Please register to access this content.
To continue viewing the content you love, please sign in or create a new account
Dismiss
This content is for our paying subscribers only

Business Energy

Philippines set to go from renewable laggard to leader in SE Asia

Country embracing renewables in a big way



COMMUNITY SOLAR POWER PROJECT: The first solar-plus-storage microgrid in Asia to use Tesla’s Powerpack energy storage syste was installed in 2018 to end power outages in the Philippine town of Paluan, Mindoro,
Image Credit: Solar Philippines

Littleton, Colorado: The Philippines is set to leapfrog Vietnam as the main renewable energy producer in Southeast Asia, thanks to an aggressive project development pipeline that will result in a 15-fold boost in combined solar and wind power by 2030.

The Philippines currently ranks a distant second in the region in combined solar and wind power generation, with 1,766 megawatts (MW) of installed capacity, compared with 12,379 MW in Vietnam, data from Global Energy Monitor (GEM) shows.

Rapid expansion

By 2030, however, the Philippines will have added 17,809 MW of solar capacity and 7,856 MW of wind power to emerge as the top green power producer in Southeast Asia, one of the world's fastest-growing economic regions.

The rapid expansion in renewable energy supplies comes at a potentially critical time for the country's energy sector.

Philippine power producers relied on coal for nearly 60% of their electricity generation in 2022 and have increased coal-fired power emissions by more than 40% since 2017 to fuel the country's rapidly growing economy, which expanded by more than 7% in 2022.

Advertisement

With real gross domestic product (GDP) set to expand by 5.8% in 2023, according to Goldman Sachs, and remain one of the region's fastest-growing economies over the next decade, the country has the potential to steeply increase fossil fuel emissions unless large increases in renewable power can be brought online.

Government push for foreign investment

A major driver behind the green power push is the looming depletion of the Malampaya gas field, which was by far the country's largest source of gas, but is expected to run dry within five years.

With imports of natural gas much more expensive than domestically supplied gas, and emissions from coal-fired power generation already at record highs, the government has unveiled an array of measures designed to spur growth in renewable energy supply capacity.

A key new policy shift that was announced in late 2022 has been the removal of stipulations that require energy assets to be owned by Filipinos.

Previously, those strict ownership rules limited foreign participation in the Philippines' energy sector to a handful of oil and gas majors.

Advertisement

Going forward, however, the combination of new ownership rules and strong energy demand growth is expected to lure growing interest from global firms engaged in renewable energy construction, including nine Chinese firms that committed a collective $13.76 billion in investment in the sector in January.

Firms from other countries are also expected to look for opportunities in the Philippines, which has "excellent resource potential and a strong financing environment, with public and private sector interest in renewables investment," according to the International Renewable Energy Agency (IRENA.)

Turnaround

Most of the swell in solar capacity already planned is set to emerge in 2025 and 2027, while the expansion in wind capacity is set to come nearer the end of the decade, GEM data shows.

In combination, those capacity additions should exceed any expansions in coal-fired power over the same period, and help boost clean power's share in the Philippines' electricity generation mix from 22.5% in 2022, according to data from Ember.

More clean power generation should also help the Philippines close the clean energy gap with the rest of Asia. For the whole continent, around 32% of electricity came from clean sources in 2022.

Advertisement

In turn, a greater proportion of power from clean sources should help the Philippines attract more manufacturing and other industries.

Major producer

The country is already a major producer of pharmaceuticals, electronics and semiconductors and is considered an attractive destination for firms looking to relocate operations outside of China.

Vietnam, Thailand and Indonesia are all also expected to rapidly increase renewable energy supply capacity over the coming years, and may sporadically compete with the Philippines as green energy hot spots.

But the combination of aggressive government policy, an urgent drop in domestic fossil fuel supplies and projections for continued rapid energy demand growth look set to push the Philippines into the top tier of all renewable energy growth markets by 2030.

The opinions expressed here are those of the author, Gavin Maguire, a columnist for Reuters.

Advertisement