After delays, the Department of Energy’s (DOE) auction for 3,300 megawatts (MW) of offshore wind capacity has been scheduled for the fourth quarter of the year. It will focus exclusively on fixed-bottom technology, where wind turbines are anchored to the ocean floor.
Fixed-bottom offshore wind is deployed in Europe, China, and the U.S., already generating about 80 gigawatts (GW) of power. It has a much higher and steadier electricity output compared with onshore wind, solar, and floating offshore turbines, according to the Global Wind Energy Council (GWEC), an international association for the wind power industry.
Ann Margret Francisco, GWEC Philippine country manager, said she was thrilled offshore wind was finally getting the support it deserves.
“Why offshore wind? It’s precisely because of the whole capacity. We’re harnessing wind that is very far from land, which means stronger and more consistent wind at sea. The technology allows for larger turbine capacities,” she told the Philippine Center for Investigative Journalism (PCIJ).
A World Bank roadmap for offshore wind in the Philippines says the country’s waters are suitable for developing the “abundant indigenous energy” that offers more than 178 GW of technical potential.
“Offshore wind can play an important role in increasing energy security and decarbonisation efforts in the Philippines,” the study said.
Offshore wind is seen by renewable energy advocates as the alternative that can reduce reliance on coal and natural gas, which policymakers have long favored for their ability to provide continuous 24/7 baseload capacity.
DOE said fixed-bottom offshore wind was selected as the focus of Green Energy Auction-5 — the fifth round of the government’s competitive bidding system for awarding long-term power supply contracts to renewable energy developers — because of its “established global track record, cost-efficiency, and scalability.” The department has been working with stakeholders to improve the terms of reference to make the tender successful.
If all goes well, the first wind turbines will be rising off Philippine shores by 2029, leapfrogging the country’s renewable output and adding capacity in time to meet national targets, said Francisco.
The Philippines has pledged to raise renewables from 22% of the country’s power generation in 2024 to 35% by 2030 and 50% by 2040. At present, hydropower and geothermal dominate — some capable of steady baseload, others serving as flexible or peaking plants. Growth is expected to come mainly from wind and solar.
Urgent investments in renewable energy
Renewable energy advocates say the climate crisis demands a government response as urgent as the power crisis of the 1990s, when generous incentives spurred a wave of power plant investments.
That rush built a fleet of coal-fired power plants, but fossil fuel is now responsible for the world’s largest source of carbon dioxide emissions that drive global warming, and the stronger typhoons that batter the Philippines.
The same rush should be taken to replace fossil fuels with renewables, said Gerry Arances, executive director of the Center for Energy, Ecology and Development (CEED).
For offshore wind to take off, the work ahead will be massive, requiring support from multiple agencies. It involves installing foundations and marine works, building transmission lines across the water, and coordinating with ports and the grid to bring power from sea to shore.
Offshore wind is a capital-intensive technology — rates are expected to be higher than onshore wind and solar — but Francisco said the industry is working on solutions to lower the cost of capital and effectively bring down cost per kilowatt-hour.
Wind requires heavy investment at the start, but once it is operating, there are hardly any other expenses, Francisco said. “Baliktad sa fossil fuels (It’s the opposite of fossil fuels). Coal has lower upfront CAPEX (capital expenditures), but over time, you spend much more on fuel and maintenance.”
“It will still be expensive because it is an expensive technology especially for an emerging market like the Philippines where we have limited supply chain. We are talking about one turbine on water producing 12 to 15 MW of power. It is almost double the existing capacity of onshore wind,” she said.
It will be worth it, according to Romil Hernandez, director for energy policy at the Institute for Climate and Sustainable Cities (ICSC).
“A large amount of capital expenditure is needed for renewable energy, especially offshore wind. However, if you look at it in the long haul and compare the operating expenses of coal and other fossil fuels like LNG, it will surely outweigh the cost required to invest in renewables,” said Hernandez, referring to the recurring fuel costs of coal and LNG.
A large amount of capital expenditure is needed for renewable energy, especially offshore wind. However, if you look at it in the long haul and compare the operating expenses of coal and other fossil fuels like LNG, it will surely outweigh the cost required to invest in renewables.
