THE Department of Energy’s (DOE) awarding of 1,392 RE service contracts in April 2025 amounting to a potential capacity of 152 gigawatts (GW) might have created an unprecedented momentum for renewable energy (RE) investments. By increasing RE share in the country’s power generation mix, the agency is taking a significant step toward a more sustainable future while the world grapples with the challenges of climate change.
In a media kapihan session on June 25 organized by Clean, Affordable and Secure Energy (CASE) for Southeast Asia Philippines, Energy Undersecretary Rowena Cristina Guevara said the agency wants to ensure the transition delivers on its promise of affordability, reliability and energy security.
The agency’s decrease of the country’s reliance on costly and volatile fossil fuels can lower electricity prices in the long run and promote a more stable and environmentally friendly energy sector. The absence of fuel costs in renewable projects lessens the country’s exposure to price shocks caused by unstable global oil and gas markets.
Every successful solar or wind project can “reduce our dependence on imported fossil fuels, making our energy system more resilient,” Guevara said.
She said that the Green Energy Auction (GEA) Program can allow the purchase of RE at competitive prices; this, in turn, can lower electricity rates, encourage the emergence of new players and basically level the industry playing field.
According to Guevara, simulations from the Independent Electricity Market Operator of the Philippines suggest that GEA projects online and the priority dispatch of renewables can impact spot market prices in 25 years.
The model-based projections forecasted how a balanced supply and demand scenario can reduce the spot prices from 2026 to 2050: In Luzon, from P4.95 per kilowatt-hour (kWh) to P0.28/kWh; in Visayas, from P5.28 per kWh to P0.48/kWh; and in Mindanao, from P4.06 per kWh to P0.36/kWh.
Lessening the risks
According to a CASE report, with RE expected to comprise a large share of the generation mix by 2050, other grid resources such as storage, flexible capacity and demand-side management are also needed to reduce prices and support reliable system operation.
The report cited BloombergNEF’s ranking of the Philippines as the second most attractive emerging market for RE investments in 2024.
CASE for Southeast Asia Philippines is a regional project implemented in the Philippines, Indonesia, Thailand and Vietnam to drive the Southeast Asian power sector toward decarbonization and increased climate mitigation ambition. CASE Philippines is jointly implemented by GIZ Philippines (German Corporation for International Cooperation), with the Institute for Climate and Sustainable Cities (ICSC) as the expert organization and the DOE as the political partner.
ICSC Executive Director Angelo Kairos dela Cruz said the DOE move sends a signal that the Philippines, with its strong policy framework and technical knowledge, is ready to accept more investments to advance the energy transition. He said that businesses want to make the RE transition but need a “push” because of the challenges.
“For businesses, derisking instruments and tempering interest rates are crucial, and the DOE is already making strides in laying these out,” dela Cruz said.
He added that access to concessional finance can further be integrated to lessen the risks for local banks. With a just energy transition cutting across various societal sectors, he mentioned the “need to have the concept of bankability translated at various levels, such as the community and household level. Investments and bankability should not only focus on big players.”