Why the Philippines Can’t Afford an Offshore Wind Gamble

December 12, 2025

Offshore wind (OSW) has become a central pillar in the global push toward net-zero emissions, driven by strong national climate commitments and a surge in offshore lease awards. Analysts expect 2025 to be a milestone year, with about 19 gigawatts (GW) of new capacity coming online and roughly $80 billion in fresh investments. This momentum is led by China and followed by Europe, the UK, and the US.

Just 10 kilometers from shore, wind speeds can be about 25% stronger than on land, allowing turbines to operate longer and generate power more consistently. This makes OSW attractive for countries looking to secure powerful, large-scale renewable energy (RE).

Europe illustrates the scale of ambition. By 2023, the EU had 19.4 GW of installed OSW, including 3 GW added that year. That total is projected to rise sharply to 111 GW by 2030, underscoring the bloc’s long-term commitment.

Technology is also reshaping the landscape. Turbines such as Siemens Gamesa’s 14-megawatt (MW) model, as well as China’s newer machines with blades stretching 118 meters, are boosting output while reducing the number of units needed. With no land footprint and rapidly improving efficiency, OSW is set to remain a key part of the global RE transition.

(Also read: Southeast Asia Races Toward Solar-Wind Integration, Yet Hard Realities Remain)

OSW faces economic headwinds

However, the global OSW boom is now running into hard economic realities. The International Energy Agency (IEA) warns that inflation and high interest rates are driving up project costs, squeezing developers already managing tight supply chains. These pressures are clear across major markets.

In the US, the Coastal Virginia Offshore Wind project’s budget climbed from $9.8 billion to $10.7 billion, largely due to pricier grid upgrades. Japan’s challenges are similar, with Chubu Electric posting an 18-billion yen loss on three Mitsubishi-linked projects in 2024 as the weak yen and rising costs hit margins.

Australia is facing its own setbacks. Developer BlueFloat Energy cancelled its AU$10-billion Gippsland Dawn project and signaled a broader pullback, saying OSW is not commercially viable for now. The company is reportedly negotiating the sale of stakes in projects across Europe and Asia, underscoring a wider investment retreat.

The policy environment has also turned volatile. In the US, President Donald Trump’s halt on the Empire Wind project disrupted momentum, and although work later resumed, financial losses pushed its developer, Equinor, to abandon a separate Australian venture.

Even the Netherlands has scaled back ambitions, dropping its 50-GW target for 2040 to 30 to 40 GW amid rising costs and weaker demand. Minister Sophie Hermans said that “realism is needed” when it comes to offshore planning.

Is the PH ready for OSW?

OSW is emerging as a major contender in the Philippines’ RE plans, supported by policies aiming to lift renewables to 35% of the power mix by 2030 and 50% by 2040. The country holds an estimated 178 GW of offshore potential, drawing strong developer interest and more than 90 service contracts so far, representing about 68 GW in prospective capacity.

Officials hope to deliver the first offshore power by 2028, backed by foreign-ownership rules and faster permitting. A landmark 3,300-MW auction is set to prioritize fixed-bottom projects. Yet even with this momentum, the path to large-scale deployment remains far from straightforward due to these challenges:

Soaring costs

Sky-high costs and long timelines are grounding the Philippines’ OSW ambitions. Early projects demand $3 to 7 million per MW, double that of onshore farms, while operations remain three to five times costlier. Average electricity prices have climbed to $230 per MWh, straining commercial viability.

Myrna Velasco of Manila Bulletin Velasco noted that potential lenders for Philippine offshore wind projects “are struggling to find a viable financing model”. She added that banks are considering longer-than-standard 20-year power agreements to ease financing and prevent “rate shock” for consumers.

The Global Wind Energy Council (GWEC) emphasized that although the Asia-Pacific region is poised for major wind energy growth, “securing investment and managing financial risks effectively are key to driving the sector’s growth.”

Additionally, OSW construction timelines stretch 24 to 48 months, compared with roughly 18 months for onshore wind. Adding to the cost are harsh ocean conditions, specialized transport, and complex marine logistics. Long undersea cables are also prone to damage, with repairs taking over three months, increasing downtime and expenses.

Burdening consumer bills

The country’s RE transition is entering a costly phase as it shifts from the Feed-in-Tariff (FIT-All) system to the Green Energy Auction (GEA) program. Under FIT-All, developers of wind, solar, biomass, and small hydro received fixed payments for 20 years, with any shortfall shared among consumers.

With most FIT slots filled, new projects now face auction-based pricing, with the National Transmission Corporation (TransCo) projecting rising cost recovery rates. By 2030, electricity bills could climb by roughly ₱1.36 per kWh, before easing gradually by 2038.

