The Philippines may be able to reduce its dependence on coal-fired power plants when renewable energy (RE) projects provide sufficient power supply, think tank Institute for Energy Economics and Financial Analysis (IEEFA) said in its latest report.
The Philippines added more than 1,000 megawatts (MW) of solar power in 2024 alone — outpacing all other energy sources including coal, gas, wind, and geothermal, IEEFA said in a report released on Thursday.
“Centralized government auctions, among other policies, are driving project developments,” the report said.
A fourth auction round is set this year, offering up to 10.5 gigawatts (GW) of new RE capacity, including 1,100 MW of solar-plus-storage projects.
Coal drop
The report’s author, IEEFA research lead Sam Reynolds, said the recent decline in coal-based generation was also due to operational issues: at least eight coal plants went offline in the first half of 2025, sidelining a combined 1.4 GW in capacity.
Citing a July report by Reuters, IEEFA noted that the Philippines is on track to register its first annual decline in coal-fired electricity output in nearly 20 years. Coal generation is projected to fall 5.5 percent this year, while output from liquefied natural gas (LNG) plants could rise 5.2 percent.
IEEFA emphasized, however, that LNG is not the only factor filling the supply gap.
“Several technologies have stepped in to compensate,” Reynolds said, adding that only one greenfield LNG project has secured a contract through the Competitive Selection Process (CSP).
Supply shift
Under CSP rules, distribution utilities may sign power supply agreements only after soliciting at least two qualified bids. If two auctions fail, only then may they enter direct negotiations with other power producers.
“In the Philippines’ liberalized electricity market, power projects win supply contracts through CSP auctions,” Reynolds explained. “Utilities are legally bound to secure power at the least cost, so generators must compete on price.”
Rates outlook
In June, the Department of Energy (DOE) projected that power rates could drop below P1 per kilowatt hour (kWh) by 2050 if all projects from the five rounds of the Green Energy Auction (GEA) push through.
DOE Undersecretary Rowena Cristina Guevara cited simulations by the Independent Electricity Market Operator of the Philippines (IEMOP), showing a sharp decline in electricity costs over time.
In Luzon, power rates could drop from P4.95 per kWh in 2026 to just P0.28 per kWh by 2050. In the Visayas, the forecast sees a decline from P5.28 to P0.48 per kWh, and in Mindanao, from P4.06 to P0.36 per kWh over the same period.
The total capacity of RE projects in the first five GEA rounds stands at 26,211 MW.
Clean power
As of end-May 2025, renewable energy — including hydro, geothermal, wind, biomass, and solar — made up 9,945 MW, or 32.1 percent, of the country’s total on-grid capacity of 30,967 MW, DOE data showed.
The government is targeting a 35 percent RE share in the power mix by 2030, and 50 percent by 2050 — a goal that, if current momentum continues, may no longer be just aspirational.