Romil Hernandez, ICSC director for energy policy
With coal and LNG, Filipino consumers shoulder price shocks through automatic pass-through charges whenever global supply chains are disrupted and fuel prices swing, as consumers experienced during the COVID-19 pandemic and Russia’s invasion of Ukraine.
This is why the Philippines should maximize indigenous energy, said Hernandez.
Francisco also echoed the World Bank study showing how building up the country’s offshore wind market could also lead to socioeconomic benefits, including job creation, local economic growth, and low-cost sustainable energy.
It will provide construction jobs and boost the country’s shipping industry because offshore operations require huge vessels.
Francisco said the global wind energy council, together with the developers and other key stakeholders, were working to ensure the spatial impact of offshore wind wouldn’t harm the environment. Verde Island, between Luzon and Mindoro islands, has drawn particular concern, as it is considered one of the best sites for offshore wind.
Auctions energize renewable sector
The auctions have revitalized the renewable energy sector, after setbacks in the implementation of the Renewable Energy Act of 2008.
Launched in 2021, the Green Energy Auction Program (GEAP) allows large conglomerates and independent renewable developers — including local firms and foreign-backed ventures — to compete for the right to supply set amounts of renewable capacity at the lowest possible tariff, securing 20-year contracts with guaranteed buyers.
GEAP marks a shift to competitive bidding from fixed, guaranteed rates under the Feed-in Tariffs (FiT) scheme, introduced after the 2008 law but hampered by opposition and delays. Concerns were raised that renewable energy would raise electricity prices, at a time when technology for solar and wind was still expensive.
The same price concerns are again being raised nearly two decades later, but renewable energy advocates said these have been addressed.
“It’s the same debate. We have already moved on to renewables. These are last-ditch attempts of coal to stay relevant,” said Antonio La Viña, lead negotiator and spokesperson of the Philippine delegation during the 2015 Paris climate negotiation and former dean of the Ateneo School of Government.
Then and now, critics argued that the expensive technology of renewable energy would distort the market, yet Arances said the same critics did not object to the incentives that fossil fuels enjoyed.
FiT and GEAP tariffs are capped at 20 years, whereas fossil fuels enjoy take-or-pay contracts, capacity payments, and automatic pass-through mechanisms with no expiry.
“Solar was P9 per kilowatt-hour ten years ago. Did we not see how it went down from P9 to P3?” Francisco said.
Solar was P9 per kilowatt-hour ten years ago. Did we not see how it went down from P9 to P3?
Ann Margret Francisco, Global wind energy council Philippine country manager
This is the argument for early investments in renewable energy. DOE said fixed-bottom offshore wind projects undertaken now would “generate valuable insights, helping to address construction and commissioning challenges and paving the way for more streamlined and efficient deployments in the years ahead.”
Early renewable energy investments have already taught the country how much project performance depends on location, how much sunlight an area gets for solar, how strong the winds are for wind farms, or how much water flows for hydropower.
Former energy official and renewable energy advocate Alberto Dalusung III said distributed solar farms were better options than large, concentrated farms. The latter are more vulnerable to weather events that can take out big capacities all at once.
La Viña advocates for rooftop solar for Metro Manila, where land is scarce.
‘Slow transition’
It should not be difficult for the Philippines to meet its renewable energy targets. The country now ranks as the world’s second most attractive market for clean energy investment, according to BloombergNEF, which tracks global commodity markets.
“The opportunity is clearly massive…. It feels like it is at the cusp of a breakthrough. It’s a matter of when that breakthrough is going to happen, not if it’s going to happen,” said Sam Reynolds, energy finance analyst of the US-based Institute for Energy Economics and Financial Analysis (IEEFA).
Conglomerates are already among the biggest producers of renewable energy, and also among the most active participants in the green auctions.
Aboitiz Power has committed to achieving a 50% renewable energy and 50% thermal energy mix in its generation portfolio by 2030. The company told PCIJ it has 1.4 GW of renewable energy installed capacity and more than 1,000 MW of new capacity in the pipeline.
