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The Philippines’ renewable energy (RE) push has long relied on the Feed-in-Tariff (FIT-All) system, which guarantees fixed payments to wind, solar, biomass, and run-of-river hydro developers for two decades. Any gap between these incentives and actual market prices is spread across all on-grid consumers, making the scheme a shared national subsidy.
With most FIT slots now taken, new wind and solar capacity is shifting to the Green Energy Auction (GEA) program. The National Transmission Corporation (TransCo) has begun outlining projected auction rates for multiple GEA rounds, covering batches from 1 through 6 and spanning 2025 to 2050, forecasting the pricing trajectory for the country’s next wave of renewable projects.
With cost recovery rates (CRR) starting at ₱2.00 per kilowatt-hour (kWh), electricity bills could rise by about ₱0.60 in 2027 and climb to roughly ₱1.36 by 2030 before easing to around ₱0.89 in 2038, showing steep cost increases as 2030 approaches, followed by a slow, long-term decline.
The data signals a pivotal decade ahead for the Philippines’ RE shift. Despite long-standing promises of cheaper, greener power, TransCo’s GEA-All projections show that consumers will face higher costs as large renewable projects enter the grid toward 2030.
“The message is that transition will not be smooth, and renewables will not immediately translate into cheaper electricity,” pointed out a Rappler piece written by veteran business journalist Val Villanueva. “For an economy still struggling with high power prices, fragile grids, and fossil-fuel volatility, understanding this curve is not optional. It is essential for everyone who relies on electricity.
Offshore wind: The biggest trigger of soon-to-rise electricity costs
From 2030 to 2033, cost recovery rates per kWh are projected to rise sharply. All tariff scenarios point to the same trend, with GEA-5 for offshore wind (OSW) and GEA-6 for waste-to-energy (WTE) development significantly reshaping the electricity cost landscape.
GEA-5 adds 3.3 gigawatts (GW) of renewable capacity, marking one of the Philippines’ largest RE projects. However, the cost is steep, with tariffs estimated at ₱12/kWh for GEA-5.
In comparison, solar PV produces power for only ₱2.50 to ₱3.50 per kWh, placing offshore wind at more than four times the cost.
“In plain English: 2030 is the year when the Philippines pays the ‘entry fee’ for large-scale renewable energy,” explained Villanueva. “This spike is not a sign of market failure. It is the natural economic profile of green transitions worldwide: upfront pain for long-term payoff.”
The UK shows how electricity prices can spike. Once among Europe’s cheapest, the country now faces some of the highest rates in the developed world. Businesses pay at least 50% more than many foreign competitors, with Oxford economist Dieter Helm citing the rapid push for RE as a key factor. He noted that the true cost of OSW goes beyond contract prices, including grid upgrades, backup gas plants, and curtailment, while many projects fail to align with the system’s actual needs.
According to Villanueva, after 2034, CRR levels off as renewable assets are paid down and total generation capacity expands. The decline is not due to offshore wind becoming cheaper, as this remains the costliest technology, but because the rest of the energy system grows around it, reducing its relative impact.
“…this is the key message for policymakers — the dilution does not eliminate the drag; it only distributes it,” warns Villanueva. “OSW will still impose a significant price impact for years. It will be a burden on the grid before it becomes a strategic advantage. And this is where the Philippines must avoid locking itself too early into massive OSW commitments.”
He added that even if OSW costs are gradually absorbed over time, the early years still place a heavy burden on consumers, who face higher generation charges, steeper system fees to recover capital outlays, and additional costs for grid integration.
(Also read: A Costly Green Transition May Soon Hit Household Bills)
The case against OSW
The IEA reports that OSW projects worldwide are being squeezed by inflation, rising interest rates, and supply chain delays, with maintenance now consuming almost a quarter of total costs and putting fresh investment under strain.
The Global Wind Energy Council (GWEC) Philippines, while promoting the country’s OSW potential, acknowledges that early projects will come with steep costs. Limited port facilities, an immature supply chain, and the absence of operational scale make initial developments especially expensive.
