Offshore Wind Roadmap For The Philippines

Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized
THE PHILIPPINES
Offshore Wind Development Program
OFFSHORE WIND ROADMAP FOR

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CONTENTS
Executive summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . xvii

Rationale for offshore wind in the Philippines . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . xvii
The Philippines’ offshore wind potential . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . xviii
Scenarios for development . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . xx
Challenges for developing offshore wind . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . xxi
Recommended actions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . xxii
1. Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2. Two scenarios for offshore wind in the Philippines . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

2.1 Volumes and timing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.2 Location of offshore wind projects . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
3. Low growth scenario . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

3.1 Development areas . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
3.2 Electricity mix . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
3.3 Levelized cost of energy and net generation cost benefit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
3.4 Supply chain and economic impact . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
3.5 Transmission and port infrastructure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
3.6 Environmental and social impacts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
3.7 Finance and procurement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
3.8 Actions to deliver the low growth scenario . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
3.9 SWOT analysis in the low growth scenario . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
4. High growth scenario . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14

4.1 Development areas . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
4.2 Electricity mix . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
4.3 Levelized cost of energy and net generation cost benefit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
4.4 Supply chain and economic impact . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
4.5 Transmission and port infrastructure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
4.6 Environmental and social impacts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
4.7 Finance and procurement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
4.8 Actions to deliver the high growth scenario . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
4.9 SWOT analysis for the Philippines in the high growth scenario . . . . . . . . . . . . . . . . . . . . . . . . . . .20
i
5. Recommendations in roadmap for offshore wind in the Philippines . . . . . . . . . . . . . . . . . 21
5.1 Justification for our key roadmap recommendations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
5.2 Vision and volume targets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
5.3 Partnerships . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
5.4 Ownership . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
5.5 Leasing, permitting, and power purchase . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
5.6 Finance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
5.7 Grid connection and transmission network . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
5.8 Port infrastructure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
5.9 Understanding the marine environment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
5.10 Supply chain development . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
5.11 Standards and regulations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
5.12 Capacity building and gender equality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
5.13 Roadmap summaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Supporting information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
6. Key factors for successful development of offshore wind in an emerging market . . . . 34

6.1 A clear energy strategy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
6.2 Stable offshore wind policies and pipeline visibility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
6.3 A strong and accessible transmission network . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
6.4 A coherent industrial policy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
6.5 Resourced, joined-up institutions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
6.6 Confident, competitive environment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
6.7 Supportive and engaged public . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
6.8 A commitment to safety . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
6.9 Using the best locations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
7. Benefits and challenges of offshore wind . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42

7.1 Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
7.2 Challenges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
7.3 Floating offshore wind . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
8. Market volume in the Philippines . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50

8.1 To date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
8.2 A vision for offshore wind to 2050 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
8.3 In the Philippines’ national context . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
8.4 Within East and Southeast Asia . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
8.5 Globally . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
8.6 Offshore wind energy production and cost data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
ii Offshore Wind Roadmap for the Philippines

9. Spatial mapping . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
9.1 Purpose . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
9.2 Method . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
9.3 Results . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .63
9.4 Discussion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
9.5 Recommendations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
10. Cost of energy reduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76

10.1 Purpose . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
10.2 Method . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
10.3 Results . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78
10.4 Background: details of methodology . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89
11. Supply chain analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 97

11.1 Purpose . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 97
11.2 Method . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 97
11.3 Results . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .99
11.4 Discussion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 115
11.5 Recommendations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 115
12. Jobs and economic benefit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 116

12.1 Purpose . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 116
12.2 Method . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 116
12.3 Results . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 117
12.4 Background: detail of method . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 125
13. Gender aspects . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 127

13.1 Purpose . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 127
13.2 Method . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 127
13.3 Results . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 127
13.4 Discussion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 130
13.5 Recommendations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 130
14. Environmental and social considerations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 132

14.1 Purpose . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 132
14.2 Method . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 132
14.3 Results . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 135
14.4 Regulatory framework review . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 163
14.5 Discussion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 166
Contents iii
15. Health and safety . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 168
15.1 Purpose . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 168
15.2 Method . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 168
15.3 Feedback from developers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 168
15.4 Results . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 169
15.5 Discussion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 173
16. Leasing and permitting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 174

16.1 Purpose . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 174
16.2 Method . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 174
16.3 Results . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 175
16.4 Discussion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 180
17. Procurement of energy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 183

17.1 Purpose . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 183
17.2 Method . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 183
17.3 Results . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 184
17.4 Discussion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 185
18. Transmission infrastructure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 187

18.1 Purpose . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 187
18.2 Method . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 187
18.3 Current transmission network . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 187
18.4 Considerations with increased deployment of variable renewable energy . . . . . . . . . . . . . . . . 188
18.5 Current transmission network upgrade plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 189
18.6 Future network requirements and implementation process . . . . . . . . . . . . . . . . . . . . . . . . . . . . 197
18.7 Grid connection process . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 199
18.8 Discussion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 202
19. Port infrastructure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 205

19.1 Purpose . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 205
19.2 Method . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 205
19.3 Results . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 208
19.4 Discussion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 221
iv Offshore Wind Roadmap for the Philippines

20. Risk and bankability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 226
20.1 Purpose . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 226
20.2 Method . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 226
20.3 Results . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .227
20.4 Discussion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 229
21. Finance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 234

21.1 Purpose . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 234
21.2 Method . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 234
21.3 Results . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .234
21.4 Discussion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 243
22. Stakeholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 244
Appendix: priority biodiversity values . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 250

1. Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 250
2. Methodology . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 251
3. Legally protected areas and internationally recognized areas . . . . . . . . . . . . . . . . . . . . . . . . . . 252
4. Natural habitats . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 275
5. Cartilaginous fish . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 277
6. Marine turtles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 278
7. Birds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 279
8. Marine mammals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 280
9. Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 281
References for Appendix . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 282
References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 293
Contents v
Figures
Figure ES.1 The 40GW vision for offshore wind and transmission network in the Philippines
in the high growth scenario, 2050. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . xix
Figure ES.2 Impact of offshore wind in the Philippines under low and high growth scenarios,
2020 to 2040. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . xx
Figure ES.3 Priority themes to create a successful offshore wind industry in the Philippines . . . . . . . . xxii
Figure 2.1 Annual installed and cumulative operating capacity in the two scenarios in the Philippines,
2020-50. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Figure 2.2 Estimated program for a representative, early offshore wind project
in established markets.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Figure 2.3 Long-term ambition in low growth scenario in the Philippines, 2020-50. . . . . . . . . . . . . . . . . . 5
Figure 2.4 Long-term ambition in high growth scenario in the Philippines, 2020-50. . . . . . . . . . . . . . . . . 5
Figure 2.5 Potential offshore wind development zones, the Philippines . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Figure 3.1 Projected amount and share of electricity supplied by offshore wind and other sources
in the low growth scenario in the Philippines, 2020-50 low growth scenario . . . . . . . . . . . . . . . . . . . . . . . . 8
Figure 3.2 LCOE and cumulative net generation cost benefit of offshore wind compared to
traditional technology in the low growth scenario in the Philippines, 2025-50. . . . . . . . . . . . . . . . . . . . . . . 9
Figure 3.3 Estimated number of jobs created in the low growth scenario
in the Philippines, 2021-40. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Figure 3.4 Local GVA in the low growth scenario in the Philippines, 2021-40.. . . . . . . . . . . . . . . . . . . . . . . . 11
Figure 4.1 Projected share and amount of electricity supplied by offshore wind and other sources
in the high growth scenario in the Philippines, 2020-50. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Figure 4.2 LCOE and cumulative net generation cost benefit of offshore wind compared to
traditional technology in the high growth scenario in the Philippines, 2025-50. . . . . . . . . . . . . . . . . . . . . . 15
Figure 4.3 Projected number of OSW-related jobs created in high and low growth scenarios in the
Philippines, 2021-40 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Figure 4.4 Projected local GVA in high and low growth scenarios in the Philippines, 2021-40 . . . . . . . . . 17
Figure 5.1 Strategy, policy, frameworks, and delivery: four key pillars for successful
offshore wind development. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Figure 5.2 Summary of recommended government and project developer responsibilities for
offshore wind activities through the project lifecycle in the Philippines. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Figure 5.3 Low growth scenario roadmap for offshore wind in the Philippines. . . . . . . . . . . . . . . . . . . . . . . 31
Figure 5.4 High growth scenario roadmap for offshore wind in the Philippines. . . . . . . . . . . . . . . . . . . . . . 32
Figure 6.1 Annual rate of meeting different offshore wind milestones required to deliver
high growth scenario. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Figure 8.1 Historic and forecast electricity supply in the Philippines, split by generation
type (without OSW). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
Figure 8.2 Historic and forecast electricity supply in the Philippines split by generation
type (with OSW high growth scenario). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
Figure 8.3 Indicative forecast of cumulative operating offshore wind capacity in high growth
scenario in the Philippines and in the rest of East Asia end 2030, 2040 and 2050. . . . . . . . . . . . . . . . . . 54
Figure 8.4 Indicative forecast of cumulative operating offshore wind capacity globally end 2050. . . . 54
Figure 9.1 Offshore wind technical potential in the Philippines. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
Figure 9.2 Water depth in the Philippines. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
Figure 9.3 Maximum 50-year gust speed at height of 100 meters in East Asia. . . . . . . . . . . . . . . . . . . . . 66
Figure 9.4 Map of ground acceleration (earthquake risk) in East Asia. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
Figure 9.5 Environmental Restrictions and Exclusions in the Philippines. . . . . . . . . . . . . . . . . . . . . . . . . . . 68
Figure 9.6 Social and technical considerations in the Philippines. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
Figure 9.7 Relative LCOE for a reference project in the Philippines in 2033 in the high
growth scenario. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
vi Offshore Wind Roadmap for the Philippines

Figure 9.8 Relative LCOE for a reference project in the Philippines in 2033 in the high
growth scenario, focused on potential offshore wind development zones. . . . . . . . . . . . . . . . . . . . . . . . . . . 71
Figure 9.9 Map of potential offshore wind development zone locations with key considerations. . . . . 72
Figure 9.10 Map of potential offshore wind development zones, showing areas of
WBG technical potential. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
Figure 10.1 Sensitivity analysis around Philippines fixed project installed in 2028. . . . . . . . . . . . . . . . . . 78
Figure 10.2 Estimated LCOE trajectory for the Philippines, compared to established
market trends and indicative comparator . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
Figure 10.3 LCOE breakdown for floating offshore sites in the low growth scenario. . . . . . . . . . . . . . . . . 84
Figure 10.4 Source of LCOE reduction by cost element for floating offshore sites in the
low growth scenario. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85
Figure 10.5 Source of LCOE reduction by geography for floating offshore sites in the
low growth scenario. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86
Figure 10.6 LCOE breakdown for floating offshore sites in the high growth scenario. . . . . . . . . . . . . . . . 87
Figure 10.7 Source of LCOE reduction by cost element for floating offshore sites in the
Figure 10.8 Source of LCOE reduction by geography for floating offshore sites in the
Figure 10.9 Schematic showing inputs and outputs for the BVGA cost model run. . . . . . . . . . . . . . . . . . 90
Figure 10.10 Schematic showing conversion from established to local market conditions. . . . . . . . . . . . 91
Figure 10.11 Schematic showing derivation of LCOE trends. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 91
Figure 11.1 Assessment of supply chain for project development. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 102
Figure 11.2 Assessment of supply chain for nacelle, hub, and assembly. . . . . . . . . . . . . . . . . . . . . . . . . . . 103
Figure 11.3 Assessment of supply chain for blades. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 104
Figure 11.4 Assessment of supply chain for towers. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 105
Figure 11.5 Assessment of supply chain for foundations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 106
Figure 11.6 Assessment of supply chain for array and export cables. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 107
Figure 11.7 Assessment of supply chain for offshore substations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 108
Figure 11.8 Assessment of supply chain for onshore infrastructure. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 108
Figure 11.9 Assessment of supply chain for turbine and foundation installation. . . . . . . . . . . . . . . . . . . 109
Figure 11.10 Assessment of supply chain for array and export cable installation. . . . . . . . . . . . . . . . . . . 110
Figure 11.11 Assessment of supply chain for offshore and onshore substation installation. . . . . . . . . . . 111
Figure 11.12 Assessment of supply chain for wind farm operation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 112
Figure 11.13 Assessment of supply chain for turbine maintenance and service. . . . . . . . . . . . . . . . . . . . . 113
Figure 11.14 Assessment of supply chain for balance of plant maintenance and service. . . . . . . . . . . . . 114
Figure 11.15 Assessment of supply chain for decommissioning. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 115
Figure 12.1 Total annual FTE-years employment for a single 1GW project installed in 2033,
split by cost element. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 118
Figure 12.2 Total GVA for a single 1GW project installed in 2033, split by cost element. . . . . . . . . . . . . . 118
Figure 12.3 Total annual FTE years of employment created by all the projects in the
Philippines in the high growth scenario, split by cost element. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 119
Figure 12.4 Total GVA created by all the projects in the Philippines in the high growth
scenario, split by cost element. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 119
Figure 12.5 Total annual FTE years of employment created by all the projects in the
Philippines in the low growth scenario, split by cost element. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 120
Figure 12.6 Total GVA created by all the projects in the Philippines in the low growth scenario,
split by cost element. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 120
Figure 12.7 Annual local FTE years of employment created by all the projects in the
Philippines in the high growth scenario, split by cost element. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 122
Contents vii
Figure 12.8 Annual local GVA created by all the projects in the Philippines in the high
growth scenario, split by cost element. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 122
Figure 12.9 Annual local FTE years of employment created by all the projects in the
Philippines in low growth scenario, split by cost element. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 123
Figure 12.10 Annual GVA created by all the projects in the Philippines in low growth
scenario, split by cost element. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 123
Figure 13.1 Key metrics for men and women in the Philippines workforce. . . . . . . . . . . . . . . . . . . . . . . . . 128
Figure 13.2 The gender pay gap in the Philippines. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 129
Figure 14.1 Protected areas in the Philippines. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 137
Figure 14.2 Marine protected areas. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 138
Figure 14.3 Critical habitats. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 139
Figure 14.4 Key biodiversity areas in the Philippines. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 141
Figure 14.5 AZE sites in the Philippines . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 142
Figure 14.6 Ramsar sites in the Philippines. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 143
Figure 14.7 EBSAs in the Philippines. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 144
Figure 14.8 UNESCO World Heritage Sites in the Philippines. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 145
Figure 14.9 UNESCO-MAB reserves in the Philippines. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 146
Figure 14.10 Coral reefs in the Philippines. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 147
Figure 14.11 Seagrass areas in the Philippines. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 148
Figure 14.12 Mangrove areas in the Philippines. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 149
Figure 14.13 Cartilaginous fish areas in the Philippines. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 150
Figure 14.14 Marine turtle areas in the Philippines. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 151
Figure 14.15 IMMAs in the Philippines . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 153
Figure 14.16 Endemic bird areas in the Philippines. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 155
Figure 14.17 Commercial fishing ports. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 157
Figure 14.18 Protected landscape and seascape areas in the Philippines. . . . . . . . . . . . . . . . . . . . . . . . . . 159
Figure 14.19 Ports and shipping routes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 161
Figure 14.20 Military bases in the Philippines. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 162
Figure 14.21 Map of ECAs. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 164
Figure 18.1 Forecast installed generating capacity, reference (left) and
clean engery scenario (right) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 188
Figure 18.2 Power plants. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 189
Figure 18.3 Key load centers. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 189
Figure 18.4 National transmission outlook. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 191
Figure 18.5 North Luzon transmission outlook. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 192
Figure 18.6 South West Luzon transmission outlook. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 193
Figure 18.7 Batangas-Mindoro interconnection. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 194
Figure 18.8 Southeast Luzon transmission line and Luzon-Visayas interconnection outlook. . . . . . . . 195
Figure 18.9 Central Visayas transmission outlook. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 196
Figure 18.10 South Visayas transmission outlook. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 196
Figure 18.11 Competitive Renewable Energy Zones CREZs in 2020. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 215
Figure 18.12 Transmission vision in the high growth scenario for 2050. . . . . . . . . . . . . . . . . . . . . . . . . . . 203
Figure 19.1 Port of Batangas Yard. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 211
Figure 19.2 Keppel Batangas Shipyard. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 212
Figure 19.3 Batangas Heavy Fabrication Yard. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 214
Figure 19.4 Keppel Subic Shipyard. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 215
Figure 19.5 Hanjin Heavy Industries Shipyard – Subic. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 217
Figure 19.6 Herma Shipyard – Bataan. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 218
Figure 19.7 Tsuneishi Heavy Industries – Balamban – Cebu. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 220
viii Offshore Wind Roadmap for the Philippines

Figure 19.8 Offshore wind manufacturing and construction ports in the Philippines. . . . . . . . . . . . . . . 221
Appendix: Figure 1: Marine protected area networks (MPANS) in the Philippines . . . . . . . . . . . . . . . . . . 255
Appendix: Figure 2: Priority conservation areas for the Whale Shark and other elasmobranch
in the Philippines . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 278
Appendix: Figure 3: Marine mammal strandings in the Philippines (2005–2018, based on
15 x 15 km grids created for each municipality/city coastline) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 280
Tables
Table 2.1 Characteristics of the two market development scenarios explored for the
Philippines, 2030, 2040, 2050. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Table 3.1 SWOT analysis for the Philippines in the low growth scenario for OSW development. . . . . . . . 13
Table 4.1 SWOT analysis for the Philippines in the high growth scenario for OSW development. . . . . . 20
Table 5.1 Summary of assessment of key conditions for OSW in the Philippines. . . . . . . . . . . . . . . . . . . . 23
Table 8.1 Electricity supplied by offshore wind to 2050 in the high growth scenario. . . . . . . . . . . . . . . . 52
Table 8.2 Energy production and cost data for low growth scenario . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
Table 8.3 Energy production and cost data for high growth scenario. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
Table 9.1 Spatial data layers used in the analysis. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
Table 9.2 Assumed characteristics of the reference wind farm project used in the modeling. . . . . . . . . 62
Table 9.3 Potential offshore wind development zones. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
Table 10.1 Key parameters for the typical sites modelled, against year of installation. . . . . . . . . . . . . . . . 77
Table 10.2 Indicative LCOEs for typical the Philippines sites modelled. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
Table 10.3 Cost element breakdown supporting LCOEs for 2028. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82
Table 10.4 Provides definitions for floating OSW. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 92
Table 11.1 Categorization of the supply chain. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 97
Table 11.2 Criteria for assessing current and future capability in the Philippines. . . . . . . . . . . . . . . . . . . . 99
Table 11.3 Summary of the supply chain analysis. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100
Table 11.4 Change in the Philippines supply chain in low and high growth scenarios. . . . . . . . . . . . . . . . . 101
Table 12.1 Local content for the OSW projects in the Philippines completed in
2028, 2032, and 2036. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 121
Table 12.2 Local supply chain investments to facilitate OSW in the Philippines. . . . . . . . . . . . . . . . . . . . 124
Table 14.1 RAG scale for environmental, social, and technical considerations. . . . . . . . . . . . . . . . . . . . . . 132
Table 14.2 Summary of environmental, social, and technical considerations. . . . . . . . . . . . . . . . . . . . . . 135
Table 14.3 Categories for Key Biodiversity Areas. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 140
Table 14.4 DENR-EMB categorization for wind energy projects. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 165
Table 15.1 Relevant health and safety legislation and guidance documents (UK/worldwide). . . . . . . . . 171
Table 16.1 List of necessary permits, licenses, and registrations for developing OSW projects. . . . . . 179
Table 18.1 Summary of the grid connection process. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 201
Table 19.1 Criteria for assessing the Philippines port capabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 208
Table 19.2 Port of Batangas Yard specifications. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 211
Table 19.3 Keppel Batangas Shipyard specifications. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 213
Table 19.4 Batangas Heavy Fabrication Yard specifications. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 214
Table 19.5 Keppel Subic Shipyard specifications. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 216
Table 19.6 Hanjin Heavy Industries Shipyard specifications. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 217
Table 19.7 Herma Shipyard specifications. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 219
Table 19.8 Tsuneishi Heavy Industries specifications. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 220
Table 19.9 Summary of manufacturing and construction ports for offshore wind
in the Philippines. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 222
Table 20.1 Offshore wind developer investment risks in the Philippines, with red/amber/green ratings
according to the perceived risk magnitude . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 227
Contents ix
Table 21.1 Financing details of five onshore wind energy projects . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 236
Table 21.2 Selection of active MDB-funded renewable energy projects in the Philippines . . . . . . . . . . . 239
Table 22.1 Key stakeholders. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 245
Appendex: Table 1: The philippine LPA alignment with the IUCN protected
area management categories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 253
Appendex: Table 2: Critical habitats in the Philippines, designated under the wildlife act . . . . . . . . . . 256
Appendex: Table 3: KBAs in the Philippines with coastal and marine components and
LPAs and other IRAs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 258
Appendex: Table 4: IBAs in the Philippines with coastal and marine components . . . . . . . . . . . . . . . . . 263
Appendex: Table 5: AZE sites in the Philippines with coastal and marine components . . . . . . . . . . . . . 265
Appendex: Table 6: Ramsar sites in the Philippines with coastal and marine components . . . . . . . . . 266
Appendex: Table 7: IMMAs in the Philippines . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 269
Appendex: Table 8: Protected areas within the sulu-sulawesi marine ecoregion EBSA . . . . . . . . . . . . . 272
Appendex: Table 9: Summary table of digitized spatial data to be included in exclusion
and restriction zone layers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 281
Appendex: Table 10: List of threatened marine species with global ranges overlapping
the Philippine EEZ . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 285
Appendex: Table 11: List of data sources to inform marine spatial planning,
site selection and environmental and social impact assessment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 289
Appendex: table 12: Environmental stakeholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 291
x Offshore Wind Roadmap for the Philippines

ABBREVIATIONS
AEP Annual energy production

AIS Automatic Identification System
AWC Asian Waterbird Census
AZE Alliance for Zero Extinction
BOOT Build-own-operate-transfer
CAPEX Capital expenditure
CDM Construction, design, and management
CfD Contract for difference
CIT Corporate income tax
COC Confirmation of Commerciality
CPA Conservation Priority Areas
CREZ Competitive Renewable Energy Zone
CTV Crew transfer vessel
DECEX Decommissioning expenditure
DEVEX Development expenditure
DOC Declaration of Commerciality
EAAFP East Asian-Australasian Flyway Partnership
E&S Environmental and Social
EBA Endemic Bird Areas
EBSA Ecologically or Biologically Significant Areas
ECA Environmentally Critical Area
ECC Environmental Compliance Certificate
ECP Environmentally Critical Projects
EEZ Exclusive economic zone
EMP Environmental Management Plan
ENIPA Expanded National Integrated Protected Areas System
EPIRA Electric Power Industry Reform Act
ESF Environmental and Social Framework
ESIA Environmental and social impact assessment
ESS Environmental and social standards
EVOSS Energy Virtual One-Stop Shop
FEED Front-end engineering and design
FID Final investment decision
xi
FIT Feed-in tariff
FTE Full-time equivalent
GCA Grid Connection Agreement
GEAP Green Energy Auction Program
GEBCO General Bathymetric Chart of the Oceans
GEOP Green Energy Option Program
GIIP Good international industry practice
GIS Geographical information system
GVA Gross value added
GWA Global wind atlas
HVDC High voltage direct current
IBA Important Bird Area
IBAT Integrated Biodiversity Assessment Tool
IMMA Important Marine Mammal Areas
INDC Intended declared contribution
KBA Key Biodiversity Area
KPI Key performance indicator
LCOE Levelized cost of energy
LGU Local Government Unit
LMPA Locally Managed Protected Area
LNG Liquified natural gas
LOI Letter of intent
LPA Legally protected areas
MAB Man and the Biosphere
MDB Multilateral development bank
MLA Multilateral lending agencies
MPA Marine Protected Area
MSA Metering Service Agreement
MSP Marine spatial planning
NIPAS National Integrated Protected Areas System
NGO Nongovernmental organization
NREP National Renewable Energy Program
OATS Open Access Transmission Service
ODA Official Development Assistance
OMS Operations and maintenance service
OPEX Operational expenditure
OCSP Open and competitive selection process
OSH Occupational Safety and Health
xii Offshore Wind Roadmap for the Philippines

OSHS Occupational Safety and Health Standards
OSW Offshore wind
PCM Production Cost Model
PDA Predetermined Area
PDP Power development plan
PDS Predevelopment stage
PEP Philippine Energy Plan
PEISS Philippine Environmental Impact Statement System
PPA Power purchase agreement
PSC Petroleum Service Contract
PSIPP Private Sector Initiated Power Project
RD&D Research, design, and development
RESC Renewable energy service contract
RESHERR Renewable Energy, Safety, Health and Environment Rules and Regulations
REZ Renewable Energy Zone
RORO Roll-on-roll-off
RPS Renewable Portfolio Standard
R&D Research and development
SEF Sustainable Energy Finance
SDG Sustainable Development Goal
SOLAS Safety of life at sea regulations
SOT Spreadsheet Optimization Tool
SOV Service operation vessel
SPMT Self-propelled modular transport
SSME Sulu-Sulawesi Marine Ecoregion
SSMP Small Scale Mining Permit
STEM Science, technology, engineering, and mathematics
SVC Static var compensator
TDP Transmission development plan
TLP Tension-leg platform
TSA Transmission Service Agreement
WACC Weighted average cost of capital
WCD Works completion date
WDPA World database on protected areas
WESC Wind energy service contract
WESM Wholesale Electricity Spot Market
Abbreviations xiii
Company and Institute Abbreviations
ADB Asian Development Bank
AG&P Atlantic, Gulf and Pacific Company
ANZ Australia and New Zealand Banking Group Limited
ASEAN Association of Southeast Asian Nations
BDO Banco de Oro
BFAR Bureau of Fisheries and Aquatic Resources
BOI Board of Investments
BPI Bank of the Philippine Islands
BSP Bangko Sentral ng Pilipinas, the central bank of the Philippines
BWC Bureau of Working Conditions
CAAP Civil Aviation Authority of The Philippines
CPA Cebu Port Authority
DBP Development Bank of the Philippines
DEA Danish Energy Agency
DENR Department of Environment and Natural Resources
DND Department of National Defense
DOE Department of Energy
DOLE Department of Labor and Employment
DOTr Department of Transportation
DTI Department of Trade and Industry
DTU Danish Technical University
EDC Energy Development Corporation
EIB European Investment Bank
EKF Eksport Kredit Fonden
EMB Environmental Management Bureau
EPIMB Electric Power Industry Management Bureau
ERC Energy Regulatory Commission
GWO Global Wind Organization
GWEC Global Wind Energy Council
GWNET Global Women’s Network for the Energy Transition
HHI Hanjin Heavy Industries
IFC International Finance Corporation
ILO International Labour Organization
IRENA International Renewable Energy Agency
MARINA Maritime Industry Authority
NCIP National Commission on Indigenous Peoples
xiv Offshore Wind Roadmap for the Philippines

NGCP National Grid Corporation of the Philippines
NREB National Renewable Energy Board
OIMB Oil Industry Management Bureau
PPA Philippine Ports Authority
RCBC Rizal Commercial Banking Corporation
Transco National Transmission Corporation
WBG World Bank Group
Abbreviations xv
ACKNOWLEDGMENTS
This report is one of a series of offshore wind roadmap studies commissioned by the World Bank Group under the
joint ESMAP-IFC Offshore Wind Development Program. Funding for this study was generously provided by the
Energy Sector Management Assistance Program (ESMAP) and PROBLUE.
This roadmap was prepared, under contract to the World Bank, by BVG Associates in association with Arup and
Puno Law. It includes a country assessment of biodiversity sensitivities undertaken by The Biodiversity Consultancy.
The roadmap work was supervised by Maria Ayuso Olmedo (Energy Specialist, World Bank) and Feng Liu (Senior
Energy Specialist, World Bank).
Direction for this roadmap was provided by the World Bank Group’s Offshore Wind Development team, led by
Mark Leybourne (Senior Energy Specialist, ESMAP/World Bank) and Sean Whittaker (Principal Industry Specialist,
IFC), and supported by Alastair Dutton (Consultant, ESMAP/World Bank) and Maya Malik (Consultant, ESMAP/
World Bank). GIS analysis and mapping were carried out by Rachel Fox (Consultant, ESMAP/World Bank).
Administrative support was provided by Noppakwan Inthapan (Program Assistant, World Bank) and Teresita
Fallado Victoria (Program Assistant, World Bank). Communications and outreach support was provided by Alyssa
Anne Pek (Consultant, ESMAP/World Bank)
Peer review was carried out by Mariano Gonzalez Serrano (Senior Energy Specialist, World Bank), Rahul Kitchlu
(Lead Energy Specialist, World Bank), Christophe de Gouvello (Senior Energy Specialist, World Bank), Alice
Thuillier (Senior Investment Officer, IFC), with inputs from Charu Suri (Senior Investment Officer, IFC), Jonathan
David Santos Chu (Investment Officer, IFC), and Iban Vendrell Armengol (Senior Investment Officer, IFC)—we are
thankful for their time and feedback.
We are exceptionally grateful to the wide range of stakeholders who provided feedback during the report
consultation process, and especially to Undersecretary Felix William B. Fuentebella, Director Mylene Capongcol,
Director Marissa Cerezo, Jan A. Ramos, Ferdinand Binondo and Jaime Planas from the Department of Energy’s
Renewable Energy Management Bureau (DOE- REMB) and the Solar and Wind Energy Management Division (DOE-
SWEMD) for all the inputs provided by them.
We would like to recognize the efforts of Bruce Valpy and Mona Petersen of BVG Associates for leading the
consultancy team and for their enthusiasm and dedication to this topic. We thank the Asian Development Bank
(ADB), and the Global Wind Energy Council (GWEC) and its members for their views and feedback on this roadmap.
We also thank COWI, BlueFloat, Copenhagen Offshore Partners, Equinor ASA, Iberdrola, Macquarie-GIG, Northland
Power, Mainstream Renewable Power, Vestas, Siemens Gamesa, PetroGreen Energy Corporation, and Copenhagen
Energy for participating in the industry consultations.
Finally, we thank the ESMAP donors for their engagement on this roadmap, particularly the embassies and staff
from the Danish and UK Governments for their comments and feedback.
xvi Offshore Wind Roadmap for the Philippines

EXECUTIVE SUMMARY
This roadmap provides strategic analysis of the offshore wind development potential in the Philippines,
considering the opportunities and challenges under different, hypothetical growth scenarios. The goal
is to provide evidence to support the Government of the Philippines in establishing policy, regulations,
processes, and infrastructure to enable successful growth of this new industry.
The roadmap was initiated by the World Bank country team in the Philippines under the umbrella of
the World Bank Group’s (WBG’s) Offshore Wind Development Program—which aims to accelerate
offshore wind development in emerging markets—and was funded by the Energy Sector Management
Assistance Program (ESMAP) in partnership with the International Finance Corporation (IFC).
RATIONALE FOR OFFSHORE WIND IN THE PHILIPPINES
With over 7,000 islands, the Philippines has a rich maritime history and is a renowned seafaring
nation. The country’s waters have conditions that are well suited to offshore wind and this abundant,
indigenous energy resource offers an opportunity for the Philippines to carry out the following:
■ Improve energy security: The Philippines is heavily reliant on imported fossil fuels. The
uncertainty of future availability and price of these fuels puts the country at risk from supply
constraints and price increases. Offshore wind, alongside other local renewable energy resources,
could help increase energy independence and resilience, as well as help reduce the country’s large
trade deficit.i
■ Lower greenhouse gas emissions: Emissions from the burning of coal and oil comprise around 87
percent of the Philippines’ carbon emissionsii and total emissions are rising rapidly. Low-carbon
electricity from offshore wind could help reduce energy-related emissions and help the Philippines
achieve its Nationally Determined Contribution (NDC) targetiii of peak emissions by 2030.
■ Increase renewable energy supply: Although renewable energy generation is increasing, its
overall share of the Philippines’ electricity mix has decreased substantiallyiv from 34 percent of
total electricity generation in 2008 to around 21 percent in 2021. The National Renewable Energy
Program (NREP) sets a target of 35 percent share of renewable energy in the power generation
mix by 2030 and 50 percent share by 2040. Offshore wind could contribute to the +28 GW of new
generation capacity requiredv by 2030.
i IMF. 2021. “Philippines Country Report.” https://www.imf.org/-/media/Files/Publications/CR/2021/English/1PHLEA2021003.ashx.

ii ICOS. 2021. “Data supplement to the Global Carbon Budget 2021.” https://www.icos-cp.eu/science-and-impact/global-carbon-budget/2021.
iii UNFCCC. 2021. “Republic of the Philippines. Nationally Determined Contribution (NDC).” https://www4.unfccc.int/sites/ndcstaging/PublishedDocuments/
Philippines%20First/Philippines%20-%20NDC.pdf.
iv Department of Energy. 2022. “National Renewable Energy Program.” https://www.doe.gov.ph/national-renewable-energy-program.
v Department of Energy. 2022. “Philippine Energy Plan 2020–2040.” https://www.doe.gov.ph/sites/default/files/pdf/pep/PEP_2020-2040_signed_01102022.pdf.
xvii
■ Reduce demands for land use: With over 22 percent of the population employed in agriculture,vi
land in the Philippines is a precious resource. The large-scale development of onshore renewable
energy is likely to compete for land and cause conflicts in some areas. By making careful use of
marine areas, offshore wind could help reduce demands for land use.
■ Benefit the economy: Offshore wind development could create local jobs, catalyze industrial
growth in the supply chain, spur port and grid infrastructure upgrades and expansion, and increase
inward investment.
THE PHILIPPINES’ OFFSHORE WIND POTENTIAL

The Philippines’ total technical potentialvii offshore wind resource is estimatedviii at 178 GW. Large
areas around the country’s coast have technically extractable wind resources. Around 90 percent of
the resource is found in waters deeper than 50 meters, which will require the use of floating offshore
wind turbines.
Existing data was gathered during this roadmap study and analysis was undertaken to further
characterize the Philippines’ offshore wind resources. This analysis assessed a wide range of
environmental, social, and technical constraints to identify six potential offshore wind development
zones with likely lower environmental and social (E&S) impacts associated with the development of
offshore wind within these zones. Stakeholder engagement, in-depth environmental and social impact
assessments (ESIAs), and power system planning will be required to better understand the suitability
and development risks within these zones. The roadmap recommends undertaking these analyses as
one of the priority next steps.
Figure ES.1 shows the six zones, the existing and planned electrical transmission network, and the
relative levelized cost of energy (LCOE) for offshore wind projects in 2033. The combined capacity
of the six zones could reach 40 GW, which is significant when compared with the Philippines' total
generation capacity of around 26 GW in 2020.
Both local and international private sector firms have already demonstrated high interest in developing
offshore wind in the Philippines. At the time of writing, the Philippines’ Department of Energy (DOE)
had already awarded 30 wind energy service contracts (WESCs), representing plans for a cumulative
offshore wind capacity exceeding 20 GW. Many of these WESC areas coincide with the zones identified
in this roadmap.
vi World Bank Group. 2022. “World Bank Open Data.” Data retrieved from the International Labour Organisation, ILOSTAT Database on January 29, 2021. https://data.
worldbank.org/indicator/SL.AGR.EMPL.ZS?locations=PH.
vii The offshore wind technical potential is an estimate of the amount of generation capacity that could be technically feasible, considering only wind speed and water
depth. This is intended as an initial, high-level estimate and does not consider other technical, environmental, social, or economic constraints.
viii ESMAP. 2020. “Offshore Wind Technical Potential in the Philippines.” https://documents1.worldbank.org/curated/en/519311586986677638/pdf/Technical-Potential-
for-Offshore-Wind-in-Philippines-Map.pdf.
xviii Offshore Wind Roadmap for the Philippines

FIGURE ES.1 THE 40 GW VISION FOR OFFSHORE WIND AND TRANSMISSION NETWORK IN THE
PHILIPPINES IN THE HIGH GROWTH SCENARIO, 2050
Note: Relative levelized cost of energy (LCOE) is for 2033.
Executive Summary xix

SCENARIOS FOR DEVELOPMENT
The analysis underpinning this roadmap is based on two possible growth scenarios for the Philippines’
offshore wind industry. The purpose of these scenarios is not to set installation targets but rather
to demonstrate and quantify the potential effect of industry scale on cost, E&S risks, and economic
impact. The scenarios were not established (and have not been tested) through modelling of current or
future energy systems and they do not consider least-cost planning.ix
The two development scenarios are summarized as follows:
■ Low growth: Offshore wind supplies over 2 percent of the Philippines’ electricity needs by 2040,
reaching around 3 GW of installed GW of installed capacity.
■ High growth: More than six times as much offshore wind installed, in which offshore wind supplies
14 percent of the Philippines’ electricity needs by 2040, reaching over 20 GW of installed capacity.
The headline impacts of these two growth scenarios, considering the key metrics of electricity
generation, cost, economic impact, and emissions, are summarized in Figure ES.2.
FIGURE ES.2 IMPACT OF OFFSHORE WIND IN THE PHILIPPINES UNDER LOW AND HIGH GROWTH
SCENARIOS, 2020 TO 2040
Low growth scenario 3%

Fraction of electricity supply in 2040
High growth scenario 21% (6.3 times higher)
3 GW
Offshore wind operating in 2040
21 GW (6.4 times higher)
83 TWh
Electricity produced by 2040
390 TWh (4.8 times higher)
15 thousand FTE years

Local employment created by 2040
205 thousand FTE years (13.6 times higher)
US$1.1 billion
Local gross value added by 2040
US$14.4 billion (13.1 times higher)
41 million tonnes
CO2 avoided by 2040
480 million tonnes (4.8 times higher)
Note: All figures are cumulative from 2020 to 2040. The fraction of electricity supply is discussed in Sections 3.2 and 4.2.
Offshore wind capacity operating in 2040 is discussed in Section 2. Electricity produced is discussed in Sections 3.2 and 4.2.
Local jobs and gross value added (GVA) are discussed in Sections 3.4, 4.4, and 12. CO2 avoided is discussed in Section 7.1.
ix This considers the daily and seasonal patterns of generation and demand and the availability of other sources of renewable energy that are competitively priced.
In markets with large areas of land with strong wind and solar resources, and few environmental and social impacts, onshore renewables projects at a scale of 100
MW or more, are likely to provide lower-cost electricity than offshore wind. In many offshore wind markets, these onshore impacts have tipped the balance toward
offshore wind. At the time of writing, the World Bank is undertaking least-cost generation expansion analysis, considering temporal patterns.
xx Offshore Wind Roadmap for the Philippines

Both growth scenarios could deliver substantial benefits to the Philippines; however, results indicate
that the high growth scenario could deliver disproportionately larger economic benefits with a lower
cost of energy. In comparison to a low growth scenario, high growth would result in the following:
■ Faster cost reductions—32 percent lower LCOE for offshore wind electricity by 2040, caused by
market scale, increased local capabilities, and quicker risk reduction.
■ Over 13 times more local jobs and value added to the economy by 2040.
Provided that clear, long-term targets are set, the larger scale of the high growth scenario would lead
to more investment in the local supply chain, thereby increasing the economic benefits and reducing
costs. The effects of scale and market certainty have been experienced in established offshore wind
markets where the increasing scale of deployment has meant that the industry generates substantial
economic value and cost of energy has reduced to grid parity.
A consequence of higher growth is a higher risk of adverse E&S impacts. This places even greater
importance to avoid areas of highest E&S sensitivity through proportionate marine spatial
planning (MSP) and informed site selection. International financing for offshore wind depends on
environmentally and socially sustainable sector development, in line with good international industry
practice (GIIP)x. This includes implementing robust ESIA requirements and frameworks during the
permitting processes and careful management and mitigation thereafter to manage risks. Ongoing
stakeholder engagement with affected communities and nongovernmental organizations (NGOs) will
form an important part of these MSP and ESIA processes.
A key prerequisite for a substantial contribution from offshore wind is a significantly upgraded
electricity transmission network, which is also needed for a decarbonized energy system.
CHALLENGES FOR DEVELOPING OFFSHORE WIND

This roadmap demonstrates that offshore wind could deliver substantial value to the Philippines and
help meet its decarbonization targets, but that there are many challenges in establishing a successful
industry at a large scale. Some of the main challenges include
■ Cost of energy: Purely on a cost of energy basis, offshore wind is more expensive than other forms of
renewable energy. However, offshore wind could become competitive with the cost of conventional,
thermal generation through large market-scale competition and innovation. This particularly applies
to offshore floating wind technology, which is currently less commercially mature than fixed offshore
technology. To catalyze the offshore wind market, a technology-specific auction would be required to
avoid offshore wind directly competing with other renewables.
■ Transmission: To connect projects at large scales sufficient to drive down the cost of energy,
transmission grid upgrades and strengthening will be required to deliver power to demand centers.
Some of the country’s best offshore wind resource locations are far from major demand centers
and therefore require lengthy new transmission lines. These will need to be delivered as part of a
strategic, long-term, transmission development plan. In some limited cases, transmission may
already be available to connect projects and could provide opportunities to deliver capacity in the
short to medium term.
x GIIP, as defined by the IFC Performance Standard 3 (PS3), is the exercise of professional skill, diligence, prudence, and foresight that would reasonably be expected
from skilled and experienced professionals engaged in the same type of undertaking under the same or similar circumstances, globally or regionally.
Executive Summary xxi

■ E&S impacts: With increased scale, the risks of adverse E&S impacts increase, especially when
cumulative impacts from multiple projects are considered. Data, stakeholder engagement, careful
planning, and robust regulations will be required to manage this.
■ Limited local supply chain: Despite the Philippines’ strong industry, a comprehensive local supply
chain will not be feasible in the short and medium term and many components will need to be
imported. The size of the market will determine the imports; a larger market size will attract
greater investment in the local supply chain and increase its capability.
■ Financing and bankability: While the Philippines has experience in attracting large-scale, local
and international financing for infrastructure projects, the unique and high risks associated with
offshore wind will require careful risk management and mitigation measures to ensure bankability
and minimize the cost of capital.
■ Project ownership: Currently, no more than 40 percent of an offshore wind project can be owned
by international parties, restricting the participation of experienced and financially sound project
developers. Removing this restriction will allow the use of lower-cost international financing and,
therefore, help reduce the cost of energy.
RECOMMENDED ACTIONS
This roadmap is the first step in developing a successful offshore wind industry in the Philippines
and action will need to be taken by the Government of the Philippines to maximize the benefits that
offshore wind can bring. To help focus efforts, the roadmap groups actions into priority themes,
corresponding to immediate, near-term, and longer-term actions as groups for the government to
consider (see Figure ES.3).
FIGURE ES.3 PRIORITY THEMES TO CREATE A SUCCESSFUL OFFSHORE WIND INDUSTRY IN

THE PHILIPPINES
2022: Set the vision

- 2050 vision
- 2030 and 2040 targets
- Transmission network vision
2022-23: Evolve the frameworks

- Marine Spatial Plan
- Offshore wind development zones
- Leasing and permitting (including ESIA)
Offshore - Auction arrangements
- Capacity building in stakeholders
wind in the - Government-industry task force
Philippines 2022-2028: Develop and install first projects

- Design
- Permitting
- Auction
- Construction
2025-2035: Develop the long-term infrastructure

- Transmission, ports
- Supply chain
- Pipeline of offshore wind projects
Source: World Bank, 2021.
xxii Offshore Wind Roadmap for the Philippines

From the analysis and findings of this roadmap study, the roadmap recommends 39 actions described
in more detail in Section 5 of the report. Evidence for the basis of each recommended action is provided
in the Supporting Information found within Sections 6 to 22. A summary of the recommended actions
is as follows:
Vision and volume targets

1. The DOE publishes its vision for offshore wind to 2050 as part of a decarbonized energy mix for
the Philippines, explaining how and why offshore wind is important.
2. The DOE sets offshore wind installed capacity targets for 2030 and 2040.
3. The DOE leads a holistic feasibility study for the Southern Mindoro potential offshore wind
development zone—due to its high resource potential but complex and long lead time for
development, this zone will need a strategic plan, particularly for transmission to enable its use for
offshore wind projects.
Partnerships
4. The DOE establishes by circular a long-term official government-industry task force involving
local and international project developers and key suppliers. The task force will help address
this roadmap’s recommendations and promote collaboration to ensure successful offshore
industry growth.
5. The DOE signs a memorandum of agreement with relevant government departments, especially
the Department of Environment and Natural Resources (DENR), to define interdepartmental
cooperation on offshore wind, covering leasing, permitting, power purchase, transmission, health
and safety, and key areas of delivery, including supply chain, ports, and finance.
Ownership
6. The DOE finds a way to resolve the restrictions of the 60 percent local ownership requirement of
each offshore wind project (bringing offshore wind in line with other renewables technologies, such
as biomass) or find alternative routes to address this barrier to investment in large projects.
Leasing, permitting, and power purchase

7. The DOE identifies offshore wind development zones through proportionate MSP, in line with GIIP,
considering E&S factors (including cumulative impacts of multiple projects) and in conjunction
with a long-term vision for transmission network development. This should include engagement
with key stakeholders.
8. The DOE establishes offshore wind development zones, respecting existing WESCs and
applications, guiding their use in prioritizing offshore wind development in the most advantageous
areas, and minimizing negative E&S impacts.
9. The DOE issues guidance to developers about accepting requests to extend the predevelopment
stage of a WESC beyond five years because of considerations outside the developer’s control.
Executive Summary xxiii

10. The DOE issues guidance about applying for a WESC for offshore wind adjacent to an existing
WESC and explains to developers how to extend a WESC after the initial 25-year term if a project
is still operating. The DOE should also confirm there is no requirement for payment of offshore
occupation fee.
11. The DOE extends the Energy Virtual One-Stop Shop (EVOSS) to cover all relevant government
departments to enable efficient and transparent permitting, including ESIA, in accordance
with GIIP. It clarifies and streamlines the permitting process and provides supporting guidance
to developers, regulators, and stakeholders, including clear timelines for permit decisions and
prioritization of renewable energy projects.
12. The DOE reviews permit flexibility for project design to prevent the need for full reapplication and
subsequent delays should any design changes be required as the project progresses. It makes sure
supporting permitting processes guidance are available and appropriate for all parties.
13. The DOE establishes a competitive system solely for the procurement of offshore wind power
offtake, with a ceiling price to limit cost to consumers, and considers a floor price in early years to
avoid the risk of non-delivery due to lowball bids. Consultation on ceiling and floor prices should be
conducted with stakeholders before competitions to reflect evolving fossil fuel and offshore wind
prices, especially recognizing the current high fossil fuel and commodity prices.
14. The DOE develops a standard Power Purchase Agreement (PPA) across offshore wind projects to
accelerate market development that provides stable income per megawatt-hour generated and
may include indexation for foreign exchange rate variations. The implications of the choices for
different terms and incentives should be studied to ensure the PPA will be attractive and bankable.
15. The DOE publishes a timetable for offshore wind power procurement competitions and coordinates
across government and private sector organizations involved in administering competition to deliver.
Finance
16. The DOE explores how to ensure PPA counterparties (offtakers), and PPA terms remain viable as
volumes of offshore wind contracted increase, including clarity on curtailment.
17. The Department of Finance promotes financial mechanisms to reduce cost of capital, including
access to climate and other concessional finance, and ensures international market standards
for contractual risk allocation, arbitration, and government backstop and an adequate security
package for lenders.
18. The DOE supports the engagement of the local finance community with offshore wind, including
communicating the E&S performance standards required to gain access to concessional and
project financing.
Grid connection and transmission network

19. The DOE publishes the 2050 vision for a nationwide electricity transmission network for a
decarbonized energy system, with milestone plans for 2030 and 2040 and financial consideration.
20. The DOE incorporates offshore wind development zones fully into Competitive Renewable Energy
Zones (CREZ) processes and transmission development plan (TDP) processes.
xxiv Offshore Wind Roadmap for the Philippines

21. The DOE, DENR, National Grid Corporation of the Philippines (NGCP), and Transmission
Corporation (TransCo) undertake power system studies to understand the potential impacts of
large-volume offshore wind on the future transmission network and ESIAs in line with GIIP and
lender requirements to understand the E&S implications of transmission network upgrades,
feeding these into MSP activities.
22. The DOE works with the NGCP and TransCo to update the TDP delivery, approval processes, and
grid management practices to reflect the move to more supply from renewable energy sources.
23. The DOE considers possible low-cost solutions for investment in transmission system upgrades,
such as concessional finance.
24. Once a grid connection agreement (GCA) is signed, the DOE ensures clarity and efficiency for
projects in securing grid connections, including point-to-point applications and compensation for
delayed grid connection availability.
Port infrastructure
25. The Philippines Ports Authority publishes an offshore wind ports prospectus, showing port
capabilities against offshore wind physical requirements, and uses this to encourage dialogue
and timely investment in relevant port facilities. This will involve engagement with independent
government entities managing freeports.
26. The Philippines Ports Authority and the DOE work with ports to build a vision of how a pipeline
of projects in the potential offshore wind development zones could be delivered in line with a
strong government vision and to assess whether it is viable to establish any new port facilities.
Planners should include E&S considerations and undertake a robust ESIA analysis for any potential
developments.
27. The DOE, Department of Trade and Industry (DTI), National Economic and Development Authority
(NEDA), Philippines Ports Authority, and relevant Freeport zone authorities explore potential local
and inward investment to finance port upgrades or new facilities.xi
Understanding the marine environment

28. The DOE initiates or coordinates wind resource measurement to build confidence in available
resource and extreme winds, recognizing typhoon risk.xii
29. The DOE, as part of a proportionate MSP process, initiates or coordinates other measurement and
data gathering campaigns on key aspects of the zones including the following:
• Metocean campaigns, especially wind speeds, and typical and extreme significant wave heights
and currents
• Geological surveys of the seabed and substrates
• Ecological surveys to address any gaps in current knowledge of the zones
• Social perceptions and potential impacts on local industries, such as fishing, shipping,
aquaculture, and tourism.
xi It is important for the DOE to secure technical assistance to ensure that international good practice is followed to maximize shared understanding about the local
marine environment.
xii It is important for the DOE to secure technical assistance with Recommendations 28 and 29 to ensure that international good practice is followed to maximize shared
understanding about the local marine environment.
Executive Summary xxv

Supply chain development
30. The DOE and the DTI present a balanced vision for local supply chain development, encouraging
international competition and enabling education and investment in local supply chain businesses,
including training of onshore and offshore workers.
31. Learning from other offshore wind markets, the government avoids restrictive local content
requirements that add risk and cost to projects and slows deployment.
Standards and regulations

32. The DENR reviews ESIA requirements for compatibility with international standards of GIIP,
updates the legislative and policy framework, where necessary, and produces guidance for
developers and stakeholders on the requirements and their relationship with the permitting and
financing processes.
33. The DOE extends the Renewable Energy, Safety, Health and Environment Rules and Regulations
(RESHERR) to cover health and safety for offshore wind and encourages focus on behavioral and
cultural aspects of health and safety.
34. The DOE and Energy Regulatory Commission (ERC) consider amendments to the Philippines Grid
Code and Distribution Codes to adjust to the significant increase in renewable power from offshore
wind and other variable forms of renewable energy generation.
35. The DOE leads the creation of technical codes and regulations relevant to offshore wind, adopting
international industry codes where appropriate.
Capacity building and gender equality

36. The DOE leads in helping government departments and other key stakeholders grow capacity and
knowledge needed to process a growing volume of offshore wind projects.
37. The DOE involves developers and supply chain companies in gender equality working groups,
supported by women’s rights organizations in the Philippines, the Global Wind Energy Council
(GWEC), and the Global Women’s Network for the Energy Transition (GWNET).
38. The government and industry collaborate to collect and measure key data to ensure positive
progress is being made to meet diversity targets.
39. The DOE considers introducing gender equality requirements into leasing and power purchase
frameworks.
xxvi Offshore Wind Roadmap for the Philippines

1. INTRODUCTION
This report is the output of a study commissioned by the World Bank Group (WBG) following an
invitation from the Government of the Philippines to the WBG for assistance. It is part of a series
of country roadmap studies supported by the WBG Offshore Wind (OSW) Development Program.
The Program aims to accelerate the deployment of OSW in emerging markets and provide country
governments with technical assistance to explore their OSW potential and develop a pipeline of
bankable projects.
This roadmap was carried out with engagement and input from the Government of the Philippines and
its relevant agencies, as well as stakeholders of the Philippines' and global OSW supply chains. See
Section 22 for a list of stakeholders. The study outlines options for a successful OSW industry in the
Philippines and supports collaboration between the Government of the Philippines and the offshore
wind industry. This report does not represent the views of the Government of the Philippines.
This report is structured as follows:

■ Section 2: Description of two scenarios for OSW in the Philippines used in the following
sections of this study
■ Sections 3 and 4: Short summaries of the outcomes of each of these two scenarios
■ Section 5: Recommendations and roadmap for OSW in the Philippines
Supporting information
■ Sections 6–8: Key ingredients for a successful wind industry, benefits and challenges of OSW,
and market volume context in the Philippines
■ Sections 9–22: Analysis covering all key aspects of the future of OSW in the Philippines
A report from the Biodiversity Consultancy, The Philippines: Priority Biodiversity Values, is provided
as an Appendix.
Throughout the report, we refer to Key Factors for Successful Development of Offshore Wind in Emerging
Markets (Key Factors).4 It describes experiences in OSW markets to date, covering OSW as part of
energy strategy, policy, frameworks, and delivery.
1
2. TWO SCENARIOS FOR OFFSHORE
WIND IN THE PHILIPPINES
The Philippines has regionally important OSW resources. They are close to shore in both
shallow and deep water, and some are near population centers. The country has an
opportunity to use this resource to generate over 20 percent of its electricity by 2050,i (see
Section 8), with the industry continuing to develop beyond this.
This report explores the impact of two possible OSW growth scenarios, chosen to cover realistic
paths for the Philippines in the context of its future electricity needs, based on understanding
from other emerging and established OSW markets. The purpose of the scenarios is to consider
the quantifiable effect of industry scale on cost, consumer benefit, environmental and social
(E&S) factors, economic benefit, and other aspects. The scenarios were not established (and
have not been tested) through deep energy system modeling, which is recommended in due
course. All other conditions are unchanged between the two scenarios, except that generation
from OSW replaces more generation from fossil fuel energy sources, including coal.
■ Low growth. Compatible with wind element of the Department of Energy (DOE) National Renewable
Energy Program (NREP).5
■ High growth. Much larger, providing a major contribution to the energy supply as the Philippines
moves to a decarbonized energy system around 2050, and sufficient to drive competition, local
supply chain investment, and more cost reduction.
The differences between the scenarios are discussed in the following subsections.
i The detailed analysis in this roadmap covers up to 2040, not looking further due to increased uncertainty regarding cost reduction and technology scale beyond a
20-year horizon. In a number of cases, however, a vision to 2050 is discussed. This is because within this timescale, the energy systems of many countries will have
been decarbonized, so it is important to keep a further horizon in mind.
2 Offshore Wind Roadmap for the Philippines

2.1 VOLUMES AND TIMING
FIGURE 2.1 ANNUAL INSTALLED AND CUMULATIVE OPERATING CAPACITY IN THE TWO
SCENARIOS IN THE PHILIPPINES, 2020–50
2.5 50
2 40
Cumulative operating capacity (GW)

Annual installaed capacity (GW)
1.5 30
1 20
0.5 10
0 0
Earlier
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
2035
2036
2037
2038
2039
2040
2041
2042
2043
2044
2045
2046
2047
2048
2049
2050
Year of installation
Low growth High growth
Source: BVG Associates.
Figure 2.1 shows the annual and cumulative installations for the two scenarios. The low growth
scenario comprises seven large projects, spaced four years apart. In the high growth scenario,
new capacity is installed each year, reaching an average installation rate of 2 gigawatts per year,
consisting of two to three large projects, by the mid-2030s. Although the scenarios appear to show
smooth trends in Figure 2.1, actual annual installation rates can be expected to vary due to project
size and timing. Large projects are suggested because of the cost reduction benefits available at scale.
Competitive auctions typically favor larger projects for this reason.
Experience from established markets is that offshore wind development timescales are significantly
longer than for onshore wind and solar projects. Figure 2.2 shows an estimated program for
a representative, early offshore wind project. In Philippines, the WESCs provide a 5-year pre-
development stage (includes permitting, feasibility study, financial closing, and declaration of
commerciality) and a 5-year development stage ( includes construction and commissioning). Some
projects received WESCs in 2019, so are required to be commissioned by 2029. The timing of the
power purchase competition in Figure 2.2 could potentially occur earlier in the development process.
Note that steps of the program and their order may vary from country to country with the power
purchase agreement (PPA) award sometimes taken place, or recommended, after the ESIA completion.
This would provide developers with power price certainty earlier in the development process, helping
2. Two scenarios for offshore wind in the Philippines 3

to manage risk of large development expenditure required. However, at an early program stage,
the developer may not fully know the project design, which adds the risk of driving up project costs
once revenue has been set. It has been learnt through established markets that the most informed
competition takes place after design and permitting. DoE could explore the optimal timing of this
through industry consultations.
FIGURE 2.2 ESTIMATED PROGRAM FOR A REPRESENTATIVE, EARLY OFFSHORE WIND PROJECT
IN ESTABLISHED MARKETS
B. Power purchase
A. Early-stage development C. Late-stage development
compeon
Applicaon !
Pre-Development Stage !
Conversion ! !
Development !
and Commercial Stage !
# # # # # #
Year 1 Year
! 2 Year 3 Year
! 4 Year
! 5 Year
! 6 Year
! 7 Year
! 8
$ $ $ $ $ $
WESC % % % % % %
Wind / metocean survey
Pre-FEED
Engineering Technical site surveys
FEED
Geotechnical
surveys
System
impact study Grid connection
Grid agreement
Connection
Environmental and social surveys

ESIA
Permitting
Application and award of permits
(incl. ESIA)
Final permits
Supply chain assessment

and planning
Procurement Procurement
and Construction
Construction Commercial
operation date
Program management
Project PPA competition Award
Management Bankability discussion with investors
Financing
and financing agreement Final investment decision

Note: ESIA = Environmental and social impact assessment; FEED = front-end engineering and design; WESC = wind energy
service contracts.
The split between fixed and floating activity is presented in Figure 2.3 and Figure 2.4. OSW
development is expected to begin with fixed projects in shallow water (50 meters or shallower) because
the levelized cost of energy (LCOE) of these projects will be lower (see Section 10). The Philippines has
limited shallow water, so only a small volume of fixed OSW will be possible before the use of locations
with less favorable resource will push the cost of generation from fixed sites higher than from that of
floating sites. There are much larger areas of deeper water (50 meters or deeper). These have higher
mean wind speeds that are well-suited to floating OSW projects, and development of floating projects
is expected to occur after the initial fixed OSW projects and dominate in both scenarios. The transition
between fixed and floating depends on project locations, progress with transmission network, and
many other factors. Competitive processes should decide this transition to minimize cost.

FIGURE 2.3 LONG-TERM AMBITION IN LOW FIGURE 2.4 LONG-TERM AMBITION IN HIGH
GROWTH SCENARIO IN THE PHILIPPINES, GROWTH SCENARIO IN THE PHILIPPINES,
2020–50 2020–50
2.5 50 2.5 50

Annual installed capacity (GW)

Annual installed capacity (GW)
2.0 40 2.0 40
1.5 30 1.5 30
1.0 20 1.0 20
0.5 10 0.5 10
0.0 0 0.0 0
2020 2025 2030 2035 2040 2045 2050 2020 2025 2030 2035 2040 2045 2050
Year of installation Year of installation
Fixed Floating Combined Fixed Floating Combined

Source: BVG Associates. Source: BVG Associates.
Figure 2.3 suggests first use of floating in the low growth scenario in 2034. Because fewer fixed sites
will be used than in the high growth scenario, floating may be further delayed.
Figure 2.4 shows a first floating project in 2030 and last fixed project in 2031. Figure 10.2 compares
technology costs for representative stated site conditions. Figure 10.2 still shows a significantly lower
levelized cost of energy (LCOE) for fixed at around 2030, but the transition to floating may be affected
by the lack of fixed sites with the wind resource stated.
Headline characteristics of the scenarios beyond volume are summarized in Table 2.1. Details of how to
deliver these scenarios are covered in Section 5. The context for these scenarios within the Philippines’
future electricity mix is in Section 8. The scenarios indicate how the OSW market could be built out. In
reality, following our recommendations:
■ The DOE will award leases in the form of wind energy service contracts (WESCs) (see Section 16).
■ Authorities will grant permits (see Section 16).
■ Power purchase contracts will be auctioned (see Section 17).
The installation rates, especially in early years, are dependent on the government’s progress in
establishing the policies and frameworks needed to enable OSW (see recommendations in Section 5),
and the volume of projects progressing through these frameworks (see Section 6.2). The rates depend on
government decisions on awards and auction caps and industry’s appetite to take projects forward and
ability to bid below the government’s ceiling prices, which relates to industry cost reduction progressing
at the pace anticipated. There are risks, especially that floating technology progresses slower because it
is newer. Floating is expected to take over from fixed foundation between 2030 and 2035.

TABLE 2.1 CHARACTERISTICS OF TWO MARKET DEVELOPMENT SCENARIOS EXPLORED FOR
THE PHILIPPINES, 2030, 2040, 2050
Low Growth Scenario High Growth Scenario
Cumulative operating
capacity by end of (GW)
2030 1.6 2.8
2040 3.2 20.5
2050
5.6 40.5
Maximum installation
1 (0.8 GW) 3 (total of 2 GW)
project rate (per year)
• Good visibility of OSW installation • As with low growth scenario
Policy environment target to 2040
• No formal local content requirement
• Improvements to leasing and • As with low growth scenario, but
permitting frameworks and bringing faster progress and frameworks
ESIA in line with GIIP resourced to deliver higher volume of
• Continued competitive auctions for projects
offtake agreements • MSP to define OSW development
• Coordinated approach to zones
transmission network upgrades • Proactive work on significant
Frameworks
• Improvements to framework for transmission network upgrades to
health and safety serve these zones
• Marine spatial planning as part of • Improvements to framework to
site selection ensure timely grid connections for
multiple projects
• Improvements to frameworks for
standards and certification
• Significant involvement of overseas • As with low growth scenario, with
project developers increased fraction of services
• Local project development and supplied locally plus tower
construction support services, manufacture
offshore substation assembly, • Two-thirds of floating
Supply chain potential use of local tugs for floating foundation manufacture
turbine installation, operational • Suitable ports upgraded and
phase services available for OSW construction
• Otherwise, mainly use suppliers
active in the regional / global
OSW market
• Engagement to smooth availability of • As with low growth scenario, but
sufficient volume of low-cost finance with increased importance due to
volume of finance required (both
for OSW projects and transmission
Other prerequisites network upgrades)
for scenario • Strong three-way collaboration
between government, Philippines’
industry, and global OSW industry
to proactively address barriers and
opportunities and build confidence
Source: BVG Associates

Note: ESIA = environmental and social impact assessment; GIIP = good international industry practice; MSP = marine spatial
planning; OSW = offshore wind.

2.2 LOCATION OF OFFSHORE WIND PROJECTS
The Philippines has a vast coastline with a range of areas suitable for OSW development, and the
government has received many WESC applications.ii Projects developed in the low growth scenario
could obtain grid connections in existing transmission network upgrade processes, but in the high
growth scenario, a much more strategic approach is required to enable efficient and timely investment
in transmission network infrastructure. OSW projects need to be located strategically in the latter
approach. Figure 2.5 presents potential OSW development zones (see analysis in Section 9). Defining
zones is relevant to both scenarios but is essential for the timely delivery of the high growth scenario.
Their introduction and use are further discussed in Section 9.
FIGURE 2.5 POTENTIAL OFFSHORE WIND DEVELOPMENT ZONES, THE PHILIPPINES
ii As of March 2022, DOE had already awarded 30 Wind Energy Service Contracts with potential OSW capacity exceeding 21 GW.

3. LOW GROWTH SCENARIO
3.1 DEVELOPMENT AREAS

The low growth scenario involves two fixed OSW projects followed by five floating projects. There are
enough wind energy service contracts (WESCs) signed or in application to deliver this volume, and
most are in the OSW development zones shown in Figure 2.5.
3.2 ELECTRICITY MIX

Figure 3.1 shows OSW supply in the context of electricity demand from 2020 to 2050. Under the low
growth scenario, OSW will provide about 3.3 percent of the Philippines’ electricity supply in 2040,
and this proportion drops slightly to 2050 (see Section 8.3). The total electricity supply does not vary
between the low and high growth scenarios, but the proportion of electricity supplied from OSW is
greater in the high growth scenario.
FIGURE 3.1 PROJECTED AMOUNT AND SHARE OF ELECTRICITY SUPPLIED BY OFFSHORE WIND
AND OTHER SOURCES IN THE LOW GROWTH SCENARIO IN THE PHILIPPINES, 2020–50 LOW
GROWTH SCENARIO
700 35%
600 30%
Offshore wind as fraction of total

500 25%
Electricity supply (TWh)
400 20%
300 15%
200 10%
100 5%
0 0%
2020 2030 2040 2050
Offshore wind supply (TWh) Other supply (TWh) Percentage of supply from offshore wind
Source: Source: BVG Associates.

3.3 LEVELIZED COST OF ENERGY AND NET GENERATION
COST BENEFIT
In the low growth scenario, the cost of energy reduces over time, reaching an estimate of US$77 per
megawatt-hour for fixed projects in 2030 and US$61 per megawatt-hour for floating projects in 2040,
by which time 83 terawatt-hours will have been generated. The reductions in cost of energy and the
key drivers are discussed in Section 10, but include:
■ Use of larger wind turbines

■ Global learning about floating OSW technology, especially in foundation hull design and
manufacture, and optimizing installation and operating logistics
■ Reduction in cost of capital due to reduction in risk and availability of significant volumes
of finance
■ Growth in local and regional supply, learning and competition, driven by volume and
market confidence
The net benefit to consumers by 2040 is minus US$0.3 billion (i.e. a net cost), rising to US$1.1 billion
by 2050. In this scenario, generation costs are higher than generation from the indicative comparator
(coal), ignoring all other considerations. An explanation of Figure 3.2, what is included in traditional
technology and how net benefit is calculated, is in Section 7.1.
FIGURE 3.2 LCOE AND CUMULATIVE NET GENERATION COST BENEFIT OF OFFSHORE WIND
COMPARED TO TRADITIONAL TECHNOLOGY IN THE LOW GROWTH SCENARIO IN THE
PHILIPPINES, 2025–50
100 50
Net benefit ($bn), Capacity GW)

80 40
60 30
Cost ($/MWh)
40 20
20 10
0 0
-20 -10
2025 2030 2035 2040 2045 2050
Year
Offshore wind LCOE for new project installed in year Traditional technology annual cost of generation
Cumulative operating capacity at end of year Cumulative net benefit

Note: LCOE = levelized cost of energy.
3. Low growth scenario 9

3.4 SUPPLY CHAIN AND ECONOMIC IMPACT
By 2040, the Philippines will have about 20 percent local content in its OSW farms (as derived in
Section 12.3). It will supply onshore substation structures and some tug vessels for floating foundation
installation, and provide development and OMS. Much of the local content and economic benefit will
come from the installation and operational phase of projects. A coordinated multiagency approach will
be required to maximize local benefits and grow local capabilities.
Jobs
Figure 3.3 shows that by 2040, the OSW industry will have created 15,000 full-time equivalent (FTE)
years of employment.iii In the 2030s, annual local employment will be about 1,000 FTEs, on average. To
compare these estimates with those in the high growth scenario, the same axis scale is used. Details
of the supply chain, economic benefits of OSW, and supply chain investment needs are discussed in
Sections 11 and 12, including a description of where and how the local content is broken down.
FIGURE 3.3 ESTIMATED NUMBER OF JOBS CREATED IN THE LOW GROWTH SCENARIO IN THE
6,000
5,000
4,000
FTE years
3,000
2,000
1,000
0
'21-'25 '26-'30 '31-'35 '36-'40
Development and project management
Turbine
Balance of plant
Installation and commissioning
OMS
iii Each FTE year of employment is the equivalent of one person working full time for a year. In reality the 11,000 FTE years of employment will be made up of some
people working on the project for much less than a year and others working on the project for many years, especially during the operational phase. The employment
profile for a typical project is shown in Figure 12.1.

