‘Funding gaps hold back Philippines RE ambitions’

MANILA, Philippines — Persistent financing challenges remain a major hurdle in the country’s pursuit of more ambitious energy transition goals, especially in renewable energy, according to the Department of Energy.

“If 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,” Energy Secretary Raphael Lotilla said in an interview with Bloomberg last week.

With the Philippines betting big on renewables to ensure energy security and sustainability, Lotilla acknowledged that the real challenge ultimately lies in the cost.

“Even the renewable energies that will be coming on stream will initially have a higher cost, even higher than conventional energy,” he said.

In terms of power generation, the country derives over 60 percent of its power needs from coal, with renewables only accounting for about 22 percent.

Notably, about 80 percent of the country’s coal supply is imported, Lotilla said.

“This huge dependency on imported energy sources cannot remain forever, and as the economy grows, we have to be more self-reliant and contribute as well to a sustainable future for the entire planet,” Lotilla said.

As such, the Marcos administration outlines a target of expanding the share of renewables in the energy mix to 35 percent by 2030 and 50 percent by 2040.

But to achieve these goals, the Philippines needs about 52.8 gigawatts (GW) of new installed renewable capacity over the next 20 years, alongside a total clean energy investment of up to P31 trillion.

“So how to transition to 35 percent and eventually 50 percent of the power mix is part of that challenge. So, if the transition financing will be available, we’ll be very happy to advance on that one,” Lotilla said.

Furthermore, the secretary highlighted the crucial role of the private sector in leading the country’s push toward cleaner, more sustainable power.

“The 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,” Lotilla said.

The Electric Power Industry Reform Act liberalizes the country’s power industry by unbundling it into four distinct sectors — generation, transmission, distribution and supply — to promote greater competition in the electricity market.

Lotilla, along with Energy Undersecretary Rowena Cristina Guevara, visited the United Arab Emirates last week to sign an implementation agreement with Emirati state-owned RE firm Masdar.

The agreement, which involves Masdar’s $15 billion committed investment, has operationalized the memorandum of understanding on energy transition cooperation signed by the Philippines and the UAE.

Under the deal, Masdar will develop one GW of solar, wind and battery energy storage system projects across the Philippines by 2030, with plans to scale up to 10 GW.

“The Philippines is integrating renewable energy into its energy mix on an unprecedented scale, ensuring energy security while fostering sustainable economic growth and environmental stewardship,” Lotilla earlier said.