Philippines bets big on renewables to cut costs and coal dependence

The Philippines is expanding its energy sector with major new projects. Demand for electricity continues to rise by 5% to 7% each year. High power costs and reliance on coal remain key challenges for the country. Coal currently supplies around 60% of the nation’s electricity. Renewable sources contribute about 22% to 24% of generation. Despite this, the Philippines has some of the highest electricity prices in Asia.

The government has certified 13 renewable energy projects worth ₱344.62 billion ($5.63 billion) as of June 2026. These include the 440 MW Ilagan Solar Power Project and the MTerra Solar and Battery Energy Storage Project, which will add 3,500 MW of solar capacity and 4,500 MWh of storage. The Pakil Pumped Storage Hydroelectric Project is also under development, with a planned capacity of 1,400 MW and an estimated cost of USD 3-4 billion.

However, transmission infrastructure has not kept pace with generation growth. Bottlenecks in the grid delay the connection of new renewable projects. The country hopes these investments will eventually reduce power rates. The new projects aim to boost renewable capacity and stabilise the grid. If successful, they could ease pressure on electricity prices. Still, transmission upgrades will be crucial to fully integrate the additional power.