The Philippines should ensure that its renewable energy (RE) certificate (REC) market is credible and well-regulated given its potential to become a source of capital for RE projects, according to an Asean-based management consulting firm.
Arthur D. Little Southeast Asia Principal Anna Rellama told the BusinessMirror in an email interview that a viable REC market could provide RE developers with an additional revenue stream while giving companies a verifiable way to demonstrate that the electricity they consume comes from renewable sources.
Rellama said it will also enhance the Philippines’s ability to compete for investments in data centers, semiconductor manufacturers and other sustainability-conscious industries.
‘When a data center operator, a semiconductor manufacturer or a regional headquarters chooses where to build, they run through a familiar list-cost of power, reliability of supply, land, talent, permits,’ she said.
‘Over the last few years, a new question has joined that list: if we operate here, can we credibly report this electricity as renewable, in the language our head office, our auditors and our own customers understand?’
Rellama said the opportunity is ‘significant’ because RECs effectively create a second revenue-generating product from RE.
One REC represents the environmental attribute of one megawatt-hour of renewable electricity. The certificate can be separated from the physical power and sold to a company seeking to substantiate its renewable-energy consumption.
For RE developers, she said this means that a single megawatt-hour can generate revenue from both the electricity itself and its renewable attribute.
Rellama said the additional income could prove particularly valuable for projects that are technically viable but require incremental revenues to reach financial close.
Unlike direct government subsidies, REC revenues are primarily driven by corporate demand for renewable-energy attributes. This could strengthen the financial case for additional investments in solar, wind, geothermal and hydropower projects.
‘The opportunity is not simply about creating certificates,’ Rellama said, saying that the market must be underpinned by credible buyers, standardized products, clear ownership rules and an efficient trading platform.
‘Demand aggregation will also be critical to developing sufficient liquidity and making the market attractive to both buyers and renewable-energy generators.’
Rellama said a domestic REC market could also become a competitive advantage for the Philippines as multinational companies increasingly factor access to credible renewable electricity into investment decisions.
For prospective investors, such as data centers, semiconductor manufacturers and regional headquarters, electricity costs and reliability remain fundamental considerations. But the ability to document the renewable character of electricity consumption is becoming increasingly important as companies face tougher sustainability and emissions-reporting requirements.
Rellama said the Philippines could potentially capitalize on its geothermal, hydropower, solar and wind resources, as well as existing renewable-energy market and registry infrastructure.
She said a credible REC market could ensure that a greater share of corporate spending on decarbonization remains within the Philippine economy.
Philippine exporters and business process outsourcing companies are increasingly being required by multinational customers to substantiate their electricity-related emissions claims. Initiatives and reporting frameworks such as RE100, CDP and the GHG Protocol are contributing to greater scrutiny of corporate energy consumption.
Instead of purchasing renewable attributes from overseas markets, she said companies could acquire Philippine-issued RECs generated by local renewable facilities and retire them against Philippine consumption.
‘This would provide companies with a more direct and verifiable trail for their renewable-energy claims while directing sustainability-related spending toward Philippine generators,’ Rellama said.