This mentoring activity aims to build the Development Bank of the Philippines' capacity to evaluate the technical and financial aspects of energy efficiency loan proposals, identify the risks that will affect the financial feasibility of ESCO projects/businesses, and understand the prevailing strategies that mitigate these risks. It also aims to identify donor-funded clean lending programs, funding windows and financing mechanisms that are active in DBP; understand what barriers are preventing DBP from utilizing these donor-funded initiatives; and determine how Subproject D of the Energy for All Initiative can provide targeted technical assistance support to DBP to help it overcome these barriers.

ADB is implementing a regional program called Promoting Sustainable Energy for All in Asia and the Pacific. Its objective is to address the twin challenges of energy security and climate change by supporting the promotion of renewable energy, energy efficiency, and energy access in the Asia Pacific Region.

One of the components of this program is Subproject D: Project Development and Investment Facilitation. It seeks to identify and support the development of clean energy projects, assist mature clean energy transactions secure investment, and share the key insights obtained in this process.

The dynamic interaction and coordination among the stakeholders of the clean energy ecosystem is essential to create an environment that is conducive to investment closure and project implementation. Commercial banks and other lending agencies are among the pillars of such an ecosystem. Therefore, increasing their understanding and appreciation of clean energy business models, financial models, investment structuring and policy & regulation are essential in increasing their participation in the space.

The Development Bank of the Philippines (DBP) is a key player in the Philippine clean energy ecosystem. DBP is mandated by the Government of the Philippines to support the country’s key industries, promote rural entrepreneurship, and advance environmental protection.

Subproject D seeks to foster a working relationship with DBP by organizing a Mentoring Activity on May 2017. The primary beneficiaries of the activity is the Financing Infrastructure, Environment and Logistics Development Department (FIELD) of DBP. FIELD is responsible for the technical evaluation of loan proposals of ‘emerging’ industries, such as renewable energy, energy efficiency and energy access. It works in parallel with a separate department that evaluates the financial component of the loan proposals. According to FIELD loan officers, it has proven to be a challenge to reconcile the technical and financial feasibility of  loan applications that are driven primarily by the technical merits of the project.

DBP’s key officers indicated the need for their teams to enhance their understanding of energy efficiency and renewable energy projects and business models. They have been receiving numerous inquiries from potential borrowers in these two sectors.

This mentoring activity will be implemented in partnership with the EU SWITCH HEMs Project. This project aims to increase the deployment of more efficient electric motors and drive systems in Philippine industries by mobilizing key stakeholders including the financing sector.