More than 40,000 poor families without electricity in remote areas of the country will soon have access to solar energy under the Access to Sustainable Energy Project grant agreement signed by the LGU Guarantee Corporation (LGUGC) and the World Bank.
The access of households to solar energy is supported with $3 million from the Global Partnership on Output-Based Aid (GPOBA), $12.8 million from the European Union and an additional contribution from the Department of Energy of the Philippines.
“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. We are very pleased that this deep engagement in the country is also reflected in this innovative results-focused energy project.”
This project targets remote areas and isolated islands whose marginalization is increased by a lack of electricity. A particular focus of the project is conflict-affected Mindanao, where poverty is disproportionately high and over a quarter of the population lives without electricity.
The project will be implemented by the private LGU Guarantee Corporation, in partnership with Electric Cooperatives. 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,” said Mara K. Warwick, World Bank Country Director for the Philippines. “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.”
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 European Union 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, as well as experience gained from implementing successful OBA projects in renewable energy in other parts of the world. GPOBA is proud to support the government’s vision of making access to off-grid electrification affordable to the poor in unserved areas of the Philippines using this results-based approach.
GPOBA, a global partnership program founded in 2003 and administered by the World Bank, is a multi-donor trust fund used to develop output and results-based aid approaches to provide basic services in infrastructure, health and education. It has a portfolio of 46 OBA pilot projects with US$234 million in commitments, serving approximately nine million people in marginalized communities.