SINGAPORE, July 22, (REUTERS) — The Philippines is on track for an annual decline in coal-fired electricity output for the first time in nearly two decades, an analysis of market and government data showed, driven by rising liquefied natural gas-fired power generation.
The Philippines has the most coal-dependent grid in Southeast Asia but its electricity tariffs, which are not subsidised, are the second highest in the region behind Singapore. The archipelago’s liberalised market enables power retailers to pivot to LNG, analysts say, unlike in Indonesia and Malaysia, where cheap coal keeps subsidies manageable.
Gas-fired generation surged more than 25 percent in June year-on-year and rose 5.2 percent to 10.36 terawatt hours (TWh) in the first half of this year, data from the Independent Electricity Market Operator of the Philippines (IEMOP) showed.
That helped push the share of gas-fired power output to 17.5 percent in the first half of 2025, up from a record low of 13.9 percent in 2023, which was due to depleting reserves at the key Malampaya field, according to government data dating back to 2003.
LNG is expected to meet a rising share of the Philippines’ projected 5 percent annual growth in power demand over the next decade as coal-fired power output is set to peak in 2030 due to a moratorium on new coal capacity construction, said James Ha, head of research for Asia-Pacific at Aurora Energy Research.
In 2020, the Philippines stopped accepting new proposals for coal-based power projects to encourage investment in other energy sources like natural gas and renewables.
Higher LNG imports will drive annual gas-fired output up by 65 percent by 2030 from 2024 levels, Aurora’s Ha said.
Philippine consortium LNGPH signed the country’s first long-term LNG deal in March with global trader Vitol, doubling down on improved prospects for the super-chilled fuel in the country of 114 million people.
Consultancy Energy Aspects expects the Philippines’ LNG import demand in 2025 to rise by more than 50 percent to 2.1 million metric tons from 2024 due to the addition of new gas-fired capacity, senior LNG analyst Kesher Sumeet said.
Coal’s retreat
Price-sensitive Asian nations with high reliance on coal have largely boosted renewable additions to slash emissions and address growing power demand instead of using LNG as a transition fuel.
However, the Philippines has instead bet on LNG, whose usage has started inching up after it began importing the fuel in mid-2023. The country registered a 40 percent increase in the generation capacity of its gas-fired power fleet in 2024 from end-2023 levels, IEMOP data showed.
Meanwhile, coal-fired power output fell 5.5 percent to 33.8 TWh during the period, IEMOP data showed, with generation falling for the fourth straight month in June and its share of the power mix dropping to 57.2 percent from 61.9 percent in 2024.
Falling coal-fired power demand led to the first decline in coal imports since the COVID-19 pandemic during the six months ended June, while LNG imports rose 51 percent in the same period, Kpler data showed.
Coal’s retreat – the first since 2008 – was also compounded by hydropower generation accounting for a higher share of Philippines’ electricity mix during the first half of the year.
Asian spot LNG prices LNG-AS have fallen about 13 percent this year on tepid demand, further boosting the competitiveness of the fuel against coal. IEMOP data also showed a wave of planned outages in early 2025 at coal-fired power plants, which helped to boost the share of gas.
“We think that the rising power demand in the Philippines will outpace renewables’ growth and that combined with the coal phase-out policy would sustain Philippines’ call on LNG in coming years,” Energy Aspects’ Sumeet said.
Electricity generated from renewable sources in the Philippines has been rising, but growth has fallen well short of its ambitious targets. — By Sudarshan Varadhan and Emily Chow
