A quicker green transition amid ASEAN grid integration

By Jomarc Angelo M. Corpuz, Special Features and Content Writer

Power has been a heated point of discussion in the Philippines over the past few months, precisely over rising electricity prices, recurring red and yellow alerts, and growing concerns over the country’s dependence on imported fuel. As geopolitical tensions in West Asia continue to disrupt global energy markets, Filipinos are increasingly feeling the effects through higher power rates and fears of supply instability.

These challenges have placed the country’s energy future at the center of national conversations, with government officials, energy experts, and private sector leaders emphasizing the urgent need to accelerate the Philippines’ transition toward a cleaner, more reliable, and more resilient power system.

That message was front and center during the BusinessWorld Economic Forum’s third panel discussion, “Philippine Energy: Powering National Competence & Regional Integration,” where officials from the Energy Regulatory Commission (ERC), the Institute for Climate and Sustainable Cities (ICSC), and ACEN Corp. discussed the country’s energy future.

One of the biggest concerns raised during the discussion was the country’s continued reliance on imported fossil fuels. According to ICSC Executive Director Angelo Kairos Dela Cruz, the Philippines remains highly vulnerable to global fuel price volatility and foreign exchange fluctuations because fuel costs are directly passed on to consumers.

“To make things worse, one of our major vulnerabilities is that fuel and forex costs are automatically passed through to consumers, meaning global shocks will lead to higher electricity prices, transport costs, and inflation. The long-term priority should be reducing this structural dependence and going for the most ambitious scenario that we can go for,” he explained.

Meanwhile, ERC Director III Sharon O. Montañer emphasized that recent international conflicts have highlighted the urgent need for the country to accelerate its transition toward renewable energy (RE). She noted that any geopolitical tension outside the country can directly impact local electricity prices and goods.

“Any conflict from outside that has an impact on these fuel sources will definitely impact the prices of electricity in the country, and it highlighted first the need for more renewable energies,” Ms. Montañer said. “The need for more RE is highlighted during the Middle East crisis, but it also exposed and highlighted the fact that we already need to address the flexibility of the system. So, in the energy transition, we cannot help but focus on flexibility.”

To address these challenges, the government has already laid out long-term renewable energy goals. Ms. Montañer reiterated that the Philippines, as stated in the Philippine Energy Plan 2023-2040, is targeting 35% renewable energy in its power mix by 2030 and more than 50% by 2040.  

In this regard, it can be seen that renewable energy is becoming increasingly important both for environmental reasons and for economic stability. Unlike imported coal and gas, renewable sources such as solar, wind, and geothermal energy are locally available in an archipelago. This allows the country to reduce its exposure to global market disruptions while strengthening long-term energy independence.

In spite of these potentials, however, it was raised during the panel that building more renewable energy projects alone will not solve the country’s energy problems.

ACEN Corp. Chief Financial Officer Jonathan Back pointed out that investments in smarter and more integrated grids are equally necessary.

“The Philippines has good RE potential in certain respects,” he said, “but to make full use of it, we do need to expand the grid. For example, the significant potential in the north of Luzon, [including] Ilocos Norte, can actually be utilized for the benefit of everyone. What we really need here in the Philippines is a more useful grid in the country.”

Not impossible, but expensive

It was also raised during the panel that the Philippines faces unique challenges because of its geography. As an archipelago, distributing electricity across thousands of islands is far more difficult compared to mainland ASEAN countries like Vietnam or Thailand. Mr. Back explained that this makes regional integration and nationwide transmission projects more expensive and technically challenging.

“[I]t is just as a matter of physics. It is harder for the Philippines to be integrated into the rest of the ASEAN grid. You start looking at very long, very expensive high-voltage direct current connectors to enable that kind of thing. It’s not impossible, but it is very expensive,” he said.

Preparations

Despite these difficulties, the Philippines continues to prepare for eventual participation in the ASEAN power grid. ERC’s Ms. Montañer said that while the country may be among the last ASEAN members to connect in 2014, its preparations are already underway, with stage one of the interconnections expected to be operational by 2027, and stage two by 2030.

She also noted that regional integration could help improve energy supply stability while lowering costs by allowing countries to share electricity resources.

“One challenge is consistency in the system with our markets and with our ASEAN neighbors, and there’s also a legal aspect in case of disputes. Those are just a few of the technical and regulatory issues that we need to look into,” she said.

“Definitely, it will ease pressure on the supply. If our supply margin is higher, prices will be lower. So, in the end, integration will translate to lower costs,” Ms. Montañer added.

Building on that, Mr. Dela Cruz of ICSC shared a vision positioning the Philippines as a future renewable energy supplier within ASEAN. However, he emphasized that achieving this goal would require major investments in infrastructure and energy systems rather than simply making ambitious promises.

“That would require more than big words and fancy interconnected roads. It would require expensive in­vestments. Should we go for that expensive investment, or should we go to just maintaining our own system, improving the things that have to be improved here in the Philippines first? That’s a discussion that would definitely happen in the next few years,” he said.

Rising need for RE

The forum also tackled recurring red and yellow alerts that have raised concerns about grid reliability. Mr. Dela Cruz explained that some energy facilities are being forced to operate outside their intended functions, repeatedly ramping up and down to compensate for weaknesses in the system. These operational issues contribute to instability and increase the risks of outages.

“Yellow and red alerts happen because we have sources of energy trying to behave something else that what they’re meant to be,” he explained. “For example, coal-fired power plants are ramping up and ramping down until their pipes burst. Therefore, they are uncommissioned for a very long time. We can see how many coal-fired power plants, old ones and even the newly commissioned ones, are failing because of this tendency to ramp up and ramp down,” he said.

“Injecting more RE into the grid during variable periods would allow a more, would actually create a more stable supply. We would actually create a more stable grid, and that requires a lot of planning. Unfortunately, we are not there; so we keep on having this problem again,” Mr. Dela Cruz added.

Multiple sources needed

At the same time, the panelists acknowledged that renewable energy alone cannot yet fully meet the country’s power needs. ACEN’s Mr. Back noted that full reliance on renewables is still impractical at present, especially without significant advances in geothermal energy and battery storage technologies.

“In the longer run, we think there actually is going to be a lot of opportunity for renewables with geothermal to actually fill in the gap of the base load. But, at the moment, the reality is that we need traditional thermal generation to provide certainly the energy that’s needed within the whole grid,” he said.

Among other alternatives discussed is nuclear energy. Ms. Montañer revealed that nuclear power is already included in the Philippine Energy Plan 2023-2050, with targets of 1,200 megawatts by 2032 and up to 4,800 megawatts by 2050. While nuclear energy remains controversial, supporters believe it could provide stable baseload power that complements renewable sources.

Ultimately, the discussion highlighted that the Philippines is entering one of the most crucial stages in its energy transition. Rising electricity costs, fuel dependence, and aging infrastructure have exposed and continue to pose major risks. However, the country also has strong renewable energy potential and an opportunity to strengthen its role within ASEAN.

The challenge now, as the panel conferred, is ensuring that investments, policy reforms, and infrastructure development move quickly enough to secure a more shock-resistant, affordable, and sustainable energy future for Filipinos.