GWEC adds that these high price levels will make OSW struggle to compete. Compared with other renewable and thermal options, OSW is expected to face difficulty securing power offtake from distribution utilities and electric cooperatives or winning in the wholesale electricity spot market (WESM).
“Even now, potential lenders for offshore wind projects in the Philippines are struggling to find a viable financing model,” observed Manila Bulletin’s Myrna Velasco. “Some banks are proposing longer contracts, beyond the standard 20-year power supply agreements (PSAs), as a way to offset high upfront costs and prevent ‘rate shock’ for consumers.”
Meanwhile, Manila Times columnist Charlie Manalo notes that OSW’s claim of higher output is undercut by volatile sea conditions, which make its generation less reliable than onshore wind. “Offshore…is a different challenge as each project requires heavy-duty foundations, specialized ships, subsea cables, offshore substations, and complex marine engineering,” he explains. “Maintenance can also be costly and dangerous as it will involve helicopters and limited weather windows.”
The Philippine Ports Authority (PPA) admits the country will not have enough OSW–ready ports in time, saying only one or two facilities may be operational by 2026 or 2027. This falls far short of what the more than 6 GW of awarded projects require, raising the risk of expensive delays or even cancellations.
The Makati Business Club likewise flagged port capacity as a major roadblock, stressing that the Philippines lacks facilities built to international OSW logistics standards. “This is a critical bottleneck requiring two to three years for planning, design, and construction– even before accounting for permits,” it argued.
(Also read: UK’s Net Zero Rush Fuels Economic Strain & Energy Woes)
Ensuring consumers aren’t overburdened
According to Eduardo Araral, an associate professor in Public Policy at the National University of Singapore, the heavy spending required for OSW ports could worsen inequality. “As recent data shows, lower-income households in countries with energy poverty can spend between 10-40% of their income on energy, and the cost per kilowatt-hour is significantly higher for them, especially when relying on renewable sources,” he stated.
Moreover, Manalo stressed that in a country where many families already struggle to afford electricity, the practical approach is to expand onshore wind first and introduce offshore projects only once strong cost and environmental safeguards are in place.
“Wind power is set to play a vital role in the Philippines’ clean energy future,” he asserted. “However, ‘clean’ should not come at the expense of affordability, and ‘renewable’ should not cause harm to communities.
If the government still wants to pursue OSW despite its high upfront costs, Villanueva recommends a measured approach.
First, large-scale projects should be delayed until prices drop, noting that OSW today is still at an early, expensive stage similar to solar PV 15 years ago. Global trends suggest future costs could fall by up to half.
Second, he urges starting with small pilot installations rather than immediately committing to 3,300 MW. Limited projects would help the country learn grid integration, build supply chains, and avoid costly failures while shielding consumers from major price shocks.
Third, he suggests a blended strategy that rolls out minimal OSW now and defers the rest until the economics improve, allowing the Philippines to stay on the OSW path without overburdening households. He also states that upcoming technologies—such as hydrogen-to-power, ammonia systems, advanced long-duration batteries, and small modular reactors—may eventually compete with or overtake OSW on cost and reliability.
“Offshore wind will eventually play a major role in stabilizing the Philippine grid. It provides scale, reliability, and baseload-like characteristics. But these advantages only materialize when OSW becomes cost-competitive. The public should not be forced to subsidize the learning curve of a technology that is not yet financially mature, especially when cheaper alternatives exist today,” he concludes.
Sources:
https://www.philstar.com/business/2025/11/20/2488453/new-es-ai-effect-osw-and-gea
https://theweek.com/tech/why-britains-electricity-bills-are-some-of-the-highest-in-the-world
https://www.iea.org/energy-system/renewables/wind
https://www.gwec.net/financing-offshore-wind-in-the-philippines-risk-sharing-mechanisms
https://solarinstallph.com/pages/solar-install-guide
https://mb.com.ph/2025/09/15/tackling-offshore-winds-toughest-development-challenges