“In step with the Philippines’ energy ambitions, Aboitiz Power is constantly pursuing opportunities to grow and diversify its portfolio through a pipeline of new renewable energy capacity and opportunistic mergers and acquisitions,” Aboitiz Power told PCIJ in a statement.
Despite these investments in renewable energy, however, CEED’s Arances said the conglomerates’ expansion of fossil fuel capacity has been faster – coal plants linger and LNG is growing. The energy transition in the Philippines is unfolding slowly because “the fossil fuel industry is still holding on,” he said.
Climate activists criticized DOE’s recent approval of the development of a 1,200 MW coal-fired power plant in Atimonan, Quezon. Energy Secretary Sharon Garin said the DOE was also considering requests to allow new coal plants for “own-use” despite a moratorium, echoing the industry position that “RE is a good source of energy, but it will not be enough.”
Tan also blamed the country’s slow energy transition on the conglomerates’ LNG investments. “The pace of coal phase-out in the Philippines is far too slow, and worse, it is being undermined by the aggressive expansion of liquefied natural gas,” she said.
San Miguel has set a net-zero target by 2050, according to its own website and reiterated in its recent stock exchange filings. Yet its main decarbonization strategy is LNG expansion.
“The planned expansion of our gas-fired generation capacity and BESS (Battery Energy Storage System) reflects our overall commitment to reduce our carbon emissions and support the government’s climate policies and objectives, including the Philippines’ Nationally Determined Contributions under the Paris Agreement,” San Miguel said on its website.
Five of the country’s conglomerates are leading the growth in LNG, with planned expansions in Batangas and Ilijan terminals.
LNG was touted as a transition fuel, but climate activists worry that, in the same manner that conglomerates won’t shut down coal plants, it would be hard to shut down LNG plants if incentives remained.
LNG is also one of the costliest fuels for the Philippines.
Arances said political will was needed to phase out coal and fossil fuels. “We don’t have a law that prioritizes coal. We have a law that prioritizes renewable energy,” he said.
He fears the Philippines’ trajectory falls short of its energy goals. “Dapat wala nang tatayo na fossil fuel. Puro renewable energy na (There should be no more fossil fuel plants. It should all be renewable energy),” he said.
Francisco is more optimistic about the country’s targets. “If even 10 GW of offshore wind goes online in the next decade, then we’re almost there,” she said, referring to the committed renewable energy projects that secured contracts in recent auctions.
She said renewable energy players were rushing to meet targets, taking a “solutions-oriented” approach to challenges such as technical and bureaucratic permitting, grid connection, and project financing — all without the deep pockets of conglomerates.
ICSC’s Hernandez also called for scrapping the automatic fuel pass-through charges that have given coal and LNG unfair advantages. “Nobody will negotiate with coal and LNG if not for automatic pass through,” he said.
Baseload vs variable energy sources
The slow transition reflects the country’s dependence on baseload power plants – large facilities, traditionally coal, nuclear, or big gas plants – that run almost continuously at a steady output. In older energy planning models, a secure grid is imagined as one anchored on these big plants.
Baseload proponents often point to the variability of solar and wind — with solar producing power only during the day and wind output depending on weather conditions — as a challenge to reliability.
“Dispatchable power sources — largely powered by fossil fuels and capable of ramping up and down quickly — must be used alongside variable forms of energy to compensate for the unpredictability of wind and the sun,” Aboitiz Power said.
Aboitiz Power cited how Brazil turned to LNG when its hydropower output declined.
“Recall the example of Brazil that had to resort to LNG due to an extreme drought that reduced their hydroelectric production for many months or Western Europe that had to resort to extending their dependence on coal plants due to the wind drought a few years ago,” the company said.
Renewable energy advocates argue that this baseload debate is antiquated, as technologies such as battery storage, demand management, and hybrid systems are already available to address the variability of solar and wind output.
Dalusung said reliability did not mean 24-hour operations. “It is about being present when it is expected,” he said.
He said pairing solar panels with hydropower or with increasingly affordable batteries could strengthen reliability. Solar could boost hydropower capacity during dry seasons, while storage would allow excess daytime generation to be dispatched at night or during cloudy periods.
