Case Study

Case Study: Philippines Energy Development Corporation

Learning about the importance of partnerships and innovative financing in developing an environment of increased organizational and physical resilience
Country/Geographic region Philippines/East Asia & Pacific Provincial Projects
Country Income Level Classification Lower-Middle Income
Hazard(s) mitigated Earthquake, Hurricane, Landslide (climate adaptation included)
Type of financing Debt (Green Bond)
Type of governance Private Utility
Lever of change EDC’s renewable energy policy unlocked green financing
Main Actors ●        Philippines Energy Development Corporation (EDC)
●        The International Finance Corporation (IFC)
●        Macquarie Infrastructure and Real Assets (MIRA)
Case study Summary Following a series of severe weather events in 2017, the renewable energy company Philippines EDC and its partners developed an approach to prioritize the implementation of risk reduction measures to protect key assets. The IFC funded the implementation of this strategy at the Malitbog plant. EDC Philippines benefitted from a regulatory environment that was amenable to green finance and resilient projects.[i]  Pre-established governance structures related to risk and capacity in disaster risk reduction allowed EDC to engage with different departments and incorporate new assessment tools, which enabled it to understand and reduce risk and to develop mitigation measures focused on resilience.
Key Takeaways ●        A robust governance structure incorporated risk reduction during non-disaster periods and a partnership mindset with local stakeholders exceeded the service provider mindset
●        Using an innovative financing mechanism can encourage the development of a new local market, as in the case of the IFC’s peso-backed green bond

 Project Rationale

The Philippines is consistently evaluated as one of the most at-risk countries to natural hazards, notably flooding, tropical cyclones, earthquakes, landslides, and volcanic eruptions. The Asian Development Bank estimates that disaster events have impacted the entire population more than once over, have caused approximately 23,000 deaths, and have resulted in $20 billion in damages between 2000 and 2016. Many of these hazard risks are expected to increase due to climate change.[ii]

In 2017, a series of hazard events impacted the country and crippled some of its electricity generation, including the private company Philippine Energy Development Corporation (EDC). EDC was the largest producer of 100% renewable energy in the Philippines (and remains the largest producer as of this writing), with a generation portfolio of geothermal, hydroelectric, wind, and solar generation. EDC’s geothermal production was the largest piece of this portfolio, generating more than 60% of the Philippines’ geothermal energy and making it one of the largest geothermal producers in the world.[iii] In July, a 6.5 magnitude earthquake and subsequent landslides damaged some of EDC’s geothermal plants in Leyte Province. Malitbog Geothermal Power Station, EDC’s largest generating station, suffered damage.[iv] Several months later, winds and severe rainfall from Tropical Storm Urduja further damaged plants including Malitbog, reducing Malitbog’s generation capacity by 50%.[v]

Project Development

To develop a strategy, EDC used its well-established risk governance structure, which was upheld by its risk management policy. EDC’s risk management policy fostered a culture of risk management, established a framework to mitigate risk, and allowed EDC to update the risk management program in alignment with international standards and practices. Risk management practices were incorporated in the execution of the company’s strategy and integrated vertically across all levels of the company into planning, budgeting, organizational structure, and project design. At the senior level, the Risk Management Committee of the Board assisted EDC’s Board of Directors by evaluating and providing recommendations on risk measures on a consistent basis, collaborating with other committees and departments, and crafting new guidance as needed.[vi]

EDC built on its previous understanding of these risks by incorporating better modeling of potential slope failure and landslides into Value at Risk (VAR).[vii] EDC also collaborated with local communities and local stakeholders to better understand risks. From this assessment, EDC identified 31 small mitigation projects across its generation and distribution network. These projects were expected to cost approximately $6.3 million in aggregate but would reduce risk to nearly $90 million in assets.[viii] Many of these projects focused on developing early geohazard warning systems at plants and enhancing weather forecasts. Several areas were also retrofitted by reconfiguring and strengthening pipelines and cooling towers to protect against earthquakes, landslides, and typhoons.[ix]

In addition to these smaller projects, damages sustained at the Malitbog plant presented a larger opportunity to build back better. Previous EDC assessments found that Malitbog was experiencing more outages than it should for the age of the plant.[x]  EDC also assessed Malitbog in its VAR approach and found that increasing the plant’s resilience and adding capacity presented the most economically sound decision in the long run, particularly considering EDC’s growth in customer base. EDC Philippines also contracted Jacobs Engineering Group to assist with damages and to develop a project to improve the plant’s resilience. This project would include retrofitting some of the plant’s geothermal wells and distribution systems.[xi]

EDC Philippines and its investors could fund the $6.3 million in smaller project costs but wanted financing to cover the approximately $90 million needed to restore and strengthen the Malitbog plant. The IFC had an interest in expanding its bond offerings to the Philippines, which they hoped would lead to the development of a local market for green bonds. This sentiment seemed to be shared by several institutions.[xii]

IFC began offering green bonds in 2010 as part of its climate-related loan portfolio and, by 2018, had issued several billion dollars in green bonds. Green Bonds are fixed-income instruments that target ‘green’ projects, such as renewable energy, energy efficiency, and sustainable forestry. In addition to attracting investors based on their environmental impact and compliance with environmental, social, and governance (ESG) standards, green bonds can offer tax or similar incentives. IFC instituted clearly defined project selection criteria to identify and fund climate projects, or climate-related aspects of projects, which could be funded with green bonds. Like World Bank green bonds, IFC used Norway’s Center for International Climate Research (CICERO) to provide a second opinion regarding whether a candidate project met green bond principles for climate projects. IFC refined its selection criteria with the help of external reviewers, including CICERO.[xiii] 

