As the fastest-growing economy in Southeast Asia, the Philippines’ energy demand will increase rapidly over the next 25 years.
Meanwhile, the Organization for Economic Cooperation and Development (OECD) estimates that delivering a clean energy transition that supports prosperity and economic growth will require a cumulative investment of over $300 billion between 2024 and 2040.
This is according to a report by the Indo-Pacific Partnership for Prosperity, which was launched in March to increase growth, resilience, and opportunity throughout the Indo-Pacific region by mobilizing private and non-profit sector investment and expertise.
IP3 executive director David Talbot emphasized that the Indo-Pacific is the world’s most dynamic and fastest-growing region and what happens over the next 10 years will shape the region’s trajectory for decades to come.
He revealed that just recently, leadership from IP3’s Coalition for Emerging Market Infrastructure Investment met with Secretary Frederick Go, Special Assistant to the President for Investment and Economic Affairs, to launch the coalition’s inaugural country platform dedicated to catalyzing infrastructure investment in the Philippines.
According to Go, they are delighted that the coalition has chosen the Philippines as its first focus country, adding that this decision affirms President Marcos’ administration’s actions of creating a regulatory environment that is conducive to attracting investments.
He added that the Philippine government is looking forward to working with private sector leaders to carry out its ambitious infrastructure development goals.
In the launch meeting, the coalition and the Philippine government agreed to establish an ambitious roadmap to enable support for investment needs into infrastructure across the country.
The country’s business and economic future depends to a large extent on the availability of affordable and reliable energy.
A report from Enerdata noted that according to its energy demand and supply outlook for the Philippines covering the period 2020-2040, final energy consumption will increase three-fold by 2040 from 2020, or a growth of 5.8 percent per year, driven by the transport and energy sectors.
Meanwhile, the Department of Energy, in its Power Development Plan covering the same period, said that in line with its commitment toward a cleaner energy transition, a national renewable energy power generation mix target of 35 percent by 2030 and the aspirational target of 50 percent by 2040 were adopted.
In the PDP, it is expected that the country’s peak demand is expected to increase by almost four folds from 2020 to 2040, equivalent to about seven percent growth annually.
To meet this demand and the 50 percent renewable energy target, the country’s installed capacity should increase by about five times from 22,317 megawatts in 2019 to 114,601 megawatts in 2040, coming from existing, committed, and new build capacities.
Meanwhile, the US International Trade Administration noted that the Philippines is facing a mounting energy crisis as the Malampaya natural gas fields, which supply 30 percent of Luzon’s energy consumption, is almost depleted.
An ever-increasing population and some of the highest electricity costs in Southeast Asia, it added, also present formidable energy production challenges.
It said that about 52 gigawatts of additional power capacity will be required by 2045, and the Philippines is clearly behind schedule in developing solutions.
As of 2022, the energy mix is made up of 31 percent coal, 4.2 percent natural gas, 32.7 percent renewable energy (RE), and 32.2 percent oil-based solutions. The RE sector includes geothermal resources (14.6 percent), solar/wind energy (1.4 percent), hydropower (4.1 percent), and biomass (12.6 percent).
Data released by the Department of Energy last November showed that power projects with a total capacity of 14,022 MW are expected to reinforce the national grid by 2030, more than half of which will come from renewables. Around 9,142 MW of RE capacity would be added to the grid during the said period, making up 65 percent of all committed projects. And of the total RE capacity, solar and wind comprise the largest share.
The department said that these RE developments bode well for the government’s target of expanding the share of renewables in the mix to 35 percent by 2030 from the current 22 percent.
The DOE expects power demand to increase by six percent annually until 2028. By 2050, the country’s peak demand is projected to reach 68.5 GW, a threefold increase from the 16.6 GW in 2022.
We need more private sector-led generation projects, but it is equally important that the government has a mechanism in place to make sure that these projects come into fruition fast. For one, there must be a way to speed up the approval process at the Energy Regulatory Commission (ERC).
It’s good that just recently, the Philippine Competition Commission approved the joint liquified natural gas (LNG) project of Meralco Power Gen, AboitizPower and San Miguel Global Power which involves an integrated facility with over 2,500 MW of generating capacity and a regasification terminal.
LNG will provide a vital role in the country’s bid to increase renewable energy because admittedly, solar and wind may not be reliable given that it is dependent heavily on mother nature.
As has been pointed out, our country’s economic targets cannot be attained if we cannot meet our electricity demands.
How can we attract foreign investors if our power supply is unreliable as well as expensive?
A report from Statista revealed that in Asia-Pacific as of March 2024, electricity price for households was highest in Australia at $0.26 per kilowatt hour, followed by Singapore at $0.24 per kwh, Japan at $0.21 per kwh, New Zealand at $0.21, and the Philippines at $0.19.
Ours was higher than Hongkong’s at $0.18 per kwh, Cambodia’s $0.15, South Korea’s $0.13 and Thailand’s $0.12.
Meanwhile, according to retail energy price tracking site GlobalPetrolPrices, Myamar has the lowest residential electricity rate in Southeast Asia at only 1.9 US cents per kwh, followed by Cambodia with 2.7 cents per kwh, Malaysia with 5.2 cents per kwh, Vietnam with 7.6 cents per kwh, and Indonesia with 9.5 cents.
Singapore has the costliest residential electricity in Southeast Asia at 25.3 cents per kwh followed by the Philippines with 20.3 cents. Both, the report noted, are higher than the global average of 15.7 cents per kwh for residential users.
Iran has the lowest residential electricity price globally at 0.2 cents per kwh, as it subsidizes the price being rich in energy resources.
High energy cost is not only bad for business but it also increases the cost of goods and lowers the standard of living.
This is the biggest challenge for our government: how to make sure that electricity supply is not only stable but also affordable. Whether or not this can be resolved during our lifetime remains to be seen.
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