Gross value added
Figure 3.4 shows that by 2040, supply to the OSW industry through local supply will add US$1.1 billion
gross value. In the 2030s, annual gross value added (GVA) will be US$77 million, on average.
FIGURE 3.4 LOCAL GVA IN THE LOW GROWTH SCENARIO IN THE PHILIPPINES, 2021–40
500
450
400
GVA (US$ million)
350
300
250
200
150
100
50
0
'21-'25 '26-'30 '31-'35 '36-'40
Development and project management
Turbine
Balance of plant
Source: BVG Associates. OMS
Supply chain investment

There is no expected large-scale investment in the supply chain in the low growth scenario.
3.5 TRANSMISSION AND PORT INFRASTRUCTURE

In this scenario, the electricity transmission system will benefit from ongoing upgrades defined
in updates of the national Transmission Network Development Plan, including those relating to
Competitive Renewable Energy Zones (CREZs). It is likely that installation of about 3 gigawatts of
OSW, split evenly between fixed and floating, by 2040 would not drive significant upgrades beyond
those already planned. The transmission system is discussed in Section 18.
With minimal local manufacturing, the delivery of four large projects up to 2040 will use only a small
fraction of available port space. If a port is used only for one or two projects, then investment to
upgrade the port is less likely and efficiency may be lower. Specific ports are discussed in Section 19.

3.6 ENVIRONMENTAL AND SOCIAL IMPACTS
By 2040, there will be about 150 large OSW turbines, installed in four large OSW projects, split
between fixed (in the early years) and floating (later). Based on early assessments, E&S impacts are
likely to be low or capable of being appropriately mitigated or compensated for through appropriate
ongoing management measures as long as:
(a) proportionate marine spatial planning (MSP) approaches are used to ensure that projects are
located carefully in the potential OSW development zones to avoid areas of high E&S sensitivity;
and (b) robust, project-specific environmental and social impact assessments (ESIAs) are completed
to good international industry practice (GIIP) and integrated into the permitting process. Key E&S
considerations are discussed in Section 14.
Filipinos will benefit from reduced local pollution from coal plants, and the global environment
will benefit from the displacement of 41 million metric tons of carbon dioxide (CO2) by 2040. The
Philippines is a signatory to the UNFCCC Paris Agreement and has a ratified unconditional target to
reduce greenhouse gas emissions.6, 7 Countries that remain heavily reliant on fossil fuels for electricity
production are likely to come under increasing international pressure to decarbonize, as well pay more
for electricity. Environmental metrics are discussed in Section 7.1.
Coastal communities may benefit through economic activity and jobs, although potential conflicts
with fisheries, aquaculture, tourism, and other marine industries—and cultural heritage—will need to
be considered and managed as part of MSP and ESIA. Residents of coastal communities, visitors, and
tourists will be aware of the wind farms and their associated onshore infrastructure. The economic
impact of these considerations has not been modeled at this stage.
People working on OSW farm construction and operations will be kept safe through a comprehensive
approach to health and safety. We discuss this in Section 15.
3.7 FINANCE AND PROCUREMENT

In both scenarios, we propose OSW will be supported through competitive auctions. This structure will
provide the best value to the Filipino economy. This is discussed in Section 17. Projects will be developed
through international and local private developers.
To achieve this low growth scenario, the frameworks for leasing, ESIA, permitting, and PPAs will need
some improvements, but no radical reform. These areas and relevant recommendations, including
suggestions for next actions, are discussed in Sections 14, 16, and 17.
Capital expenditure (CAPEX) of about US$7.5 billion will be required for projects installed to the end
of 2040. Sources of public finance will be accessed to fund projects and vital project infrastructure,
including port upgrades and transmission assets. Financial instruments such as multilateral lending,
credit enhancements, and the adoption of green standards can be used to attract international
finance and reduce the cost of OSW. Access to finance is likely to be dependent on meeting lenders’
performance standards, including those relating to E&S issues. Improvements to the ESIA and
permitting process will be required to ensure that projects can meet these standards. This is discussed
in Section 21.

3.8 ACTIONS TO DELIVER THE LOW GROWTH SCENARIO
Our recommendations for government actions are listed in Section 5. They are informed by the
analysis of key ingredients of a successful OSW industry, discussed in Section 6.
3.9 SWOT ANALYSIS IN THE LOW GROWTH SCENARIO

A strengths, weaknesses, opportunities, and threats (SWOT) analysis for the Philippines adopting
this scenario is presented in Table 3.1, comparing to low growth scenario to no OSW and the high
growth scenario.
TABLE 3.1 SWOT ANALYSIS FOR THE PHILIPPINES IN THE LOW GROWTH SCENARIO FOR
OSW DEVELOPMENT
Strengths Weaknesses
• Delivers local, large-scale source of clean electricity • Without high volumes of OSW, the Philippines has
supply, with long-term jobs and economic benefit a larger clean energy gap to fill, without obvious
• LCOE lower than traditional technology cost from large-scale alternatives
the start • Market size will not sustain local manufacturing or
• Going slower than in the high growth scenario export of any major components
enables more time to react as industry and • The cost of energy is 23 percent higher than in high
technology changes growth scenario and the cumulative net benefit
• Less resource and urgency needed than in the high is nine times lower, for 4.8 times lower volume of
growth scenario on improving frameworks and electricity by 2040
addressing other challenges • Delivers 13 times fewer jobs and GVA compared to
• Transmission system does not need significant the high growth scenario, by 2040
upgrades beyond the types of upgrades already • Much work on frameworks and industry building is
planned still required, but for lower benefit
• Full MSP with OSW development zones, and various • Current ESIA processes do not fully follow GIIP or
other actions are not needed conform to E&S performance standards mandated
• Proportionate spatial planning approaches should by international lenders
be used to ensure that projects are located carefully
in potential OSW development zones to avoid areas
of high E&S sensitivity
Opportunities Threats
• Can accelerate at any time, though with some • All government preparatory work on policy and
delay to faster acceleration due to project frameworks has a fiscal impact, with payback only
development timescales if the industry progresses as planned
• Some local supply chain development and • In the absence of clear government guidance and
job creation standards for ESIA aligned with GIIP and lender
requirements, poor siting and development of
projects could lead to adverse E&S effects, delays
in financing projects, and damage reputation of the
industry, slowing inward investment opportunities
and future growth prospects
• Poorly considered transmission network constraints
could slow OSW
• Key players may never enter the market, further
reducing competition and increasing cost

Note: E&S = environmental and social; ESIA = environmental and social impact assessment; GIIP = good international industry
practice; GVA = gross value added; LCOE = levelized cost of energy; MSP = marine spatial planning; OSW = offshore wind.

4. HIGH GROWTH SCENARIO
Compared to the low growth scenario, high growth delivers more energy, more jobs, lower net cumulative
cost, faster payback, and more CO2 avoided. All measures improve because of the increased cost
reduction delivered by a larger market, but government has to make a greater commitment and take
more urgent action.
4.1 DEVELOPMENT AREAS

The high growth scenario involves mainly floating OSW projects, following four years of fixed projects
in the lowest-cost sites. As the cost of floating OSW reduces and because of the low availability of
locations suitable for fixed projects, the market will transition to almost exclusively floating projects.
Under the high growth scenario, there will be slightly more than 20 gigawatts of OSW projects
by 2040, 17 gigawatts of which will be floating. These projects will cover about 19 percent of the
potential OSW development zones identified in Figure 2.5, more than six times as much as in the
low growth scenario. Depending on the results of MSP and energy planning for beyond 2040, other
OSW development zones may be established to preserve competition between sites. As the drivers of
levelized cost of electricity (LCOE) change and the understanding of E&S considerations evolve, other
areas may be included.
4.2 ELECTRICITY MIX

Figure 4.1 shows supply from OSW as part of demand for electricity from 2020 to 2050. In 2040,
OSW will provide 21 percent of the Philippines’ electricity supply. By 2050, this increases marginally,
reaching 23 percent, or about two-thirds of that anticipated for Europe, and nine times that in the low
growth scenario (see Section 8.3).
FIGURE 4.1 PROJECTED SHARE AND AMOUNT OF ELECTRICITY SUPPLIED BY OFFSHORE WIND
AND OTHER SOURCES IN HIGH GROWTH SCENARIO IN THE PHILIPPINES, 2020–50
700 35%
600 30%
Offshore wind as fraction of total
500 25%
Electricity supply (TWh)
400 20%
300 15%
200 10%
100 5%
0 0%
2020 2030 2040 2050
Offshore wind supply (TWh) Other supply (TWh) Percentage of supply from offshore wind

4.3 LEVELIZED COST OF ENERGY AND NET GENERATION COST BENEFIT
In the high growth scenario, the cost of energy reduces over time, reaching an estimated US$76 per
megawatt-hour for fixed projects in 2030 and US$47 per megawatt-hour for floating projects in 2040,
by which time an estimated 393 terawatt-hours will have been generated. The 20 percent lower LCOE
than in the low growth scenario is due to (a) faster reduction of the initial costs of starting in a new
market; and (b) lower weighted average cost of capital (WACC) from the expectation of more foreign
investment and reduced risk under the high growth scenario. See Section 6.6 and Section 10.
FIGURE 4.2 LCOE AND CUMULATIVE NET GENERATION COST BENEFIT OF OFFSHORE WIND
COMPARED TO TRADITIONAL TECHNOLOGY IN HIGH GROWTH SCENARIO IN THE PHILIPPINES,
2025–50
100 50

80 40
60 30
Cost ($/MWh)
40 20
20 10
0 0
2025 2030 2035 2040 2045 2050
-20 -10
Year
Offshore wind LCOE for new project installed in year Traditional technology annual cost of generation
Cumulative operating capacity at end of year Cumulative net benefit

Note: LCOE = levelized cost of energy.
The net benefit to consumers by 2040 is US$1.9 billion, rising to US$30 billion by 2050, 28 times
higher than in the low growth scenario. An explanation of Figure 4.2 and how net benefit is calculated
is provided in Section 7.1.
4. High growth scenario 15

4.4 SUPPLY CHAIN AND ECONOMIC IMPACT
By 2040, the Philippines will have about 35 percent local content in its OSW farms (see Section
12.3). It will be supplying towers, floating foundations, offshore substation foundations and topsides,
onshore substation structures, and some tug vessels for floating foundation installation, and providing
development and OMS. In the high growth scenario, the Philippines could export turbine towers
to nearby markets. Increased market size has a significant impact on local economic benefit, as
discussed in Section 6.6. Details of the supply chain, economic benefits of OSW, and supply chain
investment needs, including a description of local content, are discussed in Sections 11 and 12.
Jobs
Figure 4.3, panels a and b, shows that by 2040, the OSW industry will have created 205,000 FTE
years of employment, which is 13 times as much as in the low growth scenario. This is because 6.4
times the volume is installed and 2.2 times as many local jobs are created per megawatt installed due
to more local supply. In addition, 3,000 FTE years will have been created between 2031 and 2040
through the export of towers manufactured in the Philippines. In the 2030s, annual local employment
will be about 17,000 FTEs, on average.
FIGURE 4.3 PROJECTED NUMBER OF OSW-RELATED JOBS CREATED IN HIGH AND LOW
GROWTH SCENARIOS IN THE PHILIPPINES, 2021–40
100,000 100,000
90,000
80,000 80,000
70,000
FTE years
FTE years
60,000 60,000
50,000
40,000 40,000
30,000
20,000 20,000
10,000
0 0
'21-'25 '26-'30 '31-'35 '36-'40 '21-'25 '26-'30 '31-'35 '36-'40
Development and project management Development and project management

Turbine Turbine
Balance of plant Balance of plant
Installation and commissioning Installation and commissioning
OMS OMS

Note: High growth scenario under the graph on the left and aligned with its Y axis
Note: Low growth scenario under the graph on the right and aligned with its Y axis

Gross value added
Figure 4.4 shows that by 2040, supply to the OSW industry will add US$14 billion of gross value, which
is 13 times as much as in the low growth scenario. In addition, the export of towers manufactured in
the Philippines will create US$255 million of gross value between 2031 and 2040. During the 2030s,
annual GVA will exceed US$1.2 billion, on average.
FIGURE 4.4 PROJECTED LOCAL GVA IN HIGH AND LOW GROWTH SCENARIOS IN THE
8 8
6 6
GVA (US$ billion)
GVA (US$ billion)

4 4
2 2
0 0
'21-'25 '26-'30 '31-'35 '36-'40 '21-'25 '26-'30 '31-'35 '36-'40
Development and project management Development and project management

Turbine Turbine
Balance of plant Balance of plant
Installation and commissioning Installation and commissioning
OMS OMS

Note: High growth scenario under the graph on the left and aligned with its Y axis
Note: Low growth scenario under the graph on the right and aligned with its Y axis
Supply chain investment

Large-scale investment in the supply chain will be used to establish local manufacture of towers and
floating foundations. This investment in new or upgraded facilities and tooling could amount to US$80
million to US$250 million, with most investment likely happening around 2030.

4.5 TRANSMISSION AND PORT INFRASTRUCTURE
In this scenario, the electricity transmission system will need significant reinforcement, beyond
ongoing revisions typical of the national Transmission Network Development Plan. Strong links are
proposed, including eventually connecting a western link through Mindoro to Manila. Such links will be
important as the country moves to higher levels of electrification and decarbonization of transport,
heat, and electricity. This transformation will require significant vision, finance, and time to deliver. For
OSW to reach its potential, upgrades are needed that cannot be implemented on a project-by-project
basis. Therefore, we propose a strategic approach to OSW development zones and the transmission
network (see Section 18).
At an annual installation rate of 2 gigawatts per year, three to four ports will be in use for OSW
construction at any one time, and volumes will enable investment. It is unlikely that any new ports
will be established, but delivering the full 10–30 gigawatts of the potential Southern Mindoro OSW
development zone might warrant such investment, and other significant users may benefit. Ports are
discussed in Section 19.
4.6 ENVIRONMENTAL AND SOCIAL IMPACTS

By 2040, there will be about 1,000 large OSW turbines in the Philippines, installed in projects over at
least six OSW development zones. Eighty-five percent of these will be floating in deep water. If not
carefully planned and permitted, this high level of development could lead to significant adverse E&S
effects, including on internationally important biodiversity. Comprehensive MSP will be required to
ensure that projects are located carefully in the potential OSW development zones. Robust, project-
specific ESIA that achieve the standard of GIIP and are integrated into the permitting process will
be required to secure appropriate ongoing mitigation and management of impacts. It will not be
possible to completely avoid adverse E&S impact. Government officials, developers, financiers, and
stakeholders need to consider the trade-offs between securing reliable low-carbon power and these
adverse effects. Key E&S considerations are discussed in Section 14.
Filipinos will benefit from reduced local pollution from coal plants, and the global environment will
benefit from the displacement of 197 million metric tons of CO2 avoided by 2040, five times that of the
low scenario. This and other environmental metrics are discussed in Section 7.1.
People working on OSW farm construction and operations will be kept safe from harm through a
comprehensive approach to health and safety. We discuss this in Section 15.
Coastal communities may benefit more in the high growth than in the low growth scenario from the
projects in terms of economic activity and jobs, as discussed in Section 4.4; however, adverse impacts
on industries such as fishing, aquaculture, and tourism, as well as damage to cultural heritage, may
arise. The simplified economic analysis provided in the roadmap covers jobs and GVA from OSW
and net consumer benefit relating to cost of production only. In time, more effects (including those
discussed here) can be assessed through more detailed sectoral and economic analysis.

4.7 FINANCE AND PROCUREMENT
As in the low growth scenario, OSW will be supported through competitive auctions. This structure will
provide the best value to the economy (see Section 17). Policy makers will need to strengthen frameworks
for leasing, MSP, ESIA, permitting, and power purchase agreements (PPAs). Organizations administering
frameworks and acting as consultees will need strengthening and a significant increase in capacity.
Significant governance and administrative reforms may be required to deliver this level of capacity (see
Sections 14, 16, and 17 and relevant recommendations, including suggestions for next actions).
Standards and processes that do not meet GIIP will limit the availability of international finance,
particularly in E&S impact assessment and stakeholder engagement. There is more urgency to
progress these than in the low growth scenario. These areas are discussed in Section 21.
A capital expenditure (CAPEX) of about $US50 billion will be required for projects installed to the end
of 2040. As in the low growth scenario, sources of public finance will be accessed to fund projects and
vital project infrastructure, including port upgrades and transmission assets. Access to finance is likely
to be dependent on meeting lenders’ performance standards, including those relating to E&S issues.
Improvements to the ESIA and permitting process will ensure that projects can meet these standards
(see Section 21).
4.8 ACTIONS TO DELIVER THE HIGH GROWTH SCENARIO

Our recommendations for government actions are listed in Section 5. They are informed by the
analysis of key ingredients of a successful OSW industry, discussed in Section 6. Due to the greater
scale and faster pace of industry growth in this scenario, compared to the low growth scenario, there is
increased commitment needed and urgency for government action.

4.9 SWOT ANALYSIS FOR THE PHILIPPINES IN THE HIGH GROWTH
SCENARIO
Table 4.1 presents a SWOT analysis for the Philippines adopting the high growth scenario, comparing
to no OSW and the low growth scenario.
TABLE 4.1 SWOT ANALYSIS FOR THE PHILIPPINES IN THE HIGH GROWTH SCENARIO FOR OSW
DEVELOPMENT
Strengths Weaknesses
• Delivers local, large-scale source of clean electricity • Transmission network needs extensive
supply, with long-term jobs and economic benefit reinforcement, which will require significant vision,
• LCOE lower than traditional technology cost finance, and time
from the start • Requires greater commitment across
• Drives innovation and supply chain investment government and more urgent action than in the
much more than low growth scenario low growth scenario
• Larger market size will sustain local competition and • Needs significant increase in capacity in
support exports, delivering 13 times more jobs and organizations administering frameworks than
GVA compared to the low growth scenario, by 2040 in the low growth scenario
• The cost of energy is 18 percent lower than in low • Current ESIA processes do not fully follow GIIP
growth scenario and the cumulative net benefit or conform to E&S performance standards
is nine times higher, for 4.8 times high volume of mandated by international lenders
electricity by 2040
• Displaces 4.8 times more CO2 compared to coal
than the low growth scenario, with climate benefits
scaled similarly
Opportunities Threats
• Local manufacturing of towers and floating • All government preparatory work on policy and
foundations frameworks has a fiscal impact, with payback only if
• Export potential of towers to East or Southeast Asia the industry progresses as planned
• More prep work is needed sooner than in the low
growth scenario
• Lack of cross-government support could increase risk
• Delays to upgrading transmission network could
delay projects and lead to loss of investor confidence
• Higher number of turbines installed than in the
low growth scenario could lead to significant
adverse E&S impacts, including on internationally
important biodiversity, if not carefully planned (via
proportionate MSP), assessed (including via robust
ESIA), permitted and managed (in some cases via
implementing mitigation)
• Trade-offs between clean energy production and
other E&S harm are more likely to be required than
in the low growth scenario, which will necessitate
careful management and stakeholder engagement
• In the absence of clear government guidance and
standards for ESIA aligned with GIIP and lender
requirements, poor siting and development of
projects could lead to adverse E&S effects, delays in
financing projects, and damage the reputation of the
industry, slowing inward investment opportunities
and future growth prospects
Note: E&S = environmental and social; ESIA = environmental and social impact assessment; GIIP = good international industry
practice; GVA = gross value added; LCOE = levelized cost of energy; OSW = offshore wind.

5. RECOMMENDATIONS IN
ROADMAP FOR OFFSHORE WIND
IN THE PHILIPPINES
OSW has seen tremendous growth in some parts of the world, most notably in northwest Europe
and China. Governments recognize that if they provide a stable and attractive policy and regulatory
framework, looking at least 10 years ahead, then developers can deliver OSW farms that provide low-
cost and carbon-free electricity to power their economies.
OSW has been a success in markets like the UK, Germany, Denmark, and the Netherlands, because
successive governments have implemented and sustained strategic policies and frameworks that
encourage the development of OSW farms by private developers and investors. Frameworks set out
robust, transparent, and timely processes for seabed leasing and project permitting.
Governments have used MSP processes to balance the needs of multiple stakeholders and environmental
constraints. In parallel, they have considered what investment in grid and other infrastructure will be
required to deliver a sustainable pipeline of projects. Finally, they make sure projects are financeable and
can attract competitive capital by offering a stable and attractive route to market for the electricity
generated. Based on country-specific experience, Section 6 summarizes key ingredients for a successful
OSW industry, taking much learning from World Bank Group’s Key Factors report.4 Key questions and
topics that report addresses are summarized in Figure 5.1.
FIGURE 5.1 STRATEGY, POLICY, FRAMEWORKS, AND DELIVERY: FOUR KEY PILLARS FOR
SUCCESSFUL OFFSHORE WIND DEVELOPMENT
Source: World Bank, 20214
21
Key recommendations in the roadmap for OSW are presented in Sections 5.2 to 5.12. Figure 5.3
and Figure 5.4 summarize the two scenarios and suggest somewhat differing timing of activities
for each scenario. The timing enables delivery of early projects in 2028 and establishes a pipeline
of projects to deliver the volumes shown in the scenarios. The first WESCs were signed in late 2019
and 2020 and, although these allow a period of up to 10 years for project commissioning, the pace
of industry progress indicates momentum to move forward as quickly as reasonable. Therefore, the
timing proposed assumes the usual project development program of about 8 years of duration to be
commissioned. There is a risk that industry confidence might lessen if early projects progress more
slowly. It is however recognized that delays may be experienced if industry cost reductions do not
progress at the pace anticipated. This particularly applies to floating technology, which is currently
less technologically and commercially mature than fixed OSW.
The roadmap timelines in Figure 5.3 and Figure 5.4 are based on the principle of delivering the first
projects as early as practically possible. The timelines represent the best-case scenario, based on a
prompt and committed start by the government. Critical factors that could impact the suggested
timeline include:
■ The effort required by the government to develop a policies and frameworks for OSW and
build confidence in those frameworks with stakeholders and industry
■ The requirement for improved data to inform spatial planning, and ESIA
■ The requirement to plan, finance, and build transmission network (and potentially port)
infrastructure in time for the planned OSW capacity
■ OSW industry progress in developing technology and supply chain, especially relating
to floating OSW
To maximize the opportunity of delivering the roadmap to this timetable, the government should
manage and mitigate these critical factors.
5.1 JUSTIFICATION FOR OUR KEY ROADMAP RECOMMENDATIONS

Our recommendations are based on robust analysis, consultation, and experience. Our justification for
key roadmap recommendations is provided below. We are grateful for the consultation feedback that
was overwhelmingly positive and that contained many useful additions, which have been incorporated.
Evolution of frameworks, rather than major changes

There is already a strong basis for OSW development in many areas, and introducing major changes
risks slowing activity and damaging industry confidence. We recommend keeping the two-stage
process of awarding leases and power purchase agreements (PPAs) and an industry-led approach to
project development, rather than transferring early project development to the government.
Another key reason not to recommend significant change is that OSW has not yet delivered. Until
it has, there will be little political appetite to implement time-consuming changes and insufficient
understanding to define and implement changes well. It will be vital, however, that the government and
national industry and global wind industry players work together to address necessary frameworks. A
summary of our assessment of key conditions for OSW in the Philippines is provided in Table 5.1.

TABLE 5.1 SUMMARY OF ASSESSMENT OF KEY CONDITIONS FOR OSW IN THE PHILIPPINES
Condition Assessment
Wind resource Good, especially where floating
Demand for clean power High to 2040 and beyond
Leasing framework Needs some change
Permitting framework Needs some change
Power purchase framework Needs some change
Grid connection framework Needs some change
Health and safety framework Needs some change
Transmission network Clear vision and significant upgrades required over time
Industry likely to need to focus hard on cost reduction to meet proposed
Cost of energy
ceiling price
Local supply chain Relatively weak but OK to use regional / global supply chain
Limits to foreign ownership will limit OSW deployment and are not
Rights to ownership
compatible with rights in many other areas of the power sector
Need for comparable LCOE with other large-scale generation projects

OSW has much to offer the Philippines as it moves to a decarbonized energy system, at a volume
greater than likely to be delivered from onshore wind and solar. The government, however, has a strong
drive to deliver affordable power to consumers, meaning that early OSW project are not likely to
compete head-to-head with onshore renewables.
For OSW to have its own auction, we believe the industry needs to show costs competitive with other
forms of large-scale generation, such as coal (even recognizing the moratorium). When looking at early
projects in today’s emerging markets, the levelized cost of energy (LCOE) trajectory might seem overly
aggressive for some and reasonable for othersiv.
We recommend starting with large projects (for fixed and floating OSW), which requires
facilitating access to the global OSW supply chain and creating the conditions for competitive supply
of finance. The experience gained in emerging and established markets can be applied to future
projects in the Philippines, and ways to avoid some of the early “teething trouble” in emerging markets
will have been learned.
Although earlier markets started with small projects, this was in part due to the state of the
technology globally available. OSW technology installed in multi-gigawatt projects is now available,
and many international developers and suppliers are experienced in large project delivery. This pool
of expertise will have grown significantly by the time first projects are installed in the Philippines in
around 2028.
We suggest there be an LCOE that can be translated into an auction ceiling price for projects
completed eight years from now. This will give project developers and their supply chains time to be
creative in delivering. We believe that the can-do attitude of the global wind industry, the positive spirit
iv Traditional technology fuel price inflation and other carbon abatement measures are approximate, set to US$70/MWh in 2020 (lower than recent coal auction
prices), with an inflator of 0.5% per year. Note that as of March 2022, coal prices are at historical highs and thus, $70/MWh does not reflect recent pricing shifts with
electricity generation from coal becoming significantly more expensive, at least in the shorter term.
5. Recommendations in roadmap for offshore wind in the Philippines 23

of the people of the Philippines, and ongoing trends in cost reduction in all OSW markets mean there
is an excellent chance of delivering. If industry is slow in reducing cost in emerging markets (already at
below US$50 per megawatt-hour in some established markets), then this may delay the market in the
Philippines by a short period.
Timescales for industry growth

We recognize that some want OSW to be deployed faster than suggested. While this would be
beneficial, our experience is that establishing robust and bankable frameworks is key, and large,
nationally relevant infrastructure projects take a long time, even in established OSW markets. We also
believe the timescales fit with reasonable expectations of progress regarding transmission network
upgrades, so that there will not be a gap between early projects (that do not drive significant upgrades
to receive a grid connection) and subsequent projects that do.
Foreign ownership
Foreign ownership is seen by many in industry as essential in facilitating the vast investment
needed to deliver OSW projects, much larger in scale than other renewable energy projects. This is
especially relevant as projects move from predevelopment (with low expenditure) to the later stage
of development (higher expenditure, leading to final investment decision) and due to the need to use
global OSW experience, combined with local knowledge, in delivering successful projects.
Strategic approach to transmission

The Southern Mindoro potential OSW development zone is a key example of the importance of
a strategic approach to transmission. To access its OSW potential will require strategic
collaboration and timely progress in a range of areas, especially in transmission network upgrades
and OSW project development.
Without a strategic approach, which involves both the definition of OSW development zones and clear,
funded transmission network upgrades, the outcome is likely to be the delivery of only a small number
of early OSW projects that can be connected to the transmission network without major upgrades,
leading to increased demands on the national electricity system.
Suitability of conditions in the Philippines for offshore wind

The OSW industry started in the shallow waters of Northern Europe with high mean wind speeds.
The industry is now globalizing rapidly, accessing markets with somewhat lower mean wind speeds
and new challenges, such as typhoons. The industry is also rapidly commercializing floating OSW
technology, which will be well-proven before first floating projects in the Philippines in the early 2030s.
The industry is developing wind turbines suited to lower mean wind speeds and designed to withstand
wind speeds significantly higher than the 70 meters per second gust wind speeds that most models
are designed to withstand. Robust technical solutions are being demonstrated by the leading wind
turbine suppliers to meet these challenges. These advances mean that the OSW industry can use
the windy but mainly deep waters of the Philippines by the time projects and transmission network
upgrades are ready to go live.

Each recommendation is labeled S (strategy), P (policy), F (frameworks), or D (delivery), aiding reference
to the World Bank Group’s Key Factors report.4 Parts of Sections 9 to 22 provide further detailed
recommendations not listed here.
Many of the recommendations apply to both the low and high growth scenarios but can happen later and
to a lesser degree in the low growth scenario. Recommendations marked H (high growth scenario only)
may still be advantageous but could be avoided in the low growth scenario, and are not shown in Figure
5.3, giving a much-reduced list of roadmap actions.
Those recommendations with an * indicate where early progress is critical to the timely delivery of the
high growth scenario.
5.2 VISION AND VOLUME TARGETS

Communicating a clear long-term vision and associated volume targets for OSW will attract interest
and investment from the global industry and supply chain, stakeholders, government departments,
and the people of the Philippines.
Our recommendations to the DOE:
1. Publish its vision for OSW to 2050 as part of a decarbonized energy mix for the Philippines,
considering plans for transport and heat, explaining how and why OSW is important. Through
sectoral and economic analysis, this vision should show how OSW contributes to key elements of
national energy strategy, taking a balanced view of costs and benefits. (See Sections 6 and 8). (S, H*)
2. Set OSW installed capacity targets for 2030 and 2040. (See Sections 6 and 8). (P*)
3. Progress a holistic feasibility study for the Southern Mindoro potential OSW development
zone—due to its strategic relevance and long lead time for development—considering metocean
conditions, transmission network, OSW, and port development. (See Section 9). (S, H*)
5.3 PARTNERSHIPS
The large scale and high complexity of OSW projects make it entirely different from onshore wind or
solar. Projects combine the scale of large hydroelectricity schemes and the complexity of offshore
hydrocarbon extraction. Therefore, government-industry collaboration builds confidence, develops a
successful new sector, and delivers benefits seen in other markets.
4. Establish by circularv a long-term government-industry task force involving local and international
project developers and key suppliers to address these recommendations and other considerations,
as they arise. (See Section 6). (F, H*)
5. Sign memoranda of agreement with relevant government departments, especially the Department
of Environment and Natural Resources (DENR), to define interdepartmental cooperation on OSW,
covering leasing, permitting, power purchase, transmission, health and safety, and frameworks,
and key areas of delivery, including supply chain, ports, and finance. (See Section 6). (F, H*)
v Formal intergovernmental agency collaboration is usually in the form of a joint circular issued by such agencies or memorandum of agreement/cooperation agreement
entered into between these agencies.

5.4 OWNERSHIP
The Philippines OSW sector must tackle a large scale of projects, which need vast overseas investment
and a combination of local knowledge and international OSW experience.
Our recommendations to the DOE and the private sector:
6. Seek that Congress change the Constitution to relax requirement for 60 percent local ownership of
each OSW project (bringing OSW in line with other renewables technologies, such as biomass) or find
alternative routes to address this barrier to investment in large projects. (See Section 20). (D, H)
5.5 LEASING, PERMITTING, AND POWER PURCHASE

To develop a sustainable OSW energy industry, the Philippines needs robust, transparent, and timely
processes for leasing and permitting. International investment is required to develop the potential
volumes of OSW in the Philippines discussed in this report. The sector needs a stable route to selling
electricity to make this happen.
7. Establish OSW development zones through proportionate MSP in line with GIIP.vi Engaging with
key stakeholders, planners need to consider E&S factors (including cumulative impact of multiple
projects) and have a long-term vision for transmission network development. (See Sections 9, 14,
and 18). (F, H*)
8. Introduce OSW development zones that respect WESCs and applications. Provide guidance in
focusing OSW projects in the most advantageous areas, while minimizing negative E&S and
economic impacts. See also recommendation 18. (See Section 9). (F, H)
9. Issue guidance to developers on how to accept requests to extend a WESC’s predevelopment stage
beyond five years due to considerations outside of the control of the developer. (See Section 16). (F)
10. Issue guidance regarding applying for a WESC for OSW adjacent to an existing WESC and give
assurance to developers on the expectation to extend a WESC after the initial 25-year term if
a project is still in operation. Confirm there is no requirement for offshore occupation fee. (See
Section 16). (F)
11. Extend the Energy Virtual One-Stop Shop (EVOSS) activity to cover all relevant government
departments to enable efficient and transparent permitting, including ESIA, in accordance with
GIIP. Clarify and streamline permitting process and provide guidance for developers, regulators,
and stakeholders, including clear timelines for permit decisions and prioritization of renewable
energy projects. See also recommendation 32. (See Section 16). (F*)
12. Review design permit flexibility to prevent need for full reapplication and subsequent delays
should any design changes be required as the project progresses, plus the availability and
appropriateness of supporting guidance regarding the permitting processes, considering all
parties. (See Section 16). (F)
vi GIIP, as defined by International Finance Corporation (IFC) Performance Standard 3 (PS3), is the exercise of professional skill, diligence, prudence, and foresight that
would reasonably be expected from skilled and experienced professionals engaged in the same type of undertaking under the same or similar circumstances, globally
or regionally.

13. Establish a competitive system solely for OSW PPAs. Have a ceiling price to limit cost to
consumers, and consider a floor price in early years to avoid the risk of lowball bids. Conduct
ceiling and floor price consultations with stakeholders before to competitions to reflect
evolving fossil fuel and OSW prices, especially recognizing currently high fossil fuel and commodity
prices.vii (See Section 17). (F)
14. Explore development of a standard form PPA for adoption across OSW projects to accelerate
market development to provide stable income per megawatt-hour generated and that may include
indexation for foreign exchange rate variations. (See Section 20). (F, H)
15. Create a suggested timetable for private sector competitions. Coordinate across government and
private sector organizations involved in administering competition to deliver. (See Section 17). (F)
Figure 5.2 summarizes recommended government and project developer responsibilities for OSW
activities through the project lifecycle, showing the timing of the element of competition. This follows
the format of Figure 3.4 of World Bank’s Key Factors report, which presents responsibilities in a
range of established markets.4 The suggested Philippines model consists of an open-door leasing
arrangement, followed by a competitive auction for PPAs. It is a one-competition model, but not
combining lease and PPAs as in Denmark’s or the Netherlands’ one-competition models.
FIGURE 5.2 SUMMARY OF RECOMMENDED GOVERNMENT AND PROJECT DEVELOPER

RESPONSIBILITIES FOR OFFSHORE WIND ACTIVITIES THROUGH THE PROJECT LIFECYCLE IN
THE PHILIPPINES
Project development
Wind energy area selection Project site selection Wind farm construction
& permit application
Export system development Export system construction
Department of Energy Developer Developer C Developer
Developer Developer
Government led Developer led Competition
vii Note that a typical competition bid price cannot be directly compared with a LCOE for two main reasons: (a) PPA terms are typically for 20 to 25 years, shorter than
the expected project lifetimes of more than 30 years; and (b) actual bid prices will consider account taxation and other fiscal and financial considerations, including
those specific to each bidder. These are not included in LCOE calculations.

5.6 FINANCE
Enabling sufficient finance and reducing the cost of capital for OSW projects in the Philippines are key
drivers in enabling volume delivery at low LCOE.
16. Ensure PPA counterparties (offtakers) and PPA terms remain viable as volumes of
OSW contracted increase, including clarity on curtailment. (See Section 21). (F, H*)
Our recommendations to the Department of Finance:
17. Encourage financial mechanisms to reduce cost of capital, including access to climate and
other concessional finance. Ensure international market standards for contractual risk
allocation, arbitration, and government backstop and an adequate security package for lenders.
(See Section 21). (F)
18. Support engagement of local finance community with OSW, including communication of E&S
performance standards required to gain access to concessionary and project financing. See also
recommendation 32. (See Section 21). (D)
5.7 GRID CONNECTION AND TRANSMISSION NETWORK

The transmission network offers only limited opportunity for grid connection of early projects via local
upgrades. The Philippines needs significant strategic leadership and finance to deliver a transmission
network enabling large-scale electrification and fit for a decarbonized energy system powered by
renewable energy. This topic is much wider than OSW, considering all electricity, transport, and heat.
19. Publish a 2050 vision for a nationwide electricity transmission network for a decarbonized
energy system that includes milestone plans for 2030 and 2040 and considers finance.
(See Section 18). (S, H*)
20. Incorporate OSW development zones into CREZ and transmission development plan (TDP)
processes. (See Section 18). (F, H*)
21. Undertake power systems studies—with the DENR, National Grid Corporation of the Philippines
(NGCP), and Transmission Corporation (TransCo)—to understand the potential impacts of
large volumes of OSW on the future transmission network and ESIAs in line with GIIP and
lender requirements. These studies will help policy makers understand the E&S implications of
transmission network upgrades, feeding these into MSP activities. (See Section 18). (F, H*)
22. Work with NGCP and TransCo to update the TDP delivery, approval processes, and grid
management practices to reflect the move to more supply from renewable energy sources. (See
Section 18). (D)

23. Consider low-cost solutions for investment in transmission system upgrades, such as concessional
finance. (See Section 18). (D, H)
24. Ensure clarity and efficiency for projects in securing grid connections, including point-to-point
applications and compensation for delayed grid connection availability once a Grid Connection
Agreement (GCA) is signed. (See Section 18). (F)
5.8 PORT INFRASTRUCTURE

Suitably sized and located ports are essential to enable the construction and operation of OSW farms.
The Philippines has a range of such ports, though availability and interest in delivering OSW has not
been established.
Our recommendations to the Philippines Ports Authority:
25. Publish (or have published) a OSW ports prospectus, showing port capabilities against OSW
physical requirements, and use this to encourage dialogue and timely investment in relevant port
facilities. This will involve engagement with independent government entities managing Freeports.
(See Section 19). (D)
26. Work with the DOE and ports to plan a pipeline of projects in the potential OSW development
zones in line with a strong government vision. Assess whether it is viable to establish new port
facilities. Planners should factor E&S considerations and conduct a robust ESIA for potential
developments. (See Section 19). (S, H)
27. With the DOE, Department of Trade and Industry (DTI), National Economic and Development
Authority (NEDA), and relevant Freeport zone authorities, explore potential Philippine government
and inward investment to finance port upgrades or new facilities. (See Section 19). (D, H)
5.9 UNDERSTANDING THE MARINE ENVIRONMENT

Available resources and natural conditions contribute to LCOE and decisions about where OSW
should be located. Global datasets have established the viability of OSW in the Philippines. Further
understanding is required to underpin strategic decision making.
28. Initiate or coordinate wind resource measurement to build confidence in available resource and
extreme winds, recognizing typhoon risk.viii (See Section 9). (S, H)
29. Initiate or coordinate other measurement and data gathering campaigns on key aspects of the
zones as part of a proportionate MSP process, including:
a. Metocean campaigns, especially wind speed but also considering typical and extreme
significant wave heights and currents
b. Geological surveys of the seabed and substrates
c. Ecological surveys to address identified gaps in knowledge of the zones
d. Social perceptions and potential impacts on local industries such as fishing, shipping,
aquaculture, and tourism (see Section 9) (F, H)

5.10 SUPPLY CHAIN DEVELOPMENT
The Philippines’ good port infrastructure could host local manufacturing. It has supply chain capability
relevant to some areas of OSW. A proactive approach will help increase local readiness for supply.
30. With the DTI, present a balanced vision for local supply chain development, encouraging
international competition. Enable education and investment in local supply chain businesses,
including in onshore and offshore worker training. (See Section 11). (D)
31. Learn from other OSW markets to avoid restrictive local content requirements that add risk and
cost to projects and slow deployment. (See Section 11). (P)
5.11 STANDARDS AND REGULATIONS

Safeguarding E&S interests, designing and installing safe structures, and protecting workers are
priorities at all levels of the industry. The Philippines needs a framework of E&S impact assessment
standards, technical legislation, and design codes to establish bankability and attract and sustain
international interest and investment in the market.
Our recommendations to the DENR:
32. Review ESIA requirements for compatibility with international standards of GIIP, update the
legislative and policy framework where necessary, and produce guidance for developers and
stakeholders on the requirements and their relationship with the permitting and financing
processes. (See Section 14). (F*)
33. Extend the Renewable Energy, Safety, Health and Environment Rules and Regulations (RESHERR)
to cover health and safety for OSW. Encourage focus on behavioral and cultural aspects of health
and safety. (See Section 15). (F)
34. With the Energy Regulatory Commission (ERC), consider amendments to the Grid Code and
Distribution Codes to account for the significant increase in renewable power from OSW and other
variable forms of renewable energy generation. (See Section 18). (F, H)
35. Create a framework of technical codes and regulations relevant to OSW, adopting international
industry codes where appropriate. (See Section 6). (F, H)
5.12 CAPACITY BUILDING AND GENDER EQUALITY

Strong frameworks deliver only if they are implemented through agencies with clear roles, well-
defined mandates, and sufficiently resourced staff. Gender equality is needed for an excellent pool
of capability, both among stakeholders and the OSW industry, and to establish a future-focused
industry. According to the World Economic Forum’s Global Gender Gap Report 2021,8 the Philippines is
the 17th highest ranked country (out of 156) and the best-performing country in East Asia in closing
the gender gap around key metrics. OSW can build on this success.

36. Help government departments and other key stakeholders grow capacity and knowledge needed
to process a growing volume of OSW projects. (See Section 16). (F*)
37. Involve developers and supply chain companies in gender equality working groups, supported by
women’s rights organizations in the Philippines, Global Wind Energy Council (GWEC) and Global
Women’s Network for the Energy Transition (GWNET). (See Section 13). (D)
38. Consider introducing gender equality requirements into leasing and power purchase frameworks.
(See Section 13). (F)
Our recommendations to the government and industry:
39. Together, determine key data to collect to ensure diversity targets are measured and make sure a
framework is in place to collect data accurately. (See Section 13). (D)
5.13 ROADMAP SUMMARIES

Figures 5.3 and 5.4 present roadmap summaries for low growth and high growth scenarios, respectively.
FIGURE 5.3 LOW GROWTH SCENARIO ROADMAP FOR OFFSHORE WIND IN THE PHILIPPINES
1: Set the
Low growth scenario vision
2: Evolve the
frameworks
3: Develop and install first projects
4: Develop the long-term infrastructure
5: Stable build-out
Volumes 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035-9 2040-4 2045-9 2050
Annual installation rate (GW/yr) 0.8 0.8 0.8 0.2 0.2 0.2 0.2
Cumulative operating capacity (at end of year) (GW) 0.8 0.8 1.6 1.6 1.6 1.6 2.4 2.4 3.2 4 5.6
2. Installation targets for 2030 and 2040
Leasing, permitting and power purchase
9 and 10. WESC terms
11. Extension of EVOSS
12. Flexibility in permitting
13. Competitive system for OSW PPAs
15. Timetable for private-sector PPA competitions 0.8 0.8 0.8 0.8 0.8 0.8 0.8
Finance
17. Financial mechanisms to reduce cost of capital
18. Engagement of local finance community
Grid connection and transmission
21 and 22.Transmission network studies and processes
24. Grid connection process
Port infrastructure
25. OSW ports prospectus
30 and 31. Supply chain development
32. ESIA requirements
33. Health and safety requirements and training
36. Grow stakeholder capacity and knowledge
37. Gender equality working groups
38. Diversity targets and measurement
39. Gender equality requirements part of frameworks

Note: ESIA = environmental and social impact assessment; EVOSS = energy virtual one-stop shop; OSW = offshore wind;
PPA = power purchase agreement; WESC = wind energy service contract.

FIGURE 5.4 HIGH GROWTH SCENARIO ROADMAP FOR OFFSHORE WIND IN THE PHILIPPINES
1: Set the
High growth scenario
vision
2: Evolve the
frameworks
3: Develop and install first projects
4: Develop the long-term infrastructure
5: Stable build-out
Volumes 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035-9 2040-4 2045-9 2050
Annual installation rate (GW/yr) 0.8 1 1 1.2 1.4 1.6 1.8 1.9 2 2 2
Cumulative operating capacity (at end of year) (GW) 0.8 1.8 2.8 4 5.4 6.9 8.7 10.6 20.5 30.5 40.5
1. Vision for OSW to 2050
2. Installation targets for 2030 and 2040
3. Southern Mindoro feasibility study
Partnerships
4. Government-industry task force
5. Government cooperation agreements
Ownership
6. Local ownership requirement
Leasing, permitting and power purchase
7. OSW development zones through MSP
8. Introduction of OSW development zones
9 and 10. WESC terms
11. Extension of EVOSS
12. Flexibility in permitting
13. Competitive system for OSW PPAs
14. Standard form PPA
15. Timetable for private-sector PPA competitions 0.8 1 1 1.2 1.4 1.6 1.8 1.9 2 2 2 10 10 4
Finance
16. PPA counterparties and terms
17. Financial mechanisms to reduce cost of capital
18. Engagement of local finance community
Grid connection and transmission
19. 2050 vision for transmission network
20. OSW into CREZ
21 and 22.Transmission network studies and processes
23. New routes to investment in transmission network
24. Grid connection process
Port infrastructure
25. OSW ports prospectus
26. Vision for port use and any new port facilities
27. Inward investment
Understanding the marine environment
28. Wind resource measurement initiative
29. Broader data gathering and sharing
30 and 31. Supply chain development
32. ESIA requirements
33. Health and safety requirements and training
34. Philippines Grid Code and Distribution Codes
35. Other technical codes and regulations
36. Grow stakeholder capacity and knowledge
37. Gender equality working groups
38. Diversity targets and measurement
39. Gender equality requirements part of frameworks

SUPPORTING INFORMATION
33
6. KEY FACTORS FOR SUCCESSFUL
DEVELOPMENT OF OFFSHORE WIND
IN AN EMERGING MARKET
This section summarizes key ingredients for a successful OSW industry based on experience in a range
of countries, mainly captured in World Bank Group’s Key Factors report.4
It is recognized that each market will have different strategic drivers and considerations, so while
generic key factors are important, learning always needs to be applied in context. In response
to the key factors, we have included a commentary specific to the Philippines and reference to
recommendations presented in Section 5.
6.1 A CLEAR ENERGY STRATEGY

OSW should be considered as part of a long-term energy strategy alongside other forms of energy
production, in the context of the electrification and decarbonization of national energy systems
looking toward 2050. By then, the majority of fossil fuel use in electricity production, transport and
heat will have ended, and the majority of energy production will be from renewable sources—biomass,
geothermal, hydro, ocean, solar, and wind. Typically, OSW projects provide large-scale electricity
generation, with higher capacity factors than onshore wind and solar projects. As it stands today,
storage of energy is likely to be mainly through hydrogen and electric vehicles, and hydrogen is likely to
be an important vector for some forms of energy use, including in larger vehicle transport.viii
This means countries should ask themselves the following questions:
■ Where will our energy come from?

■ How do we manage the cost and risk of this supply?
■ How will we get energy from where it is extracted to where it is used?
■ Should OSW be a big part of our energy future?
The global OSW industry will respond positively to clarity about OSW’s role in a given country’s future
energy system. It has to invest much in an emerging market, so it will want to pick the right markets.
These are the ones where OSW makes most sense and it can see that governments understand and
are making progress on the opportunities.
Section 1 of the World Bank Group’s Key Factors report discusses this area in more detail.4 The
Philippines is well placed, with World Bank Group and other support, to develop the next iteration
of its energy strategy.
Our recommendations 1 and 19 relate to this point.
viii The cost of producing hydrogen is likely to remain higher in the Philippines in the near future than in countries with low cost, large-scale onshore renewables.

6.2 STABLE OFFSHORE WIND POLICIES AND PIPELINE VISIBILITY
Sufficient, attractive lease areas for development

OSW project developers and their supply chains need to have confidence in a sufficiently large and
visible pipeline of projects to facilitate investment, ongoing learning, and competition.
The way leases are allocated also needs to be transparent, robust, and bankable to enable developers
to invest confidently at an early stage. Proportionate marine spatial planning processes can be
used to de-risk potential lease areas by identifying environmental and social risks and prioritizing
areas for development.
The Philippines has a relatively attractive OSW resource and establishing a pipeline of 2.5 GW per year
leased by 2027 will enable 2 GW per year to be installed by 2035.
The phasing of key activities is presented in Figure 6.1. This chart includes realistic levels of attrition,
where projects are delayed, resized or fail due environmental, technical, or commercial reasons. It is
indicative and does not fully reflect the pipeline of Wind Energy Service Contracts that have already
been signed. It shows, however, that reaching an annual rate of lease awards of 2–3 GW by 2025 is
key if the Philippines is to follow the high growth scenario and reach 2 GW of installed capacity each
year by 2035.
FIGURE 6.1 ANNUAL RATE OF MEETING DIFFERENT OFFSHORE WIND MILESTONES REQUIRED
TO DELIVER HIGH GROWTH SCENARIO
3 This volume of projects needs

to be permitted each year...
Rate (GW per year)
1
... to deliver this volume of
projects installed 3 years later
0
2020 2025 2030 2035 2040
Projects leased Projects permitted
Projects reached FID Projects installed
6. Key Factors for Successful Development of Offshore Wind in an Emerging Market 35

The chart is based on the following headline typical project timeline:
■ Year 0: project leased. For the Philippines, this means Wind Energy Service Contract awarded.
■ Year 4: project permitted. For the Philippines, this means that sufficient permissions have been
obtained to be eligible to enter a power purchase auction.
■ Year 5: project reaches final investment decision (FID). In the Philippines, this will come after having
secured a power purchase agreement (PPA).
■ Year 8: project installed.
There is the opportunity for governments to shape some elements of this timeline, and a general
speeding up can be expected over time. It is compatible with that seen in established markets as we
anticipate that much learning can be applied from them to frameworks in the Philippines to enable
similar timing, and the time from lease to installation in a typical market will continue to fall over the
next two decades—in all markets, there are some projects that significantly delayed. Time scales
shown therefore are indicative, purely to flag that frameworks need to be working smoothly before
first capacity starts coming online.
This roadmap suggests a solid basis for establishing a healthy pipeline of OSW projects, especially
through the use of OSW development zones.
Our recommendations 2, 7, 8, 9, 10, and 36 relate to this point.
Streamlined permitting process

Many countries have learned that a clear, efficient, well-resourced permitting process incorporating
good practice for environmental and social impact assessment (ESIA), led by a single organization, and
with clear accountabilities and basis for decisions is key, both in terms of minimizing environmental
and social harm and facilitating project financing by meeting the performance standards of
international lenders.
The Philippines is already taking positive steps in this area, for example via the Energy Virtual One-
Stop Shop (EVOSS), but there is more to be done to facilitate a pipeline of permitted projects.
Our recommendations 11, 12, 32, and 36 relate to this.
A regime that de-risks developers’ exposure to long-term energy

price fluctuation
Wind farm owners are exposed to significant project development and construction risk, and ongoing
risks relating to wind speeds and project performance. Additional risks due to grid curtailment and
variable sales price of electricity generate additional financing cost to projects, increasing the cost to
consumers. There are also risks related to retrospective changes to tariffs. Countries that have made
fast progress on OSW deployment have managed exposure to this risk via robust, government-backed
contracts and stable policy. In some markets, these are now not at a premium to wholesale, variable
electricity prices.

The Philippines has existing processes, as discussed in Section 17, but it is likely that these will need to
be strengthened, especially in the high growth scenario.
Our recommendations 13, 14, 15 and 16 relate to this.
Stable and transparent investment environment

As well as confidence in the wind farm leasing, ESIA, and permitting processes, wind farm developers
and investors need to be confident about the legal, financial, and tax regimes in any market to consider
investments bankable.
Having a recognized framework of technical legislation and design codes and standards also helps
establish bankability and attract international investment. A balance needs to be found between
adapting existing national standards relevant to other industries and adopting international OSW
good practice, which reduces the risk and cost for international players to supply to the Philippines.
The Philippines has a good basis for development and a strong local banking sector and an excellent
opportunity to engage with the global OSW finance community and those providing concessional finance.
Our recommendations 4, 6, 17, 32, 33, 34, 35, and 36 relate to this.
6.3 A STRONG AND ACCESSIBLE TRANSMISSION NETWORK
Transmission network
A robust transmission network to take power to areas of demand, with low risk of uncompensated
curtailment, is key for project developers. Often, waiting for a grid connection and associated
transmission upgrades are the longest-lead items in an OSW project development.
Section 18 shows that substantial investment will be required in the Philippines transmission system.
Design, investment, and implementation of new transmission assets is a long-term activity that needs
to be accelerated for reasons wider than OSW, including via access to concessional finance.
Our recommendations 19, 20, 21, 22, 23, and 34 relate to this.
Timely grid connections

At the individual project level, project developers need to be confident that as they increase project
spend, once they have agreed a grid connection date, they will be able to connect on that date. Delays
between large capital spend and first generation add significantly to levelized cost of energy (LCOE),
due to the cost of finance.
Our recommendation 24 relates to this.

6.4 A COHERENT INDUSTRIAL POLICY
Policies that encourage realistic levels of local supply while keeping a

close focus on cost
OSW can provide valuable jobs and local economic benefit. Good industrial policy balances cost to
the consumer and job creation. Industry can help find optimal ways to work with the government to
achieve these objectives.
Local site conditions and research and development (R&D) capabilities in each country also offer
opportunities to reduce the cost of energy through innovation. In East/Southeast Asia, the OSW
industry is facing new challenges due to earthquakes, tsunamis, typhoons, and different ground
conditions than those in Europe. As the industry progresses, there will continue to be new areas where
government R&D support will both reduce the cost of energy and create local value.
Our recommendations 4 and 30 relate to this point.
Ports
There is always a way to install any given OSW project from available ports, but often compromises
have to be made that add to the cost. Early, strategic investment can both reduce cost for a range of
projects and in some cases, help establish clusters of suppliers in a given area, with benefits in terms of
collaboration and shared learning.
In most cases, port infrastructure will be used by different companies and different projects over many
years. Section 19 shows that the Philippines has sufficient port infrastructure to be able to meet the
requirements of the current and future OSW projects, often with relatively minor investment.
Our recommendations 25, 26, and 27 relate to this.
6.5 RESOURCED, JOINED-UP INSTITUTIONS

OSW introduces new leasing, permitting, and other regulatory considerations. The Philippines can
address this by ensuring that its public institutions have the necessary skills and resources to give
robust and timely decisions, and that these organizations and their processes work well together.
These organizations will be involved in marine spatial planning, environmental management, leasing
sites, permitting and administering revenue mechanisms. When well-resourced, these institutions
create an environment where industry has confidence to make business decisions and governments
can plan public spending and have confidence that their policy objectives are being achieved.
It is not just the organizations directly involved in the support of the OSW industry that need
resources. OSW projects have implications for military and aviation organizations, environmental
protection agencies and a range of nongovernmental organizations and other stakeholders.

Staff need training to use knowledge and implement good practice learned elsewhere in the world over
the previous 20 or so years of the OSW industry.
Gender equality is key to the development of an excellent pool of capability, both within stakeholders
and within the OSW industry, and is an important focus for establishing a future-focused industry.
Our recommendations 5, 36, 37, 38, and 39 relate to this.
6.6 CONFIDENT, COMPETITIVE ENVIRONMENT
Confidence
We have discussed the importance of confidence and ways to build it in many of the subsections
above. One further way of building confidence is to establish ongoing government-industry
collaboration involving local and international project developers and key suppliers, to work together to
address challenges and opportunities over the years, as the industry matures.
Competition
Competition increases efficiency and innovation between developers and across the supply chain. This
reduces cost of energy and improves value to consumers.
Energy markets around the world range from fully liberalized to state-controlled markets. Regardless
of the system, we have found that competition can have a significant impact on power price reduction.
Good competition for enough sites and PPAs means the best projects get built and offer best value.
Competition for finance is also important, as the cost of finance contributes significantly to LCOE.
Our recommendations 13, 15, 18, 30 and 31 relate to this.
6.7 SUPPORTIVE AND ENGAGED PUBLIC

OSW farms affect the lives of many, and it is important that the voices of individuals, communities
and organizations are heard and are involved at an early stage of the development process, and that
they understand the potential environmental, social and economic impacts of the industry.
Governments can provide an important channel for these voices and the industry will listen.
Governments and other enabling organizations can also educate on the benefits of OSW, including
environmental benefits, job creation and local economic development.
The process of public and stakeholder engagement, for example with fishing communities, can
start much earlier than project development and will be an ongoing process including marine spatial
planning, ESIA, and ongoing construction and operational management.

6.8 A COMMITMENT TO SAFETY
Working in OSW by nature is potentially hazardous due to the location, the need to work at heights,
the size of the components involved, and the presence of medium and high voltage electrical systems.
The OSW industry protects its workers by seeking to get it ‘right first time’—its aim is to anticipate
mistakes rather than just learn from them.
The Philippines has a platform to build on, with its offshore oil and gas and onshore wind industry, but
there is work to be done to ensure regulatory clarity and reinforce safety practices. It is important also
to ensure strong communication and collaboration across industry. The G+ Global Offshore Wind Health
and Safety Organization already has an Asia-Pacific (APAC) focal group to engage with. The Global Wind
Organization (GWO) provides a robust framework for OSW health and safety training and certification.
Our recommendations 33 and 35 relate to this.
6.9 USING THE BEST LOCATIONS

For the Philippines to realize all the positive benefits that OSW has to offer, it has to strike the right
balance between the cost of energy from OSW farms with impact on the natural environment, local
communities, and other users of the sea.
The Philippines should focus on developing a comprehensive framework of marine spatial planning that
seeks to achieve the above balance and provides clear direction to project developers and investors
that responsibly and respectfully developed OSW is welcomed and encouraged.
Making use of natural resources

The Philippines has valuable OSW resources. Identifying the right places in the Philippines to locate
OSW farms is an important aspect of developing a sustainable and long-term industry.
The cost of energy from OSW farms varies from site to site, depending on factors including local
wind and seabed conditions, water depth, and distance from shore. Data sets relating to these
considerations are limited at present.
Our recommendations 3, 7, 28, and 29 relate to this.

Protecting the environment
One of the drivers behind developing OSW as an energy source is its positive environmental benefit as
a source of carbon-free electricity.
Nonetheless, it is important to recognize that OSW farms are large industrial developments and that
their construction must be achieved in a way that minimizes harmful localized impacts on natural
and human environments. A wide range of environmental and social considerations are examined
in detail in Sections 9 and 14. The government should avoid areas of highest environmental and
social sensitivity through spatial planning; implement a robust permitting process where the design,
construction and operation of OSW farms is delivered in accordance with GIIP and standards, including
those for ESIA.
Our recommendations 11, 12, 29, 32, and 36 relate to this.
Respecting communities
For OSW to have a sustainable future, the rights of people and communities whose lives and activities
interact with OSW farms must be respected.
OSW farm sites in the Philippines must be identified, assessed, permitted, and developed in a way that
is sensitive to people’s livelihoods, to the recreational interests, and to their cultural heritage.
Our recommendations 7 and 29 relate to this.

7. BENEFITS AND CHALLENGES OF
OFFSHORE WIND
7.1 BENEFITS
■ Local. Once installed, it does not rely on fuel imported from other countries, so increases
energy security.
■ Low cost. Lifetime costs are still reducing quickly, while for traditional fossil fuel options, costs are
rising. It is becoming easier to finance OSW projects at the same time as it becomes more difficult
to finance fossil fuel generation.
■ Large scale. GW-scale projects can be constructed quickly compared to traditional power stations.
■ Long-term jobs. Both leading up to and during operation, OSW creates and sustains local jobs and
local economic benefit, especially in coastal regions.
■ Clean. OSW is low carbon, low air pollution, low water use, and low land use.
Local
Currently, the Philippines’ electricity supply is mainly from coal, gas, hydro and geothermal power.
Under the Clean Energy scenario of the Philippines Energy Plan 2018–2040, future demand is planned
to be met by increases in natural gas and renewable energy sources, such as wind and solar, displacing
oil and coal in the energy supply mix.
While it uses its own natural resources to create electricity from gas, geothermal, and hydro, the
Philippines imports a growing percentage of its coal and oil demand from Australia, Russia, Singapore,
Indonesia, and the Middle East. The main indigenous natural source of gas for the Philippines comes
from the Malampaya Gas Field operated by Shell Philippines Exploration together with consortium
members, Chevron Malampaya LLC and PNOC Exploration Corporation. It is expected that the
Malampaya gas field will be completely depleted by the first quarter of 2027. New LNG terminals are
being planned and constructed in Luzon to replace this source of natural gas with imported gas. OSW,
along with onshore wind and solar, offers the chance for further energy independence, increasing
energy security for supply and improving the Philippines’ trade balance.
Low cost
In Europe, OSW is cost competitive with new-build fossil fuel options. In the high growth scenario
considered here, the Philippines will reach the same position by 2028 for fixed projects, and 2032 for
floating projects, and the trend of reducing cost will continue into the 2030s and 2040s, as technology
and the supply chain continues to develop.

EXPLANATION OF FIGURE 3.2 AND FIGURE 4.2: LCOE AND CUMULATIVE NET BENEFIT OF
OFFSHORE WIND
100 50 The blue bars show the levelized cost of energy

(LCOE) for OSW installed in the given year, assumed

80 40
constant for the life of each project. The average
60 30
cost of production in a given year (not shown) is
Cost ($/MWh)
made up of higher LCOE of earlier projects and lower

40 20 LCOE of later projects, combined with capacity
factors for each. It is made up of costs from fixed
20 10 and floating projects following the scenarios
presented in Section 2.
0 0
The gray bars show the average cost of production

-20 -10
2025 2030 2035 2040 2045 2050 for traditional technology (assumed to be coal)
Year operating in a given year, assumed to increase
Offshore wind LCOE for new project installed in year slowly over time due to fuel price inflation and
Traditional technology annual cost of generation other carbon abatement measures.ix Traditional
Cumulative operating capacity at end of year
Cumulative net benefit
technology was chosen as the early comparator, as
it is the incumbent technology and can be provided
in large volume, like OSW. As the energy transition progresses, many countries will move to increased use
of onshore renewables (wind and solar) as well as OSW. The longer-term LCOE of onshore renewables in the
Philippines will depend both on the progress in improving the cost effectiveness of installed hardware and
on the availability of economically exploitable resources, based on environmental and social considerations.
Analysis of this is relevant, in time. It is likely that it will show a need for both available onshore renewable
capacity and OSW.
The purple line shows the cumulative installed capacity of OSW in this scenario.
The black line is the cumulative net generation cost benefit of production from OSW based on the
difference in average cost of production between OSW and coal, each year. The analysis is based on
project costs only, with OSW simply offsetting traditional technology. It is not based on any power system
modelling and does not consider the cost of carbon dioxide or other pollutants or of balancing costs due
to the variability of OSW generation. It therefore has a narrow definition, using information available to
the project team, that does not consider wider fiscal benefits and subsidies. In time, it may be beneficial to
conduct a broader assessment in this area.
In this example, the net benefit to consumers by 2040 is already US$1.9 billion.
Traditional technology fuel price inflation and other carbon abatement measures are approximate, set to
US$70 per MWh in 2020 (lower than recent coal auction prices), with an inflator of 0.5 percent per year.
Note that as of March 2022, coal prices are at historical highs and thus, US$70 per MWh does not reflect
recent pricing shifts with electricity generation from coal becoming significantly more expensive, at least in
the shorter term.
Sensitivity Analysis
To understand sensitivity, if the traditional technology price inflation is reduced to zero, then in the high (low)
scenario, the net generation cost benefit in 2040 would be minus US$0.6 billion (minus US$0.8 billion).
If the traditional technology price inflation is retained, then in the high (low) scenario, the net generation
cost benefit in 2040 drops (increases) to zero when the 2020 traditional technology price is set to US$66
per MWh (US$74 per MWh).
ix For any given OSW project, the LCOE, by definition, is constant over the project life. LCOE for a pool of projects changes as new projects with different LCOEs are
added into that pool. For coal, as much of the production cost is dictated by the fuel price, which is expected to increase over time, the concept of LCOE is less suitable.
Here, we have compared LCOE for the pool of OSW projects operating in a given year with the cost of production from the coal plant in that year.
7. Benefits and challenges of offshore wind 43

Large scale
The capacity of OSW projects in mature markets are usually between 0.5 GW and 1.5 GW. In 2021,
early phases of the Dogger Bank project in UK that will be developed together won power purchase
contracts totaling 3.6 GW, and a similar-sized project is progressing in Vietnam. Larger OSW turbines
continue to be brought to the market, the largest now at 15 MW, further enabling large projects to be
constructed rapidly. Typically, these GW-scale projects can be constructed more quickly than fossil
fuel plants, and in some markets in Europe, the introduction of OSW has significantly increased the
overall deployment rate for renewables when onshore renewables had slowed due to delays relating
to permitting and the lack of availability of viable sites. While a typical OSW project is likely to take
considerably longer to develop and install than a typical onshore wind or solar project, OSW has proven
to be an effective way of developing multiple GW of capacity in reasonable time scales.
Long-term jobs
OSW offers local job opportunities in developing, manufacturing, construction and operation of OSW
projects, over their life cycle of over 30 years. Section 12 explores the scale of the opportunities, based
on an analysis of the supply chain in Section 11.
Clean
OSW produces less carbon dioxide and other pollutants and uses less water and land than fossil and
nuclear sources of generation.
Carbon
Fossil fuels release on average 500 metric tons of carbon dioxide (CO2) per GWh of electricity
generated.9, 10 A typical 1 GW wind farm saves over 2.2 million metric tons of CO2 per year. In the
Philippines, emissions from coal are likely to higher than quoted above, further increasing the saving. In
the high growth scenario, by 2040 OSW will have produced almost 400 TWh, saving about 200 million
metric tons of CO2, cumulatively. This equates to a saving of between US$11.5 and US$23 billion
based on the WBG’s carbon pricing guidance which suggests the price of carbon ranges from between
US$50–100 tCO2e between 2020 and 2030 and increases for both values at the same growth rate
of 2.25 percent per year to 2050.11 In the low scenario, the saving is just over 40 million metric tons
which is equivalent to between US$2.4 and US$4.7 billion. These savings are not included in the
analysis of cumulative net benefit presented above. Further, we recognize that while OSW will mainly
displace coal, there may be times when lower-carbon technologies are displaced, or when renewables
capacity needs to be curtailed to meet demand. This could be evaluated via more detailed sectoral and
economic analysis.
Analysis by Siemens Gamesa Renewable Energy found that an OSW farm pays back the carbon
produced during construction within 7.4 months of the start of operation. The life of an OSW farm is
likely to be 30 years or more.

Pollution
Sulphur dioxide (SO2) and nitrogen oxides (NOx) are air pollutants known for creating smog and
triggering asthma attacks.
Fossil fuels release on average 1.1 metric tons of SO2 and 0.7 metric tons of NOx per GWh of electricity
generated.13 In the high growth scenario, OSW saves over 430,000 metric tons of SO2 and 275,000
metric tons of NOx, cumulatively by 2040.
As an example of public health benefits from other markets, the American Wind Energy Association
estimated that reductions in air pollution created US$9.4 billion in public health savings in the US in
2018 from the 96 GW of onshore wind generated in the US that year.14
Water
Thermal power plants require water to produce electricity and cool power generating equipment.
Fossil fuels consume on average 15 million liters of water per GWh of electricity generated.15 Wind
farms require very little water. In the high growth scenario, OSW saves almost 6 trillion liters of water
by 2040, with a 1 GW wind farm saving 65 billion liters of water per year.
Land
Onshore renewable energy projects are often constrained by local population density and competing
land uses. The onshore footprint of OSW is limited to grid infrastructure and port facilities. OSW,
located and developed properly, typically does not have a large impact on other marine users.
7.2 CHALLENGES
OSW, like any new technology and infrastructure investment has significant challenges. These include
■ Variability. The wind does not blow all the time.

■ Technology. Cost of energy reduction depends on the development of technology overseas that is
both reliable and well suited to conditions in East Asia.
■ Cost in the early years Initially, costs will be higher than in more mature OSW markets and can be
higher than traditional forms of electricity generation.
■ Young, rapidly growing industry. This introduces both risks and opportunities that need to be managed.
■ Government commitment. Cost reduction, especially local economic benefits, increase with volume
and requires greater government commitment.
■ Environmental and social considerations. The local, regional, and international adverse impacts of
OSW need to be recognized and carefully managed.
■ Impact of climate change. How OSW could be impacted by climate change.

