The Philippines, an island country in Southeast Asia, lies in the western Pacific Ocean. It is an archipelago consisting of more than 7,000 islands and islets, with Luzon being the largest island and Mindanao the second largest. The Philippines Electric Power Industry Reform Act of 2001 divided the industry into the generation, transmission, distribution and supply sectors. While generation and supply operations are open to competition, the transmission and distribution sectors are regulated. The National Grid Corporation of the Philippines (NGCP), as the transmission network provider (TNP), is regulated by the Energy Regulatory Commission and plays a crucial role in ensuring reliable transmission of electricity across the three main regional grids of Luzon, the Visayas and Mindanao. The NGCP is a private consortium comprising the State Grid Corporation of China (SGCC), with 40 per cent ownership, and Philippines-based Monte Oro Grid Resources Corporation and Calaca High Power Corporation, with a combined 60 per cent ownership. The NGCP consortium, which holds the 25-year concession contract and the 50-year franchise to operate, maintain and develop the Philippine transmission network, took over network operations from the state-owned National Transmission Corporation (TransCo) in January 2009.
Over the last few years, the presence of the SGCC in the NGCP has raised significant security concerns among Philippine lawmakers and national security experts. During the 2009-22 period, it invested PhP 300 billion, adding 3,729 circuit km (ckt km), 28 substations and 31,190 MVA of transformer capacity. Over the last couple of years, it has energised key energy projects of national significance (EPNS) such as the Mindanao-Visayas interconnection project (MVIP), the Cebu-Negros-Panay Backbone Project Stage 3 (CNP3) and the Mariveles-Hermosa-San Jose project. The company has been facing delays in project execution due to right-of-way issues, prolonged permitting procedures and natural calamities. Nevertheless, the NGCP has outlined plans to invest over three times its past investments (over PhP 900 billion) in the Philippines’ grid up to 2034.
On the supply side, the country is facing the challenges of heavy reliance on fossil fuels and a looming energy crisis as the Malampaya natural gas fields, supplying 30 per cent of Luzon’s energy consumption, are expected to be depleted by 2024-25. This, coupled with a growing population and some of the highest electricity costs in Southeast Asia, presents formidable challenges. In a bid to improve the situation, in November 2023, the Philippines introduced its Philippine Energy Transition Strategies under the Philippine Energy Plan for 2023 to 2050. The strategies focus on increasing the contribution of renewable energy sources (RES) to the power generation mix to 35 per cent by 2030, and further to 50 per cent by 2040. This includes up to 50 GW of offshore wind (OSW) capacity by 2050 in one of the scenarios.
The plan seeks to develop a smart and green grid plan (SGGP) to ensure rapid grid expansion to accommodate new RES capacity and connect demand centres with new sources of supply. The SGGP will be executed by the government, either through state financing or public-private partnerships.
Current infrastructure
As of the beginning of 2023, the Philippines had an installed capacity of 28,258 GW, most of which (or 71 per cent) was based on thermal sources such as coal, oil and natural gas. The remaining 29 per cent was based on RES including hydro, geothermal, biomass, solar and wind. Additionally, 145 MW of battery energy storage system (BESS) capacity and 674 MW of off-grid power were also installed.
The NGCP is the sole TNP and functions as a system operator, balancing electricity supply and demand to serve all customers and providing ancillary services for the grid. The NGCP’s transmission network includes 500 kV, 230 kV, 138 kV, 115 kV and 69 kV alternating current high voltage lines and cables as well as a 350 kV high voltage direct current (HVDC) network.
As of 2023, the Philippines’ transmission network comprised about 15,316 circuit km (ckt km) of transmission lines at voltage levels of 115 kV to 500 kV. Of this, 43 per cent was at the 230 kV level followed by 38 per cent at the 138 kV level. Between 2019 and 2023, the transmission network grew at a compound annual growth rate (CAGR) of about 2.3 per cent. The country witnessed a decline in the transmission line length in 2019 due to typhoon Mangkhut, which hit the Philippines in September 2018 and caused significant damage, followed by tropical depression Amang, typhoon Ursula in 2019, and typhoon Ambo in 2020. This series of natural calamities impacted restoration capacity, causing stagnant growth in the transmission network between 2020 and 2022. However, the growth rate picked up in 2023 with major projects such as the energising of the 500 kV Hermosa-San Jose line and the 350 kV HVDC MVIP, in May 2023.
In 2024, the NGCP strengthened the grid with the full energisation of three EPNS projects – MVIP, CNP3 and HSJ. MVIP links the Luzon, Visayas and Mindanao grids into a unified power grid, ensuring 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 energisation 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.
Future plans
Consumption: Electricity demand and sales in the Philippines are projected to grow from 91.3 TWh in 2022 to 408.1 TWh by 2050, at a CAGR of 5.5 per cent. Luzon will account for over 70 per cent of total electricity sales. An additional 122.7 GW of generation capacity will be required, increasing the total installed capacity to 151 GW.
Generation: The Philippines aims to shift towards RES, which will dominate installed capacity by 2050. Coal capacity will not increase beyond 2,305 MW planned from 2023 to 2028. RES will grow significantly, adding 13,791 MW by 2028 and 84,712 MW by 2050, reaching a total of 106,768 MW or 71 per cent of the total capacity by 2050. BESS capacity will also rise to 3,780 MW by 2050.
Offshore wind: The Philippines has significant offshore wind potential, with projects expected to bring 6.72 GW online by 2028 and 82 contracts awarded for 63.36 GW.
Transmission: The NGCP plans to expand and modernise the transmission network, adding 3,871 km of lines and 34,150 MVA of capacity by 2040. The focus will be on integrating RES and enhancing grid resilience. Investments of PhP 905 billion are planned for 2024-34, with additional funds for operation and maintenance.
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 DOE include extensive infrastructure upgrades, the integration of smart grid technologies, and a substantial increase in RES capacity. 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, ultimately leading to a cleaner and more resilient energy future for the Philippines.
