37657 GEF Global Action onRenewable Energy BUILDING THE PHILIPPINES' CAPACITY FOR GRID-CONNECTED SOLAR POWER The Cagayan Electric Power and Light output is not available. The PV installation is Company, or CEPALCO as it is generally called, designed to meet peak power needs during the had considered increasing its generation of daytime and allow the dam--which has insuffi- fossil fuels to meet the Philippines' growing cient water flow to run 24 hours a day--to store demand for energy. Instead, CEPALCO, the capacity for nighttime use. Because this hybrid third largest electric distribution utility in the project combines hydro and PV power, it is fully Philippines, is supplying energy through a GEF dispatchable. To avoid transmission and distribu- solar photovoltaic (PV) project. This ground- tion losses, the PV plant was constructed just five breaking project combines hydro- and photo- kilometers southeast of the business district of voltaic-based power for homes, schools, Cagayan de Oro, which is located within hospitals, offices, and other users. CEPALCO's distribution system. The key to this demonstration project is its strong BENEFITS emphasis on education and capacity building. The PV plant is expected to generate more than a The project is improving CEPALCO's technical million kilowatt-hours of clean electricity annu- competence in electricity generation from renew- ally. This amount of electricity will displace about able sources and providing valuable know-how in 1,500 barrels of fuel oil per year, reducing carbon the development and operation of clean energy dioxide emissions by about 800 metric tons per distributed electricity generation. On the national year. The project will not only have global envi- level, it is strengthening the Philippines' capacity ronmental benefits, it will also benefit the local for solar power. On the international level, it is environment by reducing the emission of diesel supporting the development of a global market generation, which would otherwise be used. for solar PV technology. Using clean technology helps to provide a clean environment for the local population. THE PROJECT The CEPALCO project is a first of its kind: the INNOVATIVE FINANCING largest grid-connected PV installation in the The project is innovative not only in its design but developing world. in its financial structure. The GEF is financing a loan that can convert to a grant after five years of The one-megawatt grid-connected solar PV operation if specific conditions are met. This power plant operates on the island of Mindanao. financing structure should promote timely execu- The PV plant works in conjunction with the tion and operation of the project. recently built seven-megawatt hydroelectric power plant. The hydro plant operates as a load POTENTIAL FOR REPLICATION follower, varying its output inversely with that of The GEF hopes the CEPALCO project--a first of the PV plant. The saved water is stored in the its kind in design, technology, and financial struc- hydro plant's reservoir, to be used when PV ture--will spur similar projects throughout the world. The project has enormous potential for tions are likely to result. There exist some 360,000 replication. If the large-scale introduction of this megawatts of potentially suitable hydro plants in technology helps to substantially reduce the costs developing countries that could benefit from of PV systems, as expected, worldwide applica- combined hydro-PV projects. FOR MORE INFORMATION Clare Fleming Global Environment Facility 1818 H Street NW Washington DC 20433 USA Tel: 202-473-0508 Fax: 202-522-3240 www.theGEF.org November 2005