Variability
Seasonal variations in average wind speeds are well understood in mature markets, but total annual
energy production can still vary by 10 percent from year to year. In these markets, forecasts for a few
days ahead are relatively accurate, but predictions of energy production still need either supply- or
demand-side action to ensure continuity of power supplies.
It is recognized that there is a cost to addressing this variability. Investment in the energy transition
inevitably involves investment in smart grid technology, flexible sources of generation, storage and
management solutions, including the use of hydrogen and electric vehicles, each helping to manage the
challenge of variability of generation from wind and solar. With many other markets having far higher
penetration of variable renewables than the Philippines, it will be able to take advantage of technology
and commercial learning in other markets as these areas develop over the next 30 years.
Technology
The continued reduction in cost of energy from OSW in the Philippines relies on further development
and support of new technology, especially
■ Larger offshore turbines, plus all the logistics and equipment related to their use;
■ More optimized floating foundations and associated mooring systems, installation methods,
and operational strategies;
■ Ongoing global improvement in the manufacture, installation, operation, and reliability of
OSW farms; and
■ Solutions to address site conditions specific to the area, including typhoons and seismic activity.
The first three points relate to OSW, globally; the last relates especially to the East Asia market.
For the past 30 years, the wind industry has been innovating rapidly, and we anticipate that this will
continue. There is, however, a risk that local markets are not large enough to drive some areas of innovation.
There also remains a risk of type faults causing significant reliability issues, especially as OSW
turbines incorporate a range of technology at the largest scale that it is used in volume, globally.
Cost in the early years

In Europe, OSW used to be much more expensive than traditional technologies. With competition,
innovation, and learning, the cost has been reduced by a factor of more than 3 in the last decade.
In new markets, not all this cost reduction will be available, as the supply chain and experience will take
time to grow, and solutions to country-specific challenges will take time to develop.
This means that, as shown in Section 10.3, costs will start higher but come down faster than in an
established market.

Our analysis shows that the getting through this period of higher costs takes less time via the high
market scenario (for example floating OSW reaches US$60 per MWh three years earlier in the high
growth scenario than in the low growth scenario, refer Figure 10.2), and in any case, even during this time,
consumer net benefit is positive, even without taking account of the climate and pollution benefits.
Young, rapidly growing industry

The wind industry is only 30 years old, and it is less than 20 years since the OSW industry started
installing one or more projects each year. Many significant global businesses are involved, but any
young and rapidly growing industry presents challenges in terms of mergers and acquisitions and
changes of strategy at a pace faster than seen in more mature sectors.
Government commitment
As seen in Figure 3.2 and Figure 4.2, more benefits are unlocked by the high growth scenario, but
this requires more urgency and commitment from the government to delivery, bringing challenges of
cost and resources. Common challenges are in establishing robust and transparent frameworks for
leasing, permitting, power purchase, and grid connection. These areas are discussed in subsequent
sections of this report and in the World Bank Group’s Key Factors report.4
Environmental and social considerations

As with any large infrastructure project, OSW farms do have local adverse impacts on ecosystems,
habitats and species, other sea users, and on local communities. These impacts can be international
in scale, considering cumulative impacts, which are difficult to manage. OSW should not be located in
areas of highest environmental and social risk, which can be identified at an early planning stage.
In established OSW markets, robust environmental and social impact assessment processes and high
levels of stakeholder engagement are used to ensure that these impacts are identified and managed
carefully. This requires considerable environmental and social baseline data collection, some of
which can take two years or more. This requirement for data collection needs to be factored into the
permitting arrangements, providing enough time to collect such data prior to construction.
Impact of climate change

It is recognized that the Philippines has high vulnerability to climate change impacts. We do not believe
that OSW will be significantly affected by climate change. Key considerations include
■ Temperature rise. OSW projects are not susceptible to even increases in mean temperature of 2
degrees or more, based on typical project specifications and our understanding of key design drivers.
■ Seal level rise. OSW projects are not susceptible to even increases in mean seal level of 1 meter or
more, again, based on typical project specifications and our understanding of key design drivers.
■ Changes in weather patterns. There is a risk to the viability of OSW projects should the long-term
trend in mean wind speeds be downwards, or if most extreme high wind speeds increase. So far,
there has been no compelling evidence regarding mean wind speeds. Globally, there is evidence of
more extreme weather patterns.

7.3 FLOATING OFFSHORE WIND
Beyond the benefits and challenges discussed above, there are some important additional
considerations relating to floating OSW that are discussed below.
Minimal differences between floating and fixed offshore wind hardware

■ Typically, turbine design, operation, and reliability are almost the same. This means that the
technology can be fully shared across markets. The only significant difference is in tower design,
where the same principles and suppliers are used for both markets.
■ Turbine routine maintenance activities are almost the same. Activities using crew transfer
vessels (CTVs) and service operation vessels (SOVs) are unchanged. Only unplanned service of
major components is different, due to the inability to use bespoke jack-up installation vessels for
floating OSW activities.
■ Export system electrical hardware is the same, except for some mechanical aspects of cabling.
The way that cables are designed and supported near foundations and substations changes due to
relative movement between foundations and compared to the seabed, otherwise, some aspects of
cable laying can be made easier due to deeper water. Mechanical aspects of offshore substations
and their foundations and installation also change, as they move from being mounted on fixed to
floating foundations.
Additional benefits beyond fixed offshore wind

■ Floating OSW allows access to a wider range of sites. In some countries, areas of water deeper
than 50 meters may have higher mean wind speeds or be located closer to population centers
than areas of shallower water. For some countries, such as those with a narrow continental shelf,
floating foundations offer the only opportunity for large-scale OSW deployment. The Philippines
certainly benefits in this regard, with many more areas of good wind resource in deep water than
shallow, including sites close to Manila.
■ Floating OSW allows for more onshore construction work. Turbines can be fully installed on
foundations in port. This offers the long-term prospect of reduced cost and risk, as offshore
activities typically have a cost and risk premium. It also enables the use of low-cost, readily
available installation vessels, rather than the use of bespoke jack-up installation vessels.
■ Floating foundation hull design is less dependent on ground conditions. This increases the
potential for standardization of foundation designs, enabling further cost reduction.
■ Floating foundations are less susceptible to seismic activity and associated extreme wave
events. Due to the dynamic separation between foundation and seabed, and the ability of the
foundation to float, early experience in Japan has been of a good resistance to extreme events.
They can however be more susceptible to extreme wind speeds associated with typhoons (for
example), depending on design.
■ Floating OSW generally has less-invasive activity on the seabed during installation. This
potentially reduces aspects of local environmental impact. This is especially relevant for the
Philippines, with many environmentally sensitive habitat especially in shallow water.

Additional challenges beyond fixed offshore wind
■ Higher costs in early years. Fixed OSW has seen significant cost reduction over time, as designs
are optimized for greater volume and the application is better understood. The same is anticipated
in floating OSW, based on early experience. A risk to the Philippines is that floating OSW costs
take longer to reduce than expected, thereby delaying deployment (or increasing cost).
■ Have to build new confidence in the technology and supply chain. Many aspects of the
technology and supply chain are almost the same, but floating foundation hulls, mooring systems,
installation and major component replacements and the use of dynamic subsea cables are key
areas of difference.
• Steel and concrete hull designs and a range of mooring systems have been used in oil and gas
and other marine applications, but not at the volumes that will be used in OSW, challenging
supply chain growth especially later in the decade.
• The challenge for replacement of major components is that in fixed OSW, relative movement
between a jack-up vessel crane hook and turbine tower top is already significant in medium
wind speeds. The dynamic challenge of synchronizing movement of a floating vessel crane hook
with a floating turbine tower top is significantly greater, giving rise to two possible strategies:
• Mechanically and electrically disconnect the turbine and its foundation and tow it to shore for
component replacement, potentially replacing the turbine straight away with a spare system,
to minimize lost generating time.
• Overcome this dynamic challenge and use a floating crane vessel.
Typically, developers assume the former solution, with a potential future upside when (possibly at
any point in a project life cycle), new solutions become available.
• Dynamic subsea cables are used in oil and gas, and supplied by similar suppliers to in OSW,
but not at the power levels needed for OSW. Practical design and testing projects have been
under way for some time to address the new challenges, and early floating projects have
demonstrated solutions.
Overall, this means that developers of early projects do have to carry more technology risks, and
owners and lenders will price this, but by the current pace of technology activity, much risk will
have been removed before the first floating project in the Philippines.
■ Some markets have an established fixed OSW pipeline of projects but no floating pipeline.
This means that however fast the technology is available, the market will be delayed by the
establishment and use of frameworks covering floating projects:
• Leasing rounds need to be in different areas

• Permitting, including ESIA, has different considerations, some of which will need precedent
set through early projects
• Power purchase, potentially to differentiate from fixed projects in markets that support
both technologies.
In the Philippines, with the first floating project anticipated in 2032 and few fixed sites available,
these barriers are unlikely to have an impact.

8. MARKET VOLUME IN THE
PHILIPPINES
8.1 TO DATE
The Philippines has about 0.5 GW of onshore wind capacity operating, but is at the early stage of
establishing OSW, with only a handful of projects having secured Wind Energy Service Contracts and
starting along the project development journey. There is now much interest, and careful management
is needed to establish a strong and sustainable pipeline of successful projects.
8.2 A VISION FOR OFFSHORE WIND TO 2050

Developing an OSW project is a long-term infrastructure investment. Developing a national program
of many projects needs to be considered within the context of strategic energy plans over decades.
This also helps drive down the cost of energy and encourage local supply chain development, as further
discussed in Sections 10 and 11.
The Philippines can accelerate OSW projects rapidly over the next few years. The success of this
acceleration will depend on the clarity of the government’s long-term ambition and the actions that
the government takes to facilitate growth.
In the high growth scenario that we model, the OSW deployment rate increases to 2 GW per year by
2036, resulting in just over 20 GW operating by 2040. We assume the deployment rate then remains
constant during the 2040s (at around 2 GW per year) representing a stable, mature sector. This leads
to 40 GW operating capacity by 2050, delivering almost 160 TWh per year in 2050.
8.3 IN THE PHILIPPINES’ NATIONAL CONTEXT
Forecast to 2040
Figure 8.1 shows how electricity demand is met by supply in the Philippines from 2000 to 2040.
Historical data from 2000 to 2014 are taken from the International Energy Agency (IEA) and data
from 2014 onward are provided by the Department of Energy (DOE).5 The electricity demand forecast
and how it is met by supply to 2040 uses the DOE’s Clean Energy scenario, which does not include
OSW. This forecast shows a significant amount of new gas generation coming online after 2030 and a
large amount of coal- and oil-fired generation still operating by 2040, representing over 23 percent of
electricity generation.

FIGURE 8.1 HISTORIC AND FORECAST ELECTRICITY SUPPLY IN THE PHILIPPINES, SPLIT BY
GENERATION TYPE (WITHOUT OSW)
400
Annual electricity supply (TWh)
300
200
100
0
2000 2005 2010 2015 2020 2025 2030 2035 2040
Biomass Onshore Wind Solar PV Hydro Geothermal Gas Coal and oil
Source: DOE.
Figure 8.2 shows the same electricity supply forecast, but with OSW (from the high growth scenario)
offsetting fossil fueled generation (the combination of coal, oil, and gas). In 2040, the 73 TWh of
OSW generation reduces fossil fueled generation by 42 percent. The addition of OSW could help
the Philippines accelerate its decarbonization, especially through the retiring of old coal plant, and
potentially reducing the need for new construction of fossil fueled generation after 2030.
FIGURE 8.2 HISTORIC AND FORECAST ELECTRICITY SUPPLY IN THE PHILIPPINES SPLIT BY
GENERATION TYPE (WITH OSW HIGH GROWTH SCENARIO)
400
300
Annual electricity supply (TWh)
200
100
0
2000 2005 2010 2015 2020 2025 2030 2035 2040
Biomass Onshore Wind Solar PV Hydro Geothermal Offshore Wind Fossil fuelled generation
Source: DOE, BVG Associates.
8. Market volume in the Philippines 51

Forecast to 2050
The DOE’s current Clean Energy scenario5 assumes 10 percent penetration of electric vehicles by
2040 and at least 50 percent of the electricity demand being met by renewable energy generation
(equivalent to around 15 MTOE). This, however, is less than 20 percent of the Philippines’ final energy
consumption, meaning that, in 2040, around 75 MTOE of the Philippines’ energy will still be supplied
by fossil fuels. This highlights the scale of the decarbonization challenge and the need for indigenous
sources of energy.
Following the recent commitments of other nations, we anticipate that by 2050 much of the
Philippines’ energy system will be decarbonized, through extensive use of
■ Electric vehicles;
■ Hydrogen as fuel for heavy transport and aviation;
■ Hydrogen to provide high-grade heat in industrial applications; and
■ Electricity, displacing burning of fuels for domestic energy use.
An indicative estimate of demand from decarbonization has been combined with an extrapolation of
electricity demand in the Clean Energy scenario to determine the national electricity demand for 2050
that is presented in Table 8.1.x It is double the demand in 2040.
OSW has the potential to play an important role in the Philippines’ energy transition. In 2050, the high
growth scenario of 40 GW of OSW will provide 23 percent of the Philippines’ electricity supply. This
40 GW, made up of 37 GW of floating and 3 GW of fixed capacity, fits comfortably within the World
Bank’s previously published view of 178 GW of technical potential,xi which includes 160 GW of floating
and 18 GW of fixed capacity.17
Snapshots of OSW supply in 2030, 2040, and 2050 are presented in Table 8.1, reflecting the trend
shown in Figure 4.1.
TABLE 8.1 ELECTRICITY SUPPLIED BY OFFSHORE WIND TO 2050 IN THE HIGH GROWTH
SCENARIO
2030 2040 2050
OSW operating capacity (GW) 2.8 20.5 40.5

Average capacity factor of operating projects (%) 37 45 47
OSW electricity production (TWh/yr) 6 73 159
National demand (TWh/yr)* 190 350 700
Percentage of electricity supplied by OSW 3 21 23
* National demand is taken from DOE for 2030 and 2040 and estimated, assuming extensive decarbonization as discussed above,
for 2050.Source: BVG Associates.
x Indicative demand from decarbonization is derived as follows:

The• capacity
Electrified aviation, electrified diesel (mainly heavy vehicle transport), electrified gasoline (mainly electric light vehicle transport) extrapolated
factor
from IEA oil final in 2030
consumption is using
by product, based on the
jet kerosine, first and
gas/diesel, two fixed
motor projects
gasoline installed up to the end of 2029 on
(see https://www.iea.org/data-and-statistics/
data-browser?country=PHILIPPINE&fuel=Energy%20consumption&indicator=OilProductsCons)
lower-wind
• Electrified sites. By and
heat (cooking 2040,
heatingthewater)average
assumed to becapacity
70 percent offactor
householdof operating
energy consumption,projects incorporates
refer DOE Clean Energy scenario. a number of
xi This technical potential includes all locations with wind speed above 7 m/s at height of 100 meters, water depth less than 1,000 meters, and with minimum size 10
km2. It does not factor in environmental, social, and technical considerations.

floating projects on higher-wind sites as well as the use of larger turbines. The calculation of capacity
factors is explained in Section 10.
Based on our understanding of social and economic constraints and future demand, we believe 20 GW
and 40 GW offer a realistic, conservative vision for OSW in the Philippines by 2040 and 2050.
With the Philippines’ other renewables resources, OSW can help the Philippines take big steps to
decarbonizing its power sector, as it continues to grow its economy and transitions toward a zero-
carbon future and meeting its international obligations. About 23 percent of electricity production in
the Philippines comprises about two-thirds of Wind Europe’s vision for the whole of Europe in 2050.18
The above discussion is based on annual supply and demand balances. As discussed in Section 7.2, we
recognize that OSW is a variable renewable energy technology, with a cost to managing that variability.
We also recognize that the energy transition will involve other vectors beyond electricity. There is much
work under way, exploring the synergies between OSW and green hydrogen production for internal use
or export. Hydrogen offers further opportunities for the Philippines to benefit from its valuable natural
OSW resource. An additional advantage of using electricity to charge electric vehicles and to produce
hydrogen that can be stored and then used as a transport or industrial fuel is that these applications
introduce significant volumes of storage into the energy system. Critical to these applications are
■ The development of faster-charging, higher energy storage batteries with lower mass
and cost; and
■ The development of lower cost electrolyzers and hydrogen distribution systems.
■ With the global focus on such technologies, it is highly likely that the Philippines will be able to
benefit from them as it accelerates decarbonization in the 2030s and 2040s.
8.4 WITHIN EAST AND SOUTHEAST ASIA

Within East and Southeast Asia, the other key OSW markets are likely to be China, Japan, Republic
of Korea, Taiwan, China, and Vietnam. Although there is much uncertainty, it is reasonable to assume
growth in OSW following the trend shown in Figure 8.3, with the Philippines overtaking Taiwan, China
in the 2040s.
These markets, each more advanced than the Philippines, offer the opportunity to access what will
be a mature regional supply chain by the late 2020s, in both fixed and floating OSW. It also enables
the Philippines to take the benefit of technology solutions relevant to regional challenges, such as
typhoons and high seismic activity.

FIGURE 8.3 INDICATIVE FORECAST OF CUMULATIVE OPERATING OFFSHORE WIND CAPACITY
IN HIGH GROWTH SCENARIO IN THE PHILIPPINES AND IN THE REST OF EAST ASIA END 2030,
2040, AND 2050
300
Offshore wind operating

capacity (GW)
200
100
s
a
r
na
an
na
e
ne
re
a
th
hi
hi
tn
Ko
pi
Ja
O
C
,C
e
ilip
Vi
an
ut
Ph
So
wi
Ta
2030 2040 2050
8.5 GLOBALLY
The almost 600 GW of OSW capacity in East Asia in 2050 fits within a wind industry vision19 of 2 TW
in 2050, as shown in Figure 8.4. This 2 TW of OSW capacity is expected to deliver 7,700 TWh per year,
or about 14 percent of global electricity demand.
FIGURE 8.4 INDICATIVE FORECAST OF CUMULATIVE OPERATING OFFSHORE WIND CAPACITY

GLOBALLY END 2050
305
GW 570
GW
Global:
480 2,000GW
GW
640
GW
East Asia Europe Americas Other

8.6 OFFSHORE WIND ENERGY PRODUCTION AND COST DATA
Table 8.2 and Table 8.3 show key data for both scenarios for the period 2028 to 2050, supporting
calculations throughout the study. It combines fixed and floating project data (costs, production) that
were calculated separately. We assume no generation from projects in the year of installation. Note
that data relate to scenarios, with smooth trends shown over time. In reality, for new projects the
project sizes, costs, lifetimes, cost of money, and nominal capacity factors will vary from this trend. In
addition, actual generation for operating projects will vary based on year-by-year mean wind speeds.
Levelized cost of energy (LCOE) and capacity factor for projects installed in the year are computed
by linear interpolation between calculated points in 2028, 2033, and 2038 and combining fixed and
floating projects, where appropriate. See Section 10 for a detailed description of how these values
have been calculated. For floating LCOE, a 2 percent year-on-year reduction is assumed after 2038 in
the low growth scenario and 3 percent is assumed for the high growth scenario, extending the trends
seen in 2030s. Analysis of the innovation and cost reduction potential of OSW to 2040 and beyond
suggests that this is valid. In the same way, a 0.5 percent year-on-year increase in capacity factor is
assumed after 2038 in both scenarios.
Annual energy production (AEP) is the sum across all wind farms operating in the year, considering
the different capacity factors for each annual capacity installed. Cumulative energy production is the
sum of this, over time. Over time, capacity factors are assumed to increase for two reasons; (1) as the
industry transitions from fixed to floating OSW, projects are gradually installed further offshore in
areas of higher wind resource, and (2) turbine technology is expected to continue improving over the
coming decades and this will lead to performance increases.
Annual net generation cost-benefit is the annual cost of generation from traditional fossil fuel
technology in the year, minus the sum across all wind farms operating in the year of energy production
multiplied by LCOE, considering the different energy production and LCOE for each annual capacity
installed (see Section 7.1). Cumulative net generation cost-benefit is the sum of this, over time.
TABLE 8.2 ENERGY PRODUCTION AND COST DATA FOR LOW GROWTH SCENARIO
Cumulative LCOE for Capacity Annual net Cumulative

Annual Annual Cumulative
operating projects factor for generation net
installed energy energy
Year capacity at installed projects cost-benefit generation
capacity production production
end of year in the year installed in (US$, cost-benefit
(GW) (TWh) (TWh)
(GW) (US$/MWh) the year (%) billions) (US$, billions)
2028 0.8 0.8 86 37 0.0 0.0 0.0 0.0

2029 0.8 2.6 2.6 0.0 0.0
2030 0.8 1.6 77 37 2.6 5.1 0.0 -0.1
2031 1.6 5.2 10.3 0.0 -0.1
2032 1.6 5.2 15.5 0.0 -0.1
2033 1.6 5.2 20.7 0.0 -0.2
2034 0.8 2.4 78 46 5.2 25.9 0.0 -0.2
2035 2.4 8.4 34.3 0.0 -0.3
2036 2.4 8.4 42.7 0.0 -0.3
2037 2.4 8.4 51.1 0.0 -0.3
2038 0.8 3.2 63 46 8.4 59.5 0.0 -0.4
2039 3.2 11.7 71.1 0.0 -0.3
2040 3.2 11.7 82.8 0.0 -0.3

Year capacity at installed projects cost-benefit generation
capacity production production
(GW) (TWh) (TWh)
2041 3.2 11.7 94.4 0.0 -0.3

2042 0.8 4.0 58 47 11.7 106.1 0.0 -0.3
2043 4.0 15.0 121.0 0.1 -0.2
2044 4.0 15.0 136.0 0.1 0.0
2045 4.0 15.0 151.0 0.1 0.1
2046 0.8 4.8 54 48 15.0 165.9 0.1 0.2
2047 4.8 18.3 184.3 0.2 0.4
2048 4.8 18.3 202.6 0.2 0.6
2049 4.8 18.3 221.0 0.2 0.8
2050 0.8 5.6 50 49 18.3 239.3 0.2 1.1
Note: Data are smoothed compared to real-life situation, as explained above.
TABLE 8.3 ENERGY PRODUCTION AND COST DATA FOR HIGH GROWTH SCENARIO

Year capacity capacity at installed projects production production cost-benefit generation
(GW) (TWh) (TWh)
2028 0.8 0.8 86 37 0.0 0.0 0.0 0.0

2029 1.0 1.8 81 37 2.6 2.6 0.0 0.0
2030 1.0 2.8 82 39 5.8 8.4 -0.1 -0.1
2031 1.2 4.0 81 42 9.3 17.6 -0.1 -0.2
2032 1.4 5.4 82 46 13.6 31.2 -0.1 -0.3
2033 1.6 6.9 71 46 19.1 50.3 -0.1 -0.4
2034 1.8 8.7 67 47 25.5 75.8 -0.1 -0.5
2035 1.9 10.6 63 47 32.7 108.5 0.0 -0.6
2036 2.0 12.6 58 47 40.5 149.0 0.1 -0.5
2037 2.0 14.6 54 47 48.7 197.7 0.2 -0.2
2038 2.0 16.6 50 47 56.9 254.6 0.4 0.2
2039 2.0 18.6 48 47 65.2 319.7 0.7 0.9
2040 2.0 20.5 47 48 73.4 393.2 1.0 1.9
2041 2.0 22.5 45 48 81.8 474.9 1.2 3.1
2042 2.0 24.5 44 48 90.1 565.1 1.5 4.6
2043 2.0 26.5 43 48 98.5 663.6 1.9 6.5
2044 2.0 28.5 41 48 107.0 770.6 2.2 8.7
2045 2.0 30.5 40 49 115.5 886.0 2.6 11.3
2046 2.0 32.5 39 49 124.0 1,010.0 3.0 14.3
2047 2.0 34.5 38 49 132.6 1,142.6 3.4 17.6
2048 2.0 36.5 37 49 141.2 1,283.8 3.8 21.4
2049 2.0 38.5 36 50 149.8 1,433.6 4.2 25.7
2050 2.0 40.5 34 50 158.5 1,592.2 4.7 30.4
Note: Data are smoothed compared to real-life situation, as explained above.

9. SPATIAL MAPPING
9.1 PURPOSE
The purpose of this section is to present an overview of the publicly available spatial data relating to
environmental, social, and technical considerations that may affect prospective OSW development in
the Philippines and to derive OSW development zones.
The maps presented are intended to inform readers of the key considerations and site characteristics
in areas potentially suitable for OSW development.
Only a preliminary analysis is carried out and additional datasets need to be considered when
developing a marine spatial plan or developing an OSW project.
9.2 METHOD
In the sections below, we present the following:
■ Technical potential for OSW in the Philippines based on a simplified assessment

■ Environmental, social, and technical considerations
■ Environmental and social restrictions and exclusions, based on these considerations
■ LCOE
■ Potential OSW development zones, based on all of the above.
The following subsections describe the methods used to derive the results in each of these areas.
Technical potential
The analysis was originally described and published in the Going Global: Expanding Offshore Wind to
Emerging Markets report,20 which estimated the Philippines ‘technical potential’ to be 18 GW
for fixed foundation and 160 GW for floating foundation OSW technologies. See this document for
full methodology.
Technical potential is defined as the maximum possible installed capacity as determined by wind
speed and water depth. Mean wind speeds (at height of 100 meters) exceeding 7 meters per second
are considered viable for OSW, and water depths of up to 50 meters and up to 1,000 meters are
considered viable for fixed and floating foundations, respectively. The datasets used in this analysis are
listed under technical considerations in Table 9.1.
The analysis of technical potential does not take into account other factors that could influence the
planning and siting of OSW projects including environmental, social, and economic considerations.
57
Environmental, social, and technical considerations
The environmental, social, and technical considerations mapping provides additional context about the
known locations of environmentally sensitive areas and important land and coastal infrastructure. Most
datasets identified are global datasets which include data covering the Philippines. Table 9.1 provides a
list of the spatial datasets and sources that were included in this considerations mapping activity.
TABLE 9.1 SPATIAL DATA LAYERS USED IN THE ANALYSIS
Data layer Notes Data Source Reference
ENVIRONMENTAL CONSIDERATIONS
Areas legally protected under the

National Integrated Protected Area
Marine https://data.unep-wcmc.org/
System (NIPAS) Act. DENR-BMB
protection areas datasets/44
Includes Locally Managed Protected
Areas (LMPAs) as listed below.
Areas of known habitats of threatened
species, designated under Wildlife https://data.unep-wcmc.org/
Critical habitats DENR-BMB
Resources Conservation and Protection datasets/44
Act No. 9147 (the Wildlife Act).
Key Biodiversity
Areas (including https://www.ibat-alliance.org/
alliance for zero Areas of international importance in sample-downloads?tab=gis-
IBAT
extinction sites terms of biodiversity conservation. downloads&anchor_id=resource-
and Important Bird header
Areas [IBA])
Wetlands of international importance
that have been designated under the
criteria of the Ramsar Convention
http://ihp-wins.unesco.org/
Ramsar sites on Wetlands for containing IBAT
layers/geonode:sites
representative, rare or unique wetland
types, or for their importance in
conserving biological diversity.
IMMAs are habitats important to
Important Marine
marine mammal species that have
Mammal Areas Tethys Research Institute https://www.tethys.org/
the potential to be delineated and
(IMMAs)
managed for conservation.
The natural World Heritage spatial
data are updated annually in the
UNESCO World World Database on Protected Areas
Heritage Natural (WDPA), after the World Heritage UNEP http://www.unep-wcmc.org
Sites Committee meeting, hosted on
Protected Planet. The current version
is August 2017.
The Man and the Biosphere (MAB)
program is an intergovernmental
scientific program that aims to
establish a scientific basis for
enhancing the relationship between
people and their environments. It
UNESCO-MAB combines the natural and social
UNESCO http://ihp-wins.unesco.org/layers
biosphere reserves sciences with a view to improving
human livelihoods and safeguarding
natural and managed ecosystems,
thus promoting innovative approaches
to economic development that are
socially and culturally appropriate and
environmentally sustainable.

Allen Coral Atlas (via https://allencoralatlas.org/
Coral reefs Important natural habitat.
TBC) resources/
Allen Coral Atlas (via https://allencoralatlas.org/
Seagrass beds Important natural habitat.
TBC) resources/
https://data.unep-wcmc.org/
Mangrove forests Important natural habitat. UNEP-WCMC
datasets/45
The Biodiversity Management Bureau
(BMB) of the DENR implements
a Coastal and Marine Ecosystem
Management Program (CMEMP),
which includes all coastal and marine
areas of the Philippines. LMPAs that
Locally managed
are designated by the Fisheries Code
marine protected Philippines geo-portal https://www.geoportal.gov.ph/
include fish reserves, sanctuaries,
areas
and refuges; seagrass sanctuaries;
marine parks; and marine reserves,
sanctuaries, and refuges. LMPAs
include all waters within a municipality
that are not included in protected
areas under the NIPAS Act.
Ecologically
or biologically Internationally agreed marine areas
CDB http://www.cbd.int/
significant of importance.
marine areas
TBC
National Stock
Assessment Program
(NSAP) under
Areas of sensitive marine species, Department of
See references for KBAs
Cartilaginous fish specifically sharks, rays, and Agriculture Bureau of
and MPAs
chimaeras. Fisheries and Aquatic
Resources (DAR-BFAR)
Sharks Assessment
Report dataset
2009–2016.
Endemic bird Areas of overlapping breeding ranges BirdLife International
http://datazone.birdlife.org/eba/
areas (EBAs) of restricted range bird species. Data Zone.
SOCIAL CONSIDERATIONS
Cultural and/or natural heritage sites http://ihp-wins.
UNESCO World with outstanding universal value to unesco.org/layers/
UNESCO
Heritage Sites humanity. No sites identified within worldheritagesites:geonode:
the Philippines analysis area. worldheritagesites
Fishing ports Municipal and regional fishing ports. Philippines geo-portal https://www.geoportal.gov.ph/
Manually digitized from
information in -
Landscape and Sites with protected status due to BMB, DENR, Philippine
https://www.denr.gov.ph/
seascape their landscape or seascape value. Government
images/DENR_Publications/
PA_Guidebook_Complete.pdf
Tourism areas Tourism ports development pipeline. DOTR DOTR
TECHNICAL CONSIDERATIONS
Regions around airports may need to
Airports Openflights 2020 https://openflights.org/data.html
be avoided to reduce radar impacts.
Exclusive economic Internationally recognized marine
Marine Eco Regions https://www.marineregions.org/
zones (EEZ) boundaries.
Extreme wind PREVIEW Global Data
Used for information. https://preview.grid.unep.ch/
speeds Risk Platform
9. Spatial mapping 59
The Global Wind Atlas
v3.0, released in 2019
(Danish Technical
Mean wind speed Used to determine AEP and LCOE. https://globalwindatlas.info/
University [DTU] and
the World Bank Group
[WBG])
Locations of military bases Manually digitized from
Military bases Arup/Google Earth
in the Philippines. Google Earth
Offshore oil and gas Locations of offshore oil and
Philippines geo-portal https://www.geoportal.gov.ph/
activity gas activity.
Humdata/Philippines
Ports Locations and size of ports. https://www.geoportal.gov.ph/
geo-portal
PREVIEW Global Data
Seismic activity Used for information. https://preview.grid.unep.ch/
Risk Platform
The raster layers were created using
International Monetary Fund’s (IMF)
analysis of hourly AIS positions
received between January 2015 and
February 2021 and represent the total
number of AIS positions that have
been reported by ships in each grid
cell with dimensions of 0.005 degree https://datacatalog.worldbank.
Shipping density by 0.005 degree (approximately a World Bank org/search/dataset/0037580/
500 meters × 500 meters grid at the Global-Shipping-Traffic-Density
Equator).
The AIS positions may have been
transmitted by both moving and
stationary ships within each grid cell;
therefore, the density is analogous
to the general intensity of shipping
activity.
Datasets include official submarine
cable system name, cable system
length in kilometers, and landing
points. Additional information such as
the owners of the cable systems can
Undersea cables Submarine Cable Map
be found on www.subamrinecablemap.
com. The routes of the cables do not
accurately reflect the exact route
taken by each cable but give an
indication of approximate location.
Used to determine areas of fixed/ https://www.gebco.net/
The General Bathymetric
Water depth floating foundations and as input to data_and_products/
Chart of the Oceans
the LCOE model. gridded_bathymetry_data/

No reliable datasets were obtained for the following social and technical considerations:
■ Aggregate and material extraction areas

■ Commercial fisheries
■ Marine aquaculture
■ Military practice and danger areas
■ Offshore disposal sites
■ Wrecks and historic offshore sites.
Future spatial analysis as part of a country-scale marine spatial plan will need to consult stakeholders,
identify relevant existing data, and gather data on prioritized biodiversity valuesxii to better understand
the Philippines’ onshore, coastal, and offshore ecosystems. It is likely that data gaps in relation to the
biodiversity baseline will require additional field surveys to be completed according to GIIP to inform
spatial planning, site selection, and project-level ESIA.

For defining potential OSW development zones, the range of environmental, social, and technical
considerations are reduced to
■ An environmental restrictions layer;

■ An environmental exclusions layer; and
■ Maps of map of social and technical considerations, with discussion about potential buffer zones.
A summary of this content is provided in Section 14.
The method for reducing to environmental restriction and exclusion layers is presented in Appendix.
Each environmental, social, and technical consideration described in Section 14 is designated either a
restriction or exclusion in that section.
Levelized cost of energy

The site parameters that have the most influence on cost of energy are as follows:
■ Wind speed
■ Water depth
■ Distance to construction port
■ Distance to operation port
■ Distance to grid.
These site parameters were used along with an assumed set of reference project characteristics, as
shown in Table 9.2 (consistent with the high growth scenario in Section 10), and functions of typical
project costs from BVG Associates as inputs into a technoeconomic model which was used to estimate
the headline spatial distribution of the relative LCOE for a reference project in the Philippines’ waters.
The analysis is fully compatible with the LCOE trajectories for typical projects presented in Section 10.
xii These aspects are likely to include birds, marine mammals, fish, benthic communities, bats, turtles, and onshore receptors.
The analysis is detailed, but not as sophisticated as is carried out for an actual OSW project, involving
years of detailed design and optimization.
TABLE 9.2 ASSUMED CHARACTERISTICS OF THE REFERENCE WIND FARM PROJECT USED IN
THE MODELLING
Fixed Floating
Scenario High
Year of installation 2033
Turbine rating (MW) 20
Turbine rotor diameter (meter) 250
Turbine hub height (meter) 147
Project size (MW) 1,000
Lifetime (years) 32
Distance from grid (offshore) (kilometer) 20 40
Distance from grid (onshore) (kilometer) 20 0
The wind speed and water depth spatial datasets used were the same as for the technical
potential mapping.
We calculated travel distance from the construction ports listed in Section 19 and assumed distance
to operations port as (distance to nearest shore2 + 20 km2)½, recognizing that there are many
potential operations ports.
We constrained water depth to less than 1,000 meters to rule out the most challenging of the floating
OSW sites. We assumed floating foundations for sites with water deeper than 50 meters. In practice,
the cutoff between fixed and floating depths will be determined on a project-by-project basis.
We constrained distance to shore to less than 200 kilometers to rule out sites where novel
transmission infrastructure or alternative energy conversion would be needed. This was also the limit
of the wind speed dataset.
Potential offshore wind development zones

To support the long-term development of OSW in the Philippines, a strategic approach to OSW and
transmission network development will be needed. In support of this, we have derived six potential
OSW development zones showing best potential for OSW.
When defining these zones, we considered the following environmental, social, and technical considerations:
■ Exclusions and restrictions based on biodiversity, social, and technical considerations (Appendix)
■ High shipping density (greater than 1 passage per hour through a given 5 km2 area)
■ Subsea cable routes (with a 1 kilometer buffer)
■ Minimum distance from shore (assumed to be 1 kilometer)
■ Maximum depth (we used 1,000 meters as the maximum depth considered for floating
foundations up to 2040s.

9.3 RESULTS
Technical potential
The technical potential is shown in Figure 9.1.
FIGURE 9.1 OFFSHORE WIND TECHNICAL POTENTIAL IN THE PHILIPPINES
Source: World Bank Group and ESMAP.
Water depth
Figure 9.2 shows water depth in the Philippines and in combination with Figure 9.1, it shows there are
few areas of shallow water, coupled with good wind resource, pointing to the need for floating projects.
FIGURE 9.2 WATER DEPTH IN THE PHILIPPINES
Source: see Table 9.1.

Shipping densities
Shipping routes are important to consider when siting OSW projects. Larger vessels, in particular,
cannot pass through an OSW farm and need to chart a course a safe distance away from projects.
Smaller vessels may be able to transit through a wind farm but there is a risk of collision with the
offshore structures. A navigational risk assessment needs to be carried out, including consultation
with the Philippines’ maritime authorities and shipping.
Extreme wind speeds
Extreme wind speeds are an important consideration in the planning and design of OSW projects in
a number of emerging markets, as they exceed normal design limits. This has not been the case in
most established markets. The key challenge for wind farms seeing high storm wind speeds (above 70
m/s, as International Electrotechnical Commission [IEC] Class 1 turbines are designed for) is the LCOE
impact of providing resistance to such conditions.
Some wind turbine suppliers seek to minimize loads through active yaw and pitch control, requiring
grid power (or long-term battery backup of auxiliary systems). Others uprate blade and other
structural component strength. Others seek to push existing materials somewhat further, by applying
arguments regarding certainty of material (especially composite) quality. It is likely that in time,
design for early projects (for example in Taiwan, China) will drive optimum solutions that can be used
elsewhere and that for many sites the LCOE impact will be in the range of 2–10 percent.
The IEC has included an additional wind class T relating to typhoons, with extreme design gust wind
speed of 80 m/s and some turbines are already certificated to this class by independent certification
bodies. Turbines can be certificated against any stated wind conditions, as long as the turbine supplier
can convince the independent certification body. In time, it is likely that higher design gust wind speeds
will be covered, but at increased turbine cost and/or reduced AEP.
Figure 9.3 shows the maximum approximately 5 second gust wind speeds around the Philippines using
data from the PREVIEW Global Data Risk Platform.22 Northern waters are more susceptible to higher
wind speeds, whereas southern waters are at lower risk. All of the potential OSW development zones
are shown to have extreme wind speeds above 70 m/s.
This means that it is likely that typhoon class wind turbines will be needed in many locations, but
extreme wind speeds may make development in the North and East too expensive and high risk, with
extreme wind speeds of over 110 m/s. It may be that local measurement and forecasting could reduce
anticipated extreme wind speeds, as the dataset used is broad.
FIGURE 9.3 MAXIMUM 50-YEAR GUST SPEED AT HEIGHT OF 100 METERS IN EAST ASIA

Seismic activity
The key challenge of seismic activity relates to foundation and tower. Monopiles are seen as the most
susceptible, followed by jackets, then floating foundations. Both ground accelerations and resulting
waves are important considerations. Early OSW experience in Japan with regard to floating foundation
survival of earthquake and resulting wave resistance has been positive. In the Philippines, the key
challenge would seem to be for fixed projects. See Figure 9.4, again using data from the PREVIEW
Global Data Risk Platform.22
Related to seismic and also volcanic activity is the risk of tsunamis. This has not yet been investigated,
but should be included in future work, as discussed in Section 9.5.
FIGURE 9.4 MAP OF GROUND ACCELERATION (EARTHQUAKE RISK) IN EAST ASIA
Environmental restrictions and exclusions
Figure 9.5 shows environmental restrictions and exclusions in the Philippines.
FIGURE 9.5 ENVIRONMENTAL RESTRICTIONS AND EXCLUSIONS IN THE PHILIPPINES

Social and technical considerations
Figure 9.6 shows social and technical considerations in the Philippines. Unlike for environmental
considerations, further work is required to reduce these down to restrictions and exclusions.
FIGURE 9.6 SOCIAL AND TECHNICAL CONSIDERATIONS IN THE PHILIPPINES
Levelized cost of energy
The LCOE from OSW is an important factor in determining the viability of projects and different sites.
The wind speed is the most critical factor as this determines the energy production. Figure 9.7 and
Figure 9.8 show the relative LCOE distribution in 2033 in the high growth scenario.
Areas with high wind speeds, shallower waters, and closer to shore and ports have lower LCOE. A key
feature of the Philippines is the extensive presence of deep water, sometimes close to shore. This limits
the opportunity for fixed foundations and, in some areas, for floating foundations.
FIGURE 9.7 RELATIVE LCOE FOR A REFERENCE PROJECT IN THE PHILIPPINES IN 2033 IN THE
HIGH GROWTH SCENARIO

FIGURE 9.8 RELATIVE LCOE FOR A REFERENCE PROJECT IN THE PHILIPPINES IN 2033 IN THE
HIGH GROWTH SCENARIO, FOCUSED ON POTENTIAL OFFSHORE WIND DEVELOPMENT ZONES
Source: see Table 9.1. For legend, see Figure 9.7.
Potential offshore wind development zones

Potential OSW development zones are shown in Figure 9.9 along with key environmental, social, and
technical considerations, and listed in Table 9.3. Note that some zones have small exclusions within
them, to be respected by project developers. All have varying levels of environmental, social, and
technical restrictions to be addressed during project development, that in some cases will limit areas of
development. None are in any disputed waters.
Figure 9.10 shows the zones, differentiating between the likely fixed and floating parts in the areas
with mean wind speeds above 7 m/s.
Typical power densities for OSW projects are 4 to 7 MW/km2. Our modelling, using the spacing
discussed in Section 10, uses a typical spacing of 5.4 MW/km2. When defining larger development
zones (as here), a more practical density to assume is around 40 percent of this, so 2.2 MW/km2. This
allows for siting around considerations and distance between individual projects within the zones. In
Table 9.3, we provide the total area for each site and our initial subjective estimation of the practical
capacity range that is likely to be accommodated, given the nature of considerations that we are
aware of. We have translated this also to an equivalent whole zone density.
In summary, the combined capacity of the six zones is likely to be between 27 and 58 GW, with a
density between 1.2 and 2.6 MW/km2. A density of 2.2 MW/km2 across all the zones gives a capacity
of 46 GW.
It is highly likely that these six zones will be able to provide all the 20 GW capacity assumed in the high
growth scenario up to 2040, with the potential to provide all the 40 GW capacity assumed up to 2050.
Naturally, in time, other zones could be opened up, as technology develops. Especially relevant is
access to water deeper than 1,000 meters, which would open up new resource especially off northwest
Luzon and Mindoro.
FIGURE 9.9 MAP OF POTENTIAL OFFSHORE WIND DEVELOPMENT ZONE LOCATIONS WITH KEY
CONSIDERATIONS
For legend and source, see Figure 9.5 and Figure 9.6.
TABLE 9.3 POTENTIAL OFFSHORE WIND DEVELOPMENT ZONES.
Foundation Overall impact of Area

Area Practical capacity
type considerations (km2)
A: Northwest Marginal - shipping 2 to 5 GW
Floating 1,571
Luzon routes on western edge (density 1.3 to 3.2 MW/km2)
Fixed and 0 to 3 GW
B: Manila Severe - shipping routes 2,281
floating (0 to 1.3 MW/km2)
C: Northern Significant - undersea 3 to 10 GW
Floating 3,606
Mindoro cables and shipping routes (0.8 to 2.8 MW/km2)
Marginal - shipping lanes,
D: Southern 20 to 36 GW
Floating cables, and ecological 11,669
Mindoro (1.7 to 3.1 MW/km2)
considerations
Significant - ecology,
E: Guimaras 0 to 1 GW
Fixed shipping, and proximity 689
Strait (0 to 1.5 MW/km2)
to shore
F: Negros/ Marginal - shipping routes 2 to 3 GW
Floating 1,534
Panay West and cables (1.3 to 2.0 MW/km2)
Fixed and 27 to 58 GW
Total 21,348
floating (1.3 to 2.7 MW/km2)

FIGURE 9.10 MAP OF POTENTIAL OFFSHORE WIND DEVELOPMENT ZONES, SHOWING AREAS
OF WBG TECHNICAL POTENTIAL
Source: World Bank Group and ESMAP, BVG Associates.
9.4 DISCUSSION
We have identified six zones off the west coast of the Philippines which offer potential for OSW
development. In total, these zones offer a practical capacity of up to 56 GW. Two of these zones offer
limited opportunity for fixed foundation turbines. The majority of the capacity, however, will be floating
in depths of up to 1,000 meters.
The definition of these zones factor in a limited number of considerations. There are other sources
of information which need to be included for a more accurate assessment of the potential capacity.
These include the following:
■ Commercial interests, such as fishing areas

■ Environmental considerations, detailed information on priority biodiversity values such as
threatened species
■ Social considerations, such as visual impact and tourism activities
■ Technical aspects, such as seabed geology and metocean conditions
■ Enabling infrastructure, such as grid capacity and port facilities (initial assessments of
both are included in this report).
The majority of considerations are ‘soft’—they are not exclusive by default, but some allowance will
typically need to be made to accommodate them. Wind farms can be built in or near shipping lanes
and fishing areas, but stakeholder engagement is key to making that a successful collaboration.
Projects outside these zones are not intended to be precluded, rather that projects within are
prioritized, especially after industry has had time to react to the publication of OSW development
zones. In the early years, it will be important for industry confidence and in establishing an early
pipeline of projects to honor existing investments in project development that may be outside these
zones, but where grid connection is feasible.
Management of a transition toward strategically focused zones sensitively by the DOE will be critical
to the success of OSW. Should project developers with assets outside of OSW development zones
provide a strategically logical case for grid connection, then their route to market should remain open.
It will be, however, important to avoid inefficient transmission network upgrades in too broad a range
of areas over time.
Southern Mindoro potential offshore wind development zone

The Southern Mindoro potential OSW development zone is of key strategic relevance, as it contributes
well over 50 percent of the OSW resource identified in the six potential OSW development zones. To
access this potential will require strategic collaboration in a range of areas:
■ Transmission network upgrades. A first network upgrade to the south of Mindoro (and onto
Panay) has been considered for many years, but to date it has not made any progress. The main
connection for OSW will be from the key demand center of Manila to Seminara Island or one of the
other neighboring islands. Any connection should be at a scale of 5 to 10 GW or more. The lowest
cost solution is likely to be subsea throughout most of its journey.

■ OSW project development. Development of a similar volume of OSW projects needs to be timed
to result in completed projects starting to come online as the transmission network upgrade is
available. Delays in either will result in significant costs.
■ Port and local workforce development. Although there are some port facilities, south of Mindoro
ports do not even show up on the World Port Index as ‘very small’, refer Figure 14.19, and the local
working population is minimal. There is, however, a logic to establishing a transshipment port
in the area—it is closer to the geographical center of the Philippines and could also serve as a
construction port for OSW.
9.5 RECOMMENDATIONS
Based on this analysis, the following are recommended:
■ The DOE establishes OSW development zones through proportionate MSP, taking into account
environmental and social considerations, stakeholder engagement, and long-term vision for
transmission network development.
■ The DOE also considers cumulative impact of multiple projects in a given area in MSP.
■ The DOE considers how to introduce the use of such zones, respecting the existing WESCs
and applications, providing guidance as to their use in focusing OSW projects in the most
advantageous areas, while minimizing negative environmental, social, and economic impacts.
■ The DOE initiates or coordinates wind resource measurement to build confidence in available
resource and help define future OSW locations so that parallel transmission network planning
can progress with confidence.
We suggest that this be focused on the larger potential OSW development zones or areas of
greatest uncertainty. It should combine new, DOE-led measurement campaigns (not located in
any specific WESC areas) with use of developer data from specific project sites, coupled with a
measure-correlate-predict process to predict long-term wind resource. Such a process combines
on-site measurement over a small number of years with long-term datasets from nearby.
Documenting and making such datasets (for example from airports) available for developers may
be valuable.
Understanding expected extreme (storm) wind speeds is also important, especially in areas with
typhoon risk. Again for this, correlation with any long-term records is valuable.
■ The DOE initiates or coordinates other measurement and data gathering campaigns on key
technical aspects of the zones including the following:
• Metocean campaigns, also considering typical and extreme significant wave heights and
currents
• Geological surveys of the seabed and substrates
• Ecological surveys to address any identified gaps in current knowledge of the zones
• Social perceptions and effect on local industries such as fishing, aquaculture, and tourism.
■ Due to its strategic relevance and long lead time for development, the DOE advances a holistic
feasibility study for the Southern Mindoro potential OSW development zone, considering
transmission network, OSW, and port development.
10. COST OF ENERGY REDUCTION
10.1 PURPOSE
In this work package, we determine the long-term cost trajectory of OSW in the Philippines,
considering global cost reduction trends, resource potential, country characteristics, regional supply
chain development, and other key factors.
We do this under the two industry scenarios. This is important as it is helpful to understand, in the long
term, what the cost of energy from OSW will be and how to influence this.
We focus on floating OSW, as this is likely to be the dominant technology due to the lack of availability
of shallow waters in areas with good wind resource. We also model fixed projects, but do not present
the detail of results.
10.2 METHOD
We modelled costs and LCOE under the two scenarios, as presented in Section 2. The context for these
scenarios is discussed in Section 8.
We established baseline costs (for installation in 2028, recognizing key differences between
established and Philippines projects) and trajectories (costs in 2033 and 2038) based on key
parameters defined in Table 10.1.xiii Note details such as project lifetime gradually extending in line
with the trend anticipated in established markets. We then interpolated between these points for
intermediate years and extrapolated beyond them for trajectories to 2050, as described in Section 8.6.
A detailed explanation of our methodology, plus detailed definitions and assumptions, is provided
in Section 10.4. The analysis presented in this section has the same basis as (and hence is fully
compatible with) the spatial LCOE analysis presented in Section 10. It is also used directly as the basis
for the economic benefit analysis presented in Section 12. It also uses the supply chain assumptions
The method is detailed and robust, breaking down project CAPEX and operational expenditure (OPEX)
each into a number of key elements. AEP (and hence capacity factor) is derived by combining a wind
speed distribution at hub height (based on mean wind speed at a height of 100 meters and a typical
annual wind speed distribution and change in wind speed with height) with a representative power curve
(derived for the given turbine power rating and rotor diameter). This AEP is then adjusted to account for a
range of real-world factors presented in Table 10.4.
xiii 2028 was chosen as the first year of installation in both scenarios; 2033 and 2038 were chosen early in the roadmap process to provide two further, equally spaced
snapshots up to 2040. These are slightly different years to those used in Section 12, which is inconsequential.

In assessing costs, we consider the regional market that is establishing in East Asia. Other markets in
the region are each more advanced than the Philippines. This offers the opportunity to access what
will be an experienced regional supply chain by the late 2020s, in both fixed and floating OSW. It also
enables the Philippines to take the benefit of technology solutions relevant to regional challenges, such
as typhoons and high seismic activity.
TABLE 10.1 KEY PARAMETERS FOR THE TYPICAL SITES MODELLED, AGAINST YEAR OF
INSTALLATION
Fixed Floating Floating Floating

Parameter
(2028) (2028) (2033) (2038)
Water depth (meter) 25 250 250 250
Mean wind speed (at height of 100 meters) (m/s)xiv 8.0 9.0 9.0 9.0
Distance from construction port (kilometer) 100 200 200 200
Distance from operations port (kilometer) 20 40 40 40
Distance from grid (offshore) (kilometer) 20 40 40 40
Distance from grid (onshore) (kilometer) 20 0 0 0
Turbine rating (MW) 16 16 20 24
Rotor diameter (meter) 231 231 250 280
Project size (MW) 800 400 1,000 1,000
Project lifetime in high growth (low growth)
30 29 32 (31) 34 (32)
scenarioxv (years)
Export system assumptions

For fixed projects, which we assume are installed only in early years, we consider the cost of an export
system consisting of offshore substation, 20-kilometer offshore export cable, 20-kilometer onshore
export cable to the nearest onshore transmission network connection point, and new switchgear and
auxiliary equipment at this point. We recognize that in some cases an offshore substation may be
avoided. We have not included any further transmission network upgrade costs.
For floating projects, we assume typical projects are connected to one of the proposed high power
transmission network links. In this case, we assume the cost of an export system consisting of
offshore substation, 40-kilometer offshore export cable to the nearest offshore transmission network
connection point, and new switchgear and auxiliary equipment at this point. We have not included any
share of the cost of the high power transmission network links, as these serve multiple purposes.
We anticipate that in both cases the export system will be developed, delivered, and operated by
the OSW project developer, the point of connection being the point of grid connection to the
transmission network.
xiv Mean wind speeds are quoted at a standard reference height to give clarity regarding trends, and because these wind speeds characterize project sites, independent
of the turbine size used. We adjust the mean wind speeds at reference height to the mean wind speeds at hub height of a given turbine when deriving AEP. This means
that a higher rated turbine with larger rotor on the same site will have a higher hub high mean wind speed than a smaller turbine.
xv Over time, as global and national market experience of technology grows and the pace of LCOE decreases, project lifetimes will continue to extend. In OSW, they
started at 20 years—the original default design lifetime of an onshore wind turbine. The anticipated lifetimes shown here reflect these trends.
Experience in Europe is that some early onshore wind projects were repowered with larger turbines before the end of their design life due to the rapid pace of
technology development offering a better return from the site through repowering than continuing operation. Generally now, most owners seek to extend the
operating life of their projects beyond the initial design life. By the time first projects are installed in the Philippines, the same situation is likely, with a drive to extend
the life of operating projects where possible.
10. Cost of energy reduction 77

10.3 RESULTS
LCOE results in this roadmap were derived as mid- (P50) estimates, meaning 50 percent chance
of exceedance. We are currently experiencing much volatility in commodity prices, meaning that
there is significant uncertainty about where such prices will head over the next five years. OSW
uses large volumes of raw material (dominated by mild steel, typically followed by cast iron,
aluminum, composites, and copper).
Changes in energy prices also affect OSW, both through the energy needed to manufacture
components and to fuel installation and operation vessels. Changes in energy prices have an
even greater impact on electricity price from fuel burning.
In this context, throughout the roadmap we have continued to state mid-estimates, but we
recognize uncertainties, for example, due to the following:
■ Technology. How will past trends of significant reduction in cost change looking forward?
■ Supply chain (including commodity prices). How will competition in the global and local
supply chain evolve, and what will be the long-term trends in commodity prices?
■ Finance. How will competition to finance OSW develop?
To give an understanding of the sensitivity of OSW LCOE to key parameters, see Figure 10.1.
FIGURE 10.1 SENSITIVITY ANALYSIS AROUND PHILIPPINES FIXED PROJECT INSTALLED IN 2028.
50%
40%
30%
20%
10%
Impact on LCOE
0%
-30% -20% -10% 0% 10% 20% 30%
-10%
-20%
-30%
Change in input
CAPEX OPEX AEP Project lifetime WACC

The LCOE for the fixed and floating Philippines sites under the two scenarios is shown in Table 10.2
and Figure 10.2, along with established market trends,xvi indicative uncertainty bars, and an indicative
comparator (traditional technology, assumed to be coal-based), as discussed in Section 7.1.xvii The
LCOE trends are compatible with the LCOE reduction trajectories seen in established markets. For a
detailed discussion and background reading on LCOE reduction, see Section 2.2 of World Bank Group’s
Key Factors report.4
■ The main differences between the floating Philippines sites modelled and established market floating
projects are that the Philippines sites have lower wind speeds, deeper water and are further from
construction port. Lower wind speeds and longer distances to construction port also apply for fixed
projects, although they are likely to be in shallower water than typical in established markets.
■ The other main differences between the Philippines and established markets projects relate to the
location of supply and the risks associated with projects. As discussed in Sections 11 and 12, there
is limited supply from the Philippines, with most supply coming from a number of established East
Asian markets. Less experienced supply chains can add cost and risk in the early years.
■ The LCOE of floating OSW remains above that of fixed OSW in the established market case, but by
2038 the gap is only 10 percent. In the Philippines, even before this, many floating sites with good
wind resource will offer lower LCOE than the limited fixed sites that are available with lower wind
resource. As there is inadequate market opportunity for fixed OSW projects in the Philippines due
to limited shallow water with high mean wind speeds, and LCOE for fixed projects starts off lower,
it is anticipated that a small volume of fixed projects will happen first, but then the market will
switch to floating projects. For this reason, no LCOE is shown for fixed projects in the Philippines in
2038. The main differences between the Philippines and established market projects are the lower
wind speeds and higher costs in the early years.
■ The LCOE of floating OSW remains above that of fixed OSW, but it expands the capacity available.
By 2035, LCOE of floating OSW is only 15 percent higher than that of the best fixed OSW sites
(and comparable to the available OSW sites).
■ LCOE in the low growth scenario is 12 percent higher than in the high growth scenario in 2033. This
gap grows to 23 percent by 2038.
The detail behind these headline LCOE trajectories is discussed in the following subsections. Note
that data relate to scenarios, with smooth trends shown over time. In reality for new projects the
project sizes, costs, lifetimes, cost of money, and nominal capacity factors will vary from this trend. In
addition, actual generation for operating projects will vary with year-by-year mean wind speeds.
Note also that the trends presented here are of technology costs on typical sites with properties
consistent over time. In reality, sites will be developed in an order driven by LCOE, transmission
network availability, and other practical considerations. As discussed in Section 2.1, this is likely to
mean the real-world competitiveness of floating projects will take place earlier than shown by this
technology-focused comparison.
xvi The established market trends are based on the same bottom-up modelling discussed in Section 10.4, but using typical turbine sizes and site conditions anticipated in
established markets over the period.
xvii Uncertainty bars for established market trends are not shown, for simplicity, but will be slightly narrower (in percentage terms) than for the Philippines.

TABLE 10.2 INDICATIVE LCOES FOR THE TYPICAL PHILIPPINES SITES MODELLED
Philippines Philippines Philippines Philippines

Established
fixed low fixed high floating floating Established
Year of market
growth growth low growth high growth market fixed
installation floating
scenario scenario scenario scenario (US$/MWh)
US$/MWh)
(US$/MWh) (US$/MWh) (US$/MWh) (US$/MWh)
86 (likely range ±10%, 123 (likely range ±15%,
2028 59 89
77 to 95)xviii 104 to 141)
65 60 82 71
2033 46 55
(likely range ±15%, 51 to 74) (likely range ±20%, 57 to 98)
Not applicable, as limited 63 50
2038 38 42
resource available (likely range +/-25%, 37 to 79)
FIGURE 10.2 ESTIMATED LCOE TRAJECTORY FOR THE PHILIPPINES, COMPARED TO

ESTABLISHED MARKET TRENDS AND INDICATIVE COMPARATOR.
140
120
100
LCOE (US$/MWh)
80
60
40
20
0
2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038
Year of installation
Fixed established market Fixed low growth scenario Fixed high growth scenario
Floating established market Floating low growth scenario Floating high growth scenario
Indicative comparator
xviii LCOEs at each end of this likely range could be obtained in various ways, for example:
• Lower end of range US$77 per MWh achievable through any of the following:
• Commodity prices return from current higher prices to 2020 levels.
• WACC is reduced from 6.0 percent to 5.5 percent through project de-risking, more balance sheet financing, and access to increased levels of concessional finance
and CAPEX and OPEX reduced by 6 percent through commodity prices returning toward 2020 levels.
• Measurements show wind resource 8 percent better than anticipated and project life extended by three years (reflecting anticipated trend in established markets).
Upper end of range US$95 per MWh through any of the following:
• Further 10 percent increase in CAPEX and OPEX due to further commodity price rises.
• WACC increases from 5.5 percent to 7.1 percent due to perceived market risks.
• Measurements show wind resource 9 percent worse than anticipated.
Note that the likely ranges are indicative, designed to represent PHP 20 to PHP 80. It is still possible that the LCOE reaches higher or lower values than those
represented in this range.

Note that Figure 10.2 shows that from early on, OSW competes well with the comparator. This is
because following the high growth scenario, the roadmap drives the following:
■ Development of a large-scale, long-term market based on strong logic and clear vision and
supported by robust, transparent frameworks to de-risk project development, evolved from
current arrangements, rather than starting afresh.
■ Delivery of large-scale projects (800 MW) from the start, as the global industry will be mature
enough by then to not need the ramp-up seen over years in established markets that were also
managing significant growth in turbine size.
■ Focus on cost reduction, through clear policy intent, with visibility of competition from a long way
out and without restrictive local content requirements. This means that the Philippines will be able
to benefit from what will be a highly experienced regional and global supply chain by the time first
projects are installed in 2028, with local supply growing consistently over time.
■ Availability of low-cost finance, through competitive local and international commercial debt and
by accessing concessional finance through involvement of multilateral development banks (MDBs).
■ Government-industry collaboration in a task force involving local and international project
developers and key suppliers, to work together to address roadmap recommendations and other
considerations, as they arise.
■ Industry commitment to making OSW competitive in these time scales is critical to securing the
support needed to drive roadmap actions at the pace described in Section 5.
If, toward 2028, the competitive position is somewhat delayed, then some projects may be deferred
until they can meet any auction price cap. The overall trend of reducing OSW LCOE and increasing
comparator cost will mean that delays are unlikely to be significant.
Likewise, the roadmap is designed so that the most competitive early floating projects start to be
installed around 2030, but allowing the market to define the actual timing of the transition between fixed
and floating projects (with the indicative high grow scenario in Figure 2.4), depending on the following:
■ The competitiveness of remaining fixed projects, based on the limited resource available
■ The relative cost of floating and fixed OSW at the time
■ The pace of transmission network and other roadmap action to enable delivery of projects in the
most attractive areas.
Table 10.3 shows the breakdown of CAPEX and OPEX plus energy production, project lifetime, and
WACC from which the LCOEs for fixed and floating OSW in established and Philippines market in 2028
have been calculated. Note that unrounded central values output from modelling is shown for full
transparency. The uncertainty discussed above is not shown.

TABLE 10.3 COST ELEMENT BREAKDOWN SUPPORTING LCOES FOR 2028
Established
Established Philippines Philippines
Cost element Unit market
market fixed fixed floating
floating
Project development US$/MW 131,625 217,271 158,506 254,394
Turbine US$/MW 1,308,917 1,462,322 1,384,011 1,541,123
Foundation US$/MW 335,445 1,102,148 324,816 1,180,078
Array cables US$/MW 38,107 43,020 36,348 40,966
Installation of
US$/MW 226,875 200,601 272,785 376,641
generating assets
Offshore substation US$/MW 109,340 226,340 110,844 236,525
Export cables US$/MW 140,069 108,259 63,991 64,762
Installation of
US$/MW 99,192 152,540 176,559 242,252
transmission assets
Total CAPEX US$/MW 2,389,571 3,512,500 2,527,861 3,936,742
Operation and planned
US$/MW/yr 43,462 48,281 37,627 42,324
maintenance
Unplanned service US$/MW/yr 27,637 36,016 25,803 34,332
Total OPEX US$/MW/yr 71,099 84,297 63,430 76,657
Net AEP MWh/MW/yr 4,180 4,340 3,205 3,825
Project lifetime year 31.7 31.7 30.1 28.5
WACC* % 5.1 6.3 6.0 7.5
LCOE** US$/MWh 59.1 88.7 85.9 122.5
Note: *The WACC for these initial projects in the Philippines is assumed to be lowered by concessional finance blended with
commercial debt. As an example, the 6.0 percent is made up of 50 percent concessional debt at about 3.5 percent; 30 percent
commercial, non-recourse project debt at 7 percent; and 20 percent equity at 11 percent. Currently, projects in emerging
markets are at higher risk than in Europe, where large project developers often balance sheet finance, say with 35 percent debt
(against their own balance sheet rather than the project) at about 1 percent and 65 percent equity at about 7 percent, giving
WACC below 5 percent. Should this practice extend to emerging markets faster than expected, this will offer lower WACC and
hence lower LCOE. Likewise, should this not happen and concessional finance is not available, this will drive higher WACC and
LCOE, according to Figure 10.1.
** See Table 10.4 for treatment of construction phase contingency and decommissioning.
Floating offshore wind

The global LCOE reduction for floating OSW in Figure 10.2 comes from improving technology and
processes, increasing turbine size, and increasing farm size.
The increases in turbine and farm size bring economies of scale in manufacture and logistics, including
OMS. There are also economies of scale in individual components because the larger turbines need less
infrastructure per MW.
Technology improvements include those in design and manufacture of floating foundations and
mooring systems and optimizing both energy production and maintenance and service of floating
OSW projects.

LCOE in 2028
In the Philippines, the floating LCOE in 2028 is just over 30 percent higher than in established
markets. Half of this is due to the different site conditions—lower wind speeds (resulting in lower
AEP), requirements for typhoon resistance, deeper water, and further from construction port. Other
key contributions are increased WACC and inefficiencies from installation and other activities in a
new market. We derived this factor by considering each cost item in Table 10.4, assigning a multiplier
relating to typical change in efficiency when working in a new market, a multiplier for change in cost
base, and a multiplier for any other relevant consideration. These factors are beyond the impact of
change in basic site characteristics between the established market and the Philippines.
For example, for project development of the typical fixed project in 2028, the following was applied:
■ An estimated 160 percent factor was applied to account for efficiency in a new market (many
items will be more expensive as much of the learning from established markets will be lost, for
first projects).
■ An estimated 75 percent factor was applied to account for lower cost base (mainly labor cost).
■ The project development cost for Philippines site conditions is 98 percent of that for established
market conditions, assuming the same established market supply chain for both, as derived from
the BVG Associates cost model.
■ Overall, a 117 percent factor was applied to the established market cost in 2028 for project
development. In other words, project development in the Philippines is assumed to cost about 20
percent more than for the typical project defined for this year in an established market.
As a further example, for installation of generating assets, the following was applied:
■ An estimated 140 percent factor was applied to account for efficiency in a new market.
■ An estimated 90 percent factor was applied to account for cost base.
■ The cost for installation of generating assets based on Philippines site conditions is 149 percent of
that for established market conditions, assuming the same established market supply chain for
both, as derived from the BVG Associates cost model.
■ Overall, a 188 percent factor was applied to the established market cost in 2028 for installation of
generating assets.
LCOE trajectory in the low growth scenario
Over the period, the LCOE premium in the Philippines from setting up in a new market reduces.
A solid regulatory environment with visibility enables some investment in capacity and learning,
but constructing only one project every four years limits this. Over time, the WACC drops somewhat
due to increased certainty in all aspects of project life cycle and revenue. We have assumed the
following over time:
■ Ongoing local supply of substation topside structures and assembly of offshore substations,
construction of onshore substations and grid connections but little other supply of local components
■ Gradually increased localization of project development services
■ Gradually increased use of local installation and operation services, including some component
refurbishment.
As shown in Table 10.1, we have assumed constant site characteristics but the use of state-of-the-art
larger turbines in line with the global market.
The LCOE breakdown and capacity factors for floating OSW in the low growth scenario are shown in
Figure 10.3.
FIGURE 10.3 LCOE BREAKDOWN FOR FLOATING OFFSHORE SITES IN THE LOW GROWTH
SCENARIO
140 60
120
50
100
40
Capacity factor (%)

LCOE (US$/MWh)
80
30
60
20
40
10
20
0 0
Baseline - 2028 Low growth scenario - 2033 Low growth scenario - 2038
(Floating) (Floating) (Floating)
Project development Turbine Foundation
Array cables Installation of generating assets Offshore substation
Export cables Installation of transmission assets Operation and planned maintenance
Unplanned service Contingency Decommissioning
WACC Capacity factor

Much of the LCOE reduction between 2028 and 2033 comes from the use of larger turbines,
improvements in the design and manufacture of floating foundation hulls and mooring systems, and
improvements in OMS strategies, as shown in Figure 10.4. This is mainly due to progress in the global
market (relating also to the scale of the global market), rather than in the Philippines, as shown in
Figure 10.5. In the period from 2033 to 2038, LCOE reduction is due mainly to further progress with
floating foundations and OMS.
FIGURE 10.4 SOURCE OF LCOE REDUCTION BY COST ELEMENT FOR FLOATING

OFFSHORE SITES IN THE LOW GROWTH SCENARIO
LCOE (US$/MWh)
0 20 40 60 80 100 120 140
All scenarios - 2028
Project development
Turbine
Foundation
Array cables
Installation of generating assets
Offshore substation
Export cables
Installation of transmission assets
Operation and planned maintenance
Unplanned service
Annual energy production
Project lifetime
WACC
Low growth scenario (floating) - 2033
Project development
Turbine
Foundation
Array cables
Offshore substation
Export cables
Unplanned service
Project lifetime
WACC

FIGURE 10.5 SOURCE OF LCOE REDUCTION BY GEOGRAPHY FOR FLOATING OFFSHORE
SITES IN THE LOW GROWTH SCENARIO
LCOE (US$/MWh)
0 20 40 60 80 100 120 140

Global effects
Philippines effects
Global effects
Philippines effects
LCOE trajectory in the high growth scenario
Over the period, the LCOE premium in the Philippines from setting up in a new market reduces more
significantly than in the low growth scenario and the premium is more than offset by benefits in terms
of labor cost. A solid regulatory environment with visibility of a strong, constant pipeline of projects
enables investment in capacity and learning. Towers and most floating foundations are manufactured
locally and more OSW services are provided locally, with increasing efficiency. Competition drives
innovation and cost reduction. Logistics costs are reduced and, critically, the WACC drops due to
increased certainty in all aspects of project life cycle and revenue.
Compared to the low growth scenario, we have assumed the following:
■ Similar localization of project development services and offshore substation activities

■ Localization of manufacture of turbine towers and most floating foundations
■ Increased involvement of local suppliers during installation
■ More local supply of replacement components during operation.
The site conditions are the same as for the low growth scenario.
The LCOE breakdown and capacity factors for floating OSW in the high growth scenario are shown in
Figure 10.6.

