The number of new businesses focused on sustainability and innovation in the Philippines has grown 500 per cent since 2020, according to a report released by a United States-based nonprofit that provides funding and training to drive clean energy innovation.
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From 15 clean energy and climate startups in 2020, there are now 91 new sustainability-related firms operating in the Philippines, a bulk of which are solar, mini-hydro systems, and wind technologies.
A fifth of these startups have raised almost US$1.3 million since 2020, but mostly come from grants from the Philippine government’s science and technology department as well as competitions sponsored by foreign institutions. The rest is financed by their entrepreneurial founders, said the study.
Because startups diversify the Southeast Asian nation’s energy sources, the report noted how they play a crucial role in helping achieve the goal of renewable energy accounting for 35 per cent of the energy mix by 2030 and 50 per cent by 2040, as outlined in the country’s energy plan.
To help support clean energy start-ups, the private sector has an obligation to invest in them, said Brenda Valerio, country director of New Energy Nexus, a nonprofit that supports clean energy entrepreneurs.
“Startups offer complementary solutions provided by the big firms. They address gaps in areas that the bigger players cannot reach because they are too remote or do not find economical to pursue, Valerio told Eco-Business.
The majority of the raised funds, accounting for 87 per cent of the total, originate from grants and competitions like those offered by the government’s department of science and technology (DOST). Image: NEX Philippines Clean Energy Ecosystem Report 2024
For instance, Shifttech Marine is a new enterprise from Cagayan de Oro in Mindanao that has developed a solar-powered battery for small fishermen as an alternative to the expensive car batteries that power their lights when they go out to sea at the break of dawn.
Hive Energy PH is an Oriental Mindoro-based startup that creates solar-powered battery systems, providing backup power to mitigate the intermittent electricity supply that is prevalent in the province.
The company does not require a minimum number of orders from buyers like small fisherfolk, unlike big firms which need large quantities of solar panels in order to go into production.
In June, the company was a recipient of a US$18,000 grant from the Department of Science and Technology. The funds can help the company in its early stages, but if it wants to scale up massively, it would need investments for the capital-intensive manufacturing of power stations and battery packs, Joseph Amiel Camingal, founder of Hive Energy PH told Eco-Business.
“Private sector support is instrumental in propelling startups like ours forward. Their investment provides the necessary resources for research and development, improvement in manufacturing, and scalability,” said Camingal.
“Having them support local startups like ours also validates our vision of making energy storage a cornerstone of sustainable solutions.”
Not just about the money
Even if Filipino clean energy startups do receive funding, many are not ready to scale beyond their early stages because of a lack of support from bigger players to test their products, said the report.
For instance, if a startup receives a huge grant, but the technology has to be tested in partnership with a solar farm or a wind developer, the company usually has limited access to larger companies that will allow them to experiment, said Valerio.
Although venture capital and private equity are becoming more active in sustainability sectors, the market in the Philippines remains less developed compared to more mature jurisdictions like Singapore and India.
The top three industries for clean energy startup companies in the Philippines are in the renewable energy generation sector, specifically solar and mini-hydro systems. The second spot goes to both sustainable transportation and the energy access sector, followed by waste management at third place. Image: NEX Philippines Clean Energy Ecosystem Report 2024
In India, an organisation called the Clean Energy International Incubation Centre has built dedicated equipment to support pilot projects, and blends public and private money with access to the facilities of a large electricity distribution company.
In Singapore, a group called Ecolabs-COI provides laboratories and office space that can host real-world tests of startups technologies.
The Philippines does not have similar organisations that support its startups in this way, which hinders their growth, said Valerio.
“A challenge in the current landscape of funding mechanisms in the Philippines is the difficulty that small-scale and early-stage startups face in accessing and utilising these opportunities, she added.
“It’s crucial that we provide support at every stage of a startup’s journey, not just when they’re ready for significant investment.”
