With clean energy push, PHL recharts power roadmap
By Sheldeen Joy Talavera, Reporter
With five years remaining to reach its 35% renewable energy (RE) target, the Philippines is stepping up efforts to expand clean energy capacity, supported by new policies, auctions, and increasing private sector participation.
The RE industry is “very dynamic, active, and aggressive,” according to Jose M. Layug, president of the Developers of Renewable Energy for AdvanceMent, Inc.
“On the short term, we’re finally increasing the targets, increasing additional capacities,” he said. “And that would help us address in the next two to three years our need for more electricity and more capacity during the peak months.”
Seventeen years since the effectivity of the Renewable Energy Act, a landmark legislation aimed at promoting the development and utilization of RE sources in the country, the sector has delivered around 3,753 megawatts (MW) of additional capacity.
At present, the Philippines has a 22% RE share in the power mix — quite a long way to go to unlock the potential of substantial resources spanning solar, wind, hydro, and geothermal.
To push this further, the country has made significant strides in boosting RE development, with record-breaking capacity additions of 794.34 MW — exceeding the total RE capacity installed over the past three years, according to the Department of Energy (DoE).
“We have seen how this government has pushed all investors to invest in the Philippines and build a lot of power plants primarily through your green energy auction programs (GEAP) and also with the DoE’s push for more power plants to get built at faster times,” Mr. Layug said.
This year alone, the government has launched three green energy auctions (GEAs), expected to deliver more than 20 gigawatts of capacity between 2025 and 2030.
These auctions cover renowned RE technologies such as solar, onshore wind, and hydro, as well as emerging ones such as offshore wind and RE equipped with energy storage systems.
The GEAP aims to promote RE as one of the country’s primary sources of energy through competitive selection. RE developers compete for incentivized fixed power rates by offering their lowest price for a certain capacity.
Winning RE projects will be awarded a 20-year supply contract starting from the commercial operation date of the plant.
Mr. Layug said that GEAP presents a ready market for investors as it provides a faster and more efficient way to sell electricity.
“Programs such as the Green Energy Auction, the steady growth in renewable energy capacity, and the increasing investor confidence in our energy transition framework underscore our collective progress in advancing the President’s policy agenda,” Energy Secretary Sharon S. Garin said.
“These initiatives are aligned not only with our long-term energy goals but also with broader aspirations for inclusive and sustainable national development,” she added.
Right after hitting the goal five years later, the Philippines is also pushing to reach a 50% mix of RE generation by 2040.
In assessing the long-term impact of higher RE penetration, Mr. Layug said that the increased entry of renewables will help reduce electricity costs due to the downtrend in prices.
“They are much lower than your spot market and much lower than your conventional fuel prices,” he said.
REDUCING COSTS
Reducing capital costs is critical in paving the way for an affordable energy transition, according to experts.
“The financing gap is not so much availability of loans. It’s really the price of borrowing, the cost of borrowing,” Mr. Layug said.
“So I’m hoping that someday, banks will be able to lend money at a lower cost of borrowing.”
For RE players, harnessing vast RE resources also entails risks such as in geothermal, according to Jerome H. Cainglet, president and chief operating officer of Energy Development Corp., the country’s largest geothermal power producer.
“It’s very risky in the sense that you have to spend a huge amount of capex (capital expenditure) just to be able to drill. And when you drill, you’re not sure right away if you are able to produce steam,” he said.
He said that the government’s initiative to facilitate a geothermal de-risking program gives existing and potential geothermal producers the financial muscle to push through.
While the Philippines has demonstrated strong momentum in renewable energy development, RE targets must be “realistic and achievable,” according to Noel M. Baga, co-convenor of think tank Center for Energy, Research, and Policy.
He said that significant challenges continue to hinder the Philippines’ energy security, particularly gaps in grid infrastructure and transmission capacity.
“Without adequate grid readiness, adding renewable capacity becomes ineffective, and our renewable energy targets must be grounded in realistic infrastructure capabilities and comprehensive planning to ensure they align with our fundamental priority of energy security for all Filipinos,” he said.
Mr. Baga said that “critical blind spots” remain, particularly in energy reliability and delivery.
“The most significant hindrance is grid congestion and lack of transmission infrastructure, which delays plant connections and results in curtailed power production even as the country adds new capacity from solar and wind sources,” he said.
According to the National Grid Corp. of the Philippines, the country’s sole grid operator, the grid has an available transmission capacity of 10,260 MW for integrating new power generation assets.
Mr. Baga said that the Philippines must recalibrate its energy strategy by addressing energy reliability issues — prioritizing energy security first, then affordability, and finally sustainability.
“This requires implementing energy plan roadmaps with definite timelines for energy infrastructure construction including power plants and transmission projects, improving transparency in how the Philippine Energy Plan is constructed, and de-risking energy investments through streamlined permitting and stronger investor protections,” he said.
He highlighted that the country needs “all forms of energy” to meet the growing demands.
“Any energy transition must follow a measured approach that ensures stable power supply while recognizing that the Philippines contributes minimally to global emissions and must balance environmental goals with immediate development priorities for all Filipinos,” he said.
Nicanor S. Villaseñor III, former energy engineering professor at the University of the Philippines Diliman, said that the implementation of the RE program has been slow.
“As an RE observer, I find the implementation of the RE program to be very slow. This program was drafted a long time ago. And there are problems in the implementation. And most of the problems in the implementations are structural in nature, in place,” he said.
He said that some areas, especially in remote areas, experience persistent power interruptions despite an adequate supply of electricity.
In order to accelerate full electrification in off-grid areas, he said that the adoption of solar rooftop systems should be encouraged as it can make a dent in the country’s power supply.
“If more will install solar for their own needs, it will really help a lot in ensuring stability in price and supply,” he said.
With a few more years to go, the government is on track to hit its RE targets with the help of its flagship programs.
“We’re still working on that. If you see our green energy auction program it’s really pushing for a number of capacities,” Energy Undersecretary Mylene C. Capongcol said.
The DoE, together with its partner agencies such as the Energy Regulatory Commission, National Transmission Corp., and the National Grid Corp. of the Philippines, is looking for all the available support to push for the entry of renewables, she said.