FIGURE 10.6 LCOE BREAKDOWN FOR FLOATING OFFSHORE SITES IN THE HIGH
GROWTH SCENARIO
140 70
120 60
100 50
Capacity factor (%)

LCOE (US$/MWh)
80 40
60 30
40 20
20 10
0 0
Baseline - 2028 High growth scenario - 2033 High growth scenario - 2038
(Floating) (Floating) (Floating)
Project development Turbine Foundation
Array cables Installation of generating assets Offshore substation
Export cables Installation of transmission assets Operation and planned maintenance
Unplanned service Contingency Decommissioning
WACC Capacity factor
As for the low growth scenario, the source of the LCOE reduction is shown by cost element in Figure
10.7. The largest difference compared to the low growth scenario is increased reduction in WACC due to
further decreased market risk and increased competitive tension between lenders. In other areas, the
savings are due to increased learning, turbine rating, competition, and international collaboration.
The source of the same LCOE reduction is depicted by geography in Figure 10.8, showing that global
activity is dominant in driving cost reduction in the Philippines. In comparison to the reduction in
the low growth scenario, the Philippines effects are greater, reflecting the increased local progress in
efficiencies and risk reduction. This is in part dependent on successful localization of supply of towers
and floating foundations. It must be noted that this, together with the dependence on international
cost reductions, introduces some level of uncertainty over the LCOE reductions estimated over the
next decades.

FIGURE 10.7 SOURCE OF LCOE REDUCTION BY COST ELEMENT FOR FLOATING OFFSHORE SITES
IN THE HIGH GROWTH SCENARIO
LCOE (US$/MWh)
0 20 40 60 80 100 120 140

Project development
Turbine
Foundation
Array cables
Offshore substation
Export cables
Unplanned service
Project lifetime
WACC
High growth scenario (floating) - 2033
Project development
Turbine
Foundation
Array cables
Offshore substation
Export cables
Unplanned service
Project lifetime
WACC
High growth scenario (floating) - 2038
FIGURE 10.8 SOURCE OF LCOE REDUCTION BY GEOGRAPHY FOR FLOATING OFFSHORE SITES IN
THE HIGH GROWTH SCENARIO
LCOE (US$/MWh)
0 20 40 60 80 100 120 140

Global effects
Philippines effects
High growth scenario (Floating) - 2033
Global effects
Philippines effects
High growth scenario (Floating) - 2038

Fixed offshore wind
We derived the baseline in 2028 for fixed OSW in the same way as above. Without local heavy lift
and jack-up installation vessels, we assumed less local supply than for floating projects, but made
other comparable assumptions about areas of supply such as project development. We applied a
somewhat lower premium on WACC and derived a LCOE reduction trajectory relatively similar to
floating. We assumed that the differences between floating and fixed OSW observed in other markets
will be similar in the Philippines. There is a similar increase in cost and risk and a similar ability to
build in sites with higher wind speeds. As such, we assumed that the LCOE differences between these
technologies in the global market will be reflected in the Philippines, reducing to small differences
during the early 2030s.
10.4 BACKGROUND: DETAILS OF METHODOLOGY
Definition of levelized cost of energy

At its most simple, LCOE is the cost of the project divided by the energy produced. The technical
definition is
Where:
It Investment expenditure in year t
Mt OMS expenditure in year t
Et Energy generation in years t
r Discount rate
s Start year of the project
n Lifetime of the project in years.
We use a WACC method to establish the discount rate. That is, a rate based on the weighted average
of the debt and equity portions of the financing, from inception of the project to decommissioning.
Method for cost analysis

The analysis presented in Section 10 is based on a significant body of work peer reviewed through
many published reports and private projects with industry clients in Europe, the US, and Asia.
In effect, here we have conducted a study of studies, where we access published, and unpublished,
studies that we have been involved with (or have received in delivery of consultancy projects). This
gives a far better dataset than is in the public domain.
This is appropriate at this stage because there are no projects operating (or even designed) at this
scale in the Philippines.
Key to the analysis are the following steps:

A. Create established market baseline for projects installed in 2028, 2033, and 2038, considering
larger turbines and larger projects but deeper water and further from shore over time. We did this
using cost models proven over time. A schematic of the inputs and outputs of a typical single BVG
Associates cost model run is shown in Figure 10.9. This step involved three cost model runs.

B. Create Philippines starting point in the same way but using Philippines sites conditions for a
typical floating and a typical fixed project in each time period. At this stage results are still for
established market conditions (and supply chain). This step involved six cost model runs. Note that
this same process, with a simplified step C, is used for each individual cell in the preparation of the
LCOE map derived in Section 9.
C. Convert each cost element to the Philippines market (and supply chain) conditions for both OSW
scenarios. For each cost element shown in Table 10.4, we established scaling factors to take
account of differences in market efficiency, cost base compared to an established market, and
other considerations. We considered the following:
• Transitory effects, such as lack of industry inexperience and high regulatory risk. For example,
if we applied a cost premium in step 2, we assumed that by 2038 in the high growth scenario,
much of that premium had been removed by more rapid learning than in Europe during the
same period.
• Permanent effects, such as need to design for typhoon survival. In some of these cases, we
assumed a larger early transitory cost penalty which reduced in time, for example, as design for
typhoon resistance gets more optimized.
• Changes in supply, as more Philippines wider regional content is used.
To do this, we used our experience of other new markets and feedback about the Philippines. A
schematic of the inputs and outputs of a single conversion process is shown in Figure 10.10. This
step involved 12 conversions, each with a set of scaling factors.
D. Combined the results of the above to derive the LCOE trends shown in Figure 10.2. A schematic
showing the source of each trend is shown in Figure 10.11.
FIGURE 10.9 SCHEMATIC SHOWING INPUTS AND OUTPUTS FOR THE BVGA COST MODEL RUN

FIGURE 10.10 SCHEMATIC SHOWING CONVERSION FROM ESTABLISHED TO LOCAL
MARKET CONDITIONS
FIGURE 10.11 SCHEMATIC SHOWING DERIVATION OF LCOE TRENDS

Cost element definitions
TABLE 10.4 PROVIDES DEFINITIONS FOR FLOATING OSW
Type Element Definition Unit

Development, permitting, and project management
work paid for by the developer up to works completion
date (WCD). Includes
• Internal and external activities such as environmental
and wildlife surveys; met ocean surveys; met mast
(including installation); geophysical, geotechnical, and
hydrological services; and engineering (pre FEED) and
planning studies
• Permitting services
• Further site investigations and surveys after FID
Development
Project • FEED studies
expenditure US$/MW
development • Environmental monitoring during construction
(DEVEX)
• Development costs of transmission system
• Project management (work undertaken or
contracted by the developer up to WCD)
• Other administrative and professional services such
as accountancy and legal advice
• Any reservation payments to suppliers.
Excludes
• Construction phase insurance
• Suppliers own project management.
Includes
• Payment to wind turbine manufacturer for the
supply of:
• Rotor, including blades, hub, and pitch system
• Nacelle, including bearing, gearbox, generator, yaw
system, the electrical system to the array cables,
control systems, and so on
• Tower
CAPEX Turbine US$/MW
• Assembly thereof
• Delivery to nearest port to supplier
• Warranty
• The wind turbine supplier aspects of
commissioning costs.
Excludes
• Turbine OPEX
• Research, design, and development (RD&D) costs.

Includes
• Payment to suppliers for the supply of the support
structure comprising the foundation (including
floating, mooring and any piles or anchors, transition
piece, and secondary steel work such as J-tubes and
personnel access ladders and platforms)
Foundation • Delivery to nearest port to supplier US$/MW
• Warranty.
Excludes
• Turbine tower
• Foundation OPEX
• RD&D costs.
Includes
• Payment to manufacturer for the supply of array
cables
Array cables US$/MW
• Warranty.
Excludes
• OMS costs
• RD&D costs.
Includes
• Transportation of all from each supplier’s nearest port
• Preassembly work completed at a construction port
• All installation work for array cables, moorings,
floating hulls, and turbines
• Commissioning work for all but turbine (including
snagging post WCD)
Installation of
• Subsea cable protection mats and so on, as required US$/MW
generating assets
• Offshore logistics such as weather forecasting,
additional CTVs, and marine coordination
• Shared wind farm infrastructure such as marker
buoys.
Excludes
• Installation of offshore substation/transmission
assets.
Includes
• Payment to manufacturer for the supply of
offshore substations
Offshore • Assembly at fabricator’s port
US$/MW
substation • Warranty.
Excludes
• OMS costs
• RD&D costs.
Includes
• Payment to manufacturer for the supply of
onshore and offshore export cables
Export cables US$/MW
• Warranty.
Excludes
• OMS costs
• RD&D costs.

Includes
• Transportation of all from each supplier’s nearest
port
• Preassembly work completed at a construction port
before the components are taken offshore
• Installation of offshore substations and onshore
and offshore export cables
• Supply and installation of the wind farm-specific
Installation of
switchgear and auxiliary equipment in the
transmission US$/MW
substation that is located on the transmission
assets
network, including any wind farm-specific buildings
at the onshore substation
• Substation commissioning work (including snagging
post WCD)
• Scour protection (for support structure and cables)
• Subsea cable protection mats and so on, as required
• Offshore logistics such as weather forecasting,
additional CTVs, and marine coordination.
Construction contingency and other CAPEX
Assumed
contingency. Also construction phase insurance
Contingency increases
cover, from start of construction until operation,
LCOE by 5%
including all construction risks and third party.
Includes operation and planned (routine) maintenance,
operations phase insurance, and other OPEX and
transmission OPEX.
Starts once first turbine is commissioned.
Operation and planned maintenance includes the
following:
• Operational costs relating to the day-to-day control
of the wind farm (including CAPEX on operations
base as an equivalent rent)
• Condition monitoring
• Planned preventative maintenance, health, and
safety inspections.
Operations phase insurance:
Operation
OPEX and planned • Takes the form of a new operational ‘all risks’ policy
maintenance and issues such as substation outages, design
faults and collision risk become more significant
as damages could result in wind farm outage.
Insurance during operation is typically renegotiated
on an annual basis.
Other OPEX covers fixed cost elements that are
unaffected by technology innovations, including the
following:
• Site rent
• Contributions to community funds
• Monitoring of the local environmental impact of the
wind farm.
• Transmission OPEX includes all OMS for the
transmission assets.

Unplanned service includes the following:
• Reactive service in response to unplanned systems
Unplanned service failure in the turbine or electrical systems US$/MW/yr
• Unplanned service may be either proactive or
reactive.
Includes
• Decommissioning, which comprises planning
work and design of any additional equipment
required to meet legal obligations. Includes further
environmental work and monitoring Assumed
Decommissioning
Decommissioning • Removal of the turbine, foundation, mooring, and increases
(DECEX)
offshore substation LCOE by 2%
• Removal or cutoff of piles/anchors, array cable,
and export cable (where applicable)
• Removal of the onshore transmission asset (where
applicable).
The discount rate is made up of finance cost from
Financing cost WACC debt and equity, weighted by their contributions to —
give a WACC. It is in real, pre-tax terms.
AEP averaged over the wind farm life at the offshore
metering point at entry to offshore substation, as a
fraction of AEP if at rated power output all year.
Accounts for improvements in early years and
degradation in later years. Includes
• Aerodynamic array losses
AEP Capacity factor %
• Blockage effect
• Electrical array losses
• Losses due to unavailability of the wind turbines,
foundations, and array cables
• Losses from cut-in/cut-out hysteresis, power
curve degradation, and power performance loss.
Note: A similar set of definitions was used for the fixed project analysis.
Generic definitions
Global assumptions
Real (2020) prices. Exchange rates fixed at the average for 2020 (for example, €1 = US$1.142).
Standard wind farm assumptions
Turbines are spaced at nine rotor diameters (downwind) and six rotor diameters (across wind)
in a rectangle. The lowest point of the rotor sweep is at least 22 meters above mean high water spring
tide. The development and construction costs are funded entirely by the project developer.
Meteorological regime
A wind shear exponent of 0.12. Rayleigh wind speed distribution.
Turbine
The turbine is certified to international OSW turbine design standard IEC 61400-3-1 for fixed and IEC
61400-3-2 for floating cases.
Support structure
Ground conditions are good for OSW. There are only occasionally locations with lower bearing pressure,
the presence of boulders, or significant gradients.
Array cables
The array cable assumption is that a three core 66 kVAC on fully flexible strings is used, that is, with
provision to isolate an individual turbine.
Installation
Installation is carried out sequentially by the mooring, array cable, and then the preassembled tower
and turbine together.
Decommissioning reverses the assembly process to result in installation taking one year. Piles are
cut off at a depth below the seabed which is unlikely to require uncovering and cables are pulled out.
Environmental monitoring is conducted at the end. The residual value and cost of scrapping is ignored.
Transmission
Transmission costs are incurred as CAPEX and OPEX where appropriate. This treatment of
transmission costs reflects the actual costs of building and operating, rather than the costs incurred
by the asset owner.
Operations, maintenance, and service
Access is by SOVs or CTVs. Dynamic positioning vessels are used for major component replacement.
Transmission OPEX covers both maintenance costs and grid charges.

11. SUPPLY CHAIN ANALYSIS
11.1 PURPOSE
In this work package, we assessed the supply chain for OSW in the Philippines, including an analysis
of current in-country capabilities and opportunities for future investment under the two scenarios
We focus on OSW supply chain needs as this will be the dominant project type in the Philippines,
covering fixed project needs in less depth. Ports are covered in Section 19.
We also explore potential bottlenecks that could slow the industry in each of the scenarios. This
analysis is important as it underpins the work on cost reduction and economic benefits in Sections 10
and 12.
11.2 METHOD
We established a categorization of the supply chain and robust criteria for assessing capability. These
are presented in Table 11.1 and Table 11.2. The level 2 categories broadly correspond with the packages
used for principal suppliers (also known as tier 1 suppliers) if a developer is multi-contracting.
TABLE 11.1 CATEGORIZATION OF THE SUPPLY CHAIN
Work by the developer and its supply chain including

Project development Project development planning consent, front-end engineering and design,
project management, and procurement
Nacelle, hub, Supply of components to produce the ex-works nacelle and
and assembly hub and their delivery to the final port before installation
Supply of finished blades and their delivery to the final port
Turbine Blades
before installation
Supply of tower sections and their delivery to the final port
Tower
before installation
Supply of foundations and their delivery to the final port
Foundation supply
before installation
Array and export Supply of cables and their delivery to the final port before
cable supply installation
Balance of plant
Offshore Supply of the completed offshore substation platform and
substation supply foundation ready for installation
Supply of components and materials for the onshore
Onshore infrastructure
substation and the operations base
97
Level 1 category Level 2 category Description
Work undertaken in the final port before installation and

Turbine and floating
the installation and commissioning of the turbines and
foundation installation
foundations, including vessels
Installation and Array and export cable Installation of the cables, including route clearance, post-
commissioningxix installation lay surveys, and cable termination
Installation of the offshore substation and the civil works
Offshore and onshore
for the onshore substation. Includes commissioning of
substation installation
electrical system
Wind farm administration and asset management,
Wind farm operation
including onshore and offshore logistics
Operation, Turbine maintenance Work to maintain and service the turbines, including spare
maintenance, and and service parts and consumables
service Balance of plant Inspection and repair of foundations, inspection and
maintenance and repair or replacement of cables, and onshore and offshore
service substation maintenance and service
Removal of all necessary infrastructure and transport to
Decommissioning Decommissioning
port; excludes recycling or reuse
Criteria for assessing capability

We developed a set of criteria for assessing the current and future capability of supply chain in the
Philippines. They relate to the likelihood that existing companies in the Philippines can be successful in
the industry and that new companies can be attracted to invest in the Philippines. The scoring relates
to the general capability of the supply chain at the country level and is not based on a detailed analysis
of individual companies. The scoring is based on an appreciation of global OSW supply chain capability
and an understanding of the factors that are key to successfully localizing OSW supply chains. Further
work is required in due course to undertake supply chain assessment at a detailed company level.
These criteria were scored for each level 2 category, as shown in Table 11.2. In the analysis, we
distinguished between principal suppliers (equivalent to tier 1) and lower tier suppliers. We shared this
assessment with key stakeholders (see Section 22) and gathered feedback and additional data, as well
as views on bottlenecks, recognizing the Philippines’ place in the regional and global market.
xix The manufacturing of vessels for OSW could be an opportunity for the supply chain in the Philippines, but was not considered in this analysis as they are not a direct
supply item for any given OSW project.

TABLE 11.2 CRITERIA FOR ASSESSING CURRENT AND FUTURE CAPABILITY IN THE PHILIPPINES
Criterion Score Description

1 No experience
Track record and 2 Experience in supplying wind farm ≤300 MW
capacity in OSW 3 One company with experience of supplying wind farm >300 MW
4 Two or more companies with experience of supplying wind farm >300 MW
1 No relevant parallel sectors
The Philippines 2 Relevant sectors with relevant workforce only
capability in
parallel sectors 3 Companies in parallel sectors that can enter market with high barriers to investment
4 Companies in parallel sectors that can enter market with low barriers to investment
1 No benefits in supplying projects in the Philippines from the Philippines
Benefits of Some benefits in supplying projects in the Philippines from the Philippines but no
the Philippines 2
significant impact on cost or risk
supply for the
Philippines Work for projects in the Philippines can be undertaken from outside the Philippines
3
projects but only with significant increased cost and risk
4 Work for projects in the Philippines must be undertaken locally
1 Investment that needs market certainty from OSW for five or more years
2 Investment that needs market certainty from OSW for two to five years
Investment risk
in the Philippines 3 Low investment ≤US$50 million that can also meet demand from other small sectors
Low investment ≤US$50 million that can also meet demand from other major
4
sectors with market confidence
1 <2% of lifetime expenditure
Size of the 2 2%≤3.5%
opportunity 3 3.5–5%
4 >5% of lifetime expenditure
11.3 RESULTS
Summary
Table 11.3 summarizes our analysis. Some categories have been considered together to avoid
duplication. The sections below discuss our findings in more detail.
The regional market, as discussed in Section 8.4, also offers the opportunity to access what will be an
experienced regional supply chain by the late 2020s, in both fixed and floating OSW.
The list of notable relevant companies is indicative and not exhaustive. Many global players are
expected to be active in the market as it establishes—those are not listed. We have listed some
companies active in the global OSW market that are already known to be present in the Philippines
and local companies with relevant capability, some of which have shown interest. Scoring relates to
general capability at the country level and not to individual companies.
11. Supply chain analysis 99

TABLE 11.3 SUMMARY OF THE SUPPLY CHAIN ANALYSIS
Track
Notable Capability Benefits Investment
record and Size of the
Category relevant local in parallel of local risk in the
capacity in opportunity
companies* sectors supply Philippines
OSW
Aecom, AFRY,
Project Arup, GHD, Jacobs,
1 4 4 4 2
development Tractebel-Engie
and others
Nacelle, hub,
1 1 2 1 4
and assembly
Blades 1 1 3 1 4
Atlantic Gulf and
Pacific Company
Tower (AG&P), EEI 1 2 3 2 3
Corporation,
Keppel, Fluor
Foundation AG&P, Bauer, EEI,
1 3 3 2 4
supply Keppel, Fluor
Array and export
1 1 1 1 3
cable supply
Offshore AG&P, EEI, Keppel,
1 2 2 3 2
substation supply Fluor
EEI, First Balfour,
JGC Philippines,
Onshore Sta. Clara,
2 4 4 4 2
infrastructure Grandspan
Development
Corporation
Turbine and Keppel, Swire
floating
1 2 2 2 2
foundation
installation
Array and export
1 2 1 2 4
cable installation
Offshore First Balfour,
and onshore Sta. Clara, then
1 2 2 2 2
substation same as turbine
installation installation above
Wind farm AC Energy, UPC
1 2 4 3 3
operation Renewables
Turbine
maintenance 1 2 4 4 4
and service
AC Energy, KEPCO
Balance of plant
Philippines, EDC, 1 2 3 3 3
maintenance
UPC Renewables
Same as
Decommissioning 1 2 1 2 2
installation
Note: *A local supplier is one which would deliver most of the work for the project in the Philippines. It includes foreign
headquartered companies operating in the Philippines

Opportunities
The analysis shows that while there is little direct experience, there is some relevant capability in most
parts of the supply chain. The main opportunities lie where
■ There is capability;
■ There is logic in supplying Philippines projects from the Philippines (which is sensitive to the
growth scenario); and
■ The investment risk is lowest.
The opportunity is therefore greatest in categories such as project development, onshore

infrastructure, tower, foundation, and offshore substation supply (specifically, topside and foundation
manufacture and substation assembly), and in the operations and maintenance phase.
The OSW industry is highly cost-sensitive and typically views competition on a global basis for many
categories of supply. This means that local suppliers will need to work hard to learn and compete, with
international collaboration likely key to success.
Table 11.4 shows the likely changes in supply chain in the Philippines in the low and high growth
scenarios. The high growth scenario creates a stronger logic for the Philippines supply and lowers
market risk. We anticipate that most strategic investments will happen before 2030. This is because
by this time the regional supply chain will have matured and it will become increasingly difficult to
attract new inward investment, unless to extend existing facilities.
TABLE 11.4 CHANGE IN THE PHILIPPINES SUPPLY CHAIN IN LOW AND HIGH GROWTH SCENARIOS

2030 2030
Project development  
Turbine  
Foundations  
Cables  
Installation  
OMS  
(key:  = minimal change;  = organic growth;  = growth via significant inward investment)
Potential bottlenecks
Due to supply from overseas and a rapidly growing global market, the Philippines will compete with
other markets for supply of key items. Should it be more attractive for key global suppliers to serve
other markets, the Philippines risks delays to projects due to supply bottlenecks. Attractiveness of a
market relates to
■ Margin available;
■ Long-term potential; and
■ Ease of doing business, without additional local certifications and standards
to meet beyond the normal international requirements.
Historically, there have been times where key items including wind turbines, subsea cables, and jack-up
installation vessels for fixed projects have been limited. All areas of the supply chain continue to invest
to meet anticipated future demand, but there remains a risk of bottlenecks that is best managed by
experienced, globally acting project developers.
Project development
Project development is likely to be led by established OSW developers, potentially with a local partner,
and the work is likely to be split between a local office and the locations of an international partner,
drawing on the
■ Local partner for in-country knowledge and relationships and

■ International partner for its project management, engineering, environmental management and
procurement skills, and OSW experience and relationships.
There are no OSW farms in the Philippines yet, but there is capability in parallel sectors from the
development of onshore wind farms and other power generation project.
There are benefits of using a local supply chain during development because these companies will
have a good understanding of relevant local regulations and local companies can minimize logistics
and labor costs. It is, however, likely that the local supply chain will need some capacity building and
support from international operators when it comes to undertaking ESIA to GIIP for OSW. The barriers
to entry are low, with investments mainly in skills to meet the needs of OSW. These conclusions are
summarized in Figure 11.1.
FIGURE 11.1 ASSESSMENT OF SUPPLY CHAIN FOR PROJECT DEVELOPMENT
Track record
and capacity in
offshore wind
4
3
2 Capability in
Size of the
parallel
opportunity 1
sectors
Investment
Benefits of
risk in the
local supply
Philippines
4 = most favourable

Turbine
With the involvement of global developers, we anticipate that wind farms in the Philippines will use the
turbine suppliers that dominate the European and US markets, since these are likely to offer the lowest
cost of energy. Chinese suppliers may start to supply to the region, but so far there has been little
evidence of appetite for this, with a continued strong focus on serving their home market.
Nacelle, hub, and assembly

The Philippines has no turbine manufacturing facilities currently, and it is unlikely that there is a
business case for investment in country even in the high growth scenario. While there is some benefit
to local supply to minimize transport costs, nacelles and hubs have complex supply chains and
components that are critical to turbine performance and reliability, and so the barriers to investment
are high. It is therefore likely that nacelles and hubs will be imported.
Political and market considerations have driven investment in a nacelle assembly factory by Siemens
Gamesa in Taiwan, China and General Electric is committed to a factory in Guangdong province, China.
General Electric and Vestas have announced plans for construction of nacelle assembly facilities in
Japan. It is not likely that leading wind turbine suppliers will establish many sets of facilities in East
and Southeast Asia. The opportunity for the Philippines is low.
These conclusions are summarized in Figure 11.2.
FIGURE 11.2 ASSESSMENT OF SUPPLY CHAIN FOR NACELLE, HUB, AND ASSEMBLY
Track record
and capacity in
offshore wind
4
2 Capability in
Size of the
parallel
opportunity 1
sectors
Investment
Benefits of
risk in the
local supply
Philippines
4 = most favourable

Blades
Currently, the Philippines has no blade production facilities. While transport costs of blades are high,
and manufacture is relatively easy to localize as its supply chain is mostly materials from commodity
suppliers, investment risk is high and there is not much relevant capability in parallel sectors in the
Philippines. Typically, a blade manufacturing facility serves only one turbine supplier and is established
by (or in close partnership with) the turbine supplier due to intellectual property considerations.
Given the growing OSW market in the region, global turbine suppliers are likely to invest in East/
Southeast Asian manufacturing facilities, but it is more likely to be in neighboring countries with
more relevant experience and earlier entry into OSW. MHI Vestas and Siemens Gamesa have made
commitments to Taiwan, China.
FIGURE 11.3 ASSESSMENT OF SUPPLY CHAIN FOR BLADES
Track record
and capacity in
offshore wind
4
3
2
Size of the Capability in
opportunity 1 parallel sectors
Investment
risk in the Benefits of
Philippines local supply
4 = most favourable
Tower
There are no tower production facilities in the Philippines currently.
There is logistical benefit to local supply due to high transport costs, and the supply chain for towers
is not complex, so in the high growth scenario there could be a business case for a tower production
facility in the Philippines, despite high investment risks. Such a facility could supply any of the wind
turbine suppliers in the market.

Tower production is largely automated, and the Philippines has a suitably qualified workforce for
tower production. A new facility could also support the onshore wind market and potentially some
exports as well.
FIGURE 11.4 ASSESSMENT OF SUPPLY CHAIN FOR TOWERS
Track record
and capacity in
offshore wind
4
3
2
Investment
4 = most favourable
Balance of plant
Foundation supply
In both the low and the high growth scenarios, we expect that the first few projects in the Philippines
will use mainly monopile (and possibly some jacket) foundations fixed to the seabed in the shallower
sites, but from 2032 most (if not all) projects installed will use floating foundations, as most of the
suitable areas for OSW in the Philippines are in deeper waters.
Although the transport costs for monopile foundations are high, it is unlikely that there is a business
case for investment in the rolling equipment needed to manufacture monopiles in country due to the
low volume of fixed foundations needed and high investment needed for a potentially short period of
supply. There is a stronger benefit of local supply for jacket foundations as it is less automated, and the
Philippines have a suitably qualified workforce. It is unlikely, however, there will be a high enough demand
for jackets even in the high growth scenario to make a business case for investment.
The majority of the future demand for foundations is likely to be for floating foundations, made from
either steel or concrete. There is some relevant capability from parallel sectors for both, and the demand
in the high growth scenario is enough to make the business case for investment, despite the relatively high
investment needed to establish an internationally competitive facility. Any facility will be able to supply a

range of different designs and may be best established in partnership with suppliers with experience at that
point in fixed or floating foundation supply. At least until the mid-2030s, some such designs will be based
fully on the use of steel. Others are likely to be based on the use of reinforced concrete. The market may in
time establish a leading design concept, but commodity prices and national market-specific considerations
may lead to a range of solutions continuing to be used globally, long term. We have assumed in our analysis
that in the high growth scenario two-thirds of floating foundations will be manufactured in country.
Although the conclusion to the supply chain analysis is the same for both scenarios, the market size in the
low scenario is unlikely to be high enough for investment in local supply of foundations.
The conclusions for the supply of floating foundations are summarized in Figure 11.5.
FIGURE 11.5 ASSESSMENT OF SUPPLY CHAIN FOR FOUNDATIONS
Track record
and capacity in
offshore wind
4
3
2 Capability in
Size of the
parallel
opportunity 1
sectors
Investment
4 = most favourable
Array and export cable supply
The Philippines has no subsea cable production capability currently. The logistical benefits are low
because in many cases a single cable vessel can transport all the cable for a project from the factory in
one or two journeys. There are subsea cable factories in China, Japan, and Korea, as well as outside the
region, and these are likely to be used for projects in the Philippines.
As the East/Southeast Asian market grows, new investment is likely to be necessary, but cable
suppliers typically seek to expand existing facilities rather than invest at new sites. This is because
long lead times for new factories with low market certainty mean a significant investment risk.
The investment risk for export cables is lower than for array cables, as there will be a market
for interconnectors in the Philippines. Despite this, it is unlikely that there is a business case for
investment in the Philippines in array and export cable supply.

FIGURE 11.6 ASSESSMENT OF SUPPLY CHAIN FOR ARRAY AND EXPORT CABLES
Track record
and capacity in
offshore wind
4
3
2
Investment
Benefits of
risk in the
local supply
Philippines
4 = most favourable
Offshore substation supply
OSW substation supply has synergies with shipbuilding as it requires steel fabrication and systems
integration skills. Substations are typically one-off designs and therefore new entrants do not need to
make investments to enable efficient volume production. A challenge for new entrants has been the
lower profit margins in OSW than in the oil and gas sector, for example.
There is benefit to local supply of the substation foundations and topsides, and in the high growth
scenario we have assumed that investing in manufacturing of floating turbine foundations would also
bring manufacturing of substation foundations and topsides. For systems integration the Philippines
has some relevant experience from the shipbuilding industry.
An offshore substation platform for the Philippines could also draw on local supply chain for items
such as secondary steel, platforms and walkways, cable trays, and auxiliary and low voltage systems.
High voltage equipment is likely to be imported from global suppliers such as Hitachi ABB, GE Grid
Solutions, and Siemens Energy. The OSW industry is typically too small to drive electrical equipment
manufacturing investments in new locations.

FIGURE 11.7 ASSESSMENT OF SUPPLY CHAIN FOR OFFSHORE SUBSTATIONS
Track record
and capacity in
offshore wind
3
2
1
opportunity parallel sectors
Investment
4 = most favourable
Onshore infrastructure
Onshore infrastructure includes the onshore export cable, the onshore substation, and the operations
base. There are significant synergies with the rest of the civil engineering sector and this work is
typically provided by local companies. No significant investment by local companies is likely to be
necessary. For the substation the electrical equipment is likely to be imported.
There is no difference between the scenarios. Figure 11.8 summarizes these conclusions.
FIGURE 11.8 ASSESSMENT OF SUPPLY CHAIN FOR ONSHORE INFRASTRUCTURE
Track record
and capacity in
offshore wind
4
3
2
Investment
4 = most favourable

Turbine and foundation installation
Fixed OSW farms use specialist jack-up vessels built almost exclusively for OSW use to install the
turbines. Fixed foundations are usually installed by either a jack-up vessel (which may also be used
for turbines) or a floating heavy lift vessel. The Philippines has no such vessels, so they are likely to be
supplied, along with most of the crew, from elsewhere for the small volume of fixed projects anticipated
in each scenario.
For floating OSW farms, it is likely that the turbines will be assembled onto the floating foundation
hull at a local port and then the floating turbine-hull system gets towed out to site and connected
to preinstalled moorings and cabling. This eliminates the need for heavy lift vessels and uses service
vessels and tugs instead. Some of these might be local, but the majority will come from overseas.
There is benefit in using local vessels for tug and other support operations, if available.
Regardless of the installation solution adopted for OSW farms in the Philippines, local ports and
services will be used in both scenarios, although the work may be undertaken by an experienced OSW
marine contractor. Local maritime crew will be used for local vessels.
Figure 11.9 summarizes our conclusions for floating OSW farms.
FIGURE 11.9 ASSESSMENT OF SUPPLY CHAIN FOR TURBINE AND FOUNDATION INSTALLATION
Track record
and capacity in
offshore wind
4
3
2 Capability in
Size of the
parallel
opportunity 1
sectors
Investment
Benefits of
risk in the
local supply
Philippines
4 = most favourable

Array and export cable installation
Array and export cable installation may use the same vessels and equipment, but optimal solutions
differ. Array cable laying vessels need to be maneuverable, but do not need high carrying capacity.
Export cable laying vessels are typically larger to carry the full length of an export cable. Ideally, they
can also operate in shallow water for installation up to the shoreline. The Philippines has no such
vessels stationed locally.
OSW cable laying is technically challenging, particularly the process of pulling in and terminating the
cable at the base of the turbine, and the risks of entering the market are significant; as well as the
investment in vessels, inexperienced cable laying companies have suffered project delays in established
OSW markets and the financial consequences can be severe.
With little benefit to local supply and high investment risk, it is unlikely that there is a business case
for investment on cable laying vessels in the Philippines. Some of the marine crew and most port
services could, however, be local.
Figure 11.10 summarizes our conclusions.
FIGURE 11.10 ASSESSMENT OF SUPPLY CHAIN FOR ARRAY AND EXPORT CABLE INSTALLATION
Track record
and capacity in
offshore wind
4
3
2
Investment
4 = most favourable

Offshore and onshore substation installation
For fixed projects in shallower water, the offshore substation foundation is often a jacket, but can be a
monopile. In these cases, offshore substation installation consists of the installation of the foundation
(as above) and then the substation topside. The substation topside is likely to weigh more than 2,000
t and in most cases is transported to site by barge then lifted into position by a large, heavy lift vessel.
There are no such vessels in the Philippines.
Deeper water, floating OSW farms are likely to use floating substations, towed to preinstalled
moorings. Floating installation, therefore, is likely to use service vessels and large tugs. Some of these
vessels might be local, but the rest are likely to come from overseas.
For onshore substation installation there are significant synergies with the rest of the civil engineering
sector and the Philippines has suitable expertise to undertake the work.
FIGURE 11.11 ASSESSMENT OF SUPPLY CHAIN FOR OFFSHORE AND ONSHORE SUBSTATION
INSTALLATION
Track record
and capacity in
offshore wind
4
3
2
Investment
4 = most favourable

Operations, maintenance, and service
Wind farm operation
Wind farm operation combines asset management expertise from onshore wind and large
electromechanical infrastructure assets along with offshore logistics. The Philippines has only a limited
onshore wind industry, but barriers to entry are generally lower than in many of the capital phase
areas described earlier; revenue streams are long term and there is benefit to local supply. It is
therefore likely that there will be local asset management combined with global resource used by the
wind farm owners and turbine manufacturers.
OSW projects close to shore typically use bespoke CTVs, and these could be built and operated locally,
normally from the closest small port to the project. Projects further from shore use larger service
operation vehicles that will be locally crewed and have a local home port.
FIGURE 11.12 ASSESSMENT OF SUPPLY CHAIN FOR WIND FARM OPERATION
Track record
and capacity in
offshore wind
4
3
2
Investment
4 = most favourable
Turbine maintenance and service
Turbine maintenance and service is typically undertaken by the turbine supplier, generally under a
service agreement of length up to 15 years, or by experienced international project developers who
go on to be lead owners of projects. A local workforce will be used for much of the work, and there
is an opportunity for local companies offering inspection services and technicians during planned
maintenance and unplanned service activities in response to turbine faults. The barriers to entry are
lower than in many of the capital phase areas described earlier, and investment will be mainly focused
on ensuring a high-quality skills base. In the early days of operation there is likely to be a significant
number of overseas technicians used, but the numbers will decline as a local workforce is trained.

Major replacements for fixed OSW projects typically use the same large jack-up vessels used in
installation. For floating projects, it is anticipated that the turbine-hull systems will be towed back to a
construction port for major replacements and repairs, though in time, alternative in situ solutions may
be introduced. When towing to shore, it is expected to hot swap in a replacement turbine, rather than
leave a location without generation for a long period. We expect that some local tugs will be used, but
the majority will be imported from overseas.
Spare parts and consumables will be imported in the absence of any wind manufacturing supply
chain in the Philippines, due to the importance of using proven, reliable products. There may be some
opportunity for local refurbishment of some components.
FIGURE 11.13 ASSESSMENT OF SUPPLY CHAIN FOR TURBINE MAINTENANCE AND SERVICE
Track record
and capacity in
offshore wind
4
3
2
Investment
4 = most favourable
Balance of plant maintenance and service
Balance of plant maintenance and service covers foundations, array cables, export cables, and
substations.
Cable maintenance and service is the most significant, with cable failures the biggest source of
insurance claims in OSW, typically due to mechanical damage caused to the cables. It uses equipment
similar to cable installation, in some cases with cables replaced and in others with cables repaired in situ.
Foundation maintenance and service includes inspections for corrosion or structural defects above and
below the water line, and cleaning and repairing areas especially around the water line. This is likely to
use a mix of expert global workforce to diagnose problems and define solutions and local workforce to
implement. For floating foundations, this may involve towing to shore.

For substations some of the structural maintenance and service could be done by local workforce, but
the electrical system component replacements are likely to come from global suppliers.
FIGURE 11.14 ASSESSMENT OF SUPPLY CHAIN FOR BALANCE OF PLANT MAINTENANCE

AND SERVICE
Track record
and capacity in
offshore wind
3
2
Capability in
Size of the
1 parallel
opportunity
sectors
Investment
4 = most favourable
Decommissioning
Although some decommissioning has been carried out in established markets, solutions have not yet
been optimized. It is most likely that vessels that have been used for installation will also support
decommissioning, following similar processes, with some simplifications. Much material can be
recycled, offering opportunities in the circular economy. As projects start reaching end of life, there will
also be work exploring extension of life of generating and/or transmission assets.

FIGURE 11.15 ASSESSMENT OF SUPPLY CHAIN FOR DECOMMISSIONING
Track record
and capacity in
offshore wind
4
2 Capability in
Size of the
parallel
opportunity 1 sectors
Investment
4 = most favourable
11.4 DISCUSSION
The Philippines has good port infrastructure that could host local manufacturing. It has supply chain
capability relevant to some areas of OSW. A proactive approach will help increase local readiness for
supply and help create the economic benefit discussed in Section 12. The regional market, as discussed
in Section 8.4, also offers the opportunity to access what will be an experienced regional supply chain
by the late 2020s, in both fixed and floating OSW.
The Government of the Philippines has the opportunity to develop a high-volume market by providing
a robust policy framework and good market visibility. International experience shows this to be an
effective way to generate local economic benefit without having to resort to restrictive local content
requirements.xx It is also the dominant way to reduce the cost to consumers and create a more
sustainable, internationally competitive supply chain.
11.5 RECOMMENDATIONS
■ DOE, working with the DTI, presents a balanced vision for local supply chain development,
encouraging international competition, and enables education and investment in local supply chain
businesses, including in training of onshore and offshore workers.
■ Learning from elsewhere, the government avoids restrictive local content requirements that add
risk and cost to projects and slow deployment.
xx As discussed in Section 2 of the World Bank Group’s Key Factors report,3 protectionist practices have not delivered value-added outcomes. They typically drive
inefficiency and are not compatible with global OSW businesses managing cost and risk across portfolios of projects.

12. JOBS AND ECONOMIC BENEFIT
12.1 PURPOSE
In this work package, we determine the economic impact of OSW in the Philippines, looking at the
potential for job creation and direct investment in the country’s OSW industry under the scenarios
established in Section 2.
The analysis looks at opportunities at different stages of the industry (including manufacturing,
installation, operation, and maintenance), both for in-country projects and export.
This analysis is important as it is helpful to understand, long term, what the economic impact of OSW
is and how to maximize this.
The analysis aimed to establish the economic impacts created by wind farms in the Philippines globally
and in-country.
12.2 METHOD
We considered three types of impact:
■ Total impacts from projects in the Philippines

■ Philippines impacts from projects in the Philippines
■ Philippines impacts from projects in the Philippines and overseas.
Direct and indirect impacts were modelled. Direct impacts are defined as those associated with project
developers and their main contractors. Indirect impacts are defined as those associated with their
sub-suppliers.
All cost data are from Section 10, ensuring that the different types of analysis presented are
consistent. Section 10 uses the supply assumptions presented in this section.

Total impacts from projects in the Philippines
We established the total FTE employment years and GVA by year created for each market scenario
if there was 100 percent local content (that is, there is no import of materials, components, and
services):
■ Low growth scenario (3 GW by 2040 and 5 GW by 2050)

■ High growth scenario (20 GW by 2040 and 40 GW by 2050).
We used an in-house model that uses multipliers to convert expenditure to FTE years and GVA. More
details of our methodology are provided in Section 12.4.
We calculated the impacts from a single 1 GW floating project in installed in 2033 in the high growth
scenario. We also calculated the impacts of the pipeline of projects in each scenario.
Philippines impacts from projects in the Philippines

We established the impacts in the Philippines by considering the current and potential future
capability of the supply chain in the Philippines and assessed the likely percentage of local content for
each scenario. The capability of the supply chain in the Philippines and opportunities for growth are
discussed in Section 11. A non-exhaustive list of notable relevant suppliers is provided in Table 11.3 in
Section 11.
Philippines impacts from projects in the Philippines and overseas

This is the sum of the above and anticipated exports. We estimated the potential based on our
understanding of the regional and global market and the supply chain in the Philippines and how that
will develop in each growth scenario.
12.3 RESULTS
Total impacts from projects in the Philippines
High growth scenario: single project
Figure 12.1 shows the total FTE years of employment created annually for a single 1 GW floating project
installed in 2033 in the high growth scenario. It shows that employment peaks in 2032, the first full
year of construction at about 16,000 FTE years, when there is significant turbine and balance of plant
manufacture as well as installation. Total employment for the project is about 60,000 FTE years over
the 30-year lifetime of the project.
Figure 12.2 shows the GVA generated by this single project. The peak GVA in 2032 is about US$1.1
billion. The total GVA over the lifetime of the project is about US$4.5 billion.
12. Jobs and economic benefit 117

FIGURE 12.1 TOTAL ANNUAL FTE YEARS OF EMPLOYMENT FOR A SINGLE 1 GW PROJECT
INSTALLED IN 2033, SPLIT BY COST ELEMENT
18,000
12,000
FTE years
6,000
39
40
32
33
34
35
36
37
38
22
23
24
25
26
27
28
29
30
31
20
20
20
20
20
20
20
20
20
20
20
20
20
20
20
20
20
20
20
Development and project management Turbine Balance of plant Installation and commissioning OMS
FIGURE 12.2 TOTAL GVA FOR A SINGLE 1 GW PROJECT INSTALLED IN 2033, SPLIT BY
COST ELEMENT
1.5
1.0
GVA (US$ billion)
0.5
0.0
22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40
20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20
Figure 12.3 shows the global annual FTE years of employment—the number of jobs grow steadily to
2035 where it reaches about 75,000 FTE years per year. The number of jobs decrease for a few years,
before plateauing at about 70,000 FTE years per year from 2037. This is because in this scenario
although the annual installed capacity reaches a steady state in 2036, some efficiencies are expected
in the supply chain, which leads to cost reduction and therefore a small decrease in FTE years.
Although there is an increase in OMS jobs after 2035, this is offset by reductions in other parts of the
supply chain as a consequence of falling LCOE. Between 2022 and 2040, more than 800,000 FTE
years are created.
In Figure 12.4, the GVA created by all projects shows a similar pattern, with GVA reaching about US$5
billion per year in the 2030s. Between 2022 and 2040, about US$60 billion GVA is generated.

FIGURE 12.3 TOTAL ANNUAL FTE YEARS OF EMPLOYMENT CREATED BY ALL THE PROJECTS IN
THE PHILIPPINES IN THE HIGH GROWTH SCENARIO, SPLIT BY COST ELEMENT
80,000
60,000
FTE years
40,000
20,000
0
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
39
40
20
20
20
20
20
20
20
20
20
20
20
20
20
20
20
20
20
20
20
FIGURE 12.4 TOTAL GVA CREATED BY ALL THE PROJECTS IN THE PHILIPPINES IN THE HIGH
GROWTH SCENARIO, SPLIT BY COST ELEMENT
6
4
GVA (US$ billion)
0
22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40
20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20
Low growth scenario
For the low growth scenario, the pattern is different, as a new project is installed every four years
from 2030. Figure 12.5 shows the peaks of about 10,000 FTEs years created in the first full year of
construction for each project in. Between 2022 and 2040, more than 130,000 FTE years are created.
In Figure 12.6 the GVA created by all projects in the low growth scenario shows a similar trend. Between
2022 and 2040, about US$12 billion is generated. This stop-start supply makes it difficult for local
suppliers to keep a consistent workforce that grows in OSW experience over time.

FIGURE 12.5 TOTAL ANNUAL FTE YEARS OF EMPLOYMENT CREATED BY ALL THE PROJECTS IN
THE PHILIPPINES IN THE LOW GROWTH SCENARIO, SPLIT BY COST ELEMENT
20,000
15,000
FTE years
10,000
5,000
39
40
32
33
34
35
36
37
38
22
23
24
25
26
27
28
29
30
31
20
20
20
20
20
20
20
20
20
20
20
20
20
20
20
20
20
20
20
FIGURE 12.6 TOTAL GVA CREATED BY ALL THE PROJECTS IN THE PHILIPPINES IN THE LOW
2.0
1.5
GVA (US$ billion)
1.0
0.5
0.0
22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40
20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20
Philippines impacts from projects in the Philippines

Table 12.1 shows how the local content changes over time as investments are made. In both scenarios,
we show the assumed local content percentage in 2028, 2032, and 2036. These are the year when the
first project is installed, the year when the factories in the high scenario are assumed operational, and
the year when the annual installed capacity stabilized at around 2 GW in the high growth scenario. The
local content percentages reflect the assumptions about the current and future supply chain in the
Philippines developed in Section 11. The important differences are that the high growth scenario leads

to investment in a tower factory and a floating foundations factory ready for a project in 2032. In
general, local content is relatively low, based on the anticipated strength and experience of the regional
supply chain by the late 2020s, in both fixed and floating OSW. Note that in some cases, local content
drops from one year to the next. This is due to the change in relative cost of different OSW project
elements over time, rather than any reduction in scope or fraction of supply.
TABLE 12.1 LOCAL CONTENT FOR THE OSW PROJECTS IN THE PHILIPPINES COMPLETED IN
2028, 2032, AND 2036
Low growth (%) High volume (%)

2028 2032 2036 2028 2032 2036
Project development 60 70 70 60 70 70
Nacelle, rotor, and assembly 0 0 0 0 0 0
Turbine Blades 0 0 0 0 0 0
Tower 0 0 0 0 25 25
Foundation supply 0 0 0 0 40 40
Array cable supply 0 0 0 0 0 0
Balance of plant Export cable supply 0 0 0 0 0 0
Onshore and offshore
5 5 5 5 40 40
substation supply
Turbine installation 15 35 35 15 35 35
Foundation installation 1 35 35 15 35 35
Installation and Array cable installation 5 5 5 5 5 5
commissioning Export cable installation 5 5 5 5 5 5
Onshore and offshore
45 45 45 45 45 45
substation installation
Wind farm operation 80 80 80 80 80 80
Turbine maintenance and
25 40 40 40 55 55
service
Foundation maintenance and
Operation and 40 75 75 60 75 75
service
maintenance
Subsea cable maintenance
30 30 30 30 30 30
and service
Substation maintenance and
60 60 60 60 60 60
service
Decommissioning 35 50 50 35 50 50
Total local content (%) 21 20 22 25 36 34

Figure 12.7 shows annual FTE years of employment created in the Philippines by all projects. It shows
that the number of FTE years peaks at about 20,000 in the 2030s. Between 2022 and 2040, 200,000
FTE years are created, about 25 percent of the total created globally by the pipeline of projects in the
Philippines.
Figure 12.8 shows annual GVA reaching a peak of about US$1.4 billion in the 2030s. Between 2022 and
2040, over US$14 billion GVA is generated, and also about 25 percent of the total generated globally.
FIGURE 12.7 ANNUAL LOCAL FTE YEARS OF EMPLOYMENT CREATED BY ALL THE PROJECTS IN
THE PHILIPPINES IN THE HIGH GROWTH SCENARIO, SPLIT BY COST ELEMENT
25,000
20,000
FTE years
15,000
10,000
5,000
40
33
34
35
36
37
38
39
29
30
31
32
22
23
24
25
26
27
28
20
20
20
20
20
20
20
20
20
20
20
20
20
20
20
20
20
20
20
FIGURE 12.8 ANNUAL LOCAL GVA CREATED BY ALL THE PROJECTS IN THE PHILIPPINES IN THE
HIGH GROWTH SCENARIO, SPLIT BY COST ELEMENT
1.5
1.0
GVA (US$ billion)
0.5
0.0
22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40
20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20

Low growth scenario
Figure 12.9 shows the Philippines annual FTE years of employment created by all projects. It shows
that the number of FTE years peaks in the first full year of construction for each project in the 2030s,
with about 1,100 FTE years. The number of FTE years created between 2022 and 2040 is about
15,000. To aid comparison with the high growth scenario, the same axis scale is used.
Figure 12.10 shows that annual GVA similarly have peaks of up to US$100 million in the 2030s The
GVA generated between 2022 and 2040 is about US$1.1 billion.
FIGURE 12.9 ANNUAL LOCAL FTE YEARS OF EMPLOYMENT CREATED BY ALL THE PROJECTS IN
THE PHILIPPINES IN LOW GROWTH SCENARIO, SPLIT BY COST ELEMENT
2,000
FTE years
1,500
1,000
500
0
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
39
40
20
20
20
20
20
20
20
20
20
20
20
20
20
20
20
20
20
20
20
FIGURE 12.10 ANNUAL GVA CREATED BY ALL THE PROJECTS IN THE PHILIPPINES IN LOW
0.10
0.08
GVA (US$ billion)
0.06
0.04
0.02
0.00
22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40
20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20

Philippines impacts from projects in the Philippines and overseas
In the high scenario we have assumed that 25 percent of the towers manufactured are exported to
nearby markets. This creates an additional 4,300 FTE years of employment between 2022 and 2040,
as well as US$255 million in GVA. These impacts continue into the 2040s as well.
In the low growth scenario, there are likely to be only minimal opportunities to export.
Investment
Table 12.2 presents the likely large-scale investment needed to deliver the supply chain development
described above, with the timeline to achieve impacts for a first floating project installed in 2032.
Investments are highly indicative, as they depend on where investment occurs and what existing
infrastructure can be used.
Total investment is in the range of US$80–US$250 million in the high growth scenario, with no
investments required in the low growth scenario. Smaller-scale investments in the supply chain and
investments in ports have not been included, so will be additional.
TABLE 12.2 LOCAL SUPPLY CHAIN INVESTMENTS TO FACILITATE OSW IN THE PHILIPPINES

Investment Timing Amount
scenario scenario
New factory to
Investment decision
produce up to
in early 2028,
Turbine towers Imported 1.5 GW of towers US$50–100 million
supplying the first
(approx. 1 section
floating projects.
per day).
2–3 new factories
Investment decision
to produce 60–70%
Floating from early 2028
Imported of all floating US$30–150 million
foundations as for first floating
foundations in
projects.
country.
Prerequisites
Based on experience in other markets, there are a number of prerequisites to such investment:
■ Confidence in a strong visible future pipeline of projects to compete for

■ A commercial and financial environment that enables investment, whether inward investment or
indigenous
■ A sufficient level of commitment to buy a reasonable amount of supply over a long enough period.
In Europe, this last point can be a frustrating barrier, as project developers often only have limited
visibility of their own projects and seek to keep competitive tension in their supply chain, so tend not to
give much commitment. Often, commitment can only be for ‘the next project’ and there is not enough
time for the supplier to build the new manufacturing facility and then manufacture components
because the developer wants to construct the project as soon as possible.

12.4 BACKGROUND: DETAIL OF METHOD
Conventional modelling of economic impacts for most industrial sectors relies on government
statistics, for example, those based on industry classification codes and use input-output tables and
other production and employment ratios.
Industry classification code data can be appropriate for traditional industries at the national level. The
development of new codes for a maturing sector, however, takes time. This means that conventional
industry classification analyses of OSW need to map existing data onto OSW activities, which is not easy
and a source of error. Analyses using industry classification codes also have to rely on generalized data.
OSW is ideally suited to a more robust approach that considers current and future capability of local
supply chains because OSW projects tend to:
■ Be large and have distinct procurement processes from one another and
■ Use comparable technologies and share supply chains.
It therefore enables a realistic analysis of the local, regional, and national content of projects even
where there are gaps in the data.
The methodology used here was developed jointly by BVG Associates and Steve Westbrook of the
University of the Highlands and Islands, UK and has been used for a series of major studies.
The methodology’s first input is the cost per MW of each of the supply chain categories at the time of
wind farm completion.
The remaining expenditure is analogous to the direct and indirect GVA created. GVA is the aggregate
of labor costs and operational profits. We can therefore model FTE employment from GVA, provided
we understand some key variables. In our economic impact methodology, employment impacts are
calculated using the following equation:
Where:
FTEa = Annual FTE employment
GVA = Gross value added (US$)
M = Total operating margin (US$)
Ya = Average annual wage (US$), and
Wa = Nonwage average annual cost of employment (US$).
To make robust assessments, therefore, we consider each major component in the OSW supply chain
and estimate typical salary levels, costs of employment, and profit margins, bringing together specific
sector knowledge and research into typical labor costs for the work undertaken in each supply chain
level 2 category.
FTEs relate to full-time equivalent job years, with part-time or part-year work considered as
appropriate. A full-time job would normally be at least 7 hours per day over 230 working days of the
year. If an individual works significantly more than this over a year, FTE attribution would be more than
1 FTE (for example, 1.5 FTEs if working long hours over 7 days per week).

FTEs are by workplace rather than by residence and will include migrant/temporarily resident workers.
Where work in a local area (for example, on an assembly site) is carried out by people who have moved
temporarily from elsewhere in the Philippines or overseas and live in temporary accommodation
while working on site, their daily expenditures on accommodation, food and drink, leisure and the
like create employment impacts locally and within the Philippines more widely. These impacts have
been considered in the indirect impacts because these payments are likely to be covered through
subsistence expenses rather than personal expenditure.
The GVA to gross earnings ratio for a business can be relatively high where it is charging for use of
expensive plant, equipment, boats, and so on. If a specialist vessel, for example, has been built in the
Philippines for offshore renewables work, the prior employment and earnings impacts from this could
be additional to what it has been possible to capture in the analysis carried out for this report.
In this report, GVA and earnings impacts have not been discounted prior to aggregation.
Definitions and assumptions

The economic analysis was structured around theoretical projects. To simplify the analysis, we
assumed that these are floating projects. There are likely to be subtle differences in the economic
impacts from fixed projects, but these are unlikely to be significant given the uncertainties over the
future supply chain in the Philippines.
For each of the theoretical projects, we made judgments of local content for each of the supply chain
categories defined in Section 11. Project costs in 2028, 2033, and 2038 were taken from the LCOE
modelling described in Section 10. To simplify this analysis, we assumed that there is no real-term
increase in salaries and that changes in cost for the projects between 2028 and 2038 are due to changes
to technology and industry learning. As a result, the analysis is likely to underestimate the GVA.
To model economic impacts from 2022 to 2040, we interpolated costs and local content between
2028 and 2038. For impacts before 2028, we assumed that there were no changes per MW from the
2028 figures and for impacts in 2039 and 2040 and no changes per MW from the 2038 figures.
Our analysis has assumed that work undertaken in the Philippines has twice the human resource
intensity of European companies because lower wage costs reduce the business case for investment
in automation.

13. GENDER ASPECTS
13.1 PURPOSE
In this work package, we present the status of gender equality in the Philippines and look at existing
legislation and policies that will affect the creation of a diverse OSW workforce.
We present the case for taking a proactive approach to ensure a gender equal OSW industry evolves
in the Philippines. We also look at some learnings around workforce diversity from the development
of OSW in other countries to highlight ways of eliminating or lowering common barriers to achieving
gender equality.
13.2 METHOD
The findings of this section are the result of research to understand the existing position of men and
women in the Philippines workforce and education system and of the legal and regulatory environment
around gender discrimination and diversity targets in the country.
Desk research and stakeholder engagement looked at how other countries have approached gender
equality issues in the wind industry. This enabled the creation of policy recommendations that can help
remove barriers to the equal participation of women in the Philippines’ OSW industry.
13.3 RESULTS
For the long-term success of OSW, and to establish it as a leading global industry, it is important to
address the gender, diversity, and inclusion challenges of our time. Research shows that 32 percent
of renewable energy jobs are held by women compared to 22 percent in oil and gas.23 Recent analysis
focusing specifically on OSW has, however, revealed that the global average for women in OSW is 21
percent with Taiwan, China, topping the diversity charts at just 26 percent. Poor diversity can be seen
as a structural threat to the health of the OSW industry as multiple studies have shown that a diverse
workforce is beneficial to the growth, innovation, resilience, and sustainability of all industries. A diverse
workforce also gives the biggest opportunity to attract the best talent into the industry workforce.25
The pursuit of gender equality is also mandated by existing legislation and soft law treaties to which
the Philippines is a signatory. For example, the 2015 Paris Agreement states that nations should
“respect, promote and consider” their obligations toward gender equality and the empowerment of
women as they reduce their emissions. The Philippines is also committed to the UN’s 17 Sustainable
Development Goals (SDGs). Gender aspects play an important role in SDG 5 (Gender equality) and SDG
8 (Decent work and economic growth). The development of the OSW industry in the Philippines will
also benefit women as consumers by providing affordable, sustainable energy to the grid, which will
help meet SDG 7 (Affordable and clean energy).
127
The Philippines has passed advanced legislation that protects and promotes women’s rights. Most
relevant to the development of an OSW industry in the country is Republic Act 9710 (the Magna Carta
of Women),26 which was introduced in 2009 and prohibits discrimination against women by public
and private entities as well as individuals. Government agencies to individuals that violate the Magna
Carta legislation are liable for damages. The law also makes specific provisions for the equal access of
women in education scholarships and training and establishes incentives and awards for companies
and government agencies that make outstanding contributions toward implementing the act.
The Magna Carta of Women mandates that the government is responsible for policy formulation
contributing toward gender equality and that it must generate and maintain gender statistics and
sex disaggregated databases to ensure targeted interventions and measure progress toward equality
goals. State agencies have gender and development (GAD) budgets to implement programs under the
Magna Carta of Women, which mandates that the government prioritizes the allocation of all available
resources to fulfill the obligations of the law.
There is already a strong network of women’s rights organizations in the Philippines that possess a
wealth of knowledge on working inside the unique sociocultural context of the country to address
problems of structural gender inequality. Global Wind Energy Council (GWEC) and Global Women’s
Network for the Energy Transition (GWNET) also operate the Women in Wind Global Leadership Program
to accelerate the careers of women in the sector.
According to the World Economic Forum’s Global Gender Gap Report 2021,8 the Philippines is ranked
17 overall (out of 156 listed) and the best performing country in East Asia when it comes to closing
the gender gap around key metrics. The Philippines has largely closed gaps around educational
attainment, health, and the number of women relative to men in senior or technical roles, as shown in
Figure 13.1 and Figure 13.2.
FIGURE 13.1 KEY METRICS FOR MEN AND WOMEN IN THE PHILIPPINES WORKFORCE
Legislators, Senior Officials and

Managers
Enrolment in Tertiary Education
Enrolment in Secondary Education
STEM Attainment Rate
Labour Force Participation Rate
0 20 40 60 80
Percentage (%)
Men Women

Note: STEM=Science, technology, engineering, and mathematics

To give context, the next best performing East Asian country, Lao PDR, is ranked 36 overall. There,
the labor force participation rate is 80.5 percent for women compared to 82.3 percent for men. Some
15.5 percent of women in Lao PDR are enrolled in tertiary education compared to 14.4 percent for men
and significant gaps remain in regard to science, technology, engineering, and mathematics (STEM)
attainment rates which stand at 12.3 percent for women and 32.4 percent for men.
The report also highlights that the Philippines has a significant gender pay gap across the economy,
with men earning on average 43 percent more than women, as shown in Figure 13.2. This exists despite
the 2007 Fair Pay Act27 mandating equal pay for equivalent jobs. Therefore, it is suggested that
women should be incentivized and supported to enter the job market to narrow the pay gap. Figure 13.1
shows that women also have a much lower attainment rate in STEM subjects, which are relevant to
accessing many high paid jobs in society and within OSW.
FIGURE 13.2 THE GENDER PAY GAP IN THE PHILIPPINES
12,000
10,000
8,000
US$
6,000
4,000
2,000
0
Estimated Annual Income
Women Men
Experience from the development of OSW in Northern Europe suggests that strong equality laws alone
are not enough to ensure there is no such gap between the number of men and women in the wind
energy workforce and the types of roles they occupy.
For example, GWEC’s Women in Wind Program and the International Renewable Energy Agency
(IRENA) have found that women make up 21 percent of the global wind energy workforce and that
65 percent of all women working in the sector perceive gender-related barriers.28 Just 8 percent of
senior management positions in wind energy are taken up by women, who generally occupy roles in
administration and non-STEM occupations within the sector.
Early experience from the UK shows how OSW can suffer from even more acute gender imbalances,
and a gender diverse industry will not emerge by itself so long as only external policies are in place.
The UK installed its first OSW project in 2000 and by 2018 had 7.5 GW of installed OSW capacity
with 7,200 people directly employed in the sector. Women, however, made up just 16 percent of that
workforce, despite the UK having passed robust equality legislation. This shows that it is important
13. Gender Aspects 129

to put schemes in place as the industry is established to challenge the social or cultural factors that
create inequality.
Industry and the government have moved to address this gender disparity as part of the UK Offshore
Wind Sector Deal29 signed in 2018, which seeks to address a broad range of gender issues affecting the
sector. An aspirational target of ensuring women make up at least 40 percent of the OSW workforce
by 2030 has been set. Meeting this target will be challenging, but educational institutions and OSW
industry programs are working to eliminate the significant barriers that exist to prevent women from
either joining or staying in the OSW. These include the following:
■ Sociocultural norms that drive men and women to pursue different educational and
employment opportunities
■ Hiring practices that unconsciously or inadvertently discriminate against women
■ A lack of gender targets within the industry
■ Workplace conditions and policies that discourage women
■ A lack of networking spaces and opportunities for women in a male-dominated sector
■ A lack of awareness about these barriers in a male-dominated sector.
Since the publication of the Offshore Wind Sector Deal, the UK has taken another major step to ensure
progress toward its 40 percent target. This has been achieved in part by incorporating gender equality
requirements in a scored ‘supply chain plan’ assessment which developers must pass as a prerequisite
for participating in future power purchase auctions.
13.4 DISCUSSION
Anecdotal evidence and feedback during the development of the roadmap supports the fact that
the Philippines has done well in closing the gender gap in many areas. The Philippines has legislated
for equality, but activities outside of this work need to be carried out to challenge the social norms
that guide different male and female perspectives around education pathways and career choices.
Acknowledging the gender equality challenges seen in the UK, the industry needs to take an active
role in changing the culture around women pursuing STEM subjects and strive to ensure the OSW
industry is an attractive place for women to work. This is an acute challenge for OSW. Women are
underrepresented in maritime industries due to multiple factors including nonfamily-friendly working
conditions and sexual harassment risk.30 The OSW industry needs to consider ways to make offshore
jobs more attractive to women, encouraging them into the sector and retaining them.
The Philippine Government has an ongoing 20-year GAD plan,31 which runs to 2025. The GAD allocates
a budget to each government agency for pursuing equality programs. It is important that the OSW
industry and the DOE collaborate closely to make the most of this resource.

Based on the above analysis, the following are recommended:
■ Industry involves developers and supply chain companies in gender equality working groups,
supported by women’s rights organizations in the Philippines, GWEC, and GWNET. This will help
ensure women can play an active role in shaping the sector, thus making offshore jobs attractive.
■ The government and industry together determine the key data that need to be collected to
ensure progress to diversity targets is measured and make sure a framework is in place to collect
it accurately. Existing sex aggregated data collected under the GAD should be used for human
resource and planning as the industry grows.
■ Industry ensures opportunities for women in OSW are well promoted to encourage women to
pursue STEM subjects to secure rewarding careers in the sector.
■ Industry uses gender decoders and gender-balanced language to ensure hiring practices are
unbiased.
■ Industry creates spaces and opportunities for women to network within the OSW sector to reduce
harassment risk and prevent leadership roles from becoming male dominated.
■ The government and industry encourage women to develop STEM interest aspirations and ensure
apprenticeship schemes attract female talent.
■ The government and industry look across sectors that have low gender imbalances in the
Philippines to find any relevant learning.
■ Industry focuses efforts on increasing gender diversity in job areas where women are typically
poorly represented, for example, OSW turbine technicians.
■ Industry publishes a best practice guide for stakeholders.
■ The government considers introducing gender equality requirements into leasing and power
purchase frameworks, for example, requiring project developers to demonstrate diversity good
practice in recruitment and communicate the gender makeup of project teams and specifying
such requirements on their key suppliers.
13. Gender Aspects 131

14. ENVIRONMENTAL AND SOCIAL
CONSIDERATIONS
14.1 PURPOSE
In this work package, we describe and rate the environmental and social considerations relevant to
OSW in the Philippines.
14.2 METHOD
A review has been undertaken of the applicable national laws, policies, regulations, and environmental
and social considerations associated with the development, installation, and operation of OSW, with a
focus on offshore rather than onshore aspects. This included information provided by The Biodiversity
Consultancy (refer to the Appendix).
Further detailed studies, surveys, and consultations will be required to be undertaken by the
government, stakeholders, and project developers on environmental and social considerations. This will
be required at both a countrywide marine spatial planning level and at a project-specific level. Future
studies and surveys should include the consideration of cumulative impacts between projects.
We assessed conditions in general and in the potential OSW development zones shown in Figure
2.5. The locations of these zones are derived in Section 9. Section 14 is limited to discussing each
consideration. The zones have been included in the maps in this section to show their location relative
to specific environmental and social considerations.
The assessment presents the environmental and social considerations relevant to the development,
installation, and operation of OSW projects. The rating shown in Table 14.1 has been used to show the
potential impact of OSW on key receptors.
TABLE 14.1 RAG SCALE FOR ENVIRONMENTAL, SOCIAL, AND TECHNICAL CONSIDERATIONS
Scale values Description
OSW development has the potential to have significant impact or influence on the
Red
environmental or social consideration.
OSW development has the potential to have an impact or influence on the environmental or
Amber
social consideration.
OSW development is unlikely to have an impact or influence on the environmental or social

Green
consideration.
Note: RAG=Red-Amber-Green

These categories are defined based on a combination of our knowledge and professional judgment of
considerations relevant to OSW in other markets, and through limited early engagement with some
relevant stakeholders in the Philippines. Beyond this roadmap, further work is needed to provide a full
view of environmental and social considerations.
The inputs from local stakeholders have been assessed for their relevance and incorporated to ensure
that the preliminary assessment is in line with GIIP.
For each constraint, the following have been undertaken:
■ Assessment of how the constraint is considered in laws and applied in practice in the Philippines
■ Consideration of the potential impact of an OSW
■ Determination of the extent to which the constraint is relevant to potential OSW development
zones in the Philippines
■ Discussion of options to address the constraint
■ Categorization into two types of consideration, further used in Section 9:
• Exclusions - areas of highest environmental or social sensitivity to be excluded from OSW
assessment
• Restrictions - high-risk areas requiring further evaluation for OSW site selection, ESIA and MSP.
An initial list of key stakeholders who have a concern for the environmental and social considerations
in developing OSW are listed as follows:
Government Institutions/Agencies:
■ Local, provincial, regional, and national government units and community leaders
■ Biodiversity Management Bureau (DENR-BMB)
■ Bureau of Fisheries and Aquatic Resources (BFAR)
■ Cebu Port Authority
■ Civil Aviation Authority of The Philippines (CAAP)
■ Department of Energy (DOE)
■ DENR, especially Environmental Management Bureau (EMB)
■ Department of Interior and Local Government through its Philippine National Police –
Maritime Group
■ Department of National Defense (DND) through the Philippine Navy
■ Department of Science and Technology through the Philippine Council for Aquatic and Marine
Research and Development (PCAMRD)
■ Department of Tourism (DOT)
■ Department of Transportation through its Philippine Ports Authority (PPA), Maritime Industry
Authority (MARINA), and the Philippine Coast Guard (PCG)
■ Fisheries and Aquatic Resources Council
14. Environmental and social considerations 133

■ National Economic and Development Authority (NEDA)
■ National Commission on Indigenous Peoples (NCIP)
■ National Grid Corporation of the Philippines (NGCP)
■ National Mapping and Resources Information Authority (NAMRIA) of the DENR.
NGOs/Academes/Private Entities:
■ Electric companies involved in OSW development
■ Businesses and project developers with relevance or potential interest to OSW
project in the Philippines
■ Nongovernmental organizations (NGOs) with relevance or interest to OSW project in the
Philippines, such as Biodiversity Conservation Society of the Philippines, Haribon Foundation,
Marine Conservation Philippines, WWF Philippines, and so on.
■ Philippines academic organizations with relevance or interest to OSW project in the Philippines
such as De La Salle University Br. Alfred Shields FSC Ocean Research (SHORE) Center, University
of Philippine Marine Mammal Research & Stranding Laboratory and University of Philippines
Marine Science Institute (MSI).
■ Communities and fisherfolk that may be affected.
See Section 22 for more details. For MSP activities we suggest that the majority of organizations listed
would be ‘Key consultees’. NAMRIA could be a ‘Supporting agency’ and the DENR could be the ‘Lead
coordinating agency’.
Consideration has also been given to the World Bank Environmental and Social Framework (ESF).32 It
consists of 10 core environmental and social standards (ESS) listed below. These core standards have
been used to evaluate the environment and social risks posed by OSW development in the Philippines
setting to refine the project outcome.
■ ESS1: Assessment and Management of Environmental and Social Risks and Impacts
■ ESS2: Labor and Working Conditions
■ ESS3: Resource Efficiency and Pollution Prevention and Management
■ ESS4: Community Health and Safety
■ ESS5: Land Acquisition, Restrictions on Land Use, and Involuntary Resettlement
■ ESS6: Biodiversity Conservation and Sustainable Management of Living Natural Resources
■ ESS7: Indigenous Peoples/Traditional Local Communities
■ ESS8: Cultural Heritage
■ ESS9: Financial Intermediaries
■ ESS10: Stakeholder Engagement and Information Disclosure.

