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The Philippines is sitting on one of Southeast Asia’s richest mixes of renewable energy (RE). Geothermal remains the backbone of the sector, supplying around 1,932 megawatts (MW) or nearly 15% of capacity. Hydropower contributes just over 1,100 MW, while solar has grown to more than 1,300 MW, and wind adds about 443 MW, together making up a modest share. Biomass also plays a role, delivering close to 760 MW.
However, its transition to a low-carbon power system has lagged behind regional peers. The result: abundant potential that remains only partially tapped as the rest of the region accelerates.
Business Mirror columnist John Mangun noted the contrast: Vietnam added 9 GW of solar in just one year, while Indonesia attracts investors through guaranteed utility offtake.
“Regional peers are winning on velocity,” he wrote, adding that Vietnam unlocked a solar boom in 2019 with feed-in tariffs and grid priority, while Indonesia gained investor confidence through guaranteed payments. Though both markets faced setbacks, they proved that capital follows cash flow.
“The Philippines has yet to prove it can compress timelines without sacrificing contract integrity or grid stability,” Mangun wrote.
(Also read: Why Ilocos Norte is Dubbed Southeast Asia’s Renewable Energy Capital)
10 challenges slowing down RE in the PH
RE players in the Philippines are stepping up. ACEN, Ayala’s energy arm, runs 4.8 GW regionally with 1.6 GW at home, making it a key local anchor and regional force. Energy Development Corporation (EDC) holds 1,480 MW of geothermal, a fifth of the renewable base, prized for steady output.
Meanwhile, First Gen’s 3,600 MW portfolio spans geothermal, hydro, and gas, giving it transition flexibility. AboitizPower is channeling nearly half of its ₱153-billion 2024 budget into renewables, aiming for 4,600 MW by 2034. SP New Energy is going big on Terra Solar, a project designed to match the country’s entire solar fleet.
But despite these efforts, the country’s renewable push could stall if systemic hurdles remain unaddressed.
- Grid hurdles
The Philippines’ archipelagic geography fragments its electric grid, making transmission across islands and mountainous terrain difficult and expensive. Rugged topography increases the costs of building lines and substations, while isolated mini-grids on remote islands struggle with poor connectivity and high losses. The government set aside ₱22.3 billion for grid upkeep through 2025, as the Mindanao-Visayas link advances to unify island networks.
- Transmission constraints
National Grid Corporation of the Philippines (NGCP) data show transmission lines grew under 0.6% yearly since 2009, lagging behind RE goals. While Think Tank BMI warned RE growth could outpace grid upgrades, the Developers of Renewable Energy for AdvanceMent Inc.
(DREAM) President Jose Layug Jr. said only 2,699.76 MW was added from 2009 to 2019, mostly coal, highlighting weak interconnection capacity.
By 2025, NGCP completed only 75 of 258 projects, delaying grid growth and hindering RE rollout.
- Minimal battery energy storage system (BESS)
Battery storage in the Philippines remains scarce, raising concerns that the country is moving too slowly. For the first time, the Department of Energy (DOE)’s 4th green energy auction (GEA-4) included solar projects paired with storage, aiming for 1,100 MW to bolster grid stability. DOE expects 330 MW of BESS capacity online in 2025, though at a cost– storage could add an estimated ₱5 to ₱6 per kilowatt-hour (kWh) to project tariffs.
- Irregular climate-resilience frameworks
Many RE infrastructures in the Philippines are highly exposed to typhoons, flooding, and other climate events. The country is visited by about 20 tropical cyclones annually, with around 10 becoming typhoons.
On Leyte’s Limawasa Island, solar panels at its hybrid solar-diesel power plant were destroyed by Super Typhoon Odette in 2021, leaving many barangays with no power. Without clear climate-resilience standards, future renewable projects risk similar setbacks.
- Lengthy clearance process
RE developers in the Philippines face a complex permitting process, needing barangay resolutions, mayor’s permits, environmental clearances, and agency endorsements. Renewable Energy Association of the Philippines President Erel B. Narida flagged the approval process as overly rigid, saying, “If one official did not sign today, you cannot finish it in a year,” noting that utility-scale solar farms can require over 250 signatures from agencies and local officials.
The DOE is working to address local government unit (LGU) delays in approving power projects by developing a standardized energy infrastructure ordinance template to simplify and accelerate approval procedures.
