Written by: George KIONGSON
Verified by: Krishnan SRINIVASAN
The Philippines, a dynamic Southeast Asian economy with over 7,000 islands, faces rising energy demand driven by population growth and industrial expansion. Currently dependent on fossil fuels, especially coal, the country must balance energy security with sustainability. With vast renewable energy potential, the Philippines offers significant opportunities for green development, where corporate involvement is crucial. This article explores the renewable energy landscape, policies, and the vital role of corporations in accelerating the shift to clean energy.
Philippines Renewable Energy Landscape
The energy mix in the Philippines is still largely dominated by fossil fuels, with coal comprising 63% of electricity generation, oil at 1%, and natural gas at 14%.
Figure 1: Philippines Power Mix
The government has set ambitious goals to increase the share of renewable energy to 35% by 2030 and 50% by 2040, aiming to enhance energy security and sustainability.
Given its unique geographical characteristics, the Philippines possesses vast potential for renewable energy development, making it an attractive market in Southeast Asia. The country ranks as the second-largest producer of geothermal energy globally and enjoys favorable conditions for solar energy production, with the Department of Energy (DOE) estimating that solar installations can generate between 4.5 to 5.5 kWh per square meter per day.
1. Current Renewable Energy Initiatives
To tap into this renewable energy potential, the Philippine government has enacted various policies and initiatives. The Renewable Energy Act of 2008 introduced several incentives, such as tax breaks and the Feed-in Tariff (FiT) system, to stimulate investments in renewable energy projects. In 2022, the DOE amended the law to permit 100% foreign ownership of renewable energy projects, a significant increase from the previous 40% limit, to attract foreign investments.
Key Initiatives:
·Renewable Portfolio Standards (RPS). Mandating distribution utilities (DUs), electric cooperatives (ECs), and retail electricity suppliers (RES) to source a specified percentage of their total energy sales from renewable energy sources. DOE increased the mandated minimum portion of energy from renewables from 1% to 2.5% in 2023. Failure to comply with or violation can lead to imprisonment of one (1) year to five (5) years.
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·Green Energy Option Program (GEOP). Allowing electricity consumers to choose renewable energy as their primary source. It empowers end-users with more than 100 kW of demand to directly purchase renewable energy from licensed RE suppliers.
It is a from the initiative of Retail Competition and Open Access (RCOA), where end-users with at least 500 kW.
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·Green Energy Auction Program (GEAP). Providing mechanisms for competitive bidding to secure long-term power purchase agreements (PPAs) with renewable energy developers. Launched in 2022, GEAP enables developers to submit bids to supply energy at competitive prices, ensuring affordability.
Figure 2. Philippines Renewable Energy Law of 2008
Exploring Nuclear Energy
Despite its renewable energy potential, the Philippines faces some of Southeast Asia’s highest electricity costs, with Metro Manila averaging PHP 12/kWh (USD 0.20/kWh). The Philippines is exploring alternative energy sources to reduce costs and secure future supply. To reduce costs and secure supply, the country is revisiting nuclear energy, particularly the Bataan Nuclear Power Plant—a facility completed in the 1980s but never activated due to safety concerns after Chernobyl. Nuclear energy could help meet rising demand with stable, clean power, though challenges remain, including public perception, regulatory needs, and infrastructure. If activated, Bataan could transform the energy landscape, reduce fossil fuel dependency, and help stabilize prices.
The Role of Corporations in Renewable Energy Development
To advance renewable energy development in the Philippines, the private sector's engagement is essential. By leveraging market tools successfully used in other countries, the Philippines can stimulate investments and accelerate the transition to cleaner energy sources. The following strategies illustrate this approach:
·Corporate Power Purchase Agreements (CPPAs): CPPAs are long-term contracts between corporations and renewable generators, providing fixed-rate, renewable-sourced power. With GEOP allowing large consumers to buy directly from renewable suppliers, CPPAs have a supportive foundation in the Philippines. Such agreements provide stability for both corporations and developers, helping secure financing for new projects.
·Renewable Energy Certificates (RECs): RECs represent one megawatt-hour (MWh) of renewable energy produced and can be traded independently of the electricity itself, enabling companies to claim renewable energy usage. The Renewable Energy Market (REM) in the Philippines currently facilitates RPS compliance, but it is not yet open to voluntary buyers. However, companies can purchase International Renewable Energy Certificates (I-RECs), widely recognized in global sustainability reporting, allowing them to meet renewable energy targets and enhance their social image.
·Green Bonds, Carbon Credits, and Green Tariffs: Financial tools like green bonds, carbon credits, and green tariffs encourage renewable energy use. Green bonds offer a lower-cost financing method for corporate renewable projects. Carbon credits reward emissions reductions, and green tariffs let consumers pay a premium for clean energy, creating demand and supporting renewable infrastructure development.
Figure 3. Wind (Photo by Jeremy Bishop on Unsplash)
For the Philippines to maximize renewable energy adoption and remain globally competitive, it needs to boost awareness and regulatory support for these instruments. A solid policy framework, incentives, and alignment with global sustainability initiatives (such as RE100) are essential. By mandating renewable energy use and promoting market-based tools, the Philippines can position itself as a leader in sustainable investment and align its energy sector with international standards.
In summary, while challenges remain, the Philippines holds significant potential for renewable energy expansion. Corporate engagement, combined with government incentives and favorable policies, can drive the transition towards a greener, more resilient energy future. This partnership between the public and private sectors is essential for achieving energy security, sustainability, and economic growth in this unique archipelago.
At Mt. Stonegate, we offer customized solutions to empower companies to achieve their renewable energy goals while protecting long-term business interests. Elevate your clean energy strategy with insights from Southeast Asia. Contact us today to explore how we can assist you in navigating the future of renewable energy in the Philippines.
Reference:
1.  https://doe.gov.ph/sites/default/files/pdf/energy_statistics/01_Summary_of_2023_Power_Statistics.pdf
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