14.3 RESULTS
The key environmental and social considerations are outlined in Table 14.2, then discussed below.
Spatial data layers used in the analysis are listed in Table 9.1.
TABLE 14.2 SUMMARY OF ENVIRONMENTAL, SOCIAL, AND TECHNICAL CONSIDERATIONS
Consideration Category Rating Definition and potential OSW impact

Environmentally designated sites of regional, national, and
international significance such as mangrove reserves, marine
parks, and sanctuaries which are considered as high-risk areas.
A. Protected
This includes identified freshwater and/or marine KBAs.
Areas and Key
Environmental R OSW development during pre-construction and construction
Biodiversity
stages can cause displacement and habitat changes and pose
Areas (KBAs)
a threat to marine species and surrounding biodiversity due
to noise and vibration levels, and reduced water quality during
construction.
Coastal habitats such as coral reefs, seagrass beds, and
mangrove forests.
Construction in coastal areas and marine ecosystems can lead to
biodiversity disturbance and possibility of local increased erosion
B. Natural caused by scour around new structures and water pollution during
Environmental R
Habitats construction. Wastes anticipated for the project include domestic
wastewater, solid wastes (hazardous and non-hazardous), oil
and lubricants during construction. Indirect effects include
interruption or changes to natural coastal processes such as tidal
flows and sediment movement.
Includes dolphins, dugongs, sharks, rays, turtles, and other
marine species sensitive to survey, construction, and operational
activities. Includes various endangered species.
Noise, acoustic vibration, and light produced during OSW
construction can impact sensitive marine species causing
C. Sensitive
Environmental R changes in feeding and breeding patterns through habitat
marine species
disruption. Increased sediment loading during construction and
operation could cause smothering of habitats and species.
Operational noise sources include mechanical (acoustic emission)
and aerodynamic (noise created by the wind turbine blades
interacting with the wind).
Habitats for resident and migratory bird species, particularly
intertidal feeding grounds and high-tide roost sites which support
D. Bats and populations of threatened species.
Environmental R
birds OSW poses risk of injury or death from turbine collision, habitat
displacement, disruption of feeding grounds, and changes in
breeding patterns.
Comprises commercial fishing areas, and small-scale fisheries for
E. Artisanal
individual households or communities.
and
In many countries, larger fishing vessels are not permitted to
commercial Social R
enter OSW farms, driving changes to fishing areas and practices,
fishing
though changes in risk perceptions are in some cases softening
grounds
such restrictions.

Consideration Category Rating Definition and potential OSW impact
Areas for coastal aquaculture and mariculture of fish, shellfish,
and seaweed in the country.
OSW construction such as piling may cause noise/vibration
F. Aquaculture Social A
impacts to the marine environment. Civil works increase the
potential for water pollution that could result in potential
economic displacement through reduced yields.
Any significant viewpoints (landscape, seascape, or visually
significant landforms/structures) that will be affected by the
G. Landscape visual impact of wind turbines and associated facilities, such as
Social A
and seascape transmission lines and substations.
Impacts can relate to the presence of infrastructure but also
flicker or shadow effects changing as turbine rotors rotate.
Shipwrecks and heritage sites that have significance to local
H. Historical culture or local setting.
and cultural Social R OSW construction can pose risks to potential offshore artifacts,
areas that may have cultural or tourist value. Visual considerations are
also relevant.
Tourism areas consist of beaches, hotels, natural areas, cultural/
heritage buildings, and locations for water activities such as
diving, surfing, recreational fishing, boating, sailing, and cruise
I. Tourism
Social A ships.
areas
Construction activities can cause disruption. Visual
considerations are also relevant. Early OSW projects can create
new local tourism opportunities.
Ports and shipping routes for a range of vessel sizes.
Construction activities can cause temporary disruption, and
J. Ports and larger vessels are not permitted to enter OSW farms, potentially
shipping Technical R driving changes to navigation routes. The presence of structures
routes* at sea are a collision risk.
Road traffic due to associated onshore works (grid connection
and transmission and port upgrades) can impact locally.
This comprises military bases, firing ranges, exclusion zones
(including due to radar), and military no-fly zones.
K. Military
Technical G Potential impacts are as directly above, plus OSW projects can
exercise areas*
affect radar and defense systems due to the presence of large,
moving structures at sea (as rotors turn).
This comprises local and international airports, flight paths, and
related radar systems.
L. Aviation* Technical A
Potential impacts are risk of collision plus OSW projects can
affect radar, as above.
Note: *Are technical considerations and are not defined as social issues by WBG E&S standards.

A. Protected Areas and Key Biodiversity Areas
Protected Areas
Protected areas include both local and national protected areas in different state jurisdictions
including strict nature reserves, natural parks and monuments, wildlife sanctuaries, protected
landscapes and seascapes, and natural biotic areas. These areas, shown in Figure 14.1, are included
in the NIPAS Act of 1992 and the Expanded National Integrated Protected Area System (ENIPAS)
Act of 2018.33,34 NIPAS and ENIPAS are both complemented by Wildlife Resources Conservation and
Protection No. 9147,35 which further identified critical habitats, being areas with endangered species
that fall outside of the protected areas under NIPAS/ENIPAS.
FIGURE 14.1 PROTECTED AREAS IN THE PHILIPPINES

Coastal and Marine Protected Areas
Marine protected areas (MPAs) under NIPAS/ENIPAS include marine sanctuaries, marine reserves,
marine parks, and protected landscapes and seascapes where protection might include marine
resources. MPAs are established legally to protect marine habitats. Currently, ENIPAS covers 244
protected areas, 72 of which are classified as MPAs covering around 1.40 percent of the total sea area
of the country. MPAs host globally threatened and restricted range species such as mollusks, sharks,
rays, reef fishes, and marine turtles. Further, the Philippines covers more than 1,600 LMPAs under
the Fisheries Code (Republic Act No. 8550)36 and Local Government Code (Republic Act No. 7160).37
LMPAs include all waters within a municipality not covered under the NIPAS Act. Figure 14.2 shows the
locations of MPAs in the country.
MPAs are considered as exclusions while LMPAs are considered as restrictions due to insufficient
spatial information on the biodiversity values distribution. Developing an OSW project in or near
an MPA will require significant environmental and biodiversity consideration and implications on
permitting and clearance requirements.
FIGURE 14.2 MARINE PROTECTED AREAS

Critical Habitats
Critical habitats in the Philippines, as specified in DENR Administrative Order 2007-02, consist of five
coastal and marine areas as shown in Figure 14.3 and listed below. These locations are considered as
exclusions and must be avoided for the development of OSW:
■ Cabusao Wetland Critical Habitat in Camarines Sur

■ Carmen Critical Habitat in Agusan del Norte
■ Adams Wildlife Critical Habitat in Ilocos Norte
■ Magsaysay Critical Habitat for Hawksbill Turtles in Misamis Oriental
■ Dumaran Critical Habitat in Dumaran, Palawan.
On inspection, it is found that only the Adams Wildlife Critical Habitat is located near one of the
potential OSW development zones. This habitat represents the last frontier of the dipterocarp forest
in the Ilocos Region. While it may be argued that this habitat would not be affected directly by an
OSW development, consideration would need to be given to associated onshore infrastructure such as
substations and transmission cables.
FIGURE 14.3 CRITICAL HABITATS

Note: Geographic positions are approximate

Key Biodiversity Areas
KBAs contribute to long-term survival of species and their habitats. Areas or sites are considered
as KBAs if they meet one or more of the eleven criteria grouped into five major categories presented
Table 14.3.
TABLE 14.3 CATEGORIES FOR KEY BIODIVERSITY AREAS
Categories Description
Threatened Flora or fauna species in danger of extinction or perceived to becoming rare in the future
biodiversity if current numerical decline or habitat degradation trends continue.
Geographically
The area is a habitat for flora or fauna species found in only few places or sometimes
restricted
nowhere else in the world.
biodiversity
The area that can maintain and support a community of organisms with species
Ecological integrity composition, diversity, and functional organization compared to other natural habitats
within a region.
The area provides a platform for vital organism processes to live and shape its capacities
Biological processes
for community and environment interaction.
Irreplaceability
of the ecological
The area is measured for its irreplaceability with regard to its environment and ecological
system / fauna /
processes as nesting ground for a specific fauna and flora species
flora within the
area
KBAs in the Philippines have been categorized in two phases: 128 terrestrial and freshwater KBAs were
designated in 2006, while a further 123 marine KBAs were designated in 2009. Most of these KBAs
are recognized based on the 117 Important Bird Areas (IBAs) identified by BirdLife International and
the Haribon Foundation, as well as 206 conservation priority areas (CPAs) defined in the Philippine
Biodiversity Conservation Priority-Setting program. All Philippines KBAs with coastal and marine
components specified in the World Database of KBAs are considered as exclusions.
Marine and terrestrial KBAs are shown in Figure 14.4, along with potential OSW development areas.
Figure 14.4 shows that the five proposed development zones are near some of the marine and
terrestrial KBAs. OSW development in KBAs in OSW development zones should not proceed. Also, for
OSW development zones near KBAs, it is important to consider further evaluation and to determine
appropriate mitigating measures.

FIGURE 14.4 KEY BIODIVERSITY AREAS IN THE PHILIPPINES
Other categories of KBAs that need to be considered for the development of OSW area are described in
the subsections below.

Alliance for Zero Extinction sites
Alliance for Zero Extinction (AZE) sites, as one of the KBAs, are known for conservation of the most
significant areas for global biodiversity. A total of 835 globally identified AZE sites hold the remaining
population of one or more critically endangered species.38 There are twelve AZE locations in the
country, as shown in Figure 14.5. Three of these have coastal and marine components:
■ Culion Island
■ South and North Gigantes Island
■ Tawi-Tawi Island.
AZE locations are considered as exclusions.
FIGURE 14.5 AZE SITES IN THE PHILIPPINES

Ramsar Sites
Ramsar sites, as shown in Figure 14.6, are wetlands of international significance identified under
the Ramsar Convention for containing representative, rare wetland types or for their importance in
conserving biological diversity. Listed below are five Philippine Ramsar Sites with coastal and marine
components:39
■ Las Piñas-Parañaque Critical Habitat and Ecotourism Area

■ Negros Occidental Wetlands Conservation Area
■ Olango Island Wildlife Sanctuary
■ Sasmuan Pampanga Coastal Wetlands
■ Tubbataha Reefs Natural Park.
Some of these Ramsar sites are also identified as critical habitats and MPAs under NIPAS and the
Wildlife Conservation Act, and overlap with UNESCO Natural World Heritage Sites, UNESCO-MAB
Reserves, IBAs, and KBAs. All Ramsar sites are considered as exclusions.
FIGURE 14.6 RAMSAR SITES IN THE PHILIPPINES

Ecologically or Biologically Significant Areas
Ecologically or Biologically Significant Areas (EBSAs) are discrete areas supporting the healthy
functioning of oceans and the services that they provide. They include marine and terrestrial protected
areas under Environmentally Critical Areas (ECAs), areas that are environmentally sensitive and listed
under Presidential Proclamation No. 2146, series of 1981,40 and areas considered as environmentally
critical under Section 4 of PD 1586.41 An examples of an EBSA in the Philippines is the Sulu-Sulawesi
Marine Ecoregion (SSME) located at the apex of Coral Triangle Region and includes several marine
areas. SSME is home to coral reefs, seagrass meadows, mangrove forests, fish, marine turtles,
dolphins, whales, sharks, ray species, and marine flora and fauna. Seagrass beds in SSME provide vital
feeding grounds for marine turtles and dugongs. The large coverage of EBSAs requires detailed spatial
information and survey data to thoroughly evaluate the effects of OSW development near EBSAs, so
they have not been treated as Restrictions or Exclusions at this stage. They are shown in Figure 14.7.
FIGURE 14.7 EBSAS IN THE PHILIPPINES

UNESCO World Heritage Natural Sites
UNESCO Heritage Natural Sites, as shown in Figure 14.8, are places of outstanding universal value
to humanity. The Philippines has three natural heritage sites, two of which have marine and coastal
aspects—the Puerto Princesa Subterranean River Natural Park and Tubbataha Reefs Natural Park.
The Puerto Princesa Subterranean River Natural Park in Palawan is home to tropical forests,
mangroves, and a variety of endemic species. Meanwhile, the Tubbataha Reefs Natural Park in Sulu
is a marine habitat for a range of whales, dolphins, sharks, marine turtles, and over 600 fish species
including humphead wrasse. IFC Guidance Note 6 prohibits development in UNESCO World Heritage
Sites. Thus, these areas are included as exclusions.
FIGURE 14.8 UNESCO WORLD HERITAGE SITES IN THE PHILIPPINES

UNESCO Man and the Biosphere Reserves
UNESCO MAB Reserves, as shown in Figure 14.9, are terrestrial, marine, and coastal ecosystems
designated as learning areas for sustainable development. The Philippines has two biosphere reserves
with coastal and marine features—Puerto Galera and Palawan.
The Puerto Galera Biosphere Reserve in Mindoro includes savanna and grassland, dipterocarp and mossy
forests, coral reefs, and coastal ecosystems. The Palawan Biosphere Reserve covers the entire Palawan
archipelago and has the largest mangrove cover in the country. The Palawan Biosphere Reserve is home
to 105 threatened species in the Philippines, 379 corals, 13 seagrass, and 31 mangrove species. The two
biosphere reserves are considered as exclusions.
FIGURE 14.9 UNESCO-MAB RESERVES IN THE PHILIPPINES

B. Natural Habitats
Natural habitats refer to several coastal and marine ecosystems that are both ecologically and
economically important. Potential threatened natural habitats in the Philippines are coral reefs,
seagrass beds, and mangrove forests.
Coral reefs
The Philippines is ranked third for the largest coral reef area in the world after Indonesia and Australia.
The Philippines has 200 threatened and 12 endemic scleractinian (stony) corals. More than 40 million
ha of coral reefs are estimated to be included within the KBAs, with 60 percent located in the West
Philippines Sea around Kalayaan Group of Islands.42 Coral reefs are not only habitat to five threatened
marine turtle species and over 1,700 reef fish species, but also provide income to many Filipinos.43 Coral
reefs are shown in Figure 14.10. With this, coral reef natural habitats are considered as exclusions.
FIGURE 14.10 CORAL REEFS IN THE PHILIPPINES

Seagrass beds
Seagrass beds provide important ecological and biological functions. They act as shoreline protection,
support adjacent coral reefs and mangroves, and provide food and shelter to fish, invertebrates,
marine turtles, and dugong. The Philippines has the highest seagrass diversity in Southeast Asia with
18 species found throughout the country, mainly in Bolinao Bay, Palawan, Cebu-Bohol-Siquijor area,
Zamboanga, and Davao. Seagrass beds are considered as exclusions.
FIGURE 14.11 SEAGRASS AREAS IN THE PHILIPPINES

Mangrove forests
Mangrove forests, shown in Figure 14.12, are a significant part of the ecosystem in protecting
shorelines, reducing the amount of carbon dioxide in the atmosphere and providing feeding areas
for threatened marine species, dugong, turtles, cartilaginous fish, and cetaceans. Palawan province
has the largest extent of mangroves in the country. Other provinces with major mangrove areas are
Sulu, Quezon, Zamboanga Sibugay, Surigao del Norte, Tawi-Tawi, Samar, Zamboanga del Sur, Bohol,
and Basilan provinces. Mangrove forests are considered as exclusions due to their significance to
environment and marine conservation.
FIGURE 14.12 MANGROVE AREAS IN THE PHILIPPINES

C. Sensitive Marine Species
Marine species are sensitive to survey, construction, and operational activities which may result in
habitat disruption and displacement, pollution, vibration, exposure to electromagnetic fields, and
underwater noise.
Cartilaginous Fish
The Philippines has more than 150 species of sharks, rays, and chimaeras, some of which have been
identified as new and potentially endemic in the country.44 Most sharks and ray species were recorded
in Western Visayas, Central Visayas, and Ilocos regions. These areas are considered as restrictions
requiring careful environmental impact assessment and MSP for OSW site selection to prevent habitat
disturbance of cartilaginous fish.
FIGURE 14.13 CARTILAGINOUS FISH AREAS IN THE PHILIPPINES

Marine Turtles
The Philippines has five of the seven marine turtle species in the world, all of which are considered
threatened. These are the green turtle, the hawksbill turtle, the Olive Ridley turtle, the leatherback
turtle, and the loggerhead turtle. The majority of the nesting places of these marine turtles are
designated as Legally Protected Areas (LPAs). Turtle Island Wildlife Sanctuary and Tubbataha Reef
National Marine Park are two of the most important LPAs for marine turtles. LPAs and Ramsar sites
identified for foraging and nesting grounds of marine turtles are considered as exclusions.
FIGURE 14.14 MARINE TURTLE AREAS IN THE PHILIPPINES

Marine Mammals
The Philippines has 29 marine mammal species composed of 1 sirenian species (dugong) and 28
cetaceans, 5 of which are threatened species. Marine mammal species are recorded in all the main
regions of the country. Sperm whales are found in all key seas of the Philippines. The Irrawaddy dolphin
population is in Malampaya, Palawan while dugongs are mostly situated in the southern and western
Mindanao coast, Guimaras Strait and Antique, Aurora, Quezon province, Tawi-Tawi and Sulu Archipelago.
Also, there have been numerous sightings of blue whales in the Bohol Sea from 2010 to 201945.
IMMAs are distinct and important habitats for marine mammal species that have potential for
conservation purposes. IMMAs are designated using the criteria below:
■ Criterion A - Vulnerable species. These are areas important for survival of endangered species
■ Criterion B - Distribution and Abundance including small and resident populations, and
aggregations
■ Criterion C - Key Life Cycle Activities which includes reproduction, feeding, and migration
■ Criterion D - Special Attributes including diversity and distinctiveness.
Listed below and shown in Figure 14.15 are the five IMMAs in the Philippines:
■ Babuyan Marine Corridor

■ Bohol Sea
■ Iloilo and Guimaras Straits
■ Malampaya Sound
■ Tañon Strait.
Some of the IMMAs overlap with protected areas and KBAs. IMMAs are in general considered as
exclusions, but the overlap of the Northwest Luzon potential OSW development zone, suitable only for
floating OSW, with an IMMA is considered as a restriction. Floating OSW avoids seabed piling activities
and is therefore likely to have a lower negative impact on marine mammals during construction, in
comparison to piled, fixed foundation OSW. The deployment of floating OSW in this area may therefore
be possible, but it is important to recognize that any development in this area would require careful
assessment of the impact on whale activity in the area, following the precautionary principle, as part
of ESIA. It would be prudent to start assessment of the potential interaction with whales in this area
at an early stage, including commencing strategic, baseline surveys to better understand the marine
mammal distribution and characteristics.
Likewise, dugongs are an important consideration in the Guimaras Strait. The IMMA in the Guimaras
Strait has already been treated as an exclusion, limiting the potential OSW development zone. A
marine mammal site is indicated in the strait. The size of any exclusion around this site has not been
considered at this stage.

FIGURE 14.15 IMMAS IN THE PHILIPPINES

D. Bats and birds
Most of the bat species in the Philippines are found in caves, forests, and mountains, a considerable
distance from offshore areas. Important bat species are however found in protected areas such as
Sagay Marine Reserve, Negros Occidental which is home to giant fruit bats.46
While wind farms are known to affect bats, this is more commonly associated with onshore
facilities and the impact from OSW is not expected to be significant. Despite this, during baseline
studies, ecological surveys for bats should be carried out to ensure that bats that are known to
frequent protected seascapes, such as those in Sagay, are properly considered and any impacts
mitigated, if necessary.
The Philippines has several bird and biodiversity areas for seabird breeding and seasonal migration.
A range of coastal areas host important populations of threatened birds. Coastal wetlands of the
Philippines are part of the East Asian-Australasian Flyway (EAAF) monitored by the Asian Waterbird
Census (AWC) at AWC sites in the country. The EAAF partnership identifies important sites within the
flyway for long-term survival of migratory waterbirds. Philippines has three EAAF sites with coastal
and marine components—Olango Island Wildlife Sanctuary, Tubbataha Reefs Natural Park, and
Negros Occidental Coastal Wetlands Conservation Area.
The development of OSW projects can pose a significant risk to migratory birds through the risks
of turbine collision, wind farm barrier effects, disturbance, habitat displacement, and disruption to
feeding grounds. There are environmental laws which protect migratory birds and bats. These include
the Wildlife Resources Conservation and Protection Act (Republic Act 9147).47
There are 117 Important Bird Areas in the country, covering a total area of approximately 2.7 million ha.
The most relevant bird areas are those with marine components. Marine IBAs in the Philippines are Apo
Reef Natural Park and Tubbataha Reef National Marine Park, both of which are designated KBAs. Apo
Reef Natural Park has several habitats including small patches of mangroves, reefs, bird sanctuaries,
and hawksbill and green turtle nesting grounds. Meanwhile Tubbataha Reef National Marine IBA in
Central Sulu Sea serves as nesting grounds for seabirds and green turtle and hawksbill Turtle. This
marine IBA supports a few of the remaining colonies of breeding seabirds in the region and is home to
Oceanica White-tip Shark and threatened fish species like humphead wrasse and giant grouper.
BirdLife identified EBAs as locations with overlapping breeding ranges of restricted-range species. The
Philippines has 10 endemic bird areas which are recognized as Wetlands of International Importance
specified below:
■ Batanes and Babuyan Islands

■ Cebu
■ Luzon
■ Mindanao and Eastern Visayas
■ Mindoro
■ Negros, and Panay
■ Palawan

■ Siquijor
■ Sulu archipelago
■ Tablas, Romblon, and Sibuyan.
Most EBAs cover large areas to be protected and have not been considered as either Exclusions or
Restrictions in their own rights. Figure 14.16 shows the location of the EBAs. It is recommended that
OSW development should be avoided in these areas to prevent significant mitigation measures and
permitting delays. In cases that OSW development is not prevented in these locations, When OSW is not
prevented in these locations, a critical habitat assessment is recommended to be prepared with detailed
cumulative effects assessment focused on these impacts. Each season needs to be evaluated as the area
may also be traversed by migratory birds. Assessment should identify possible turbine collisions, bird
flight movements, and climatic factors to prevent potential hazards to bird species. Also, the assessment
should identify species categorized by the International Union for Conservation of Nature (IUCN) Red
List as Endangered (EN), Near Threatened (NT), and Least Concern (LC). No analysis of bird migration
routes has been carried out at this stage as no existing spatial data was available, however this should be
considered in future MSP activities.
FIGURE 14.16 ENDEMIC BIRD AREAS IN THE PHILIPPINES

E. Artisanal and commercial fishing grounds
Fishing in the Philippines is an important source of food, economic activity, and livelihoods. Artisanal
fishing uses low capital, conventional or low-technology fishing methods, and relatively small fishing
boats for individual or local consumption. The latest Philippines Fisheries Code, Republic Act No. 1065a,
states that artisanal fisherfolk are allowed to access fishery resources inside the country’s municipal
waters or 15 kilometers from the coastline to protect the spawning areas of marine organisms.
Commercial fishing consists of medium- to large-scale fishing activities for commercial profit. All types
of artisanal and commercial fishing practices from traditional techniques, pole and line fishing, gillnets,
trawling, to purse seine fishing are likely to be constrained by the presence of OSW infrastructure sites.
Changes to fishing practices, stocks, and the physical environment (including climate change) can lead
to the location of important fishing grounds over time. The installation of foundations and cables can
also temporarily increase suspended sediments in the water with negative impacts to both artisanal
and commercial fisheries.
Options, beyond consultation with the fishing community, include:
■ Site selection to avoid interference with the most important commercial fishing grounds and their
biologically linked habitats, such as spawning or nursery areas;
■ Use of compensation schemes, including retraining, community investment, or disruption
payments; and
■ Agreements on multiuse areas.49
Figure 14.17 shows the location of municipal and regional fishing ports in the Philippines. Municipal
ports are under the jurisdiction of local harbor authorities to ensure management of local government
statutory requirements. Regional ports follow the existing regulations established within different
port districts through the country as per the Philippine Ports Authority guidelines, except for those in
Cebu City which follow the Cebu Port Authority. Based on Figure 14.17, the majority of the potential
OSW development zones are not expected to have any effect to commercial fishing grounds. Artisanal
fishing grounds throughout the country should be assessed in due course and considered when
locating OSW infrastructure. Due to the lack of spatial data at this stage, fishing areas have not been
included as restrictions or exclusions.

FIGURE 14.17 COMMERCIAL FISHING PORTS

F. Aquaculture
Aquaculture is the cultivation of aquatic organisms such as fish, crustaceans, mollusks, and aquatic
plants in a controlled environment for commercial and public purposes. Aquaculture is not only
beneficial for food production, but also for protecting and improving stocks of endangered species.
Marine aquaculture areas cover sea-based or lake-based cages, brackish water ponds, freshwater
lakes and shallow bays fish pens, or suspended water columns.
Aquaculture contributes significantly to the country’s food security, employment, and earnings.
Development of an OSW project near aquaculture areas can disturb marine species, leading to
displacement or reduction in fish (tilapia or milkfish), shrimp, shellfish, and other resources. Further,
this will affect the aquaculture businesses, and those working in this industry.
Established aquaculture sites should be avoided by developers to mitigate disturbance of spawning

areas and the habitat of marine species. Other options include marine spatial planning for
identification and establishment of aquaculture management areas (clusters), and multiuse areas as
well as assessing potential for coexistence of aquaculture activities with OSW.
Biological and technical studies have demonstrated the general feasibility of co-location between
marine aquaculture and OSW projects, but socioeconomic and technical challenges would still need to
be addressed.51 An example of OSW coexisting with aquaculture is the demonstration project in Buan,
South Jeolla Province in the Republic Korea where a wind turbine foundation incorporates artificial
reefs and an aquaculture system. As OSW generally are further from the shore than aquaculture areas
and due to the lack of spatial data at this stage, aquaculture areas have not been included as
restrictions or exclusions.
G. Landscape and seascape

Protected landscape and seascape in the country that are close to the potential OSW development
zones are Roosevelt Protected Landscape, and Taal Volcano nearby the Manila OSW development
zone. OSW project development may affect the aesthetic value of landscapes and seascapes,
especially those near heritage and cultural sites, tourism locations, and forest areas that are protected
under the local and national legislations.
OSW development is prohibited within or near landscape or seascape under ENIPAS Act of 2018 since
these areas are considered as exclusions. Landscapes and seascapes in the ENIPAS Act are considered
restrictions. Buffer zones to OSW projects will depend on local government unit (LGU) existing
ordinances/laws (if any) and/or project impact such as shadow flicker, noise, and vibration effects, to
be derived through modelling.
Stakeholder engagement and avoiding protected landscapes and seascapes through marine spatial
planning is key to addressing this consideration. Protected landscape and seascape areas are shown in
Figure 14.18. At this preliminary stage, landscape and seascape considerations have not been included
as restrictions or exclusions.

FIGURE 14.18 PROTECTED LANDSCAPE AND SEASCAPE AREAS IN THE PHILIPPINES
H. Historical and cultural areas

This includes shipwrecks, sunken aircraft, war graves, coastal historical and heritage sites, and
religious and ceremonial areas. Examples of historical and cultural sites in the country are
■ Apo Reef, 80 kilometers from the northern Mindoro potential OSW development zone;
■ Calapan Church, 30 kilometers from northern Mindoro potential OSW development zone;
■ Corregidor Island, within the Manila potential OSW development zone;

■ Silay City historical landmark, less than 10 kilometers from the Guimaras Strait potential OSW
development zone; and
■ Miagao Church beside Negros/Panay West potential OSW development zone.
Buffer zones between OSW and historical/cultural areas will depend on existing LGU ordinances/laws
(if any) and/or project impacts that are usually based on shadow flicker, noise, and vibration effect.
Buffer zones based on project impacts will be determined through modelling.
Early identification of important heritage sites through marine spatial planning is recommended
to minimize harm and local conflict. It is possible, however, that important sites and finds may
arise during the ESIA process and from stakeholder engagement. Protection of underwater
archaeology and historical settings may need to be secured through the permitting process. OSW
development potentially affecting these areas should be verified with NCIP through a clearance
application in compliance with the international standards and Philippine Republic Act No. 8371 or
the Indigenous Peoples Act of 199752 for protection of the rights of Indigenous and Cultural
Communities in these areas.
Protection of underwater archaeology and historical settings may need to be secured through
the permitting process. It is required to secure a Certificate of Precondition, if found within a known
ancestral domain, or a Certificate of Non-Overlap if the area does not overlap any ancestral domain.
At this preliminary stage, known historical and cultural areas have been considered, but not modelled
as restrictions or exclusions.
I. Tourism areas
The Philippines is well known for its tourist destinations which are mostly situated on the coast,
providing access to the marine environment. As an example, Bangui-Pagudpod Beach and Paoay Lake
National Park are located near the Northwest Luzon OSW, and Corregidor Island is within the Manila
OSW. Tourism is an important source of economic activity, and livelihoods, as well as supporting
balance of trade.
Buffer zones between OSW and tourist areas will depend on existing LGU ordinances/laws (if any) and/
or project impacts determined through modelling.
International experience suggests that OSW developers avoid areas with important tourism
activities, but it is relevant to note that early OSW projects create local tourism opportunities. Public
consultation is key to managing this consideration. At this preliminary stage, known tourism areas
have been considered, but not modelled as restrictions or exclusions. Future potential tourism ports are
shown in Figure 9.6.

J. Ports and shipping routes
OSW development near ports and shipping routes creates risk of collision. Exclusion zones and
minimum safety zones are required during construction and operational stages.
Figure 14.19 illustrates the location sites of shipping ports in the Philippines which need to be
considered when developing OSW projects. Figure 14.19 shows ports as classified by the World Port
Index (using the ‘Harbor Size’ attribute), and areas of high shipping density.xxi At this preliminary stage,
ports and shipping routes have been considered, but not modelled as restrictions or exclusions. See
Section 9.3.
FIGURE 14.19 PORTS AND SHIPPING ROUTES
xxi The classification of harbor size is based on several applicable factors, including area, facilities, and wharf space. It is not based on area alone or on any other single factor.

K. Military exercise areas
Military activities, such as vessel maneuvering exercises, firing practice, low-fly training, and testing of
ammunition and other technologies are in most cases not compatible with OSW projects and pose a
hard constraint.
Although, no known military areas are located within the OSW development zones, naval and air bases
near the potential OSW development zones should be assessed. Samples of military bases within
proximity of OSW development zones are Basilio Fernando Air Base which is approximately 27 kilometers
to Manila OSW and the Naval Station in Alfonso Palencia which is less than 12 kilometers to Negros/
Panay OSW and is 15 kilometers away from Guimaras OSW. Military bases are shown in Figure 14.20.
The buffer zone between military bases and OSW sites will depend on the prevailing LGU ordinances/
laws (if any) and/or project impacts such as flicker, noise, radar impact, shadow, and vibration effects.
These need to be assessed through modelling.
Early consultation with the DND, coordination with coast guard, and clearance application for OSW
development are keys to managing this consideration. It is likely to lead to exclusion zones, and site-
specific restrictions. With this, military areas are considered as restrictions.
FIGURE 14.20 MILITARY BASES IN THE PHILIPPINES

L. Aviation
OSW turbines pose a risk to the aviation sector in terms of physical obstruction, air defense and civil
aviation radar interference and potential negative effects on the performance of communication and
navigation systems.53 Air traffic control centers, airports, and air traffic zones can pose constraints on
constructing OSW.
Consultation with CAAP is key to managing this consideration. It is likely to lead to exclusion zones,
and site-specific restrictions, for example on wind turbine tip height restrictions. Airports are shown in
Figure 9.6.
At this preliminary stage, aviation considerations have been considered, but not modelled as
restrictions or exclusions.
14.4 REGULATORY FRAMEWORK REVIEW

This section discusses Philippine national laws and policies associated with environmental and social
aspects of the development of OSW projects.
The Philippine Environmental Impact Statement System

The Philippine Environmental Impact Statement System (PEISS) was introduced in 1977 with the
issuance of the Philippine Environmental Policy Law through Presidential Decree 1151. It was established
by virtue of Presidential Decree 1586 in 1978 as Establishing an Environmental Impact Statement System,
Including Other Environmental Management Related Measures and For Other Purposes.54
Presidential Decree 1586 requires projects that are classified as environmentally critical or operating
in an ECA to secure an Environmental Compliance Certificate (ECC) prior to commencement of
construction.55
Environmentally Critical Areas

Areas that are environmentally sensitive and listed under Presidential Proclamation No. 2146,
series of 1981 as well as other areas which the President may proclaim as environmentally critical in
accordance with Section 4 of PD 1586.56 With this, OSW development should be avoided near these
environmentally sensitive areas to prevent substantial mitigating measures, extensive stakeholder
engagement, and longer ESIA. A map of ECAs in the country is shown in Figure 14.21.
According to Proclamation No. 2146, an area is considered to be environmentally critical if it exhibits

any of the characteristics described below.
■ All areas declared by law as national parks, watershed reserves, wildlife preserves, and sanctuaries
■ Areas set aside as aesthetic potential tourist spots
■ Areas which constitute the habitat for any endangered or threatened species of indigenous
Philippine Wildlife (flora and fauna)
■ Areas of unique historic, archaeological, or scientific interests
■ Areas which are traditionally occupied by cultural communities or tribes

■ Areas frequently visited or hard-hit by natural calamities
■ Areas with critical slopes
■ Areas classified as prime agricultural lands
■ Recharged areas of aquifers
■ Water bodies characterized by one or any combination of the following conditions:
• Tapped for domestic purposes
• Within the controlled and/or protected areas declared by appropriate authorities
• Support wildlife and fishery activities.
■ Mangrove areas characterized by one or any combination of the following conditions:
• With primary pristine and dense young growth
• Adjoining mouth of major river systems
• Near or adjacent to traditional productive fry or fishing grounds
• Act as natural buffers against shore erosion, strong winds and storm floods
• On which people are dependent for their livelihood.
■ Coral reefs characterized by one or any combinations of the following conditions:
• With 50 percent and above live coralline cover
• Spawning and nursery grounds for fish
• Act as natural breakwater of coastlines.
FIGURE 14.21 MAP OF ECAS

Environmental Compliance Certificate
ECC is issued by the DENR-EMB certifying that the applicant has complied with all the requirements
of the PEISS and has committed to implement its approved Environmental Management Plan (EMP).
The ECC also provides guidance to other agencies and to LGUs on environmental impact assessment
(EIA) findings and recommendations, which they need to consider in their respective decision-making
process.
The level of documentation required to secure an ECC depends on the categorization of the project.
Current project screening and categorization guidelines by the DENR-EMB are presented in Table 14.4.57
Practically, this means that all OSW projects rated over 100 MW are classified under Category B and
an EIA report (rather than a less onerous Initial Environmental Examination Report) will be required to be
submitted to the DENR-EMB, even if the project site traversed or will be located near an ECA.
TABLE 14.4 DENR-EMB CATEGORIZATION FOR WIND ENERGY PROJECTS
Category Description
Projects or undertakings which are classified as Environmentally Critical
A Projects (ECPs). Proponents of these projects implemented from 1982 onward
are required to secure an ECC.
Projects or undertakings which are not classified as ECPs under Category A, but
which are likewise deemed to significantly affect the quality of the environment
B
or located in an ECA. Proponents of these projects implemented from 1982
onward are required to secure an ECC.
Projects or undertakings not falling in Categories A or B, which are intended
C to directly enhance the quality of the environment or directly address existing
environmental problems.
Projects or undertakings that are deemed unlikely to cause significant adverse
impact on the quality of the environment according to the parameters set
forth in the Screening Guidelines. These projects are not covered in the PEISS
D and are not required to secure an ECC. However, such non-coverage shall not
be construed as an exemption from the compliance with other environmental
laws and government permitting requirements such as submission of Project
Description Report for Certificate of Non-Coverage approval.
Energy Virtual One-Stop Shop Act (EVOSS)

Republic Act No. 11234 of the Energy Virtual One-Stop Shop Act (EVOSS) established set of rules and
regulations to streamline online application process of permits and certifications for power generation,
transmission, or distribution projects. This online system allows coordination and simultaneous
submission and processing of all required data and information and provides a single decision-making
portal for actions on permit or certification applications necessary for or related to application of energy-
related project. The DENR, under EVOSS, requires the following items as part of the ESIA process:
1. LGU clearance, business permit, endorsements, or resolution for no objection on the project
2. Permits such as ECC, Foreshore Lease Agreement, and clearances from related government
agencies such as Bureau of Fishers and Aquatic Resources (BFAR), The Department of Tourism
(DOT), Philippine Coast Guard, The Department of Energy (DOE), and so on.

Comparison with WBG ESIA requirements
The World Bank Environmental and Social Framework and the IFC Sustainability Framework promote
sound environmental and social practices, transparency, and accountability. These frameworks define
client responsibilities for managing risks and ensure that offshore wind sector preparatory work is
aligned with good international industry practice (GIIP). Many international lenders also require that
projects receiving their investments meet GIIP and align with WBG’s E&S standards.
Aligning with GIIP standards allows developers to understand the most important issues to address in
ESIA and gives a useful early indication of the scale of mitigation requirements of a project. As well as
informing the scope of the ESIA, this information can also influence project feasibility decisions before
the permitting process is too far advanced. If national permitting requirements are not aligned with
international lender requirements, this can delay or even preclude permitted projects from proceeding.
There are some similarities between the requirements of PEISS and WBG’s E&S standards. These
include the identification of some of the key E&S components to be assessed as part of an ESIA such
as biodiversity, land use restrictions, noise, air, and water quality, and impacts on landscape/seascape.
PEISS only specifies general surveys and monitoring requirements, which are common to all project
types. While strong in terms of the need for baseline sampling (depending on the category of the
project and the requirements of the review committee), Philippines EIS does have significant gaps
when compared to international standards with respect to duration of sampling, extent of sampling
and analysis in terms of Critical Habitat Assessment. Variations in specific environmental monitoring
requirements and sampling periods are normally suggested during consultation with the DENR.
In terms of social aspects, there are significant differences between the two requirements. In
particular, WBG standards require consideration of economic development, poverty reduction,
gender inclusion, and vulnerable groups.
14.5 DISCUSSION
This section describes and rates relevant environmental and social considerations. Section 9 discusses
the impact of these on the location of OSW projects in the Philippines.
The preliminary comparison of local standards and practices shows shortfalls compared to WBG
requirements and GIIP. The absence of clear government guidance and standards for ESIA aligned with
GIIP and lender requirements risks leading to
■ Adverse environmental and social impacts;

■ Delays to financing projects; and
■ Damage to the reputation of the industry, slowing inward investment opportunities, and future
growth prospects.

Based on this analysis, it is recommended that:
■ The DENR addresses shortfalls in the Philippines ESIA requirements compared to those of the
International Finance Corporation (IFC), GIIP, and other lender standards.
■ The DOE continues further site screening and investigations on the potential OSW development
zones to determine possible environmental and socioeconomic constraints and hence level of
suitability for further development of OSW as part of a wider OSW marine spatial planning
activity, especially considering cumulative assessment. Stakeholder engagement is critical to
understand perceptions and concerns and explore mitigation measures.

15. HEALTH AND SAFETY
15.1 PURPOSE
The management and regulation of health and safety (H&S) is a vital aspect of developing a sustainable
and responsible OSW industry. The purpose of the work package is to undertake a high-level review of
applicable H&S guidance and law in the Philippines, to understand how this guidance and law aligns with
OSW requirements and to identify areas for improvement, where required.
15.2 METHOD
Our assessment has been based on our existing knowledge of OSW H&S issues, primary research in
relation to H&S frameworks in the Philippines, engagement with local partners with direct knowledge
of marine operations in the Philippines, and discussions with active project developers.
15.3 FEEDBACK FROM DEVELOPERS

The H&S practice the renewable energy industry is required to follow is the Department of Energy
(DOE) Circular No. DC 2012-11-0009, otherwise known as the Renewable Energy, Safety, Health and
Environment Rules and Regulations (RESHERR).58 This was created pursuant to Republic Act No. 9513
(the Renewable Energy Act of 2008) and Section 5 of Republic Act No. 7638 (the DOE Act of 1992).
Pursuant to Rule 2, Section 8 of the circular DC2012-11-0009, a further circular has been drafted,
the Safety, Health and Environment Code of Practice for Wind Energy Operations, to be adopted in the
Philippines.59 The code of practice as it stands is generally suitable for onshore works but does not
address many of the typical H&S issues relevant to the OSW industry. Therefore, the OSW industry
will need to generally follow the principles of regulations already in place for the offshore oil and
gas industry in the Philippines with the understanding that not everything will be covered by these
regulations and that a pragmatic approach will be required in the early years.
Developers expect to use design standards based on international good practice, with Philippine
standards followed when they exceed international standards, recognizing that local law prevails.
Developers expect to specify the various H&S standards that will be relevant during construction
and operation and ensure contractors have access to the necessary resources to be able to properly
implement these standards.
In addition to applying international standards, developers expect to use experienced personnel from
other regions for the training and development of operational personnel in the Philippines.

15.4 RESULTS
The OSW industry in the Philippines is in its infancy and no construction has yet been undertaken. This
section therefore first considers relevant existing regulations and standards and then discusses the
interim and future position for OSW.
Philippines law differentiates Occupational Safety and Health (OSH) Rules and Regulations that will
apply between maritime and non-maritime workers on offshore projects. Works on land fall under
the jurisdiction of the Department of Labor and Employment (DOLE) for which the Philippine OSH
standards apply.
Onshore activity: Occupational Safety and Health Standards

The legal provisions on OSH in the Philippines come from the Occupational Safety and Health Standards
(OSHS) which were formulated in 1978 under the tripartite agreement by the Bureau of Working
Conditions (BWC) of the DOLE, the International Labour Organization (ILO) Manila Office, and the
private sector in compliance with the constitutional mandate to safeguard workers’ social and economic
well-being as well as their physical safety and health. Department Order No. 13, also known as Guidelines
Governing Occupational Safety and Health in the Construction Industry, was created in 1998.
The DOLE has exclusive jurisdiction in the preparation of OSHS for the construction industry including
its enforcement, as provided for by law.
As embodied in Article 162, Chapter 2, Title I of Book Four of The Labor Code of the Philippines, “The
Secretary of Labor and Employment shall by appropriate orders set and enforce and health hazards in
all work-places and institute new and update existing programs to ensure safe and healthful working
conditions in all places of employment.”60
As embodied in Article 165, Chapter 2, Title I of Book Four of The Labor Code of the Philippines, “(a)
The Department of Labor and Employment shall be solely responsible for the administration and
enforcement of OSH laws, regulations and standards in all establishments and workplaces wherever
they may be located.”62
Onshore activity: Department of Energy renewable energy guidelines

Under Republic Act No. 9513, the DOE is mandated to supervise and control all plans, programs,
projects, and activities of the government related to energy exploration, development, utilization,
distribution, and conservation.
This was supplemented by RESHERR which details the H&S rules and regulations governing all
renewable energy-related projects. The contents are not specific to either onshore or OSW projects.
These rules will be further supplemented by the Code of Practice for Wind Energy Operations, which is
in draft form at the time of writing. The draft Code of Practice focuses on onshore wind activities and
could be extended to also cover offshore works.
15. Health and safety 169

Offshore activity: Maritime Industry Authority jurisdiction
While in theory the OSW activities are to be covered by RESHERR, there is not much mention of the
H&S risks associated with works undertaken offshore, and industry assumes that other existing,
relevant regulations would still apply. If it is by sea, jurisdiction falls under the Maritime Industry
Authority (MARINA), an attached agency of the Department of Transportation (DoTr). MARINA covers
regulations governing commercial, recreational, and technical maritime vessels within the Philippine
territorial waters.
By virtue of Republic Act No. 9295, MARINA assumed responsibilities in making sure that all marine
vessels within the territorial jurisdiction of Philippine waters are regulated to ensure H&S of all
passengers and crew. This gives MARINA rights to
■ Ensure all relevant vessels are registered;

■ Issue certificate of public convenience or any extensions or amendments thereto, authorizing the
operation of all kinds, classes, and types of vessels in domestic shipping;
■ Set safety standards for vessels in accordance with applicable conventions and regulations;
■ Require all domestic ship operators to comply with operational and safety standards for vessels
set by applicable conventions and regulations; maintain its vessels in safe and serviceable
condition; meet the standards of safety of life at sea and safe manning requirements; and furnish
safe, adequate, reliable, and proper service at all times;
■ Inspect all vessels to ensure and enforce compliance with safety standards and other
regulations; and
■ Adopt and enforce such rules and regulations which will ensure compliance by every domestic
ship operator with required safety standards and other rules and regulations on vessel safety.
However, there is no mention of the OSW industry. MARINA is also responsible for overseeing
the implementation of the 1978 International Convention on Standards of Training, Certification and
Watchkeeping for Seafarers, as amended.
Oil and gas regulations

The Oil Industry Management Bureau (OIMB), an agency attached to the DOE, is mandated to
formulate and implement policies, plans, programs, and regulations on the downstream oil industry,
including the import, export, stockpiling, storage, shipping, transportation, refining, processing,
marketing, and distribution of petroleum crude oils, products, and by-products. OIMB also monitors
developments in the downstream oil industry.
The existing oil and gas regulations derived under the provisions of the OSH rules in the Philippines and
formulated in 1978 under the tripartite agreement by BWC, the ILO, and the private sector provide
details on safety management for all operations including search, exploration, processing, storage, and
transport of oil and gas.62 The regulations cover the following:
■ Safety management program (including policies, objectives, safety activities, national and
international regulations, and a compliance assessment)
■ Risk assessment reports

■ Emergency response plan
■ Responsibility of organization of individual for safety management (including materials,
safety and risk management, emergency response, occupational safety, personnel training,
and qualifications)
■ Safe design and construction of facilities (including general requirements, hazardous area
classification, and firefighting and prevention)
■ Safe operation of facilities (including facility operation and maintenance management,
communication, transportation of people and cargo, work permits, wind farm vessels, and
safety zones)
■ Inspection, investigation, and reporting system (including safety inspection, incident or accident
investigation, and reporting systems).
ILO Code of Practice 82B09, Safety and health in the construction of fixed offshore installations in the
petroleum industry, is similar to the Philippine OSHS except that the latter does not have standards or
rules and regulations pertaining to rescue or pick-up by boats, access between vessels and installations,
survival craft and life rafts, operations of helicopters, landing areas, and control of helicopter
movements which are relevant for OSW.63
Regulations and industry good practice in established markets

To determine any gaps in the current Philippine regulations and determine areas for improvement, it
is important to understand the various H&S documents that are applicable to OSW activities globally.
Table 15.1 lists the various H&S legislation documents that are commonly used around the world, along
with some that are specific to the United Kingdom. UK-specific guidelines have been used here as an
example of a market that is more established than the Philippines market. While some UK-specific
regulations have been included, the vast majority are international standards (that have also been
applied to UK projects) and, as indicated by developer feedback, the intention is to apply these to OSW
projects in the Philippines.
Chapter 3.8 of the World Bank Group’s Key Factors report also provides additional relevant
information.4
TABLE 15.1 RELEVANT HEALTH AND SAFETY LEGISLATION AND GUIDANCE DOCUMENTS
(UK/WORLDWIDE)
Project Applicable to the

Document Summary
Stage / Area Philippines projects
General safety principles,
requirements, and guidance
DNVGL-ST-0145, Offshore for platform installations Yes (international standard
Design
Substations for Wind farms associated with offshore applied globally)
renewable energy projects
(substations)
General principles and
DNVGL-ST-0126, support guidelines for the structural Yes (international standard
Design
Structures for Wind Turbines design of wind turbine applied globally)
supports

Project Applicable to the
Document Summary
Stage / Area Philippines projects
Principles, technical
DNVGL-ST-0437, Loads and
requirements, and guidance Yes (international standard
Design Site Conditions for Wind
for loads and site conditions applied globally)
Turbines
of wind turbines
Minimum design
IEC 61400, Wind Turbine Yes (international standard
Design requirements for wind
Generator Systems applied globally)
turbines
CAP 437, Standards for Criteria required in assessing Yes (UK standard
Design Offshore Helicopter Landing the standards for offshore but typically applied
Areas helicopter landing areas internationally)
EN 50308: Wind Turbines
Defines requirements for
Design, - Protective Measures - Yes (international standard
protective measures relating
operation Requirements for Design, applied globally)
to H&S of personnel
Operation and Maintenance
Principles, technical
requirements, and guidance
Design, DNVGL-ST-0119, Floating Yes (international standard
for design, construction, and
operation Wind Turbine Structures applied globally)
inspection of floating wind
turbine structures
Regulations to cover the
Construction Design management of health, No (UK specific and there
Construction and Management (CDM) safety, and welfare when may already be similar in
Regulations carrying out construction place in the Philippines)
projects in the UK
Sets minimum safety
Safety of Life at Sea standards for life Yes (international standard
Operation
Regulations (SOLAS) saving appliances and applied globally)
arrangements
Good practice guidance
intended to improve the
G+ Good Practice Guidelines global H&S standards within
Yes (international standard
Various and Safe by Design OSW farms and workshop
applied globally)
Workshop Reports reports that explore
current industry design and
investigate improvements
Various H&S guidelines
RenewableUK H&S for OSW farms including UK specific but may be
Various
Publications emergency response applied internationally
guidelines
World Bank General Minimum requirements for
and industry-specific obtaining finance from World
Various Yes (applied globally)
Environmental, Health, and Bank and other international
Safety Guidelines lenders
In the UK, the Construction, Design and Management (CDM) regulations apply to most construction
projects, while the DNVGL-ST guidelines are the main global standards for offshore substations and
wind turbines.
G+ is the global H&S organization bringing together the OSW industry to work on incident data
reporting, good practice guidelines, safe by design workshops, and learning from incidents. The
guidance is intended to be used by all to improve global H&S standards within OSW farms.

The various G+ and RenewableUK guidelines have been developed specifically for the wind industry
(offshore and onshore) and are used in conjunction with the DNV-GL guidelines.
It should be noted that this is not an exhaustive list but just the main legislation and guidance applied
to OSW projects. Many international standards are applicable for specific design areas, including EN,
ISO, and IEC standards.
Current process
Under the current regulations, the developer is required to submit a Health, Environment, and Safety
Plan and Job Hazard Analysis before the commencement of any physical works, which will be examined
by both the DOE and the local authority having jurisdiction of the proposed development site. The
government will notify the relevant organization or individual on the status of submission—whether it
has been accepted or if further work or modifications are required. The local authority may then carry
out on-site inspections and hold verification meetings.
15.5 DISCUSSION
The Philippines does not currently have any H&S regulation in place specifically for the OSW industry.
Experience with other emerging OSW markets has shown that in advance of specific guidelines
being available for the OSW market, project developers have made use of international regulations,
standards, and guidelines in conjunction with any overarching guidelines in place for the country.
Feedback from developers is that they expect to do the same in the Philippines, using
■ International regulations, standards, and guidelines, as listed in Table 15.1 and

■ Philippines OHS, OIMB guidelines, and RESHERR, supplemented by the Code of Practice for Wind
Energy Operations when available.
Based on this, it is important for all to be clear on the legal basis, what national regulations and
guidelines apply, and how conflicting requirements are addressed.
Behavioral H&S training also forms an integral part of modern H&S frameworks and has been
widely adopted and applied in the OSW industry. The Philippines can benefit from international
experience by involving experienced developers, suppliers, and training providers from other more
established OSW markets.
Based on this analysis, it is recommended that the DOE
■ Extends RESHERR to cover health and safety for OSW and

■ States in any updated guidance specific to OSW that experienced personnel from other regions
should be involved and train local personnel. Guidance should have a firm focus on the behavioral
aspects of H&S and ensure that ongoing behavioral training forms a core element of compliance,
enabling establishment of a strong H&S culture.
■

16. LEASING AND PERMITTING
16.1 PURPOSE
Balanced, transparent, and efficient processes for granting contract areas and permits are required
for the Philippines to deliver the significant volumes of OSW in the scenarios presented in Section 2.
In this work package, we examine how leasing and permitting of OSW is currently managed in the
Philippines. We identify gaps that need to be addressed to ensure the processes are suitable for
the expected increase in the volume of projects seeking permits and provide recommendations for
improvement to underpin the development of a sustainable OSW industry in the Philippines. In
Section 17, we cover the next stage for OSW projects, securing a revenue for energy produced.
16.2 METHOD
We have mapped the regulatory processes that apply when an OSW developer wishes to secure
■ An exclusive right to explore, develop, and utilize OSW resources over a specific contract area,
including access to lands, offshore areas, and seabed, identified by the developer and approved by
the Philippine Government through model renewable energy service contracts (RESCs) or in the
case of wind resources, through wind energy service contracts (WESCs) under which OSW energy
resources are harnessed and
■ All necessary permits, licenses, and clearances from other agencies of the national government,
local government units (LGUs), and other government departments and instrumentalities to allow
construction to proceed.
These processes were mapped based on existing Philippine laws and regulations and engagement
with relevant stakeholders in the Philippines such as project developers and national government
departments and agencies, including
■ DOE;
■ Board of Investments (BOI) under the DTI;
■ ERC; and
■ DENR.

16.3 RESULTS
Key Legislation
The following are the main laws that govern OSW energy in the Philippines:
■ 1987 Constitution of the Philippines

■ Executive Order No. 462, Ocean, Solar and Wind Energy Resources Exploration
■ Department Circular No. 98-03-005, Rules and Regulations Implementing Executive Order No. 462
■ Executive Order No. 232, Amendments to Executive Order No. 462
■ Republic Act No. 9513, Renewable Energy Act of 2008
■ Department Circular No. DC2009-05-0008, Rules and Regulations Implementing Republic
Act No. 9513
■ Department Circular No. DC2012-11-0009 on Renewable Energy Safety, Health and Environment
Rules and Regulations
■ Department Circular No. DC2019-10-0013, Omnibus Guidelines Governing the Award and
Administration of Renewable Energy Contracts and the Registration of Renewable Energy
Developers. 65,66,67,68,69,70,71
Energy and wind resources

The 1987 Constitution of the Philippines adopted the legal concept of Regalian Doctrine in relation to
ownership of all lands of the public domain and natural resources, including geothermal, solar, hydro, and
wind. In its broadest sense, Regalian Doctrine or jura regalia means that all lands of the public domain,
waters, minerals, coal, petroleum and other mineral oils, all sources of potential energy, fisheries, forests
or timber, wildlife, flora and fauna, and other natural resources are owned by the State or the Philippine
Government. The exploration, development, and utilization of these natural resources shall be under
the full control and supervision of the Philippine Government. The State may directly undertake such
activities, or it may enter into co-production, joint venture, or production sharing agreements with Filipino
citizens or corporations or associations at least 60 percent of whose capital is owned by such citizens.
For wind energy resources, these agreements come in the form of WESCs.
The DOE is the main government agency tasked to ensure continuous, adequate, and economic
supply of energy resources with the end in view of ultimately achieving self-reliance in the country’s
energy requirements through the integrated and intensive exploration, production, management,
and development of indigenous energy resources in the Philippines.72 The DOE is mandated by law to
prepare, integrate, supervise, and control all plans, programs, projects, and activities related to energy
exploration, development, utilization, distribution, and conservation. In this regard, the DOE is the lead
agency that issues WESCs. These are the service agreements between the Philippine Government,
through the DOE, and the developer over a period of 25 years (extendible to another 25 years) in
which the developer has the exclusive right to a particular area for exploration and development of
the specific renewable energy resource.73 The WESC is the primary OSW permit for OSW developers,
which serves as the underlying basis to secure other necessary permits, licenses, endorsements, and
clearances from all other relevant departments and agencies, especially the following:
16. Leasing and permitting 175

■ BOI under the DTI
■ ERC
■ The DENR
■ The Department of Agrarian Reform
■ National Commission on Indigenous Peoples (NCIP).73
Site identification and exclusivity

The first stage of pursuing an OSW project in the Philippines involves the developer identifying a
specific contract area for development and filing a letter of intent (LOI) with the DOE for contract
area exclusivity.xxii
Area verification
After submission by the developer of the LOI, the DOE conducts verification to determine whether the
contract area chosen by the applicant is open for RESCs or WESCs.74
Area verification results
The verification report may indicate that the proposed contract area is
1. Covered by an existing Pre-Determined Area (PDA) identified by the DOE for public
bidding purposes;
2. Within or overlaps the area of an existing energy service or operating contract such as Petroleum
Service Contract (PSC), Small Scale Mining Permit (SSMP), or WESC, other than the renewable
energy resource or technology being applied for;
3. Within or overlaps the area of an existing energy service or operating contract application such as
PSC, SSMP, or RESC, other than the renewable energy resource or technology being applied for;
4. Within the protected areas under the Expanded National Integrated Protected Areas System Act of
2018, ancestral domains with Certificate of Ancestral Domain Title or Claim, areas with Tenurial
Instruments from other government agencies, and other areas covered by significant geospatial
data that will be identified as necessary in the evaluation of the renewable energy application
based on available data on file at the DOE and the National Mapping Resource Information
Authority’s Philippine Geoportal Project website;
5. Covered by the LOI of the same or other energy resource; or
6. Open for RESC Applications.75,76
xxii In the Philippines, the site remains exclusive to the developer/investor as long as it can continue with the development and demonstrate its commitment. If it cannot,
the WESC is cancelled.

Award of WESC
When the developer completes all requirements to prove its technical, legal, and financial qualification,
the DOE awards the WESC to the developer based on a model template, with standard provisions
adopted by the DOE and made applicable to all developers.
Offshore occupation fee
Executive Order No. 462 (1997) states that for offshore contract areas, an occupation fee of PHP50
(US$1) per hectare, or a fraction of a hectare, is to be paid by the developer to the treasurer of the
host municipality or city immediately upon signing of the WESC and every year thereafter at the
anniversary of signing.77
For offshore areas outside territorial jurisdiction of any municipality or city, Executive Order No. 462
(1997) states that the occupation fee shall be paid by the developer to the DOE immediately upon
signing of the WESC and every year thereafter at the anniversary of the signing.
The above notwithstanding, the Renewable Energy Act, its implementing rules and regulations, the
Omnibus Guidelines Governing the Award and Administration of Renewable Energy Contracts and the
Registration of Renewable Energy Developers, and the model WESCs issued by the DOE to developers
currently do not provide for any obligation of the developer to pay the occupation fee for OSW contract
areas. The DOE has not imposed the occupation fee on any OSW developer that was recently awarded
a WESC. At this time therefore, there is no occupation fee being charged to OSW developers.
Considering the obligations of the developer under the WESCs and the Renewable Energy Act, including
the obligation of a developer to pay the Philippine Government 1 percent of the gross income resulting
from the sale of renewable energy produced and such other income incidental to and arising from
renewable energy generation and transmission, and considering further that Executive Order No. 462
(1997) predated the Renewable Energy Act and the model WESCs, we believe that the payment of
offshore occupation fee should no longer be required.79
Seabed lease
The award of WESC concurrently grants to a developer access to seabed without any further need for
a lease agreement.
The model WESC grants to the OSW developer exclusive right to explore, develop, and utilize wind energy
resources within the contract area specifically identified by the OSW developer (the Contract Area). As
part of the developer’s rights under the WESC, the developer shall receive assistance from the DOE in
securing access to lands and offshore areas where wind energy resources shall be harnessed. The model
WESC also provides that the developer shall have, at all times, the right of ingress to and egress from
the Contract Areas. Under the WESC, the DOE also grants the developer the right to acquire rights-of-
way and similar rights on, over, under, across, and through the Contract Areas or properties adjacent to
the Contract Area, which constitute or is reasonably expected to constitute the Contract Area as the
developer may reasonably deem necessary.66

WESC application process and permits
In the Philippines, the application process for OSW power is governed by the provisions of the
Omnibus Guidelines Governing the award and administration of renewable energy Contracts and the
Registration of Renewable Energy Developers.73
Under this Department Circular, WESCs are awarded either through
■ An open and competitive selection process (OCSP) or

■ Direct application.
Each type of process is governed by a different procedure.79 The procedure under OCSP includes
publication of competition, pre-submission conference, submission and evaluation of documents,
high-level approval, payment of signing fee and performance bond, and delivery of signed WESC.80
Under existing DOE guidelines, the signing fee for WESC is PHP 100 (US$2) per hectare based on
Contract Area granted to the developer.
This procedure has not been adopted by the DOE for OSW. The DOE has however reserved certain
onshore areas with data already collected from onshore wind met masts of the DOE’s Detailed Wind
Resource Assessment Project and the Quantum Leap in Wind Power Development in Asia and the
Pacific of the Asian Development Bank (ADB). The DOE is to extend its wind resource assessment
campaign to cover offshore areas and may consider OCSP for pre-determined OSW areas in the
future. The DOE determines and publishes the criteria for evaluating bids under OCSP.
The procedure under direct application includes submission of an LOI, area verification, submission and
evaluation of WESC application, high-level approval, payment of signing fee and performance bond, and
delivery of signed WESC.
Upon its award by the DOE, the WESC involves two stages.
Pre-Development Stage
The Pre-Development Stage involves conducting preliminary assessments and feasibility studies up
to Final Investment Decision and Declaration of Commerciality (DOC) of the OSW project. During this
period, the developer secures all necessary permits, licenses, and registrations from various national
government departments, agencies, and LGUs. Under the model WESC, an OSW developer is granted
a Pre-Development Stage period of five years from execution of the WESC to conduct these activities
and thereafter submit a DOC to be duly confirmed by the DOE. Considering that WESCs for OSW have
only been recently awarded in the Philippines, we have not yet seen any developer seek extension of
this period. If there are justifiable grounds that are beyond the control of the developer, for example,
force majeure events, the developer may seek extension of the Pre-Development Stage.

Development and Commercial Stage
The Development and Commercial Stage involves development, construction, and commercial
operation of the OSW project, including the construction and installation of relevant facilities up to the
operation phase of the project.82 Upon approval of the DOC by the DOE, the WESC remains in force
for the balance of a period of 25 years from execution of the WESC. At the option of the developer
upon written notice to the DOE one year before expiration, the WESC may be extended by the DOE for
another 25 years subject to terms and conditions to be mutually agreed upon by the developer and the
DOE. Grid connection is discussed in Section 18.7.
In 2019, Philippine Congress passed into law the Energy Virtual One-Stop Shop Act (EVOSS) which
created an online platform allowing the coordinated submission and synchronous processing of data
and information relative to applications for energy projects. EVOSS hopes to streamline the leasing
and permitting processes and requirements of all government agencies, instrumentalities, LGUs,
government-owned or controlled corporations, and private entities involved in energy projects.83 In
July 2021, Executive Order No. 143 was issued creating the EVOSS Task Group to accelerate activity,
composed of different government department heads and chaired by the Philippine President and
assisted by the DOE Secretary as vice chairman.
With EVOSS, the Philippine Government aims to shorten the time frame for securing all necessary
permits, licenses, and registrations for developing OSW projects. Table 16.1 provides an indicative list of
substantive permits, licenses, and registrations necessary for developing OSW projects.
TABLE 16.1 LIST OF NECESSARY PERMITS, LICENSES, AND REGISTRATIONS FOR DEVELOPING
OSW PROJECTS
Securities and Exchange Commission Bureau of Investments

Article of Incorporation and By-Laws (for corporation/ Certificate of Registration / Project Registration for
joint venture/consortium/cooperative) Incentives
Certificate of Authority to Import relating to any duty-
Registration of Stock and Transfer Book, if applicable
free equipment imported for the Power Plant
Bureau of Internal Revenue Bureau of Customs
Payment of Documentary Stamp Tax Registration and Accreditation as Importer
Certificate of Registration Registration and Accreditation as Exporter
Registration of Books The Department of Energy
Local Government Unit Certificate of Endorsement for BOI Registration
Municipal and Barangay Resolutions of Support Registration as Renewable Energy Developer
Business Permit Wind Energy Service Contract
Bangko Sentral ng Pilipinas (BSP), the central bank The Department of Environment and National
of the Philippines Resources
Environmental Compliance Certificate/ Certificate of
Registration of Inward Foreign Investments
Non-Coverage
The Department of Labor and Employment Hazardous Waste Generator Registration
Letter of Approval of Construction Safety and
Pollution Control Officer Accreditation
Health Program
Certificate of Electrical Inspection Permit to Operate Air Pollution Source

Registration of Employer (for purposes of
Foreshore/ Miscellaneous Lease
occupational safety and health standards)
Establishment Registration for Alien Employment
Civil Aviation Authority of the Philippines
Permit purposes (if applicable)
Alien Employment Permit (if applicable) Height Clearance Permit
National Commission on Indigenous Peoples The Department of Trade and Industry
Certificate of Registration (for individual or
Certification Precondition / Certificate of Non-Overlap
proprietorship)
Bureau of Immigration
Alien Certificate of Registration Identity Card
Special Work Permit
16.4 DISCUSSION
Leasing
The award of a WESC by the DOE grants to a developer the exclusive right to explore, develop and
utilize OSW resources over a specific contract area, including access to lands, offshore areas, and
seabed, identified by the developer.
The WESC, by itself, is sufficient legal right to the developer. Under existing DOE guidelines, there
is no separate agreement or permit required for the lease of OSW areas approved by the DOE under
the WESC.
The Government is able to drive the location and timing of lease applications through defining OSW
development zones and timely Transmission Development Plans. OSW development zones themselves
are defined through marine spatial planning.
The five-year time frame for Pre-Development is typically insufficient for most of the +20 GW of
WESCs already awarded (and for future awards), as it is likely that many of these projects will not
have a grid connection for 10 to 15 years. It will be important for the DOE to provide clear guidance and
firm but fair and transparent management of WESCs to
■ Honor development activity;

■ Challenge project developers not progressing, with the ultimate sanction of cancelling the
WESC; and
■ Not penalize project developers that realistically should only make slow progress to avoid high
expenditures ‘at risk’ many years before commercial operation.

