London-based sustainable infrastructure investment firm Actis has agreed to enter a strategic partnership with Manila Electric Company (Meralco) and its subsidiary, Solar Philippines New Energy Corporation, to invest in a solar mega project in the Philippines.
Actis is investing US$600 million for a 40% stake in Terra Solar, one of the world’s largest integrated renewables and energy storage projects. It represents the largest foreign direct investment for a greenfield infrastructure project in the Philippines.
Morgan Stanley acted as financial adviser to Actis. Milbank and SyCipLaw were international and domestic legal counsel, respectively.
The project, located on the main island of Luzon, about 100 kilometres from Manila, will combine 3.5 gigawatts peak (GWp) of solar photovoltaic capacity and 4.5 gigawatt-hours (GWh) of battery energy storage system (BESS).
It is backed by a 20-year, 850-megawatt (for 12 hours daily on average) power supply agreement (PSA) with Meralco, the country‘s largest distribution utility.
It will provide electricity to approximately 2.4 million households and offset about 3.6 million tonnes of carbon emissions per year.
“We are delighted to have advised Actis on this landmark investment in Terra Solar, their first investment into the Philippines," says Milbank global capital markets partner and Hong Kong office head James Grandolfo. "Their new partnership with Meralco and Solar Philippines will bring significant new renewable energy and more than 10,000 new jobs to the Philippines and greatly enhance the country's drive to a carbon-free future."
The Philippines is one of the fastest growing economies in Asia-Pacific. Its established energy sector is backed by private companies, operating across generation, transmission and distribution. The country has set the ambitious goal of increasing renewable energy to 35% of the total power generation mix by 2030.
To support this transition, around 5GW of solar and wind power purchase agreements (PPAs) have been awarded in recent years, with an additional two rounds of auctions of around 12GW expected to follow over the next year.
The Terra Solar project has strong sustainability credentials as it helps decarbonize the country’s energy system (Sustainable Development Goal 7), generates power to support economic development (SDG8), creates more than 10,000 new jobs (SDG8), and facilitates local development (SDG3 and 4).
Actis is one of the world’s largest energy transition investors. It has committed US$9 billion to more than 185 projects across 30 platforms in 35 countries through its five energy funds, creating a generation capacity of 36GW, of which over half (20GW) comes from renewable sources.
