Philippines - Commercial Guide
Energy

This is a best prospect industry sector for this country. Includes a market overview and trade data.

Last published date: 2020-07-22

Overview

The Philippines is facing a mounting energy crisis as the Malampaya gas fields, supplying 30% of Luzon`s energy consumption, are expected to be depleted by 2024. An ever increasing population, an administration-mandated infrastructure boom, and some of the highest electricity costs in Southeast Asia all combine to present formidable challenges. The Government has stated that it envisions the Philippines being energy self-sufficient, utilizing a combination of fossil fuels and renewable energy as solutions. About 43 GW of additional capacity will be required by 2040, and the country is clearly behind schedule in developing solutions. The current energy mix is composed of coal (47%), natural gas (22%), renewable energy (hydro, geothermal, wind, solar) (24%), and oil-based (6.2%). While the country indicated interest in clean energy, this clearly will not come at the expense of development, and no penalties or incentives are in place for utilizing different types of energy sources. The electricity sector is fully privatized, with one major utility, Meralco, holding 80% of the market. The remaining 20% is made up of a few regional players, and 100+ electric cooperatives. The need for energy solutions and new equipment exists, but larger players make purely commercial decisions that favor lower cost, and the smaller players often cannot purchase U.S. solutions long-term.

Market Opportunities

LNG: The Government has put out a call for applications for entities to compete to build the nation`s first integrated LNG import terminal. The process does not restrict the number of entities that can compete, and many foreign and U.S. firms are actively pursuing this opportunity. In addition to the opportunity to build the terminal itself, the private sector entities managing the terminal will need to procure gas.
Power Generation: Firms are in different stages of power plant rehabilitation, upgrading, and/or regular maintenance work. This presents a range of opportunities for supplying various types of equipment and services. As the market is fully privatized, these firms will make decisions based on price and need for diversification.

Distribution and Transmission: Solutions are needed for the main grid and new projects, such as $2 billion Visayas-Mindanao Interconnection Project. Smaller utilities will need to enhance their capabilities. 
Unserved and Underserved Markets: The need for electricity and solutions outside the main islands is critical, but often not commercially profitable. USAID funded projects allow for opportunities in consulting and pilot projects.

Recent global trends have made the Philippines more aware of the need for diversification. In the past, decisions centered around price, but the need to have multiple sources to ensure business continuity does now seem to be recognized. U.S. firms can expect some share of such business as long as they build relationships with local utilities and register themselves as potential suppliers. A lack of energy standards does present uncertainties, but as the market is private sector driven, should one`s product/solution be desired by the major utilities, one can expect that it will eventually be endorsed by the Government.

Resources

Department of Energy: https://www.doe.gov.ph 
Energy Regulatory commission: https://www.erc.gov.ph 
National Grid Corporation of the Philippines: https://www.ngcp.ph 

U.S. Commercial Service Philippines: 
Thess Sula, Commercial Specialist 
Email: Thess.Sula@trade.gov