Permitting
The existing permitting process in the Philippines for OSW projects involves numerous national
government departments and agencies and LGUs requiring submission of volumes of supporting
documents. The Philippine Government hopes to streamline the permitting process through the
implementation of the EVOSS.
The effective aspects of the current permitting process and key risks and issues in the Philippines are
as follows:
■ While an old executive issuance requires payment of occupancy fee for offshore areas, the
Renewable Energy Act and its implementing rules and regulations, DOE issuances, and model
WESC do not require payment of any occupancy permit fees.
■ Standards of environmental and social impact assessment (ESIA) are not specific to OSW and do
not meet GIIP for OSW farm development. Increased environmental and social risks and significant
project delays can arise when GIIP or lender standards are not followed. Examples of differences
are discussed in Section 14.4.
■ Large number of different permits and letters of approval are required throughout development
and construction, adding an administrative burden and slowing the delivery of projects.
■ Pursuant to the EVOSS, changes are currently being made to existing guidelines to aid the
development of OSW projects in the Philippines. Although welcome, this introduces uncertainty.
■ Lengthy and bureaucratic permitting process system may dissuade developers from working in
the Philippines or it will add to risk premium.
■ No clear timelines and deadlines for permit approvals or compliance by government agencies make
it hard to plan and finance projects.
■ Inefficiency in administration throughout the permitting process adds to development risks
and costs.
■ No clear alignment or coordination between the national government departments and agencies
and LGUs adds to uncertainty over the time frame for permits being issued.

Based on this analysis, the following is recommended to prepare for an increase in volume of projects
seeking leases and permits:
Leasing
■ The DOE builds capacity and knowledge needed to process a growing volume of OSW projects.
■ The DOE issues appropriate guidance regarding applying for a WESC for OSW adjacent to an
existing WESC.
■ The DOE issues appropriate guidance to developers regarding the grounds for accepting requests
to extend the Pre-Development Stage of a WESC (whether already signed or future) beyond five
years due to considerations outside the control of the developer such as non-availability of a firm,
timely grid connection agreement.
■ The DOE gives assurance to developers on the expectation to extend a WESC after the initial
25-year term if a project is still in operation.
■ The DOE confirms that there is no requirement for payment of offshore occupation fee.
Note that further discussion regarding foreign ownership of OSW projects is covered in Section 20.
Permitting
■ The DOE fully implements the EVOSS to enhance and align coordination among different
government departments, agencies, and LGUs. This will improve efficiency and minimize the risk of
local delays holding up national renewable energy developments.
■ The DOE ensures collaboration between all relevant ministries, authorities, and OSW organizations
to deliver a more efficient process.
■ The DOE clarifies and streamlines the permitting process, ensuring ESIA standards and
stakeholder engagement requirements are in line with GIIP and lender standards, with specific
guidelines for OSW development. This is likely to involve reducing the number of permits and
approval letters required to avoid duplication and potential overlap.
■ The DOE reviews the availability and appropriateness of supporting guidance regarding the
permitting processes, considering all parties—developers, regulators and stakeholders—including
clear timelines for permit decisions and prioritization of renewable energy projects.
■ The DOE enables sufficient permit flexibility in design to prevent the need for full reapplication and
subsequent delays should any design changes be required as the project progresses.
■ The DOE facilitates environmental and social data sharing to improve efficiency and robustness of
feasibility studies.
■ The DOE leads in helping government departments and other key stakeholders to grow capacity
and knowledge needed to process an increasing volume of OSW projects.
Note that a recommendation regarding improvements to ESIA standards is provided in Section 14.

17. PROCUREMENT OF ENERGY
17.1 PURPOSE
Robust, transparent, and efficient processes for procurement of large volumes of energy are critical to
deliver OSW at the scale explored, especially in the high growth scenario.
In this work package, we examine how procurement of onshore renewables is currently managed in the
Philippines and propose a solution for OSW.
17.2 METHOD
Through engagement and literature review, we have summarized the existing processes, designed for
relatively small onshore projects.
OSW projects are typically designed to operate for at least 25 years. To recoup their investments,
developers, lenders, and investors desire long-term visibility and certainty of the revenues a project will
generate. Similar to other renewable energy projects, revenue certainty can be provided by long-term
offtake agreementsxxiii (PPAs) and government mechanisms to provide revenue support.
Through engagement with relevant stakeholders and a headline options analysis, we have proposed a
solution for OSW, based on the following considerations:
■ Continuity with existing arrangements, where possible, to minimize barriers to implementation;

■ Future proofing, so that any system does not need to be changed significantly in a few years,
which risks delaying the industry and reducing confidence;
■ Ensuring projects awarded contracts enable projects to be constructed promptly and competently;
■ Consumer value for money;
■ Robustness, transparency and fairness; and
■ Bankability.
xxiii Offtake agreements can take several forms, including Power Purchase Agreements (PPA), Feed-In Tariffs (FIT), Contracts for Difference (CFD), and bilateral
agreements with corporate entities
183
17.3 RESULTS
Existing processes
Feed-in-tariff
To accelerate the development of emerging renewable energy resources, a feed-in tariff (FIT) system
for electricity produced from wind, solar, ocean, run-of-river hydropower, and biomass is mandated
under the Renewable Energy Act.70 The DOE implemented the first FIT program after the ERC set
the first FIT rates for biomass, solar, run-of-river hydropower, and wind in 2012. As a result, a total of
approximately 1,400 MW of new renewable energy capacities were successfully installed under the
FIT program. This program was successful because of the attractive FIT rates for a period of 20 years
paid directly by the electricity end users through a payment system adopted by the ERC, priority
connections to the grid, priority purchase and transmission of, and payment for such electricity by the
grid system operator.
The DOE is planning to revise its current proposed Green Energy Auction Program (GEAP)84 to apply
the same FIT-concept framework as used in 2012. This means the National Transmission Corporation
will act as FIT-fund administrator and collect a FIT allowance from all electricity consumers based on
the FIT rates approved by the ERC. This makes it easier for renewable energy developers to collect their
FIT rates from one administrator, rather than the current GEAP draft that requires individual power
supply agreements with various distribution utilities.
The DOE has expressed its intention to implement the GEAP on an annual basis in the hope to reach at
least 50 percent installed capacities of renewable energy in the Philippine energy mix by 2040.
Renewable Portfolio Standards
In 2017, to contribute to the growth of renewable energy in the Philippines under the Renewable Energy
Act, the National Renewable Energy Board (NREB), with the approval of the DOE, mandated specific
electric power industry participants, to source or produce at least one percent (1%) of their annual energy
demand over the next ten years from eligible renewable energy resources. Under these Renewable
Portfolio Standards (RPS) rules, the mandated participants include all distribution utilities and electric
cooperatives for their captive customers, all suppliers of electricity for the contestable market and
generating companies to the extent of their actual supply to their directly connected customers.
With the RPS, OSW developers can secure power supply agreements with the mandated participants.
While most distribution utilities have small captive customer demand, Manila Electric Company
(Meralco) which had an average peak demand of about 8 GW in 2020 is a viable counterparty.
Green Energy Option Program
In 2018, the DOE established the Green Energy Option Program (GEOP) that provides end users the
option to choose supply from renewable energy projects. Under the GEOP rules, end users with at
least 100 kW peak demand may directly contract with renewable energy providers for their energy
requirements, distributed through their respective distribution utilities. As the largest end users
of manufacturing plants, hotels, resorts, and shopping malls usually have a demand of only a few
megawatts each, this option is not viable for OSW project developers.

17.4 DISCUSSION
Proposed process for offshore wind

World Bank Group’s Key Factors report Sections 3.2 and 3.6 discuss different ways of organizing
leasing and revenue frameworks and the different options available regarding energy procurement.4
Taking the learning from this and following a headline options analysis, it is concluded that it would be
detrimental to move to a single competition system (where service contract, permits, grid connection
agreement and PPA are all awarded to the winner of the single competition) or to establish a route
to market for OSW that is radically different from other technologies. Such changes cause delays,
introduce risk, and decrease competition in the market.
It is proposed, therefore, that a refinement to GEAP is established solely for OSW projects. This
will involve a competitive auction held between developers of projects soon before reaching final
investment decision FID, and incorporate
■ Prequalification criteria covering

• Relevant permits
• Grid Connection Agreement (GCA) for connection within an agreed time frame
• Project deliverability to an agreed time scale, including availability of finance
• Other technical criteria in line with good practice in established markets.
■ A competitive bidding process, with bidders submitting evidence of lender endorsement of
proposed price, to minimize the possibility of unviable bids.
■ A ceiling price acceptable to government, consumers, and project developers for projects
constructed toward the end of the decade, a realistic time frame for first projects, based on
progress to date. This price could potentially be comparable to the cost of generation from plants
constructed after recent auctions for coal. Such a ceiling reduces the requirement for technology-
neutral auctions.
■ A floor price (possibly) in the early stages to avoid the risk of lowball bids with a lack of precedent
projects reducing price certainty on capital and operating costs that would come through a more
established market.
■ Standardized PPA terms, including curtailment arrangements. Robust, standardized terms will
reduce uncertainty and enable FID on much larger projects than typical for onshore wind and
solar, with capital investment of US$2 to 3 billion for a 1 GW project. At this scale, what happens
when power is not required is critical. It is also critical to ensure bankability of the cumulative
commitments of any offtaker to buy multiple GW of OSW output at given prices over many years.
To finalize a form of contract, it is good practice to consider PPA contracts in other markets and
discuss with project developers and other relevant stakeholders.
■ A centralized coordinating body or alternative that can backstop private offtaker obligations for
multiple GW-scale projects.
17. Procurement of energy 185

The precise details should be drafted by the DOE and agreed with industry and other relevant stakeholders,
to ensure that all key considerations are met and equitable compromises found, where needed.
Many of the principles of the existing processes can be used, but due to the investment and
infrastructure needed to deliver OSW, and the long-term benefits available, it is not feasible for OSW
to enter auctions against small volumes of onshore wind and solar.
Over time, and for example as corporate PPAs and hydrogen start to play a larger role, there will
always be a need to evolve the procurement arrangement but established markets have shown that
stability (rather than constant changes seeking the optimum solution) is important.
Note that a typical competition bid price cannot be directly compared with a levelized cost of energy
(LCOE) for two main reasons:
■ PPA terms are typically for 20 to 25 years, shorter than the expected project lifetimes of more
than 30 years.
■ Actual bid prices will take into account taxation and other fiscal and financial considerations,
including those specific to each bidder. These are not included in LCOE calculations.
Based on this analysis, it is recommended that to deliver a system fit for long-term use and a
potentially large volume of projects, the DOE
■ Establishes a competitive system solely for OSW PPAs, with a ceiling price to limit cost to
consumers and considers a floor price to avoid the risk of lowball bids. Consultation on ceiling
and floor prices should be conducted with relevant stakeholders in the run up to competitions to
reflect evolving fossil fuel and OSW prices, especially recognizing high current high fossil fuel and
commodity prices.
■ Sets out a suggested timetable for private sector competitions, and coordinates across
government and private sector to deliver.
■ Explores how to ensure PPA counterparties (offtakers) and PPA terms remain viable as volumes
of OSW contracted increase, including clarity on curtailment. The DOE ensures that PPA
counterparties (offtakers) and PPA terms remain viable as volumes of OSW contracted increase

18. TRANSMISSION
INFRASTRUCTURE
18.1 PURPOSE
In this work package, we examine the existing transmission network and transmission upgrades as well
as changes in transmission network management that may be required to support development of
OSW under the scenarios presented in Section 2.
We also review the processes that are used to manage grid connection applications and how upgrades
are managed in the Philippines.
18.2 METHOD
Our assessment has been based on sources as cited within this section along with industry knowledge
from which suggestions have been made for the upgrading of the transmission network to facilitate
the development of OSW projects in the Philippines. It is recognized that parts of the proposed
transmission network development and enhancement options will pass close to environmentally
sensitive areas. This will need to be considered and incorporated during the planning and detailed
option appraisals for the future transmission network upgrading works but should not fundamentally
change the principles being promoted.
Environmental and social aspects have only been considered at a headline level and would need to be
incorporated fully during future, more detailed, option appraisal.
18.3 CURRENT TRANSMISSION NETWORK

The Philippines transmission network is divided into three grids covering Luzon, Visayas, and
Mindanao. The Luzon and Visayas grids are interconnected via 350 kV high-voltage direct current
(HVDC), 440 MW submarine cables, and Mindanao remains an independent grid, pending completion
of the 350 kV HVDC, 440 MW Mindanao-Visayas Interconnection Project.
In 2019, the existing transmission assets comprised a total of 36,436 MVA substation capacity and
20,079 circuit kilometers (ckt km) of cable which are owned by the government through the National
Transmission Corporation (TransCo). This is operated and maintained by the National Grid Corporation
of the Philippines (NGCP). The transmission system network consists of 500 kV, 230 kV, 138 kV, 115
kV, and 69 kV high-voltage alternating current (HVAC) and HVDC lines, as well as the 350 kV HVDC
interconnectors, mentioned above, between Luzon and Visayas.
As of 2020, the system peak demand was 15 GW, with predictions for this to increase to 60 GW by
2040 due to economic growth. The Luzon grid contributed 11.1 GW or 73 percent of the total peak
demand, while Visayas and Mindanao have a share of 14 percent (2.2 GW) and 13 percent (2 GW),
respectively. As such, the system will require additional generation to satisfy the predicted increase in
187
demand. This poses challenges for developing and reinforcing the transmission network, whatever new
generation capacity is installed.
By the end of 2020, the Philippines had a total generating capacity of 26.3 GW, including embedded
generation. Renewable energy (RE) projects include 3.8 GW hydro, 1.9 GW geothermal, 1 GW solar, 483
MW biomass, and 443 MW wind. Under the Reference scenario and the Clean Energy scenario of the
Philippines Plan 2018–2040 by the Department of Energy (DOE), the total installed capacity reaches
90.6 GW and 93.4 GW by 2040, respectively, with considerable addition of RE sources as seen in
Figure 18.1.
FIGURE 18.1 FORECAST INSTALLED GENERATING CAPACITY, REFERENCE (LEFT) AND CLEAN
ENERGY SCENARIO (RIGHT)
Source: DOE.5
Figure 18.2 shows a map of power generation by type which is generally located north and south of
Manila; central and western Visayas; and northern, central, and southern Mindanao. Figure 18.3 shows
the same map with main load centers where most of the demand for this power generation comes
from. In Luzon, the main load center is Manila which provides nearly 50 percent of demand. In Visayas,
the main load centers are found in the southwest in Cebu, Bacalod City, and Bohol. Of these, Cebu is
the largest also taking nearly 50 percent of the power supply for the region. In Mindanao, the main
load centers are in the south at Davao and Soccsksargen which similarly make up around 50 percent
of the power demand.

FIGURE 18.2 POWER PLANTS FIGURE 18.3 KEY LOAD CENTERS
Source: Greening the Grid.86 Source: Greening the Grid.88
18.4 CONSIDERATIONS WITH INCREASED DEPLOYMENT OF

VARIABLE RENEWABLE ENERGY
Key considerations are
■ The need for substations and transmission upgrades. Inevitably as new power plants are
brought online, new substations and transmission line upgrades will be needed. New transmission
infrastructure will also be required to bring RE (including OSW) and other power from areas of
remote generation.
■ Inclusion of suitable energy storage systems. The inclusion of suitable and strategically placed
energy storage systems in the transmission network will enhance the grid robustness and
resilience to handle increased RE sources through peak load management, frequency regulation,
and reduction of the required spinning reserves.
■ Grid harmonics. A wind turbine contains variable-speed generator technology with a power
converter, which emits harmonic currents. In addition, they impact the resonance frequencies
of the grid due to the presence of large amounts of capacitance in subsea cables and capacitor
banks. At the point of connection, harmonic compensation must be considered.
■ Reactive compensation. Connection of OSW by onshore and subsea cables also gives rise to
voltage increases during energization and low load situations, needing reactive compensation
locally through static var compensators (SVCs).
18. Transmission infrastructure 189

■ Dispatching and wind farm control. Increased wind capacity warrants the use of forecasting
systems to estimate the variable infeed. Dispatch procedures and reserve calculations may need to
be changed to consider variations in output. Where the amount of conventional generation is low,
system stability can be a major issue. A mix of wind farm control and other control technologies are
therefore required to ensure security of supply which could otherwise lead to periods of wind farm
curtailment which if uncompensated will lead to an unacceptable investment risk.
■ System frequency and inertia. Following the disconnection of a generator, the frequency of
the transmission and distribution system will decrease. The frequency drop and rate of change
depends on the contribution to system inertia from the offline generator, duration of fault,
available inertia from other generators on the network and network demand. With the increased
penetration of wind, the overall system inertia will decrease. To balance this, however, inertial and
frequency response can also be provided by wind power by balancing controls between maximizing
performance, reliability, and stability provision to the transmission network. OSW farms can
control active power to respond to grid frequency events to assist in overall grid stability. A similar
performance to conventional generators can be achieved by using controlled inertial response
technology. Wind farm capabilities can also provide flexibility to transmission and distribution
network operations through inertial response which can assist system reliability. In many power
systems, ancillary service markets have been developed and provide incentives toward developing
technologies which provide support to transmission system reliability.
■ Technologies to address grid challenges. The Renewable Readiness Assessment Report for the
Philippines provides specific recommendations for grid evaluation studies to be undertaken to
determine the impact of variable RE system power flows on the stability of the existing network
from which it is expected that there may be grid stability, voltage, congestion, or overloading
concerns within the transmission network. The studies will help identifying the needs to implement
grid upgrading works with the aim to identify and implement technologies to address challenges
for the longer-term Philippines transmission network.
18.5 CURRENT TRANSMISSION NETWORK UPGRADE PLANS

The planned upgrading works to 2030 are shown in Figure 18.4 and we consider the opportunity to
connect early large OSW projects in the OSW development zones to this upgraded system. It is assumed
that the upgrades to absorb 20 GW of OSW by 2040 and 40 GW by 2050 will require up to 15 years of
design, planning, and construction and therefore this process needs to be started in the early 2020s.
Environmental and permitting requirements have the potential to delay such a large-scale program.

FIGURE 18.4 NATIONAL TRANSMISSION OUTLOOK
Source: NGCP.

North Luzon
The existing and proposed transmission grid upgrades for the North Luzon area are shown in Figure
18.5. The implementation of the Bolo to Laoag 500 kVAC transmission line addresses the entry of the
proposed coal, hydro, and wind power generating plants in the northeast of Luzon and is scheduled
for completion by 2028. It is understood that, once complete, 800 MW of additional power may be
accommodated at the new Laoag 500 kV substation which is planned for completion by 2028, though
some of this capacity has already been allocated. However, this substation is still located far from the
potential OSW development zone at the northern tip of Luzon. It is therefore recommended that the
500 kVAC line be extended further north to Bangui and around the northern tip of Luzon in a loop with
potential to connect with the 500 kVAC line which is currently being implemented between Kabugao
and Nagsaag forming a connection with Bolo, to form a ring around the northern end of Luzon Island. It
is noted that this will likely pass through several Key Biodiversity Areas including the Apayao Lowland
Forest and the Kalbario Natural Park and therefore suitable measures will need to be taken to mitigate
the impacts from these works in these regions. This will require careful route selection, and robust
environmental and social impact assessment (ESIA) for each route.
FIGURE 18.5 NORTH LUZON TRANSMISSION OUTLOOK
Source: NGCP.

The Tuguegarao-Lal-lo 230 kVAC transmission line is also currently being implemented to improve
the quality and reliability of supply in the area. This is targeted for completion by 2024 and will form
part of the planned development of the Northern Luzon 230 kVAC Loop. The Northern Luzon project
will involve the development of three 230 kVAC substations in Bangui, Sanchez Mira, and Pudtol
and upgrading of the 230 kVAC lines. It is doubtful, however, that the 230 kVAC lines will be able to
accommodate an additional 800 MW of power from OSW and therefore the 500 kVAC lines will most
likely be needed to provide the required capacity.
Southwest Luzon
The existing and proposed transmission grid upgrades for the Southwest Luzon area are shown in
Figure 18.6. The southwest part of Luzon has three planned transmission lines.
The West Luzon backbone will connect the existing 500 kVAC at Paliwag in Batangas to the planned
substation at Bolo which will connect to the northern section of Luzon through the Bolo to Laoag
transmission line.
FIGURE 18.6 SOUTHWEST LUZON TRANSMISSION OUTLOOK
Source: NGCP.

The Batangas-Mindanao interconnection to Mindoro Island from the existing Luzon transmission
network will provide access to RE projects on Mindoro Island as shown in Figure 18.7. This is currently
planned to be a 230 kVAC transmission line and will be unlikely to have sufficient capacity to take
an additional 800 MW of power from an OSW project. The nearest connection point in the Luzon
transmission network for the planned interconnection projects is the Pinamukan 500 kV substation
while Calapan would serve as the interconnection point on Mindoro Island. The future establishment
of a 230 kVAC line through Mindoro Island to Panay Island is also planned. Considering the location
of good OSW resources both to the north and south of Mindoro Island, we recommend increasing the
planned upgrade of the Bantagas-Mindanao interconnection to a 500 kVAC transmission line. It is
noted that this will potentially pass through several Key Biodiversity Areas including the Naujan Lake
National Park and therefore suitable measures will need to be taken to mitigate the impacts from
these works in these regions. This will require careful route selection, and robust ESIA for each route.
FIGURE 18.7 BATANGAS-MINDORO INTERCONNECTION
Source: NGCP.
Southeast Luzon
The existing and proposed transmission grid upgrades for the Southeast Luzon area are shown
in Figure 18.8. On the southeastern side of Luzon, it is understood that the existing 500 kVAC
transmission backbone from Naga to Yabos currently only operates at 230 kVAC due to limitations in
the energizing capacity of the Naga substation located in the Bicol Region. This therefore serves as a
termination point for the HVDC interconnection system that allows the exchange of power for up to

440 MW between Luzon and Visayas. To provide additional capacity in the system to accommodate
OSW developments on the east side of Luzon (where a WESC has already been awarded and others
have been applied for), it will be necessary to upgrade the Naga Substation to 500 kVAC to connect
with the existing 500 kVAC substation at Pinamukan in Batangas and hence to provide a direct
transmission path to Manila. This is not essential for the identified potential OSW development zones.
Any development will require careful route selection, and robust ESIA for each route.
FIGURE 18.8 SOUTHEAST LUZON TRANSMISSION LINE AND LUZON-VISAYAS

INTERCONNECTION OUTLOOK
Source: NGCP.
Visayas
The existing and proposed transmission grid upgrades for the Visayas area are shown in Figure 18.9.
The reinforcement of the existing 138 kV Cebu-Negros-Panay submarine cable interconnection is
planned along with the development of a 230 kV transmission backbone from Cebu up to Panay Island
(Cebu-Negros-Panay 230kV Backbone) and the development of the new 230 kV backbone up to Bohol
to accommodate planned conventional and RE projects. Much of the increased power generation in
this area, including from planned OSW projects, is proposed to be sent to Cebu as shown in Figure
18.10 where the demand is significant. Currently two lines are planned for the Cebu-Negros-Panay
submarine cable interconnection which is planned to be completed in 2025 with further plans to
increase to four by 2035.

FIGURE 18.9 CENTRAL VISAYAS TRANSMISSION OUTLOOK
Source: NGCP.
FIGURE 18.10 SOUTH VISAYAS TRANSMISSION OUTLOOK
Source: NGCP.
Mindanao
Mindanao operates at a maximum voltage of 230 kV. It is proposed that two 230kV interconnectors
may be enabled to provide further demand for power produced from the new OSW farms, but it is
unlikely that OSW projects will be built in the area due to poor wind resource.

18.6 FUTURE NETWORK REQUIREMENTS AND IMPLEMENTATION
PROCESS
General Process for Deciding Future Transmission Network

Development Requirement Upgrades
The future requirements for transmission networks are decided by the DOE and documented in the
TDP. This plan is based on the list of Private Sector Initiated Power Projects (PSIPP), which classifies
each project into one of three different categories:
■ Committed projects have a WESC and are at the development and commercial stage and have
reached FID.
■ Indicative projects are similar to committed projects but have not reached FID.
■ Prospective projects are at the pre-development stage and therefore not included in the official
list for the PSIPP but have clearance to apply for service contracts and undertake a system
impact study. These projects are monitored regularly by the DOE and their Electric Power Industry
Management Bureau (EPIMB) for potential inclusion on the DOE’s Power Development Plan (PDP) list.
At present, most committed projects on the list comprise coal, natural gas, solar, hydro, geothermal,
and biomass. As discussed in Section 15, the application for WESC is through the DOE following
the procedures given in the Renewable Energy Act of 2008, RA 9513 and details the general, legal,
technical, and financial aspects for the proposed project. It also includes the letter of intent (LOI), map
coordinates, facility capacity, and the primary equipment to be energized.
Integration of Renewables into the Future Transmission Network

Development Plans
Due to the mismatch in timing between the development of most RE projects and the establishment of
the associated grid connection, as described above, the transmission upgrade process for renewables is
undertaken through separate policy initiatives in accordance with the DOE Circular No. 2018-09-0027
- Establishment and Development of Competitive Renewable Energy Zones.88 The CREZ transmission
planning process applies to all potential RE projects that are constrained by the lack of existing
available transmission network capacity.89 This is achieved by identifying areas for RE development
and encouraging transmission upgrades to the areas with highest potential at optimal cost which
is undertaken through the Philippine Energy Plan (PEP), PDP,TDP, and the NREP. The intention is
to proactively provide transmission to the most productive areas to encourage development of
renewables which can often be established much quicker than the transmission connections. There are
four steps to the CREZ planning process:
1. Resource assessments to identify suitable renewable energy zones

2. Candidate selection for CREZ based on resource potential, technical, geographical, environmental,
and social considerations
3. Transmission options development including system impact studies for the proposed CREZ areas
4. Final transmission plan designation for the CREZ.

Currently proposed projects that are included as CREZ developments are summarized in Figure 18.11.
It is noted that many of these CREZ developments are close to the potential OSW development zones
and hence there is already consideration of transmission network upgrade works in these areas.
FIGURE 18.11 COMPETITIVE RENEWABLE ENERGY ZONES CREZs IN 2020
Source: DOE.
To identify and characterize a set of implementable TDPs to deliver the power from the CREZ
developments, a three-stage modelling process is followed:
1. The DOE is initially responsible for the preparation of the Capacity Expansion Model to determine
the optimal transmission network build-out plan to meet demand and reserve requirements.
2. The findings from this will be fed into the Spreadsheet Optimization Tool, which is the responsibility
of NGCP, to further optimize the capacities by consideration of practical issues.
The results will then be provided back to the DOE to undertake the Production Cost Model to
optimize the planned dispatch schedules and generation units to physical and economic constraints
of the system.
One of three outcomes are typically expected from this processxxiv:
1. Implementation without the need for transmission network reinforcement aside from what is
already stated in TDP 2020–204090;
2. Implementation with general transmission network expansion; or
3. Implementation with specific transmission network expansion.
xxiv The need for additional transmission reinforcement depends on the existing or planned capacity of the proximate transmission network in the selected area and
proposed power generation output of the proposed renewable energy source. A general expansion will entail directly increasing the capacity of the transmission
network while specific expansion will entail upgrading of selected facilities only.

An 800 MW wind farm would likely require general expansion of the transmission network in the
majority of the potential areas as it will be challenging to accommodate such a high load input within
the existing grid and planned upgrades stated in TDP 2020–2040.
18.7 GRID CONNECTION PROCESS

The Philippine Grid Code and Distribution Code establishes the basic rules, requirements, procedures,
and standards that govern the operation, maintenance, and development of the high-voltage
backbone and distribution transmission systems in the Philippines.91 The code identifies and recognizes
the responsibilities and obligations of different functional groups, including
■ Grid owner,
■ System operator,
■ Market operator,
■ Distributers, and
■ Users.
These functional groups must comply with all the provisions of the grid code. The grid code is
intended to be used along with the Market Rules of the Wholesale Electricity Spot Market to ensure
the safe, reliable, and efficient operation of the grid. The codes are enforced by the ERC, which may
impose fines and penalties for violations of their provisions. The grid code was updated in 2016 to
incorporate renewables and therefore covers the general principles for the electrical connection of
intermittent supply sources to the transmission network. This is satisfactory for the case where the
same transmission owner and operator manage the onshore and offshore network infrastructure and
connections. For the scenario where separate offshore transmission network owners and operators
exist, there will be a need to incorporate additional specific requirements for the grid entry point within
the existing code. These would substantially reduce the risk of an outage or low power quality impact
from large-scale power import to the Philippines Grid. There is therefore potentially a need to update
the code further, depending on the proposed ownership and operation responsibilities for the respective
transmission networks to include the incorporation of up to 20 GW of OSW renewable power by 2040.
In addressing future needs, the Philippines needs to ensure that the processes for issuing grid
connections to projects is capable of handling increased volumes and applications in a fair,
transparent, and timely manner. Grid connection for OSW in the Philippines’ context means the
connection of a system to the main transmission network operated and maintained by the NGCP.
A WESC covers two phases of activity:
1. Pre-development stage (PDS). The aim is to develop a detailed feasibility study, which will include
a system impact study for the transmission network (endorsed by the DOE and undertaken
by NGCP) and a distribution impact study (undertaken by the distribution utility). The detailed
feasibility study aids in taking the decision to declare commerciality for the project, which will
trigger conversion of the project to a development stage project upon confirmation by the DOE.

2. Development and commercial stage (DCS). This stage covers a number of steps, including grid
connection agreements. As a committed project, the OSW project will be included in the TDP once
FID is complete, and necessary transmission network upgrades will be proposed jointly between
the DOE and NGCP. NGCP will be tasked with the delivery of the transmission network upgrade
works which will be planned to meet the timeline for the proposed completion of the OSW project.
This will be endorsed by the ERC. In assessing a potential RE project, or set of projects, it must
be demonstrated that the proposed output meets a known demand, the grid remains stable and
secure and that the investment costs and the resulting costs of electricity must be minimized. The
projects that satisfy these requirements, as well as other statutory pre-construction requirements,
will be issued a Certificate of Confirmation of Commerciality and are generally included on the
DOE list which details the required grid reinforcement and the timing for each project.
Unfortunately, this situation causes a mismatch in schedules between the timeline for the OSW project
construction, which takes around two years from FID, and the availability of the grid connection which
can take more than five years. The need for advanced grid development is therefore crucial for the
development of OSW. Without a guaranteed network connection, it is not possible for developers to
reach FID. The principle of CREZ has been developed to address this issue by planning and developing the
transmission network ahead of time in the most promising areas as described in the sections below.
Grid connection agreement

The OSW developer must secure a Grid Connection Agreement (GCA) which allows connection of the
plant to the grid from relevant authorities. In case the power plant is to be directly connected to the
transmission network, the OSW developer will secure this with NGCP. The GCA is a legally binding
contract which will be formed between the NGCP and the developer for which penalties will apply both
ways in the event either party is delayed. These penalties will normally be linked to the penalties that
the developer will be exposed to with the transmission network operator under their PPA.
Service agreements
Upon successful completion of the development and commercial stage, a service agreement must be
applied for, which consists of
■ A Transmission Service Agreement (TSA) and

■ A Metering Service Agreement (MSA).
In the Philippines, NGCP is mandated to provide revenue meters to all RE installations. A metering
agreement therefore must be signed between the RE developer and NGCP.
Following completion of the works, electrical inspections will be conducted by a LGU and the DOE,
respectively. The Certificate of Final Electrical Inspection will be granted
after successful inspection by the LGU and the Confirmation of Electromechanical Completion
will be secured after the inspection by the DOE. The cost of inspection by the DOE will be borne by
the developer.
The list of sub-steps for each procedure to secure a grid connection has been presented in Table 18.1.

TABLE 18.1 SUMMARY OF THE GRID CONNECTION PROCESS
Step Sub-Step Required Documents
Grid Connection • Submission of GCA application adheres to • LOI from developer

Agreement (GCA) 1. Open Access Transmission Service • Clearance from the DOE
(OATS) • Plant description and technical data
2. The Philippines grid code • Connection scheme and target
3. Open access procedures completion date
• Reviewed by NGCP • Feasibility study
• Notification to pay a fee for a grid impact • Signed offer of service
study or contract a consultant and pay a • Grid impact study
review fee to NGCP
Transmission • Submission of TSA application • Letter of application

Service • Construction of facilities at the • Load approval from the ERC
Agreement (TSA) connection point approved by NGCP • GCA
• Conducting of pre-energization activities • Issuance of certificate of technical
together with the grid customer requirements:
• Issuance of a readiness to connect 1. District Office clearance
• Conducting of online testing witnessed by 2. Metering Services Group clearance
the NGCP 3. Maintenance and Testing Division
• Final connection validation by NGCP clearance
4. Payment of security deposit
• Signing of the TSA
Metering Service • Same steps as TSA application • Same documents required as TSA
Agreement (MSA) application
LGU’s Certificate • Electrical safety inspection conducted by • None

of Final Electrical the respective LGU
Inspection • Testing and verification of the electrical
wiring before the installation of meters
DOE • Informing the DOE of the completion • Letter informing the DOE that the
Confirmation of • Site visit by the DOE within 15 days; project has reached electromechanical
Electromechanical the project must have reached completion
Completion 80% completion based on approved plan
• Issuance of confirmation/denial in
15 days

18.8 DISCUSSION
It is apparent that significant upgrades are required to strengthen the transmission and distribution
network over the next 30 years to accommodate the increase in both the demand and supply of
power which will come from a variety of sources. The current plans from NGCP are the first step in
the upgrade but a much bigger vision will be required for 2050 to support the energy transition. It is
recognized that the focus of the power demand is presently at Manila and Cebu with ambitions to
open new transmission corridors through Mindoro and throughout Visayas. While this is encouraging,
there is a concern that with these current plans, increasing RE penetrations could have an adverse
impact on the operation and stability of the transmission network. Therefore, detailed power systems
analyses focusing on the reliability and resilience of these plans are recommended through power flow
simulations to determine the most appropriate grid reinforcement measures to be applied.
On inspection of the currently proposed transmission upgrades, additional measures that may
be required to enable 20 GW output from the potential OSW development zones by 2040 include
the following:
■ Creating a strong backbone in Northern Luzon to bring power from the Northwest Luzon potential
OSW development zone, suitable for floating projects, into the Manila area, an extension to the
existing proposed 500 kVAC upgrading works.
■ Creating a link between Manila and the Southern Mindoro potential OSW development zone.
■ Significant stretches of these lines could be subsea, offering increased build-out speed at reduced
cost. These lines would need to be supplemented with suitable energy storage systems to regulate
the transmission network frequency and provide better peak load management.
In this manner, significant capacity can be developed close to these links, allowing growth of the OSW
market in the potential OSW development zones, as well as extensive electrification of domestic and
commercial activities along the routes.
Although this would potentially meet most OSW needs up to 2040, further strengthening will be
needed beyond this, especially in the areas where a sizable proportion of the OSW developments
could be located, such as the southern end of Mindoro. This vision is shown in Figure 18.12. The grid
reinforcements shown will provide increased capacity in parts of the grid that projects the OSW
Development Zones will likely connect to.

FIGURE 18.12 TRANSMISSION VISION IN THE HIGH GROWTH SCENARIO FOR 2050
Source: NGCP.
The financing and timing of these transmission network upgrades will be critical as they can typically
take more than ten years to plan, design, and implement but will allow the connection of OSW projects
to offshore hubs for the high growth scenario and is therefore a key recommendation for this study.
Substantial investment will be required to build such transmission system upgrades. This can be
undertaken using conventional loans from the international market, although the sums are potentially
prohibitive. One commonly used mechanism to facilitate large transmission system upgrades that
lessen the investment burden on governments is a build-own-operate-transfer (BOOT) model. Under

this model, a private business is mandated by the government to finance, construct, build, and operate
the transmission infrastructure. The investment is recovered by levying a fee to the government.
This approach could allow the Philippines to undertake an accelerated program of transmission build
without public investment.
Note that throughout our analysis, we have included the cost of a 40-kilometer export system,
connecting each OSW project to the transmission network, via either
■ Offshore substation, 20-kilometer subsea export cable and 20-kilometer of onshore export cable,
to an onshore substation or
■ Offshore substation, 40-kilometer subsea cable, to an offshore hub, likely serving multiple
OSW projects.
The cost of the above plus the wind farm specific switchgear and auxiliary equipment in the substation
that is located on the transmission network are included, but not the onward cost of transmission
network upgrades, that will contribute to the ongoing electrification of the Philippines.
Based on this analysis, it is recommended that the DOE
■ Publishes the 2050 vision for a nationwide electricity transmission network for a decarbonized
energy system, with milestone plans for 2030 and 2040 and consideration of finance. This is a
topic much wider than OSW, considering all electricity, transport, and heat.
■ Incorporates OSW development zones fully into CREZ processes and TDP processes.
■ Along with the Department of Environment and Natural Resources (DENR), NGCP, and
Transmission Corporation (TransCo) undertake regional and countrywide power systems studies
to understand the potential impacts of large volume OSW on the future transmission network,
building in system robustness through the integration of suitable energy storage systems and
other stabilization measures. In undertaking this process, careful consideration should be given
to the route selection, with robust ESIA analysis in line with GIIP and lenders’ requirements
undertaken for each potential route, feeding relevant information into MSP activities.
■ Works with NGCP and TransCo to update TDP delivery, approval processes, and grid management
practices to reflect the move to more supply from RE sources.
■ With WBG support, considers low-cost solutions for the investment and procurement of
transmission system upgrades including BOOT models to encourage private businesses to finance,
construct, build, and operate the transmission infrastructure, and the use of concessional finance.
■ Ensures clarity and efficiency for projects in securing grid connections, including point-to-point
applications and compensation for delayed grid connection availability once a GCA is signed.
■ With ERC, consider amendments to the existing Philippines Grid Code and Distribution
Codes to cater to the significant increase in renewable power from OSW and other variable
forms of RE generation.
·

19. PORT INFRASTRUCTURE
19.1 PURPOSE
In this work package, we assess the Philippines port infrastructure capability for OSW. We focus
mainly on floating OSW supply chain needs and on ports to support coastal manufacturing and
construction, in line with the scenarios presented in Section 2. Typically, the requirements for floating
OSW activities exceed those for fixed when the fabrication and assembly of floating foundations
with turbines are completed in the same location as turbine marshalling. Road, rail, and other
infrastructure requirements around ports depend on port use. In general terms, although there is
limited infrastructure, we do not see significant issues relating to onshore logistics for the construction
and types of manufacturing that we anticipate within the next 10 to 20 years.
Ports to support operation of the project over the 25 or more years of generation typically have much
lower requirements and any investment is easier to justify over the long operating life of an OSW project.
It is preferable for floating projects that the ports can accommodate floating foundation manufacture,
preassembly of turbines, and final assembly of turbines and floating foundations in one location or where
these activities can be completed in ports near each other. The current consensus from industry is for
floating projects to be installed with the turbine and floating foundation fully assembled and towed to
site using tugs. It is therefore preferable that transit distances are as low as possible to reduce the length
of weather window required during towing operations, conducted at relatively low speeds.
We understand that Central Luzon, Calabarzon, and Central Visayas have shipbuilding facilities that
could provide suitable infrastructure for manufacture and preassembly, without significant upgrade cost.
We look at the Philippines port capabilities and gaps and provide recommendations on how best
to address potential bottlenecks. This is important as good ports are critical for safe and efficient
construction of OSW projects. This underpins the work in Section 10 and Section 11 and informs
other activities.
19.2 METHOD
We started by establishing port requirements for floating OSW by 2035. As the industry continues to
develop quickly, a 15-year horizon for investment in ports is a reasonable time scale.
We then used team and stakeholder knowledge to assess existing ports in locations relevant to OSW,
categorizing ports as
■ Suitable with little or minor upgrades (cost less than US$5 million);
■ Suitable with moderate upgrades (cost between US$5 million and US$50 million); or
205
■ Suitable only with major upgrades (cost greater than US$50 million).
We shared this assessment with key developers and other stakeholders and gathered feedback and
additional data.
We have focused on ports that meet (or are close to meeting) requirements but recognize that there
are also smaller ports with potential for expansion that could also in time be suitable for OSW activity,
especially on the basis of a long-term government strategic vision for OSW.
Environmental and social aspects have only been considered at a headline level and would need to be
incorporated fully during more detailed option appraisal in the future.
Port assessment criteria

The criteria used to assess both construction and manufacturing ports are defined in this section and
summarized in Table 19.1. Construction ports must accommodate the delivery and storage of a large
volume of wind farm components. These ports must be capable of facilitating full or partial assembly
of turbines and foundations prior to load out and transport to the wind farm site.
For fixed projects, the load out of components normally occurs in batches of four or more turbines or
foundations at a time, depending on the capacity of the vessel used.
A construction port for floating projects can vary in terms of application. In some instances,
fabricated floating foundations can be transferred to a marshalling port for assembly with turbines,
while under another approach fabrication of floating foundations is completed in the same location
as turbine marshalling.
The main difference between construction and manufacturing port requirements is space.
Manufacturing facilities require large areas for warehouses and storage space for components before
onward transportation. In some cases, manufacturing ports may facilitate construction activities
through co-location or clustering. The feasibility of this solution depends on storage space and
quayside access constraints, ensuring each process can continue simultaneously without hindrance.
Construction port requirements
Fixed projects
For fixed projects, construction ports will often receive components in batches which are temporarily
stored before load-out for installation. The minimum storage space for a construction and marshalling
port is specified as 13 ha for 400 MW build-out per year. For sites with greater weather restrictions or
for larger-scale projects, up to 30 ha is required.
Quay length requirement is between 250 and 300 meters, which will accommodate up to two midsize
jack-up installation vessels or one next-generation installation vessel such as Jan De Nul’s ‘Voltaire’
or DEME’s ‘Orion’. These vessels have drafts ranging between 8 and 10 meters and minimal channel
depths have been specified based on this. Port channels must be wide enough for vessels with beams
ranging between 45 and 60 meters with overhead clearances of 140 meters to allow for the vertical
shipment of turbine towers.

Quaysides need bearing capacities between 20 and 30 metric tons/m2 for load-out to adjacent vessels
while storage areas need a capacity of at least 10 metric tons/m2.
Quayside cranes can be used to lift turbine components and foundations in port areas. Suitable cranes
have capacities between 500 and 1,000 metric tons for turbine components and between 1,400 and
2,200 metric tons for medium to large monopiles. We acknowledge that lifting is often completed by
installation vessels or temporary land-based cranes during load-out, so the importance of this criteria
has been reduced in our analysis. Self-propelled modular transports (SPMT) facilitate the onshore
transport of cargo between storage and quayside areas. Mobile and crawler cranes are also used for
materials handing but as ports can temporarily hire this equipment, weightings were applied to reduce
the significance of this criteria.
Ports also need workshop areas, personnel facilities, and good onshore transport links, which are
included in Table 19.1 under ‘other facilities’.
Floating projects
Foundations for floating projects generally require more space due to their size and general preference
to fabricate steel tubulars or sections at the same location where the final assembly of foundations
is completed. This would require a minimum of 20 ha. For a port to facilitate floating foundation
manufacture and assembly with turbines at the same location, a minimum of 40 ha is required across
a site. In practice, the chosen method will depend on factors such as floating foundation type, port
facilities, and proximity to other ports that might be used for marshalling of turbines separately. An
additional port location can also be used for the marshalling for anchors, which are installed separately
and in advance of floating foundations. The space requirement for anchor marshalling is around 5 ha.
A key feature of floating foundations is the draft of the floating substructure, with the leading
concepts such as tension-leg platform (TLP) and semi-submersible expected to require a minimum
water depth at the quay of around 10 meters. Anchorage areas are also required to store completed
floating foundations and a minimum requirement of around 13 ha is estimated for these purposes.
A quay length or dry dock boundary similar to ports for fixed projects is required to allow for the
assembly of a single turbine with a floating foundation, which could extend to around 500 meters if two
assembly processes are completed simultaneously. Quayside or dry dock bearing capacities of between
20 and 30 metric tons/m2 will be required for the assembly process. A minimum of 10 metric tons/m2 is
also required in storage areas. Quayside cranes are required for the assembly of turbine components with
floating foundations. Suitable cranes have capacities between 500 and 1,000 metric tons.
Manufacturing port requirements
The typical minimum space needed at a turbine tower or blade manufacturing facility is around 20 ha,
while nacelle manufacturing tends to require less space at between 6 and 10 ha. We anticipate blades
or nacelles will not be manufactured locally in the Philippines, rather being supplied from elsewhere in
East Asia, at least up until the early to mid-2030s.
Suppliers of floating foundations often have transferable expertise from the manufacture of jackets,
ship hulls, and other large-scale marine structures. The minimum space required for a floating
foundation manufacturing yard to serve 400 MW per year is approximately 20 ha which can be either
19. Port infrastructure 207

on land or in dry dock areas. This increases to 40 ha to deliver up to 1 GW annually. This considers only
partially assembled floating foundations such as hull sections and tubulars which would be shipped
elsewhere for full assembly.
Offshore substations tend to be large but are often fabricated and then assembled as single or two
units at a time and require space similar to a nacelle manufacturing facility. Substations use less serial
manufacturing processes, so are more like oil and gas fabrications. Local manufacture of substations
is likely.
TABLE 19.1 CRITERIA FOR ASSESSING THE PHILIPPINES' PORT CAPABILITIES
Port criteria Value
13–30 (marshalling and preassembly)

Fixed project port storage space (ha)
20–30 (manufacturing)
20–40 (foundation manufacturing)
Floating project port storage space (ha)
40–60 (foundation manufacturing
(incorporating available dry dock space)
and assembly with turbines)
Storage area bearing capacity (metric tons/m2) 10
Quay length (meter) 250–300

Quayside bearing capacity (metric tons/m2) 20–30
Quayside depth (meter) 10
Channel depth (meter) 10
Channel width (meter) 45–60
Wet storage area for completed floating
13
foundations (ha)
Overhead clearance (meter) 140
Crane capacity for fixed foundations (metric tons)* 1,400–2,200
Workshops, skilled workforce,
Other facilities
personnel facilities, road and rail links
Note: *Lifting capacities may be provided by mobile or vessel cranes during load-out.
19.3 RESULTS
The Philippines has an expansive coastline of over 36,000 kilometers, owing largely to over 7,600 islands
that make up the country. There are approximately 436 ports in the Philippines that are owned and
operated by private and public entities. The Philippines Ports Authority is responsible for most of the
ports in the country, managing 88 public and 238 private ports. The World Economic Forum ranked
the efficiency of the Philippines seaport services as 88 out of 141 countries, while road connectivity was
ranked 125, suggesting that access to ports by road can be a restriction in many locations.
With the majority of suitable wind resource and potential OSW sites located in the central and
northern regions of the Philippines, including off Cagayan, Central Luzon, Western Visayas, and
Mindoro, this has helped focus the search for suitable ports. Notable major ports in these regions are
Iloilo, Batangas, Manila, and Subic. With the Philippines being a significant trading nation, the majority
of the large-scale ports are congested with land space mainly reserved for cargo, container traffic,

and roll-on-roll-off (RORO) ferries. This is especially the case for the capital Manila, where the port
areas are heavily utilized with container traffic, with little or no unused space for heavy fabrication
or marshalling. A given OSW project needs a large amount of space for only one to two years, which
tends not to be compatible with an active cargo port having a constant flow of goods. It is the same in
Iloilo, Batangas, and Subic; however, heavy fabrication sites and shipbuilding facilities exist within 100
kilometers of these locations, which present the greatest potential for OSW development activities.
Batangas Bay and Subic Bay are two potential hotspots with a strong legacy in shipbuilding and heavy
fabrication of marine structures.
Elsewhere there are many smaller multipurpose ports distributed throughout the country with land
areas ranging between 3 and 5 ha. These sites have not been considered in the review due to 5 ha
being insufficient for full construction support. It is likely that several of these facilities could provide
storage and load-out of anchors for floating foundations or safe havens for vessels to shelter from
adverse weather during installation of floating turbines.
Location of potential OSW suppliers

There are companies in the Philippines that will depend on reliable and accessible port infrastructure
to supply the OSW industry. While there is limited immediate expertise in OSW in the Philippines,
there are several entities with transferable knowledge that could play a part in the development of
OSW projects.
Atlantic, Gulf and Pacific Company (AG&P) of Manila owns and operates the Batangas Heavy
Fabrication Yard which is profiled in this section. AG&P is predominantly a downstream liquified natural
gas (LNG) supplier and has experience of fabricating heavy, large, and complex units such as process
units, modules, and various structures for marine applications from their Batangas Yard. AG&P has
been identified as a potential supplier for towers, foundations, and offshore substations due to its
transferable skills and marine expertise.
Keppel owns and operates two large yards in Batangas and Subic, both of which are profiled in
this section. These locations are used for shipbuilding and repair but have good potential for heavy
fabrication such as floating or fixed foundations. Keppel has a strong track record in the fabrication
of offshore substations in other countries and could leverage this expertise to provide input to OSW
in the Philippines.
EEI is one of the leading construction companies in the Philippines and has a steel fabrication shop
located in Bauan, Batangas. EEI has the capability to fabricate and erect structures and assemblies for
industrial installations and infrastructure projects. It has a strong track record in pressure silos, drums,
and intricate steel structures. It has also utilized the Keppel Batangas Yard for large-scale fabrication
projects. EEI has the potential to transfer this expertise for the fabrication of towers, foundations, and
substation topsides.
Bauer Foundations is a subsidiary of Bauer Spezialtiefbau and has its Philippines headquarters in
Manila. Bauer is mainly focused on ground piles and anchors for buildings in the Philippines although
the parent organization has a renewables arm, based in the UK. This division provides marine solutions
division for designing and installing steel foundation piles in all offshore environments and would likely
make use of its position in the Philippines to provide these services as required. Bauer could use one

of the yards in Western Luzon to fabricate and load out foundations for fixed projects. Its expertise in
floating foundations is limited but it could likely make a transition into this area based on its legacy in
marine expertise.
Ports likely to be used most for offshore wind

We have identified seven potential ports, driven mainly by the requirements for floating projects as
these present the predominant long-term opportunity in the Philippines. A summary is provided in
Table 19.9. A map of the port locations is provided in Figure 19.8.
Our assessment has generally identified that many of these ports have the space for manufacturing
as well as construction. At this stage, we have not assessed port availability and interest in OSW—key
next considerations for project developers. This activity could be left to industry or the government
could play a role.
Port of Batangas Yard
The Port of Batangas is one of the major ports in the Calabarzon region and is seen as a less congested
alternative to Manila. Batangas is mainly focused on international container traffic and domestic
RORO activities, which are located toward the right side of the port basin in Figure 19.1. There is
a significant amount of open storage space as shown by the amber region in Figure 19.1, which is
approximated at 23 ha.
For floating projects, space constraints would limit the port to either smaller-scale floating foundation
manufacture or assembling turbines with completed foundations after wet towing from another
fabrication port. The port is in Batangas Bay, which provides natural shelter, and there is sufficient
space to moor floating foundation assemblies surrounding the port.
The available space is potentially suitable for marshalling of fixed foundations or turbines. The site
could also be leveraged for fixed foundation, tower, or blade manufacturing.
The site could also be considered for a manufacturing facility for offshore substations. There could
be an opportunity to explore the use of additional land space in the surrounding container port for
marshalling and preassembly activities. The load-out quay would need to be shared with the container
port for the transfer of components to and from installation vessels, while there could be an option
to build a new quay neighboring the amber shaded area in Figure 19.1. The port has good cranage
and welfare facilities. It has handled many heavy cargo deliveries separate from container traffic.
Neighboring greenfield space could potentially be explored to expand landside storage areas, though
this appears to support remnant wetland habitats. Table 19.2 provides headline port specifications.

FIGURE 19.1 PORT OF BATANGAS YARD
Source: Google Maps, BVG Associates.
TABLE 19.2 PORT OF BATANGAS YARD SPECIFICATIONS
Port criteria Value

Storage space (ha) 23
Storage area bearing capacity (metric tons/m2) 5*
Quay length (meter) 660
Quayside bearing capacity (metric tons/m2) 5–10 (expected)
Quayside depth (meter) 8–10
Channel depth (meter) 8–20
Channel width (meter) 420
Wet storage areas (ha) >13
Overhead clearance (meter) Unrestricted
Cranage Good
Other facilities Good

Keppel Batangas Shipyard
Keppel Batangas Shipyard is equipped to provide a broad range of offshore and marine services. The
yard has completed extensive repair works for many vessel types including bulk carriers, dredgers,
offshore support vessels, oil rigs, oil, and LNG tankers.
The facility has limited outdoor storage space of approximately 7 ha, although there are several
covered halls that could provide facilities for fabrication of foundation sections. Additionally, a dry dock
and a ship-lifting platform located to the right and bottom of the image in Figure 19.2 could be used
for the load-out or launch of completed foundations. The facility could be considered for the fabrication
of floating foundations while the quay length means that assembling of turbines with floating
foundations could not be completed at this location. The neighboring Batangas Heavy Fabrication Yard
could provide turbine marshalling and subsequent assembly with completed foundations. The site can
also make use of the natural sheltering and expansive anchoring areas available to store completed
floating foundations.
The site could also be considered for the fabrication and preassembly of fixed foundations by making
use of the covered fabrication halls, although the quay would likely be able to accommodate only one
vessel at any time, unless the quay alongside the ship-lifting platform can be used simultaneously,
provided it has sufficient width and bearing capacity.
To the left of Figure 19.2, a disused coal terminal shaded in blue could also be leveraged to provide
approximately 4.5 ha of space, though this is likely to be a modified habitat. The cranage and land
bearing capacity is expected to be of a good standard. Table 19.3 provides headline port specifications.
FIGURE 19.2 KEPPEL BATANGAS SHIPYARD

TABLE 19.3 KEPPEL BATANGAS SHIPYARD SPECIFICATIONS
Port criteria Value

7 (6 on land, 1 in dry dock)
Storage space (ha)
Possible 4.5 extension
Storage area bearing capacity (metric tons/m2) 10 (expected)
Quay length (meter) 133 (177 alongside ship-lifting platform)
Quayside bearing capacity (metric tons/m2) 10–20*
Channel width (meter) n.a.
Cranage Good
Batangas Heavy Fabrication Yard
Batangas Heavy Fabrication Yard is located next to the Keppel yard. AG&P of Manila owns and
operates the 100 ha facility, which is used for heavy fabrication and assembly. The site benefits from
direct, open water access and AG&P has a history of fabricating heavy, large, and complex units from
this facility such as process units, modules, and various structures for marine applications. The yard
has approximately 25 ha of open air storage space with several covered fabrication buildings.
The site has good potential for floating projects, either as a small-scale foundation fabrication space
or as a turbine marshalling hub. The quayside could accommodate the assembly of one turbine and
floating foundation at a time. The coordination of activities with the neighboring Keppel shipyard could
be explored, with foundations built in the shipyard and the final assembly with the turbine completed
at Batangas Heavy Fabrication Yard.
The yard could provide a suitable marshalling location for smaller fixed projects, offering sufficient
space for fixed foundations or turbines.
This site could also be considered as a potential location for the manufacture of turbine components
such as towers or nacelles and, based on its legacy of large-scale fabrication, could be considered
for the fabrication of offshore substations. Usage of the 240-meter quay will likely require coordination
with a neighboring car export facility. The yard will also benefit from the natural sheltering in
Batangas Bay and make use of the widespread anchorage locations as required. Table 19.4 provides
headline port specifications.

FIGURE 19.3 BATANGAS HEAVY FABRICATION YARD
TABLE 19.4 BATANGAS HEAVY FABRICATION YARD SPECIFICATIONS
Port criteria Value

Storage space (ha) 25
Cranage Limited

Hanjin Heavy Industries Shipyard
Keppel Subic Shipyard is located in the Subic Special Economic Zone and also in the Zambales
Marine Protected Area Network. It has a strong history of ship repair, conversion, new build, offshore
structures, and topside module fabrication. It boasts one of the largest dry docks in the Philippines
spanning approximately 10 ha which includes a 1,500 metric ton gantry crane. The dry dock is
adaptable and can be partially flooded to allow for the launch of completed structures or ship hulls,
while others toward the back end of the dock remain dry.
The yard has a total expanse of approximately 21 ha, including the dry dock. The land adjacent to
the dry dock is occupied by covered fabrication spaces meaning there is limited storage space at the
facility. The longest quay has a length of 360 meters but is particularly narrow with a width of 30
meters. Subic Bay provides natural shelter from the open seas and many vessels anchor in this area.
The shipyard has the greatest potential for the fabrication of floating foundations, which would
benefit from transferable expertise and dry dock infrastructure that will allow for the batch load
out of completed floating foundations. With limited storage space elsewhere in the yard, completed
floating foundations will likely need to be towed to a different port for assembling with the turbines.
One potential option is to utilize the nearby Hanjin Heavy Industries (HHI) fabrication site, located
approximately 6 kilometers south. Table 19.5 provides headline port specifications.
FIGURE 19.4 KEPPEL SUBIC SHIPYARD

TABLE 19.5 KEPPEL SUBIC SHIPYARD SPECIFICATIONS
Port criteria Value

Storage space (ha) 10 (10 dry docks)
Channel Width (meter) n.a.
Overhead Clearance (meter) Unrestricted
Cranage Good
Hanjin Heavy Industries Shipyard - Subic
The HHI Shipyard in Subic spans over 180 ha of land in the Subic Freeport Zone and also in the
Zambales Marine Protected Area Network. It was built on the location of a former US navy base
after being handed over to the Philippine Government in 1992. The yard has built a variety of vessels
including large container ships, LNG, and bulk carriers. It has two large dry docks of 10 and 7 ha and at
its peak employed around 20,000 workers. The yard has suffered from the downturn in international
shipping in recent years and sought court receivership in 2019. The yard is now inactive and seeking
a new buyer. The Philippine Navy was considering the potential for a new base on this site while more
recent reports have indicated that an American-Australian consortium is considering a takeover.
With infrastructure well suited to ship and hull fabrication, the dry docks would be an ideal location for
the manufacture and load-out of floating foundations. The expansive fabrication halls could be used
to serially fabricate floating foundation components. Besides the two dry dock spaces, approximately
20 ha of land could provide additional storage as shown on the bottom right of Figure 19.5. This could
provide a location for turbine storage for eventual assembly with floating foundations in the dry dock.
Subic Bay has expansive anchorage areas for the storage of completed floating foundations, which
would be sufficiently sheltered in the enclosed basin.
The site could facilitate the fabrication of fixed foundations as required. The 20 ha of land could
provide storage and preassembly of turbines or foundations for fixed projects. The nearby Keppel
Shipyard could be used in tandem with this site, coordinating fabrication of marshalling activities as
required. Table 19.6 provides headline port specifications.

FIGURE 19.5 HANJIN HEAVY INDUSTRIES SHIPYARD - SUBIC
TABLE 19.6 HANJIN HEAVY INDUSTRIES SHIPYARD SPECIFICATIONS
Port criteria Value

Storage space (ha) 38 (18 in dry docks)
Storage area bearing capacity (metric tons /m2) 10 (expected)
Quayside bearing capacity (metric tons /m2) 10–20*
Cranage Good

Herma Shipyard - Bataan
Herma Shipyard is based in the Bataan Freeport Zone and has built 11 new vessels since its
inception in 2000. The shipyard is shown on the right half of Figure 19.6 and spans across 17 ha of
land, 9 ha of which is available as open air storage. The shipyard has several covered fabrication
spaces and offers one dry dock, a floating dry dock, and a slipway. The longest quay at Bataan is
approximately 140 meters.
A nearby yard, as shown on the left of Figure 19.6, could provide an additional space of 12 ha and an
additional slipway. If used in conjunction with the shipyard, these combined spaces could facilitate
the fabrication of floating foundations. The dry dock could be used as a means to assemble floating
foundation with turbines; however, the lack of large-scale cranage could be an issue and would require
large mobile cranes to be brought onto the site. As the yard is located in the bay behind Bataan
peninsula, it is expected that there will be sufficient anchorage areas to accommodate fully assembled
floating foundations, though it will be relevant to consider the environmental impact of such activity.
If the site to the left of Figure 19.6 is made available, it could alternatively be used for nacelle or
offshore substation manufacture. Table 19.7 provides port specifications.
FIGURE 19.6 HERMA SHIPYARD - BATAAN

TABLE 19.7 HERMA SHIPYARD SPECIFICATIONS
Port criteria Value

Storage space (ha) 9, with possible 12 ha extension
Cranage Poor
Tsuneishi Heavy Industries, Balamban - Cebu
The Tsuneishi Heavy Industries (THI) shipbuilding facility is the most southerly port considered in this
review and was identified as the most feasible site to support potential developments in the Guimaras
Strait. It is located in Tanon Strait Important Marine Mammal Area and Tañon Strait Protected
Seascape, with remnant patches of mangrove to the north and south. THI is one of the leading
medium-size shipbuilders in the world. Its site on the island of Cebu is large at almost 150 ha and has
two shipbuilding berths with a maximum throughput of around 30 vessels per year. It has built many
different types of vessels including bulk carriers, tankers, and car carriers.
As shown by the amber regions in Figure 19.7, around 30 ha of open air storage is available at the
facility with around 5 ha of dry dock space. The site could therefore be used for various activities
such as the fabrication of floating and fixed foundations while potentially using some of the open
air storage space for the marshalling of turbines. Approximately 5 ha of additional space would be
required to fabricate, make, and launch floating foundations on the site, which could be made available
in the central area of the image in Figure 19.7. The dry docks could facilitate the assembly of floating
foundations with turbines installed in the dock before float-out or at the 520-meter repair quay. The
Tanon Strait where the THI facility is located could be used for the storage of floating foundations
and would benefit from sheltering by the land mass, either side of the passage. As the facility is
heavily active in ship repair and manufacture, early booking will be required to secure space for OSW
development. Table 19.8 provides port specifications.

FIGURE 19.7 TSUNEISHI HEAVY INDUSTRIES - BALAMBAN - CEBU
TABLE 19.8 TSUNEISHI HEAVY INDUSTRIES SPECIFICATIONS
Port criteria Value

Storage space (ha) 35 (30 land, 5 dry docks)
Cranage Good

19.4 DISCUSSION
Figure 19.8 shows that the ports with greatest potential are predominantly clustered on the west side
of Central Luzon, except for the THI facility located in the Guimaras Strait. These are well placed to
serve the proposed development surrounding Mindoro and Iloilo, although for other sites located in
Northern Luzon and in Camarines, there is a lack of immediate port infrastructure. If the ports profiled
in this section are to serve these locations, this could introduce prohibitively long vessel transit times.
This is particularly problematic for floating projects as long weather windows will be required to safely
tow turbine and floating foundation assemblies to these sites. If there is continued ambition to develop
these sites, a case could be made to develop or upgrade an existing smaller port on the east coast in
regions such as Aurora or Isabela.
FIGURE 19.8 OFFSHORE WIND MANUFACTURING AND CONSTRUCTION PORTS IN THE

PHILIPPINES

Table 19.9 summarizes the assessment of ports, showing ports in indicative order of suitability for
OSW construction and manufacturing.
TABLE 19.9 SUMMARY OF MANUFACTURING AND CONSTRUCTION PORTS FOR OFFSHORE

WIND IN THE PHILIPPINES
Suitability for Suitability for

Port Comment
construction manufacture
• Ownership: Private
• Location: Coastal (sheltered)
• Capable of fabricating ships and large steel structures.
• Good port facilities, quays, dry docks, cranage and space
Tsuneishi
• Good potential for fabrication of floating foundations
Heavy Suitable Suitable
Industries, with minor with minor • Potential to accommodate floating foundation fabrication
Balamban upgrades upgrades and assembly with turbines at same site with some
- Cebu additional space made available
• Minor to moderate upgrades likely to bearing
capacity of quayside
• Moderate upgrades likely to quayside depth and width
• Ongoing shipbuilding activity could affect availability of site.
• Ownership: Formerly private (now looking for a buyer).
Austrian and American consortium considering purchase.
Interest from Philippines Navy
Hanjin Heavy • Capable of fabricating very large structures, ships, and hulls
Suitable Suitable
Industries
with minor with minor • Good port facilities, quays, dry docks, and cranage
Shipyard
upgrades upgrades • Good potential for fabrication of floating foundations
- Subic
• Good potential for direct storage of turbines and assembly
of turbines with floating foundations in dry docks
capacity of quayside.

Port Comment
• Capable of fabricating large structures, ships, and hulls
Suitable • Good port facilities, quays, dry docks, and cranage
Suitable with
Keppel Subic with minor • Good potential for fabrication of floating foundations
moderate
Shipyard to moderate • Moderate upgrades to bearing capacity of quayside
upgrades
upgrades • Additional port space required for marshalling
• Minor upgrades required to channel depth.
• Good potential for manufacturing of turbine
components or substations
• Good potential for marshalling foundations or
turbines for fixed projects
Suitable • Suitable for small-scale floating foundation manufacture or
Port of Suitable with
with minor as a turbine to floating foundation assembly location
Batangas moderate
to moderate • Additional port space likely required for combined floating
Yard upgrades
upgrades foundation manufacture and turbine assembly
• Quay access could be restricted. An additional quay could
be considered
• Minor to moderate upgrades to bearing capacity
of storage area
• Moderate to major upgrades required to bearing
• Location: Coastal
• Good potential for manufacturing of turbine
components or substations
• Additional port space likely required for large-scale
Batangas Suitable floating foundation manufacturing
Suitable with
Heavy with minor • Good potential for fixed foundation and turbine marshalling
moderate
Fabrication to moderate • Potential to coordinate activities with neighboring
upgrades
Yard upgrades Keppel yard
• Minor upgrades to quayside depth
• Minor to moderate upgrades to bearing capacity
of storage area
• Major moderate upgrades required to bearing

Port Comment
• Potential to leverage neighboring yard space to
enhance space availability and facilitate fabrication
of floating foundations
Herma Suitable with Suitable with
• Additional port space required for manufacturing and
Shipyard moderate moderate marshalling
- Bataan upgrades upgrades
• Moderate upgrades to quay length
• Moderate upgrades to bearing capacity of storage area
• Improved cranage and handling solutions required.
• Limited outdoor space for storage and fabrication
• Potential to extend into neighboring yard
• Greater potential to use extension and neighboring
Keppel Suitable with Suitable with Batangas Heavy Fabrication Yard
Batangas moderate moderate • Moderate to major upgrades to quay length
Shipyard upgrades upgrades • Additional port space likely required for manufacturing
• Extension of quayside required
• Minor to moderate upgrades to bearing capacity of
storage area
The ports that have been profiled can sufficiently meet demand in both scenarios through the 2030s,
based on the conservative assumption that approximately 20 ha of port space can accommodate
for around 250 MW of annual development. Sufficiency also depends on other port uses and, in some
cases, on ports working collaboratively and addressing the necessary upgrades required. Greater
transparency of port specifications and capabilities is also needed to allow developers to identify the
best site for fabrication or marshalling.
■ Philippines Ports Authority encourages the publication of an OSW port prospectus, showing port
capabilities against offshore physical wind requirements, and uses this to encourage dialogue
and timely investment in relevant port facilities. This will involve engagement with independent
government entities managing freeports.
■ Philippines Ports Authority and the Department of Energy (DOE) work with ports to build a vision
of how a pipeline of projects in the potential OSW development zones could be delivered in line
with a strong government vision and to assess whether it is viable to establish any new port
facilities. In undertaking this process, careful consideration should be given to environmental and

social considerations and robust environmental and social impact assessment (ESIA) analysis
undertaken for any potential developments.
■ Project developers and owners of suitable ports discuss early how the needs of OSW projects can be
addressed, recognizing the need to share fabrication and assembly responsibilities in some cases.
■ The DOE, the Department of Trade (DTI), National Economic and Development Authority (NEDA),
Philippines Ports Authority, and relevant freeport zone authorities explore potential Philippines and
inward investment to finance port upgrades or new facilities.

