Convergence awarded a proof of concept grant to Allotrope Partners (“Allotrope”) for the design and launch of a blended finance vehicle, Local Utility Project Aggregator (LUPA), that would support electric cooperatives (ECs) in the Philippines to invest in and own renewable energy (RE) projects to meet and exceed their government-mandated RE targets.
ECs are a special type of non-profit and membership-based utility designed to bring energy infrastructure and development to remote areas of the 7,000 island Philippine archipelago. The Philippines has some of the highest electricity prices in Asia due to the cost of transmitting power and transporting fuel across the Philippine archipelago. LUPA aims to reduce the Philippines’ dependence on unsustainable and expensive energy sources, such as coal and diesel, by supporting EC projects to align with the government’s goals to transition 35% of its energy mix to RE by 2030.
Allotrope was previously awarded a grant under this window to explore the feasibility of LUPA for supporting ECs to own RE assets. Based on feedback from stakeholders during the study, Allotrope identified the need for the role of an aggregator to identify and connect individual ECs with project development and financing resources. Convergence’s proof-of-concept grant will support Allotrope to build on that work and launch LUPA.
Design question and learning potential for the market: How can a blended finance structure be developed to empower local ECs to meet renewable energy targets by investing in and owning renewable energy projects in the Philippines?
During the feasibility study, Allotrope has already engaged with some ECs and other relevant stakeholders to identify prospective pipeline projects. For the proof of concept, Allotrope will deepen its engagement with key stakeholders including ECs, developers, and investors to implement a pilot project following the launch of LUPA. LUPA will also work with these stakeholders to incorporate a gender-lens in the development of prospective pipeline projects.
LUPA intends to support EC projects by financing a portion of the initial project development activities, providing technical support during the development process, and facilitating engagement between ECs, relevant development partners, and potential commercial and concessional investors. For this, LUPA will aim to structure and launch a new corporate entity with a blended finance structure including a combination of commercial capital and grant funding.