Road to PH Energy Transition Paved by Innovation-Friendly Policies

It is still a slow, but hopefully steady road for the Philippines’ transition to green energy to future-proof the country’s power supply and foster economic growth for all its citizens.

“We have to go through a transformation of the energy sector, and this transformation will have to occur over time and definitely not overnight,” said Department of Energy Secretary Raphael Lotilla during Stratbase ADR Institute’s Pilipinas Conference 2024 held in the Manila Polo Club in

Makati City. “Right now, the concern for the economy would be energy security to sustain that economic growth and to reduce poverty, which is the number one goal among the sustainable development goals.” 

“There are, of course, uncertainties, and in order to address these uncertainties — as well as which technologies would be available and whether financing would be available for them — is to diversify our sources of energy,” he explained. 

“The transition really requires a holistic approach to solving the problem. The journey is not going to be linear. It’s extremely complex and it ultimately requires transforming the entire energy system — the supply side, the networks, and the demand side,” added AboitizPower Chief Finance Officer Sandro Aboitiz. “Part of our focus is ensuring that we can help the demand side — through rooftop solar, for example — to help consumers be part of the solution as well.” 

The Department of Energy (DOE)’s Philippine Energy Plan aims to increase the renewable energy mix to over 50% by 2050, develop offshore wind projects through increasing port infrastructures, and add nuclear energy to the country’s power mix at 1,200 megawatts by 2032 and 4,800 megawatts by 2050.

According to Lotilla, having a balanced portfolio of energy sources in the mix is the most efficient strategy to wean off coal dependence, with the nation at the mercy of imported coal which generates 80% of its demand, 98% of which comes from Indonesia.

According to the Department of Environment and Natural Resources Secretary Maria Antonia Yulo Loyzaga, the Philippines has “significant untapped reserves of copper, gold, and chromite”, considered as “critical energy transition minerals for the development of low-carbon renewable energy technologies, including solar panels, wind turbines, and storage batteries.” 

Aboitiz estimates that solar rooftops can supply up to 13 gigawatts of renewable energy, and aims to ease the current policy restrictions for wide adoption.

“Technology changes rapidly and consumer preferences change rapidly over time as well. Policy and regulation has to keep pace and evolve fast enough to enable innovation and experimentation to help us find new solutions,” he said. 

“In the Philippines, we estimate there are around 13 million households who are eligible for rooftop solar but penetration is very low. The question is why is that happening? Do net metering rules have to be improved? Do we need to further incentivize people to put panels on their roofs?,” he asked rhetorically. 

Despite the traction of renewable energy development, Lotilla iterates the necessity of incorporating baseload energy sources such as coal and natural gas to supplement the intermittency of renewable sources like solar and wind.

“We should have an eye on carbon capture utilization and storage, as well as coal-firing technologies that would be coming online in the future. That underlines why we look at upstream gas exploration to substitute for foreign supply and still be price competitive with international prices,” the Energy Secretary said. 

“Part of the transition is our coal power plants. The coal moratorium excludes plants that were committed before its issuance. Co-firing with other fuels is an important element in the transition and the early decommissioning or repurposing is encouraged as a voluntary exercise on the part of the existing coal-fired power plants,” he further explained. 

Aboitiz wishes to support the projected economic growth of the Philippines by supplying the inevitable surge in energy demand for years to come.

“The economy continues to grow at 6% a year, [translating] to about 600-700 megawatts of new baseload demand that is needed just in Luzon alone,” the executive said. “We have an opportunity and the responsibility to continue building baseload projects where it makes sense to support the economic growth of the country, whether that means expanding some of our coal facilities in places like the Visayas and investing in LNG platforms.” 

The energy company set a goal to build 3,600 megawatts of new renewable energy capacity in its bid to reach 4,600 megawatts by 2030. Its aggressively increasing portfolio already has more than 1,000 megawatts of disclosed projects consisting of indigenous sources including solar, hydro, geothermal, wind, and energy storage systems.

At the start of 2024, AboitizPower acquired a stake in Chromite Gas Holdings, which is currently in negotiations to buy a majority interest in two natural gas power plants. Combined, these have the capacity of over 2,500 megawatts, and serve as a terminal for importing LNG in support of diversifying the country’s power portfolio.