20. RISK AND BANKABILITY
20.1 PURPOSE
The purpose of this work package is to define project and market elements that affect the bankability
of OSW projects in the Philippines. Our focus is the risks that have the potential for high commercial
impact which may be perceived as a barrier by international or local investors.
We have considered a project developer’s market risks associated with construction, commencement
of commercial operations, and generation of revenue. Project risks relating to supply and technology
are important, but not directly relevant to this roadmap. Broader financial market risks are addressed
in Section 21. Risks to the government are covered in the SWOT analyses in Sections 3 and 4.
20.2 METHOD
Developing an OSW plant involves different risks and considerations to onshore wind and solar
development. There are, however, benefits in taking elements of onshore renewables frameworks as a
basis for the OSW frameworks, where relevant.
We therefore reviewed key aspects of the existing renewables market in the Philippines and considered
current trends, such as the move toward an auction scheme from the current feed-in tariff (FIT)
scheme and identified the risks that such a regime may create. We also looked at specific activities
or commercial arrangements that have the greatest potential for impact to future cash flows of a
project, for example, local grid capacity or skills level of local labor force for OSW.
Throughout, our guiding principle has been that risk should be placed where it can be best managed.
There are some risks, such as higher than expected operating costs, which investors should bear as
they are well placed to manage them. If risks that are outside of their control—such as regulatory or
policy risks—are placed with investors, they will require an increased rate of return for bearing them.
If risks exceed investors’ limits, they will decide not to invest and to allocate their capital to other
international investment opportunities. As a result, in some cases it can be more efficient for these
risks to be placed on the government or directly on customers, as this will result in a lower cost to
customers than the cost of paying investors to bear them.
Where we have found that the existing regime may allocate risks inappropriately in a way which may
create a barrier to the rollout of OSW, we have suggested changes.

Each of the risks identified has been assigned a risk magnitude based on the following scale:
■ Red. Significant financial risk to investors that is likely to stop investment happening, requiring
mitigation from the government.
■ Amber. Moderate financial risk to investors that will have significant cost or contractual
implications and may need mitigation from the government.
■ Green. Low-level financial risk not likely to stop investment, the government may consider mitigation.
20.3 RESULTS
The main financial risks for OSW in the Philippines are summarized in Table 20.1 and then discussed,
alongside possible mitigations for the Government to consider.
TABLE 20.1 OFFSHORE WIND DEVELOPER INVESTMENT RISKS IN THE PHILIPPINES, WITH RED/
AMBER/GREEN RATINGS ACCORDING TO THE PERCEIVED RISK MAGNITUDE
Risk
Project Suggested government
Risk Description magnitude
phase mitigation/measures
RAG
Accelerate implementation of
Complexity in pre- Energy Virtual One-Stop Shop
1. Pre- development applications (EVOSS).
Project
development and approval process R Set up service pledges for the
development
risks could lead to planning EVOSS to encourage timely
and development delays. approvals and cooperation
across government agencies.
Complexity and limited
capacity/efficiency Accelerate implementation of
of permitting process EVOSS.
2. Development combined with limited Project Set up service pledges for the
R
risks local precedent of OSW development EVOSS to encourage timely
deals could lead to delays approvals and cooperation
and risk of changes in across government agencies.
requirements.
Need to take account of
Potential environmental stakeholder views, follow
and social risks leading Project GIIP, and understand the
3. Environmental
to permitting challenges, development/ R environmental and social
and social risks
non-alignment, and Construction impacts during development,
construction delays. construction and operational
phases of projects.
A mismatch between
the timing required by More coordinated national
National Grid Corporation planning around renewable
of the Philippines (NGCP) generation capacity and
to obtain approval to transmission network capacity
4. Grid
develop the required grid Construction R to enhance certainty of offtake.
connection risks
infrastructure and the Compensation for delayed grid
OSW developer’s project connection availability once Grid
timetable could lead to Connection Agreement (GCA) is
delay in grid connection signed.
being available.
20. Risk and bankability 227

Risk
RAG
Curtailment compensation
(beyond a certain threshold).
Under existing PPAs, curtailment
of renewable energy (RE)
Limitations in
generation due to transmission
interconnection and grid
constraints is considered a
5. Curtailment management could result
Operation R force majeure event. Hence, no
risks in the curtailment of wind
compensation entitlement.
power and affect project
More coordinated national
revenues.
planning around renewable
generation capacity and grid
capacity to enhance certainty of
offtake.
40% foreign ownership
cap will curb foreign Soften foreign ownership caps
investor appetite to allow foreign companies
6. Foreign for Philippines OSW to hold majority shares in
ownership investment, especially Operation R projects, enable more overseas
limitations later in project involvement, and accelerate
development, and this is knowledge transfer to local
likely to significantly slow companies.
project delivery.
No single or national
offtaker for power Explore establishing either a
supply agreements in national offtaker or centralized
7. Counterparty
the Philippines could Operation A coordinating body that can
risks
lead to risk of variance in backstop offtaker obligations for
the creditworthiness of multiple GW-scale projects.
offtakers.
A shift toward an auction
Establishing a floor on pricing or
scheme for RE instead
requirement that bidders submit
8. Policy/ of the existing FIT
Operation A evidence of lender endorsement
regulatory risks scheme could encourage
of proposed price may help
developers to propose
alleviate this risk.
unsustainable tariffs.
Lack of a local and widely Explore opportunity to develop
employed standardized a standard form PPA for
9. Contractual PPA or offtake contract adoption across OSW projects to
Operation A
risks could lead to challenges accelerate market development.
in establishing market See Key Factors report for further
precedence. discussion on this topic4.

Risk
RAG
The majority of foreign currency
denominated cost is anticipated
to be in upfront capital cost
and can be managed through
Adverse movements in
hedging.
Philippine peso relative to
For foreign investors, long-
10. Exchange hard currencies including
Operation G term exposure to adverse
rate risks US dollar could lead to
movements in Philippine peso
reduced foreign investor
can be managed by including
appetite.
tariff indexation for foreign
exchange rate variations into
standard form PPA, under ERC
mandate.xxv
Enforceability of contracts,
both with the government and
Local conditions
suppliers, is key, with access
stemming from the
to international arbitration
Philippines political, Project life
11. Country risks A essential. Establishing either a
economic, and legal cycle
national offtaker or centralized
framework could affect
coordinating body that can
the stability of earnings.
backstop offtaker obligations
can help manage this risk.
20.4 DISCUSSION
The Philippines deregulated its electricity market following the introduction of the Electric Power
Industry Reform Act (EPIRA) of 2001. In 2008, the Philippines implemented the Renewable Energy Act
aimed at promoting the development, utilization, and commercialization of RE resources.70 A developer
can pursue five major types of business models for on-grid RE:92,93
■ FIT, which involves signing a long-term power purchase agreement (PPA) with the National
Transmission Corporation (Transco) for the sale of the energy generated.
■ Power supply agreements with a distribution utility, referring to bilateral agreements between RE
developers and distribution companies.
■ Power supply agreements with commercial bulk consumers, referring to bilateral agreements
between RE developers and contestable consumers (end users with a monthly average peak
demand of at least 750 kW over a 12-month period, and who are entitled to choose their electricity
supplier). This is unlikely to be applicable to GW-scale OSW projects, due to demand from such
consumers typically being only a few MW each.
■ Green Energy Option Program (GEOP) that enables RE generators to sell directly to end users with
at least 100 kW peak demand. As the largest end users of manufacturing plants, hotels, resorts,
and shopping malls usually have a demand of only a few MW each, this option is not that viable for
OSW project developers.
■ Green Energy Auction Program (GEAP), a FIT being revised to apply the same concept as used in
2012 where the National Transmission Corporation will act as FIT fund administrator.
xxv While there is currently strong dollar liquidity in the Philippines coming from foreign remittances, it might be tough to get currency hedges for greater than five years.
Based on recent public service agreements (PSAs), it seems that if a project relies heavily on dollar imports, indexation is generally allowed.

The regulatory regime in the Philippines is largely standardized across the different types of RE.94
Based on this market structure, key risks, challenges, and considerations for bankability of OSW
developments in the Philippines context are as follows:
1. Pre-development risks: Complexity in pre-development applications and approval process could

lead to planning and development delays. The wind energy service contract (WESC) provides a
five-year provision for conducting wind energy resource exploration and obtaining various permits
and licenses. A focus on accelerating implementation of the EVOSS Act will help streamline
processing of government-led site planning and other necessary approvals through a ‘single
window’ interface with approving authorities within the five-year timeframe. Establishing service
pledges or key performance indicators (KPIs) for the EVOSS will encourage timely approvals and
cooperation across government agencies.
2. Development risks: Given the nascent nature of the local OSW industry, limited local experience
and capability may lead to delays in final investment decision (FID), equipment procurement,
physical construction, and securing permits to begin commercial operation. The RE developer will
need to obtain permits and certifications from the Department of Energy (DOE) when construction
is near completion (typically around 80 percent) before the development can commence operation:
• If using FIT, a Certificate of FIT Eligibility from the DOE and endorsed by ERC
• If using a power supply agreement, ERC approval is required
• Certificate of Compliance from ERC
• A connection permit from NGCP.
The need to secure various permits at a late stage may result in cost risks (capital costs increases)
and uncertainty in the timing of the construction completion and commencement of revenue
generation. The potential timing delays exposes the developer to the risk of unfunded costs during
development and challenges fulfilling debt service obligations in line with the anticipated schedule.
Similar to the pre-development phase, accelerating implementation of and establishing service

pledges or KPIs for EVOSS will help streamline necessary approvals.
3. Environmental and social risks: The gap between domestic and international environmental and
social impact assessment (ESIA) requirements could lead to delays in financing. If the proponent
has obtained the Philippines’ EIS but the lender requires the project to comply with International
Finance Corporation’s (IFC) Performance Standards, for example, significant extra study may
be required to comply with the lender’s requirement which can delay the construction phase.
Environmental mitigation measures recommended by lenders (such as shutdown periods during
times of bird migration) can potentially affect energy production, which translates to a reduction
in the profitability of an OSW project.
4. Grid connection risks: A mismatch between the timing required by NGCP to obtain approval to
develop required grid infrastructure and the OSW developer’s project timetable could lead to delay
in grid connection being available. For larger-scale projects, there is often a mismatch between the
timing required by NGCP to obtain approval to develop the required grid infrastructure and the RE
developer’s project timetable.96 Such events can affect cash flow and ability to meet debt service

obligations. More coordinated national planning around RE generation capacity and requirements
for supporting grid capacity will improve investor confidence and certainty of offtake. At the
project level, incorporating compensation provisions into GCAs is essential.
5. Curtailment risks: Limitations in interconnection and grid management may result in the
curtailment of wind power and affect project revenues. In the Philippines, the transmission grid
is owned by the government through Transco, but is managed and operated by the NGCP, a
regulated private entity, through a concession agreement. With the growth in RE development in
the country, there have been instances of curtailment of wind power resulting from grid-related
technical issues. Implementing a reasonable level of curtailment compensation measures to
reallocate this risk away from OSW developers (who are not in a position to control it) is essential.
6. Foreign ownership limitations: About 40 percent foreign ownership will curb foreign investor
appetite for Philippines OSW investment. The DOE has outlined limitations on foreign ownership
of RE projects in the implementing rules and regulations of the Renewable Energy Act, based on
the Philippines constitution. It states that foreign ownership is restricted to 40 percent, but as the
Act does not refer to generation, it is understood that there are no restrictions on that. Other laws
also apply; however, for example, only Filipino citizens or corporations with capital stock owned by
Filipino citizens are allowed to own land, so careful structuring of contracts will be needed.
Softening foreign ownership caps to allow foreign investors to hold majority shares in projects would
enable overseas involvement in the Philippines market, establish a track record of successful project
delivery to de-risk the sector, and accelerate knowledge transfer to local companies. It is seen by
many in industry as essential in facilitating the vast investment needed to deliver OSW projects,
especially as projects move from pre-development (with low expenditure) to the later stage of
development (higher expenditure, leading to FID). Routes to lifting the cap include the following:
• Constitutional change
• Issue of a DOE circular, in line with previous circulars covering biomass generation
• Use of the changes to the Public Service Act that passed through the Senate in December 2021,
liberalizing ownership of public utilities except for the distribution of electricity, the transmission
of electricity, and water pipeline distribution and wastewater pipeline systems, airports,
seaports, and public utility vehicles
• Use of the Finance and Technical Assistance Agreement (FTAA) process, as suggested by one
leading international OSW developer
• Work-arounds recognizing state ownership of resources under the Regalian Doctrine, but
allowing foreign ownership of energy extraction plant, while paying a fee to the state for rights
to ‘access’ the wind, a resource not depleted long-term by extracting energy from it.
Senate Bill 2094 was proposed in 2021, which seeks to amend the Commonwealth Act No. 146, also
known as the Public Service Act, and ease the restriction on foreign investment in public services.96
This does not amend the Renewable Energy Law or the Philippines Constitution, so does not affect
OSW development, but suggests a willingness to soften the foreign ownership limitations.
7. Counterparty risks: No single or national offtaker for power supply agreements in the Philippines
leads to risk of variance in the creditworthiness of offtakers. For wind projects that are eligible

for the FIT scheme, power supply agreements are signed between RE developers and Transco.
For projects subject to power supply agreements, these will be with a distribution utility as
counterparty. Each are separate entities with individual cash flow and credit risk profiles, and
hence present lenders to a project with a unique set of counterparty risks to consider and
evaluate. Establishing either a national offtaker similar to Vietnam or Taiwan, China or centralized
coordinating body that can backstop offtaker obligations would minimize variance across market
and improve investor and lender appetite for the OSW sector, increasing the availability and
decreasing the cost of finance. Lenders will require a strong (or government-backed) offtaker able
to deliver on a potentially rapidly growing set of contracts for OSW and beyond.
8. Policy or regulatory risks: A shift toward an auction scheme for RE instead of the existing FIT
scheme could encourage developers to propose unsustainable tariffs. The DOE introduced the
GEAP, a competitive process for the procurement of RE supply, including wind energy for an initial
capacity of 2 GW.97 A higher auction capacity is being considered given strong demand. While
procuring RE, including OSW, through auctions is more transparent than a FIT scheme, the lack
of sufficient precedent projects limits price certainty on equipment and operating costs that
would come through a more mature market, giving rise to a risk of lowball bids by developers and
diminishing developer margins and project solvency. Establishing a floor on pricing or requirement
that bidders submit evidence of lender endorsement of proposed price may help alleviate this risk.
9. Contractual risks: A lack of a standardized PPA or offtake contract creates challenges in

establishing market precedence. This implies that terms and conditions associated with energy
offtake are agreed under bilateral negotiations on a project-by-project basis and as a result
there is likely to be variance across projects, in turn increasing the level of due diligence needed
by investors and lenders prior to making formal investment decisions. Through developing a
standard form PPA for adoption across OSW projects, market development can be accelerated by
minimizing variation in deal parameters and improving the predictability of terms.
10. Exchange rate risks: Adverse movements in Philippine peso relative to hard currencies such as US
dollar could lead to reduced foreign investor appetite. This risk is of concern to local developers
where a significant element of cost will be hard currency. For OSW, the majority of foreign
currency denominated cost is anticipated to be in upfront capital cost, associated with the
import of turbines and balance of plant. Ongoing operating costs are unlikely to require material
foreign currency denominated input. There is opportunity for local developers to minimize foreign
exchange risk through entering into hedging arrangements, such as foreign exchange swaps.xxvi
There is strong precedent for foreign investment into the Philippines across various infrastructure
sectors; however, foreign investors do face long-term exposure to adverse movements in Philippine
peso, risking eroding their earnings over time when measured in hard currency. While foreign
exchange swaps could be used, it is understood there may be limited market depth for long-dated
foreign exchange swaps beyond a three to five-year horizon, in turn limiting ability to manage
long-term exposure to currency fluctuation. ERC has the mandate to adjust tariffs annually to
allow pass-through of foreign exchange rate variations for foreign investors.98
xxvi While there is currently strong dollar liquidity in the Philippines coming from foreign remittances, it might be tough to get currency hedges for greater than five years.
Based on recent public service agreements (PSAs), it seems that if a project relies heavily on dollar imports, indexation is generally allowed.

11. Country risks: Local conditions stemming from the Philippines’ political, economic, and legal
framework could affect the stability of earnings. The Philippines has an investment grade
sovereign credit rating (S&P BBB, Moody’s Baa2) with a stable outlook, suggesting overall strength
of the local economy. There is strong precedent of foreign direct investment into the Philippines as
one of the few investment grade investment destinations in the Association of Southeast Asian
Nations (ASEAN), but there have been examples where investment was not realized due to country
risks that were not managed well. Local economic conditions such as high inflation or availability
of suitably skilled labor could also affect project returns and debt serviceability.
Similarly, the enforceability of contracts, both with the government (for example, WESCs) and
suppliers, is key for OSW projects, with access to international arbitration essential. There is room
for increased transparency in how WESCs are allocated to minimize risk of subsequent challenge.
Establishing either a national offtaker or centralized coordinating body that can backstop offtaker
obligations can help manage this risk but would require proper governance and oversight to build
and maintain investor confidence.
Based on this analysis, the following are recommended that the DOE
■ Accelerates implementation of EVOSS, including service pledges to encourage timely approvals

and cooperation across government agencies and requirements for ESIAs standards and
stakeholder engagement in line with GIIP and lender standards.
■ Ensures coordinated national planning around renewable generation capacity and transmission
network capacity to enhance certainty of offtake.
■ Ensures clarity on compensation for delayed grid connection availability once GCA is signed.
■ Ensures clarity on curtailment compensation (beyond a certain threshold).
■ Explores establishing either a national offtaker or centralized coordinating body that can backstop
offtaker obligations for multiple GW-scale projects.
■ Considers establishing a floor on auction pricing or requirement that bidders submit evidence of
lender endorsement of price.
■ Explores the opportunity to develop a standard form PPA for adoption across OSW projects to
accelerate market development that provides stable income per MWh generated and may also
include indexation for foreign exchange rate variations.
■ Considers support for lifting foreign ownership caps to higher levels.

21. FINANCE
21.1 PURPOSE
The cost of finance has a significant impact on power purchase agreement (PPA) prices and the cost
to consumers. This section presents a high-level assessment of the potential role of broader public
policy (including concessionary and climate finance) in the OSW rollout in the Philippines. It presents
examples where public financial support has been used to enable other types of large infrastructure
industries. It also considers the availability of local and international bank finance.
21.2 METHOD
We identified relevant financial instruments that could play an enabling role in the development of
the Philippines OSW industry. We also identified several case studies that show a successful path to
utilizing public and concessionary financing in the context of OSW.
21.3 RESULTS
We discuss seven categories of financial support relevant to minimizing cost of OSW to consumers,
beyond equity provided by project owners:
■ Enabling local and international bank lending

■ Tax and policy incentives
■ Multilateral lending
■ Credit enhancement mechanisms
■ Climate finance
■ Green debt instruments
■ Green equity instruments.
Enabling local and international bank lending

Globally, much debt finance in OSW has been provided by international banks. Enabling a competitive
market for bank finance is a key way to minimize levelized cost of energy (LCOE). HSBC Global
Research, in April 2021, ranked the Philippines as the second-best investment destination for
renewable energy in the Asia-Pacific (APAC) region, second to Vietnam.99
Local banks
The Philippines has a strong local banking sector. According to the Bangko Sentral ng Pilipinas (BSP) in
July 2021, the overall outlook in the domestic banking sector remains stable and is expected to remain
so over the next two years despite the Covid-19 pandemic. While the economy has been adversely

affected by the Covid-19 pandemic, the Philippines banking sector has a significant liquidity buffer
to withstand adverse shocks as a result of prior regulatory change and several years of favorable
banking conditions.100 In November 2020, the liquidity coverage ratio of the local banking sector was
201 percent, which is double the regulatory minimum of 100 percent.101 At least 71.3 percent of the
respondent banks in the Banking Sector Outlook Survey second semester 2020 projected double-digit
growth in their loan portfolios for the next two years.102
Local banks are increasing their public commitments to end coal financing and are looking at
renewable energy to supplement deal pipelines. In November 2020, Rizal Commercial Banking
Corporation (RCBC) was the first bank in the Philippines to announce its aim to end financing of
coal-fired projects, to move toward renewable energy and gas-fired power facilities.103 More recently
in August 2021, the Bank of the Philippine Islands (BPI) announced its intention to stop all coal-fired
projects by 2033 and to channel more funds toward renewable energy instead.104 While other local
banks have not made specific announcements on their commitment to finance renewable projects,
BSP’s push for banks to fully transition to sustainable financing in the next three years suggests that
local banks will be increasingly prompted to embrace renewables projects.105,106
The BPI has been particularly active in financing onshore renewable energy projects. It first partnered
with International Finance Corporation (IFC) on the Sustainable Energy Finance (SEF) Program in
2009, providing access to capital and technical support for renewable project developers. This included
two wind projects with a combined capacity of 51 MW in the first eight years of the program.107 The
bank has also developed a Sustainable Funding Framework with the intention of providing green
loans or advice on green bond issuance for eligible projects, including wind.108 The SEF model has
been replicated by other local banks such as Banco de Oro (BDO), which has financed 45 renewables
projects in the Philippines to date. The scale of OSW projects is however quite different to what has so
far been financed onshore.
State-owned banks have also provided financing for renewable energy projects. State-owned banks
such as the Development Bank of the Philippines (DBP) and the Land Bank of the Philippines have
provided finance for renewable energy projects. These banks receive official development assistance
(ODA) funds intended to support developmental projects that are not able to attract mainstream
capital, including for energy infrastructure.109 The 54 MW San Lorenzo wind farm was partially funded
by DBP through project financing that amounted to US$85.1 million (PHP 4.3 billion) in 2013.110 The
bank recently engaged with Terasu Energy on a US$24 million (PHP 1.65 billion) loan agreement
to partially finance the development of a 40 MW solar plant in Concepcion, Tarlac.111 Given the
development focus of such lenders, they may be a good source of financing for early OSW projects.
Traditional limited or non-recourse project financing has not historically been a feature of renewable
energy projects in the Philippines, but this is starting to change. Renewable energy projects have been
historically financed on a corporate basis with recourse back to sponsor balance sheets, but Energy
Development Corporation (EDC) secured a US$315 million (PHP 21.7 billion) loan with leading foreign
and local banks for the 150 MW Burgos onshore wind farm. The finance facility is denominated in
US dollars and Philippine pesos, with a loan tenor of 15 years.112 Denmark’s export credit agency,
Eksport Kredit Fonden (EKF), provided credit enhancement to a proportion of the US dollar component,
which was a key element of getting commercial lenders comfortable with the non-recourse financing
structure. The experience suggests that MDBs have a role to play in de-risking the OSW sector, by
unlocking access to capital until such time as sufficient local track record has been established.
21. Finance 235

The single borrower limit requirement in the Philippinesxxvii results in local banks having to explore new
clients to minimize the risk of reaching single borrower limit and diversify risk. This is favorable to new
OSW developers as local banks continue to seek to diversify.
International banks
While international banks have experience in financing renewable energy assets in the Philippines, local
banks and MDBs have dominated. Australia and New Zealand Banking Group (ANZ) and ING Bank
have been involved in the financing of large-scale wind assets. In 2014, ANZ acted as lead arranger of
the Burgos onshore wind farm. This consisted of three 15-year tranches: 40 percent from a Philippine
peso tranche (provided by a domestic bank syndicate) and 60 percent from two US dollar tranches.
Despite appetite from overseas lenders, they have limited peso balance sheets and limited liquidity in
long dated swap markets. This requires developers to either borrow in US dollars and accept a level of
foreign exchange risk if looking to leverage the appetite of foreign banks or pivot toward local lenders.
Table 21.1 outlines a selection of bank-financed onshore wind energy projects in the Philippines where
lender groups have been publicly disclosed.
TABLE 21.1 FINANCING DETAILS OF FIVE ONSHORE WIND ENERGY PROJECTS114,115,116,117,118,119
Project Amount Financing

Project Name Debt providers
developer (US$, millions) year
Mindanao Japan’s Ministry of Economy,
Shizen Energy 300 2017
(160 MW) Trade and Industry
BDO, Rizal Commercial Banking
Alternergy Wind
Pililla (54 MW) Corporation, China Banking 178 2015
One Corporation
Corporation
Asian Development Bank (ADB),
ANZ, DZ Bank, ING Group,
NordLB, Philippine National Bank,
Energy Security Bank, BDO, Land Bank of
Burgos (150 MW) Development the Philippines, Maybank, Bank of 315 2014
Corporation the Philippine Islands, Philippine
Commercial Capital, Rizal
Commercial Banking Corporation,
BPI Capital Corporation
Trans-Asia
San Lorenzo Development Bank of the
Oil & Energy 141 2013
(54 MW) Philippines, Security Bank
Development
Ayala
Corporation,
Bangui Bay World Bank, ABN Amro, and
NorthWind Power 20 2011
(33 MW) Nordea
Development
Corporation
xxvii This limits lending by a bank to a single client to 25 percent (increased to 30 percent temporarily until December 2021) to spread the risk of losses from non-paying
borrowers to ensure stability of banks and the financial sector.

Tax and policy incentives
Several tax and policy incentives are already in place for renewable energy projects in the Philippines.
The National Renewable Energy Program introduced a number of tax and policy incentives to
accelerate the development and use of renewable energy resources, including OSW, by reducing the tax
burden on projects. Current incentives include the following:89
■ Accelerated depreciation. If the renewable energy project fails to receive an income tax holiday
before full operation, it may apply for accelerated depreciation through either the declining balance
method or the sum-of-the-years’ digit method.
■ Cash incentive for missionary electrification. Developers of renewable energy projects for missionary
electrification are entitled to a cash incentive per kilowatt-hour rate generated.
■ Duty-free import of equipment. This incentive is valid for ten years after a certification of
entitlement to incentives is issued.
■ Income tax holiday and low-income tax rate. Income tax exemption is for the first seven years of
commercial operations. Corporate income tax (CIT) rate of 10 percent on net taxable income is
valid after the income tax holiday.
■ Net Operating Loss Carry-Over (NOLCO). Losses during the first three years from start of
commercial operation can be carried over as a deduction from gross income for the next seven
consecutive years.
■ Special realty tax rate on equipment and machinery. These taxes on civil works, equipment,
machinery, and other improvements exclusively used for renewable energy facilities cannot exceed
1.5 percent of their original costs.
■ Tax exemption on carbon credits. There is tax exemption on all proceeds from the sale of carbon
emission credits.
■ Tax credit on domestic capital equipment and services. This tax credit is equivalent to 100 percent
of the combined value added tax (VAT) and customs duties on renewable energy machinery and
equipment had these items been imported. This is given to a renewable energy project developer
that purchases the machinery and equipment from a domestic manufacturer or supplier.
■ Zero percent VAT rate. Applies to (a) sale of fuel or power generated from renewable energy sources;
(b) local supply of goods, properties, and services needed for the development, construction, and
installation of plant facilities; and (c) process of exploring and developing renewable energy sources
for conversion into power, including, but not limited to, the services of subcontractors and/or
contractors.
These incentives directly lead to cost reductions for developers, reducing the amount they that needs
to be recovered through revenue.
Given the substantial overlap between the energy consumers paying tariffs and taxpayers, these
policies are less likely to be effective where the concern is the overall level of affordability to the
Philippines as a country. They may have advantages where particular distributional outcomes are
more difficult to achieve with the tariff regime than with the tax regime.
Government reducing project developer risk by acting as a backstop on offtaker (PPA counterparty)
obligations is also an option.
21. Finance 237

Multilateral lending
The ability of private sector developers to secure finance from MDBs such as IFC, ADB, and European
Investment Bank (EIB) can create several benefits in terms of the overall availability of finance and
associated cost.
Participation (in equity or, more typically, debt) of multilateral lenders has several benefits. For the
sectors they prioritize, they will typically offer a source of lower-cost finance. Participation is also likely
to increase the appetite of other lenders because
■ They are often willing to take on a larger tranche of financing for early, higher-risk projects;
■ Their presence often increases interest among private institutions;
■ Their environmental and social impact assessment (ESIA) standards such as IFC Performance
Standards ensure that best practice in ESIA is applied, making it easier for other investors to
participate—this is aided by regulatory requirements ensuring that ESIAs and permits meet such
standards and other GIIP;
■ Their due diligence processes are often relied on by others, reducing the cost of participation by
private financing parties; and
■ Their participation often comes with other support, either advisory or in terms of credit
enhancement.
Multilateral lenders may offer concessional loans (loans on more favorable terms than market loans,
either lower than standard market interest rates, longer tenors, or a combination of these terms) which
have been used previously in the Philippines.
Where there are particular areas of priority, MDBs may also participate at the equity level in projects
(or provide convertible debt). This can help ensure there is available finance, particularly for up-front
development costs before debt financing is available.
MDBs have played an important role in providing financing to renewable energy projects and
stimulating private investment. In 2009, the Philippines received US$250 million (PHP 12.6 billion) from
the Climate Investment Fund to provide concessional financing to climate-related projects, including
renewable energy. Under the leadership of the Government, ADB, and the World Bank Group (WBG),
it used the funding to implement various programs.112 The SEF Program was launched by IFC with the
aim of mobilizing local financing. IFC provided two financial products to four local private banks: a risk
sharing facility and line of credit. This helped partner banks reduce economic capital required to hold
renewable energy loans and to offer loans with tenors of at least five years. As a result, partner banks
have provided direct loans worth US$439 million (PHP 22.2 billion) in total to finance 118 renewable
energy or energy efficiency projects.113
Examples of instruments that have already been implemented in the local context are infrastructure
guarantee mechanisms (guarantee funds and credit guarantee) and first-loss provisions. In 2010, ADB
established the Credit Guarantee and Investment Facility to provide guarantees for local currency
denominated bonds issued by companies in Philippines and the wider region. Such credit guarantees
make it easier for companies to issue local currency bonds with longer maturities as they reduce risk
to bond investors.

A list of active projects, including financing details, is provided in Table 21.2. MDBs are also active in the
issuance of green bonds (see below).
TABLE 21.2 SELECTION OF ACTIVE MDB-FUNDED RENEWABLE ENERGY PROJECTS IN THE

PHILIPPINES,
MDB Project Name Finance Type Description Amount

Project loan in
pesos and a credit
enhancement (in
the form of a partial
credit guarantee in US$35.6 million
Tiwi and MakBan pesos) to support (loan),
ADB Loan, guarantee
Geothermal Project the issuance of the US$158.2 million
Philippines’ first (guarantee)
peso-denominated
green project bond
for refinancing of a
geothermal plant
150 MW Burgos Construction and

ADB Loan US$20 million
Wind Farm Project operation
Credit enhancement mechanisms

While credit enhancement mechanisms from MDBs have been used to address the offtaker’s credit
risk, the type of credit enhancement mechanisms in the Philippines is limited. Credit enhancement
instruments are used to improve the credit risk profile of a business, which should lead to reductions
in financing costs. These credit enhancement mechanisms can be deployed by national entities or as
part of participation in a project by an MDB; the latter is more common in the Philippines. We note
that some of the credit enhancement mechanisms such as political risk guarantees may overlap with
some of our suggestions of risk mitigation solutions discussed in Section 20. Some common credit
enhancement mechanisms used in other Southeast Asia countries such as Vietnam include partial risk,
project completion risk, and political risk guarantees. Such products are yet to be used for renewable
energy projects in the Philippines.
Climate finance
Climate finance refers to sources of public finance aimed at supporting developing economies to make
investments that mitigate climate change and adapt to its impacts. The impetus for global climate
finance funds comes from the United Nations Framework Convention on Climate Change (UNFCC).
The UNFCC calls for financial assistance from countries with greater financial resources (Annex 1
countries) to those that require assistance to address climate change (non-Annex 1 countries). The
Philippines is a non-Annex 1 country due to its heavy economic reliance on fossil fuel production and
related commerce.
The UNFCC Paris Agreement developed plans for an annual US$100 billion climate finance fund to be
made available to non-Annex 1 countries, funded by financial commitments from Annex 1 countries.
This goal was reemphasized at COP26 in November 2021 as part of the Glasgow Climate Pact.126
21. Finance 239

The main climate finance mechanisms are the Green Climate Fund (GCF), the Global Environment
Facility (GEF), and the Climate Investment Funds (CIF).
The GCF is the centerpiece of efforts to raise climate finance under the UNFCC. It supports projects,
programs, and policies in developing economies. As a non-Annex 1 country, the Philippines is eligible to
receive GCF funding.127 The Department of Finance (DOF) is the designated authority in the Philippines
for the implementation of GCF funding.
The GEF provides funding to assist developing countries in meeting the objectives of international
environmental conventions. Regarding renewable energy, GEF funds can be deployed to address policy,
regulatory, and technical barriers to the adoption of renewable energy technology, to build capacity,
and to finance investments in renewable energy, including demonstration projects. The Philippines is
eligible to receive assistance from the GEF.
CIF is administered by the World Bank in partnership with the African Development Bank (AfDB), ADB,
European Bank for Reconstruction and Development (EBRD), and the Inter-American Development
Bank (IDB). The Philippines is eligible for support from the CIF.
CIF operates through various financing windows including the Clean Technology Fund (CTF) and the
Special Climate Change Fund (SCF). These various funding programs provide financing to low- and
middle-income countries. Renewable energy programs under the CIF include the following:
■ Scaling up technologies that enable renewable energy, like storage solutions, grid management,
and green fuels
■ Enhancing infrastructure to be renewable energy ready through smart grids and grid
interconnections
■ Supporting renewable energy innovation, for example, by empowering consumers to contribute
actively to demand-side management
■ Enhancing system and market design and operation, through regulatory change and procedural
innovation.
The GCF, GEF, and CIF can be used to enable access to additional private finance.
The Philippines’ eligibility to these sources of climate finance offers an opportunity to progress
and accelerate the OSW program, including the funding of enabling activities, development of the
demonstration project, decarbonization of the energy system, and strengthening of transmission
infrastructure.

Green debt instruments
Green debt instruments are bonds or securities issued to fund projects or assets that have a positive
environmental or climate impact. These bonds can be issued either by public or private actors and may
bring the following benefits:
■ Enhancements to the issuer’s reputation, as green bonds serve to enhance their commitment to
environmental goals or targets.
■ Requirement of good standards of ESIA to be applied.
■ Investor diversification, as there is a growing pool of capital earmarked for green projects. Thus,
the issuer can access investors who may not have been interested in purchasing a regular bond.
■ Potential pricing advantages if the wider investor base allows the issuer to get better pricing terms
on a green bond than on a regular bond, though evidence to support the existence of a pricing
advantage is mixed.
IFC and Amundi Asset Management launched the Green Cornerstone Bond Fund in 2018, the world’s
largest green bond fund targeting emerging markets, including the Philippines. IFC will provide first-
loss coverage through a junior tranche to lower risk and attract private sector investments.129
Green bonds have been issued to finance renewable energy projects in the country, and green bond
issuance is expected to grow in line with global trends, though there is limited precedent of ‘project
bonds’ with no recourse to a corporate issuer/sponsor. As of June 2021, larger banks in the Philippines
have issued US$2.8 billion (PHP 141.6 billion) worth of green and sustainability bonds to finance
sustainable infrastructure in the country, including renewable energy projects.130 The Philippines was
also cited by the Climate Bonds Initiative as a regional leader in green finance in Southeast Asia, driven
by the country’s initiatives on green bonds, loans and equity, credit guarantees, and specialty funds for
green infrastructure and renewable energy.131 AP Renewables, a subsidiary of Aboitiz, issued the first
green bond in the Association of Southeast Asian Nations (ASEAN) in 2016 to finance the TiwiMakBan
geothermal project. Since then, Philippines-linked issuers have continued issuing green bonds and debt
instruments to finance renewable energy projects in the country.
■ Supra-national green bonds: Financing of nominated projects or assets. Credit rating is based
on the issuing supra-national. An example is the Mubuhay bond, which was the first peso-
denominated triple A bond issued by IFC to repair the Malitbog Geothermal Power station.132
■ Green project bonds (project finance): Financing of nominated projects or assets. Credit rating is
based on the quality of the backing green assets and the returns stream. An example is the first
green bond issued by AP Renewables in 2016 for the TiwiMakBan geothermal project.133
■ Private placement: Green bond placed directly with investors. BDO issued its first green bond
investment of US$150 million (PHP 7.6 billion) to finance climate-smart projects including
renewable energy, with IFC being the sole investor in this issuance.134
■ Perpetual green bonds: Fixed income security with no maturity date.135
21. Finance 241

The growth of the green bond market has been driven by MDBs, corporates, and private local banks. No
green bond has been issued exclusively to finance wind projects, though larger green bond issuances have
had wind projects as part of the portfolios of activities being financed. As of August 2020, the estimated
total value of green bonds that have been issued by Philippine entities is US$2.6 billion (PHP 131.5 billion),
with most of the proceeds used to finance renewable energy projects.136 IFC and ADB have acted as
anchor investors for a number of green bonds, with the aim of crowding-in other institutional investors.
The largest green bond issuer in the Philippines is AC Energy Corporation, the listed energy platform of
the Ayala Group. To date, five local (only one state-owned) banks have issued green bonds in either local
or foreign currency. Recent green bonds that have been issued in the country include the following:
■ Rizal Commercial Banking Corporation issued a US$296.5 million (PHP 15 billion) green bond
to support the bank’s expansion of green initiatives. The proceeds will be allocated to fund and
refinance loans issued for various green initiatives, including renewable energy.
■ DBP issued a US$357.8 million (PHP 18.1 billion) sustainability bond, with some proceeds going
to green initiatives within three DBP programs, including Financing Utilities for Sustainable
Energy Development.137
■ AC Energy Corporation first issued a total of US$300 million (PHP 15.2 billion) five-year green
bonds in two tranches. The 2019 issuance was supported by a US$75 million (PHP 3.8 billion) IFC
investment. Proceeds were allocated to 5 GW of renewable energy projects in the region, including
geothermal, solar, and wind. Then, in 2021, AC Energy Corporation issued a US$400 million (PHP
20.2 billion) green bond to finance photovoltaic solar and onshore wind projects.
Green equity instruments

Green equity instruments relate to equity issuances by a company where the capital raised is to be
used specifically for projects that have a positive environmental impact.
There are currently two main green equity instruments being used in the Philippines that are relevant
to the financing of OSW.
■ Private equity/venture capital/unlisted equity funds that aid project developers to secure a
funding stream for their projects. For example, the Renewable Energy Asia Fund is a private equity
fund managed by Berkley Energy investing in small hydro, wind, geothermal, solar, and biomass
projects. Global investors are also starting to invest in renewable energy projects in the Philippines.
For example, in 2019, Singapore’s Wenergy Global and its venture partners invested US$20 million
(PHP 1 billion) in equity for four new energy projects in the Philippines.
■ Joint venture partnerships that pool capital, skills, and resources for a specific project. For
example, Siemens Gamesa has partnered with UPC Renewables and AC Energy Corporation to
build the Balaoi and Caunayan onshore wind farm.138

21.4 DISCUSSION
There are a number of viable sources of finance for OSW developments and a track record of
renewable transactions across loan, bond, green bond, and equity markets. We anticipate that the
greatest volume of finance will come from international lenders, with local lenders and MDBs playing
an important role. A well-informed, competitive debt market supporting experienced project developers
that are able to show their commitment through equity investment is key to minimizing WACC for
OSW projects.
■ International lenders are active in the Philippines market. Many of these have experience with
OSW through other Asian markets, including Japan, Korea, and Taiwan, China, but have limited
peso-denominated balance sheets and therefore are likely to seek part of the loan proceeds in US
dollars, giving rise to the need to manage foreign currency exchange risk.
■ The Philippines has an established and active banking market. Local lenders have a growing
appetite for renewables and growing familiarity with project finance structures. They are well
capitalized and ready to lend but lack significant experience with OSW.
■ MDBs are active and familiar with the Philippines context. They have a role to play in ‘de-risking’
OSW development in the coming years until there is a greater local track record of successfully
operational OSW projects. Direct lending and credit enhancement appear to be suitable tools to
unlock private sources of debt that are otherwise available in the country.
■ The Philippines green bond market is small but growing. Given the small pool of investors and the
need for a minimum credit rating, raising project bonds without credit enhancement is likely to be
challenging in the short term. Larger corporate developers may be able to secure bond issuance
(and green bonds) as part of corporate bond programs, which in turn could be used to fund OSW.
■ Government has established a series of tax and policy measures aimed at encouraging the
purchase of renewable energy and reducing tax costs to developers and renewables operators.
■ The DOE requires that frameworks and ESIAs are fully aligned with GIIP and lender requirements.
■ The DOF encourages financial mechanisms to reduce cost of capital for OSW projects, including
access to climate and other concessional finance, and ensures international market standards
for contractual risk allocation, arbitration and Government backstop, and an adequate security
package for lenders. Early engagement with MDBs is encouraged, to shape any guarantee scheme,
credit enhancement, first-loss support, or other arrangement.
■ The DOE supports the engagement of local finance community with OSW.
■ The DOE considers, with the DOF, any refinement of tax and policy incentives to support OSW
and any measures to manage exchange rate risk (for example, a limited pass-through of US dollar
tariff to customers or absorption by the Government).
21. Finance 243

22. STAKEHOLDERS
One of the goals of the project is to establish a strong network of industry stakeholders whose views
and collaboration will aid development and socialization of the OSW roadmap for the Philippines. The
engagement carried out in the inception mission and consultation mission of this roadmap aimed to start
the establishing of such a network. Key stakeholders identified during the missions are listed below.
Early and constructive stakeholder engagement is essential for a number of reasons.
■ Working together with industry to address recommendations in this roadmap

and other considerations
■ Providing input into policy and frameworks
■ Identifying priority biodiversity values, verifying data, and ensuring they are considered
appropriately and proportionately in planning for OSW development.
Stakeholder engagement should be an integral and important part of future processes, including MSP
and ESIA. A list of key stakeholders has been identified and is provided in Table 22.1 under seven headings:
■ Government. Government departments, regulators, and institutions at the national and regional
levels. This list includes government owned or controlled corporations (GOCCs) and private
corporations with congressional franchises performing relevant governmental functions.
■ Offtakers. Electricity companies that would likely be involved in distributing energy from OSW.
■ Project developers. OSW project developers known to be active or interested in the Philippines.
■ OSW supply chain. Supply chain businesses known to be active in OSW in the Philippines or those
with potential to provide services.
■ Nongovernmental organizations (NGOs). National and international NGOs with an interest in OSW in
the Philippines.
■ Academics. Academic organizations with relevance or declared interest in OSW in the Philippines.
■ Overseas governments. Offices that have declared interest in OSW in the Philippines.
This list is dynamic and as interest in the market continues to increase, it will be outdated soon
after publication.

TABLE 22.1 KEY STAKEHOLDERS
Name Role
Government
Agency of the Department of Environment and Natural
Resources responsible for formulating and recommending
Biodiversity Management Bureau policies, guidelines, rules, and regulations for the establishment
and management of national parks, wildlife sanctuaries and
refuge, marine parks, and bio-spheric reserves
Agency of the Department of Trade and Industry responsible
Board of Investments
for the development of investments in the Philippines
Agency of the Department of Agriculture responsible for the
Bureau of Fisheries and Aquatics Resources development, improvement, management, and conservation of
the country’s fisheries and aquatic resources
Agency of the DTI responsible for promoting, accelerating, and
Construction Industry Authority
regulating the growth and development of the construction
of the Philippines
industry
Government department responsible for the promotion of
The Department of Agriculture
agricultural and fisheries development and growth
Government department responsible for the preparation,
integration, coordination, supervision, and control of all plans,
The Department of Energy programs, projects, and activities of the Government related to
energy exploration, development, utilization, distribution, and
conservation
Government department responsible for the conservation,
management, development, and proper use of the country’s
The Department of Environment environment and natural resources, including those in
and Natural Resources reservations, watershed areas, and lands of the public domain;
also responsible for the licensing and regulation of all natural
resource utilization
Government department responsible for the formulation,
institutionalization, and administration of fiscal policies in
The Department of Finance
coordination with other concerned subdivisions, agencies, and
instrumentalities of government
The Department of Interior Government department responsible for assisting the President
and Local Government in general supervision over local governments
Government department responsible for guarding against
The Department of National Defense
external and internal threats to peace and security
Government department responsible for the regulation and
The Department of Tourism
promotion of the Philippine tourism industry
Government department responsible for the regulation,
The Department of Trade and Industry
management, and growth of industry and trade
Government department responsible for the promotion,
The Department of Transportation development, and regulation of transportation systems and
transportation services
Agency of the DENR responsible for production and sustainable
Ecosystem Research
land use that combines fish production and planting of nipa
and Development Bureau
and agricultural crops
Regulator responsible for promoting competition, encouraging
Energy Regulatory Commission market development, ensuring customer choice, and penalizing
abuse of market power in the electricity industry
22. Stakeholders 245

Name Role
Agency of the DENR responsible for formulating, integrating,
coordinating, supervising, and implementing national
Environmental Management Bureau environmental laws and setting appropriate environmental
quality standards (water, air, and noise) for the prevention,
control of pollution, and protection of the environment
Has specific role in the project leasing and permitting
Local Government Unit
processes
Agency of the DoTr responsible for the development of the
Maritime Industry Authority maritime industry of the Philippines and development and
regulation of shipping enterprises
Agency of government responsible for protecting the rights of
National Commission on Indigenous Peoples
the indigenous peoples of the Philippines
Independent government agency responsible for formulating
National Economic
and continuing coordinated and fully integrated social and
and Development Authority
economic policies, plans, and programs
National Fisheries Research and
Research institute under BFAR
Development institute
Agency of the DENR responsible for providing the public with
mapmaking services and acting as the central mapping
National Mapping and
agency, depository, and distribution facilities for natural
Resource Information Authority
resources data in the form of maps, charts, texts, and
statistics
Advisory body responsible for recommending renewable energy
National Renewable Energy Board
policies to the DOE
Agency of the DENR responsible for promoting and undertaking
Natural Resources Development Corporation the development and use of technologies and systems that
complement the utilization of natural resources
Civilian armed uniformed service attached to the DOT
responsible for enforcing laws, conducting maritime security
Philippine Coast Guard
operations, safeguarding life and property at sea, and
protecting marine environment and resources
Council of the Department of Science and Technology
Philippine Council for Agriculture, Aquatic,
responsible for helping national research and development
and Natural Resources Research and
efforts in agriculture, forestry, and natural resources of the
Development
Philippines.
Agency of the DOTr responsible for port planning, development,
Philippine Ports Authority
operations, and regulation
Technical Education and Agency responsible for managing and supervising the
Skills Development Authority Philippines’ technical education and skills development
Offtakers and power companies (some state owned)
Aboitiz Private power distribution company

MERALCO PowerGen Private power distribution company
Private corporation responsible for operating, maintaining, and
National Grid Power Corporation developing the country’s state-owned transmission network
under a long-term franchise contract
Government-owned-and-controlled corporation responsible
for undertaking the development of hydroelectric generation
National Power Corporation
of power and the production of electricity from nuclear,
geothermal, and other sources

Name Role
National Transmission Corporation Owns all transmission assets
Subsidiary of the state-owned Philippines National Oil
Philippines National Oil Company – Company, mandated to pursue and implement projects on
Renewable Corporation new, renewable, non-conventional, and environment-friendly
energy sources and systems
Project developers
Holds, has applied for, or has issued letter of intent for an OSW
AC Energy
wind energy service contract, alone or in partnership
ACX3 Capital Holdings
WESC, alone or in partnership
CleanTech Global Renewables
International developer with declared interest in OSW in the
Copenhagen Energy
Philippines
Earth Sol Power Corporation
Philippines-based developer with declared interest in OSW in
Energy Development Corporation
the Philippines
Equinor
Philippines
Philippines-based developer with declared interest in OSW in
FirstGen
the Philippines
Giga ace 7
GIGAWIND5
Ivisan Windkraft Corporation
Jet Stream Windkraft
Macquarie Renewable Energy Group
Philippines
Mainstream Renewable Energy Power
Philippines
Northland Power
Philippines
OceanWinds
Philippines
PetroGreen Energy Corporation
Scatec ASA
Philippines
Shell
Philippines
Sitex Windkraft Corporation
TotalPower

Name Role
Triconti Southwind Corporation
Vena Energy
Philippines
Vind Energy Corporation
wpd
OSW supply chain
Supply chain business (towers, floating foundations, offshore
Atlantic Gulf and Pacific Company
substation)
Bauer International Supply chain business (floating foundations)
EEI Corporation
substation)
First Balfour Supply chain business (onshore infrastructure)
Fluor
substation)
General Electric Renewable Energy International OSW turbine supplier
Grandspan Development Corporation Supply chain business (onshore infrastructure)
Supply chain business (towers, floating foundations,
Keppel offshore substation, turbine and foundation installation,
decommissioning)
Siemens Gamesa Renewable Energy International OSW turbine supplier
Vestas International OSW turbine supplier
NGOs
Biodiversity Conservation Society
National NGO
of the Philippines
Conservation International Philippines International NGO
Coral Cay Conservation National NGO
Developers of Renewable Energy for
Philippines-based renewable energy developers association
AdvanceMent, Inc
Foundation for the Philippine Environment National NGO
Global Mangrove Alliance International NGO
Haribon Foundation National NGO
Large Marine Vertebrates
National NGO
Research Institute Philippines
Marine Conservation Philippines National NGO
Marine Wildlife Watch of the Philippines National NGO
Oceana Philippines International NGO
People and the Sea National NGO
Philippine Mangroves: Biodiversity,
National NGO
Conservation and Management
Quantitative Aquatics, Inc. National NGO

Name Role
Rare International NGO
Save Philippine Seas National NGO
Sea Around Us Fisheries, Ecosystems
International NGO
& Biodiversity
Seagrass Watch Philippines International NGO
Sea Institute National NGO
Society for Conservation of Philippine
National NGO
Wetlands
Sustainable Fisheries Partnership International NGO
The Philippine Marine Mammal Stranding
National NGO
Network (PMMSN)
Wind Energy Developers Association
Wind energy association
of the Philippines
World Wildlife Foundation Philippines International NGO
Academics
University of the Philippines Marine
Academic institute
Science Institute
The University of Philippines Marine
Academic institute
Mammal Research & Stranding Laboratory
De La Salle University Br. Alfred Shields
Academic institute
FSC Ocean Research Center
Overseas governments
British Embassy, Manila Embassy that has expressed interest in OSW in the Philippines
Danish Embassy, Manila Embassy that has expressed interest in OSW in the Philippines
Foreign, Commonwealth and British Government department which leads the ASEAN Low
Development Office Carbon Energy Programme, active with the DOE
See Appendix for other environmental stakeholders

APPENDIX:
PRIORITY BIODIVERSITY VALUES
1. INTRODUCTION
The World Bank Group (WBG) commissioned The Biodiversity Consultancy to provide environmental
support for the WBG Offshore Wind Development Program. This support includes the completion
of early-stage identification of priority biodiversity values and available spatial data to inform the
offshore wind country roadmap for the Philippines. Incorporating considerations of priority biodiversity
values in the assessment of ‘practical potential’ for offshore wind development is essential to avoid
adverse impacts from inappropriate development and provide a foundation for a pipeline of bankable
projects eligible for funding by international finance Institutions.
The World Bank and International Finance Corporation (IFC) environment and social requirements
are integral to the Offshore Wind Development Program and the production of individual country
roadmaps. They enable the World Bank, IFC, and client countries to better manage the environmental
and social risks of projects and to improve development outcomes. The World Bank Environmental
and Social Framework and the IFC Sustainability Framework promote sound environmental and
social practices, transparency, and accountability. These frameworks define client responsibilities
for managing risks and ensure that offshore wind sector preparatory work is aligned with GIIP. Of
particular relevance to this study are
■ World Bank Environmental and Social Standard 6 (ESS6) Biodiversity Conservation and
Sustainable Management of Living Natural Resources (2018), together with the associated
Guidance Note ESS6 (2018) and
■ IFC Environmental and Social Performance Standard 6 (PS6): Biodiversity Conservation and
Sustainable Management of Living Natural Resources (2012), together with the associated
Guidance Note 6 (2019).
The objective of this study is to identify priority biodiversity values and areas that support these
values that should either be excluded from offshore wind development (that is, areas of the highest
biodiversity sensitivity) or require additional assessment through subsequent MSP, site selection, and
ESIA processes. To meet GIIP, wind developments in areas supporting priority biodiversity values would
likely be subject to restrictions in the form of greater requirements for baseline studies, as well as
more intensive mitigation measures to avoid, minimize, and restore adverse environmental impacts.
According to IFC PS6 and World Bank ESS6, projects situated within critical habitats are required to
demonstrate that:
■ No other viable alternatives within the region exist for development of the project on modified or
natural habitat that are not critical;
■ The project does not lead to measurable adverse impacts on those biodiversity values for which the
critical habitat was designated, and on the ecological processes supporting those biodiversity values;

■ The project does not lead to a net reduction in the global and/or national/regional population of
any critically endangered or endangered species over a reasonable period of time; and
■ A robust, appropriately designed, and long-term biodiversity monitoring and evaluation program is
integrated into the client’s management program.
In addition, projects need to achieve net gains of those biodiversity values for which the critical habitat
was identified.
This study has focused on the following key groups of priority biodiversity values, which have been
identified through a review of the scientific literature and on experiences in well-developed offshore
wind markets:
■ Legally Protected Areas and Internationally Recognized Areas - see Section 3

■ Natural Habitats - see Section 4
■ Cartilaginous Fish - see Section 5
■ Marine Turtles - see Section 6
■ Birds - see Section 7
■ Marine Mammals- see Section 8.
2. METHODOLOGY
For each group of priority biodiversity values, the available global and regional spatial datasets were
identified and screened for inclusion in one of two spatial data layers for use in the country roadmap:
1. Exclusion zone (that is, areas of the highest biodiversity sensitivity to exclude from the technical
assessment of offshore wind resource) and
2. Restriction zone (that is, high-risk areas requiring further assessment of risk during MSP, site
selection, and/or ESIA).
Numerous global and regional biodiversity datasets exist (primarily produced by academic, scientific,
government, and nongovernmental organizations [NGOs]) and are useful and important resources.
Broadly, these datasets provide an indication of the distribution of given biodiversity values. For
example, datasets show
■ Verified point records of species occurrence;

■ Species range maps;
■ The extent of a particular habitat or ecosystem type, or location of key habitat features;
■ Modelled indicative habitat suitability; and
■ The boundaries of globally important LPAs and internationally recognized areas (IRAs) that
represent areas of high biodiversity conservation value.
Appendix: priority biodiversity values 251

Threatened and range-restricted species are the focus of criteria 1 and 2 for the determination
of critical habitat, as defined by IFC PS6 and therefore represent priority biodiversity values. As a
foundational stage, the IUCN Red List was screened to identify all threatened and all range-restrictedi
marine species with global ranges that overlap with the Philippine Exclusive Economic Zone (EEZ). A full
list of the identified threatened species is provided in Table 10.
A detailed literature search was completed to identify spatial data and additional contextual
information on these species. In addition to identifying digitized spatial data, many supplementary
data sources that provide more detailed information on relevant priority biodiversity values were
identified. These sources provide a valuable resource for future MSP, site selection, and ESIA stages of
offshore wind development in the Philippines and are listed in Table 11, along with a short commentary
on each dataset highlighting its suitability for MSP.
Early and constructive stakeholder engagement is an essential component of identifying priority

biodiversity values, verifying data, and ensuring they are considered appropriately and proportionately
in planning for offshore wind development. Stakeholder engagement should be an integral and
important part of future MSP and ESIA processes, and a list of relevant environmental stakeholders
has been identified and is provided in Table 12.
3. LEGALLY PROTECTED AREAS AND INTERNATIONALLY

RECOGNIZED AREAS
Following the IUCN definition, a LPA is any clearly defined geographical space, recognized, dedicated,
and managed, through legal or other effective means, to achieve the long-term conservation of nature
with associated ecosystem services and cultural values.ii Internationally recognized areas (IRAs) are
exclusively defined in IFC PS6 as UNESCO Natural World Heritage Sites, UNESCO MAB Reserves,
KBAs, and wetlands designated under the Convention on Wetlands of International Importance (the
Ramsar Convention).iii
LPAs and IRAs represent high-value areas designated for various biodiversity conservation objectives,
and some should be excluded from consideration for offshore wind development because of this. For
example, development in KBAs (see Section 3.3) should be avoided because these sites represent
the most important places in the world for species and their habitats.iv It may also be necessary to
avoid other types of designated areas, such as EBSAs (see Section3.5), or UNESCO-MAB Reserves
(see Section 3.6). To note, IFC standards prohibit development in AZE sites and UNESCO Natural and
Mixed World Heritage Sites.v In the Philippines, three of the twelve AZE sites have coastal and marine
components (see Section 3.2.2). There are also two designated World Heritage Natural Sites with
coastal and marine components and another six sites on the tentative list (see Section 3.6).
1 Range-restricted marine species are defined by IFC PS6 as having an Extent of occurrence less than 100,000 km2
ii Dudley 2008; IFC 2012.
iii IFC 2012.
iv KBA n.d.
v IFC 2019.

3.1 Nationally protected areas
Protected areas are afforded varying levels of legal protection in different national jurisdictions, often
underpinned by commitments made under international conventions. The Philippines Congress has
the sole authority to establish protected areas through a national legislative act. Two landmark laws—
Republic Act No. 7586 NIPAS Act of 1992 and Republic Act No. 11038 ENIPAS Act of 2018—determine
the legal basis for protected natural areas in the Philippines, which comprise 39 percent of the total
area of the country. There is a range of LPA types, which are aligned with the IUCN protected area
management categoriesvi (Table 1).
TABLE 1: THE PHILIPPINE LPA ALIGNMENT WITH THE IUCN PROTECTED AREA MANAGEMENT
CATEGORIES
LPA Categories in the Philippines IUCN Protected Area Management Categories

Strict Nature Reserve Ia: Strict Nature Reserve
Ib: Wilderness Area
Natural Park II: National Park
Natural Monument III: Natural Monument or Feature
Wildlife Sanctuary IV: Habitat/Species Management Area
Protected Landscape/Seascape V: Protected Landscape/Seascape
Natural Biotic Area VI: Protected Area with Sustainable Use of Natural Resources
The Department of Environment and Natural Resources (DENR) is the primary implementing
agency and administrator of the protected area system in the Philippines. Under the current ENIPAS
implementation, there are a total of 244 protected areas, 72 of which are classified as MPAs and
have a total coverage of 1.3 million hectares.vii The NIPAS/ENIPAS are complemented by the Wildlife
Resources Conservation and Protection Act No. 9147 (the Wildlife Act), which further designates
critical habitats.viii These are areas of known habitats of threatened species and fall outside the
abovementioned protected areas under the NIPAS/ENIPAS.
For the purpose of this study, LPAs with coastal and marine components that fall under these two
protected area categories—MPAs and critical habitats—have been screened and further described in
the remainder of this section.
vi IUCN n.d.
vii BMB-DENR n.d.
viii Critical habitats are defined and designated by DENR according to their own set of criteria that are further detailed in Section 3.1.2. The term ‘Critical Habitat’ in this
context does not refer to the IFC PS6 definition for critical habitat.

3.1.1 Coastal and marine protected areas
The Philippines is divided into three main island groups—Luzon, Visayas, and Mindanao—and 17
administrative regions, which encompass over 7,000 islands and a coastline of around 37,000 km. The
Biodiversity Management Bureau (BMB) of the DENR implements a Coastal and Marine Ecosystem
Management Program (CMEMP), which includes all coastal and marine areas of the Philippines
covering 72 national MPAs under the NIPAS/ENIPAS and more than 1,600 LMPAsix under the Fisheries
Code (Republic Act No. 8550) and Local Government Code (Republic Act No. 7160). Based on the
objectives of their establishment, MPAs in the Philippines are classified under four main categories:x
■ Marine Sanctuary or no-take marine reserve, where all forms of extractive activities are prohibited
■ Marine Reserve, where extractive and non-extractive activities are regulated
■ Marine Park, where uses are designated into zones
■ Protected Landscape and Seascape, where protection may include non-marine resources.
National MPAs are mostly referred to as ‘MPAs under the NIPAS/ENIPAS’ and include marine reserves,
managed natural resource and protected areas, protected landscape and seascape, and wildlife
sanctuaries. LMPAs that are designated by the Fisheries Code include fish reserves, sanctuaries
and refuges; seagrass sanctuaries; marine parks; and marine reserves, sanctuaries, and refuges.
LMPAs include all waters within a municipality that are not included in protected areas under the
NIPAS Act.xi There is a mandate enforced by the House Bill No. 8145 to establish MPAs in all coastal
municipalities and cities in the Philippines to ensure protection and preservation of marine resources
and development of fisheries.
One of the components of the CMEMP is ‘MPA Network Establishment and Strengthening’. The
Philippines has three MPA Networks (MPANs): Davao Gulf, Lanuza Bay, and Verde Island Passage
(FIGURE 1). MPANs have been identified to increase the effectiveness of coastal and marine
ecosystem management, and the ability to provide ecological goods and services to improve the
quality of life of coastal populations through combining LMPA resources.xii Establishment of MPANs
is widely supported as networks fulfil conservation targets more effectively and comprehensively
than individual MPAs, and enhance social and economic benefits through collaboration among local
communities and management units.xiii,xiv
ix Ibid.
x BMB-DENR 2016.
xi BMB-DENR n.d.
xii Horigue et al. 2012.
xiii IUCN-WCPA 2007.
xiv UNEP-WCMC 2008.

FIGURE 1: MARINE PROTECTED AREA NETWORKS (MPANS) IN THE PHILIPPINESxv
BMB-DENR defines the main objectives of MPA establishment as biodiversity conservation, fisheries
sustainability, tourism, and recreation.xvi It is unlikely that offshore wind development would
be compatible with the biodiversity conservation objectives of MPAs under the NIPAS/ENIPAS.
Although human activity is permitted in some of these protected areas, due to the likely sensitivity
of threatened habitats and species to impacts associated with offshore wind development, they are
included in the exclusion zone layer.
LMPAs under the Fisheries Code are included in the restriction zone layer due to lack of detailed spatial
information on the distribution of their biodiversity values. Additional survey data are required to
better assess whether offshore wind development is appropriate within a particular LMPA.
xv BMB-DENR n.d.
xvi BMB-DENR 2016.

3.1.2 Critical habitats
Critical habitats in the Philippines are designated on the basis of scientific data considering species
endemism and/or richness and presence of anthropogenic threats to the survival of wildlife in the area.
DENR regional or field offices facilitate establishment of critical habitats through their own initiative
or upon a request from another concerned local government unit. The procedure for critical habitat
establishment includesxvii
■ Identification and validation of threatened species;

■ Population estimate and rapid habitats assessment, community consultation, review and
recommendation by DENR; and
■ Declaration of areas as critical habitat by DENR and/or local government units and ground
truthing.
Currently, there are nine declared critical habitats in the Philippines,xviii five of which have coastal and
marine components as listed in Table 2, with qualifying threatened species identified for each. Critical
habitats with coastal and marine components are included in the exclusion zone layer.
TABLE 2: CRITICAL HABITATS IN THE PHILIPPINES, DESIGNATED UNDER THE WILDLIFE ACT
No. Critical Habitat Area (ha) Threatened Biodiversity

Anas luzonica (Philippine Wild Duck; VU), Numenius
Cabusao Wetland madagascariensis (Far Eastern Curlew; EN), Calidris tenuirostris
1 27
Critical Habitat (Great Knot; EN), Platalea minor (Black-faced Spoonbill; EN), and
Egretta eulophotes (Chinese Egret; VU)
Carmen Critical
2 5,756 Nesting grounds for Eretmochelys imbricata (Hawksbill Turtle; CR)
Habitat
Adams Wildlife
3 3,253 Last frontier of the dipterocarp forest in Ilocos Region
Critical Habitatxix
Magsaysay Critical
4 Habitat for 613 Nesting grounds for Eretmochelys imbricata (Hawksbill Turtle; CR)
Hawksbill Turtles
Dumaran Critical Cacatua haematuropygia (Philippine Cockatoo; CR), Siebenrockiella
5 1,628
Habitat leytensis (Philippine Pond Turtle; CR)
xvii DENR Administrative Order 2007-02, DENR 2007.

xviii BMB-DENR n.d.
xix Adams Wildlife Critical Habitat is divided into two sections, where only “Adams Wildlife Critical Habitat (Parcel 2)” extends into the northern coast of Luzon. The
declared area includes both sections.

3.2 Key Biodiversity Areas
KBAs have been designated to cover the most important places in the world for species and their
habitats. KBAs are identified using a global standard that includes criteria that were developed
through a multi-stakeholder process. These criteria include quantitative thresholds that mean sites
are globally important for the long-term survival of biodiversity. KBA identification is rigorous,
transparent, and can be applied consistently in different countries and over time.
Sites qualify as KBAs if they meet one or more of eleven criteria, clustered into five higher-level
categories: threatened biodiversity, geographically restricted biodiversity, ecological integrity,
biological processes, and irreplaceability (KBA Criteria n.d).. The KBA criteria are broadly aligned with
IFC PS6 criteria for critical habitat, although KBA criteria are wider, and therefore not all KBAs will
qualify as critical habitat. All BirdLife International IBA are also classified as KBAs, although some
would not meet the updated global KBA standard, and therefore might be treated as regional or
national KBAs (see Section 3.2.1). All existing AZE sites are also KBAs (see Section 3.2.2).
The KBA identification process in the Philippines was undertaken in two phases. Terrestrial and
freshwater KBAs (128) were designated in 2006, followed by identification of marine KBAs (123) in
2009, totalling up to 228 (with overlaps between marine and terrestrial/freshwater KBAs). Many of
these KBAs were identified based on the 117 IBAs that had previously been identified by the BirdLife
International and the Haribon Foundation (BirdLife Partner in the Philippines), as well as the 206 CPAs,
which had been defined through the Philippine Biodiversity Conservation Priority-Setting Program.xx
The World Database of KBAs includes 139 of these KBAs that meet the global KBA standard, 37 of
which are designated as marine KBAs. About 38 percent of the marine KBAs overlap with MPAs.xxi,xxii
Table 3 provides a list of KBAs with their corresponding LPAs and other IRAs, where there are complete
or partial overlaps. All the KBAs listed in the World Database in the Philippines with coastal and marine
components are included in the exclusion zone layer.
xx BMB-DENR n.d.
xxi KBA 2021.
xxii IBAT n.d.

