The case for offshore wind energy

The Philippines has launched the 5th round of its Green Energy Auction Program, or GEA-5, and this one is different. It is the country’s first auction dedicated exclusively to offshore wind. The Department of Energy (DoE) has set an installation target of 3,300 megawatts for delivery between 2028 and 2030, while the Energy Regulatory Commission (ERC) has fixed a ceiling tariff — the Green Energy Auction Reserve, or GEAR, price — at P11 per kilowatt-hour (kWh). That makes GEA-5 more than another procurement round. It is the country’s first serious market test of whether offshore wind can move from PowerPoint to steel, cable, and delivered electricity.

This matters because the Philippines cannot discuss energy security the old way anymore. The war in the Middle East has again reminded import-dependent economies how quickly external shocks spill into domestic inflation, power costs, and public anxiety. The country still relies heavily on imported fossil fuels, and every spike in oil or LNG risk is eventually transmitted to transport, electricity, and food. Offshore wind will not solve that immediately. But if built at scale, it can become one of the few large indigenous resources capable of materially reducing exposure to imported fuel over time.

So what exactly is GEA-5? In simple terms, it is a competitive auction where qualified developers bid to supply electricity from offshore wind projects, subject to technical and commercial rules. The DoE has limited this round to fixed-bottom offshore wind, not floating wind, explicitly citing current technical, regulatory, and infrastructure readiness. The supply delivery period is 20 years, which is critical because projects of this scale need long-term revenue certainty to attract lenders and equity investors. The logic is sound: start with the part of offshore wind the country is most capable of building first, then expand later as ports, transmission, and supply chains mature.

The location question is central. While the auction is technology-based rather than branded around one province, early fixed-bottom opportunities are not evenly distributed across the archipelago. The ERC’s own benchmark model for the ceiling tariff uses four Philippine reference areas — Manila Bay, San Miguel Bay, Guimaras Strait, and Southern Mindoro — to estimate capacity factors and project costs. The World Bank’s offshore wind roadmap similarly identifies six major potential development zones, including Manila, Northern Mindoro, Southern Mindoro, Guimaras Strait, Northwest Luzon, and Negros/Panay West. But not all of these are equal for GEA-5. Guimaras Strait is identified as a fixed zone; Manila includes both fixed and floating potential but faces severe shipping constraints; Southern Mindoro has the largest resource, yet the roadmap treats it as strategically important but complex, requiring major transmission and port planning. In practice, that means the early auction is likely to favor shallower, more buildable sites rather than the country’s largest but more difficult resource base.

That is also why GEA-5 matters for energy security. Offshore wind is not just another renewable. Properly developed, it can produce utility-scale domestic power close to major load centers and coastal industrial corridors. The World Bank and DoE roadmap estimates that the Philippines could install as much as 21 gigawatts (GW) by 2040 under a high-growth scenario, and the broader technical resource has often been cited at around 178 GW. Those numbers should be treated as long-term potential, not near-term promise. Still, even a modest first wave would diversify supply, reduce fossil-fuel exposure, and strengthen the country’s strategic energy position. An archipelago with strong marine wind resources should not remain structurally dependent on imported coal, imported gas, and oil-linked price shocks forever.

But the case for offshore wind is not the same as the case for any offshore wind price. The hardest question in GEA-5 is affordability.

At P11/kWh, the ceiling price is not absurd for a first-of-a-kind offshore wind auction in an emerging market. But it is still high compared with recent wholesale and generation benchmarks in the Philippines. Meralco’s generation charge in early 2026 was around P7.64/kWh, while average spot prices in the Wholesale Electricity Spot Market, or WESM, fell to roughly P4.14/kWh in the first half of 2025 and even lower in some months. Offshore wind is therefore not entering the market as the cheapest source of electricity today. It is entering as a strategic resource whose value lies in diversification, fuel-risk reduction, and long-term decarbonization — but only if the costs fall over time and only if implementation risk is controlled.

That last point is crucial. First-round auctions are expensive not only because technology costs are higher, but because uncertainty is higher. The ERC itself raised the price from the preliminary P10.3859/kWh to P11/kWh after updating assumptions for capacity factor, inflation, foreign exchange, port rental, fishery compensation, and land acquisition or rental. In other words, the auction price is already carrying the weight of unresolved implementation risks. That is understandable. But it also means consumers must be protected from paying for avoidable delays and policy failures.

Implementation may in fact be the biggest challenge of all. Offshore wind is not like auctioning solar farms on flat land. The DoE’s own supplemental terms of reference effectively admits this by adopting a milestone approach that links private developers and government agencies to parallel deliverables. Ports have to be identified and made available. Transmission and grid-connection agreements have to be completed. Multiple permits must be secured across agencies. The DoE even provides that delays caused by government agencies can count as force majeure for affected bidders. That is a sensible protection for investors, but it is also a quiet confession that the real bottleneck may lie outside the wind farm itself.

Then there is the Philippines’ most obvious challenge: typhoons.

Can offshore wind survive in a country hit by severe tropical cyclones? The answer is yes, but not cheaply and not everywhere. The World Bank roadmap is explicit: all potential Philippine offshore wind development zones face extreme wind speeds above normal design limits for standard turbines. It notes that typhoon-class turbines will likely be needed in many locations, and that some northern and eastern areas may become too risky or too expensive because extreme gusts can exceed 110 meters per second. This does not kill the case for offshore wind. It changes the engineering and the economics. Philippine offshore wind has to be designed for Philippine seas, not copied from the North Sea.

That has two implications. First, policymakers should stop overselling offshore wind as cheap power in the near term. It is not. It is strategic power. Second, the first auction must be disciplined. Projects should be concentrated in the most bankable sites, with realistic wind data, credible port access, clear transmission paths, and strong community engagement, especially where fisheries and coastal livelihoods are affected. The ERC’s model already includes fishery compensation for a reason. This is not a footnote. It is part of project viability.

So, should GEA-5 proceed? Yes. But with realism.

The Philippines needs offshore wind because it needs more indigenous energy, more long-term supply diversity, and more options beyond imported fuels. It needs offshore wind because energy security is no longer just about capacity; it is about resilience to geopolitical shocks. But the country also needs to avoid making offshore wind a symbol of overpromising and underdelivering. A failed first auction would be worse than a cautious one.

The right test for GEA-5 is not whether bids come in below P11. The right test is whether the auction awards projects that can actually be financed, connected, built, and operated in Philippine conditions. If it does, GEA-5 will mark the start of a new domestic energy industry. If it does not, it will become another reminder that in power policy, ambition is easy but execution is everything.

Dianne Araral is a green and sustainable finance and energy analyst based in Singapore.