“The idea that coal is necessary for energy security is simply false. Coal does not make us secure; it makes us dependent, vulnerable, and sick,” said Jonelle Mitzi Tan of the Youth Advocates for Climate Action Philippines.
“Almost all of our coal is imported, which means we are at the mercy of volatile global markets. That’s why electricity bills skyrocket when coal prices rise,” she said.
Dalusung argued it was actually coal that had proven to be unreliable based on the country’s experience.
The country has too many large-scale coal plants, resulting in an overcapacity of baseload power, he said.
“What happens with overcapacity is that our baseload power plants are forced to ramp up and down. They are not designed to run flexibly — that function is for flexible power plants,” he said.
Hernandez said baseload plants were meant to run at a steady capacity to meet the country’s minimum electricity demand that must be supplied continuously. But coal plants have also been used to cover peak demand, forcing them to ramp up during high-demand hours and ramp down when demand fell.
This process strains the facilities and leads to frequent shutdowns, he said. “Think of it like a vehicle: if you keep starting and shutting it off, its lifespan shortens, especially if it’s a diesel engine.”
Because of their large capacities, a single plant shutdown can be enough to trigger a yellow supply alert. Dalusung and Hernandez pointed to Wholesale Electricity Spot Market data that had consistently shown that when supply fell short after unplanned coal plant outages, prices quickly spiked.
The grid is better managed if coal is used to address baseload requirements and allowed to operate at a steady pace. Peak demand, he said, should be addressed by renewable energy. This is how the Philippines can reduce reliance on fossil fuels.
“Why use baseload capacity to meet peak demand? What you need is variable energy supply, not baseload,” said Hernandez.
Arances said allegations of gaming and collusion among power sector players also needed to be investigated.
Connecting to the grid
In early September, the Philippine Energy Transition Dialogue 2025 gathered government officials, business and civil society groups, and international partners in Makati City to discuss challenges and solutions to advance clean energy.
A study on long-term scenarios for the Philippines projected optimistic prospects for renewables, showing that the country could surpass its targets under the Philippine Energy Plan—raising the share of renewables from the 50% target to 57% by 2040 and 64% by 2050.
Hernandez, who presented the findings, said the study also assessed system costs and concluded that renewables would lower electricity prices over time, while fossil fuels would become increasingly expensive. This scenario points to 70% energy self-sufficiency by 2050.
“Let’s look at the data. If you have enough renewable energy—solar and wind capacity—then we can do away with LNG,” he told PCIJ.
But achieving these projections will require overcoming structural barriers in the power sector.
One of the key challenges identified at the Makati dialogue was the limited ability of many renewable energy projects to connect to the grid. “The role of NGCP is very crucial. They are supposed to be our partners in accelerating renewable energy,” said Hernandez.
NGCP’s Transmission Development Plan (TDP) shows that nearly half of the 16,895.98 MW of committed capacity will connect renewable energy sources. But the plan underscored “new challenges” because of “the intermittent nature of RE resources, particularly VRE (variable renewable energy).”
NGCP said the grid needs an upgrade and expansion. “Operational flexibility is also crucial in addressing the additional net-load variability and reduced system inertia brought by VRE. Advanced forecasting to reduce the uncertainty of VRE, deployment of more flexible and fast-acting energy storage systems, and the application of STATCOM (Static Synchronous Compensator) and grid-forming technologies are among the options to improve operational flexibility,” the TDP said.
Among the proposals discussed at Makati dialogue was the decentralization of the grid through flexible microgrids that can link far-flung renewable sites to distribution utilities.
Renewable energy advocates say overcoming grid challenges is the final hurdle that will push the country’s clean energy transition forward.
The Renewable Energy Act of 2008 grants qualified renewable energy sources “priority dispatch” in the grid, requiring government agencies to ensure that they are used ahead of non-renewable power.
“You put more renewable energy in the system, then it is automatic. Malalaglag ang coal (Coal will be displaced). It’s a natural displacement to coal. They are the least priority,” said Francisco.
Dalusung said priority dispatch recognizes that there is zero marginal cost for renewable energy, unlike imported coal, which is subject to foreign supply contracts.
“Left to market forces, renewables would eventually drive coal and gas plants out of business,” he said. — PCIJ.org
