Philippines - Country Commercial Guide
Energy

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

Last published date: 2021-09-11

Overview

The Philippines is facing a mounting energy crisis as the Malampaya natural gas fields, currently 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 to energy production. Due to the impact of COVID-19, the energy sector faced many challenges that necessitated adjustments to ensure continuity of energy services to consumers. The Philippine government stated that it envisions the Philippines being energy self-sufficient soon, utilizing a combination of fossil fuels and renewable energy as solutions. About 43 GW of additional power 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 has 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 solutions in the near-term, and the smaller players often unable to purchase U.S. solutions for the long-term.

Market Opportunities

Renewable Energy: The renewable energy (RE) market has created new policy mechanisms such as renewable energy portfolio standards, net metering, and green energy option/auction programs. Low enthalpy geothermal technologies, offshore wind development and energy efficiency projects are in different stages of feasibility development and technical evaluation.

LNG: The Government put out a call for applications for entities to compete to build the nation`s first integrated LNG import terminal targeted for operations in 2022-2025. 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. The Philippine government is also encouraging the use of small-scale LNG (SSLNG) facilities once the downstream natural gas market is established and after the first LNG terminal is built.

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. Large conglomerates are rebalancing their thermal/coal power assets with more renewable resources. 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. The DOE mandates all distribution utilities undergo a competitive selection process (CSP) in securing power supply agreements (PSA).

Unserved and Underserved Markets: The need for electricity and solutions outside the main islands and major population centers is critical, but often is not commercially viable. Off-grid and micro-grid solutions allow the use of additional solutions such as energy storage systems and rural electrification enhancements. USAID-funded projects allow for opportunities in consulting and pilot projects.

Recent global trends have made the Philippines more aware of the need for energy 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 this business if they build relationships with local utilities and register themselves as potential suppliers. A lack of developed energy standards can present uncertainties, but as the market is private sector-driven, if a company’s product/solution is desired by the major utilities, firms can expect that it will eventually be endorsed by the Philippine government.

Resources

  • Department of Energy
  • Energy Regulatory Commission
  • National Electrification Administration
  • Contact Information

Thess Sula, Commercial Specialist, U.S. Commercial Service Philippines

Email: Thess.Sula@trade.gov