According to Rappler’s Val Villanueva, GEA-5 alone adds 3.3 GW of OSW, with estimated tariffs of ₱12/kWh. Villanueva underscores that OSW, the costliest technology, will heavily burden consumers in the early years through higher generation charges, system fees, and grid integration costs.

Comparing global trends, PhilStar’s Bienvenido Oplas observed that nations with significant wind reliance—including Europe, the US, and Australia—experienced higher inflation, while Asian countries with limited wind exposure maintained stable or falling costs, highlighting the economic pressures tied to large-scale wind adoption.

Issues in GEA-5

The launch of GEA-5, targeting fixed bottom OSW, was pushed to late November after the Department of Energy (DOE) revised its terms of reference (TOR) to address stakeholder concerns over non-price evaluation criteria, including port access, transmission readiness, and environmental compliance. Investors also sought force majeure provisions to avoid penalties for delays in permitting or infrastructure, which could otherwise undermine project bankability.

Another major concern centered on the Green Energy Auction Reserve (GEAR) prices previously set by the ERC. Developers say that in previous rounds, the reserve tariffs were so low that projects could not be financially justified, causing weak participation and casting doubt over the auction programme’s long-term credibility.

Meanwhile, critics, including Manila Times columnist Ben Kritz, argue that the auction prioritizes political targets over technical feasibility, with low Green Energy Auction Reserve (GEAR) prices discouraging investors.

Kritz calls the approach “upside-down planning,” saying the system encourages the government to chase politically driven numbers rather than respond to real demand. This has created an environment where developers feel pressured to bid even when they lack certainty about whether ports, grid connections, or project sites will be ready, increasing the risk of stalled or abandoned ventures.

Deployment readiness

OSW projects feature turbine blades 80 to 100 meters long and multi-ton nacelles, defining the scale and complexity of such developments. Yet only a handful of facilities can handle such oversized cargo, while most remain far from proposed project sites, and road networks for transport are inadequate.

While GEA-5 now requires developers to submit port development plans, these depend on uncertain future upgrades rather than current capacity. Dr. Eduardo Araral of the National University of Singapore warned that port and grid improvements could represent 20 to 25% of project costs.

The Philippine Ports Authority (PPA) aims to upgrade Sta. Clara (Batangas) and Mercedes (Camarines Norte) ports by 2026, but Currimao (Ilocos Norte) has been dropped due to its costly ₱26-billion upgrade. According to PPA officials, OSW projects demand 23 to 25 hectares of port space, far exceeding the 2 to 5 hectares typical at existing facilities.

The MBC warns that the country still lacks port facilities that meet global logistics standards, and this remains one of the biggest obstacles to OSW development. Developing ports that can handle massive OSW components is not a quick task. The group notes that constructing these facilities takes “two to three years just for planning, design, and construction”—and that this estimate does not yet include the long process of securing permits.

Another challenge lies in the steep cost of storing RE. Araral noted that although the prices of solar and wind technologies have fallen sharply over the years, with solar becoming 89% cheaper since 2009 and wind dropping by 70%, storage remains the expensive hurdle. He explained that the high price of energy storage continues to limit how far renewables can go on their own.

“… large-scale battery storage costs hovered around $137 per kilowatt-hour (kWh), a significant expense that adds to the overall cost of renewable energy systems. Until storage costs decrease, conventional energy sources will still be needed to provide backup power, particularly for managing the intermittency of solar and wind power,” he stressed.

Regulatory gaps and corruption

Red tape and corruption are anchoring the Philippines’ OSW ambitions. Developers often need approvals from more than 20 local governments, with coordination across multiple agencies slowing progress, as Triconti ECC Renewables’ Björn Rosenberger observed. Moreover, the Energy Virtual One-Stop Shop (EVOSS), useful for onshore projects, remains poorly integrated for offshore permitting, leaving integration studies in limbo.

Seabed leasing also surfaced as a major issue. Because the rules on how developers can obtain and secure long-term rights to the seabed remain vague, banks are reluctant to finance OSW projects. Lenders worry about what happens to seabed rights if a project is delayed or runs into financial trouble. Investors emphasize that simplifying the leasing process and clearly defining how OSW assets are handled in cases of default or disruption are critical steps to making projects more bankable.

Corruption compounds these challenges. Developers report that permits are routinely stalled unless unreceipted “facilitation payments” are made, while land transactions and procurement are steered toward politically connected suppliers.

For foreign investors bound by strict anti-bribery laws, these practices are legally and reputationally untenable, effectively forcing many compliant firms to withdraw. This entrenched local-level corruption has created an environment of open extortion, deterring serious investment and leaving projects mired in uncertainty.

