INVESTING as much as a quarter of a billion dollars for the remainder of the current administration in developing a solar photovoltaic (PV) manufacturing industry in the Philippines could add nearly P10 billion to the country’s GDP by 2030, according to the Asian Development Bank (ADB).
Based on its new report titled, “Renewable Energy Manufacturing: Opportunities for Southeast Asia,” ADB said the Philippines needs to invest $150 million to $250 million in the next 3 to 5 years to develop a solar PV manufacturing industry.
This would lead to an addition to GDP of $100 million to $175 million or around P5.6 billion to P9.8 billion by 2030. This is based on an exchange rate of P56 to the dollar.
“As we often say in ADB, the battle against climate change will be won or lost in Asia and the Pacific. A decisive front in that battle is Southeast Asia,” said ADB Sectors Group Director General and Group Chief Ramesh Subramaniam.
“This research shows the promise of renewable energy manufacturing—with policy, technical, and financing support—in helping the region’s developing countries to transition away from coal-based energy, while lowering carbon emissions, expanding local industrial capabilities, spurring job creation, and driving long-term economic growth,” he added.
Based on ADB estimates, the increase in GDP includes both direct and indirect impacts. Direct impact would be from the construction, equipment purchase and operations.
Indirect impact will be from supply chains, with potential impact rising the more localized the supply chain is; induced impact happens when there is increased spending driven by income changes of employees in the value chain.
The $100 million to $175 million that is projected to be added to GDP includes $65 million to $115 million direct impact. The amount, ADB said, includes $23 million to $43 million indirect impact while $13 million to $20 million are considered “induced.”
Developing a solar PV manufacturing industry will also create 8,000 to 12,000 new jobs. Of these, 4,000 to 7,000 jobs are direct impacts to the creation of the manufacturing industry.
ADB also said 3,000 jobs will come from indirect effects and 1,000 to 2,000 jobs are considered induced impact.
The ADB also projected $100 million to $140 million in annual cost savings from operational improvements.
“Scaling solar PV manufacturing has the potential to create significant economic and social value for the region. Investment in a manufacturing industry adds to its gross domestic product (GDP) and creates jobs during both its construction phase (i.e., facility development and expansion) and operation phase,” ADB said.
Climate impact on GDP
In a statement, ADB said Southeast Asia could lose up to 30 percent of its gross domestic product by 2050 due to increases in global temperature and extreme weather events.
However, bolstering the region’s renewable energy manufacturing capacity would position Southeast Asian countries to create new jobs and meet growing energy demand while drastically reducing emissions.
ADB said growing Southeast Asia’s solar PV cells, battery, and electric two-wheeler industries presents an estimated $90-billion to $100- billion revenue opportunity by 2030, with a potential 6 million renewable energy jobs to be created by 2050.
“The clean energy industry is already a massive growth opportunity, and will need to scale even more rapidly for us to achieve carbon neutrality globally by 2050. Southeast Asia, which is home to one-fourth of the world’s population, is well positioned to become a global leader in renewable energy manufacturing with its vibrant business environment and large talent pool,” said ClimateWorks Foundation President and Chief Executive Officer (CEO) Helen Mountford.
“In doing so, the region can boost the supply of affordable and reliable renewable energy solutions to people and communities in Southeast Asia and around the world, and create new job opportunities locally,” Mountford said.
The report also identified potential ambitions and outcomes for Southeast Asia to achieve the growth of solar PV manufacturing capacity in modules from 70 gigawatts (GW) to 125–150 GW by 2030.
This will also help develop a regional battery manufacturing value chain, increasing national and regional demand, and establish Southeast Asia as a regional and global export hub, producing 140–180 gigawatt-hours (GWh) of battery cells by 2030.
ADB also said these efforts will expand assembly capacity for electric two-wheelers (E2W) in Southeast Asia from 1.4 to 1.6 million units annually to approximately 4 million units by 2030.
The report also highlighted how Southeast Asia can build on its strong history of regional collaboration to enhance the competitiveness of its renewable energy industries and meet its net-zero targets.
For example, ADB said production factors could benefit from trade across the value chain and regional efforts to improve workforce quality and distribution.
Demand markets could be supported by the buildout of the Asean Power Grid to enable higher renewables deployment through multilateral power trade and expanded grid balancing areas.
Harmonization of technical standards for E2W vehicles and charging stations could enable original equipment manufacturers (OEMs) to develop products that suit needs across Southeast Asian markets.
“Southeast Asia has the potential to become a leader in renewable energy manufacturing to contribute to the global renewable energy deployment, while simultaneously achieving economic growth and mitigating the impacts of climate change,” said Bloomberg Philanthropies Environment Program Head Antha Williams.
“This report proves how increasing private sector investments into local renewable energy manufacturing sectors, strengthening regional value chain collaboration, and bringing together key stakeholders will create jobs, increase GDP, and help Southeast Asian nations meet their climate goals,” she said.
The research was released Thursday on the sidelines of the Asean Finance Ministers and Central Bank Governors Meeting by the Asian Development Bank (ADB), Bloomberg Philanthropies, ClimateWorks Foundation, and Sustainable Energy for All (SEforALL).