism. In the Philippines’ first green bond issue, ADB guaranteed 75% of a $225 million-equivalent bond issued by Aboitiz in Philippine peso. 

"We had proposed a solution where ADB will credit-enhance—and this enabled new lenders to come in and consider the project. It was an opportune time and in a way giving an alternative funding source for infrastructure projects in Asia, not just the Philippines," Genalyn Uy, Senior Investment Specialist, Asian Development Bank 

Credit-enhanced project bonds can offer an attractive alternative to bank financing and expand private sector interest in long-term investments. That will be critical if Asia is to meet its massive infrastructure needs.