The World Bank has approved a USD 1 billion policy loan to support the Philippines’ energy transition, backing reforms aimed at lowering electricity costs, expanding renewable energy deployment, and attracting billions of dollars in private investment.

Approved last week, the financing under the Second Energy Transition and Climate Resilience Development Policy Loan (DPL), will support government measures to reduce the country’s reliance on imported fossil fuels, strengthen energy security, and accelerate the rollout of renewable energy projects.

In a statement released Thursday (Washington time), the World Bank said the program responds to “one of the most pressing challenges facing Filipino households and businesses today: the high and volatile cost of electricity.”

“The Philippines has everything it needs to power itself at lower cost— wind along its coasts, sunlight year-round, and geothermal energy beneath its soil,” said Zafer Mustafaoglu, World Bank Division Director for the Philippines, Malaysia, and Brunei.

“This operation helps turn those natural advantages into reliable, affordable electricity for Filipino families and businesses. At a time when global energy markets are deeply volatile, this DPL helps the Philippines take control of its own energy future, support growth, and create jobs,” he added.

The World Bank said the loan supports key energy reforms, including the full operationalization of the Renewable Energy Market, the integration of electric vehicle charging into utility planning, and the launch of the Philippines’ first offshore wind auction.

The Philippine offshore wind auction targets 3.3 gigawatts of contracted capacity by 2030, a scale the World Bank said is enough to power millions of homes and is expected to mobilize around USD 7 billion in private investment, generating additional jobs in the energy sector.

Under the program, the share of installed renewable energy capacity is targeted to increase from 30% to 42% by 2027, helping diversify the country’s power mix and reduce its exposure to volatile global fossil fuel prices.

The policy loan also includes reforms to improve water security by strengthening financing and regulatory frameworks for local water service providers. 

The World Bank said the measures aim to expand the number of local water providers with sustainable business plans from 10 to 100 by 2027, with priority given to poor and climate-vulnerable communities.

The financing package consists of a USD 1 billion loan from the International Bank for Reconstruction and Development (IBRD) and a USD 20 million performance-based grant from the Livable Planet Fund, making it one of the World Bank Group’s largest IBRD operations supporting the Philippines.

According to the World Bank, the operation builds on an earlier policy loan that established the legal framework for offshore wind development, launched the reserve market, expanded retail energy competition, and laid the institutional foundations for sustainable local water services.

What do you think? Will these reforms translate into lower electricity prices and faster renewable energy investments in the Philippines? Join the discussion in the comments.

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