MANILA, Philippines — With the Philippines racing toward energy security, the government and private sector are shifting into high gear to power the nation with clean energy — one home at a time.
Energy stakeholders are building on the positive momentum from 2024, a year considered nothing short of remarkable for the Philippines after achieving its highest renewable energy (RE) installation to date.
The Department of Energy (DOE) reported that around 794.34 megawatts (MW) of new RE capacity boosted the country’s supply in 2024, exceeding the amount added in the previous three years combined.
The Philippines added 230.54 MW of new RE capacity in 2023, 328.18 MW in 2022 and 230.1 MW in 2021, DOE data showed.
Contributing to record-high installations was the net-metering program, which contributed about 141 MW from 2015 to 2024.
Net metering is a scheme that allows power end-users to build their own RE facilities for personal use and sell any excess electricity generated to the grid.
Energy Secretary Raphael Lotilla has credited the “unprecedented growth” to the “effectiveness” of the country’s RE policies and the government’s commitment to steering the Philippines toward a “more self-reliant energy future.”
A key initiative in this effort is the integration of all applications and permitting processes for energy projects into the Energy Virtual One-Stop Shop System, which streamlines the entire application process.
The DOE has also issued new guidelines simplifying the application process for RE development to further advance the country’s energy transition push.
Under the new guidelines, RE developers may now commence the processing of permits and the conduct of surveys and other feasibility activities before the official 25-year contract term starts.
For that purpose, a certificate of authority (COA) will be issued to developers, allowing them to proceed with activities that were previously permitted only after the contract was approved and signed by the DOE chief.
The COA’s validity period depends on the project type, with biomass, geothermal, hydropower, ocean and wind projects having three years and land-based solar and solar floating projects having one and two years, respectively.
“The implementation of these new guidelines marks a significant step toward facilitating faster RE project implementation, fostering innovation and attracting investments across the archipelago,” Lotilla said.
Priority tags
To further attract investments in the sector, the government grants priority tags to high-impact power projects, especially those involving renewables, in line with efforts to ensure timely implementation.
From May to December 2024, the DOE awarded certificates of energy projects of national significance (CEPNS) to 91 RE developments totaling 17.6 gigawatts.
Projects granted CEPNS status are expected to receive priority processing and expedited approvals from permitting agencies, government-owned and controlled corporations, local government units and other relevant authorities.
The DOE grants CEPNS to energy projects with a capital investment of at least P3.5 billion. Such certifications remain valid until the commercial operation date.
Similarly, RE projects also dominated the list of those certified by the Board of Investments for green lane processing.
Latest BOI data showed that 141 RE projects worth P4.13 trillion were deemed eligible for green lane treatment in 2024. This accounted for about 80 percent of the total projects certified by the agency last year.
Under Executive Order 18, green lanes help streamline, simplify and automate approvals for high-impact projects to ensure swift realization of the investment.
Investments in renewables increased significantly after the government allowed full ownership in the RE sector, which was previously subject to a 40-percent cap.
This landmark move was well received by industry stakeholders, as it effectively opened the floodgates for investments, particularly capital-intensive offshore wind developments.
Hotspot for RE investments
The government’s sound and investor-friendly policies helped the Philippines emerge last year as the second most attractive emerging market for RE investments globally.
According to the BloombergNEF Climatescope 2024 report, the Philippines earned a power score of 2.65, closely trailing India’s 2.73 and besting 103 other developing countries.
This marked an improvement from 2023’s fourth-place ranking and an impressive leap from 20th place in 2021.
The Philippines’ power score was also better than the regional average of 1.94 in Asia-Pacific, bringing the country into the second spot regionally.
The rise in the rankings was attributed to the country’s effective implementation of energy policies, including feed-in tariffs, net metering, import and value-added tax incentives, priority grid access and RE certificates.
But with peak demand seen growing by around 5.3 percent annually until 2028, the DOE has admitted that the country’s energy transition journey “is far from over.”
It emphasized that private sector investors should further step up and accelerate the development of RE technologies to meet the energy needs of the expanding economy.
Under the Philippine Energy Plan, the country wants to scale up the share of renewables in the energy pie to 35 percent by 2030 and 50 percent by 2040.
Currently, renewables only account for about 22 percent of the country’s power generation mix.
Geothermal power
Among the trailblazers in the wider adoption of clean power is First Gen Corp., which has helped numerous businesses across the country reduce carbon emissions and lower electricity costs.
First Gen, the energy arm of the Lopez Group, recently partnered with the local subsidiaries of Japan’s Sanyo Denki Co. Ltd. and Nippon Sanso Holdings Group for geothermal supply.
Sanyo Denki Philippines Inc. has tapped First Gen to energize its four manufacturing plants, along with its technology center, at the Subic Bay Freeport Zone in Zambales with 5,500 kilowatts of geothermal power.