- Unclear regulations
In 2024, the DOE and the Department of Environment and Natural Resources (DENR) signed an agreement to streamline offshore wind permitting, removing the need for separate foreshore leases and allowing projects under Offshore Wind Energy Service Contracts (WESCs). Yet, the lack of finalized “no-go zones” for offshore wind sites remains a key concern.
This lack of comprehensive spatial planning has led to concerns that service contracts may be awarded in areas that are ecologically sensitive or unsuitable for development. For instance, the Civil Aviation Authority of the Philippines (CAAP) has identified that about five offshore wind projects fall into “no-build” areas due to aviation safety concerns, potentially rendering these sites unbuildable.
- Uncertain local gains
Some RE projects are promoted as socially responsible initiatives, yet in practice, their benefits for local communities can be limited or uncertain.
For instance, the proposed 2,000-MW BuhaWind Offshore Wind Farm in Ilocos Norte puts more than 6,300 fisherfolk in Pasuquin, Burgos, Bangui, and Pagudpud at risk. Its 50-meter “no-sail zones” around turbines would block access to traditional fishing areas. Although compensation and alternative livelihood programs are planned, their effectiveness in offsetting long-term impacts is far from guaranteed.
- Flawed pricing policies
In 2023, RE developers blamed low Green Energy Auction Reserve (GEAR) prices for poor participation in the government’s GEA-2. Sun Asia CEO Tetchi Cruz-Capellan criticized the Energy Regulatory Commission (ERC) for setting ceilings that fail to reflect market realities. As a result, DOE received only 3,580 MW—30% of the 11,600 MW on offer. Experts warned that artificially low tariffs risk discouraging investment in new RE projects.
- Corruption
According to Rappler columnist Val Villanueva, RE investors are grappling with corruption deeply entrenched at the local government level. Despite nominal gains in the country’s “ease of doing business” rankings, developers report widespread demands for facilitation payments and pressure to buy from politically connected suppliers.
“For foreign firms governed by the United States Foreign Corrupt Practices Act or the United Kingdom Bribery Act, these conditions are legally and reputationally untenable,” wrote Villanueva. “Their only lawful option is to walk away.”
- Inadequate infrastructure
Manila Times columnist Ben Kritz highlights a key hurdle for offshore wind in the Philippines: inadequate onshore infrastructure. Turbine components, including 100-meter blades, nacelles, and foundations, must be transported and partially assembled on land, but ports are largely unable to handle such oversized, heavy cargo.
Roads are also a challenge, as many cannot support the weight and size of transport trucks. Without upgrades, moving and assembling offshore wind parts will be slow, costly, and logistically difficult.
(Also read: Electric Cooperatives & the Energy Transition: Help or Hindrance?)
Moving forward
To unlock the Philippines’ RE potential, critical infrastructure must be prioritized. Ports and grid systems should be upgraded as public goods to ensure readiness before major private investments begin. Clear and stable policies are equally essential, including realistic GEAR pricing, formalized offshore “no-go zones,” and legal certainty to de-risk projects and attract investors.
Corruption and bureaucratic delays must be tackled with genuine reforms, while permitting processes are streamlined across all government levels. Engaging communities and providing fair, comprehensive compensation will secure the social license to operate. Without these foundational reforms, the Philippines risks lagging in the global RE race.“The obstacle is not vision—it is bankability,” wrote Mangun. “In a nation of 110 million, where rolling blackouts can halt economic momentum overnight, energy security will belong to those who can turn capacity targets into bankable, grid-ready megawatts. The clock is not only ticking—it is measuring execution speed. And there are no prizes for ‘almost.’”
Sources:
https://businessmirror.com.ph/2025/08/21/from-oils-retreat-to-the-renewable-race
https://www.trade.gov/market-intelligence/philippine-renewable-energy-opportunities
https://www.sciencedirect.com/science/article/pii/S2211467X24000221
https://www.bworldonline.com/opinion/202506/24/680856/gearing-up-grid-transition-in-the-philippines
https://thebenildean.org/2025/05/reality-check-the-philippines-crawl-toward-clean-energy
https://manilastandard.net/business/314490519/doe-cites-need-to-cut-cost-of-energy-storage.html
https://www.rappler.com/environment/disasters/126001-typhoons-enter-philippines-fast-facts
https://world.350.org/philippines/powering-limasawa-after-super-typhoon-odette
https://www.pna.gov.ph/articles/1219022
https://www.rappler.com/voices/thought-leaders/vantage-point-why-green-energy-failing
https://www.manilatimes.net/2025/06/22/opinion/columns/tilting-at-windmills/2137401/amp