Top banker urges more baseload power investments to avert shortages

The head of the country’s largest investment bank called for more investments in baseload power sources to avert potential shortages, arguing that renewable energy alone cannot meet growing demand without significant funding for costly battery storage solutions.

Eduardo Francisco, president of BDO Capital & Investment Corp., said on Friday, solar and other clean power sources are crucial for providing a cleaner energy supply, in line with the government’s green transition.

Stable power supply needed 

But he also underscored that reliable baseload energy sources, which include coal and liquefied natural gas (LNG) sources, are essential to ensuring a stable power supply.

“We need more baseload supply,” Francisco said during the Economic Journalists Association of the Philippines’ energy forum on Friday.

He said the government needs to provide incentives to encourage investments in LNG.

Eduardo Francisco 

BDO Capital & Investment Corp. president 

Small projects, large risks 

BDO Capital is ready to finance clean power projects, but based on the current pipeline, Francisco said the government is likely to miss its goal of increasing renewable energy to 35 percent by 2030.

While large companies can secure approvals and funding for their clean power projects, smaller firms face significant risks, making many projects unlikely to be finished.

Francisco estimated that as much as a third of smaller solar power projects might not reach completion.

“The numbers reported to the DOE are super optimistic,” he said. “I’m concerned we’re still heading toward a shortage.”

Insufficient battery storage investments 

Another issue, he said, was the lack of battery storage systems, which also have huge capital spending requirements. 

BDO Capital’s parent firm, BDO Unibank, was among the lenders that provided up to P40 billion in financing for San Miguel Corp.’s battery energy storage system projects.

“I’m not seeing enough battery. You need a mix,” he said.

The lack of battery energy storage means power is available during peak daytime hours but insufficient to meet evening demand.

Apart from funding needed energy projects, BDO is part of the Sy family's SM Group, which has made direct investments in the country's renewable power sector through the acquisition of Philippine Geothermal Production Co. in 2022.