Project Implementation

In June 2018, IFC issued the first AAA peso-denominated green bond for approximately $90 million with a fifteen-year maturity. The bond was intended to support EDC with restoration and resilience efforts at the Malitbog plant. The bond quickly attracted investment from several major players within the Philippines, including Sun Life Financial (Philippines Branch) and Insular life.[xiv]

These efforts seem to have reduced risk to EDC Philippines’ assets, allowing EDC to expand its generation capacity and its offerings to other clients. EDC began some of these projects in late 2017 and commenced the Malitbog project after receiving funds. In 2019, the year following the bond’s issuance, EDC increased the number of customer facilities it supplied by 28%. In addition to increasing resilience to physical assets, IFC’s green bond also paved the way for EDC Philippines to issue its own green bonds. EDC established a similar procedural model for green bond issuance as the IFC, with clearly defined guidelines for projects and a second reviewer. EDC issued its first bonds in 2021 for several small projects across its portfolio.[xv] 

Lessons Learned

In addition to noting the importance of the enabling regulatory environment that Philippines EDC benefitted from, key lessons learned include:

  • The role of established governance structures and existing capacity. EDC did not have to develop new inter-departmental collaborations around risk or emphasize the value of risk to secure internal buy-in. EDC Philippines also had a solid understanding of its risks, which it expanded following hazard events in 2017 and new modeling. These factors helped EDC to design, prioritize, fund, and begin to execute resilience projects and other ‘build back better’ initiatives quickly and effectively in the months following the hazard impacts. In this light, EDC highlights the importance of developing governance structures committed to risk and resilience during periods of no disasters. Although the development of these structures can be accelerated through leadership, buy-in, and mandate, EDC’s experience with risk governance highlights the case of governance structures that adapted incrementally over 20 years to address new risks and serve communities.
  • A holistic vision can be enacted by leveraging green infrastructure finance approaches. IFC’s peso-backed green bond was innovative not necessarily due to the financial mechanism used, but for a vision of what it could bring for local investment. IFC and other investors anticipated that the first green bond issued for the Philippines could create a market for local green bond investments in the country. Although some sectors in the Philippines, particularly the government, have issued green bonds backed by foreign currency, energy companies like ACEN have issued peso-backed bonds worth tens of millions in USD.[xvi] 

EDC also looks to benefit from local, peso-backed investment in green bonds for its projects. EDC’s commitment to renewable energy was a lever that allowed it to unlock green bond financing for restoration and resilience projects following these hazard events. For instance, EDC was not the Philippines’ only electricity provider to be severely impacted by tropical storm Urudja. The corporation’s commitment to green energy and its project scope, however, seem to have made it an attractive candidate for the first peso-backed green bond.

  • Including customers and local communities is a key success factor. EDC’s business model aims to serve as a partner to customers and local communities, which has produced co-benefits and has increased resilience to the entire network. Following disaster events, EDC collaborated with local stakeholders to understand the impacts of outage events. EDC also enhanced capacity through these collaborations. For instance, EDC’s response units shared knowledge with local stakeholders through emergency response trainings. Several of EDC’s resilience projects also rehabilitated and reinforced some roads around its areas of operations, which have produced co-benefits for locals.[xvii]


[i] Arame Tall, Sarah Lynagh, Candela Blanco Vecchi, Pepukaye Bardouille, Felipe Montoya Pino, Elham Shabahat, Vladimir Stenek, Fiona Stewart, Samantha Power, Cindy Paladines, Philippe Neves and Lori Kerr, 2021. Enabling Private Investment In Climate Adaptation & Resilience. UNDRR (Accessed August 2022).

[ii]Shikha Jha, Arturo Martinez, Pilipinas Quising, Zemma Ardaniel, and Limin Wang, 2018. “Natural Disasters, Public Spending, And Creative Destruction: A Case Study of The Philippines.” Asian Development Bank (Accessed August 2022).

[iii] IFC, 2018. Green Bond Impact Report. IFC (Accessed August 2022).

[iv]IFC, 2018. “Green Bond Impact Report;” Macquarie, 2020. Sustainability Report. Macquarie (Accessed August 2022).

[v]Macquarie, 2020. “Renewable energy and resilience in the Philippines.” Macquarie (Accessed August 2022).

[vi] Philippine Energy Development Corporation, n.d. “Risk Management.” Philippine EDC (Accessed August 2022).

[vii] Macquarie, Sustainability Report.

[viii] Philippine Energy Development Corporation, 2018. “Bouncing back strong as consumers make the switch to renewable energy.” Philippine EDC (Accessed August 2022).

[ix] Macquarie, Sustainability Report.

[x] Philippine Energy Development Corporation, 2017. “Company Presentation.” Philippine EDC (Accessed August 2022).


[xii] Scarlett Evans, 2018. “Philippines introduce new green bond worth $90m.” Power Technology (Accessed August 2022).

[xiii] IFC, Green Bond Impact Report; IFC, n.d. “IFC’s Green Bonds Process.” IFC (Accessed August 2022).

[xiv] IFC, Green Bond Impact Report

[xv] IFC, Green Bond Impact Report; Lenie Lectura, 2022. “EDC green bonds lauded.” Business Mirror (Accessed August 2022).

[xvi] Enrico Dela Cruz, 2022. “Philippines offers at least $500 mln green bonds to European investors.” Reuters (Accessed August 2022).; Richmond Mercurio, 2022. “ACEN gets highest rating for planned green bond issue.” PhilStar (Accessed August 2022).

[xvii] Philippine Energy Development Corporation, n.d. “Powering Economic and Social Development in the Philippines.” Philippine EDC (Accessed August 2022).