IMF says PHL transition to RE plagued by bottlenecks

RECENT REFORMS in the Philippine energy sector have boosted investment in renewable energy (RE), but the power system must still resolve bottlenecks to achieve its clean-energy goals, the International Monetary Fund (IMF) said.

In a Jan. 30 report, the IMF said inadequate grid systems, land acquisition issues, and labor shortages are hindering the shift to RE.

“Recent reforms such as liberalizing the RE sector (through) 100% foreign ownership for certain RE sources), Energy Virtual One Shared System, and Green Lanes for Strategic Investments have increased investor confidence leading to record high RE investments,” the IMF said.

“However, critical barriers persist, including limited grid infrastructure, high capital costs, disparities in energy access gaps across regions, and complex land acquisition,” it added.

The IMF also noted that the lack of qualified workers have the potential to stall progress.

“While the Philippines has the largest RE development pipeline in the region, there is currently a substantial gap in the skilled RE workforce,” it said.

According to the IMF, the Philippines rode a wave of strong investor confidence in attracting private investment in solar, wind energy and hydropower between 2022 and 2024.

The Board of Investments and the Department of Trade and Industry have tallied RE investments of P1.38 trillion in 2024.

The IMF noted that RE investment accounted for 3.7% of gross domestic product that year.

“At the same time, the entry of multinational energy firms has brought in fresh capital, technology, and expertise,” the IMF said. “Multinational partnerships — often through joint ventures and strategic partnerships with local developers — also drove substantial foreign investment in wind farms, reaching P330 billion in 2023 and P314 billion in 2024.”

Investment in solar farms hit P462 million in 2024, which the IMF is expecting to nearly double to P905 million in 2025. — Katherine K. Chan