The Philippines faces some major challenges in its quest for energy security – high cost of electricity production, its excessive reliance on fossil fuels, the possible depletion of the Malampaya natural gas fields that supply 30 per cent to the country’s largest island, Luzon, and increased demand due to its growing population. To address these challenges, the Philippines introduced its Philippine Energy Transition Strategies under the Philippine Energy Plan for the period 2023-50. The initiative aims to enhance access to affordable energy, improve reliability and resilience, and expand the use of clean and sustainable energy. The strategies focus on increasing the contribution of renewable energy sources to the power generation mix to 35 per cent by 2030 and to 50 per cent by 2040. This includes up to 50 GW of offshore wind capacity by 2050.
Current infrastructure
As of the beginning of 2023, the Philippines had an installed capacity of 28,258 GW, of which 71 per cent was based on thermal sources such as coal, oil and natural gas. The remaining 29 per cent was based on renewable energy sources (RES) including hydro, geothermal, biomass, solar and wind. Additionally, 145 MW of battery energy storage system (BESS) and 674 MW of off-grid power was also installed.
The Luzon grid sources bulk generation from the northern and southern parts of Luzon Island, with around 50 per cent of the demand concentrated in Metro Manila. The Visayas transmission system consists of five subgrids (Panay, Negros, Cebu, Bohol and Leyte-Samar) interconnected by submarine cables. In Mindanao, power is generated from renewable and conventional plants in Lanao, Misamis Oriental and Davao. A 230 kV backbone enables power transfer between northern and southern Mindanao.
The National Grid Corporation of the Philippines (NGCP), the transmission network provider in the Philippines, plays a crucial role in ensuring the reliable transmission of electricity across the three main regional grids of Luzon, the Visayas and Mindanao.
In 2024, the NGCP strengthened the grid with the full energisation of three energy projects of national significance such as the Mindanao-Visayas interconnection project (MVIP), the Cebu-Negros-Panay Backbone Project Stage 3 (CNP3) and the Hermosa-San Jose (HSJ) transmission line. The MVIP links the Luzon, Visayas and Mindanao grids into a unified power grid, ensuring a more stable and secure power supply across the country’s three major islands. This PhP 52 billion project, which was fully energised in January 2024, involved constructing a 92 km, 450 MW, ±350 kV HVDC submarine cable between Santander (Cebu) and Dapitan (Zamboanga del Norte). Further, the operationalisation of CNP3 in April 2024 enables the delivery of excess power from Panay and Negros to the rest of Visayas, facilitating the full operation of the MVIP. This PhP 43.4 billion project involved 354 km of overhead lines, 58 km of submarine cables and 10 substations.
The HSJ project, which spans the provinces of Bulacan, Pampanga and Bataan, accommodates new bulk power generation from the Bataan area and is a major component of the Luzon 500 kV transmission backbone. It includes an 82.4 km 500 kV HSJ line and the 500 kV Hermosa substation, which enables better voltage regulation and power transfer from existing 230 kV facilities in the area. Fully energised by the NGCP in June 2024, this PhP 16.5 billion initiative significantly boosts the reliability of the Luzon grid.
Future plans
Consumption
Electricity demand and sales in the Philippines are projected to expand more than four times from 91.3 TWh in 2022 to 408.1 TWh by 2050, growing at a CAGR of 5.5 per cent, with Luzon contributing more than 70 per cent of total electricity sales. This surge in electricity sales will necessitate an additional generation capacity of 122.7 GW by 2050, raising the country’s total installed generating capacity to about 151 GW.
Generation
The Philippines aims to significantly shift its energy mix towards RES, which will dominate the installed capacity, supported by natural gas and BESS. Coal will see no additional capacity beyond the 2,305 MW planned from 2023 to 2028, natural gas capacity will substantially increase and oil capacity will remain largely unchanged. RES will see the most growth with an addition of 13,791 MW by 2028 and an additional 84,712 MW by 2050, culminating in a total RES capacity of 106,768 MW (71 per cent) of the total capacity by 2050. The capacity for BESS will also increase, with an additional 2,080 MW by 2028 and 1,544 MW by 2050, totalling 3,780 MW by 2050.
OSW
According to a World Bank study, the Philippines, with its substantial coastline and favourable wind conditions, has a significant offshore wind (OSW) potential of 178 GW. In January 2024, the Philippines Department of Energy (DOE) announced that at least 10 OSW projects aggregating 6.72 GW are expected to become operational by 2028. As of November 2023, the DOE had awarded 82 OSW energy service contracts with a total capacity of 63.36 GW.
With assistance from the World Bank, the DOE is engaged in grid integration and transmission planning. This includes wind resource measurement, which identifies OSW development zones and sets auction price ceilings, as well as transmission expansion and upgrades that review data, present future generation scenarios and outline indicative transmission plans for 2030, 2035 and 2040.
Transmission
The NGCP has outlined an extensive plan to expand and modernise the transmission infrastructure across the Luzon, Visayas and Mindanao grids, including island interconnection projects, to meet the country’s increasing electricity demand and facilitate RES integration. The primary objectives include enhancing grid resilience and reliability, addressing congestion issues and enabling the interconnection of regional grids.
As per its Transmission Development Plan 2023-40, the NGCP aims to add approximately 3,871 km of transmission lines and 34,150 MVA of transformation capacity at the 69-500 kV voltage levels by 2040. A significant aspect of the NGCP’s strategy involves the continuous expansion and reinforcement of key transmission backbones, particularly within the competitive renewable energy zones. These zones, identified for their high RES potential, are prioritised for transmission infrastructure development to support RES projects.
The NGCP has envisaged an investment of about PhP 905 billion in the Philippines’ high voltage grid between 2024 and 2034. These projects are presently in the consultation stage. Of this, about 59 per cent will be spent on developing transmission lines and 41 per cent on developing substations. An additional investment of PhP 48 billion is planned for the operations and maintenance of the transmission network between 2024 and 2030.
The way forward
The Philippines is poised for a significant transformation in its energy sector, emphasising RES to meet its growing electricity demand and reduce reliance on fossil fuels. The plans outlined by the NGCP and the DOE include extensive infrastructure upgrades, the integration of smart grid technologies and a substantial increase in RES capacity. These initiatives aim to enhance grid resilience, address congestion issues and support sustainable development. Moving forward, the focus will be on the timely execution of these projects, continuous monitoring and ensuring the alignment of regulatory frameworks to foster a stable and efficient energy supply that will ultimately lead to a cleaner and more resilient energy future for the Philippines.
