The LGU Guarantee Corp. (LGUGC) and the World Bank signed a $15.8 million worth grant agreement to provide solar-energy access to 40,000 poor families nationwide.
The Access to Sustainable Energy Project (Asep) grant agreement is supported by a $12.8 million worth grant from the European Union (EU) and $3 million from the Global Partnership on Output-Based Aid (GPOBA).
“This project supports affordable, clean energy in the Philippines for those who have no access to the grid,” said Catherine Commander O’Farrell, head of GPOBA. “GPOBA has had a long engagement in the Philippines, working to mainstream results-based financing in the World Bank’s operations to ensure that basic services are extended to poor households.”
This project targets remote areas and isolated islands that do not have access to electricity, particularly in Mindanao, where poverty is disproportionately high and over a quarter of the population lives without electricity.
The project will be implemented by the LGUGC in partnership with electric cooperatives.
The LGUGC, in coordination with other stakeholders, will organize competitive bidding to select private contractors to supply and install the solar home systems (SHS).
GPOBA will disburse output-based subsidies to contractors upon verification that SHSs have been installed and are functioning.
“We are working with the IFC-World Bank Lighting Global Initiative to provide quality service under Access to Sustainable Energy Project,” World Bank Country Director for the Philippines Mara K. Warwick said.
“The certified solar packages will ensure not only lighting, but will also provide households with energy-efficient appliance packages, including televisions, radios, phone chargers and fans,” she added.
The project builds on long-term advisory work undertaken by the World Bank and GPOBA for the government of the Philippines.
This includes support in setting up the policy and regulatory framework for establishing an output-based aid (OBA) solar-energy facility to provide output-based subsidies that make energy affordable for poor households.
Part of the new grant from GPOBA will be allocated for advisory support for organizing transactions for both GPOBA’s subsidy funding and EU funding.
The World Bank has incorporated in the design of Asep lessons learned on the sustainability of solar business models from a previously funded project in the Philippines, the Rural Power Project.
The Washington-based lender will also incorporate the experience gained from implementing successful OBA projects in renewable energy in other parts of the world.