Actis, a leading global investor in sustainable infrastructure, has agreed to enter a strategic partnership with Manila Electric Company (Meralco) and its subsidiary, Solar Philippines New Energy Corporation, to invest in the Terra Solar Project, poised to be the world’s largest integrated renewables and energy storage project.
The transaction represents the largest foreign direct investment for a greenfield infrastructure project in the Philippines and will see Actis bring its rich experience in contracting, building, and operating infrastructure assets to the project.
The project, which is strategically located on the Philippines’ main island of Luzon, about 100km from Manila, will combine 3.5GWp of solar PV capacity with 4.5GWh of battery energy storage system (BESS). The project covers circa 3,500 hectares or the equivalent to the size of c.83,300 basketball courts – and is backed by a 20-years, 850MW (for 12-hours daily on average) power supply agreement (PSA) with Meralco, the Philippines’ largest distribution utility. It will provide electricity to approximately 2.4 million households and avoid carbon emissions by circa 3.6 million tonnes per year by displacing coal.[2]
The transaction with Solar Philippines New Energy Corporation, which currently owns 100% of the project, was announced at a signing ceremony in Pasig City, Philippines, attended by Torbjorn Caesar, Chairman and Senior Partner at Actis, Manuel V. Pangilinan, Chairman of Meralco, and Emmanuel V. Rubio, CEO of Meralco PowerGen (MGen).
The Philippines is one of the largest economies in Southeast Asia and among the fastest growing across the Asia Pacific region, with GDP growth of circa 6% forecast from 2023-2027.[3] The country has an established energy sector, with private companies operating across generation, transmission and distribution. It has also set the ambitious goal of increasing renewable energy generation to 35% of the country’s total by 2030.[4]
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 c.12GW expected to follow over the next year. The Terra Solar Project PSA will play a key role in meeting this demand for renewable energy.[5]
The project has strong sustainability credentials, notably because of its impact in decarbonising the Philippines’ energy system (SDG7), but also by generating power to support economic development (SDG8), creating more than 10,000 new jobs (SDG8), and facilitating local development (SDGs3+4).
Rahul Agrawal, Head of Energy for Southeast Asia at Actis, said: “Southeast Asia represents some of the most dynamic economies globally and the region’s energy transition is picking up speed. The Philippines is showing real purpose on the energy transition and no project represents this more than the Terra Solar Project. It will co-locate solar PV with battery storage on a scale the region hasn’t seen before, backed by a sizeable PSA, to deliver a stable renewable power supply to the main grid of Luzon in the Philippines. MGen and its management team’s vision for this project is truly exceptional and we are excited about the partnership with MGen to together build this landmark project.”
Manuel. V. Pangilinan, Chairman and CEO of Manila Electric Company (MERALCO), parent company of MGEN, said: “Terra Solar is one of the most ambitious renewables projects the world has ever seen. We are looking forward to contributing to the Government’s goal to have 35% of the country’s energy come from renewable energy.”
Emmanuel V. Rubio, President and CEO of MGEN and SPNEC, commented: “We are delighted to be partnering with Actis, a world-class investor of sustainable infrastructure, in this monumental project. We look forward to the combined expertise of Meralco Power Generation, SPNEC, and Actis that will bring the Terra Solar project into reality.”
Actis is one of the world’s largest energy transition investors[6]. 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.
Morgan Stanley acted as financial advisor to Actis. Milbank and Sycip Law acted as international and domestic legal counsel to Actis.
