As one of the world’s fastest growing economies, having recorded GDP growth of 7 per cent in 2017, the Philippines is seeking to rapidly expand its power generating capacity while minimising costs to consumers, particularly its rising manufacturing industry.
The country’s hydropower sector has experienced limited capacity growth in recent years but still accounts for 18 per cent of total installed capacity, and there are significant projects under development.
The Philippine government is juggling with the energy trilemma of balancing energy security, affordability and sustainability. Over the past fifteen years it has introduced several initiatives including Feed-in Tariffs (FiTs) to support the growth of renewables, but its electricity mix is still dominated by fossil fuels namely coal (35% of installed capacity), oil (18%) and gas (15%). Coal is expected to remain the largest single source for the foreseeable future with 500 MW added to the grid last year, as it is still considered to be the cheapest option in many provinces.
The development and trajectory of the country’s power sector to 2040 is guided by the ‘Philippine Energy Plan’ which was published in 2017. The plan outlines that the country’s installed capacity will need to increase by some 40 GW to over 60 GW to meet increasing demand.
The share of renewables on the grid is likely to remain more or less constant to 2040 (30-35 per cent) as the plan includes an ambition to expand the installed capacity of renewables to at least 20,000 MW from its current 7,079 MW. Hydropower is expected to make up the lion’s share of this growth in renewables with the Department of Energy having most recently approved and awarded over 450 projects totalling 13.5 GW.
In 2017, the 8.5 MW run-of-river Maris Canal plant was commissioned, which was developed by SN Aboitiz Power- Magat Inc (SNAP-Magat), a joint venture of the locally based AboitizPower and the Norwegian SN Power AS. Located in Ambatali village within the province of Isabella, the USD 47 million project took two years to complete and in addition to bolstering the grid, will improve irrigation facilities for the surrounding communities. Maris is SNAP-Magat’s first completed project since its acquisition of the 380 MW Magot project back in 2007.
AboitizPower, through its wholly owned subsidiary Hedcor Bukidnon, is also set to commence operations on the 69 MW Manolo Fortich cascade project in 2018. Located in Bukidnon province, it includes two run-of-river plants: 43.4 MW Manolo Fortich 1 and 25.4 MW Manolo Fortich 2.
While much of the hydropower developed over the past decade has been relatively small-scale run-of-river projects aided by FiTs, there are a number of large projects under development including SNAP’s 350 MW Alimit project. Situated in Ifugao province, it comprises three plants including a 240 MW pumped storage facility, with a final investment decision expected to be announced in the first half of 2018.
A further large project under development is the 500 MW Wawa pumped storage project in Rizal province. In July last year, the Philippine developer Olympia Violago Water & Power signed an agreement with PowerChina for design, procurement and construction. Expected to cost USD 1 billion, it will greatly contribute to the country’s renewable energy ambitions with commissioning planned for 2022.
The government is seeking Official Development Assistance (ODA) finance from China for the rehabilitation of the state-owned 983 MW Agus-Pulangi cascade project which is currently operating at only 60 per cent of its capacity due to ageing infrastructure. The works would cost up to USD 1 billion and once completed would extend its service life by an additional 30 years while also increasing total capacity by an average of 10 per cent for each of the six powerhouses. The government has also expressed a desire to privatise the project once the rehabilitation is completed.
This country profile is featured in the 2018 Hydropower Status Report. Download the full report here.
This profile was last updated in June 2018.