The supply will come from the geothermal power plant in Negros Oriental that is owned and operated by First Gen unit Energy Development Corp. (EDC).
Nippon Sanso Ingasco Group (NSIG), meanwhile, will source 2.6 MW of geothermal energy from First Gen to power its gas manufacturing facility at the Phividec Industrial Estate in Tagoloan, Misamis Oriental.
EDC’s Mindanao Geothermal Power Plant will provide the geothermal supply.
Besides the two Japanese firms, First Gen is also supplying geothermal power to Cebu-based steelmaker and property developer Chioson Group of Companies.
Under the deal, the company will energize the Chioson Group’s steel plants in Mandaue City and corporate buildings in Cebu City with 2.1 MW of clean power.
The Chioson Group first tapped First Gen in 2020 to reinforce its goal of manufacturing a wide range of steel products in a more sustainable manner.
And since partnering with the Lopez-led firm, the group has displaced at least five million tons of carbon emissions.
First Gen, through EDC, owns and operates 13 power plants running on geothermal energy. These facilities have an aggregate installed capacity of about 1,200 MW, equivalent to roughly 60 percent of the country’s geothermal capacity.
Geothermal facilities are sources of baseload power or the minimum amount of electricity needed on the power grid to meet constant demand.
Last year, First Gen earmarked around P24 billion to develop and operate four geothermal power plants across the Philippines.
These projects include a 5.6-MW facility in Negros Occidental, the 28-MW Mahanagdong plant in Leyte and two others in Bicol — the 29-MW Palayan facility and the 20-MW Tanawon plant.
Likewise, EDC intends to invest about P25 billion to sustain steam flows at its massive geothermal project in Valencia, Negros Oriental.
With this project, the company aims to sustain and maximize the power generation of the geothermal power plants by opening new areas and pads to support the drilling of wells.
The investment covers the construction of road networks, pipeline routes and other support structures, as well as the integration of emerging technologies.
De-risking strategy
The DOE said the Philippines could still unlock about 2,000 MW of untapped geothermal potential.
While it is not as much as before, the energy department said the potential capacity is “still worth developing.”
However, the main risk in geothermal development comes during the exploration stage, as drilling wells does not guarantee viable results, leading to significant investment without assured returns.
As such, the Marcos administration wants to secure a loan from the Asian Development Bank to fund its geothermal risk reduction strategy.
The mechanism is designed to help cost-share exploration drilling with qualified private developers to de-risk geothermal resources at the pre-development stage.
Energy Undersecretary Rowena Cristina Guevara estimates an investment of around $6 million to $8 million to drill one hole for geothermal exploration.
Solar energy on the rise
One of the country’s notable achievements in recent years is the continued rise in solar installations—ranging from small rooftop systems for homes and offices to large-scale projects capable of powering communities.
Leading the way is Meralco PowerGen Corp. (MGen), the company behind the sprawling MTerra Solar across Nueva Ecija and Bulacan.
The P200-billion project consists of 3,500 MW of solar panels paired with 4,500 MW-hours of battery energy storage system components.
MTerra Solar, which broke ground last November, is set to be completed in phases: the first phase by 2026 and the second phase by 2027.
Upon completion, it is poised to become the world’s largest integrated solar and battery storage project.
The Meralco Group took over the project in 2023 after acquiring a controlling stake in SP New Energy Corp. (SPNEC) through MGen Renewable Energy Inc.
“Started as an ambitious project, MTerra Solar is moving toward the direction of providing meaningful contributions to the government’s goal,” said tycoon Manuel V. Pangilinan, who chairs Meralco, MGen and SPNEC.
In the first quarter of this year, MGen activated three large-scale solar farms across Luzon.
It switched on the 52.8-MW MGreen Cordon in Isabela, the 19.8-MW Bongabon Solar in Nueva Ecija and the 80-MW Baras Solar in Rizal.
As the power generation arm of the Meralco Group, MGen aims to contribute to achieving the country’s targets, hoping to scale up its renewables capacity to at least 1,500 MW before 2030.
REinforcements
Amid rising power demand, the government is counting on new RE projects to reinforce the country’s power supply and ensure energy security.
In particular, the DOE expects over 11,600 MW of committed RE projects to come online between 2025 and 2030.
Broken down, solar projects dominated the list with a total capacity of 8,431.19 MW, followed by wind (2,233.24 MW), hydropower (836.38 MW), geothermal (74.22 MW) and biomass (50.28 MW).
Committed projects refer to those that have secured firm financial closure, are already under construction or have been awarded through the government’s green energy auction rounds.
With the government playing a supporting role, the DOE has urged investors to take the steering wheel and drive the Philippines toward its energy transition goals.
“The private sector needs to share the responsibility for progress, or lack of it, in the energy sector. It’s not fair to put it all on the government. If the private sector is a full partner, it needs to take full responsibility,” Lotilla said.