Grid integration hurdles

Connecting OSW projects to the Philippine grid remains a major challenge. The National Grid Corporation of the Philippines (NGCP) has identified potential connection points with over 30 GW of capacity, but developers are responsible for linking turbines, adding financial and logistical burdens. Potential sites lack high-voltage transmission, and building a 300-kilometer line could take up to seven years due to right-of-way issues.

Industry participants at a Makati Business Club discussion stressed the need for clear timelines and guidance on grid integration.

Typhoon threats and maritime oversight

Weather disturbances and murky regulations are testing the country’s OSW ambitions. Turbines must be engineered to withstand extreme winds, with NGCP reinforcing transmission lines for gusts up to 300 kph, though “typhoon-proof” foundations remain costly.

In 2024, the DOE and the Department of Environment and Natural Resources (DENR) removed some permitting barriers by doing away with separate foreshore leases, but developers say the most critical issues remain unresolved. Without a solid legal framework or finalized “no-go zones,” companies still face the risk of proposing projects in locations that are either unsuitable or environmentally restricted. This uncertainty has already discouraged several investors, who are wary of committing resources without clearer rules on where OSW projects can and cannot be built.

Velasco warned that without marine spatial planning, developers are “sailing blind through waves of uncertainty.” She added that projects must also navigate environmental protections and the livelihoods of fishing communities, adding another layer of complexity to the sector’s growth.

Sustainability and social risks

San Miguel Bay is becoming a hotspot for OSW development, with a 1,000-MW project led by Copenhagen Infrastructure New Markets Fund spanning 23,000 hectares across Camarines Sur and Camarines Norte. Most targeted waters are municipal fishing grounds, yet no public consultations have been held, putting 6,000 small-scale fishers at risk of displacement and loss of livelihood. Another project, a 500-MW facility by Singapore-based NEXIF Ratch Energy, adds to the pressure.

In April, fisherfolk in Pagudpud, Ilocos Norte, held a fluvial protest against the proposed BuhaWind offshore wind farm, a massive 2,000-MW floating project estimated to cost ₱360 billion. The project, led by Danish company Copenhagen Energy in partnership with PetroGreen Energy of the Yuchengco-led PetroEnergy Resources, is set to stretch along the coasts of Pasuquin, Burgos, Bangui, and Pagudpud. Turbines are planned to be installed 1 to 18 kilometers offshore in waters ranging from 80 to 800 meters deep.

According to the Bureau of Fisheries and Aquatic Resources (BFAR), at least 6,339 registered fisherfolk across the four municipalities could be affected, not counting unregistered fishers. During the three-year construction period, fishing in the project area would be prohibited, and even after the wind farm becomes operational, boats may still be restricted from approaching within 50 meters of each turbine. These limitations threaten to shrink traditional fishing grounds and pose serious risks to local livelihoods.

(Also read: Tourists Flee as Samal Plunges Into Darkness)

Experts urge caution on OSW

Experts warn that a hasty OSW rollout could strain the grid and burden consumers financially.

Kritz questioned the DOE’s plan to auction 3,000 MW of OSW between 2028 and 2030, predicting that while bids may be submitted, “virtually none of it will be completed by the 2028–2030 deadline, and most of it will not be completed at all.”

Meanwhile, Araral emphasized that OSW is costly, rapidly evolving, and complex to maintain. He warned that high upfront expenses, including port construction and grid integration, could shift burdens onto consumers. In nations facing energy poverty, he noted, lower-income households already spend “10 to 40% of income on energy,” making additional charges particularly harmful. Araral recommended treating port and grid upgrades as public goods funded through general taxation rather than directly passing costs to users.

With developed countries struggling to scale offshore wind efficiently, Velasco highlighted the need for the Philippines to learn from global experiences. “… for the most crucial stakeholders—the consumers, it’s a waiting game, hoping that both investors and the government will make the right calls,’ she wrote.

Some proponents argue that the high initial cost of OSW can be justified, pointing to the experience with solar energy, where prices fell significantly over time. However, committing too early to such an expensive technology could place unnecessary financial pressure on households. Waiting for costs to decrease, as happened with solar PV, might achieve comparable benefits at a much lower expense. Balancing ambition with affordability requires a pragmatic approach.

Examining global experiences while considering local conditions is crucial to avoid costly mistakes. Policymakers and investors need to carefully weigh the potential benefits of OSW against its long-term impacts. The goal is to expand clean energy without inadvertently raising electricity bills for households, ensuring that the transition remains both sustainable and economically sensible.

As Villanueva stated, “Offshore wind will eventually play a major role in stabilizing the Philippine grid… 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.”

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