In June, BDO Unibank, the largest bank in the Philippines by total assets, announced that it will be the lead financier of what has been touted as the world’s largest integrated solar and battery storage facility, set to be fully operational by 2027, among five other lenders.
Known as the Meralco Terra (MTerra) Solar project, the facility is being built to help meet the Philippines’ rising power demand. BDO, which is investing a bulk of the 150 billion pesos (US$2.64 billion) into the project finance facility, said it is expected to provide clean energy to approximately 2.4 million households.
Although the country has made significant strides in electrification, about 3.6 per cent of households in the Philippines are still not connected to the national power grid, according to government data.
Located across 3,500 hectares in Nueva Ecija and Bulacan, MTerra Solar will integrate solar generation with battery energy storage to ensure continuous power supply even beyond daylight hours. A transmission line will also be built to connect the plant to the national grid.
The massive renewable energy initiative is spearheaded by Meralco PowerGen Corp (MGEN), through its investment in SP New Energy Corp. BDO said it can reduce carbon emissions by about 4.3 million tonnes annually, the equivalent of at least taking 3 million gasoline-powered cars off the road.
BDO’s partnership with MGen showcases the significant role of local financing in driving large-scale renewable energy projects in order to “strengthen the country’s energy security as we transition to a greener, more resilient future,” said Eduardo V. Francisco, president of BDO Capital, which acts as the sole mandated lead arranger and bookrunner for the transaction.
The completion of the facility will also see other socially-focused initiatives being implemented to benefit local communities, such as solar streetlights for barangays, as well as the provision of training spots and job placements.
“We take pride in empowering businesses that champion innovation and sustainability, ensuring that renewable energy benefits various industries and millions of Filipino households,” said Charles M. Rodriguez, BDO’s executive vice president and head of its Institutional Banking Group.
Other lenders to the facility include Security Bank Corp, China Banking Corp, Philippine National Bank, Metropolitan Bank & Trust Co and Bank of the Philippine Islands.
In July, BDO also reported that its sustainable financing of projects across various sectors such as energy, water and infrastructure, has crossed 1 trillion pesos (US$17.6 billion) since 2010.
The bank’s Sustainable Finance Framework includes the US$2 billion sustainability bond it issued recently, which will be used not only to finance renewable energy projects, but improve food security, generate employment, develop green buildings, among others.
In 2022, the bank also received a US$100 million investment for the country’s first of its kind blue bond, slated to raise money for projects on water conservation, wastewater treatment, plastic recycling, sustainable tourism, fisheries, and sustainable seafood processing.
Local banks’ role in rural areas
The transition of communities and workers who might have their jobs and livelihoods impacted during a green energy transition is the bank’s priority, Federico P. Tancongco, senior vice president and chief compliance officer of BDO Unibank, said in a previous media interview.
The MTerra Solar Project is being built on the island of Luzon, spanning multiple towns primarily across the provinces of Nueva Ecija and Bulacan.
“The communities living there will be impacted by climate change in different ways. They have specific needs as some are fisherfolk, some are farmers and some work in cottage industries,” he said.
As such, socio-economic growth has been prioritised in the host communities, with up to 10,000 jobs expected to be generated to locals during the project’s construction period.
Specialised training has been offered to over 600 scholars tailored to support the ongoing construction of project. Qualified scholars will be absorbed by contractors, ensuring immediate employment opportunities and technological skills upgrade for the people of Nueva Ecija.
Three temporary community marketplaces within the project’s site, serving as hubs for local vendors, providing them with a designated area to sell goods and services and fostering economic activity and entrepreneurship within the community. This marketplace aims to empower small business owners and enhance local trade, serving up to 7,500 workers.
The MTerra Solar project will support the Department of Energy’s renewable energy targets of 35 per cent by 2030, and 50 per cent by 2040, in line with the country’s nationally determined contributions, said BDO.
It will undergo a first phase where it will deliver 600 megawatt alternating current (MWac), followed by the second phase with 250 MWac of mid-merit renewable energy delivered. The project is set to commence commercial operations in the first quarter of 2026 for the first phase.
So far it has reached 35 per cent overall progress marked by the ongoing construction of the substation, continued site development, and the start of assembling structures for the solar panels.
Correction note: An earlier version of the article stated that the MTerra Solar project financing deal is worth US$264 million. This is incorrect, the accurate figure is US$2.64 billion. We apologise for the error.
