The Philippinesโ energy transition goals face a formidable obstacle: persistent financing challenges, particularly in the renewable energy sector, according to the Department of Energy (DOE).
โIf the financial requirements or the financial resources were there, we can go as the sky is the limit as far as renewable energy is concerned,โ Energy Secretary Raphael Lotilla shared in an interview with Bloomberg last week.
While the Philippines is placing big bets on renewables to secure energy sustainability, Lotilla emphasized that the core issue lies in affordability.
โEven the renewable energies that will be coming on stream will initially have a higher cost, even higher than conventional energy,โ he noted.
Increased Renewable Energy Share
Currently, the country derives more than 60 percent of its power from coal, with renewables contributing just 22 percent. Compounding the issue, about 80 percent of the countryโs coal supply is imported, creating a significant reliance on external sources.
โThis huge dependency on imported energy sources cannot remain forever. As the economy grows, we have to become more self-reliant and contribute to a sustainable future for the entire planet,โ Lotilla said.
The Marcos administration has laid out ambitious targets to increase renewablesโ share in the energy mix to 35 percent by 2030 and 50 percent by 2040. Achieving these goals will require approximately 52.8 gigawatts (GW) of new installed renewable capacity over the next 20 years and an estimated P31 trillion in clean energy investments.
โHow to transition to 35 percent and eventually 50 percent of the power mix is part of that challenge. If transition financing becomes available, weโll be very happy to advance on that one,โ Lotilla stated.
Lotilla also underscored the critical role of the private sector in driving the countryโs renewable energy push.
Liberalized Power Industry
โThe entire energy sector is market-driven, privately owned, and unsubsidized. So, we are really depending on the private sector to push renewable energy, and they, too, have to take into account the risks involved,โ he explained.
The Electric Power Industry Reform Act has liberalized the power industry by dividing it into four sectors โ generation, transmission, distribution, and supply โ to encourage greater competition in the electricity market.
In a significant move, Lotilla and Energy Undersecretary Rowena Cristina Guevara visited the United Arab Emirates last week to formalize a partnership with Masdar, a state-owned renewable energy firm.
The agreement operationalizes a memorandum of understanding on energy transition cooperation signed by the Philippines and the UAE. Masdar has committed $15 billion to develop one GW of solar, wind, and battery energy storage projects across the Philippines by 2030, with plans to scale up to 10 GW.
โThe Philippines is integrating renewable energy into its energy mix on an unprecedented scale, ensuring energy security while fostering sustainable economic growth and environmental stewardship,โ Lotilla said earlier.
The path forward is steep, but with robust investment and private sector leadership, the Philippines eyed to transform its energy landscape, balancing economic growth with environmental responsibility.