TABLE 3: KBAS IN THE PHILIPPINES WITH COASTAL AND MARINE COMPONENTS AND
LPAS AND OTHER IRAS
Other LPA/IRA
Area LPA (NIPAS/ IUCN UNESCO UNESCO
KBA Critical
(ha) E-NIPAS) Category IBA AZE Ramsar EBSA Natural Biosphere IMMA
Habitat
Heritage Reserve
Apo Reef
Apo Reef
Marine Natural 25,557 II
Natural Park
Park KBA
Babuyanes
809,775 — —
Islands KBA
Palawan Game
Refugee and
Bird Sanctuary
Balabac Entire Province
34,927 —
Island KBA of Palawan
Mangrove
Swamp Forest
Reserve
Bataan Natural
Park and Subic Bataan
25,181 II
Bay Forest Natural Park
Reserve KBA
Batanes
Batanes Protected
210,791 V
Island KBA Landscape and
Seascape
Buguey
10,873 — —
Wetlands KBA
Palawan Game
Refugee and
Bird Sanctuary
Busuanga Entire Province
94,692 —
Mangrove
Swamp Forest
Reserve
Calauit Island
Calauit Game Preserve
3,640 —
Island KBA and Wildlife
Sanctuary
Calituban and Talibon Group

Tahong-tahong of Islands
25,643 Protected V
Islands (Talibon Landscape and
group) KBA Seascape
Catanduanes
Catanduanes
Watershed Forest 62,747 II
Natural Park
Reserve KBA

Other LPA/IRA
KBA Critical
Habitat
Heritage Reserve
Palawan Game
Refugee and
Bird Sanctuary
Coron Entire Province
7,788 —
Mangrove
Swamp Forest
Reserve
Palawan Game
Refugee and
Bird Sanctuary
Culion Entire Province
45,029 —
Mangrove
Swamp Forest
Reserve
Palawan Game
Refugee and
Bird Sanctuary
Dumaran Entire Province
30,017 —
Araceli KBA of Palawan
Mangrove
Swamp Forest
Reserve
El Nido
Managed
El Nido KBA 91,753 IV
Resource
Protected Area
Lalaguna
3,139 — —
Marsh KBA
Malampaya Malampaya
Sound Protected Sound
200,001 Protected V
Landscape and Landscape and
Seascape KBA Seascape
Mactan,
Kalawisan
6,373
and Cansaga
Bays KBA
Manila Bay 95,508 — —
Northern
North Eastern Sierra Madre II
Natural Park
Cagayan
Protected 227,586
Landscape and Peñablanca
Seascape KBA Protected V
Landscape and
Seascape
Northern Sierra Northern

Madre Natural 385,032 Sierra Madre II
Park KBA Natural Park
Olango Olango Island

1,619 Wildlife V
Island KBA Sanctuary

Other LPA/IRA
KBA Critical
Habitat
Heritage Reserve
Palsabangan
River up to
Mazintuto
Pagbilao River, Bacong
and Tayabas 2,697 River to —
Bay KBA Sandoval Point
Mangrove
Swamp Forest
Reserve
Peñablanca Peñablanca
Protected Protected
127,397 V
Island of
Polillo, Alabat,
Cabelete,
Jomalig,
Patnanongan,
Kalotkot,
Polillo Kalongkooan,
20,285 —
Islands KBA Palasan,
Calabao,
Icol and
San Rafael
Mangrove
Swamp Forest
Reserve
Puerto
Princesa
Natural Park
Puerto Princesa Palawan Game
Subterranean Refugee and
River Natural 125,278 Bird Sanctuary —
Park Cleopatra’s Entire Province
Needle KBA of Palawan
Mangrove
Swamp Forest
Reserve
Rasa Island
Rasa Island KBA 1,019 Wildlife IV
Sanctuary
Maulawin
Spring
Ragay Gulf KBA 20,417 V
Protected
Landscape
Romblon Island 8,553 — —
Palawan Game
Refugee and
Bird Sanctuary
San Vicente-
Taytay-Roxas — Entire Province —
Forests KBA of Palawan
Mangrove
Swamp Forest
Reserve
Siargo Island Siargo Island
Protected Protected
64,578 V

Other LPA/IRA
KBA Critical
Habitat
Heritage Reserve
Sibutu and
Tumindao 100,873 — —
Islands KBA
Simunul and
Manuk Manka 19,369 — —
Islands KBA
South and North

2,251 — —
Gigante Island
Tawi-tawi
86,088 — —
Island KBA
Tubbataha Reef Tubbataha

National Marine 39,541 Reefs —
Park KBA Natural Park
Palawan Game
Refugee and
Bird Sanctuary
Ursula Entire Province
1,148 —
Mangrove
Swamp Forest
Reserve

3.2.1 Important bird and biodiversity areas
The BirdLife Global Seabird Programme has identified marine IBAs that include seabird breeding
colonies, foraging areas around breeding colonies, non-breeding (usually coastal) concentrations,
migratory bottlenecks, and feeding areas for pelagic species. The methodology for the designation of
marine IBAs is described in the marine IBA toolkit.xxiii
The Philippines has two Marine IBAs: Apo Reef Natural Park and Tubbataha Reef National Marine
Park. Both areas are also designated KBAs and LPAs and located within Sulu-Sulawesi Marine
Ecoregion EBSA (see Section 3.5). Tubbataha Reef National Marine Park IBA is also a Ramsar Site (see
Section 3.3), East Asian – Australasian Flyway (EEAF) Site, UNESCO Natural World Heritage Site, and
UNESCO-MAB Reserve.
Apo Reef Natural Park Marine IBA has a variety of habitats including reefs, a small patch of
mangroves, a stretch of sandy beach, and beach vegetation of coconut palms, scrub, and trees. The
LPA is divided into three zones: the Strictly Protected Zone includes the coral sanctuary and the entire
Apo Island and surrounding waters up to 500 meters from the shore; the Managed Reserve Zone
comprises bird sanctuaries and Hawksbill and Green Turtle nesting grounds, where controlled human
activities are allowed; and the Multiple-use Zone has recreation, anchorage, and fishing areas. The
marine IBA is estimated to have 10,000 breeding pairs of seabirds.
Tubbataha Reef National Marine Park IBA is located in Central Sulu Sea and composed of North
and South Atolls and the Jessie Beazley Reef. The most significant feature of the IBA is the North
Atoll, which serves as a nesting ground for seabirds and two marine turtle species: Green Turtle
and Hawksbill Turtle. It supports a few of the remaining colonies of breeding seabirds in the region.
The mixed colonies include boobies, terns, egrets, and herons.xxiv There are also 600 fish species, 7
seagrass, and 13 shark species in these areas. Tubbataha Reefs is known to have the highest number
of the Oceanic Whitetip Shark (Carcharhinus longimanus; CR) and supports threatened fish species like
the Humphead Wrasse (Cheilinus undulatus; EN) and Giant Grouper (Epinelphus lanceolatus; VU).xxv
BirdLife has also identified EBAs, which are defined as areas that encompass the overlapping breeding
ranges of restricted-range species, such that the complete ranges of two or more restricted-range
species are entirely included within the boundary of the EBA.xxvi There are ten EBAs in the Philippines,
five of which include IBAs with coastal and marine components: Batanes and Babuyan Islands EBA,
Luzon EBA, Mindanao and the Eastern Visayas EBA, Mindoro EBA, and Palawan EBA. However, as
most EBAs are too large to be protected as a whole; IBAs within each EBA stand as smaller areas that
are more compatible with conservation objectives. Therefore, EBAs have not been included in either
restricted or exclusion zones in their own right.
xxiii BirdLife International 2010.

xxiv BirdLife International 2021.
xxv Ramsar 2014.
xxvi BirdLife International 2021.

Table 4 provides a list of IBAs in the Philippines with coastal and marine components with associated
threatened and restricted-range species and the EBAs they fall under. All IBAs with coastal and marine
components are included in the exclusion zone layer.
TABLE 4: IBAS IN THE PHILIPPINES WITH COASTAL AND MARINE COMPONENTS
IBA Threatened Species EBA

Apo Reef Marine Seabirds - 10,000 breeding pairs. Marine turtles - Eretmochelys
—
Natural Park imbricata, Chelonia mydas.
Birds - Anthracoceros marchei, Cacatua haematuropygia, Ducula
Balabac Island pickeringii, Prioniturus platenae, Ptilocichla falcata. Marine turtles Palawan
-Eretmochelys imbricata.
Birds - Anas luzonica, Bubo philippensis, Cacatua haematuropygia,
Bataan Natural
Erythrura viridifacies, Nisaetus philippensis, Prioniturus luconensis. Luzon
Park and Subic Bay
Mammals - Acerodon jubatus.
Birds - Egretta eulophotes, Emberiza sulphurate. Marine turtles - Batanes and
Batanes Islands
Eretmochelys imbricata, Chelonia mydas, Lepidocheyls olivacea. Babuyan Islands
Birds - Anas luzonica, Nisaetus philippensis, Wintering and staging
Buguey Wetlands —
area for migratory waterfowl.
Birds - Anthracoceros marchei, Cacatua haematuropygia, Ficedula
Busuanga Island platenae, Prioniturus platenae. Marine turtles - Eretmochelys imbricata, Palawan
Chelonia mydas.
Birds - Anthracoceros marchei, Cacatua haematuropygia, Ducula
Calauit Island Palawan
pickeringii, Egretta eulophotes, Prioniturus platenae.
Calituban and Birds - Egretta eulophotes, Together with Olango Island and Mactan,
Tahong-tahong Kalawisan and Cansaga Bays IBAs, supports the largest non- —
Islands breeding population of the species.
Catanduanes
Birds - Anas luzonica, Ceyx melanurus, Cacatua haematuropygia.
Watershed Forest Luzon
Marine turtles - Chelonia mydas, Lepidocheyls olivacea.
Reserve
Birds - Anthracoceros marchei, Cacatua haematuropygia, Ficedula
Culion Island Palawan
platenae, Polyplectron napoleonis, Prioniturus platenae.
Birds - Anthracoceros marchei, Ducula pickeringii, Egretta eulophotes,
El Nido Ficedula platenae, Polyplectron napoleonis. Marine turtles - Palawan
Eretmochelys imbricata, Chelonia mydas, Lepidocheyls olivacea.
Lalaguna Marsh Birds - Anas luzonica. —
Birds - Egretta eulophotes. Together with Olango Island and Calituban
Mactan, Kalawisan and Tahong-tahong Islands IBAs, supports the largest non-breeding
—
and Cansaga Bays population of the species. Important staging area for migratory shore
birds – variety of herons and egrets.
Birds - Anas luzonica, Egretta eulophotes, Platalea minor, Thalasseus
Manila Bay —
bernsteini.
North Eastern
Birds - Anas luzonica, Bubo philippensis, Ceyx melanurus, Ducula
Cagayan Protected
carola, Hypothymis coelestis, Nisaetus philippensis, Oriolus isabellae, Luzon
Landscape and
Pithecophaga jefferyi, Prioniturus luconensis, Ramphiculus marchei.
Seascape

IBA Threatened Species EBA
Birds - Bubo philippensis, Ceyx melanurus, Ducula carola, Erythrura
viridifacies, Geokichla cinerea, Hypothymis coelestis, Muscicapa randi,
Northern Sierra Nisaetus philippensis, Oriolus isabellae, Pithecophaga jefferyi, Prioniturus
Luzon
Madre Natural Park luconensis, Ramphiculus marchei, Vauriella insignis. Marine turtles -
Eretmochelys imbricata, Chelonia mydas. Mammals - Acerodon jubatus,
Dugong dugon.
Birds - Anas luzonica, Egretta eulophotes, Numenius madagascariensis.
Together with Mactan, Kalawisan and Cansaga Bays and Calituban
Olango Island and Tahong-tahong Islands IBAs, supports the largest non-breeding —
population of the Chinese Egret. Important staging area for
migratory shorebirds – as many as 50,000 birds using the site.
Birds - Anas luzonica, Ceyx melanurus, Egretta eulophotes, Pithecophaga
Pagbilao and
jefferyi. Important stating and wintering area for migratory herons, —
Tayabas Bay
egrets and shorebirds.
Peñablanca Birds - Anas luzonica, Bubo philippensis, Ceyx melanurus, Ducula carola,
Protected Erythrura viridifacies, Geokichla cinerea, Hypothymis coelestis, Muscicapa
—
Landscape and randi, Nisaetus philippensis, Oriolus isabellae, Pithecophaga jefferyi,
Seascape Prioniturus luconensis. Mammals - Acerodon jubatus.
Birds - Anas luzonica, Egretta eulophotes, Ceyx melanurus, Cacatua
Polillo Islands Luzon
haematuropygia. Mammals - Dugong dugon.
Birds - Gallicolumba platenae, Ducula mindorensis, Centropus steerii,
Puerto Galera Mindoro
Penelopides mindorensis, Cacatua haematuropygia, Geokichla cinerea.
Puerto Princesa
Birds -Anthracoceros marchei, Cacatua haematuropygia, Egretta
Subterranean
eulophotes, Ficedula platenae, Polyplectron napoleonis, Prioniturus Palawan
River Natural Park
platenae, Ptilocichla falcata, Tringa guttifer.
Cleopatra’s Needle
Birds - Egretta eulophotes. Important area for migratory herons and
Ragay Gulf —
shorebirds.
Birds - Cacatua haematuropygia, Otus gurneyi, Penelopides panini Mindanao and the
Siargao Island
Sarcophanops steerii. Eastern Visayas
Sibutu and Birds - Cacatua haematuropygia, Ducula pickeringii, Egretta eulophotes,
Sulu Archipelago
Tumindao Islands Picoides ramsayi, Prioniturus verticalis.
Simunul and Manuk Birds - Cacatua haematuropygia, Gallicolumba menagei, Prioniturus
Sulu Archipelago
Manka Islands verticalis.
Birds - Anthracoceros montani, Cacatua haematuropygia, Ducula
pickeringii, Gallicolumba menagei, Hypothymis coelestis, Phapitreron
Tawi-tawi Island cinereiceps, Picoides ramsayi, Prioniturus verticalis, Todiramphus Sulu Archipelago
winchelli. Marine turtles - Eretmochelys imbricata, Chelonia mydas,
Dermochelys coriacea. Mammals - Dugong dugon.
Birds - Egretta eulophotes. Marine turtles - Eretmochelys imbricata,
Tubbataha Reef —
Chelonia mydas. Mammals - Physeter catodon.
Birds - Ducula pickeringii, Otus mantananensis. Shoreline is a migratory
Ursula Island and wintering ground for shorebirds and the surrounding waters are Palawan
important feeding grounds for seabirds, particularly terns.

3.2.2 AZE sites
The AZE was established to designate and conserve the most important sites for global biodiversity.
AZE engages governments, multilateral institutions, and nongovernmental biodiversity conservation
organizations working to prevent species extinctions. There are 835 globally identified AZE sites, which are
the areas that hold the last-remaining populations of one or more species evaluated as critically endangered
or endangered by the IUCN Red List.xxvii
IFC Guidance Note 6 considers “sites that fit designation criteria for the AZE” not acceptable for financing with
a possible exception of projects designed to contribute to the conservation of the area.xxviii
There are twelve AZE sites in the Philippines, three of which have coastal and marine components—Culion
Island, South and North Gigante Island, and Tawi-Tawi Island. Table 5 provides a list of these sites with
species that trigger designation of each. AZE sites are included in the exclusion zone layer.
TABLE 5: AZE SITES IN THE PHILIPPINES WITH COASTAL AND MARINE COMPONENTS
AZE Site Trigger Species

Culion Island Cycad (plant): Cycas wadei (Wade’s Pitago; CR)
South and
Amphibian: Platymantis insulatus (Island Forest Frog; CR)
North Gigante Island
Birds:
Anthracoceros montani (Sulu Hornbill; CR)
Tawi-tawi Island Gallicolumba menagei (Sulu Bleeding-Heart; CR)
Phapitreron cinereiceps (Dark-eared Brown Dove; EN)
Prioniturus verticalis (Blue-winged Racket-tail; CR)
3.3 Ramsar sites

Ramsar sites are wetlands of international importance that have been designated under the criteria of the
Ramsar Convention on Wetlands for containing representative, rare, or unique wetland types, or for their
importance in conserving biological diversity. There are eight Ramsar sites in the Philippines, six of which
have coastal and marine components:
■ Las Piñas-Parañaque Critical Habitat and Ecotourism Area

■ Negros Occidental Coastal Wetlands Conservation Area
■ Olango Island Wildlife Sanctuary
■ Puerto Princesa Subterranean River Natural Park
■ Sasmuan Pampanga Coastal Wetlands
■ Tubbataha Reefs Natural Park
Some of these areas are also designated as MPAs and critical habitats under the NIPAS and Wildlife
Conservation Act, respectively, and some overlap with KBAs, IBAs, and EEAF sites, EBSAs, UNESCO-MAB
Reserves, and UNESCO Natural World Heritage Sites. Table 6 summarizes these overlaps and Ramsar
qualifying biodiversity.xxix All Ramsar sites are included the exclusion zone layer.
xxvii AZE n.d.

xxviii IFC 2019, GN55.
xxix Ramsar n.d.

TABLE 6: RAMSAR SITES IN THE PHILIPPINES WITH COASTAL AND MARINE COMPONENTS
Protected Area
Ramsar Site Area (ha) Priority Biodiversity
LPA IRA
At least 5,000 individuals of migratory and

resident birds have been recorded at the site,
including about 47 migratory species such as
Las Piñas- the Chinese Egret (Egretta eulophotes; VU). The
Nature
Parañaque Reserve most important of the resident bird species is the
Critical Habitat 174 — endemic Philippine Duck (Anas luzonica; VU) which
and Ecotourism Critical breeds at the site. Records during 2007–2011
Habitat
Area show that the site supports at least 1% of the
estimated population of Black-Winged Stilts
(Himantopus himantopus) using the East Asian-
Australasian Flyway.
72 waterbird species have been recorded at

the site, including the Great Knot (Calidris
tenuirostris; CR), Far Eastern Curlew (Numenius
madagascariensis; EN), and Spotted Greenshank
(Tringa guttifer; EN). There are three other
Negros vulnerable species: the Philippine duck (Anas
Occidental luzonica), Chinese egret (Egretta eulophotes),
Coastal and Java sparrow (Lonchura oryzivora). It is also
89,608 — EEAF Site
Wetlands known for its rich and diverse coastal resources,
Conservation particularly mangroves and shellfish. The site
Area hosts three threatened marine turtle species:
Hawksbill Turtle (Eretmochelys imbricata; CR),
Green Turtle (Chelonia mydas; EN), and Olive
Ridley Turtle (Lepidochelys olivacea; VU). The
Irrawaddy dolphin (Orcaella brevirostris; VU) also
inhabits the coastal areas.
One of the most important areas in the

Philippines for migratory waterbirds providing
habitat for staging, wintering, roosting, and
Olango Island KBA/IBA feeding birds reaching 40,000 in number. There
Wildlife
Wildlife 5,900 EEAF Site are 97 bird species in Olango, 48 of which are
Sanctuary
Sanctuary EBSA migratory, while others are residents. The most
significant species in the area are the Asiatic
Dowitcher (Limnodromus semipamatus; NT) and
the Chinese Egret (Egretta eulophotes; VU).
The site connects a range of important

ecosystems including limestone karst landscape,
cave system, mangrove forests, lowland
KBA/IBA
tropical forests, and freshwater swamps. The
Puerto Princesa EBSA site supports 15 endemic bird species including
Subterranean UNESCO the Palawan Peacock Pheasant (Polyplectron
22,202 Natural Park Natural
River Natural emphanum; VU) and Tabon Scrub fowl
Park World (Megapodius freycinet cumingii), as well as the
Heritage Philippine Cockatoo (Cacatua haematuropygia;
Site CR), Nordmann’s Greenshank (Tringa guttifer; EN),
Hawksbill Turtle (Eretmochelys imbricate; CR), and
Green Turtle (Chelonia mydas; EN).

Protected Area
Ramsar Site Area (ha) Priority Biodiversity
LPA IRA
Located on the island of Luzon in the north of the
Philippine Archipelage, the site includes mudflats,
mangroves, and riverine habitats serving as an
important stopover point for migratory birds.
In 2020, over 50,000 individuals were counted.
Sasmuan KBA/IBA Threatened species recorded at the site include
Pampanga Critical (part of the Spotted Greenshank (Tringa guttifer; EN),
96,828 Manila Bay) Black-faced Spoonbill (Platalea minor; EN), and
Coastal Habitat
Wetlands Far Eastern Curlew (Numenius madagascariensis;
EN). The site also hosts zones of the vulnerable
mangrove species, Avicennia rumphiana, which
along with more common Sonneratia alba
provides shelter for juvenile fish, molluscs, and
other marine and estuarine species.
KBA/IBA
UNESCO Islets of the natural park provide the only known
Natural breeding area for the endemic subspecies of the
World Black Noddy (Anous minutus worcestri) in the
Tubbataha Heritage Philippines and provide breeding and feeding
Reefs Natural 96,828 Natural Park Site grounds for threatened species such as the
Park
UNESCO- Christmas Island Frigatebird (Fregata andrewsi;
MAB EN) as well as the Hawksbill Turtle (Eretmochelys
Biosphere imbricata; CR).
Reserve

3.4 Important marine mammal areas
IMMAs are a joint project between the IUCN Species Survival Commission (SSC) and World
Commission on Protected Areas (WCPA).xxx IMMAs are defined as discrete portions of habitat,
important to marine mammal species that have the potential to be delineated and managed for
conservation. IMMAs are designated using standard criteria:
■ Criterion A - Species or Population Vulnerability: Areas containing habitat important for the
survival and recovery of threatened and declining species.
■ Criterion B - Distribution and Abundance (including small and resident populations, and
aggregations).
■ Criterion C - Key Life Cycle Activities (including reproduction, feeding and migration).
■ Criterion D - Special Attributes (including distinctiveness and diversity).
The criteria have quantitative thresholds that are aligned with both IUCN standard for the
identification of KBAs, and IFC PS6 criteria for Critical Habitat. Therefore, IMMAs should generally
meet IUCN KBA and potentially IFC Critical Habitat criteria. There are five IMMAs in the Philippines:
Babuyan Marine Corridor, Bohol Sea, Iloilo and Guimaras Straits, Malampaya Sound, and Tañon
Strait. Mayo Bay to Pujada Bay is a candidate IMMA (cIMMA).xxxi IMMA qualifying criteria, species,
and description of these areas are summarized in Table 7.
Babuyan Marine Corridor, Malampaya Sound, and Tañon Strait IMMAs are included in the exclusion
zone layer, as all three areas overlap with LPAs and KBAs. Iloilo and Guimaras Straits IMMA is also
included in the exclusion zone due to the presence of the Irrawaddy dolphin population. Mayo Bay to
Pujada Bay cIMMA should also be considered once its assessment is completed and spatial boundaries
are determined.
xxx IUCN-MMPATF 2019.

xxxi IUCN-MMPATF n.d.

TABLE 7: IMMAS IN THE PHILIPPINES
Additional Species
IMMA
IMMA Area (ha) Primary Species - (IMMA Criterion D Description
Criteriaxxxii
(ii) Diversity)
Babuyan Islands and

surrounding waters
Megaptera are the only known
Criterion A; Physeter
novaeangliae wintering/breeding
C (1) macrocephalus,
(Humpback whale) populations of the
Globicephala
Humpback whale
macrorhynchus,
in the Philippines.
Pseudorca crassidens,
There is also a small
Babuyan Feresa attenuata,
resident population
Marine 1,689,300 Peponocephala
of the Rough-toothed
Corridor electra, Kogia sima,
dolphin. Babuyanes
Stenella attenuata,
Islands is also a marine
Stenella longirostris,
Steno bredanensis KBA supporting
Criterion B Tursiops truncatus,
(Rough-toothed 11 other cetacean
(1); C (2) Grampus griseus,
dolphin) species, as well as
Lagenodelphis hosei
whale sharks, marine
turtles, fish, and
corals.
Bohol Sea represents

Physeter Balaenoptera edeni, a hotspot for the
macrocephalus Balaenoptera omurai, cetaceans in the
(Sperm whale) Feresa attenuata, Philippines and South
Grampus griseus, East Asia, where 19
Globicephala species are known to
Balaenoptera macrorhynchus, occur. It is the only
musculus Criterion A Kogia sima, Kogia known area in the
(Blue whale) Criterion A breviceps, Mesoplodon Philippines where the
Criterion B densirostris, Orcinus Blue whale has been
Bohol Sea 2,951,700
(2) orca, Pseudorca identified. There are
Peponocephala crassidens, Stenella also records of Sperm
Criterion B
electra attenuata, Stenella whale, Bryde’s whale,
(2)
(Melon-headed longirostris and Omura’s whale.
whale) longirostris, Deeper waters support
Stenella longirostris resident populations of
roseiventris, Steno Melon-headed whale,
Lagenodelphis hosei bredanensis, Tursiops Short-finned Pilot
(Fraser’s dolphin) truncatus whale, Risso’s dolphin,
and Fraser’s dolphin.
Tursiops aduncus, This IMMA hosts
Grampus griseus, one of the three
Iloilo and Pseudorca crassidens, subpopulations of
Orcaella brevirostris Criterion A;
Guimaras 34,000 Kogia sima, Stenella Irrawaddy dolphin,
(Irrawaddy dolphin) B (1)
Straits attenuata, Dugong represented by an
dugon, Globicephala estimated number of
macrorhynchus 30 individuals.
xxxii IUCN-MMPATF 2021

Additional Species
IMMA
IMMA Area (ha) Primary Species - (IMMA Criterion D Description
Criteriaxxxii
(ii) Diversity)
Malampaya Sound
in Palawan hosts
a locally occurring
subpopulation of the
Malampaya Orcaella brevirostris Criterion A; Irrawaddy dolphin,
19,700 Tursiops truncates
Sound (Irrawaddy dolphin) B (1); D (1) which is estimated
to be around 35
individuals. It is also
a designated LPA and
KBA.
Tañon Strait is a
Tursiops aduncus Protected Seascape,
Criterion B Tursiops aduncus,
(Indo-Pacific where all cetaceans
(1); C (2) Stenella longirostris,
Bottlenose dolphin) are under full
Grampus griseus,
protection by local
Globicephala
and national law. The
Tañon Strait 537,100 macrorhynchus, Kogia
area is significant
sima, Peponocephala
for resident Indo-
electra, Pseudorca
Stenella longirostris Criterion C Pacific Bottlenose and
crassidens, Stenella
(Spinner dolphin) (2, 3) Spinner dolphins, as
attenuata
well as high cetacean
diversity.
The candidate IMMA

encompasses two
neighboring bays
separated by the
Guanguan Peninsula.
Pujada Bay is rich in
Detailed information
Mayo Bay to Unconfirmed its coral reef system.
Dugong dugon will be available
Pujada Bay — – pending The area has 850
(Dugong) when full IMMA
(cIMMA) assessment hectares of mangroves
status is granted.
and 9 of the 16
seagrass species in the
Philippines occur here.
IUCN-MMPATF reports
good Dugong feeding
activity in the area.

3.5 Ecologically or biologically significant areas
EBSAs are special areas in the ocean that support the healthy functioning of oceans and the many
services that they provide. The Conference of the Parties (COP 9) to the Convention on Biological
Diversity adopted the following seven scientific criteria for identifying EBSAs: Uniqueness or rarity;
Special importance for life history stages of species; Importance for threatened, endangered, or
declining species and/or habitats; Vulnerability, fragility, sensitivity, or slow recovery; Biological
productivity; Biological diversity; and Naturalness. The identification of EBSAs and the selection of
conservation and management measures is a matter for states and competent intergovernmental
organizations (IGOs), in accordance with international law (including the UN Convention on the Law
of the Sea). The criteria do not include quantitative thresholds, but in principle they have a lot in
common with WBG/IFC natural habitats definition and IFC critical habitat criteria and could therefore
constitute an important high-level planning consideration for offshore wind development.
The SSME EBSA is located at the apex of the Coral Triangle Region. It covers 100,352,600 hectares
and includes multiple marine areas within the Philippine EEZ. The SSME is home to coral reefs,
seagrass meadows, and mangrove forests that support a range of fish, marine turtle, dolphin, whale,
shark, and ray species, as well as other less well-known marine flora and fauna. The largest and almost
intact mangrove forests are found in Palawan and Mindanao. Seagrass beds are found throughout the
SSME providing important feeding grounds for marine turtles and dugongs. All types of corals can be
found in the SSME, where the most common are the patch and fringing reefs that are found along the
coastline of islands.xxxiii
In the Philippine EEZ, in addition to several undefined marine areas, the SSME EBSA encompasses
LPAs and IRAs that are listed in Table 8. Due to the large spatial extent of the EBSA and lack of
detailed spatial information on the distribution of its biodiversity values, marine areas of the EBSA
that are not already included in the exclusion zone layer because of overlap with LPAs and KBAs are
included in the restriction zone layer. However, additional survey data are required to better assess
whether offshore wind development is appropriate within the EBSA.
xxxiii CBD 2017.

TABLE 8: PROTECTED AREAS WITHIN THE SULU-SULAWESI MARINE ECOREGION EBSA
No. Protected Area LPA IRA

1 Apo Reef Marine Natural Park
2 Asid Gulf Marine Protected Area Network (AGMPAN)
3 Balabac Island
4 Busuanga Island
5 Calauit Island
6 Calituban and Tahong-tahong Islands (Talibon group)
7 Carmen Critical Habitat
DENR Antique, BFAR Antique, Office of the Provincial Agriculture (OPA)
8
Antique and Rare Inc.
9 Dumaguete City, Negros Oriental
10 Dumaran Araceli
11 Hinatuan Passage Development Alliance (HIPADA)
12 Initao-Libertad Protected Landscape and Seascape
Island of Sta Cruz and Salomague, foreshoreline of dapdap and alabo to the
mouth of tagum river, malinoa creek to salomague point, foreshoreline of
13
Barrio Cabuyagan to eastern side of Dating Bayan River in Calancan Bay
Mangrove Swamp Forest Reserve
14 Magsaysay Critical Habitat
15 Olango Island
Palawan Game Refuge and Bird Sanctuary & Entire Province of Palawan
16 Mangrove Swamp Forest Reserve that does not overlap with KBAs (including
islands)
17 Puerto Princesa Subterranean River Natural Park Cleopatra’s Needle
18 Ragay Gulf
19 Sagay Marine Reserve
20 San Juan Siquijor
21 Siargo Island Protected Landscape and Seascape
22 Sibutu and Tumindao Islands
23 Simunul and Manuk Manka Islands
24 South and North Gigante Island
25 Tañon Strait Protected Seascape
26 Tawi-tawi Islands
27 Ticao-Burias Pass Protected Seascape
28 Tubbataha Reef National Marine Park
29 Ursula Island

3.6 UNESCO World Heritage Natural Sites
The Convention concerning the Protection of the World Cultural and Natural Heritage adopted by
UNESCO in 1972 embodies designation of World Heritage Sites for having outstanding universal
value to humanity. States Parties to the Convention identify and nominate suitable sites of cultural
and/or natural heritage sites to the World Heritage Committee, which is the main body in charge
of implementation of the Convention. In line with UNESCO’s World Heritage Mission to help States
Parties safeguard World Heritage properties, Operational Guidelinesxxxiv for the Implementation of the
Convention sets forth procedures for:
■ Inscription of properties on the World Heritage List and the List of World Heritage in Danger;
■ Protection and conservation of World Heritage properties;
■ Grating of International Assistance under the World Heritage Fund; and
■ Mobilization of national and international support in favour of the Convention.
Article 4 of the Convention states that each State Party “recognizes that the duty of ensuring the
identification, protection, conservation, presentation and transmission to future generations of cultural
and natural heritage situated on its territory, belongs primarily to that State.”xxxv The Philippines has
three natural heritage sites, two of which have coastal and marine components: Puerto Princesa
Subterranean River Natural Park and Tubbataha Reefs Natural Park.
Puerto Princesa Subterranean River Natural Park is located in Palawan, comprising an area of
approximately 22,202 hectares and containing an 8.2 km long underground section of Cabaguyan
River that flows directly into the sea. The site encompasses a distinctive cave system with limestone
karst formations, mangrove and tropical forests, and a range of endemic species.
Tubbataha Reefs Natural Park has a unique location in the center of the Sulu Sea with near pristine
coral reefs of at least 359 coral species. The site protects almost 100,000 hectares of marine habitats
with a large area of deep sea and has a great diversity of whales, dolphins, sharks, marine turtles, and
over 600 fish species including the Humphead Wrasse.xxxvi
Both sites are designated national parks (under NIPAS), KBAs (Table 3), IBAs (Table 4), Ramsar Sites
(Table 6), and they both fall within the Sulu-Sulawesi Marine Ecoregion EBSA (see Table 8). Tubbataha
Reefs Natural Park is also protected as a UNESCO-MAB Reserve (see Section 3.7) and under the
Tubbataha Act (Republic Act No. 10067).
Another six sites with coastal and marine components are on the tentative list submitted by the
Philippines to the World Heritage Committee, on the basis of on an initial inventory of natural and
cultural heritage sites located within its boundaries:
xxxiv UNESCO World Heritage Centre 2019.

xxxv Convention concerning the Protection of the World Cultural and Natural Heritage 1972.
xxxvi UNESCO World Heritage Centre n.d.

■ Apo Reef Natural Park
■ Batanes Protected Landscapes and Seascapes
■ Coron Island Natural Biotic Area
■ El Nido-Taytay Managed Resource Protected Area
■ Northern Sierra Madre Natural Park and outlying areas inclusive of the buffer zone
■ Turtle Islands Wildlife Sanctuary.
All of these sites are designated LPAs and IRAs, except for Turtle Island Wildlife Sanctuary, which is
not a designated KBA but is protected under the NIPAS Act.
IFC Guidance Note 6 prohibits development in UNESCO World Heritage Sites. The two World Natural
Heritage Sites in the Philippines—Puerto Princesa Subterranean River Natural Park and Tubbataha
Reefs Natural Park—and the six sites on the tentative list are thus included in the exclusion zone layer.
3.7 UNESCO-MAB Biosphere Reserves

As approved by UNESCO in 1995, the Statutory Framework for the World Network of Biosphere
Reserves is a ‘soft legal framework’ for development and recognition of biosphere reserves,
which can be proposed by all members and associate members. UNESCO MAB Programme is an
intergovernmental programme combining natural and social sciences to improve human livelihoods
and safeguard natural and managed ecosystems. Biosphere reserves are nominated by national
governments and designated under the MAB program, which provides support in national planning
and implementation of research and training programs with technical assistance and scientific advice.
These sites are internationally recognized.
The Philippines has three biosphere reserves, two of which have coastal and marine components:
Puerto Galera and Palawan. Puerto Galera Biosphere Reserve is located on Mindoro Island covering
23,300 hectares. It is composed of savannas and grasslands, dipterocarp forests, mossy forests,
coral reefs, and coastal ecosystems. Coral reef conservation is one of the main tasks defined for the
reserve, where maintenance of traditional livelihoods, culture, and tourism is also targeted.xxxvii Puerto
Galera Biosphere Reserve and Puerto Galera KBA/IBA overlap for the most part, but the latter does not
extend to the northern tip of Mindoro Island to include coastal and marine components.
Palawan Biosphere Reserve includes the entire Province of Palawan Island covering 1,150,800 hectares.
Palawan is an archipelago that is composed of a main island and more than 1,700 smaller islands.
Of the 475 threatened species identified in the Philippines, 105 are found in Palawan. There are 379
coral, 13 seagrass, and 31 mangrove species. The biosphere reserve has some of the highest remaining
mangrove cover in the Philippines. The entire province of Palawan has two LPA statuses: Game Refuge
and Bird Sanctuary (and the small island of Palawan is a National Reserve)xxxviii and Mangrove Swamp
Forest Reserve.xxxix Palawan also includes KBAs and IBAs with coastal and marine components that
are listed in Table 3 and Table 4, respectively.
UNESCO-MAB Reserves of Puerto Galera and Palawan are included in the exclusion zone layer.
xxxvii UNESCO 2018a, 2018b.
xxxviii Under Proclamation No. 219.
xxxix Under Proclamation No. 2152.

4. NATURAL HABITATS
The Philippines has several coastal and marine ecosystems that are highly important, both ecologically
and economically, for the country. Although the Philippines has no official list of threatened natural
habitats, for the purpose of this report, the three threatened natural habitats that are discussed in this
section are coral reefs, seagrass beds, and mangrove forests.xl
Coral Reefs: The estimated coral reef area of the Philippines is around 26,000 km2, which is the third
largest in the world after Indonesia and Australia. There are approximately 500 scleractinian corals,
of which almost 200 are threatened, and 12 are endemic. Coral reefs are home to more than 1,700
reef fish, as well as the five threatened marine turtle species. Coral reefs also provide livelihood to
nearly half of the Philippines’ population.xli,xlii Apo Reef is the largest coral reef in the Philippines, and
the second-largest contiguous coral reef in the world after Australia’s Great Barrier Reef. The National
Assessment of Coral Reef Environment Ecosystems (NACRE) Program data from 2014 to 2017 identify
the status of coral reefs at 206 stations within the three main island groups, Luzon, Visayas, and
Mindanao, across the six biogeographic regions of the country. Accordingly, the Sulu Sea has the
highest hard coral cover (HCC) with a percentage of 28.4% ± 2.4%, followed by the West Philippine Sea
and Celebes Sea, with 26.0% ± 1.6% and 23.6% ± 3.7%, respectively. The Sulu and West Philippine Seas
also hold the highest coral generic diversity (TAU).xliii,xliv
MPAs and LMPAs under the NIPAS/ENIPAS are estimated to protect 2.7–3.4 percent of the total coral
reef area in the Philippines.xlv More than 40 million hectares of coral reefs are estimated to lie within
KBAs, mostly (60 percent) in the West Philippine Sea, with a significant concentration around the
Kalayaan Islands Group.xlvi
The mapped areas of coral reef sourced from the Allen Coral Atlasxlvii are included in the exclusion zone
layer. Threatened invertebrates and reef-associated fish species are also covered by these areas.
Seagrass Beds: Seagrass beds support biodiversity and important ecological functions, providing
food, shelter, and nursery areas to juvenile and small adult fish, invertebrates, marine turtles, and
the dugong in the Philippine EEZ. They act as a buffer protecting the shoreline and support adjacent
coral reefs and mangroves by stabilizing the sea bottom. Seagrass beds are also important for coastal
livelihoods due to the support they provide to fisheries and tourism. More recently, seagrasses have
been recognized as a ‘blue carbon’ ecosystem as they sequester high amounts of carbon from the
atmosphere.xlviii,xlix,l
xl There are several components of national legislation that address the conservation and management of marine habitats and associated biodiversity.
xli BMB-DENR 2019.
xlii ADB 2014.
xliii BMB-DENR 2019.
xliv Licuanan, Robles, and Reye 2019.
xlv Weeks et al. 2010.
xlvi ADB 2014.
xlvii ASU 2021.
xlviii Fortes 2018.
xlix Du et al. 2020.
l ADB 2014.

The Philippines has the highest seagrass diversity in Southeast Asia with 18 species found at 529
sites, distributed throughout the country from Bolinao Bay in the north, Palawan and the Cebu-Bohol-
Siquijor area in the center, and Zamboanga and Davao in the south. Halophila beccarii (Ocean Turf
Grass), assessed as Vulnerable according to the IUCN Red List, is the only threatened seagrass species.
The Philippines also has the largest extent of seagrass beds in Southeast Asia. Most of the studies
are from Northwest Luzon. The Eastern Philippine Ecoregion, which encompasses Luzon (excluding
Palawan), Visayas, and Mindanao Islands has 11 species within an area of approximately 715 hectaresli
Due to their importance for the ecosystem and threatened marine species, the mapped areas of
seagrass beds sourced from the Allen Coral Atlaslii are included in the exclusion zone.
Mangroves: Coastal mangrove forests grow in the intertidal zone of tropical and subtropical regions
and play a crucial role in protecting the shoreline from erosion and tropical storms. They not only
provide nursery and feeding areas for threatened marine species (including cetaceans, dugong, marine
turtles, and cartilaginous fish) but mangroves also offer important ecosystem services to coastal
communities.liii,liv,lv
Mangrove forest cover in the Philippines is reported to have increased from 247,362 hectares in 2003
to 310,531 hectares in 2010, but decreased to 303,402 hectares in 2015.lvi The Province of Palawan
has the largest extent of mangroves with 63,532 hectares, where 4.4 percent of the province’s total
land area comprises 46 percent of the total mangrove forest area in the country. Provinces of Sulu,
Quexzon, Zamboanga Sibugay, Surigao del Norte, Tawi-Tawi, Samar, Zangoanga del Sur, Bohol, and
Basilan have the major mangrove areas.
Twenty percent of the Philippines’ mangroves lie within LPAs that correspond to IUCN protected area
categories I–VI, the majority of which are located in Palawan and Siargao. The Mangrove and Beach
Forest Development Project (MBFDP) is one of the components of the National Greening Program
(NGP) run by the Philippine Government and has been implemented at disaster-affected areas and
targets sites in almost all regions of the country.lvii,lviii The mapped areas of mangroves sourced from
Clarks Labslix are included in the exclusion zone.
Table 11 provides additional sources of information in relation to threatened marine habitats that
could be useful to inform MSP, site selection, and ESIA.
li Fortes et al. 2018.

lii ASU 2021.
liii Primavera 2004.
liv Long and Giri 2011.
lv ADB 2014.
lvi BMB-DENR 2019.
lvii PCSD 2015.
lviii Long and Giri 2011.
lix Clarks Lab, Clarks University 2021.

5. CARTILAGINOUS FISH
The Philippines has at least 164 species of sharks, rays, and chimaeras that belong to 45 families. The
presence of 96 species has been confirmed on vouchers specimens, photos, or other validated data,
while 26 species require additional confirmation and 40 have been identified as new and potentially
endemic to the Philippines.lx
The National Stock Assessment Program (NSAP) under the Department of Agriculture Bureau of
Fisheries and Aquatic Resources (BFAR) has been conducting shark and ray assessments in different
administrative regions. The Sharks Assessment Report (SAR) dataset for 2009–2016 has records
of 180 shark and ray species with landings in all administrative regions of the Philippines, except for
Region 9 Zamboanga Peninsula. The highest number of species was recorded in Region 6 Western
Visayas, 45 shark, and 36 ray species, followed by Region 7 Central Visayas and Region 1 Ilocos.
The most prevalent cartilaginous species include threatened Carcharhinus melanopterus (Blacktip
Reef Shark; VU), Sphyrna lewini (Scalloped Hammerhead; CR), Alopias pelagicus (Pelagic Thresher; EN),
Carcharhinus albimarginatus (Silvertip Shark; VU), Carcharhinus falciformis (Silky Shark; VU), Manta
birostris (Giant Manta Ray; EN), and Himantura uarnak (Coach Whipray; VU). Of the top 16 most
prevalent species, 75 percent are pelagic, including carcharhinid sharks, sphyrnids, threshers, and even
mantas and eagle rays, while about 25 percent are demersal stingrays and bamboosharks.lxi A full list
of the identified threatened species is provided in Table 10.
Priority conservation areas (PCAs) for Rhincodon typus (whale shark; EN) and other elasmobranchs
were identified in 2001 by the Philippine Biodiversity Conservation Priority-Setting Program. The
baseline studies were conducted in Donsol, Sorsogon, Honda Bay, Puerto Princesa, Zambales, Mati,
Davao, Bohol Sea and Sogod Bay, and Leyte, which resulted in identification of 12 PCAS for whale
sharks based on important aggregation sites and feeding grounds for the species. Due to lack of
fishery-independent data on other elasmobranchs, PCAs were based on historical shark fisheries
information on West Sulu Sea, Lamon Bay, Babuyan Channel, and Cuyo Pass in Luzon, Visayan Sea,
East Sulu Sea, Guimaras Strait, Sibuyan Sea, South Sulu Sea, and Moro Gulf (FIGURE 2).
At least 24 threatened elasmobranchs were considered as trigger species during the marine KBA
identification process in the Philippines, which led to the designation of six KBAs (see Section 3.2).
Pujada Bay Protected Landscape and Seascape, Cagayancillo MPA, Donsol Marine Conservation
Park, Malapascua MPA, and a number of other LMPAs to conserve cartilaginous fish among other
threatened habitats and species.lxii
KBAs and MPAs significant for sharks, rays, and chimaeras are included in the exclusion zone layer. No
additional digitized spatial datasets were found for cartilaginous fish, but there are survey and sighting
data available that could be useful to inform MSP, site selection, and ESIA as listed in Table 11.
lx BFAR-NFRDI 2017.
lxi Ibid.
lxii Ibid.

FIGURE 2: PRIORITY CONSERVATION AREAS FOR THE WHALE SHARK AND OTHER
ELASMOBRANCH IN THE PHILIPPINES
Whale Shark Priority Conservation Areas Elasmobranch Priority Conservation Areas
6. MARINE TURTLES
The Philippines is home to five of the seven marine turtles in the world, all of which are threatened
species: Chelonia mydas (Green Turtle; EN), Eretmochelys imbricata (Hawksbill Turtle; CR), Lepidochelys
olivacea (Olive Ridley Turtle; VU), Demochelys coriacea (Leatherback Turtle; CR), and Caretta caretta
(Loggerhead Turtle; VU) (Table 10).
The Green, Hawksbill, and Olive Ridley Turtles are widely distributed throughout the country. The Green
Turtle nests in the Turtle and San Miguel Islands in Tawi-Tawi, Pitogo, Zamboanga del Sur, and two
islands in Basilan—Languil and Malamawi. The Hawksbill only nests in Lagonoy Gulf. Olive Ridleys have
been sighted all over the country with nesting sites in Subic Bay Freeport Zone, Morong, Bataan, Lian
and San Juan, Batangas, and Puerto Princesa City. The Leatherback nests mostly in Malaysia and
Indonesia and forages in the Philippines around Palawan, Central Visayas, Bicol, and the Davao Gulf.
The first nesting Leatherback was recorded in 2013 in Barangay Rawis in Bicol Region. The Loggerhead
nests in Japan and forages in waters of Basilan and Bicol Region of the Philippines. It has no nesting
records.lxiii,lxiv
lxiii MWWP 2014.

lxiv Miclat and Arceo 2018.

The majority of these nesting sites are designated LPAs and IRAs. Turtle Island Wildlife Sanctuary and
Tubbataha Reef National Marine Park are two of the most important LPAs for marine turtles. Section
3 identifies LPAs that have known nesting and foraging sites of marine turtles (Critical Habitats [Table
2], IBAs [Table 4], Ramsar Sites [Table 6], Babuyan Marine Corridor IMMA [Table 7]), all of which are
included in the exclusion zone layer. No additional digitized spatial data have been identified in relation
to marine turtles; however, Table 11 provides additional sources of survey and nesting data in relation
to marine fish that could be useful to inform MSP, site selection, and ESIA.
7. BIRDS
7.1 Threatened Species

There are 18 threatened waterbird species whose IUCN global ranges overlap with the Philippine EEZ
(Table 10). LPAs and IRAs that are important for threatened species are described in Section 3, all of
which are included in the exclusion zone layer. Some of the other important coastal wetlands include
Balayan Bay, Cabulao Bay, Caramoan Peninsula, Inabanga Coast, Panguil Bay, Talabong Island and
Bais Bay, Turtle Island, and Ulugan Bay.lxv No additional digitized spatial data were found in relation
to threatened bird species; however, Table 11 provides additional sources of survey data that could be
useful to inform MSP, site selection, and ESIA.
7.2 Migratory Waterbird Flyways

Migratory marine birds are at risk of collision with turbines, barrier effects, and displacement due to
offshore wind farms. Both inland and coastal wetlands of the Philippines are part of the EAAFP and
are being monitored annually through the AWC at AWC sites throughout the country. During the AWC
2014–2017 monitoring period, based on an informal classification by BMB-DENR, migratory waterbird
groups with the highest number of recorded species and highest population counts were shorebirds
and waders; herons and egrets; geese and ducks; rails, gallinules, and coots; and gulls, terns, and
skimmers.lxvi
The EAAF Partnership also identifies internationally important sites within the flyway to ensure
long-term survival of migratory waterbirds. The Philippines has three EAAF sites with coastal and
marine components:lxvii Olango Island Wildlife Sanctuary, Tubbataha Reefs Natural Park, and Negros
Occidental Coastal Wetlands Conservation Area, all of which are designated MPAs, KBAs, and Ramsar
Sites. Section 3 provides information on other protected areas that are significant for migratory
waterbirds and therefore included in the exclusion zone layer.
No additional digitized spatial data were found in relation to migratory waterbird species; however,
Table 11 provides additional sources of bird survey and modelling data that could be useful to inform
MSP, site selection, and ESIA.
lxv ADB 2014.

lxvi BMB-DENR 2019.
lxvii EAAFP 2018.

8. MARINE MAMMALS
There are 29 confirmed marine mammal species in the Philippines: 28 cetaceans, of which five are
threatened species (Table 10) and 1 sirenian—Dugong dugon (dugong; VU). During the annual surveys
in 2005–2018 led by the Philippine Marine Mammal Stranding Network (PMMSN), 952 strandings of
27 species were recorded in all regions of the Philippines with a coastline. Most of these (60 percent)
occurred in Luzon, while Visayas and Mindanao had an equal share of 20 percent each. FIGURE 3
shows the number of strandings based on 2005–2018 data points.lxviii,lxix
FIGURE 3: MARINE MAMMAL STRANDINGS IN THE PHILIPPINES (2005–2018, BASED

ON 15 X 15 KM GRIDS CREATED FOR EACH MUNICIPALITY/CITY COASTLINE)
lxviii Aragones, Laggui, and Amor 2017.

lxix Aragones and Laggui 2019.

Physeter macrocephalus (Sperm whale; VU) is found in almost all major seas of the Philippines but
sightings are mostly of solitary animals. There are only a few records of sightings of more than two
animals.lxx Orcaella brevirostris (Irrawaddy dolphin; EN) has a single known population in Malampaya
Sound in Palawan.lxxi Dugongs are mostly found around the southern and western Mindanao Coast,
Guimaras Strait and Antique, Aurora, Quezon and the Polillo Island, Tawi-Tawi, and Sulu Archipelago.
Between 2010 and 2019, there were 23 sightings of Balaenoptera musculus (Blue whale; EN) in the Bohol
Sea around Pamilacan Island, Panglao Island, Sogod Bay, and Oslob.lxxii
IRAs that are significant for marine mammals are described Section 3 (IBAs, Table 4; and IMMA, Table
7). Most coasts where there are marine mammal records are also designated MPAs and are therefore
included in the exclusion zone layer. No additional digitized spatial data were found in relation to
marine mammals; however, Table 11 provides additional sources of sighting and stranding data that
could be useful to inform MSP, site selection, and ESIA.
9. SUMMARY
Sections 3 to 8 provide the rationale for the digitized spatial data included within the Exclusion and
Restriction zone layers, to be taken into account within the Philippine offshore wind roadmap. These
are summarized in Table 9 along with the sources of the relevant digitized spatial data.
TABLE 9: SUMMARY TABLE OF DIGITIZED SPATIAL DATA TO BE INCLUDED IN EXCLUSION AND

RESTRICTION ZONE LAYERS
Priority
Available Digitized
Zone Biodiversity Source
Spatial Data Layer
Value
MPAs under the NIPAS/ENIPAS
Critical Habitats BMB-DENR
KBAs, including IBAs and AZE Sites www.ibat-alliance.org
LPAs and Ramsar Sites http://www.ibat-alliance.org

IRAs
IMMAs http://www.marinemammalhabitat.org
Exclusion
Zone UNESCO World Heritage
http://www.unep-wcmc.org
Natural Sites
UNESCO-MAP Biosphere Reserves http://ihp-wins.unesco.org/layers
Coral Reefs
Natural https://allencoralatlas.org/
Seagrass Beds
Habitats
Mangrove Forests http://www.unep-wcmc.org
Restricted LPAs and LMPAs

Zone IRAs EBSA http://www.cbd.int/
lxx Acebes 2014.

lxxi Aragones Laggui, and Amor 2017.
lxxii Acebes et al. 2021.

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TABLE 10: LIST OF THREATENED MARINE SPECIES WITH GLOBAL RANGES OVERLAPPING THE
PHILIPPINE EEZ
Class Latin Name Common Name IUCN Status Range area (km2)
Marine Mammals
MAMMALIA Orcaella brevirostris Irrawaddy Dolphin EN —
Balaenoptera
MAMMALIA Blue Whale EN —
musculus
Balaenoptera
MAMMALIA Fin Whale VU —
physalus
Physeter
MAMMALIA Sperm Whale VU —
macrocephalus
MAMMALIA Dugong dugon Dugong VU —
Birds
AVES Anas luzonica Philippine Duck VU 279,937
AVES Aythya ferina Common Pochard VU 27,566,004
Anthracoceros
AVES Palawan Hornbill VU 41,300
marchei
AVES Calidris tenuirostris Great Knot EN 3,461,414
Spoon-billed
AVES Calidris pygmaea CR 355,000
Sandpiper
Numenius
AVES Far Eastern Curlew EN 6,587,512
madagascariensis
AVES Tringa guttifer Spotted Greenshank CR 749,000
Chinese Crested
AVES Thalasseus bernsteini CR 114,000
Tern
Onychoprion
AVES Aleutian Tern VU 6,660,000
aleuticus
AVES Ciconia boyciana Oriental Stork EN 941,000
North Philippine
AVES Ceyx melanurus VU 318,000
Dwarf-kingfisher
AVES Egretta eulophotes Chinese Egret VU 860,335
Japanese
AVES Gorsachius goisagi VU 1,010,000
Night-Heron
Black-faced
AVES Platalea minor EN 169,000
Spoonbill
Hydrobates Matsudaira’s
AVES VU 22,432,343
matsudairae Storm-Petrel
Short-tailed
AVES Phoebastria albatrus VU 48,011,637
Albatross
Pterodroma
AVES Galapagos Petrel CR 16,800,000
phaeopygia
Cacatua
AVES Philippine Cockatoo CR 734,000
haematuropygia
Christmas
AVES Fregata andrewsi CR 4,235,730
Frigatebird
Marine Turtles

REPTILIA Chelonia mydas Green Turtle EN 176,482,666
Eretmochelys
REPTILIA Hawksbill Turtle CR 276,653,106
imbricata
REPTILIA Lepidochelys olivacea Olive Ridley VU
REPTILIA Caretta caretta Loggerhead Turtle VU
REPTILIA Dermochelys coriacea Leatherback Turtle VU
Cartilaginous Fish
Carcharhinus
CHONDRICHTHYES Silvertip Shark VU
albimarginatus
Carcharhinus
CHONDRICHTHYES Borneo Shark EN 2,197,228
borneensis
Carcharhinus
CHONDRICHTHYES Silky Shark VU
falciformis
CHONDRICHTHYES Lamiopsis temminckii Broadfin Shark EN 3,458,609
Carcharhinus
CHONDRICHTHYES Grey Reef Shark EN 5,939,686
amblyrhynchos
Carcharhinus
CHONDRICHTHYES Dusky Shark EN 15,765,442
obscurus
Carcharhinus Oceanic Whitetip
CHONDRICHTHYES CR 200,950,876
longimanus Shark
Carcharhinus
CHONDRICHTHYES Blacktip Reef Shark VU
melanopterus
CHONDRICHTHYES Hemigaleus elongata Snaggletooth Shark VU
Hemigaleus Sicklefin Weasel
CHONDRICHTHYES VU
microstoma Shark
Blackspotted
CHONDRICHTHYES Halaelurus buergeri EN 654,029
Catshark
Cephaloscyllium Reticulated
CHONDRICHTHYES CR 40,006
fasciatum Swellshark
CHONDRICHTHYES Eusphyra blochii Winghead Shark EN 9,607,302
CHONDRICHTHYES Sphyrna mokarran Great Hammerhead CR 31,445,766
Scalloped
CHONDRICHTHYES Sphyrna lewini CR 31,603,907
Hammerhead
Smooth
CHONDRICHTHYES Sphyrna zygaena VU
Hammerhead
CHONDRICHTHYES Squalus montalbani Philippine Spurdog VU
Hemitriakis
CHONDRICHTHYES Whitefin Topeshark EN 646,297
leucoperiptera
Starspotted
CHONDRICHTHYES Mustelus manazo EN 2,029,405
Smooth-hound
CHONDRICHTHYES Chimaera phantasma Silver Chimaera VU
CHONDRICHTHYES Alopias pelagicus Pelagic Thresher EN 132,386,857
CHONDRICHTHYES Alopias superciliosus Bigeye Thresher VU
CHONDRICHTHYES Alopias vulcpinus Thresher VU
CHONDRICHTHYES Cetorhinus maximus Basking Shark EN 221,820,483

Carcharodon
CHONDRICHTHYES White Shark VU
carcharias
CHONDRICHTHYES Isurus paucus Longfin Mako EN 185,106,241
CHONDRICHTHYES Isurus oxyrinchus Shortfin Mako EN 222,540,198
Urogymnus
CHONDRICHTHYES Mangrove Whipray VU
granulatus
CHONDRICHTHYES Urogymnus lobistoma Tubemouth Whipray EN 395,063
CHONDRICHTHYES Pateobatis fai Pink Whipray VU
Maculabatis
CHONDRICHTHYES Round Whipray EN 1,371,097
pastinacoides
CHONDRICHTHYES Himantura uarnak Coach Whipray VU
Honeycomb
CHONDRICHTHYES Himantura undulata EN 1,977,221
Whipray
CHONDRICHTHYES Pateobatis jenskinsii Jenkins’ Whipray VU
Pateobatis
CHONDRICHTHYES Whitenose Whipray EN 1,987,036
uarnacoides
CHONDRICHTHYES Maculabatis macrura Sharpnose Whipray EN 2,009,744
Whitespotted
CHONDRICHTHYES Maculabatis gerrardi EN 2,116,824
Whipray
Blotched Fantail
CHONDRICHTHYES Taeniurops meyeni VU
Ray
CHONDRICHTHYES Mobula alfredi Reef Manta Ray VU
CHONDRICHTHYES Mobula kuhlii Shortfin Devilray EN 10,281,673
CHONDRICHTHYES Mobula mobular Spinetail Devil Ray EN 200,430,791
CHONDRICHTHYES Mobula birostris Giant Manta Ray EN 203,755,004
CHONDRICHTHYES Mobula thurstoni Bentfin Devilray EN 213,269,951
CHONDRICHTHYES Mobula tarapacana Sicklefin Devilray EN 216,443,327
Mobula Longhorned Pygmy
CHONDRICHTHYES EN
eregoodootenkee Devil Ray
Aetomylaeus
CHONDRICHTHYES Mottled Eagle Ray EN 866,543
maculatus
Aetomylaeus
CHONDRICHTHYES Ornate Eagle Ray EN 5,655,227
vespertilio
Javanese Cownose
CHONDRICHTHYES Rhinoptera javanica VU
Ray
Indonesian
CHONDRICHTHYES Chiloscyllium hasselti EN 274,821
Bambooshark
CHONDRICHTHYES Rhincodon typus Whale Shark EN 171,328,569
CHONDRICHTHYES Stegostoma tigrinum Zebra Shark EN 16,086,945
Glaucostegus Sharpnose
CHONDRICHTHYES CR 685,737
granulatus Guitarfish
CHONDRICHTHYES Glaucostegus thouin Clubnose Guitarfish CR 1,293,706
CHONDRICHTHYES Glaucostegus typus Giant Guitarfish CR 4,459,625
CHONDRICHTHYES Pristis clavata Dwarf Sawfish EN 3,356,258
CHONDRICHTHYES Pristis zijsron Green Sawfish CR 5,842,057

CHONDRICHTHYES Pristis zijsron Green Sawfish CR 5,842,057
Anoxypristis
CHONDRICHTHYES Narrow Sawfish EN 5,923,232
cuspidata
CHONDRICHTHYES Pristis pristis Largetooth Sawfish CR 7,356,955
CHONDRICHTHYES Pristis pristis Largetooth Sawfish CR 7,356,955
Rhynchobatus Broadnose
springeri Wedgefish
Rhynchobatus Bottlenose
australiae Wedgefish
Bowmouth
CHONDRICHTHYES Rhina ancylostoma CR 5,182,345
Guitarfish
Blackfin Gulper
CHONDRICHTHYES Centrophorus isodon EN 35,272
Shark
Centrophorus
CHONDRICHTHYES Gulper Shark EN 2,898,533
granulosus
Centrophorus Leafscale Gulper
CHONDRICHTHYES EN 3,980,354
squamosus Shark

TABLE 11: LIST OF DATA SOURCES TO INFORM MARINE SPATIAL PLANNING, SITE SELECTION
AND ENVIRONMENTAL AND SOCIAL IMPACT ASSESSMENT
File Name Layer Citation Restrictions Source
PHL_Critical_
Habitat & PHL_
Critical_Habitat_
indicative
IUCN, UNEP-WCMC 2021. Restricted use,

The World Database on available through
World Database Protected Areas (WDPA). Integrated
PHL_WDPA_
on Protected Cambridge (UK): UNEP World Biodiversity www.ibat-alliance.org
Poly_2021
Areas (WDPA) Conservation Monitoring Assessment Tool
Centre. URL: www. (IBAT)
protectedplanet.net
Protected Areas (WDPA). IBAT
PHL_WDPA_
Cambridge (UK): UNEP World www.ibat-alliance.org
Poly_2021
Conservation Monitoring
Centre. URL: www.
protectedplanet.net
Protected Areas (WDPA). IBAT
PHL_WDPA_
Cambridge (UK): UNEP World www.ibat-alliance.org
Poly_2020
Conservation Monitoring
Centre. URL: www.
protectedplanet.net
BirdLife International 2021. Restricted use,
World Database of Key available through
Biodiversity Areas. Developed IBAT
by the KBA Partnership:
BirdLife International,
International Union for the
Conservation of Nature,
Amphibian Survival Alliance,
Key Conservation International,
PHL_KBA_2021 Biodiversity Critical Ecosystem Partnership www.keybiodiversityareas.org.
Areas Fund, Global Environment
Facility, Global Wildlife
Conservation, NatureServe,
Rainforest Trust, Royal
Society for the Protection of
Birds, Wildlife Conservation
Society and World Wildlife
Fund. Available at www.
keybiodiversityareas.org.

File Name Layer Citation Restrictions Source
IUCN MMPATF (2019) Global Restricted use , For

Dataset of Important Marine commercial use,
Mammal Areas (IUCN IMMA). please contact:
2021. immacoordinator@
Made available under gmail.com
Important agreement on terms and
http://www.
Marine Mammal conditions of use by the IUCN
PHL_IMMA marinemammalhabitat.org/
Areas (IUCN Joint SSC/WCPA Marine
imma-eatlas/
IMMA) Mammal Protected Areas
Task Force and accessible via
the IMMA e-Atlas
http://www.
marinemammalhabitat.org/
imma-eatlas/
http://ihp-wins.unesco.org/
PHL_MAB
layers
PHL_WDPA_
Poly_2021
Allen Coral Atlas maps,
bathymetry and map
statistics are © 2018-2021
Allen Coral Atlas Partnership
PHL_Seagrass Seagrass No restrictions https://allencoralatlas.org/
and Vulcan, Inc. and
licensed CC BY 4.0 (https://
creativecommons.org/
licenses/by/4.0/)
Allen Coral Atlas maps,
bathymetry and map
statistics are © 2018-2021
Allen Coral Atlas Partnership
PHL_Coral Coral No restrictions https://allencoralatlas.org/
and Vulcan, Inc. and
licensed CC BY 4.0 (https://
creativecommons.org/
licenses/by/4.0/)
PHL_ Global Mangroves

Mangroves No restrictions https://clarklabs.org/
GMW_2016_v2 Watch 2016
Convention on Biological
PHL_EBSA No restrictions https://www.cbd.int/
Diversity (CBD) 2021

TABLE 12: ENVIRONMENTAL STAKEHOLDERS
Early and constructive stakeholder engagement is an essential component of identifying priority

biodiversity values, verifying data, and ensuring they are considered appropriately and proportionately
in planning for offshore wind development. Stakeholder engagement should be an integral and
important part of future MSP and ESIA processes. A list of relevant environmental stakeholders has
been identified and is provided in the following table.
Stakeholder Type Website
National Stakeholders
Government
Biodiversity Management Bureau (DENR-BMB) https://bmb.gov.ph/index.php
Agency
Coral Reef Visualization and Assessment Government
http://202.90.159.82/corva/
(CoRVA) Program Program
Department of Environment and Natural Government
Resources (DENR) Agency
Department of Agriculture Bureau of Fisheries Government
https://www.bfar.da.gov.ph/
and Aquatic Resources (BFAR) Agency
Department of Environment and Natural Government
Resources (DENR) Agency
Ecosystem Research and Development Bureau Government
http://erdb.denr.gov.ph/
(DENR-ERDR) Agency
Environmental Management Bureau Government
https://emb.gov.ph/
(DENR-EMB) Agency
Mangrove & Beach Forest Development Government http://erdb.denr.gov.ph/2015/11/27/
Project (MBFDP) Project mangrove-beach-forest-development-project/
National Mapping and Resource Information Government
https://www.namria.gov.ph/
Authority (NAMRIA) Agency
Natural Resources Development Government
https://nrdc.denr.gov.ph
Corporation (NRDC) Agency
Palawan Council for Sustainable Government
https://pcsd.gov.ph/
Development (PCSD) Agency
Biodiversity Conservation Society of the
NGO http://www.biodiversity.ph/
Philippines
Coral Cay Conservation NGO https://www.coralcay.org/
Foundation for the Philippine Environment NGO https://fpe.ph/
Haribon Foundation (BirdLife Partner) NGO www.haribon.org.ph
Large Marine Vertebrates Research Institute
NGO https://www.lamave.org
Philippines (LAMAVE)
Marine Conservation Philippines NGO https://www.marineconservationphilippines.org/
Marine Wildlife Watch of the Philippines NGO http://mwwphilippines.org/pawikanwatchph/
People and the Sea NGO https://www.peopleandthesea.org/
Philippine Mangroves: Biodiversity,
NGO https://mangroveecology.com/
Conservation and Management
Quantitative Aquatics, Inc. (Q-quatics) NGO https://www.q-quatics.org/
Save Philippine Seas NGO https://www.savephilippineseas.org/
Sea Institute NGO http://seainstitute.org/
Society for Conservation of
NGO https://www.wetlands.ph/
Philippine Wetlands
The Philippine Marine Mammal Stranding
NGO http://pmmsn.org/
Network (PMMSN)

Stakeholder Type Website
De La Salle University Br. Alfred Shields FSC https://www.dlsu.edu.ph/research/research-centers/
Academic Institute
Ocean Research (SHORE) Center shore/
The University of Philippines Marine Mammal
Academic Institute https://iesm.science.upd.edu.ph/
Research & Stranding Laboratory
The University of Philippines Marine Science
Academic Institute http://www.msi.upd.edu.ph/
Institute (MSI)
International Stakeholders
Conservation International Philippines NGO https://www.conservation.org/philippines
Global Mangrove Alliance NGO https://www.mangrovealliance.org/
Oceana Philippines NGO https://ph.oceana.org/
Rare NGO https://rare.org/

Sea Around Us Fisheries, Ecosystems &
NGO http://www.seaaroundus.org/
Biodiversity
Seagrass Watch Philippines NGO https://www.seagrasswatch.org/philippines/
Sustainable Fisheries Partnership NGO https://www.sustainablefish.org/
WWF Philippines NGO https://wwf.org.ph/
Coral Triangle Initiative on Coral Reefs, Multilateral

https://www.denr.gov.ph
Fisheries, and Food Security (CTI-CFF) Partnership
Multilateral
Dugong and Seagrass Hub https://www.dugongseagrass.org/
Partnership
Multilateral
EAAFP https://www.eaaflyway.net/
Partnership
Multilateral
UNDP Biodiversity Finance Initiative (BIOFIN) https://www.biofin.org/philippines
Initiative
Government
GIZ Philippines https://www.giz.de/en/worldwide/376.html
Agency (Germany)
UNDP Philippines IGO https://www.ph.undp.org/
UNDP Global Marine Commodities (GMC)

Research Project https://globalmarinecommodities.org/en/home/
(2017–2021)
https://oceanconference.un.org/
UNDP Philippines SMARTSeas PH Research Project
commitments/?id=17454

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OFFSHORE WIND ROADMAP FOR

RIGHTS AND PERMISSIONS

Executive summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . xvii

2. Two scenarios for offshore wind in the Philippines . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

3. Low growth scenario . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

4. High growth scenario . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14

6. Key factors for successful development of offshore wind in an emerging market . . . . 34

7. Benefits and challenges of offshore wind . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42

8. Market volume in the Philippines . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50

ii Offshore Wind Roadmap for the Philippines

10. Cost of energy reduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76

11. Supply chain analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 97

12. Jobs and economic benefit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 116

13. Gender aspects . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 127

14. Environmental and social considerations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 132

16. Leasing and permitting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 174

17. Procurement of energy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 183

18. Transmission infrastructure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 187

19. Port infrastructure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 205

iv Offshore Wind Roadmap for the Philippines

21. Finance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 234

22. Stakeholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 244

Appendix: priority biodiversity values . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 250

vi Offshore Wind Roadmap for the Philippines

viii Offshore Wind Roadmap for the Philippines

x Offshore Wind Roadmap for the Philippines

AEP Annual energy production

xii Offshore Wind Roadmap for the Philippines

xiv Offshore Wind Roadmap for the Philippines

xvi Offshore Wind Roadmap for the Philippines

RATIONALE FOR OFFSHORE WIND IN THE PHILIPPINES

i IMF. 2021. “Philippines Country Report.” https://www.imf.org/-/media/Files/Publications/CR/2021/English/1PHLEA2021003.ashx.

THE PHILIPPINES’ OFFSHORE WIND POTENTIAL

xviii Offshore Wind Roadmap for the Philippines

Note: Relative levelized cost of energy (LCOE) is for 2033.

Executive Summary xix

The two development scenarios are summarized as follows:

Low growth scenario 3%

15 thousand FTE years

xx Offshore Wind Roadmap for the Philippines

CHALLENGES FOR DEVELOPING OFFSHORE WIND

Executive Summary xxi

FIGURE ES.3 PRIORITY THEMES TO CREATE A SUCCESSFUL OFFSHORE WIND INDUSTRY IN

2022: Set the vision

2022-23: Evolve the frameworks

Philippines 2022-2028: Develop and install first projects

2025-2035: Develop the long-term infrastructure

Source: World Bank, 2021.

xxii Offshore Wind Roadmap for the Philippines

Vision and volume targets

Leasing, permitting, and power purchase

Executive Summary xxiii

Grid connection and transmission network

xxiv Offshore Wind Roadmap for the Philippines

Understanding the marine environment

Executive Summary xxv

Standards and regulations

Capacity building and gender equality